Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former's special knowledge. (n) An opinion of an expert is like a statement of fact, and if false, may be considered a fraud giving rise to annulment. Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual. (n) *The general rule is that the fraud employed by a third person upon one of the parties does not vitiate consent and cause the nullity of a contract.*Exception: If one of the parties is in collusion with the third person, or knows of the fraud by the third person, and he is benefited thereby, he may be considered as an accomplice to the fraud, and the contract becomes voidable. Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error. (n)Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. Incidental fraud only obliges the person employing it to pay damages. (1270) *Fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person into error; that which cannot deceive a prudent person cannot be a ground for nullity.*Besides being serious, the fraud must be the determining cause of the contract. It must be dolo causante.*When both parties use fraud reciprocally, neither one has an action against the other; the fraud of one compensates that of the other. Neither party can ask for the annulment of the contract. Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. (n) * Simulation is the declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purposes of deception, the appearance of a juridical act which does not exist or is different from that which was really executed. Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. (n) *In absolute simulation, there is color of a contract, without any substance thereof, the parties not having any intention to be bound. *In relative simulation, the parties have an agreement which they conceal under the guise of another contract. Example: a deed of sale executed to conceal donation.
SECTION 2. - Object of Contracts •The object of a contract is its subject matter. It is the thing, right, or service which is the subject-matter of the obligation arising from the contract. •Requisites: [CILID] 1) [C] within the commerce of man; 2) [I] not intransmissible 3) [L] must be licit, or not contrary to law, morals, good customs, public policy, or public order; 4) [I]not an impossible thing or service; and 5) [D] it must be determinate as to its kind. Art. 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All rights which are not intransmissible may also be the object of contracts. No contract may be entered into upon future inheritance except in cases expressly authorized by law. All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract. (1271a) * Things which are outside the commerce of man: •Services which imply an absolute submission by those who render them, sacrificing their liberty, their independence or beliefs, or disregarding in any manner the equality and dignity of persons, such as perpetual servitude or slavery; •Personal rights, such as marital authority, the status and capacity of a person, and honorary titles and distinctions; •Public offices, inherent attributes of the public authority, and political rights of individuals, such as the right of suffrage; •Property, while they pertain to the public dominion, such as the roads, plazas, squares, and rivers; •Sacred things, common things, like the air and the sea, and res nullius, as long as they have not been appropriated. •Even future things can be the object of contracts, as long as they have the possibility or potentiality of coming into existence. •The law, however, generally does not allow contracts on future inheritance. A contract entered into by a fideicommissary h e i r w i t h r e s p e c t t o h i s eventual rights would be valid provided that the testator h a s a l r e a d y d i e d . T h e r i g h t o f a fideicommissary heir comes from the testator and not from the fiduciary. Art. 1348. Impossible things or services cannot be the object of contracts. (1272) *Things are impossible when they are not susceptible of existing, or they are outside the commerce of man. Personal acts or services
impossible when they beyond the ordinary strength or power of man.*The impossibility must be actual and contemporaneous with the making of the contract, and not subsequent thereto.*The impossibility is absolute or objective when nobody can perform it; it is relative or subjective when due to the special conditions or qualifications of the debtor it cannot be performed.*The absolute or objective impossibility nullifies the contract; the relative or subjective does not. Art. 1349. T he object of every contract must be determinate as to its kind. T h e f a c t t h a t t h e q u a n t i t y i s n o t determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties. (1273) *The thing must have definite limits, not uncertain or arbitrary.*The quantity of the of the object may be indeterminate, so long as the right of the creditor is not rendered illusory. SECTION 3. - Cause of Contracts *The cause of the contract is the “why of the contract,” the immediate and most proximate purpose of the contract, the essential reason which impels the contracting parties to enter into it and which explains and justifies the creation of the obligation through such contract.*The cause as to each party is the undertaking or prestation to be performed by the other. The object of the contract is the subject matter thereof (e.g., the land which is sold in a sales contract). Consideration, meanwhile, is the reason, motive, or inducement by which a man is moved to bind himself by an agreement. *Requisites: 1) it must exist; 2) it must be true; and 3) it must be licit. Art. 1350. In onerous contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the other; in remuneratory ones, the service or benefit which is remunerated; and in contracts of pure beneficence, the mere liberality of the benefactor. (1274) * In onerous contracts, the cause need not be adequate or an exact equivalent in point of actual value, especially in dealing with objects which have a rapidly fluctuating price. There are equal considerations.* A remuneratory contract is one where a party gives something to another because of some service or benefit given or rendered by the latter to the former, where such service or benefit was not due as a legal obligation. The consideration of one is greater than the other’s.*A gratuitous contract is essentially an agreement to give donations. The
generosity or liberality of the benefactor is the cause of the contract. There is nothing to equate. Art. 1351. The particular motives of the parties in entering into a contract are different from the cause thereof. (n) * Cause is the objective, intrinsic, and juridical reason for the existence of the contract itself, while motive is the psychological, individual, or personal purpose of a party to the contract.* As a general principle, the motives of a party do not affect the validity or existence of a contract. Exceptions: W hen motive predetermines the purpose of the contract, such as:*When the motive of a debtor in alienating property is to defraud his creditors, the alienation is rescissible;* W hen the motive of a person in giving his consent is to avoid a threatened injury, as in the case of intimidation, the contract is voidable; and*W hen the motive of a person induced him to act on the basis of fraud or misrepresentation by the other party, the contract is voidable. Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to law, morals, good customs, public order or public policy. (1275a)Art. 1353. The statement of a false cause in contracts shall render them void, if it should not be proved that they were founded upon another cause which is true and lawful. (1276) Where the cause stated in the contract is false, the latter may nevertheless be sustained by proof of another licit cause. Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary. (1277) Unless the contrary is proved, a contract is presumed to have a good and sufficient consideration. This presumption applies when no cause is stated in the contract. Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (n) * In case of lesion or inadequacy of cause, the general rule is that the contract is not subject to annulment.* In cases provided by law, however, such as those mentioned in Art 1381, the lesion is a ground for rescission of the contract.* Gross inadequacy naturally suggests fraud and is evidence thereof, so that it may be sufficient to show it when taken in connection with other circumstances
