II. CONTRACTS (Read Arts. 1305-1422) A. General Provsons Provsons
1. !e"nton Art#le 1305. A #ontra#t s a $eetn% o" $nds &et'een t'o ersons 'ere&* one &nds $s $sel el"+ "+ 't 't res rese# e#tt to te te ote oter+ r+ to %ve %ve so$etn% or to render so$e serv#e. ,alane: ,alane: thinks that the definition in Art. 1305 is inaccurate. The term “persons” should be substituted by the term “parties”. Also, contracts may be multilateral there can be more than ! parties in"ol"ed #i.e. partnership$. SANC/-ROAN a %uridical “con"ention” manifested in le&a le&all form form,, by "irt "irtue ue of 'hc 'hc one one or more more part partie iess bind bind themsel"es in fa"or of one another or others, or reciprocally, to d fulfillment of a prestation to &i"e, to do or not to do. Tolentno: Tolentno: (ontracts ')reciprocal *s e+cluded by d def.
Q: An agreeme agreement nt was was made betw. betw. A & B. B. Was a © created? A: . A&reement to &o to church toðer is is not a -.
Q: May a © be perfecte perfected d as to an Agreement Agreement no to do? YES /: not to en&a&e in business #pro"ided not in perpetuity$
Q: MAY…eed of sa!e s"gned by on!y # party? A: es, in auto ATO-CONTRACT ATO-CONTRACT s a - e+ecuted by one person only, but in such e+ecution he represents at least ! parties
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•
+ecuted by one person, either:
'hen a person in his capacity as rep, of 1. himself, or 'hen as a rep of ! diff persons he brin&s abt 2. a - bet his principals by -2in& ')himself 4: "alid, e+c. 161. /: - of A( #4ead art. 1760$
&o"ernm &o"ernment ent
The prohibition rests on the fact that &reed mi&ht &et the better of loyalty. The la' does not trust human nature to resist the temptations likely to arise out of the anta&onism bet'een the interest of the seller 9 the buyer. •
An a&ent 'ho 'ho has renounced renounced the a&ency 9 is is a %ud&ment creditor of his principal principal may ac;uire ac;uire the latter2s property in a public sale. •
The prohibition a&ainst la'yers is intended to curtail any undue influence the la'yer may ha"e o"er his client on account of their confidential association. uch sales are "oid 9 cannot be ratified. >ublic interest 9 public policy remain paramount 9 do not permit compromise 9 ratification. •
Q: W$en "s a t$"ng deemed to be t$e s%bect of !"t"gat"on? ot only if there is some contest or liti&ation in court, but also fr. the moment it becomes sub%ect to %udicial %udicial action. action. •
Art#le 10. 10. f the a&ent has been empo'ered to borro' money, money, he may may himsel himselff be the lender lender at the current current rate of interest. f he has been authori8ed to lend money at interest, he cannot borro' it 'ithout the consent of the principal. A%ent #an &e lender &t e $a* not &e te &orro'er. •
9 n ales #art. 161$: one party can ne"er "alidly &i"e consent. Art#le 141. 141. The The foll follo' o'in in& & pers person onss cann cannot ot ac;u ac;uir iree by purchase, e"en at a public or %udicial auction, either in person or throu&h the mediation of another: (CAPACIT6 TO ,6 OR S77) #1$ The %ardan, %ardan, the the prop propert erty y of the the pers person on or persons 'ho may be under his &uardianship #!$ A%ents, A%ents, the property 'hose administr administration ation or sale sale may may ha"e ha"e bee been n intrus intrusted ted to them, them, unless unless the consent of the principal has been &i"en #3$ #3$ 8e#tors and ad$nstrators, ad$nstrators , the property of the estate under administration #$ #$ P&l# o""#ers and s, s, the property of the tat tatee or of any any subd subdi" i"is isio ion n ther thereo eof, f, or of any any
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(ontin&ent fee< not contrary to la' as it 'ill encoura&e encoura&e the la'yer to 'ork harder to 'in the case in order order to earn the said said fee. thus, thus, it is to the client2s client2s ad"anta&e. ?ut the court may reduce the fee is found to be unconscionab unconscionable. le. #@ A @B 4C4A AD C4?A AD$ Art#le 1<4<. The 1<4<. The persons dis;ualified to buy referred to in articles 160 and 161, are also dis;ualified to become lessees of the thin&s mentioned therein •
TO7NTINO •
All -s under 161 are "oid by reason reason of >>
n (ode of commerce, #Art.!=E$ a #o$$sson #o$$sson a%ent ')o permis permissio sion n of princi principal pal cannot buy for himself or for another, nor to sell 'hat he ou&ht to buy. •
(2) 7NTS O> CONTRACTS
a) TA b) ATC4A c) A((DTA
1
(a) ssental le$ents The essenti essential al elemen elements ts are those those 'ithou 'ithoutt 'hich there can be no contract. #indispensable r;mts.$ •
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These elements are, in turn, subdi"ided into:
#o$$on #comm%nes$ those those 'hich 'hich are 1.) presen presentt in all contract contracts, s, such as #onsent+ #onsent+ o&:e#t #ertan+ and #ase # ase
2.)
se#al #espec"a!es$ are pres present ent only only in in certain certain contracts, contracts, such as delver* in in real contracts, or "or$ in "or$ in solemn ones.
3.)
e8traordnar* #espec"a!"ss"mos$ are those 'hich are peculiar to a specific contract #i.e. r#e in r#e in sales$. (&) NATRA7 7NTS those 'hich are deri"ed from the nature of the contract and ordinarily accompany the same.
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They are presumed by la', althou&h they can be e+cluded by the contractin& parties if they so desire.
(3) (4) (5)
Futuality @bli&atory Borce 4elati"ity
(1) ,01SE1S2A'3+Y 04 ,01+A,+S Art#le 1305. A cont contra ract ct is a meet meetin in& & of minds minds bet'een t'o persons 'hereby one binds himself, 'ith respect to the other, to &i"e somethin& or to render some ser"ice. Art#le 131B. o 131B. o one may contract in the name of anothe anotherr 'ithou 'ithoutt bein& bein& author authori8 i8ed ed by the latter, latter, or unless he has by la' a ri&ht to represent him. A contract entered into in the name of anot anothe herr by one one 'ho 'ho has has no auth author orit ity y or le&a le&all representation, or 'ho has acted beyond his po'ers, shall shall be unenforceab unenforceable, le, unless it is ratified, ratified, e+pressly or impliedly, by the person on 'hose behalf it has been e+ecuted, before it is re"oked by the other contractin& party. Consent vtated voda&le I" &* Re atort* s vod nen"or#ea&le
•
. r%t to resolve (Art. 111) 111) . 'arrantes n sales sales #ontra#ts+ $led $led
#c$ A##dental le$ents le$ents The accide accidenta ntall elemen elements ts are those those 'hich 'hich e8st onl* 'en te artes e8ressl* rovde "or te$ for te$ for the purpose of limitin& or modifyin& the normal effects of the contract #i.e. conditions, terms, modes$ •
Q: St"p%!at" St"p%!at"on on as to "nterest "nterest "n a © of 'oan( w$at w$at )"nd of *? A: Accidental nterest must al'ays be e+pressed)'ritten to be &i"en effect.
BA+,-E'E /s ,B 44 SCRA 45
i. Stlaton o" artes ii. 7a' on O&lCon iii. Analo%os #ontra#ts iv. iv. Csto$s 13B0 ntenton o" artesD #onte$oraneos E s&se=. A#ts
&ased
on
Q: What may not be SM of ©of Sale? A serv#e Q: © that is perfected perfected at the negotiation stage? stage? A Oton F a reFal H
(onsensuality Autonomy
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CONTRACT O> A!SION Ghere one party has already prepared the form form of a -, containin containin& & stips. stips. he desire desires, s, and he simply asks the other party to a&ree to them if he 'ants to continue ')d - •
The party 'ho adheres to the - is in reality free to re%ect it entirely, but if he does, he consents
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n case of doubt in interpretation of stip in -, such 'ill be construed "s. d party 'ho prepared such stip. H: - of adhesion adhesion is bein& disputed disputed on the &round &round of lack of consent of the other other party. s this tenableI A: ( held no, - is "alid. #ng #ng !iu "# $%$ $%$
,. GO?RNING 7A@ 9RIS!ICTION 9RIS!ICTION 130B - innominate (2s &o"erned by:
(1) (2)
5a6 t$ose entered "nto "n t$e name name of anot$er person person by one w$o $as been g"/en no a%t$or"ty or !ega! representat"on( or w$o $as acted beyond $"s powers 5r7t Art.#8#9 6
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RATIO: RATIO: Monetary Boards do not create ©s bet. ,B & do!!ar earner.
A: by a mt& of the offer and acceptance, upon the thin& 'hc is to constitute the - and as to the cause. The follo'in& contracts are nen"or#ea&le nless nless te* are rat"ed (Art. 1403)
Q: Is warranty a natural Σ of ©? Not Not always A: only implied 'arranty are are natural, not e+press ones
C. CARA ARAC CTRI RISTIC STICS S CONTRACTS
Q: -ow "s consent g"/en?
PRI PRINCIP NCIP7 7S S
E2B'3, /( '+ '++ 2< SCRA <20 RATIO: RATIO: 4reedom of part"es to st"p%!ate ; >arties can not be coerced to enter into a contract 'here no a&reement is had bet'een them as to the principal terms and conditions of the contract. Breedom to stipulate such terms and conditions is of the essence of our contractual system, and by e+press pro"ision of the statute, a contract may be annulled if tainted by "iolence, intimidation, or undue influence influence (Art#les 130<+ 133<+ 133B+ CC).
,02S ,0 2S /. ,A+ SCRA 424 O>
RATIO: RATIO:
An atty
s fees "s based on
2
t$e !aw of ©>s concept of fac"o %t des 53 do and yo% g"/e6.
8. to pay money for an immoral cause N i.e. commit a crime bribe a public ofc marry testify in court.
56 A2+010MY 04 ,01+A,+S: Art. 130<. The contractin& parties may establish such stipulations, clauses, terms and conditions as they may deem con"enient, pro"ided they are not contrary to la', morals, &ood customs, public order or public policy.
,23 @. AE''A10 ## -3' #8 5#CD#6
+: unconscionable)usurious interest #Jurado$
T>CAT@ (@T4A4 T@ >.>.
autonomy of 'ill iberty of -s)Breedom to
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contract CONSTI 1on<"mpa"rment ,!a%se+ le&isture nor (ourts may not prescribe the terms of a le&al -, Kfreedom to - ')o prior restraint •
>arties may freely stipulate #as lon& as not contrary to )F)()>@)>>$ but the %uridical relations created by their - 9 the rts 9 *s arisin& therefrom are det. ?y a' #+: a &acto de 'etro ale may be construed by court to be loan ')mort&a&e after lookin& at the substance of d - 9 not merely its form or name. •
Breedom to - limited by the common &ood #>olice >o'er$
S+32'A+301 W-EEBY S+2E1+ ,A110+ +A1S4E +0 A10+-E S,-00' W70 E42131F S,-0'AS-3 ,AS-( 12'' A1 @03. 4AT@:
S#olarss are a'arded n re#o%nton o" $ert E NOT to ;ee stdents n s#ool to &olster rest%e. As for the Def., scholarship a'ard is a business scheme desi&ned to increase the business potential of an educational institution.
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/: a > 'hc constitute a &amblin& debt is unenforceable •
(ompromise A&reement appro"ed by court, 'here a &rantee of public land promised to sell to another, 'ithin the 5
SA2A /. S313,0+ 10B P 33< S+32'A+301 ,01+AY +0 ..
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RATIO:
Among t$ose t$at may not be t$e s%bect matter 5obect6 of contracts are certa"n r"g$ts of "nd"/"d%a!s( w$"c$ t$e !aw and p%b!"c po!"cy $a/e deemed w"se to eGc!%de from t$e commerce of man.
7$tatons n >reedo$ to Contra#t n A&ency, a stipulation 'hich e+cludes one or more partners from any share in the profits or losses is "oid. # Art#le 1B) n >led&e)mort&a&e The creditor cannot appropriate the thin&s &i"en by 'ay of pled&e or mort&a&e, or dispose of them. Any stipulation to the contrary is null and "oid. # Art#le 20) Art#le 2130. A stipulation forbiddin& the o'ner from alienatin& the immo"able mort&a&ed shall be "oid. >arties may not A&ree on a ceilin& price of mort&a&ed prop.in e+ecution b)c such shd be made to d hi&hest bidder #Garner ", Jaucian$ nor stipulate that upon non
Tere are #ertan $atters 'ere $an+ &* natre $st ave "reedo$ o" de#son+ ts $a* not valdl* &e &ond &* Fal H+ s# as 1. promise to marry or not, to secure le&al sep, or to adopt a child •
7A7 v. IAC+ 155 SC 34
,ontracts are genera!!y b"nd"ng between t$e part"es( t$e"r ass"gns and $e"rsH $owe/er( %nder Art. # of t$e ,"/"! ,ode of Spa"n( w$"c$ "s app!"cab!e "n t$"s "nstance( pacts( c!a%ses( and cond"t"ons w$"c$ are contrary to p%b!"c order are n%!! and /o"d( t$%s( w"t$o%t any b"nd"ng effect. Annotat"ons on t"t!e: pro$"b"t"on to se!! property to t$"rd part"es w$c "s "ndef"n"te & %n!"m"ted as to t"me( w$c s$a!! cont"n%e to be app!"cab!e beyond t$e !"fet"me of t$e or"g"na! part"es to t$e ©( "s a n%!!"ty. edempt"on: "g$t to redeem m%st be eGpress!y st"p%!ated "n t$e © of sa!e to $a/e !ega! eG"stence. RATIO
(3) M2+2A'3+Y 31,3'E:
+$e contract m%st b"nd bot$ contract"ng part"esH "ts /a!"d"ty or comp!"ance cannot be !eft to t$e w"!! of one of t$em #Art. 1307$. •
2. promise to chan&e citi8enship, professions, reli&ion or domicile 3. promise not to hold public ofc, or limit perf or ofc duties 4. promise to %oin a poli.party or separate fr it.
5. - not to en&a&e in 'ork, labor 6. to "ote for a candidate, 7. to do, at the risk of life,
The determination of the performance may be left to a 3 person, 'hose decision shall not be bindin& until it has been made kno'n to both contractin& parties #Art. 1306$. •
rd
The determination shall not be obli&atory if it is e"idently ine;uitable. n such case, the courts shall decide 'hat is e;uitable under the circumstances #Art. 1310$. •
An e+ample of a determination made by a 3rd person #Art. 1306$ is the fi+in& of the price by the 3 rd person. •
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3
m%t%a!"ty of contracts ordaned n Art#le 130 o" te •
The contract may be re"oked if there is mutual
dissent. The condition can ne"er depend solely upon the 'ill of the debtor. f the condition depends solely on the 'ill of the debtor, the obli&ation is "oid #Art. 112$. •
The obli&ation is "oid because there is no "inculum (uris. The creditor could ne"er compel the debtor to perform the *. (otestatve ssensve H tat deends on sole 'll o" !&)
Cvl Code.
Esca!at"on c!a%ses are /a!"d st"p%!at"ons "n commerc"a! contracts to ma"nta"n f"sca! stab"!"ty and to reta"n t$e /a!%e of money "n !ong term contracts.
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Q: A st"p. +$at © may be term"nated by # party( /a!"d? A: es, does not "iolate mutuality, b)c the latter pertains to "alidity)performance, not termination # &hilban)ing "# *ui She$ ACC7RATION C7AS EI: 3n - of ale by nstallment basis Cpon non
4. 0B'3FA+0Y 40,E 04 ,01+A,+S: O&l%atons arsn% "ro$ #ontra#ts ave te "or#e o" la' &et'een te artes and sold &e #o$led 't n %ood "at #Art. 1156$ (ontracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of 'hat has been e+pressly stipulated but also to all the conse;uences 'hich, accordin& to their nature, may be in keepin& 'ith &ood faith, usa&e and la' #Art. 1315$. GN R7: (ontracts are perfected by mere consent N the principle of consens%a!"ty #Art. 1315$ KCPTION: 4eal contracts, such as deposit, pled&e, and commodatum are not perfected until the delver* of the ob%ect of the obli&ation #Art. 131<$
t is pro"ided by the parties, to ad%ust compensation)consid. upon the happenin& of an e"ent.
H: >erfection of - &oes into 'hat principleI A: @bli&atory force of -, 'hen parties became bound
imitation of ((2s liability for loss of passen&er2s ba&&a&e that 'as under declared by the latter, "alid. (0ng Y"% /. ,A)
!onaton o" $$ova&les (Art. B4) The donation must be in a public instrument.
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s#alator #laseJ Lalid if not potestati"e solely on the 'ill of one of the parties #"iolates mutuality$ K - of oan) - of G@4O)ser"ice)pro%ect< independent -in& •
Q: w+o de,escalation clause- will © still be "alid? A *esD onl* te es#alaton #lase 'll not &e %ven e""e#t
BA1,0 43'3310 SA@31FS @S 1A@A0+ 152 SC
The acceptance must either be in the same public instrument or in a d ifferent public instrument. Acceptance shall not take effect unless it is done durin& the lifetime of the donor. f the acceptance is made in a separate public instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments
. E'A+3@3+Y 04 ,01+A,+S
34< (B) RATIO A contract w$"c$ embod"es an Esca!at"on ,!a%se a%t$or"J"ng a%tomat"c "ncrease "n "nterest rates "n t$e e/ent a K!aw "ncreas"ng t$e !awf%! rates of "nterest t$at may be c$argedL( does not "nc!. a ,B ,"rc%!ar( w$c( a!t$o%g$ $a/"ng t$e face & effect of !aw( "s not str"ct!y a stat%te or a !aw. An Esca!at"on ,!a%se to be /a!"d m%st "nc!%de a de
4'0E10 @S ,A+ 2<5 SC
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GN R7: The contract is bindin& only upon the parties and their successors #Art. 1311$. Po'e"er, if the contract is purely personal #"nt%"t% personae$, then the contract 'ill not bind assi&ns and heirs. #intransmissible rts.$ •
Tol GR 4ts. 9 *s under a - are transmitted to the heirs of the parties. Peirs can2t be considered as 3>, bec. there is pri"ity of interest bet. them 9 their predecessor.
Q: W$o are bo%nd by ©s? A: parties)successors
(2) by the "ery natre o" te Hs arisin& therefr., such as those re;uirin& special personal ;ualifications of the obli&or - of ser"ice, det
4
(3) or by st o" artes i.e. pacto de retro sale 'here only the party may redeem not anyone else
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#>A$ A##etan#e &* 3P no art#lar "or$. ?efore acceptance, the -2in& parties, by mutual a&reement, may modify the - or re"oke it. #>A$ ince 3>2s rt. is based directly on the -, it is also sub%. to all defenses a"ailable ". the -, such as those affectin& its "alidity. ,av : A #ons%nee+ to% not str#tl* a art* n te F o" transo+ #an se+ on te F+ te #o$$on #arrer. Reason Tere s a st. n s "avor. • n Art. 1314, Any 3> 'ho induces another to "iolate his - shall be liable to the other contractin& party.
Tol Re=s. o" a8n nder ts art#le • e+istence of a "alid • kno'led&e by 3> of -2s e+istence • interference by 3> in the -2al relation ')o le&al %ustification • Ghate"er may be the char. of the liability ')c a stran&er to a - may incur by ad"isin& or assistin& one of the parties to e"ade perf., such stran&er can2t become more e+tensi"ely liable in dama&es for non
the "endor
?7ASCO ?S CA+ 5 SC <1<
3n t$e eed of Q%"tc!a"m "n %est"on w$ere"n 'a"go ea!ty wa"/ed "n fa/or of FS3S "ts rts "n fa/or of t$e s%bd"/"s"on "n %est"on ar"s"ng o%t of "ts de/t and ass%med to pay t$e c!a"ms of any contractor( mater"a! f%rn"s$er( !ot b%yer( etc. $a/"ng connect"on w7t$e sa"d de/t( t$e FS3S was not re!"e/ed of any !"ab"!"ty to pet. 4or cost of mater"a!s & !abor t$e !atter "nc%rred "n b!dg t$e s%bd/ $o%ses "f 'a"go "s %nab!e to pay t$em. RATIO:
(Soldar* la<* o" Prn#al R+ ':o& #ontra#tor 'en s 'a%es not ad.) La""$an v. Natonal ,an;+ 42 Pl 12 4AT@: A stipulation in fa"or of a 3> cannot be re"oked by the obli&ated party alone, ')o the conformity of the other contractin& party.
B0134A,30 B0S. @. M0A( N S,A D#
A+30: ,01+A,+S +AOE E44E,+ 01'Y BE+. +-E A+3ES +-EE+0.
4'0E1+310 @. E1,A1A,301 RATIO
A st"p%!at"on po%r a%tr%" "s a st"p%!at"on "n fa/or of a t$"rd person conferr"ng a c!ear and de!"berate fa/or %pon $"m( and w$"c$ st"p%!at"on "s mere!y a part of a contract entered "nto by t$e part"es( ne"t$er of w$om acted as agent of t$e t$"rd person( and s%c$ t$"rd person and demand "ts f%!f"!!ment pro/o)ed t$at $e comm%n"cates $"s to t$e ob!"gor before "t "s re/o)ed
• 3>2s liability. is solidary ') non
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,A7 KCPTION 3 artes are a""e#ted &* te #ontra#t n te "ollo'n% nstan#es and #an ta;e arorate a#ton
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#i$ acc"on pa%!"ana #Art. 11BB$ A rescissory action in"ol"in& a contract in fraud of • creditors. (reditors are protected in cases of contracts intended to defraud them #Art. 1313$. •
#ii$ acc"on d"screta #Arts. 1<52+ 1B2$ A direct #not subro&atory$ action by the creditor a&ainst his debtor2s debtor, a remedy 'hich &i"es the creditor the prero&ati"e to act in his o'n name, such as the actions of the lessor a&ainst the sublessee #Art. 1<52$ •
the laborer of an independent contractor a&ainst the o'ner)principal 4 #Art. 1B2$ •
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principal
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!nd par. permits a 3> to a"ail himself of a benefit e+tended to him by its terms. !o#trne o" stlatons po%r a%tr%" #SPA $. Re=stes o" SPA (1) stip. in fa"or of 3> (2) stip. shld. be a part, not the 'hole, of the (3) clearly 9 deliberately conferred by -2in& parties (4) not be conditioned or compensated by any kind of * 'hate"er 3> must ha"e communicated his acceptance (5) to obli&or before re"ocation (6) neither of the -2in& parties bears the le&al representation or authori8ation of the 3>
the
a&ainst the suba&ent #Art. 1763$ and
The acceptance does not ha"e to be in any particular form, e"en 'hen the stipulation is for the third person an act of liberality or &enerosity on the part of the promisor or promise. t need not be made e+pressly and formally. otification of acceptance, other than such as is in"ol"ed in the makin& of demand, is unnecessary. Te re=stes are ./0 that the stipulation in fa"or of a third person should be a part- not the whole- of the contract1 .20 that the fa"orable stipulation should not be conditioned or compensated by any )ind of obligation whate"er1 and .30 neither of the contracting bears the legal represented or authori4ation of third person#
W$"!e a st"p%!at"on "n fa/or of a t$"rd person $as no b"nd"ng effect "n "tse!f before "ts acceptance by t$e party fa/ored( t$e !aw does not pro/"de w$en t$e t$"rd person m%st ma)e $"s acceptance. As a r%!e( t$ere "s no t"me at s%c$ t$"rd person $as after t$e t"me %nt"! t$e st"p%!at"on "s re/o)ed. BA1O 04 AME3,A /s. 3A,
5
,ontract between fore"gn ban) & !oca! ban) as)"ng t$e !atter to pay an amo%nt to a benef"c"ary( "s a SA.
to'ards the celebration of another subse;uent contract #i.e. partnership, a&ency$.
RATIO
MA3ME30 /s. ,A RATIO A party w$o $as not ta)en part "n t$e ©
cannot s%e or be s%ed for t$e performance or cance!!at"on t$ereof( %n!ess $e $as a rea! "nterest affected t$ereby. 3n a © of s%b!ease( t$e persona!"ty of t$e !essee does not d"sappear & t$e s%b!ease genera!!y does not $a/e any d"rect act"on aga"nst t$e owner of t$e prem"ses as !essor.
!A6@A7T ?S CORP ! PP AGSTINOS RATIO W$ate/er may be t$e c$aracter of t$e
!"ab"!"ty w$"c$ a stranger to a contract may "nc%r by ad/"s"ng or ass"st"ng one of t$e part"es to e/ade performance( t$ere "s one propos"t"on %pon w$"c$ a!! m%st agree. +$"s "s( t$at t$e stranger cannot become more eGtens"/e!y !"ab!e "n damages for t$e nonperformance of t$e contract t$an t$e party "n w$ose be$a!f $e "ntermedd!es. F3',-3S+ /s. ,2Y A+30: 0ne w$o wrongf%!!y "nterferes "n a contract between ot$ers( and( for t$e p%rpose of ga"n to $"mse!f "nd%ces one of t$e part"es to brea) "t( "s !"ab!e to t$e party "n%red t$erebyH and $"s cont"n%ed "nterference may be gro%nd for an "n%nct"on w$ere t$e "n%r"es res%!t"ng w"!! be "rreparab!e
b. rn#al A rn#al #ontra#t is one 'hich can subsist independently from other contracts and 'hose purpose can be fulfilled by themsel"es #i.e. sales, lease$. c. a##essor* An a##essor* #ontra#t is one 'hich can e+ist only as a conse;uence of, or in relation 'ith, another prior contract #i.e. pled&e, mort&a&e$. 2. A##ordn% to Per"e#ton a. #onsensal A #onsensal #ontra#t is one 'hich is perfected by mere a&reement of the parties #i.e. sales, lease$. b. real
A real #ontra#t is one 'hich re;uires not only the consent of the parties for their perfection, but also the delver* of the ob%ect by 1 party to the other #i.e. commodatum, deposit, pled&e$. 3) A##ordn% to ter >or$ or sole$nt* a. Co$$on or n"or$al An informal contract is one 'hich does not re;uire some particular form #i.e. loan, lease$. b. Se#al or "or$al A formal contract is one 'hich re;uires some particular form #i.e. donation, chattel mort&a&e$. 4) A##ordn% to Prose a. transfer of o'nership #i.e. sale$
7!
3n%nct"on "s t$e proper remedy to pre/ent a wrongf%! "nterference w"t$ contract by strangers to s%c$ contracts w$ere t$e !ega! remedy "s "ns%ff"c"ent and t$e res%!t"ng "n%ry "s "rreparab!e.
b. con"eyance of use #i.e. commodatum$ c. rendition of ser"ice #i.e. a&ency$ 5) A##ordn% to te Natre o" te O&l%aton
ES+. 04 O.-. -EMAY /s. '2P01 S2E+Y A partys contract%a! r"g$ts and ob!"gat"ons are transm"ss"b!e to t$e s%ccessors. RATIO
S0 31F B21 /s. ,A W$ere t$ere was no ma!"ce "n t$e "nterference of a contract( and t$e "mp%!se be$"nd ones cond%ct !"es "n a proper b%s"ness "nterest rat$er t$an "n wrongf%! mot"/es( a party cannot be a ma!"c"o%s "nterferer. W$ere t$e a!!eged "nterferer "s f"nanc"a!!y "nterested( and s%c$ "nterest mot"/ates $"s cond%ct( "t cannot be sa"d t$at $e "s an off"c"o%s or ma!"c"o%s "ntermedd!er RATIO
!. C7ASSI>ICATION O> CONTRACTS 1. ACCOR!ING TO !GR O> !PN!NC a. rearator* A rearator* #ontra#t is one 'hich has for its ob%ect the establishment of a condition in la' 'hich is necessary as a preliminary step
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a. &lateral
A bilateral contract is one 'hich &i"es rise to reciprocal obli&ations for both parties #i.e. sale, lease$. &. nlateral A unilateral contract is one 'hich &i"es rise to an obli&ation for only 1 of the parties #i.e. commodatum, &ratuitous deposit$. <) A##ordn% to Case a. oneros
An onerous contract is one in 'hich each of the parties aspires to procure for himself a benefit throu&h the &i"in& of an e;ui"alent or compensation #i.e. sale$. b. %rattos A &ratuitous contract is one in 'hich one of the parties proposes to &i"e to the other a benefit 'ithout any e;ui"alent or compensation #i.e. commodatum$.
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B) A##ordn% to Rs; a. #o$$tatve A comm%tat"/e contract is one in 'hich each of the parties ac;uires an e;ui"alent of his prestation and such e;ui"alent is pecuniarily appreciable and already determined from the moment of the celebration of the contract #i.e. lease$. b. aleator* An a!eatory contract is one in 'hich each of the parties has to his account the ac;uisition of an e;ui"alent prestation , but such e;ui"alent, althou&h pecuniarily appreciable, is not yet determined, at the moment of the celebration of the contract, since it depends upon the happenin& of an uncertain e"ent, thus char&in& the parties 'ith the risk of loss or &ain #i.e. insurance$. ) A##ordn% to Na$e a. no$nate A nom"nate contract is one 'hich has a name and is re&ulated by special pro"isions of la' #i.e. sale, lease$ b. nno$nate An "nnom"nate contract is one does not ha"e a name and is not re&ulated by special pro"isions of la'. nnominate contracts shall be re%lated &* the 1$ stipulations of the parties, !$ pro"isions of obli&ations and contracts, 3$ rules &o"ernin& the most analo&ous nominate contracts, and $ customs of the place #Art. 130E$.
4 Classes o" Inno$nate Contra#ts i# I do- you do ii# I do- you gi"e iii# I gi"e- you do i"# I gi"e- you gi"e
) A##ordn% to S&:e#t atter a. thin& #i.e. sale, deposit, pled&e$ b. ri&ht c. ser"ice #i.e. a&ency, lease of ser"ices$ . STAGS O> CONTRACTS
#. 1EF0+3A+301 >reparation, conception, or &eneration, • 'hich is the period of ne&otiation and bar&ainin&, endin& at the moment of a&reement of the parties CONTRACT O> OPTION Art. 1324 Ghen the offerer has allo'ed the offeree a certain period to accept, the offer may be 'ithdra'n at any time before acceptance by communicatin& such 'ithdra'al, e8#et 'en te oton s "onded on a #onsderaton+ as so$etn% ad or ro$sed. Art. 1E6. A promise to buy 9 sell a determinate thin& for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thin& for a price certain is bindin& upon the promissor if the promise is supported by a consideration distinct fr. the price.
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Article 17!. Ghene"er earnest money is &i"en in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. 5a": The parties could stipulate other'ise 9 that the earnest money 'ill be forfeited, as in the (A? Ghen there is a ri&ht of first refusal, at the time the offer is made, the o'ner still has not yet decided to sell, but in case he does, the holder of the ri&ht has the priority to accept it. Distin&uished fr. an option to sell, 'here there is a continuin& offer to sell on the part of the o'ner. •
SA1,-EP @S. 3F0S As Justice ?en&8on e+plained, “an oton is nlateral a ro$se to sell at the r#e "8ed 'hene"er the offeree should decide to e+ercise his option ')in the specified time. After acceptin& the promise 9 before he e+ercises his option, the holder of the option is not bound to buy. Pe is free either to buy or not to buy later...ho'e"er, upon acceptin& herein petitioner2s offer, a bilateral promise to sell 9 to buy ensued, 9 the resp. ipso facto assumed the obli&ation of a purchaser. Pe did not %ust &et the ri&ht subse;uently to buy or not to buy. t 'as not a mere option then it 'as a bilateral - of sale.” f the option is &i"en ')o a consideration, it is a mere offer of a contract of sale, ')c is not bindin& until accepted. 3f
$owe/er( acceptance "s made before a w7drawa!( "t const"t%tes a b"nd"ng © of sa!e( e/en t$o%g$ t$e opt"on was not s%pported by a s%ff"c"ent cons"derat"on. ,A?IRA M !stn%s &et'een Art. 14B E 1324 14B 1324 Applies if - has @T beenThis is the 4A 4C A((>TD on (@T4A(T: f A((>TD, the a&reement A consideration other than becomes ?D #G@ the purchase price isthere is a consideration re;uired to make theother than the purchase unilateral promise bindin& price$
In order tat a nlateral ro$se $a* &e &ndn% on te ro$ssor+ Art. 14B re=res te #on#rren#e o" te #ondton tat te ro$se &e sorted &* a #onsderaton dstn#t "r. te r#e.J A##ordn%l*+ te ro$see #annot #o$el te ro$sor to #o$l* ' te ro$se+ nless te "or$er esta&lses te e8sten#e o" sad dstn#t #onsderaton. Te ro$see as te &rden o" rovn% s# #onsderaton. #$ronco "# 6ua4on$ •
Conventonal Rede$ton Art. 1=01. (on"entional redemption shall take place 'hen the "endor reser"es the ri&ht to repurchase the thin& sold, ') the obli&ation to comply ') the pro"isions of Art. 1=1= 9 other stipulations ')c may ha"e been a&reed upon. Art. 1=1=. The "endor cannot a"ail himself of the ri&ht of repurchase ')o returnin& to the "end the price of the sale , 9 in addition: #1$ The e+penses of the contract, 9 any other le&itimate payments made by reason of the sale #!$ The necessary 9 useful e+penses made on the thin& sold.
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,avera n an e=ta&le $ort%a%e, the property must still first be foreclosed before o'nership passes to the seller. Distin&uished fr. a pacto de retro sale, 'here o'nership already passes to the buyer upon perfection of the contract, but if the ri&ht to redeem is e+ercised, then o'nership re"erts to the seller.
acto de retro, or #onventonal rede$ton, is "avored &* #redtors, bec. it does a'ay ') the necessity of a foreclosure, in case the debtor fails to pay the loan. All that the creditor has to do is to e+ecute an affida"it consolidatin& o'nership in himself 9 re&ister the same in the 4e&ister of Deeds. The price in a pacto de retro sale is naturally lesser than that in an absolute sale, bec. the sale is sub%ect to a resolutory condition, 9 also to facilitate redemption. Thus, the mere fact that the price is not the true "alue of the property does not %ustify the conclusion that the contract is one of mort&a&e. I" te seller 'ants to redee$+ e $st %ve te &*er te r#e te e8enses o" te #ontra#t an* oter le%t$ate a*$ents $ade &* reason o" te sale te ne#essar* e8enses $ade on tn% sold. •
=ta&le ort%a%e Art. 1=0!. The contract shall be presumed to be an e;uitable mort&a&e in any of the follo'in& cases: #1$ Ghen the price of the sale ') ri&ht to repurchase is unusually inade;uate #!$ Ghen the "endor remains in possession as lessee or other'ise #3$ Ghen upon or after the e+piration of the ri&ht to repurchase another instrument e+tendin& the period of redemption or &rantin& a ne' period is e+ecuted #$ Ghen the purchaser retains for himself a part of the purchase price #5$ Ghen the "endor binds himself to pay the ta+es on the thin& sold #=$ n any other case 'here it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obli&ation. n any of the fore&oin& cases, any money, fruits, or other benefit to be recei"ed by the "endee as rent or other'ise shall be considered as interest ')c shall be sub%ect to usury la's. Art. 1=03. n case of doubt, a contract purportin& to be a sale ') ri&ht to repurchase shall be construed as an e;uitable mort&a&e. Paras An e%"tab!e mortgage is one ')c, thou&h lackin& in some formality or other re;uisites demanded by la', re"eal an intention of the parties to char&e a real property as security for a debt 9 constrains nothin& impossible or contrary to la'. •
Art 1=0=. The ri&ht referred to in Art. 1=01, in the absence of an e+press a&reement, shall last four years fr. date of the contract. hould there be an a&reement, the period cannot e+ceed ten years. Po'e"er, the "endor may still e+ercise the ri&ht to repurchase ')in thirty days fr. the time final %ud&ment 'as rendered in a ci"il action on the basis that the contract 'as a true sale ') ri&ht to repurchase. ,avera An a%ree$ent to rer#ase becomes an oton to &* 'hen entered into after the time to redeem stipulated in a pacto de retro sale had already e+pired, bec. then the "endee a retro became absolute o'ner of the thin& sold, 9 the subse;uent &rant of the ri&ht to repurchase is a ne' a&reement. ?ut 'here the period to repurchase has not e+pired, 9 another a&reement is entered into &rantin& the "endor a retro the ri&ht to repurchase the ob%ect of the contract at any time, the subse;uent a&reement is not a promise to sell but is an e+tension of the period to redeem, ')c cannot e+ceed 10 years.
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Reason "or te 10-*ear l$taton A pacto de retro is a suspension of title, 9 it is a&ainst public interest to permit such uncertainty to continue for a lon& time. Contn% o" 4-*ear erod: Brom the e+ecution of the contract. ?ut if the ri&ht is suspended by a&reement that it shall be e+ercised only after a certain time or condition arises, then the period shall be counted only fr. the time such ri&ht could be e+ercised, but not e+ceedin& 10 years fr. e+ecution. ot sufficient that a "endor a retro manifests his desire to redeem. This must be accompanied by an actual or simultaneous tender of payment of the redemption price. ?ut if "endee refuses, then "endor may file a suit a&ainst him 9 consi&n the amount in court.
. E4E,+301 >erfection or &rt o" te #ontra#t, 'hich is the moment 'hen the parties come to a&ree on the terms of the contract •
4C: (ontracts are perfected by mere consent N the principle of consensuality #Art. 1315$ •
/(>T@: 4eal contracts, such as deposit, pled&e, and commodatum are not perfected until the deli"ery of the ob%ect of the obli&ation #Art. 131=$ •
8. E40MA1,E R. ,01S2MMA+301 (onsummation or death, 'hich is the fulfillment or performance of the terms a&reed upon •
>. SSNTIA7 7NTS O> CONTRACTS 1. CONSNT o" te #ontra#tn% artes Consent is the manifested by the meetin& of offer and acceptance upon the thin& and the cause 'hich are to constitute the contract #Art. 1316, 1 st par$. le$ents o" Consent a. plurality of sub%ects b. capacity #le&al$ c. intelli&ent and free 'ill d. e+press or tacit manifestation of the 'ill e. conformity of the internal 'ill and its manifestation CONSNT is the concurrence of 'ills of the offerer 9 the acceptor as to the thin& 9 the cause 'hc constitute a contract O>>R manifestation of a 'illin&ness to enter into a bar&ain so made as to %ustify another in understandin& that his assent to that bar&ain is in"ited 9 'ill conclude it. @ffer ne&otiation imperfect promise policitation o acceptance no concurrence of 'ills no consent no -Q Contra#t to Sell s a &lateral F+ 'here there is merely an offer by one party ')o acceptance on the other party, no consent. #alon&a ". Barrales, July 10, 1671$ An o""er is a unilateral proposition 'hich 1 party makes to the other for the celebration of a contract. Re=stes o" O""er
1.
def"n"te
The offer must be definite, so that upon acceptance, an a&reement can be reached on the 'hole contract.
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2.
comp!ete
Bor e+ample, the offer 'as made in Da"ao on Beb. 1. The offer 'as sent throu&h mail 'hich is recei"ed in Fanila on Beb. 5. @n the same day, the offer is accepted. Fail is sent to Da"ao on Beb. 5 si&nifyin& acceptance. @n Beb. 7, the party in Fanila becomes insane. @n Beb.13 the mail reaches Da"ao. Accordin& to >rof. ?alane, under Art. 13!3, there is no contract since there 'as no contractual capacity. •
The offer must be complete, indicatin& 'ith sufficient clearness the kind of contract intended and definitely statin& the essential conditions of the proposed contract as 'ell as the non
3.
"ntent"ona!
An offer 'ithout seriousness, made in such manner that the other party 'ould not fail to notice such lack of seriousness, is absolutely 'ithout %uridical effects and cannot &i"e rise to a contract #i.e. must not be made in %est, or a prank$. A##etan#e must be affirmati"ely and clearly made 9 must be e"idenced by some acts or conduct communicated to offeror, either in formal or informal manner, 9 may be sho'n by conduct, acts, 'ords, by acceptin& party that clearly manifest the intention to buy or sell. #Art. 1316 %delfa &roperties "# $%$ Re=stes o" A##etan#e 1. ne=vo#al
O""ers Tro% A%ents An offer made throu&h an a&ent is accepted from the time acceptance is communicated to him #Art. 13!!$. •
""e#t o" !eat+ Insant* An offer becomes ineffecti"e upon the death, ci"il interdiction, insanity or insol"ency of either party before acceptance is con"eyed #Art. 13!3$. •
@tdra'al o" te O""er 2. n#ondtonal o f the acceptance is ;ualified, then that is a #onter-o""er. o An amplified acceptance may or may not be an acceptance of the ori&inal offer. t depends on the circumstances. Bor e+ample, A is sellin& 1000 k&s. of o cement. ? says he 'ants to buy !000 k&s of cement. There is no acceptance of the offer if ? 'ill only buy !000 k&s and nothin& less. an"estaton o" A##etan#e o An acceptance may be e+press or implied #Art. 1320$. o ilence is ambi&uous. @ne must look at the circumstances to determine if the silence is a form of acceptance. A o and ? are o'n stalls 'hich sell rice. ( deli"ers 1000 k&s of rice to A e"ery unday. f A is not there, ( %ust lea"es it to A2s assistant. ( tries to do business 'ith ?. ? is not there thou&h. ( lea"es rice 'ith ?2s assistant. ? does not call (. ?oth A and ? are silent. A acceptance the rice because of the arran&ement. f A did not 'ant to accept the rice, then A should ha"e called. ?2s silence is not acceptance. Q: $ould there be a perfected contract in a unilateral promise to sell? A: es, a er"e#ted #ontra#t o" oton is an accepted unilateral promise 'hc specifies the thin& to be sold and the price to be paid, 'en #oled 't a vala&le #onsderaton dstn#t and searate "ro$ te r#e. (Art. 1324) OPTION is a contract &rantin& a pri"ile&e to buy or sell at a determined price ')in an a&reed time # Ang Y"% As%nc"on /. ,A, Dec. !, 166$
,0F13+301 +$eory Acceptance made by letter of tele&ram does not bind the offer e+cept from the time it came to his kno'led&e #Art. 131, !nd par$. •
This is kno'n as the (o&nition Theory
f the parties are face to face, then there is no problem since there is no time &ap. •
The problem arises 'hen there is a time &ap. Cnder Art. 1316, there is perfection of the contract 'hen there is kno'led&e of the other party2s acceptance). This has serious conse;uences. •
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Ghen the offerer has allo'ed the offeree a cetain period to accept, the offer may be 'ithdra'n at any time before acceptance by communicatin& such 'ithdra'al, e+cept 'hen the option is founded upon consideration, somethin& paid or promised #Art. 13!$. •
/: A offers to ? by mail on Beb.1 The offer reaches ? on Beb. 5. ? accepts "ia mail. The mail reaches A on Beb. 7. @n Beb. 7, A also decides to 'ithdra' the offer. Ghich 'ill take effectI f the mail of ? reaches A first, then A cannot 'ithdra' the offer. The problem here is e"identiary. Art. 13! is related to Art. 1E6, par. !. They actually say the same thin&. •
/: ? offers to sell a car to J for >300,000. J needs to think about it, and so J asks for 30 days. J pays ? earnest money 'orth >5,000. The payment of >5,000 is a distinct consideration from the price of the car. This distinct consideration of >5,000 is payment for the 30 days. J is payin& for time. The option contract is separate from the contract of sale. ? cannot sell the car to anybody else 'ithin that 30 day period. /: ? offers to sell a car to J for >300,000. J needs to think about it, and so J asks for 30 days. J does not pay ? for time, but ? promises to &i"e J 30 days. n this case there is no option contract. Po'e"er, in anche8 ". 4i&os, the ( said that e"en if there 'as no option contract, ? must still communicate the 'ithdra'al of the offer to J. f ? does not communicate his 'ithdra'al, that is tantamount to a continuin& offer. >rof. ?alane does not a&ree 'ith this. Accordin& to him, if there is no "alid option contract, there should be no continuin& offer. Accordin& to >rof. ?alane, the ( should ha"e e+plained that. /: ? offers to sell a car to J for >300,000. J needs to think about it, and so J asks for 30 days. J pays earnest money 'orth >5,000. J decides to buy the car 'ithin 30 days. The car is not sold to anybody else. ? does not 'ant to sell the car to J. J can sue ? for specific performance N compel ? to sell him the car. /: ? offers to sell a car to J for >300,000. J needs to think about it, and so J asks for 30 days. J pays earnest money 'orth >5,000. J decides to buy the car 'ithin 30 days. ?efore J is able to buy the car, ? sells the car to /. J can sue ? for dama&es. J cannot sue for specific performance since the car has been sold to an innocent purchaser. A r%t o" "rst re"sal vs. oton #ontra#t r%t o" "rst re"sal oton #onta#t ri&ht to ha"e first opportunity tolimits the promissor2s po'er to
9
purchase or the ri&ht to meetre"oke an offer any other offer not co"ered by the (i"il (ode Art. 1324+ CC n 78uatorial "# Mayfair then %ng !u "# $%, the ( said ri&ht of first refusal 'as "iolated that an action for specific 'hen the "endor sold the ob%ectperformance 'ill not lie a&ainst to another person < an action for the promissor. Po'e"er, a specific performance may becomplaint under Art. 16 for filed. dama&es may be filed if the actions of the promissor are 'himsical.
RIGT O> >IRST R>SA7 The basis of the ri&ht of first refusal must be the current • offer to sell of the seller or offer to purchase of any prospecti"e buyer. Onl* a"ter te otonee "als to e8er#se ts r%t o" "rst rort* nder te SA ter$s E 'n te erod #onte$lated+ #old te o'ner valdl* o""er to sell te roert* to a 3rd erson+ a%an+ nder te sa$e ter$s as o""ered to te otonee. # &%'%N%Q97 IN;S 7N67'&'IS7S "s# $%$
SA1,-EP @. 3F0S t should be noted that: 1. Art. 1324 ales to Fs n %eneral, 'hereas the !nd par of Art. 1E6 refers to RsalesR in particular, 9, more specifically, to an Raccepted unilateral promise to buy or to sell.R Art. 14B s #ontrolln% n te #ase at &ar. !. n order that said unilateral promise may be bindin& upon the promisor, Art. 1E6 re;uires the concurrence of a condition, namely, tat te ro$se &e sorted &* a #onsderaton dstn#t "r. te r#e. n other 'ords, the promise, e"en if accepted, may be ')dra'n if there is no consideration distinct fr. the price. #G u&ar case$ n a r%t o" "rst re"sal, there is no definite offer since the "endor has to option of decidin& not to sell the ob%ect. Also, in a ri&ht of first refusal, there is no need for a separate consideration. n an option contract, there is a definite offer. Accordin& to >rof. ?alane, the ri&ht of first refusal is inferior to an option contract since there is no definite offer. >rof. ?alane does not understand 'hy an action for specific performance is allo'ed in "iolations of ri&hts of first refusal but not in the case of option contracts 'hen the ob%ect is sold to another person. Ghy is the ( &i"in& &reater le&al effect to a ri&ht of first refusal 'hich is more tentati"eI Also, 'here the ( &et these rules since the ri&ht of first refusal is not co"ered by the (i"il (ode. •
A!?RTISNTS Cnless it appears other'ise, business ad"ertisements of thin&s for sale are not definite offers, but mere in"itations to make an offer #Art. 13!5$
Ad/ert"sements for b"dders are s"mp!y "n/"tat"ons to ma)e proposa!s, and the ad"ertiser is not bound to accept the hi&hest or lo'est bidder, unless the contrary appears #Art. 13!=$. Fost ad"ertisements are simply in"itations to make an offer and are not offers in themsel"es since not all the necessary terms can fit in the ad"ertisement. •
a. A&soltel* S$lated (contrato s"m%!ado ) Absolute simulation of a contract takes place 'hen the artes do not ntent to &e &ond at all #Art. 135$. /: / pretends to sell his car to a"oid ta+ liability. Po'e"er / has no real intention to sell the car. An absolutely simulated or fictitious contract is vod #Art. 13=$ &. Relatvel* S$lated (contrato d"s"m%!ado) 4elati"e simulation of a contract takes place 'hen the artes #on#eal ter tre a%ree$ent #Art. 135$. n a relati"ely simulated contract, the parties enter into a contract but dis&uise it as another. •
/: / has many creditors, and they are &oin& after /2s car. / cannot donate his car to since the creditors 'ill %ust resort to accion pauliana. o, / antedates a contract of sale, sellin& his car to , e+cept that /2s intention is to donate his car to . A relati"ely simulated contract, 'hen it does not pre%udice a 3rd person and is not intended for any purpose contrary to la', morals, &ood customs, public order or public policy binds the parties to their real a&reement #Art. 13=$. •
The la' 'ill apply the rules of the true contract and not the ostensible contract. •
Art#le 3B. 9rd#al #aa#t* , 'hich is the fitness to be the sub%ect of le&al relations, is inherent in e"ery natural person and is lost only throu&h death. Caa#t* to a#t, 'hich is the po'er to do acts 'ith le&al effect, is ac;uired and may be lost. Art#le 3. nort*+ nsant* or $&e#lt*+ te state o" &en% a dea"-$te+ rod%alt* and #vl nterd#ton are mere restrictions on capacity to act, and do not e+empt the incapacitated person from certain obli&ations, as 'hen the latter arise from his acts or from property relations, such as easements. Art#le 3. The follo'in& circumstances, amon& others, modify or limit capacity to act: a%e+ nsant*+ $&e#lt*+ te state o" &en% a dea"-$te+ enalt*+ rod%alt*+ "a$l* relatons+ alena%e+ a&sen#e+ nsolven#* and trstees. The conse;uences of these circumstances are &o"erned in this (ode, other codes, the 4ules of (ourt, and in special la's. (apacity to act is not limited on account of reli&ious belief or political opinion. Art#le B3. The follo'in& donations shall be "oid: #1$ Those made bet'een persons 'ho 'ere &uilty of adultery or concubina&e at the time of the donation #!$ Those made bet'een persons found &uilty of the same criminal offense, in consideration thereof #3$ Those made to a public officer or his 'ife, descendants and ascendants, by reason of his office. n the case referred to in o. 1, the action for declaration of nullity may be brou&ht by the spouse of the donor or donee and the &uilt of the donor and donee may be pro"ed by preponderance of e"idence in the same action. Art#le 14B<. n the case of a sale by auction:
"en if the ad had all the necessary terms, it2s still an in"itation to make offer since there is no definite person to 'hom the offer is bein& made #public offer$. •
S$lated Contra#ts
bern.carrasco
+++ #$ Ghere notice has not been &i"en that a sale by auction is sub%ect to a ri&ht to bid on behalf of the seller, it shall not be la'ful for the seller to bid himself or to employ or induce any person to bid at such sale
10
on his behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or kno'in&ly to take any bid from the seller or any person employed by him. Any sale contra"enin& this rule may be treated as fraudulent by the buyer.
prohibition shall also apply to persons li"in& toðer as husband and 'ife 'ithout a "alid marria&e.
Art#le 140. The husband and the 'ife cannot sell property to each other, e+cept:
Art. 124. The administration and en%oyment of the con%u&al partnership shall belon& to both spouses %ointly. n case of disa&reement, the husbandSs decision shall pre"ail, sub%ect to recourse to the court by the 'ife for proper remedy, 'hich must be a"ailed of 'ithin fi"e years from the date of the contract implementin& such decision.
#1$ Ghen a separation of property 'as a&reed upon in the marria&e settlements or #!$ Ghen there has been a %udicial separation of property under article 161. Art#le 141. The follo'in& persons cannot ac;uire by purchase, e"en at a public or %udicial auction, either in person or throu&h the mediation of another: #1$ The &uardian, the property of the person or persons 'ho may be under his &uardianship #!$ A&ents, the property 'hose administration or sale may ha"e been intrusted to them, unless the consent of the principal has been &i"en #3$ +ecutors and administrators, the property of the estate under administration
Se#ton 5. Ad$nstraton o" te Con:%al Partners Proert*
n the e"ent that one spouse is incapacitated or other'ise unable to participate in the administration of the con%u&al properties, the other spouse may assume sole po'ers of administration. These po'ers do not include disposition or encumbrance 'ithout authority of the court or the 'ritten consent of the other spouse. n the absence of such authority or consent, the disposition or encumbrance shall be "oid. Po'e"er, the transaction shall be construed as a continuin& offer on the part of the consentin& spouse and the third person, and may be perfected as a bindin& contract upon the acceptance by the other spouse or authori8ation by the court before the offer is 'ithdra'n by either or both offerors. ANCIPATION AN! AG O> A9ORIT6
#$ >ublic officers and employees, the property of the tate or of any subdi"ision thereof, or of any &o"ernment
Art. 234. mancipation takes place by the attainment of ma%ority. Cnless other'ise pro"ided, ma%ority commences at the a&e of t'enty
#5$ Justices, %ud&es, prosecutin& attorneys, clerks of superior and inferior courts, and other officers and employees connected 'ith the administration of %ustice, the property and ri&hts in liti&ation or le"ied upon an e+ecution before the court 'ithin 'hose %urisdiction or territory they e+ercise their respecti"e functions this prohibition includes the act of ac;uirin& by assi&nment and shall apply to la'yers, 'ith respect to the property and ri&hts 'hich may be the ob%ect of any liti&ation in 'hich they may take part by "irtue of their profession
#!$ ?y the recordin& in the (i"il 4e&ister of an a&reement in a public instrument e+ecuted by the parent e+ercisin& parental authority and the minor at least ei&hteen years of a&e. uch emancipation shall be irre"ocable.
mancipation also takes place: #1$ ?y the marria&e of the minor or
RA No. <0U 4epublic Act o. =706, 'hich reduced the a&e of ma%ority to e%teen (1) *ears 'as appro"ed only on 13 !e#e$&er 1 and became effecti"e t'o 'eeks after publication in t'o ne'spapers of &eneral circulation. •
#=$ Any others specially dis;ualified by la' Art. 1533 (ar.5). The seller is bound to e+ercise reasonable care and %ud&ment in makin& a resale, and sub%ect to this re;uirement may make a resale either by public or pri"ate sale. Pe cannot, ho'e"er, directly or indirectly buy the &oods. Art#le 1<4<. The persons dis;ualified to buy referred to in articles 160 and 161, are also dis;ualified to become lessees of the thin&s mentioned therein Art#le 1B2. >ersons 'ho are prohibited from &i"in& each other any donation or ad"anta&e cannot enter into uni"ersal partnership. Art#le 140. The follo'in& contracts are ine+istent and "oid from the be&innin&:
1B CONSTITTION ARTIC7 KII - NATIONA7 CONO6 AN! PATRION6 Se#ton B. a"e in cases of hereditary succession, no pri"ate lands shall be transferred or con"eyed e+cept to indi"iduals, corporations, or associations ;ualified to ac;uire or hold lands of the public domain. Se#ton . ot'ithstandin& the pro"isions of ection E of this Article, a naturalhilippines 'ho has lost his >hilippine citi8enship may be a transferee of pri"ate lands, sub%ect to limitations pro"ided by la'. 2. O,9CT #ertan '# s S o" F
+++ #E$ Those e+pressly prohibited or declared "oid by la'. These contracts cannot be ratified. either can the ri&ht to set up the defense of ille&ality be 'ai"ed. Art#le 5. Acts e+ecuted a&ainst the pro"isions of mandatory or prohibitory la's shall be "oid, e+cept 'hen the la' itself authori8es their "alidity. >C .O. 20Q Art. B. "ery donation or &rant of &ratuitous ad"anta&e, direct or indirect, bet'een the spouses durin& the marria&e shall be "oid, e+cept moderate &ifts 'hich the spouses may &i"e each other on the occasion of any family re%oicin&. The
bern.carrasco
The ob%ect of the contract is the prestation. Thus, it is al'ays the conduct 'hich is to be obser"ed. t is not a concrete ob%ect like a car. n a contract of sale, the ob%ect is the deli"ery of the ob%ect and not the ob%ect itself. •
The pro"isions on ob%ect ho'e"er blur the distinction • bet'een the ob%ect of the contract, the prestation, and the ob%ect of the prestation. Accordin& to >rof. ?alane, these pro"isions are not fatal thou&h. Re=stes o" O&:e#t
1.
the ob%ect must be 'tn te #o$$er#e o" $an+ either already e+istin& or in potency (Art. 134B)
11
the immediate and most pro+imate purpose of the
Githin the #o$$er#e o" $an means that the ob%ect is capable of appropriation and transmission •
The term “n oten#* ” means that the ob%ect 'ill come into e+istence in the future •
contract the essential reason 'hich impels
the contractin& parties to enter into it and 'hich e+plains and %ustifies the creation of the obli&ation throu&h such contract
The cause is different from consideration.
enerally, in reciprocal contracts particularly sales, the sale of future thin&s is allo'ed. Bor e+ample, it is possible to sell the future har"est of a farm. •
The comin& into bein& of the future thin& is a suspensi"e condition. •
Empt"o re" speratae is a conditional sale. There is a suspensi"e condition. f the future thin& does not come into e+istence, then there is no contract of sale. •
Consderaton in the An&lo
al'ays be "aluable or capable of pecuniary estimation. Case, on the other hand, need not be material at all, and may consist in a moral satisfaction for the promissor. Re=stes o" Case 1. t $st e8st 2. t $st &e tre 3. t $st &e l#t (ause is different from moti"e. Case is the pro+imate 'hy 'hile $otve is the
•
Empt"o spe" is the sale of a hope. "en if
the future thin& does not materiali8e, the buyer must pay since the buyer is takin& a chance. #i.e. sale of lotto ticket$. Pope is a present thin&. ome future thin&s are not allo'ed to be ob%ects of the prestation. Te la' does not allo' #ontra#ts on "tre nertan#e. •
2.
the ob%ect must be 7ICIT+ or not be contrary to la', morals, &ood customs, public policy or public order (Art. 134B)
3.
f the ob%ect is impossible, then the contract is vod "or la#; o" #aseD
Art. 137 does not talk of super"enin& impossibility 'hich is a mode of e+tin&uishment
mpossibility under Art. 137 must be actual and contemporaneous 'ith the makin& of the contract.
4.
the ob%ect must be deter$nate as to ts ;nd and deter$na&le as to ts =antt* (Art. 134) The ob%ect need not be indi"iduali8ed. must be determinate as to its kind or species
ike failure of or lack of ob%ect, the failure of cause has
an effect on the contract. I" tere s no #ase or te #ase s lle%al+ ten te #ontra#t s vod.
lackin&, the contract is not "oid. merely voda&le.
The contract is
Art#le 1350. n onerous contracts the cause is understood to be, for each contractin& party, the prestation or promise of a thin& or ser"ice by the other in remuneratory ones, the ser"ice or benefit 'hich is remunerated and in contracts of pure beneficence, the mere liberality of the benefactor. GRQ >alre o" $otve as a %eneral rle does not a""e#t te #ontra#t. KCQ otve a""e#ts te #ontra#t 'en 1. the moti"e becomes a suspensi"e condition or !. the reali8ation of the moti"e is the cause for the contract and there is an inter"enin& serious mistake of fact
t
The ;uantity of the ob%ect may be indeterminate, so lon& as the ri&ht of the creditor is not rendered illusory. •
5.
/: A 'ants to sell his house for >=0 F because A is mo"in& to (anada. ? is 'illin& to buy the house for >=0 F. n this case, the cause for A is the >=0 F 'hile the cause for ? is the house. A2s moti"e is to dispose of the house 'hich he does not need since A is &oin& to (anada.
This is unlike the lack of consent. Ghen consent is
the ob%ect must be oss&le (Art. 134)
•
ultimate 'hy
the ob%ect must be trans$ss&le This is actually a redundancy since this is already in the re;uisite of bein& 'ithin the commerce of man. •
n onerous contracts, the cause is the prestation or promise of a thin& or ser"ice by the other party. •
t has been held that, as a mort&a&e is an accessory contract, its cause or consideration is the "ery cause or consideration of the principal contract, from 'hich it recei"es its life, and 'ithout 'hich it cannot e+ist as an independent contract #(hina ?ank ". ichauco$. •
n remuneratory contracts, the cause is the ser"ice or benefit 'hich is remunerated . •
A re$nerator* #ontra#t is one 'here a party &i"es somethin& to another because of some ser"ice or benefit &i"en or rendered by the latter to the former, 'here such ser"ice or benefit 'as not due as a le&al obli&ation. •
3. CAS o" te H The cause of a contract is the “ '* o" te #ontra#t”
n %rattos #ontra#ts, the cause is the mere liberality of the benefactor. •
bern.carrasco
12
Art#le 1351. The particular moti"es of the parties in enterin& into a contract are different from the cause thereof. Art#le 1352. (ontracts 'ithout cause, or 'ith unla'ful cause, produce no effect 'hate"er. The cause is unla'ful if it is contrary to la', morals, &ood customs, public order or public policy. Art#le 1353. The statement of a false cause in contracts shall render them "oid, if it should not be pro"ed that they 'ere founded upon another cause 'hich is true and la'ful. Art#le 1354. Althou&h the cause is not stated in the contract, it is presumed that it e+ists and is la'ful, unless the debtor pro"es the contrary. Art#le 1355. +cept in cases specified by la', lesion or inade;uacy of cause shall not in"alidate a contract, unless there has been fraud, mistake or undue influence. 4. !elver* "or real #ontra#ts 5. >or$ "or "or$al #ontra#ts Art. 135=. (ontracts shall be obli&atory, in 'hate"er form they may ha"e been entered into, pro"ided all the essential re;uisites for their "alidity are present. Po'e"er, 'hen the la' re;uires that a contract be in some form in order that it may be "alid or enforceable, or that a contract be pro"ed in a certain 'ay, that re;uirement is absolute 9 indispensable.
0n!y an abso!%te or %n%a!"f"ed acceptance of a def"n"te offer man"fests t$e consent necessary to perfect a contract 5Art"c!e #8#C( 1ew ,"/"! ,ode6. 0nce a contract "s s$own to $a/e been cons%mmated or f%!!y performed by t$e part"es t$ereto( "ts eG"stence and b"nd"ng effect can no !onger be d"sp%ted. +A1F / ,A RATIO
Art. #88. W$en one of t$e part"es "s %nab!e to read( or "f t$e contract "s "n a !ang%age not %nderstood by $"m( and m"sta)e or fra%d "s a!!eged( t$e person enforc"ng t$e contract m%st s$ow t$at t$e terms t$ereof $a/e been f%!!y eGp!a"ned to t$e former. +$e ob!"gat"on to s$ow t$at t$e terms of t$e contract $ad been f%!!y eGp!a"ned to t$e party w$o "s %nab!e to read or %nderstand t$e !ang%age of t$e contract( w$en fra%d or m"sta)e "s a!!eged( de/o!/es on t$e party see)"ng to enforce "t. ,A30 / ,A RATIO
Tolentno Art. 135= pro"ides for TG@ (A 'here form is absolute 9 indispensable, namely: (1) Ghen the form is essential to the "alidity of the - (2) Ghen the - is unenforceable unless it is in a certain form, such as those under the Statte o" >rads #SO>$ 4: A - ha"in& the essential re;uisites of Art. 1317 'ill be "alid as bet'een the parties 'hate"er the form it may ha"e been entered into Re=stes nder Art. 131 1. (onsent of the contractin& parties !. @b%ect certain ')c is the sub%ect matter of liti&ation 3. (ause of the obli&ation ')c is established Te "or$altes re=red &* la' tree %ros
RATIO
are #lass"ed nto
#1$ ad esent"a- ad solemnitatem those ')c are re;uired for the "alidity of the - #!$ those re;uired to make the © effecti"e as a&ainst 3rd parties, such as those mentioned in Arts. 135E 9 1357 #3$ formalities ad probat"onem those re;uired for the purpose of pro"in& the e+istence of a ©, such as those pro"ided in the @B
01F Y32 / ,A @n& may not ha"e si&ned the ticket ne"ertheless, he is bound by such stipulation the same bein& part of the contract of carria&e, "alid 9 bindin& upon the passen&er re&ardless of lack of kno'led&e or assent.
3t "s a contract of ad$es"on w$ere"n one party "mposes a ready made contract for t$e ot$er party( t$e p!ace t"c)et "n ,AB. S%c$ contracts are not ent"re!y pro$"b"ted. +$e one w$o ad$eres to t$e contract "s free to reect "t ent"re!y( "f $e ad$eres $e g"/e consent.
,ontracts w$c are abso!%te!y s"m%!ated or f"ct"t"o%s are "neG"stent and n%!! & /o"d ab "n"t"o. 'AF21PA / F01PA'ES RATIO
%t"es m%st comp!y w7©s entered "nto w$ere pro/"s"ons t$ereof are not contrary to '7M7F,707.
G. >OR O> CONTRACTS 135<-135 CAPTR 3 - >or$ o" Contra#ts Art#le 135<. (ontracts shall be obli&atory, in 'hate"er form they may ha"e been entered into, pro"ided all the essential re;uisites for their "alidity are present. Po'e"er, 'hen the la' re;uires that a contract be in some form in order that it may be "alid or enforceable, or that a contract be pro"ed in a certain 'ay, that re;uirement is absolute and indispensable. n such cases, the ri&ht of the parties stated in the follo'in& article cannot be e+ercised. #1!E7a$ Art#le 135B. f the la' re;uires a document or other special form, as in the acts and contracts enumerated in the follo'in& article, the contractin& parties may compel each other to obser"e that form, once the contract has been perfected. This ri&ht may be e+ercised simultaneously 'ith the action upon the contract. #1!E6a$ Art#le 135. The follo'in& must appear in a public document: #1$ Acts and contracts 'hich ha"e for their ob%ect the creation, transmission, modification or e+tin&uishment of real ri&hts o"er immo"able property sales of real property or of an interest therein are &o"erned by articles 103, o. !, and 105 #!$ The cession, repudiation or renunciation of hereditary ri&hts or of those of the con%u&al partnership of &ains #3$ The po'er to administer property, or any other po'er 'hich has for its ob%ect an act appearin& or 'hich should appear in a public document, or should pre%udice a third person
WE'01 / ,A
bern.carrasco
13
#$ The cession of actions or ri&hts proceedin& from an act appearin& in a public document. All other contracts 'here the amount in"ol"ed e+ceeds fi"e hundred pesos must appear in 'ritin&, e"en a pri"ate one. ?ut sales of &oods, chattels or thin&s in action are &o"erned by articles, 103, o. ! and 105. @T: >urpose of form in Art. 1357 is to pre%udice or to affect third persons. 1. 4C: #any$ Tere s no need "or a se#"# "or$+ &t tere $st stll &e so$e $an"estaton o" #onsent /(>T@: Ghen the 'ritten form is re;uired
4. n so far as the donor is concerned, the donation is not accepted unless he)she is notified of such acceptance. Art. E7. + + + f the "alue of the personal property donated e+ceeds fi"e thousand pesos, the donation 9 the acceptance shall be made in 'ritin&. @ther'ise, the donation shall be "oid. Tolentno+ R B4Q • A donation of personal prop. e+ceedin& >5 thou in "alue must AGA be made in 'ritin&, 9 accepted also in 'ritin&. •
The document of donation 9 the acceptance need not be public instruments but may simply be pri"ate documents.
•
Ghen the "alue does not e+ceed >5 thou, a donation may be mare orally or in 'ritin&.
•
f donation is made orally, there must be simultaneous deli"ery.
•
f there is no simultaneous deli"ery, the donation is "oid unless made in 'ritin&. ?CT in this case, the la' does not re;uire that that 'hen the donation is made in 'ritin&, the acceptance should also be in 'ritin&.
2. SPCIA7 >OR a) "or valdt* f it not 'ritten, the same is "oid. +amples are donations #Arts. E7, E6$, antichresis #Art. !13$, interest in a loan #Art. 165=$, sale of land by an a&ent #Art. 17E$, contribution of immo"ables in a partnership #Art.
1EE3$ Art. E6. n order that the donation of an immo"able may be "alid, it must be made in a public document, specifyin& therein the property donated 9 the "alue of the char&es ')c the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done durin& the lifetime of the donor. f the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, 9 this step shall be noted in both instruments. Tolentno • f the donation of an immo" 'as not made in a public instrument, the donee cannot brin& an action to compel the donor to e+ecute a public instrument of donation under Art. 135E. •
Art. 135E applies only to -s ')c "alidly e+ist, 9 cannot be held applicable to a case 'here the form is re;uired in order to make it "alid
•
A public instrument is not necessary in cases of onerous donations bec. they are &o"erned by the rules on contracts.
•
Title to immo" prop. does not pass fr. the donor to the donee until 9 unless:
1. t as &een a##eted n a &l# nstr$ent<<<'hether in the deed of donation itself or on a separate public instrument. olemn 'ords of acceptance are not necessary. 2. Te donor 'as dl* not"ed tereo"--ecessary that formal notice is &i"en to the donor 9 the fact that due notice has been &i"en must be noted in the instruments containin& the offer to donate 9 that sho'in& the acceptance. Then 9 only then is the donation perfected 3. Te a##etan#e $st &e $ade drn% te l"e o" te donorD if not made before the donor2s death, it is ')o effect.
bern.carrasco
Tolentno Art. 135< pro"ides for TG@ (A 'here form is absolute 9 indispensable, namely: Ghen the form is essential to the "alidity of 1) the 2) Ghen the - is unenforceable unless it is in a certain form, such as those under the tatute of Brauds #@B$ 4A 4C: A - ha"in& the essential re;uisites of Art. 1317 'ill be "alid as bet'een the parties 'hate"er the form it may ha"e been entered into Re=stes nder Art. 131 1. (onsent of the contractin& parties 2. @b%ect certain ')c is the sub%ect matter of liti&ation 3. (ause of the obli&ation ')c is established Tolentno •
A donation of personal prop. e+ceedin& >5 thou in "alue must AGA be made in 'ritin&, 9 accepted also in 'ritin&.
•
The document of donation 9 the acceptance need not be public instruments but may simply be pri"ate documents.
•
Ghen the "alue does not e+ceed >5 thou, a donation may be made orally or in 'ritin&.
•
f donation is made orally, there must be simultaneous deli"ery.
•
f there is no simultaneous deli"ery, the donation is "oid unless made in 'ritin&. ?CT in this case, the la' does not re;uire that that 'hen the donation is made in 'ritin&, the acceptance should also be in 'ritin&.
14
Instan#es 'en te la' re=res F to &e n a #ertan "or$ to &e vald Art. 1EE3. A contract of partnership is "oid, 'hene"er immo"able property is contributed thereto, if an in"entory of said property is not made, si&ned by the parties, 9 attached to the public instrument. Art. 167. The depositary cannot demand that the depositor pro"es his o'nership of the thin& deposited. e"ertheless, should he disco"er that the thin& has been stolen 9 'ho its true o'ner is, he must ad"ise the latter of the deposit. f the o'ner, in spite of such information, does not claim it ')in the period of one month, the depositary shall be relie"ed of all responsibility by returnin& the thin& deposited to the depositor. f the depositary has reasonable &rounds to belie"e that the thin& has not been la'fully ac;uired by the depositor, the former may return the same. Art. !13. The amount of the principal 9 of the interest shall be specified in 'ritin& other'ise, the contract of antichresis shall be "oid.
PROIS IS ORIGINA7PROIS IS CO77ATRA7 OR IN!PN!NT f the promisor becomesf the promise is collateral to the primarily liable for thea&reement of another 9 the payment of a debt, thepromisor becomes thereby merely a promise is not ')in thesurety, the promise falls ')in the statute @B 9 hence, it should be in 'ritin&
5c6 an agreement made "n cons"derat"on of marr"age( ot$er t$an a m%t%a! prom"se to marry 5Art. #RN8 5c66 ,A?IRA +amples of this 'ould be a marria&e settlement, donation propter nuptias •
A mutual promise to marry, 'hether or not in 'ritin&, is unenforceable bec. it is a personal act.
Tolentino: Ghen the marria&e is a mere incident, 9 not the end to be attained by the a&reement, the contract is not in consideration of marria&e, 9 oral e"idence can pro"e the a&reement "en 'hen marria&e is a consideration, but in addition thereto, there is some other consideration sufficient to support the oral a&reement, this may be pro"ed by ')o a 'ritin&. •
Art. 73<<)
a
#ontra#t
5a6 an agreement that by its terms is not to be performed w"t$"n a year from t$e ma)"ng t$ereof 5Art. #RN8 5a66 ,A?IRAQ rationale of this: bec. of memory lapse Tolentino: The time be&ins fr. the day the - is entered into, 9 not fr. the time that performance of it is entered upon •
t must appear that the parties intended 'hen they made the - that it should not be performed ')in a year.
•
Ghere no time is fi+ed by the parties for performance, 9 there is nothin& in the a&reement itself to sho' that it cannot be performed ')in a year accordin& to its terms 9 the understandin& of the parties, the a&reement is @T ')in the @B.
5b6 a spec"a! prom"se to answer for t$e debt( defa%!t or m"scarr"age of anot$er 5Art. #RN8 5b66
.d0 an agreement for the sale of goods- chattels or things in action- at a price not less than &<==- unless the buyer accepts and recei"es part of such goods and chattels- or the e"idenceor some of them- of such things in action- or pay at the time some part of the purchase money1 but when a sale is made by auction and entry is made by the auctioneer in his sales boo)at the time of sale- of the amount and )ind of property soldterms of sale- price- names of the purchasers and person on whose account the sale is made- it is a sufficient memorandum (Art. 1403 (d)) ?AL4A Coses n a#ton refer to incorporeal property Tolentino: The re;uirement of a 'ritten instrument or a memo for sales of personal prop. for a price not less than >500, co"ers both TA? 9 TA? personal prop. To &rn% a sales transa#ton 'n te oeraton o" te SO>+ te r#e o" te ro. sold $st &e at least P500. •
A F "or te sale o" %oods+ #attels or tn%s n a#ton s re$oved "r. te oeraton o" te SO> 'ere te &*er ACCPTS E RCI?S art o" s# %oods E #attels. •
Neter 'll te SO> al* 'ere tere as &een art a*$ent o" te r#ase r#e. •
vden#e to rove an oral F o" sale o" real estate $st &e dsre%arded " t$el* o&:e#tons are $ade to ts ntrod#ton. •
A #ons$$ated sale o" real ro. s not #overed &* te SO>. •
,A?IRA contracts
+amples of this are &uaranty 9 surety
Tolentno This has been defined as an undertakin& by a person, not before liable, for the purpose of securin& or performin& the same duty for ')c the ori&inal debtor continues to be liable. • The test as to 'eter a ro$se s 'n te statte has been said to lie in the ans'er to the ;uestion 'hether the promise is an ori&inal or a collateral one:
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5e6 an agreement of !ease for a per"od of more t$an # year( or t$e sa!e of rea! property or of an "nterest t$ere"n 5Art. #RN8 5e66 5f6 a representat"on as to t$e cred"t of a 8rd person 5Art. #RN8 5f66 Tolentno
15
The representations are limited to those ')c operate to induce the person to 'hom they are made to enter into contractual relations ') the third person, but not to those representations tendin& to induce action for the benefit of the person makin& them. •
5g6 no eGpress tr%sts concern"ng an "mmo/ab!e or any "nterest t$ere"n may be pro/ed by paro! e/"dence 5Art. #RR8 6 ,A?IRA
BAVIERA:Q: What is the ratio for the SOF?
This pro"ision is not "ery clear as to the meanin& of “parol.” trictly, parol e"idence rule presupposes a 'ritten a&reement. t is much better to make it unenforceable. •
A: To pre"ent fraud. The problem ') oral contracts is that they are easy to fabricate 9 per%ure the 'itnesses.
Q: An ora! contract for t$e !ease of property for years. W$at "s t$e stat%s of t$e O? A: nforceable for the 1st year, unenforceable for the !nd year
Q: An ora! O for t$e sa!e of !and. +$e b%yer s%ffered damages w$en t$e se!!er ref%sed to comp!y w7 $"s prom"se e/en "f t$e b%yer offered to pay. B cons"gned t$e payment. So w$at>s %p? A: Acceptance of benefits #e"en if it 'as %ust an earnest money$ takes it a'ay ')in the ambit of the tatute of Brauds. To allo' a O ')c has been partially performed to become unenforceable 'ould be to allo' a party to perpetrate fraud.
Q: W$en "s t$ere a wa"/er of t$e S04? A: n the ff. instances: • Ghen there has been acceptance of benefits • Ghen there is failure to ob%ect to the introduction of oral e"idence
Q: Se!!er $as ad/ert"sed a spec"f"c obect for sa!e. A b%yer comes to b%y 5s%s...e$ ano pa nga bang g"nagawa ng b%yer?6. Se!!er says KB%)as )a na !ang b%ma!")( a!as 9:NN na e$TL +o s$ow good fa"t$( b%yer depos"ts NN.NN as earnest money. 3s t$e sa!e enforceab!e e/en "f t$ere>s no comp!"ance w7 t$e S04? A: @@ naman.
>ertinent Bamily (ode >ro"isions Art. EE. The marria&e settlements 9 any modification thereof shall be in 'ritin&, si&ned by the parties 9 e+ecuted before the celebration of the marria&e. They shall not pre%udice third persons unless they are re&istered in the local ci"il re&istry 'here the marria&e contract is recorded as 'ell as in the proper re&istries of property. Art. 73. These donations are &o"erned by the rules on ordinary donations established in Title of ?ook of the (i"il (ode, insofar as they are not modified by the follo'in& articles.
'A0 S0O /. SABAYSABAY+ 13 SC 135 RATIO
erfected © < w$ere t$e E offered t$e EEs payment of separat"on pay w$c offer was %ncond"t"ona!!y accepted( a © was perfectedH ©s t$o ora!!y made are b"nd"ng on t$e part"es.
GA77AR!O v. IAC+ 155 SC 134 RATIO
eg"strat"on of a pr"/ate deed of sa!e by t$e "s %na%t$or"Jed and does not !end /a!"d"ty to t$e defect"/e pr"/ate doc of sa!eH t of a /endee of reg>d prop "n a pr"/ate doc.
TolentnoQ 4ationale of the @B: Oral #ontra#ts lead to "rad n te "l"ll$ent o" o&l%atons+ or to "alse test$on*. •
@B applies only to /(CT@4 9 not to completed or e+ecuted -s.
•
A - fallin& under the @B cannot be pro"ed ')o the 'ritin& or a memorandum thereof.
•
@B simply pro"ides for the manner in ')c -s under it shall be pro"ed. t does not make such Os in"alid if not e+ecuted in 'ritin&, but only makes ineffecti"e the action for specific performance.
•
•
Ghere one party has entirely performed his * under an oral -, e;uity 'ould a&ree that all e"idence be admitted to pro"e the alle&ed a&reement. >erformance takes it out of the operation of the statute. Durin& trial, if the parties to the action make no ob%ection to the admissibility of oral e"id to support the - co"ered by the statute, 9 thereby permits such - to be pro"ed orally, it 'ill be %ust as bindin& upon the parties as if it had been reduced to 'ritin&.
n order that a @T)FF@4ADCF shall meet the re;uirements of the @B, it must contain: • the names of the parties • the terms 9 conditions of the a&reement • a description of the sub%ect matter sufficient to render it capable of identification • the date 9 place of the makin& of the a&reement • si&nature of the party assumin& the obli&ation
bern.carrasco
C. >or Greater ""#a#* or Convenen#e or "or Re%stra<* te "ollo'n% $st aear n a &l# nstr$ent
1.
acts and contracts 'hich ha"e for their ob%ect the creation, transmission, modification or e+tin&uishment of real ri&hts o"er immo"able property sales of real property or of an interest therein &o"erned by Arts. 103 #!$ and 105
2.
the cession, repudiation or renunciation of hereditary ri&hts or of those of the con%u&al partnership of &ains
3.
the po'er to administer property, or any other po'er 'hich has for its ob%ect an act appearin& or 'hich should appear in a public document, or should pre%udice a 3rd person
4.
the cession of actions or ri&hts proceedin& from an act appearin& in a public document
(ontracts enumerated in Art. 1357 are vald as &et'een te #ontra#tn% artes even 'en te* ave not &een red#ed to &l# or rvate 'rtn%s. +cept in certain cases 'here public instruments and re&istration are re;uired for the "alidity of the contract itself, the le&ali8ation of a contract by means of a public 'ritin& and its entry in the re&ister are not essential solemnities or re;uisites for the "alidity of the contract as bet'een the •
16
contractin& parties, but are re;uired for the purposes of makin& it effecti"e as a&ainst 3 rd person.
instrument has made a mistake and the other kno's it and conceals the truth from him.
Art. 135E &i"es the contractin& parties the coerci"e po'er to reciprocally compel the e+ecution of the formalities re;uired by la', as soon as the re;uisites for the "alidity of the contracts are present. . Re"or$aton o" Instr$ents
The mistake of 1 party must refer to the contents of the instrument and not the sub%ect mater or the principal conditions of the a&reement. n the latter case, an action for annulment is the proper remedy.
•
@nce the minds of the contractin& parties meet, a "alid contract e+ists, 'hether the a&reement is reduced to 'ritin& or not. There are instances ho'e"er, 'here in reducin& their a&reements to 'ritin&, the true intention of the contractin& parties are not correctly e+pressed in the document, either by reason of mistake, fraud, ine;uitable conduct or accident. t is in such cases that reformation of instruments is proper. The action for such relief rests on the theory that the parties came to an understandin&, but in reducin& it to 'ritin&, throu&h mutual mistake, fraud or some other reason, some pro"ision 'as omitted or mistakenly inserted, and the action to chan&e the instrument so as to make it conform to the contract a&reed upon. •
•
f ! parties a&ree upon the mort&a&e or pled&e of real property or personal property, but the instrument states that the property is sold absolutely or 'ith a ri&ht of repurchase, reformation is proper. #) te roo" o" $tal $sta;e $st &e #lear and #onvn#n% •
7$tatons o" Re"or$aton 1. Re"or$aton s not roer n te "ollo'n% #ases a$ simple donations inter "i"os 'herein no condition is imposed b$ 'ills c$ 'hen the real a&reement is "oid
Re"or$aton !stn%sed "ro$ Annl$ent Re"or$aton Annl$ent presupposes that there is a "alid if the minds of the parties did e+istin& contract bet'een thenot meet, or if the consent of parties, and only the documenteither one 'as "itiated by or instrument 'hich 'as dra'n "iolence or intimidation or up and si&ned by them does not mistake or fraud, so that no real correctly e+press the terms of and "alid contract 'as made their a&reement &i"es life to it upon certainin"ol"es a complete nul lification corrections of the contract 'hile reformation &i"es life to it upon certain corrections.
2. @o $a* as; "or re"or$aton a) I" te $sta;e s $tal+ reformation may be ordered at the instance of either party or his successors in interest &) I" te $sta;e s not $tal+ reformation may be ordered upon petition of the in%ured party or his heirs and assi&ns 3. ""e#t o" en"or#n% an a#ton Ghen one of the parties has brou&ht an action to enforce the instrument, he cannot subse;uently ask for its reformation. •
Oeraton and ""e#t o" Re"or$aton 4: 4eformation relates back to, and takes effect from the time of its ori&inal e+ecution, especially as bet'een the parties.
Re=stes o" Re"or$aton 1. tere $st ave &een a $eetn% o" te $nds on te #ontra#t 2. te nstr$ent or do#$ent evden#n% te #ontra#t does not e8ress te tre a%ree$ent &et'een te artes 3. te "alre o" te nstr$ent to e8ress te a%ree$ent $st &e de to $sta;e+ "rad+ ne=ta&le #ond#t or a##dent Re=stes o" sta;e a) tat te $sta;e s one o" "a#t Ghene"er an instrument is dra'n 'ith the o intention of carryin& an a&reement pre"iously made, but 'hich, due to mistake or inad"ertence of the draftsman or clerk, does not carry out the intention of the parties, but "iolates it, there is a &round to correct the mistake by reformin& the instrument. &) tat t 'as #o$$on to &ot artes A 'ritten instrument may be reformed 'here there is a mistake on 1 side and fraud or ine;uitable conduct on the other, as 'here 1 party to an •
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I. Interretaton o" Contra#ts (13B0-13B) Ghere the parties ha"e reduced their contract into • 'ritin&, the contents of the 'ritin& constitutes the sole repository of the terms of the a&reement bet'een the parties. Ghate"er is not found in the 'ritin& must be understood as 'ai"ed and abandoned. enerally, therefore, there can be no e"idence of the terms of the contract other than the contents of the 'ritin&, unless it is alle&ed and pro"ed that the intention of the parties is other'ise. Ghen the terms of the a&reement are so clear and e+plicit that they do not %ustify an attempt to read into it any alle&ed intention of the parties, the terms are to be understood literally %ust as they appear on the face of the contract. •
Ghen the true intent and a&reement of the parties is established, it must be &i"en effect and pre"ail o"er the bare 'ords of the 'ritten a&reement. •
n order to %ud&e the intention of the contractin& parties, their contemporaneous and subse;uent acts shall be principally considered. •
Ghen a &eneral and a particular pro"ision are inconsistent, the particular pro"ision 'ill control. •
Ghere the instrument is susceptible of ! interpretations, 1 'hich 'ill make it in"alid and ille&al, and another 'hich 'ill make it "alid and le&al, the latter interpretation should be adopted. •
17
n the construction of an instrument 'here there are se"eral pro"isions or particulars, such a construction is, if possible, to be adopted as 'ill &i"e effect to all. •
Ghen there is doubt as to the meanin& of any particular lan&ua&e, it should be determined by a consideration of the &eneral scope and purpose of the instrument in 'hich it occurs. •
An instrument may be construed accordin& to usa&e in order to determine its true character. •
The party 'ho dra's up a contract in 'hich obscure terms or clauses appear, is the one responsible for the obscurity or ambi&uity they must therefore be construed a&ainst him. •
Ghen it is absolutely impossible to settle doubts by the rules established in the precedin& articles, and the doubts refer to incidental circumstances of a &ratuitous contract, the least transmission of ri&hts and interest shall pre"ail. f the contract is onerous, the doubt shall be settled in fa"or of the &reatest reciprocity of interests. •
f the doubts are cast upon the principal ob%ect of the contract in such a 'ay that it cannot be kno'n 'hat may ha"e been the intention or 'ill of the parties, the contract shall be null and "oid. •
9. Lnds o" Contra#ts as to ?aldt* 1. ?ald and ,ndn% 2. ?ald &t de"e#tve a. rescissible - #1370<76 1161$ b. "oidable #1360<10! 13!ECTI? CONTRACTS
1.
Res#ss&le Contra#ts
A res#ss&le #ontra#t is a contract 'hich is "alid because it contains all the essential re;uisites prescribed by la', but 'hich is defecti"e because of in%ury or dama&e to either of the contractin& parties or to 3rd persons, as a conse;uence of 'hich it may be rescinded by means of a proper action for rescission. •
Res#sson is a remedy &ranted by la' to the contractin& parties, and e"en to 3rd persons, to secure the reparation of dama&es caused to them by a contract, e"en if the same should be "alid, by means of the restoration of thin&s to their condition prior to the celebration of the contract. •
Re=stes o" Res#sson
a6 t$e contact m%st be a resc"ss"b!e contract %nder Art. #8U# or Art. #8U: Te "ollo'n% #ontra#ts are res#ss&le -
". t$ose entered "nto by g%ard"ans w$ene/er t$e w$om t$ey represent s%ffer !es"on by more t$an V of t$e /a!%e of t$"ngs w$"c$ are t$e obect t$ereof 5Art. #8U# 5#66
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4escission shall not take place 'ith respect to contracts appro"ed by the court #Art. 137=$.
As a rule, 'hen a &uardian enters into a contract in"ol"in& the disposition of the 'ard2s property, the &uardian must secure the appro"al of the &uardianship court. A &uardian is only authori8ed to mana&e the estate of the 'ard. A &uardian has no po'er to dispose of any portion of the estate 'ithout appro"al of the court. f more than acts of mere administration are in"ol"ed, %udicial appro"al is necessary.
n case of sale, mort&a&e, or other encumbrance of any portion of the estate 'hich does not ha"e %udicial appro"al is an unenforceable contract #Art. 103 #1$$. Therefore, Art. 1371 #1$ is limited to contracts 'hich constitute mere acts of administration #i.e. the purchase of e;uipment for the culti"ation of lands, purchase of materials for repair of buildin&s, etc.$.
7eson s ver* d""#lt to al* n ra#t#e Bor e+ample, A is the a&ent of ?. ? o'ns land 'orth >10 F. A sells the land for >E F. Brom the facts, the lesion suffered by ? is 30W. n practice, are you sure that >10 F is the fair market "alue of the land. Ghat if the situation is ur&ent and that property must be disposed of ri&ht a'ayI Another e+ample, A is the a&ent of ?. ? o'ns land 'orth >10 F. ( 'ants to buy the land. ( is 'illin& to pay > E F N lump sum payment. D is 'illin& to pay > 10 F but on installments.
"". t$ose agreed %pon "n representat"on of absentees( "f t$e absentee s%ffers !es"on by more t$an V of t$e /a!%e of t$"ngs w$"c$ are t$e obect t$ereof 5Art. #8U# 566 4escission shall not take place 'ith respect to contracts appro"ed by the court #Art. 137=$. •
As a rule, 'hen the le&al representati"e of an absentee enters into a contract in"ol"in& the disposition of the absentee2s property, he must secure the appro"al of the court. •
A le&al representati"e is only authori8ed to mana&e the estate of the absentee. Pe has no po'er to dispose of any portion of the estate 'ithout appro"al of the court. f more than acts of mere administration are in"ol"ed, %udicial appro"al is necessary. •
n case of sale, mort&a&e, or other encumbrance of any portion of the estate 'hich does not ha"e %udicial appro"al is an unenforceable contract #Art. 103 #1$$. •
The refore, Art. 1371 #!$ is limited to contracts 'hich constitute mere acts of administration #i.e. the purchase of e;uipment for the culti"ation of lands, purchase of materials for repair of buildin&s, etc.$. •
""". t$ose %nderta)en "n fra%d of cred"tors w$en t$e cred"tors cannot "n any ot$er manner co!!ect t$e c!a"ms d%e t$em 5Art. #8U# 5866 This is an e+ception to the principle of relati"ity of contracts. •
(reditors, after ha"in& pursued the property in possession of the debtor to satisfy their claims may e+ercise all the ri&hts and brin& all the actions of the latter •
18
for the same purpose, sa"e those 'hich are inherent in his person they may also impu&n the acts 'hich the debtor may ha"e done to defraud them #Art. 11EE$. (reditors are protected in cases of contracts intended to defraud them #Art. 1313$. •
The follo'in& pro"ision in sales are e+amples of rescissible contracts declared by la' N Arts 15!=, 153, 1537, 1536, 150, 155=, 15=0, 15=E, 1=56. •
payments made in a state of insol"ency for obli&ations to 'hose fulfillment the debtor could not be compelled at the time they 'ere effected #Art. 137!$ •
n determinin& 'hether or not a certain con"eyance is fraudulent, the ;uestion in e"ery case is 'hether the con"eyance 'as a bona fide transaction or trick and contri"ance to defeat creditors, or 'hether it conser"es to the debtor a special ri&ht.
(1)
All contracts by "irtue of 'hich the debtor alienates property by &ratuitous tile are presumed to ha"e been entered into in order to defraud creditors, 'hen the donor did not reser"e sufficient property to pay all debts contracted before the donation #Art. 137E, 1st par$.
te erson de$andn% res#sson $st (2) &e a&le to retrn 'atever e $a* &e o&l%ed to restore " res#sson s %ranted (Art. 135+ 1 st ar)
•
•
te erson as;n% "or res#sson $st ave no oter le%al $eans to o&tan rearaton "or te da$a%es s""ered &* $ (Art. 133)D
Alienations by onerous title are also presumed fraudulent 'hen made by persons a&ainst 'hom some %ud&ment has been rendered in any instance or some 'rit of attachment has been issued. The decision or attachment need not refer to the property alienated, and need not ha"e been obtained by the party seekin& the rescission #Art. 137E, ! nd par$. •
,ad%es o" >rad
1.
the fact that the consideration of the con"eyance is inade;uate
2.
a transfer made by a debtor after suit has be&un and 'hile it is pendin& a&ainst him
3.
a sale upon credit by an insol"ent debtor
4.
e"idence of lar&e indebtedness or complete insol"ency
5. the transfer of all or nearly all of his property by a debtor, especially ' hen he is insol"ent or &reatly embarrassed financially 6.
the fact that the transfer is made bet'een father and son 'hen there are present any of the abo"e circumstances
7.
the failure of the "endee to take e+clusi"e possession of all the property
"/. t$ose w$"c$ refer to t$"ngs %nder !"t"gat"on "f t$ey $a/e been entered "nto by t$e defendant w"t$o%t t$e )now!edge and appro/a! of t$e !"t"gants or of competent %d"c"a! a%t$or"ty 5Art. #8U# 5R66 Art. 1371 #$ refers to a contract e+ecuted by the defendant in a suit in"ol"in& the o'nership or possession of a thin&, 'hen such contract is made 'ithout the kno'led&e and appro"al of the plaintiff or court. •
As in the case of a contract in fraud of creditors, the remedy of rescission in this case is &i"en to a 3rd person 'ho is not a party to the contract. The purpose is to protect the plaintiff. •
/. a!! ot$er contracts spec"a!!y dec!ared by !aw to be t$e s%bect of resc"ss"on 5Art. #8U# 566
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This re;uisite is only applicable if the one 'ho suffers the lesion is a party to the contract. This re;uisite does not apply 'hen a defrauded creditor resorts to accion pauliana. (3) te tn%s '# are te o&:e#t o" te #ontra#t $st not ave assed le%all* to te ossesson o" a 3rd erson a#tn% n %ood "at (Art. 135+ 2 nd ar)
Ghoe"er ac;uires in bad faith the thin&s alienated in fraud of creditors, shall indemnify the latter for dama&es suffered by them on account of the alienation, 'hene"er, due to any cause, it should be impossible for him to return them #Art. 1377,1st par$.
f there are ! or more alienations,the 1st ac;uirer shall be liable 1 st, and so on successi"ely #Art. 1377, !nd par$. (4) te a#ton "or res#sson $st &e &ro%t 'tn te res#rtve erod o" 4 *ears (Art. 13) Art. 1161. The po'er to rescind obs. s implied in reciprocal ones, in case on of the obli&ors should not comply ') 'hat is incumbent upon him. The in%ured party may choose bet'een the fulfillment 9 the rescission of the ds., ') the payment of dama&es in either case. Pe may also seek rescission, e"en after he has chosen fulfillment, if the latter should become impossible. The ct. shall decree the rescission claimed, unless there be %ust cause authori8in& the fi+in& of a period. This is understood to be ')o pre%udice to the rts of third persons 'ho ha"e ac;uired the thin&, in accordance ') Arts. 1375 9 1377 9 the Fort&a&e a'. Art. 116!. n case both parties ha"e committed a breach of the obli&ation, the liability of the 1 st infractor shall be e;ually tempered bye the cts. f it cannot be det. Ghich of the parties 1st "iolated the O, the same shall be deemed e+tin&uished, 9 each shall bear his o'n dama&es. TolentnoQ S$lartes &et'een Rsn nder Art. 111 E Art. 130 #1$ both presuppose -s "alidly entered into 9 e+istin&, 9 #!$ both re;uire mutual restitution 'hen declared proper. !""eren#es: #1$ 4sn under 1161 may be demanded only by party to the -, under 1370X by 3> pre%udiced by the - #!$ 4sn under 1161 may be denied 'hen there is sufficient reason to %ustify e+tension of time to perform, under 1370X such reason does @T affect rt. To ask for 4sn
19
#3$ on
2. ?OI!A,7 Contra#ts A "oidable contract s a #ontra#t n '# all o" te essental ele$ents "or valdt* are resent+ &t te ele$ent o" #onsent s vtated eter &* la#; " le%al #aa#t* o" 1 o" te #ontra#tn% artes or &* $sta;e+ volen#e+ nt$daton+ nde n"len#e+ or "rad. Loidable contracts are &ndn% nless te* are annlled &* a roer a#ton #ort. Te* are ss#et&le to #on"r$aton. There is a difference bet'een confirmation and ratification: Con"r$aton is the process of curin& the defect of a • "oidable contract. Rat"#aton is the process of curin& contracts 'hich are defecti"e because they 'ere entered into 'ithout authority. •
The follo'in& #ontra#ts are voda&le or annlla&le, e"en thou&h there may ha"e been no dama&e to the contractin& parties:
a. t$ose w$ere one of t$e part"es "s "ncapab!e of g"/"ng consent to a contract. The follo'in& cannot &i"e consent to a contract #Art. 13!E$: . ne$an#ated $nors Ghere necessaries are sold and deli"ered to a minor or other person 'ithout capacity to act, he must pay a reasonable price therefore. ecessaries include e"erythin& that is indispensable for sustenance, d'ellin&, clothin&, and medical attendance. (ontracts effected by minors 'ho ha"e already passed the a&e of puberty and adolescence and are near the adult a&e, 'hen they pretend to ha"e already reached the a&e of ma%ority, 'hile in fact they ha"e not, are "alid, and cannot be permitted after'ards to e+cuse themsel"es from compliance 'ith obli&ations assumed by them or seek their annulment. This is in consonance 'ith the rules of estoppel. # Mercado /. Esp"r"t%$. Po'e"er in BraganJa /( e @"!!a , the ( said that the misrepresentation of an incapacitate person does not estop him from denyin& that he 'as of a&e, or from assertin& that he 'as under a&e, at the time he entered into the contract. Accordin& to >rof. ?alane, this "ie' is "ery lo&ical. f the minor is too youn& to enter into contracts, he is too youn& to be estopped.
"". "nsane or demented persons( and deaf m%tes w$o do not )now $ow to wr"te
(ontracts entered into durin& a lucid inter"al are "alid. (ontracts a&reed to in a state of drunkenness or durin& a hypnotic spell are "oidable #Art. 13!7$. . tose 'ere te #onsent s vtated &* $sta;e+ volen#e+ nt$daton+ nde n"len#e or "rad
bern.carrasco
A contract 'here consent is &i"en throu&h mistake, "iolence, intimidation, undue influence or fraud is "oidable (Art. 1330). a) $sta;e n order that mistake may in"alidate consent, it should refer to the substance of the thin& 'hich is the ob%ect of the contract, or to those conditions 'hich ha"e principally mo"ed one or both parties to enter into the contract (Art. 1331+ 1 st ar). Fistake as to the identity or ;ualification of one of the parties 'ill "itiate consent only 'hen such identity or ;ualifications ha"e been the principal cause of the contract (Art. 1331+ 2 nd ar). A simple mistake of account shall &i"e rise to its correction #Art. 1331, 3 rd par$. Ghen one of the parties is unable to read, or if the contract is in a lan&ua&e not understood by him, and mistake or fraud is alle&ed, the person enforcin& the contract must sho' that the terms thereof ha"e been fully e+plained to the former #Art. 133!$. There is no mistake if the party alle&in& it kne' the doubt, contin&ency or risk affectin& the ob%ect of the contract #Art. 1333$ Futual error as to the le&al effect of an a&reement 'hen the real purpose of the parties is frustrated, may "itiate consent #Art. 133$. Fisrepresentation by a 3 rd person does not "itiate consent, unless such misrepresentation has created substantial mistake and the same is mutual #Art. 13!$. Fisrepresentation made in &ood faith is not fraudulent but may constitute error #Art. 133$. &) volen#e There is "iolence 'hen in order to 'rest consent, serious or irresistible force is employed (Art. 1335+ 1 st ar). Liolence shall annul the obli&ation, althou&h it may been employed by a 3rd person 'ho did not take part in the contract (Art. 133<). Re=stes o" ?olen#e i. irresistible physical force is employed ii. the force is the determinin& cause for &i"in& consent #) nt$daton There is intimidation 'hen one of the contractin& parties is compelled by a reasonable and 'ell<&rounded fear of an imminent and &ra"e e"il upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to &i"e his consent (Art. 1335+ 2 nd ar). Re=stes o" Int$daton . te treat $st &e te deter$nn% #ase "or %vn% #onsent . te treatened a#t s n:st and nla'"l A threat to enforce one2s claim throu&h competent authority, if the claim is %ust or le&al, does not "itiate consent (Art. 1335+ 4 t ar).
The threat to enforce a ri&ht, should not be aimed at a result 'hich is contrary to la' or morals, or 'hich is un%ust and contrary to &ood faith. Althou&h it is la'ful to e+ercise ri&hts, it is not al'ays
20
la'ful to use them for purposes different from those for 'hich they 'ere created. Thus, althou&h it is la'ful to report crimes, the threat to report it may be illicit if the purpose is not to cooperate in the disco"ery and prosecution of the crime, but to obtain some prestation from the culprit 'hich other'ise could not be obtained and 'hich does not constitute indemnity for dama&es for the crime committed. Thus, the threat to report a murderer if he does not a&ree to pay a certain sum to one 'ho sa' the offense committed, 'ould constitute intimidation, because he is made to a&ree to somethin& 'hich has no relation to his crime.
Ghen one of the parties is unable to read, or if the contract is in a lan&ua&e not understood by him, and mistake or fraud is alle&ed, the person enforcin& the contract must sho' that the terms thereof ha"e been fully e+plained to the former (Art. 1332). Tere s "rad 'en+ throu&h insidious 'ords or machinations of one of the contractin& parties, the other is induced to enter into a contract 'hich, 'ithout them, he 'ould not ha"e a&reed to (Art. 133) deceit or dolo causante. Re=stes o" >rad
The rule re&ardin& marria&e is different. Ghere a man marries under the threat to obstruct his admission to the bar by filin& char&es a&ainst him for immorality committed by him, he cannot a"oid the marria&e on the &round of duress.
""". t$e t$reat "s rea! and ser"o%s Bor e+ample the threat must be to kill you or burn your house and not merely to pinch you.
"/. +$e t$reat prod%ces a we!!
2ESS is that de&ree of constraint or dan&er sufficient to
1.
fraud is employed by 1 party on the other #Arts. 13!,
13$
2.
the other party 'as induced to enter into the contract #Art.1337$
3.
the fraud must be serious #Art. 13$
4.
there is dama&e or in%ury caused
Bailure to disclose facts, 'hen there is a duty to re"eal them, as 'hen the parties are bound by confidential relations, constitutes fraud (Art. 133) The usual e+a&&erations in trade, 'hen the other party had an opportunity to kno' the facts, are not in themsel"es fraudulent (Art. 1340). A mere e+pression of an opinion does not si&nify fraud, unless made by an e+pert and the other party has relied on the former2s special kno'led&e (Art. 1341). Fisrepresentation by a 3 rd person does not "itiate consent, unless such misrepresentation has created substantial mistake and the same is mutual (Art. 1342).
o"ercome the mind and 'ill of the person or ordinary firmness. ?olen#e Int$daton Duress actually inflicted threatened or impendin& +ternal nternal er"es to pre"ent an act fromoperates upon the 'ill, induces bein& done performance of an act >hysical force employed isnfluences the mind to choose irresistible bet. t'o e"ils @r of such de&ree as that "ictimnfluences the e+pression of the has no other choice but to 'ill, inhibits the true intent and submit makin& of manifest somethin& apparently as that of the person 'ho consents uch force is the determinin&intimidation caused the consent cause in &i"in& consent to be &i"en Threatened act un%ust or unla'ful Threat must be real or serious producin& reasonable and 'ell< &rounded fear
Fisrepresentation made in &ood faith is not fraudulent but may constitute error (Art. 1343). n order that fraud may make a contract "oidable, it should be serious and should not ha"e been employed by both contractin& parties (Art.1344+ 1 st ar). In#dental "rad only obli&es the person employin& it to pay dama&es (Art. 1344+ 2 nd ar). f a 3rd person should commit "iolence or intimidation on 1 of the contractin& parties and this "itiates the contractin& party2s consent, then the contract may be annulled (Art. 133<). ?y analo&y, if a 3 rd person should e+ert undue influence on 1 of the contractin& parties and this "itiates the consent of the contractin& party, then the contract may be annulled. Po'e"er, if the 3rd party commits fraud, dama&es is the only remedy unless the fraud committed by the 3 rd person has created a mutual substantial mistake (Art. 1342).
d6 %nd%e "nf!%ence
Rles Re%ardn% ?oda&le Contra#ts
There is undue influence 'hen a person takes improper ad"anta&e of his po'er o"er the 'ill of another, depri"in& the latter of a reasonable freedom of choice. The follo'in& circumstances shall be considered: the confidentiality, family, spiritual and other relations bet'een the parties, or the fact that the person alle&ed to ha"e been unduly influenced 'as sufferin& from mental 'eakness, or 'as i&norant or in financial distress (Art. 133B).
a)
e6 4ra%d
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@o"dab!e contracts are effect"/e %n!ess set
as"de.
b)
+$e /a!"d"ty of a /o"dab!e contract can on!y be assa"!ed "n a s%"t for t$at p%rpose 5".e. comp!a"nt or co%nterc!a"m6. The action for annulment of contracts may be
instituted by all 'ho are thereby obli&ed principally or subsidiarily. Po'e"er, persons 'ho are capable cannot alle&e the incapacity of those 'ith 'hom they
21
contracted nor can those 'ho e+erted intimidation, "iolence, or undue influence, or employed fraud, or caused ,mistake base their action upon these fla's of the contract (Art. 13B). The action for annulment shall be brou&ht 'ithin years. This period shall be&in: nt$daton from the time the defect of the consent ceases volen#e from the time the defect of the consent ceases nde n"len#e from the time the defect of the consent ceases $sta;e from the time of the disco"ery of the mistake "rad from the time of the disco"ery of the fraud Re=stes o" Consent vtated &* 1. it shd be ntell%ent, 'ith e+act notion by error or mistake of the matter to 'hc it refers !. it shd be "ree "iolence, intimidation, or undue influence 3. it shd be sontaneos by fraud The 4 *ear res#rton erod to annl #ontra#ts entered into by minors or other incapacitated persons shall be&in from the time the &uardianship ceases (Art. 131+ 4 t ar). An obli&ation ha"in& been annulled, the contractin& parties shall restore to each other the thin&s 'hich ha"e been the sub%ect matter of the contract, 'ith their fruits, and the price 'ith its interest, e+cept in cases pro"ided by la' (Art. 13+ 1st ar). n obli&ations to render ser"ice, the "alue thereof shall be the basis for dama&es (Art. 13+ 2 nd ar). Ghen the defect of the contract consists in the incapacity of 1 of the parties, the incapacitated person is not obli&ed to make any restitution e+cept insofar as he has been benefited by the thin& or price recei"ed by him (Art. 13)D M @at " te Tn% to ,e Retrned s 7ost
a. 'oss d%e to 4a%!t of efendant to pay t$e p!a"nt"ff /a!%e of t$e t$"ng !oss( fr%"ts "f any( "nterest b. 'oss d%e to a 4ort%"to%s E/ent or d%e to a 8rd party
&) " te a#ton to annl as res#r&ed (Art. 131) #) 'en te tn% '# s te o&:e#t o" te #ontra#t s lost tro% te "alt or "rad o" te erson 'o as a r%t to nsttte te ro#eedn%s (Art. 1401+ 1 st ar) d) estoel ?oda&le #ontra#ts #an &e #on"r$ed. Con"r$aton e+tin&uishes the action to annul a
"oidable contract #Art. 136!$. (onfirmation #leanses te #ontra#t "ro$ all ts
de"e#ts "ro$ te $o$ent t 'as #onsttted #Art. 136=$. Re=stes o" Con"r$aton
i.
tat te #ontra#t s a voda&le or annlla&le #ontra#t
ii.
tat te rat"#aton s $ade 't ;no'led%e o" te #ase "or nllt*
iii.
tat at te t$e te rat"#aton s $ade+ te #ase o" nllt* as alread* #eased to e8st (onfirmation may be effected e+pressly or tacitly. t is understood that there is tacit confirmation if, 'ith kno'led&e of the reason 'hich renders the contract "oidable and such reason ha"in& ceased, the person 'ho has a ri&ht to in"oke it should e+ecute an act 'hich necessarily implies an intention to 'ai"e his ri&ht #Art. 1363$. ?oda&le #ontra#ts #an &e # on"r$ed onl* &* te art* 'ose #onsent 'as vtated. (onfirmation does not re;uire the conformity of the
contractin& party 'ho has no ri&ht to brin& the action for annulment #Art. 1365$. (onfirmation may be effected by the &uardian of the
incapacitated person #Art. 136$.
Defendant has to pay the plaintiff "alue of the
thin& loss fruits if any
c. 'oss d%e to 4a%!t or 4ra%d of !a"nt"ff The plaintiff loses the ri&ht to annul #Art. 101$. There is fault on the part of the plaintiff once the
plaintiff re&ains capacity.
d. 'oss w"t$o%t 4a%!t on t$e !a"nt"ff>s art (ommentators ha"e a difference of opinion < the ri&ht to annul is e+tin&uished unless the plaintiff offers to pay the "alue of the ob%ect at the time of loss the plaintiff is entitled to annul 'ithout ha"in& to pay anythin&.
(3) nen"or#ea&le Contra#ts An unenforceable contract s a #ontra#t '# #annot &e en"or#ed &* a roer a#ton n #ort+ nless te* are rat"ed+ &e#ase eter te* are entered nto 'tot or n e8#ess o" atort* or te* do not #o$l* 't te Statte o" >rads or &ot te #ontra#tn% artes do not ossess te re=red le%al #aa#t*. ,A?IRAQ M Atort* to sell oral &t sale s n 'rtn% A: Loid. M Atort* to sell n 'rtn% &t sale o" land s not A: Cnenforceable under tatute of Brauds.
As lon& as 1 of the contractin& parties does not restore 'hat in "irtue of the decree of annulment he is bound to return, the other cannot be compelled to comply 'ith 'hat is incumbent upon him (Art. 1402).
M @* sold loan &e n 'rtn% "or ant#ress to &e n 'rtn% A: Antichresis takes a lon& time. oan is "alid if not in 'ritin& but antichresis not
Te a#ton "or annl$ent 'll not roser n te "ollo'n%
Donation propter nuptias: rules on ordinary donations 'ould apply.
a) " te #ontra#t as &een #on"r$ed (Art. 132)
M ,*er E seller orall* a%reed "or Seller to sell land. ,*er sold ala* E ' te $one* "r. ts sale ,*er %ave to Seller. Seller re"sed.
bern.carrasco
22
A: eller can refuse. Pe did not recei"e any benefit yet.
'ithin a year. Bor practical re asons, the contract must be in 'ritin& since the parties mi&ht for&et. Accordin& to >rof. ?alane, the (2s interpretation is incorrect. f the obli&ation cannot be finished 'ithin 1 year, the contract is not 'ithin the tatute of Brauds because of partial performance.
M K sa' an advertse$ent "or te sale o" a #ar "or P200T. K oned 6 E te latter noted te order. 6 "aled to delver te #ar. Can K en"or#e te o&l%aton A: ale of mo"able Y >500 should be in 'ritin& under the tatute of Brauds or else unenforceable.
. a se#al ro$se to ans'er "or te de&t+ de"alt or $s#arra%e o" anoter
f person promises to lend money to another, then refuses to lend, no cause of action. f a bank does it, enforceable.
The test as to 'hether a promise is 'ithin the statute has been said to lie in the ans'er to the ;uestion 'hether the promise is an ori&inal or collateral one. f the promise is an ori&inal one or an independent one, that is, if the promisor becomes thereby primarily liable for the payment of the debt, the promise is not 'ithin the statute.
"!ag /s. 3A, Badges of fra%d: 'hether sale to children 'as paid • not re&istered until after decision in the ;uasi< delict case • parents continued to e+ercise acts of o'nership o"er land • relationship bet'een "endor 9 "endee. •
f the promise is collateral to the a&reement of another and the promisor becomes merely a surety or &uarantor, the promise must be in 'ritin&.
This does not fall s;uarely under the presumption of fraud bec. there 'as a sale before %ud&ment in 16E. f sale 'as after, presumed to be fraudulent.
. an a%ree$ent $ade n #onsderaton o" $arra%e+ oter tan a $tal ro$se to $arr*
M K roosed to &* 6s ose E lot. K ad te P100T ten #onsttted a #attel $ort%a%e on 6s ose E lot "or te nad &alan#e. Art. 144 CC la' %ves seller te #o#e o" re$edes. A: cannot choose to rescind bec. alternati"e remedy of foreclosure is a"ailable.
A mutual promise to marry does not fall • 'ithin the tatute of Brauds since they are not made in 'ritin&. A&reements made in consideration of marria&e other than the mutual promise to marry are 'ithin the tatute of Brauds.
Te "ollo'n% #ontra#ts are nen"or#ea&le nless te* are rat"ed (Art. 1403)
5a6 t$ose entered "nto "n t$e name of anot$er person by # w$o $as been g"/en no a%t$or"ty or !ega! representat"on( or w$o $as acted beyond $"s powers o one may contract in the name of another 'ithout
bein& authori8ed by the latter, or unless he has by la' or ri&ht to represent him #Art. 131E, 1 st par$. A contract entered into in the name of another by one
'ho has no authority or le&al representation, or 'ho has acted beyond his po'ers, shall be unenforceable, unless it is ratified, e+pressly or impliedly, by the person on 'hose behalf it has been e+ecuted, before it is re"oked by the other contractin& party. #Art. 131E, !nd par$. Ghen a person enters into a contract for and in the
name of another, 'ithout authority to do so, the contract does not bind the latter, unless he ratifies the same. The a&ent, 'ho has entered into the contract in the
name of the purported principal, but 'ithout authority from him, is liable to 3 rd persons upon the contract.
5b6 t$ose t$at do not comp!y w"t$ t$e Stat%te of 4ra%ds . an a%ree$ent tat &* ts ter$s s not to &e er"or$ed 'tn a *ear "ro$ te $a;n% tereo" n Babao /. ereJ , the ( interpreted the phrase “not be to performed 'ithin a year” to mean that the obli&ation cannot be finished 'ithin 1 year. >rof. ?alane does not a&ree 'ith this interpretation. Accordin& to >rof. ?alane the phrase “not to be performed 'ithin a year” should mean that the obli&ation cannot be&in
bern.carrasco
n ,abag%e /. A%G"!"o , the father of the &room promised to impro"e his dau&hterrof. ?alane disa&rees 'ith the (. Accordin& to >rof. ?alane, the father of the &room should be able to sue since there 'as partial performance. v. an a%ree$ent "or te sale o" %oods+ #attels or tn%s n a#ton+ at a r#e not less tan P500+ nless te &*er a##ets and re#eves art o" s# %oods and #attels+ or te evden#e+ or so$e o" te$+ o" s# tn%s n a#ton+ or a* at te t$e so$e art o" te r#ase $one*D &t 'en a sale s $ade &* a#ton and entr* s $ade &* te a#toneer n s sales &oo;+ at te t$e o" sale+ o" te a$ont and ;nd o" roert* sold+ ter$s o" sale+ r#e+ na$es o" te r#asers and erson on 'ose a##ont te sale s $ade+ t s a s""#ent $e$orand$ The
re;uirement of a 'ritten instrument or a memorandum for sales of personal property for a price not less than >500, co"ers both tan&ible and intan&ible personal property. t also co"ers the assi&nment of choses in action.
Ghere a contract for the sale of &oods at a price not less
than >500 is oral, and there is neither partial payment or deli"ery, receipt, and acceptance of the &oods, the contract is unenforceable, and cannot be the basis of an action for the reco"ery of the purchase price, or as the basis of an action for dama&es for breach of the a&reement. Ghere there is a purchase of a number of articles 'hich
taken separately does not ha"e a price of >500 each, but taken toðer, the price e+ceeds >500, the operation of the statute of frauds depends upon 'hether there is a sin&le inseparable contract or a se"eral one. f the contract is entire or inseparable, and the total price e+ceeds >500,
23
the statute applies. ?ut if the contract is separable, then each article is taken separately.
. a##etan#e o" &ene"ts (Art. 1405) if there has been performance on 1 side and
v. an a%ree$ent o" lease "or a erod o" $ore tan 1 *ear+ or te sale o" real roert* or o" an nterest teren As lon& there is a sale of real property, the sale must
be in 'ritin&. There is no minimum. An oral contract for a supplemental lease of real
property for lon&er period than 1 year is 'ithin the tatute of Brauds. An a&reement to enter into an a&reement is also 'ithin the tatute of Brauds. v. a reresentaton as to te #redt o" a 3rd erson A 'ants to borro' money from (. ( does not kno' A.
the other side accepts, then the tatute of Brauds is not applicable. (&) Te Statte o" >rads ales onl* to e8e#tor* #ontra#ts and not to tose '# ave &een e8e#ted n 'ole or n art. TO7NTINO Prose o" te Statte o" >rads To pre"ent fraud 9 per%ury in the enforcement of obli&ations dependin& for their e"idence upon the unassisted memory of 'itnesses by re;uirin& certain enumerated contracts 9 transactions to be e"idenced by a 'ritin& si&ned by the party to be char&ed. Statte O" >rads simply pro"ides for the manner in ')c contracts under it shall be pro"ed
( &oes to ? to ask about A2s credit standin&. ? says that A2s credit standin& is satisfactory e"en thou&h ? kno's that A is insol"ent. Cnder Art. 103, ( can &o after ? if ?2s representation 'as in 'ritin&.
such contracts are "alid but effect of noncompliance ') the @B is simply that no action can be pro"ed unless the re;uirement is complied ')
not applicable to contracts either totally or partially performed but only to e+ecutory contracts
tatute of Brauds. There is no contract bet'een ( and ?. ? did not bind himself to pay (. Ghat 'e ha"e here is an unenforceable tort.
neither applicable to actions ')c are neither for specific performance of the contract nor for the "iolation thereof
Accordin& to >rof. ?alane, “a representation as to the
>rof. ?alane thinks that this does not belon& in the
credit of a 3rd person” should be replaced by Art. 13. Art. 13 pro"ides that no e+press trusts concernin& an immo"able or any interest therein may be pro"ed by parol e"idence. Ghen the e+press trust concerns an immo"able or an
interest therein, a 'ritin& is necessary to pro"e it. This 'ritin& is not re;uired for the "alidity of the trust. t is re;uired only for purposes of proof. Ghen the property sub%ect to the e+press trust, ho'e"er is not real estate or an interest therein, then it may be pro"ed by any competent e"idence, includin& parol e"idence. (#) tose 'ere &ot artes are n#aa&le o" %vn% #onsent to a #ontra#t either party or his representati"e can enforce the
contract into a "oidable contract N "oidable at the option of the party 'ho has not ratified the latter, therefore, can enforce the contract a&ainst the party 'ho has ratified. @r, instead, of enforcin& the contract, the party 'ho
has not ratified it may ask for annulment on the &round of his incapacity. 2 Prn#les n te Statte o" >rads (a) Parol evden#e s not ad$ss&le. o'ever+ tere are 2 'a*s o" &rn%n% t ot. i. failure to ob%ect by the opposin& la'yer 'hen parol e"idence is used #Art. 105$
contract under @B cannot be pro"ed ')o the 'ritin& or a memorandum thereof
note or $e$orand$J e"idence of the a&reement used to sho' the intention of the parties
may consist of any kind of 'ritin&, fr. a solemn deed to a mere hasty note or memorandum in books 9 papers, may be in ink or in pencil, typed or printed
meets re;uirements of tatute of Brauds if it contains:
names of the parties
terms 9 conditions of the a&reement
a description of the sub%ect matter sufficient to render it capable of identification
date 9 place of the makin& of the a&reement
si&nature of the party assumin& the obli&ation
contract unless it has been pre"iously ratified. The ratification by 1 party, ho'e"er, con"erts the
partial performance must be duly pro"ed
Ghere there is a sale of a number of articles ')c separately do not ha"e a price of >500 each but ')c in their a&&re&ate ha"e a total price e+ceedin& >500, the operation of the @B depends upon 'hether there is a sin&le inseparable contract or a se"eral one. f the contract is entire or inseparable, @B applies. f separable, then each article is taken separately, 9 the application of the @B depends upon its price. oral e"idence to pro"e a consummated sale of real property < allo'ed by the tatute of Brauds “representation as to credit of a third person” < limited to those ')c operate to induce the person to 'hom they are made to enter into contractual relations ') the 3 rd person, but @T to those representations tendin& to induce action for the benefit of the person makin& them.
f there is no ob%ection, then parol e"idence
is admitted.
bern.carrasco
24
An oral contract for a supplemental lease of property for a period lon&er than 1 year < also ')in @B. An a&reement to enter into an a&reement is also ')in the @B 9 the promise is not enforceable unless the statute is satisfied. !e"ense o" te Statte o" >rads personal to the party to the a&reement like minority, fraud, mistake, 9 similar defenses ')c may be asserted or 'ai"ed by the party affected cannot be set up by stran&ers to the a&reement
As bet'een the parties to a contract, "alidity cannot
be &i"en to it by estoppel if it is prohibited by la' or is a&ainst public policy.
96 any person can "n/o)e t$e contract>s n%!!"ty "f "ts %r"d"ca! effects are fe!t as to $"m The defense of ille&ality of co ntracts is not a"ailable to
3rd persons 'hose interests are not directly affected #Art. 1!1$.
4. ?od Contra#ts A "oid contract s an a&solte nllt* and rod#es no e""e#t+ as " t ad never &een e8e#ted or entered nto. Te "ollo'n% #ontra#ts are ne8stent and vod "ro$ te &e%nnn% (Art. 140)
(a)
t$ose w$ose ca%se( obect or p%rpose "s contrary to !aw( mora!s. Food c%stoms( p%b!"c order or p%b!"c po!"cy
(b) t$ose w$"c$ are abso!%te!y s"m%!ated or f"ct"t"o%s (c)
t$ose w$ose ca%se or obect d"d not eG"st at t$e t"me of t$e transact"on ,alane: Art. 106 #3$ should not be “did not e+ist”. 4ather, the correct phrase should be “could not come into e+istence” because there can be a contract o"er a future thin&.
5d6 t$ose w$ose obect "s o%ts"de t$e commerce of men 5e6 t$ose w$"c$ contemp!ate an "mposs"b!e ser/"ce
ar" e!"cto #n e=al %lt$
A. f it constitutes a criminal offense 1. f both parties are in pari delicto o action for specific performance can prosper on either side #Art. 111, 1 st par$. o action for restitution can prosper on either side #Art. 111, 1 st par$. A shabu supplier supplies shabu to the shabu dealer. f the shabu supplier does not deli"er the shabu, the dealer cannot file an action for specific performance. f the shabu dealer pays the shabu supplier but
fails to deli"er the shabu, the shabu deli"er cannot reco"er 'hat he has paid. !. f only 1 party is &uilty o action for specific performance can prosper on either side. •
An action for restitution 'ill be allo'ed only if the innocent party demands. •
5f6 t$ose w$ere t$e "ntent"on of t$e part"es re!at"/e to t$e pr"nc"pa! obect of t$e contract cannot be ascerta"ned
?. f it does not constitute a criminal offense
5g6 t$ose eGpress!y pro$"b"ted or dec!ared /o"d by !aw
1. f both parties are in pari delicto o action for specific performance can prosper on either side #Art. 111, 1st par$.
Cara#terst#s o" ?od Contra#ts
#6 t$e contract prod%ces no effect w$atsoe/er e"t$er aga"nst or "n fa/or of anyone 6 a %dgment of n%!!"ty wo%!d be mere!y dec!aratory "en 'hen the contract is "oid o r ine+istent, an action
is necessary to declare its ine+istence, 'hen it has already been fulfilled. obody can take the la' into his o'n hands. The inter"ention of a competent court is necessary to declare the absolute nullity of the contract and to decree the restitution of 'hat has been &i"en under it. The %ud&ment of nullity 'ill retroact to the "ery day 'hen the contract 'as entered into.
86 "t cannot be conf"rmed or rat"f"ed R6 "f "t $as been performed( t$e restorat"on of w$at $as been g"/en "s "n order 6 t$e r"g$t to set t$e contract>s n%!!"ty cannot be wa"/ed D6 t$e act"on for n%!!"ty "s "mprescr"pt"b!e 5Art. #R#N6
bern.carrasco
o action for restitution can prosper on
either side #Art. 111, 1 st par$. !. f only 1 party is &uilty o action for specific performance can prosper on either side. •
An action for restitution 'ill be allo'ed only if the innocent party demands. •
8#etons to ar" e!"cto: nterest paid in e+cess of the interest allo'ed by the usury la's may be reco"ered by the debtor, 'ith interest therefrom from the date of payment (Art. 1413) Ghen money is paid or property deli"ered for an ille&al purpose, the contract may be repudiated by 1 of the parties before the purpose has been accomplished, or before any dama&e has been caused to a 3rd person. n such case, the courts may, if the public interest 'ill thus be subser"ed, allo' the party repudiatin& the contract to reco"er the money or property (Art. 1414). Ghere 1 of the parties to an ille&al contract is incapable of &i"in& consent, the courts, may, if the interest of %ustice so demands, allo' reco"ery of money or property deli"ered by the incapacitated person (Art. 1415).
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Ghen the a&reement is not ille&al per se but is merely prohibited, and the prohibition by la' is desi&ned for the protection of the plaintiff, he may, if public policy is enhanced, reco"er 'hat he has paid or deli"ered (Art. 141<).
Ghen the la' fi+es, or authori8es the fi+in& of the ma+imum number of hours of labor, and a contract is entered into 'hereby a laborer undertakes to 'ork lon&er than the ma+imum thus fi+ed, he may demand additional compensation for ser"ice rendered beyond the time limit (Art. 141).
Ghen the price of any article or commodity is determined by statute, or by authority of la', any person payin& any amount in e+cess of the ma+imum price allo'ed may reco"er such e+cess (Art. 141B).
Ghen the la' sets or authori8es the settin& of a minimum 'a&e for laborers, and a contract is a&reed upon by 'hich a laborer accepts a lo'er 'a&e, he shall be entitled to reco"er the deficiency (Art. 141).
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