2.

Fraud/dolo
OBLIGATION - juridical necessity to give, to do or not to do 4 3. Negligence/culpa
4. Contrary to terms of obligation
ELEMENTS OF OBLIGATION
1. DEFAULT/MORA - delay
1. ACTIVE SUBJECT (creditor/obligee) - whose obligation is
3kinds
constituted
a. Mora solvendi - debtor's delay to give (real ob.), to do (personal
2. PASSIVE SUBJECT (debtor/obligor) - has duty to give, to do or
ob.)
not to do
b. Mora accipiende - creditor's delay to accept
3. OBJECT/PRESTATION - subject matter
c. Compensatio Morae - delay of both in reciprocal obligation
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) - reason
CIVIL OBLIGATION NATURAL OBLIGATION CONCEPT OF DELAY
derived from positive law derived from equity & justice General Rule: No demand, No delay
enforceable by court action not enforceable by court action Exceptions:
1. Law states
2. Obligation states
5 SOURCES OF OBLIGATION
3. Time is the essence
1. LAW
4. Demand be useless if delay
2. CONTRACTS
5. Debtor guilty of delay
3. QUASI-CONTRACTS - arise from lawful, voluntary acts; no one
shall be unjustly enriched... EFFECTS OF DELAY
2Kinds 1. Damages
a. Solutio indebiti - something received (delivered on a mistake), 2. When to deliver determinate thing, STILL LIABLE in fortuitous
no right to demand it event.
b. Neeotiorum eestio - voluntary mgt of property/affairs of 2. FRAUD/DOLO - conscious, deliberate, intentional evasion of
another w/o his knowledge/consent fulfillment
4. QUASI-DELICT/TORTS/CULPA AQUILIANA - arise from damage; 2Kinds
fault/negligence a. Dolo causante/Causal fraud - fraud in obtaining consent;
5. CRIMES/ACTS/OMISSIONS punished by law - arise from civil consent is defective, contract is voidable. Remedy: annulment
liability that is a consequence of a criminal offense b. Dolo incidente/Incidental fraud - fraud w/c vitiates consent.
Remedy: damages
DILIGENCE OF A GOOD FATHER OF A FAMILY
- care need to be exercised by a debtor to deliver/give 3. NEGLIGENCE/CULPA - voluntary act/omission; no bad faith
determinate thing intended
Exception: When law/stipulation of parties requires a differnt 3Kinds
standard of care (slight/extraordinary diligence). a. Culpa aquiliana/Civil negligence - quasi-delict/torts
When creditor is entitled to the fruits b. Culpa contractual/Contractual negligence - breach
Rule: The creditor has personal right (right to ask for delivery) from c. Culpa criminal/Criminal negligence - crime/delict
the time the obligation to deliver arises. 4. Contrary to the terms of obligation
But NO real right (right enforceable against the whole world) until it
is delivered. 2 RULES OF PRINCIPAL & INSTALLMENT
3 KINDS OF FRUITS 1. Receipt of principal w/o mention of interest, presumed interest
1. NATURAL - w/o human intervention is paid also.
2. INDUSTRIAL - w/ human intervention 2. Receipt of latter installment w/o mention of prior installment,
3. CIVIL - derived by virtue of juridical relation presumed prior installment is paid also.

Creditor's rights if debtor fails to comply w/ the obligation 4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim against
1. Determinate DEBTOR
a. Performance 1. Exact payment
b. Damages 2. Attach debtor's properties
2. Generic 3. Accion subrogatoria - exercise rights & actions except inherent
a. Performance in person
b. Damages 4. Accion pauliana - cancel acts/contracts by debtor to defraud
c. Obligation be complied at debtor's expense creditor

Creditor's rights if debtor does in contravention TRANSMISSIBILITY OF RIGHTS

1. Damages General Rule: ALL RIGHTS are transmissible.
2. Ask it be UNDONE at debtor's expense Exceptions:
1. Law states
FORTUITOUS EVENT - cannot be foreseen, if foreseen, inevitable 2. Contract states
General Rule: No person liable to fortuitous event. 3. Obligation is purely personal
Exceptions:
1. Law states 10 Kinds of Obligation
2. Stipulation/contract states 1. Pure
3. Assumption of risk 2. Conditional
4. Delay 3. Alternative
5. Debtor promises deliver to 2/more persons who do not have 4. Facultative
same interest (bad faith) 5. Joint
6. Solidary
EFFECTS OF FORTUITOUS EVENT to thing to be delivered 7. Divisible
- extinguish the obligation if determinate; generic does not 8. Indivisible
extinguish the obligation 9. Obligation w/ a period
10. Obligation w/ a penal clause
3 MISCELLANEOUS RULES ON PERFORMANCE OF OBLIGA-TION
1. When to deliver determinate, accessions (additions/ 1. PURE OBLIGATION
improvements) and accessories (joined/included with the principal) - w/o condition, demandable at once (pure has resolutory
are INCLUDED even not mentioned. condition/period)
2. If debtor fails to do, it shall be DONE AT HIS EXPENSE, same with
doing the contravention; poorly done be undone. 2. CONDITIONAL OBLIGATION
3. In obligation not to do, and obligor does what is forbidden, shall - there is condition in performance; future & uncertain
be UNDONE AT HIS EXPENSE. 2Kinds
a. Suspensive condition - happening of condition gives RISE to
4 GROUNDS; debtor liable for damages obligation
1. Default/mora
 b. Resolutory condition - happening of condition EXTINGUISHES Therefore, NEITHER of them can demand performance of obligation.
obligation Exception: If the term of obligation has to favor one of them.
6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION 5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE "PERIOD"
1. Impossible conditions, contrary to law, shall ANNUL 1. Debtor is insolvent.
obligation. 2. Debtor attempts to abscond.
2. The condition not to do an impossible thing is considered 3. Impairment of guarantees/securities.
not agreed upon. 4. Failure to furnish guarantees/securities promised.
3. The condition that happens in determinate time, 5. Violation of undertaking.
EXTINGUISHES obligation.
4. ALTERNATIVE OBLIGATION
4. The condition that happens in INDETERMINATE time,
obligation only effective at arrival. - w/ 2 or more prestations, only 1 is due.
5. The condition is fulfilled if DEBTOR prevents fulfillment.
5. FACULTATIVE OBLIGATION
6. The effect of conditional obligation, once fulfilled:
- to give: retroact to the day of constitution of obligation - w/ ONLY 1 prestation but can be substituted.
- has reciprocal prestations: fruits & interests be mutually
ALTERNATIVE prestations LOST w/ debtor's fault
compensated
- has unilateral obligation: debtor shall give fruits & interests Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
RULES in case of Loss, Improvement, or Deterioration of thing 2. All prestations lost/become impossible due to debtor's fault.
during the pendency of condition
1. LOST
a. w/ debtor's fault - damages ALTERNATIVE OBLIGATION FACULTATIVE OBLIGATION
b. w/o debtor's fault - extinguishes obligation several prestations due, giving one one prestation due, but can be
2. DETERIORATION is sufficient subtituted
a. w/ debtor's fault - (1) cancel obligation & damages; or (2) right to choose (debtor) unless right to choose DEBTOR ONLY
fulfill obligation w/ damages granted to creditor
b. w/o debtor's fault - creditor suffer impairment If 1 of the prestation is illegal,
3. IMPROVEMENT others may be valid, obligation nullity of principal carries w/ it
remains nullity of accessory/ substitute
a. By nature/time - benefit to creditor
loss/impossibility of ALL prestations loss/impossibility of presta-tion
b. at expense of debtor - debtor no right than that granted to due, w/o debtor's fault, due, w/o debtor's fault,
usufructuary (debtor no right to compensate amount for extinguishes obligation extinguishes obligation
improvement)
EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION General (3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF DEBTOR IN
Rule: The obligation becomes effective retroactively to the day ALTERNATIVE OBLIGATION
obligation was constituted. 1. If 1 of prestations lost through fortuitous event, shall still be
Exceptions: perform by choosing (creditor) from the remainder.
1. In reciprocal obligation, fruits & interests during pendency 2. If 1 of prestations lost through debtor's fault, creditor may claim
of condition shall compensate each other. any of remainders w/ damages.
2. In unilateral obligation, debtor gets fruits & interests unless 3. If ALL prestations lost through debtor's fault, creditor choose
there is a contrary intent. price w/ damages.
3 EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION RULES on LOSS/DETERIORATION of the thing intended as
1. Extinguish obligation. SUBSTITUTE in FACULTATIVE OBLIGATION
2. Both parties restore what they received plus fruits & 1. If there is a loss/deterioration of thing intended as substitute,
interests. debtor is NOT liable if NOT HIS FAULT.
3. The rule on L, D, or I will apply to person who has to return But if substitution is already made, debtor is liable for loss of
the thing. substitute when in DELAY, NEGLIGENCE, or FRAUD.
When one of debtors in reciprocal obligation does not comply
w/ his obligation 6. JOINT OBLIGATION
1. The right of injured party is (1) cancel contract & damages; or - obligation is to be paid proportionately by debtors or to be
(2) fulfill obligation & damages demanded proportionately by creditors

3 Kinds of Obligation (Accdng to PERSON OBLIGED) 7. SOLIDARY OBLIGATION

1. UNILATERAL - only 1 party obliged to comply - each one of debtors has right to render or each one of creditors
2. BILATERAL - both parties; performance not same time has right to demand the entire compliance w/ prestation
3. RECIPROCAL - both parties; performance same time
3. OBLIGATION W/ A PERIOD
MAXIMS & SYNONYMS
- demandability/extinguishment subject to the expiration of
MAXIMS SYNONYMS
period
JOINT Obligation "To each his own" proportionate
PERIOD - interval of time; either suspends demandability or SOLIDARY Obligation "One for all, all for individually &
produces extinguishment one" collectively

DAY CERTAIN - must come, not known when

(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
7 CASES CONSIDERED TO BE "OBLIGATION W/ A PERIOD" 1. Law states
1. Little by little 2. Stipulation states
2. In partial payment 3. Nature of obligation requires
3. Payable ASAP 2 PRESUMPTIONS THAT OBLIGATION IS JOINT
4. When I can afford it 1. The debts be divided as many shares as there are
5. When I have the money debtors/creditors.
6. When I am able to 2. The debtors/creditors are distinct from one another.
7. When my means permit me to do so
8. DIVISIBLE OBLIGATION
- prestation is capable of partial performance

PERIOD CONDITION 9. INDIVISIBLE OBLIGATION

certain uncertain - prestation incapable of partial performance
future only future/past but unknown
10. OBLIGATION W/ A PENAL CLAUSE
(*influence upon obligation) only(*) on the very existence of
- one w/ accessory undertaking attached to obligation to
upon its demandability obligation itself
assume greater liablity in case of breach/non-fulfillment of
obligation
FOR WHOSE BENEFIT IS THE PERIOD?
General Rule: Both the debtor & creditor.
3 PURPOSES OF PENAL CLAUSE
 1. Ensure performance of obligation NOT act of novation act of novation
2. Substitute for damages & interest in case of noncompli-ance NOT transfer ownership transfer ownership
3. Penalize debtor in case of breach requires partial/total insol-vency may happen during solvency of
debtor
In case obligation has a PENAL CLAUSE
General Rule: Penalty takes the place of damages & interest in case
of non-compliance. d. TENDER OF PAYMENT & CONSIGNATION
Exceptions: TENDER OF PAYMENT - act of offering the creditor what is due to
1. Stipulation states. him w/ a demand that the creditor accept it
2. Debtor refuse to pay penalty. CONSIGNATION - act of depositing thing due w/ the court when
3. Debtor guilty of fraud in performance of obligation. creditor cannot/refuses acceptance of payment

NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSE 5 REQUISITES OF CONSIGNATION

Nullity of principal obligation = nullity of penal clause Nullity of penal 1. Debt due.
clause = NOT nullity of principal obligation 2. Creditor refused the tender of payment w/o just cause
3. Notice of consignation already given to persons interested in
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS fulfillment of obligation
1. Payment or performance 4. Consignation of thing/amount due
2. Prescription 5. Subsequent notice of consignation to interested persons
3. Compensation
4. Confusion/merger 5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT
5. Condonation/remission 1. Creditor is absent/unknown.
6. Fulfillment of resolutory condition 2. Creditor is incapacitate to receive at time it is due.
7. Annulment 3. Creditor refused give a receipt, w/o just cause.
8. Rescission 4. 2 or more persons claim the right to collect.
9. Novation 5. Title of obligation lost.
10. Loss of thing due 2. LOSS OF THING DUE
1. PAYMENT/PERFORMANCE - perishes, disappears, or goes out of commerce; existence is
unknown; cannot be recovered
- Payment means delivery of money & performance of obligation
3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS
2 PLACE OF PAYMENT 1. Determinate thing.
1. At place agreed upon 2. W/o debtor's fault.
2. If w/o agreement 3. No delay.
a. Object is indeterminate - paid at domicile of DEBTOR
b. Object is determinate - place of thing at the time of constitution 3. CONDONATION/REMISSION
of obligation - gratuitous abandonment of right by the creditor
4 SPECIAL MODES OF PAYMENT 3 REQUISITES OF A VALID CONDONATION/REMISSION
a. Application of payment 1. It must be gratuitous.
b. Cession
2. Accepted by obligor.
c. Tender of payment & consignation
3. Obligation is demandable.
d. Dacion in payment
4. CONFUSION/MERGER
a. APPLICATION OF PAYMENT
- meeting in 1 person of qualities of debtor & creditor w/ same
- designation of debt to w/c payment must be applied when
obligation
debtor has several obligations of same kind in favor of same
creditor. 3 REQUISITES OF VALID CONFUSION/MERGER
1. The merger of characters of debtor & creditor must be in same
3 REQUISITES OF APPLICATION OF PAYMENT
person.
1. Only 1 debtor & 1 creditor
2. Take place between principal debtor & creditor.
2. 2 or more debts, same kind
3. Clear & definite.
3. All debts are due
4. Insufficient payment to exinguish ALL debts 5. COMPENSATION
3 RIGHTS TO MAKE APPLICATION OF PAYMENT - 2 persons are debtors & creditors of each other
1. Right belongs to CREDITOR.
2. If debtor does not avail, creditor can give him receipt 6 ESSENTIAL REQUISITES OF COMPENSATION
designating the debt from which payment will be applied. 1. Parties both principal debtors & creditors of each other.
3. If debtor accepts the receipt, he cannot complain unless THERE 2. Compensation is not prohibited by law.
IS just cause to invalidate the contract. 3. No retention/controversy by 3rd person.
4. 2 debts are due & demandable.
b. CESSION 5. 2 debts are liquidated.
- debtor abandons ALL his property for creditor's benefit to obtain 6. 2 debts both in money/consumable things.
payment from proceeds of his property
(2) CLASSES OF COMPENSATION
5 REQUISITES OF VALID CESSION 1. As to effect
1. 1 debtor & 2 or more creditors a. TOTAL - obligations completely extinguished.
2. Debtor is in partial/total insolvency. b. PARTIAL - a balance remains
3. Debtor to deliver ALL his property to creditors
4. Debt is due & demandable. 2. As to origin or cause
5. Creditors must sell the properties & apply the proceeds to their a. LEGAL - by law
respective credits proportionately. b. VOLUNTARY/CONVENTIONAL - agreement of parties
c. JUDICIAL - order from the court
c. DACION IN PAYMENT (dacion en pago) d. FACULTATIVE - 1 of parties can choose/oppose claiming
- alienation of property to the creditor in satisfaction of debt compensation
6. NOVATION
3 REQUISITES OF DACION IN PAYMENT
- substitution/change of obligation
1. Consent of creditor
- substitution of debtor
2. NOT prejudicial to another creditor
- subrogation of creditor
3. Debtor not insolvent declared by a judicial decree
(3) OBLIGATIONS MAY BE MODIFIED BY:
1. Changing object/principal conditions. (REAL NOVATION)
2. Changing the person of debtor/creditor. (PERSONAL
NOVATION)

CESSION DACION IN PAYMENT

all properties NOT all properties
require more than 1 creditor NOT require all creditors
a. Substitution - change of debtor 6. NAME
b. Subrogation - change of creditor a. NOMINATE - contract given a particular/special name (eg.
3. Changing person of the parties & the objects of principal partnership)
condition. (MIXED NOVATION) b. INNOMINATE - not given special name (eg. I give that you may
give)
4 REQUISITES OF NOVATION
1. Old valid obligation. 7. SUBJECT MATTER
2. Agreement of parties to new obligation. a. Contracts involving things
3. Extinguishment of old obligation. b. Contracts involving rights/credits
4. Validity of new obligation. c. Contracts involving services
2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR 3 STAGES OF CONTRACT
1. EXPROMISION - w/ consent of creditor, NO consent of old 1. PREPARATION/CONCEPTION - preparatory steps to perfect
debtor 2REQUISITES contract
a. Initiative of 3rd person. 2. PERFECTION/BIRTH - meeting of minds between 2 contracting
b. Consent of creditor. parties
2. DELEGACION - all must agree (creditor, old debtor, new debtor) 3. CONSUMMATION/TERMINATION - terms of contract are
3REQUISITES performed, & contract is fully executed
a. Initiative from old debtor.
b. Consent of debtor. 5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT
c. Acceptance by creditor. 1. PRINCIPLE OF AUTONOMY (liberty to contract)
Provided they are not contrary to:
7. SUBROGATION a. Law
- change of creditor b. Morals
c. Good customs
2 KINDS OF SUBROGATION d. Public order
1. CONVENTIONAL - consent of original parties & 3rd person e. Public policy
2. LEGAL - by law
2. MUTUALITY OF CONTRACTS
a. creditor pays another preferred creditor even w/o debtor's
- the contract must bind both parties; its validity/compliance
knowledge
cannot be left to the will of one of them
b. 3rd person pays the express approval of debtor
c. 3rd person pays even w/o knowledge of debtor 3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the parties, their assigns &
heirs except when there are rights & obligations not transmissible:
a. by their nature
b. by stipulation (stipulation por autri)
c. by provision of law
CONTRACT - meeting of minds between 2 persons to give
something or to render service. 4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere consent Exceptions:
3 ELEMENTS OF CONTRACT a. REAL CONTRACTS - perfected by delivery
1. ESSENTIAL - w/o them, contract cannot exist b. FORMAL/SOLEMN CONTRACTS - special form required for its
a. CONSENT of contracting parties perfection
b. OBJECT CERTAIN - subject matter
c. CAUSE/CONSIDERATION 5. OBLIGATORINESS OF CONTRACTS
In some contracts, ff are also essential: - The contract, once perfected, has the force of law between
d. FORM parties which bound to comply in good faith
e. DELIVERY 4 KINDS OF INNOMINATE CONTRACTS
2. NATURAL - found in certain contract, presumed to exist unless 1. I give that you may give
stipulated 2. I do that you may do
3. I give that you may do
3. ACCIDENTAL - various particular stipulations that may be 4. I do that you may give
agreed upon by contracting parties
4 RULES FOR INNOMINATE CONTRACTS
(7) CLASSIFICATION OF CONTRACTS 1. Agreement of parties
According to: 2. Law on Obligations & Contracts
1. PERFECTION/FORMATION 3. Rules on most analogous nominate contract
a. CONSENSUAL - perfected by mere consent 4. Customs of place
b. REAL - perfected by delivery
c. FORMAL/SOLEMN - special formalities are essential before STIPULATION POR AUTRI
perfection of contract - stipulation in favor of 3rd person

2. PARTIES OBLIGATED 5 REQUISITES OF STIPULATION POR AUTRI

a. UNILATERAL - only 1 has obligation 1. Stipulation in favor of 3rd person
b. BILATERAL - both parties require to render reciprocal 2. Stipulation is only PART, not the whole of the contract.
prestations 3. Both parties must conferred upon a favor of 3rd person
4. 3rd person must accept & say it to debtor before its
3. CAUSE
revocation/cancellation
a. ONEROUS - exchange of considerations
5. Neither of both parties be the legal representation/autho-
b. GRATUITOUS - no consideration received in exchange of what is
rization of 3rd person
given
c. REMUNERATORY - something is given for benefit/service that CONSENT
had been rendered previously - meeting of offer (certain) & acceptance (absolute) upon a thing
4. RISK OF FULFILLMENT
a. COMMUTATIVE - equivalent values are given by both parties 5 REQUISITES OF CONSENT
b. ALEATORY - fulfillment of contract depends on chance (eg. 1. Must be given by 2 or more parties
insurance) 2. Parties are capacitate to enter in contract
3. No vitiation of consent
5. IMPORTANCE 4. No conflict between declared & intended
a. PRINCIPAL - contract may stand alone (eg. sale, partnership) 5. Legal formalities must be complied
b. ACCESSORY - existence depends on another contract (pledge,
guarantee)
c. PREPARATORY - contract not an end by itself but a means thru
w/c other contracts may be made (eg. agency)

7 RULES ON OFFER/ACEPTANCE
 1. An offer must be certain. 5. A mere expression of opinion is NOT FRAUD UNLESS made by an
2. Business advertisements for sale are NOT offers but ONLY expert & the other party relies on his special knowledge.
invitations to make an offer. 6. Misrepresentation made in good faith is NOT FRAUD but may
3. Advertisements for bidders are ONLY invitations. constitute an error.
4. An acceptance made by letter/telegram does NOT 7. Misrepresentation by 3rdperson DOES NOT vitiate consent
bind offeror EXCEPT from the TIME it came to his knowledge. UNLESS it created substantial mistake.
5. An offer made through an agent is accepted from the TIME the
3. VIOLENCE
acceptance is done through an agent.
6. An offer is ineffective upon death, insanity, insolvency, of - serious/irresistible force is employed.
EITHER party BEFORE acceptance is made.
7. When offeror allowed offeree a certain period 2 RULES ON VIOLENCE
to accept, offer MAY be withdrawn AT ANYTIME unless there is 1. Serious/irresistible force is employed w/c constitutes the reason
something PAID/PROMISED. why one entered into a contract.
2. Violence ANNULS obligation although it is DONE by 3rd person
3 persons who CANNOT GIVE CONSENT to a contract (if entered not part of contract.
into, contract is voidable)
1. UNEMANCIPATED MINORS 4. INTIMIDATION
2. INSANE/DEMENTED PERSONS (unless they acted DURING - 1 of the parties is compelled by a reasonable & well-grounded
LUCID INTERVAL) fear of an imminent & grave evil upon his person/property to give his
3. DEAF-MUTES who DO NOT know how to write consent.

DEMENTED PERSON - NOT exactly insane; difficult to distin-guish 3 RULES ON INTIMIDATION

right from wrong 1. Age, sex, & condition of person must used to determine the
degree of intimidation.
LUCID INTERVAL - period when an INSANE has acquired SANITY 2. Intimidation ANNULS obligation although it is DONE by 3rd
temporarily, therefore, capacitated to enter into a valid contract person not part of contract.
2 RULES on persons WHO CANNOT GIVE CONSENT to a contract 3. A threat to enforce one's claim (claim must be just & legal),
1. Age of majority is 18 yrs old DOES NOT vitiate consent.
2. A contract entered into by UNEMANCIPATED MINOR w/o
parents/guardian's consent is voidable, except: VIOLENCE INTIMIDATION
a. Minor MISREPRESENTS his age (estoppel) External Internal
b. Contract involves sale & delivery of necessities to minor Physical contact/coercion NO physical coercion; ONLY
MENTAL/MORAL coercion

5. UNDUE INFLUENCE
5 VICES OF CONSENT - a person takes improper advantage of his power over other's will,
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of parties, depriving the other to his reasonable freedom of choice.
contract is voidable: Remedy: annulment of contract.
1. MISTAKE/ERROR 3 RULES ON UNDUE INFLUENCE
2. FRAUD/DECEIT 1. There is a person who takes improper advantage of his power
3. VIOLENECE over other's will, depriving the other to his reasonable freedom of
4. INTIMIDATION choice.
5. UNDUE INFLUENCE 2. Undue influence ANNULS obligation although it is DONE by 3rd
person not part of contract.
1. MISTAKE/ERROR 3. To constitute undue influence, ff circumstances must be
- wrong conception & lack of knowledge upon a thing considered: (1) confidential, family, spiritual, & other relations of
parties; or (2) the aggrieved party is suffering from mental weakness;
(2) MISTAKES W/C VITIATES CONSENT or (3) ignorant; or (4) in financial distress.
It should refer to:
1. substance of thing that is the OBJECT of contract SIMULATION OF CONTRACT
2. conditions w/c MOVED either/both parties to enter into - process of INTENTIONALLY deceiving others by producing a
contract contract not really exist (absolute simulation), or w/c is different
from true agreement (relative simulation).
4 RULES ON MISTAKE
1. Mistake to identity/qualifications of either of parties will vitiate 2 KINDS OF SIMULATED CONTRACT
consent ONLY when IT is the principal cause of contract. 1. ABSOLUTE SIMULATION (the parties DO NOT intend to be bound
2. Simple mistake of account must be corrected. at all)
3. No mistake if parties knew the risk/doubt affecting OBJECT of - completely fictitious/make-believe; VOID
contract. 2. RELATIVE SIMULATION (parties conceal their true/real
4. When one of parties is unable to read or the contract is in agreement)
language not understood by him, & mistake/fraud is alleged, the - parties are bound to real/true agreement, EXCEPT:
person enforcing the contract must FULLY explained the terms to a. contract prejudice 3rd person
him. b. purpose is contrary to law, morals, good customs, public order,
public policy
2. FRAUD/DOLO
- when through insidious words/machinations of one of the 7 REQUISITES OF OBJECT OF CONTRACT
parties, INDUCED the other to enter into a contract, & w/o them, he 1. Specific & certain
will not agree. 2. Services not contrary to law, morals, good customs, public order,
public policy
3. Services/things must NOT be legally/physically impossible
DOLO CAUSANTE DOLO INCIDENTE 4. Services/things are w/in commerce of man including future
Serious Not serious things
cause induces party to ENTER into NOT the cause to enter into 5. Rights are NOT TRANSMISSIBLE.
contract contract 6. Determinate (kind) or determinable ( w/o the need of new
make contract voidable contract is valid; liable for damages contract/agreement)
7. NO contract be entered for future inheritance UNLESS law states
4 REQUISITES OF CAUSE
7 RULES OF FRAUD 1. It is just & equitable.
1. Failure to disclose facts when these needs to be revealed, is a 2. It exists.
fraud. 3. It is lawful.
2. Fraud should be SERIOUS (dolo causante) & SHOULD NOT be 4. It is true.
done by BOTH parties to make contract voidable.
LESION
3. Incidental fraud (dolo incidente) ONLY obliges person to PAY
DAMAGES. - inadequacy of cause (eg. insufficient price for thing sold)
4. Usual exaggerations in trade, when other party know the "real"
facts, is NOT FRAUD.
 5. Those whose CAUSE/OBJECT/PURPOSE is contrary to law,
RULES ON LESION morals, good customs, public order, or public policy.
- Lesion DOES NOT invalidate contract, except there is: 6. Those where INTENTION of parties to principal object CANNOT
a. Fraud be ascertained.
b. Mistake 7. Those expressly prohibited/declared VOID by law.
c. Undue influence
2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument
1. Contracts w/c must be IN WRITING to be valid:
a. Donation of personal property exceeds P5000.
b. Agent's authority in sale of land/any interest.
c. Contract of antichresis.
d Stipulation to pay interest on loans.
e. Stipulation to reduce common carrier's extraordinary diligence &
to limit its liability.
2. Contracts w/c must be IN A PUBLIC INSTRUMENT to be valid:
a. Donation of real property (both the donation & accep-tance).
b. Sale of real property.
c. Partnership where real property/rights is contributed; or when
capital contribution exceeds P3000.
REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written instrument is made/construed
to the REAL intention of parties when there is an error/mistake.
(5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE
1. Mutual mistake of parties.
2. One party was mistaken & the other acted fraud.
3. One party was mistaken & the other knew/believed that the
instrument did not state their REAL agreement.
4. Ignorance, lack of skill, negligence, or bad faith of person
drafting the instrument DOES NOT state the TRUE INTENTION of
parties
5. Two parties agree on mortgage/pledge of personal/real
property BUT the instrument states the property is sold
ABSOLUTELY, or w/ the right to repurchase.
(3) NO REFORMATION OF INSTRUMENT WHEN:
1. Simple donation inter vivos where NO CONDITION is imposed.
2. Will.
3. Real agreement is VOID.
4 KINDS OF DEFECTIVE CONTRACTS
1. RESCISSIBLE - valid until rescinded; has ALL essential requisites
but because of injury/damage to one of the parties, the contract
may be rescinded.
2. VOIDABLE - valid until annulled; has ALL essential requisites but
because of defect in consent, contract may be annulled.
3. UNENFORCEABLE - cannot be sued/enforced unless ratified; no
effect NOW but may take effect upon ratification.
4. VOID - NO effect at all; cannot be ratified/validated.
5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & suffered LESION by more than %
of value of the value that is the OBJECT.
2. Those agreed upon in representation of absentees, if the
absentees suffered LESION.
3. Those undertaken in FRAUD of creditors when the creditors
cannot further claim.
4. If entered into contract w/o knowledge/approval of litigants
under litigation.
5. Contracts subjected to rescission declared by law.

3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving consent to a contract.
2. Those where consent vitiates by vices of consent. (MFVIU)
3. Those agreed in the state of drunkenness/hypnotic spell.
3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other person, or who acted BEYOND
his powers.
2. Those who do not comply w/ the Statute of Frauds.
3. Both parties are incapable of giving consent to a contract.
7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY simulated/fictitious.
2. Those w/c contemplate an impossible service.
3. Those whose OBJECT is outside the commerce of man.
4. Those whose CAUSE/OBJECT did not exist at time of tran-
saction.