Review Notes_contracts, Natural Obligations and Damages 2014

8/10/2019 Review Notes_contracts, Natural Obligations and Damages 2014

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REVIEW NOTES ON THE LAW ON CONTRACTS, NATURAL OBLIGATIONS & DAMAGES

Atty. Janet Grace B. Dal!ay"#a$rer%

B!ne!! La', Re(e'er

)ART * + LAW ON CONTRACTS

General Provisions (Arts.1305-1317)

1. Defne Contracts.- It is a meeting o minds between two (2) persons whereby one binds himsel, with respect to theother, to give something or render some service. (rt.1!"#)

$%ample&', a law stdent inormed that he needed a bicycle which he wold se in going to and rom *an 'eda+ollege o aw-labang. told ' that he may get the bicycle in s room. as there a perected contract/

0 es. he contract is one o commodatm, where one party loaned something to another. In thiscase, the bicycle was loaned by to '.

2. Di3erence between contract and obligation+ontract is considered as the case and obligation as an e3ect. here are however fve (#) sorces oan obligations and the most important among them is contracts. +onse4ently, there can be an

obligation withot a contract, bt there can be no contract withot a reslting obligation.

!. hat are the elements o a contract/

a) $ssential 5 +onsent, certain ob6ect and case or consideration.*pecial elements 5 present only in certain contracts sch as delivery in real contracts or rom insolemn ones

b) 7atral 5 derived rom the natre o the contracts and ordinarily accompany the same. he lawpresmes them, althogh the contracting parties can e%clde them i they so desire. hs,warranty against eviction is implied in a contract o sale. arranty o 8idden Deects.

c) ccidental 5 are those that e%ist only when the parties e%pressly provide or them or the prposeo limiting or modiying the normal e3ects o the contract, $%amples o these are conditions,terms and modes.

9. hat are the di3erent classes o contracts/

a) ccording to their relation to other contracts&1. :reparatory 5 those that have or their ob6ect the establishment o a condition In law

which is necessary as a preliminary step towards the celebration o another sbse4entcontract. $%amples 5 partnership, agency

2. :rincipal 5 those which can sbsist independently rom other contracts and whose prposecan be lflled by themselves. $%amples 5 sale, lease

!. ccessory 5 those that can e%ist only as a conse4ence o, or in relation with, anotherprior contract. $%ample 5 pledge, mortgage.

b) ccording to their perection&

1. +onsensal 5 those that are perected by the mere agreement o the parties, e%amples 5sale, lease2. real 5 those which re4ire not only the consent o the parties or their perection, bt also thedelivery o the ob6ect by one party to the other.

c) ccording to their orm&1. +ommon or inormal 5 those that does not re4ire some particlar orm. $%amples 5 loan, lease2. *pecial or ormal 5 those that re4ire some particlar orm. $%amples 5 donation, chattel

mortgage.

d.) ccording to their prpose&1. ranser o ownership. $%ample- sale2. +onveyance o se. $%ample 5 commodatm!. ;endition o services. $%ample 5 agency

e) s to the natre o the obligation1.


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!. ;emneratory or remnerative or one that case o which is the service or beneft whichis remnerative.

g) ccording to ris> involved&1. +ommtative 5 those where each o the parties ac4ires an e4ivalent o his

prestation and sch e4ivalent is pecniary appreciable and already determined rommoment o the celebration o the contract. $%ample- lease

2. leatory 5 those where each o the parties has to accont the ac4isition o an e4ivalent

o his prestation bt sch e4ivalent, althogh pecniarily appreciable is not yetdetermined, at the moment o the celebration o the contract, since it depends pon thehappening o n ncertain event, ths charging the parties with the ris> o loss or gain.$%ample 5 insrance.

h) ccording to their designation or names&1. 7ominate 5 those that have their own individality and are reglated by special provisions

o law. $%amples 5 sale and lease2. Innominate 5 those which lac> individality and are not reglated by special provision o

law

#. Di3erent :hases or stages in the ie or 'iology o a +ontract&a) :reparatory or :reliminary 5 frst stage o the contract where negotiation transpiresb) :erection 5 birth o the contractc) +onsmmation 5 lfllment o the prpose or which the contract was constitted.

?. Five (5) Most Essential characteristics of A Contract&1. bligatory @orce or character o contract 5 the principal that once a contract is perected, it shall

be obligatory pon both o the contracting parties. (rt.11#A,1!1#,1!#?)2. tonomy o +ontracts 5 principle that the contracting parties are ree to enter into a contract and

to establish sch stiplations, clases, terms and conditions as they may deem convenient savethose that are contrary to law, pblic policy, morals, good cstoms and pblic order. (rt.1!"?)

7ote& lso >nown as @reedom to +ontract or @reedom to *tiplate. $%ercise o police power othe *tate may limit also said right. *aid right is a constittional right as laid down nder*ection 1", rticle III o the 1ABC :hilippine +onstittion.

!. tality o +ontracts 5 an essential 4ality o the contacting parties whereby the contract mstbind both o them validity or compliance o the contracts shold not be let to the will o one o

them. (rt.1!"B)

7ote& he determination o perormance may be let to a third person whose decision shall bebinding when commnicated to the contracting parties. (rt. 1!"A) *ch obligation shallnot be obligatory i it is evidently ine4itable. In sch case the cort shall decide what ise4itable nder the circmstances. (rt. 1!1")

Illstration&

* sold his cabinet to ' or :#,""". he parties gave their consent reely to the contract beore itsperection. ter delivery o the cabinet to ' and his payment o the price to *, ' was inormed by 7, hisneighbor that ' paid too mch or the cabinet since he (7), >new o a similar item that is sold or a loweramont. ' now wants to set aside the contract becase he believed he got a bad bargain. Decide.

0 ' may not set aside the contract based on the principle o tality o +ontract.

9.;elativity o +ontracts 5 contracts ta>e e3ect only between the parties, their assigns and heirs.(rt.1!11)0

7otes&0 o be read together with the principle o transmissibility o rights nder rticle 11CB whichprovides that sb6ect to the laws, all rights in virte o an obligation are transmissible, i there hasbeen no stiplation to the contrary.E

$%ceptions&

a. *tiplation por tri - where contract may either avor or pre6dice a third person. ( rt.1!11 par.2)

;e4isites or *tiplation :or tri&

he contracting parties by their stiplation mst have clearly anddeliberately conerred avor pon a third personF

he third person mst have commnicated his acceptance to the obligorbeore its revocation by the by the obligee or the original parties.

he stiplation in avor o the third person shold be a part, not the whole,o the contractF

he avorable stiplation shold not be conditioned or compensated byany >ind o obligation whateverF and

7either o the contracting parties bears the legal representation orathoriGation o the third party or otherwise, the rle on agency will apply.

Illstration&

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and ' entered into a 6oint ventre contract whereby ' agreed to pt p a restarant on the lot o . 7,s neighbor who owned a lot across s lot, learned o the transaction between and '. nticipatingthat many cstomers wold patroniGe the restarant, 7 decided to improve his vacant lot or par>ing. 8eincrred :2",""" or a gardhose and other improvements which he had not yet paid to his contractor.ater, however, and ' mtally cancelled their earlier contract and entered into a new one whereby 'agreed to pt p the restarant on another lot belonging to which was located abot 1"" meters romthe original area. 7 learned o the cancellation o the contract and decided that he wold se and ' ordamages he allegedly sstained by reason thereo. Decide.

0 is not entitled to se and ' or the damages he sstained. his is not a case o a stiplationpor atri, where the parties in a contract deliberately conerred pon a third person a avor or beneft.he beneft that wold have been received by 7 rom the contract between and ' was only incidentaland did not give him the right to recover damages.

b. In contracts creating real rights (rt. 1!12) real right is binding against the whole world

and attaches to the property over which it is e%ercised wherever it goes. ;egistration tothe ;egistry o :roperty (;egistry o Deeds) constittes real right.

Illstration&D obtained a loan rom + amonting to :2"",""". o secre the loan, D mortgaged his lot. + registeredthe mortgage with the ;egister o Deeds. ater, D sold the lot to H who was not aware that the lot wasmortgaged. n the de date o the loan, + demanded payment bt D cold not pay. ccordingly, +decided to oreclose the mortgage on the lot. H, however opposed the oreclosre claiming that he wasnot bond by the mortgage since he was not a party thereto. Decide.

0 H was bond by the mortgage. *bse4ent prchaser is bond by the mortgage registered inthe ;egister o Deeds even i he is not aware o it. he contract herein is one which creates real rightsthereore third persons who come into possession o the ob6ect o contract is bond thereby. (1!12)

c. In contracts entered into to derad creditors (rt. 1!1!)07ote& ;emedy o the creditor is as>ed or rescission o the contract i contract is valid btit is entered to derad the creditor. (*ee rticle 1!B1 paragraph ! o the +ivil +ode. 't icontract is absolte simlated contracts made to derad the creditor, the contract is void.;emedy o the creditor is to as> or the declaration o the nllity o contract considering itis nll and void and has no e3ect at all.

d. In contracts which have been violated at the indcement o a third person (rt. 1!19)

#. +onsensality o +ontracts 5 =enerally, all contracts are perected by consent. ne o the

essential elements o the contract is consent. hs, even i some contracts re4ire other re4isites,all contracts however mst satisy the element o consent. (rt. 1!1#)

Illstration& * sold his only horse to ' or :!",""". he parties agreed that * shall deliver the horse onewee> rom the e%ection o their agreement. ', however, shold pay the price immediately and incertifed chec>. In the place o * and ', it was the cstom that anyone selling a horse shold place ahorseshoe on its eet. Is the seller bond to place a horseshoe on the horse/

0 * is obliged to place a horseshoe on the horse becase the observance o cstom or sage is aconse4ence o entering into a contract. (1!1#)

C. Di3erent >inds o Innominate +ontracts and how they are reglated&a) Do t des 5 I give that yo giveFb) Do t acias 5 I give that yo doFc) @acio t des 5 I do that yo gived) @acio t acias 5 I do that yo do- hese contracts shall be reglated by the stiplation o the parties by the general provisions or

principles o obligations and contracts, by the rles governing the most analogos nominatecontracts, and by the cstom o the place.(rt. 1!"C)Do t des is now considered nominate contract as it is now defned as barterE and governed by

rticle 1?!B.

B. 8ow contracts are perected&a) +onsensal contract 5 by mere consent. (his is the general rle) rt. 1!1#b) ;eal contracts 5 perected by delivery li>e deposit, pledge and commodatm (rt.1!1?)0c) @ormal or solemn contracts 5 here a special orm is re4ired or perection. $%amples a simple

donation intervivos o real property, to be valid it mst be in pblic instrment& rt. C9A.7otes&0 ;eal contracts are perected by actal delivery o the ob6ect. hile there may be meeting o theminds as to the ob6ect and consideration, the contract is not deemed perected ntil sch time as theob6ect is actally delivered.

+onse4ence o :erection&a) he parties are bond to the lfllment o what has been e%pressly stiplated (rt.1!1#) and

compliance thereo mst be in good aith (rt.11#A)b) he parties are also bond to all the conse4ences which, according to their natre, may be in

>eeping with good aith, sage and law.

A.


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he contract entered by a person who is nathoriGed by the principal or i athoriGed bye%ceeded his athority is UEF!"CEA#$E. (*ee rticle 1!"9 paragraph o the +ivil +ode nless dlyratifed by the party he is representing.

1". $ssential ;e4isites o +ontracts (rt. 1!1B)a) +onsent o the contracting partiesFb) b6ect certain which is the sb6ect matter o the contractFc) +ase o the obligation, which is established.

Jinds o elementsa) $ssential elements 5 those withot which contract cannot validly e%ist.

1. +ommon ( consent, ob6ect and case)2. *pecial 5 those not common to all contracts bt is pecliar to certain

contracts. i.e pledge re4ires delivery, donation o real property re4iresormalities

b) 7atral elements 5 those that are presmed to e%ist in certain contracts nless the contraryis e%pressly stiplated. arranty against hidden deects, warranty againsteviction.

c) ccidental elements 5 stiplations, clases, terms and conditions established by the partiesnder the principle o atonomy. (rticle 1!"?)

C!%E& (Arts. 131' 13*)

1. eaning o +onsent 5 signifes concrrence o the will o the contracting parties with respectto the ob6ect and the case, which shall constittes the contract.

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!. In the rle on =$7+, o3erees acceptance given to the athoriGed agent o the principal will bee4ivalent to acceptance given to the o3eror who is the principal. (rt. 1!22)

Illstration& : gave a special power o attorney to to sell :s hose and lot or :2. n ay C, ,prsant to the athority granted to him by :, o3ered to sell the hose and lot to ' at the price o :2. 'accepted the o3er on ay B by sending a letter o acceptance to on sch date, which letter oacceptance was received by on ay 1". n ay 11, : died beore cold inorm him o 's acceptance.as the contract perected/

0 he contract was perected on ay 1" when received the letter o acceptance. n o3er made

throgh an agent is accepted rom the time acceptance is commnicated to him. (1!22)

?. n o3er becomes ine3ective pon death, civil interdiction, insanity or insolvency o either partybeore acceptance is conveyed. (rticle 1!2!) ter the acceptance, principle o relativity applies.

. n Mne 1, * o3ered to sell a specifc generator set to ' or :!"",""". ' sent his letter oacceptance to * on Mne B. n Mne 1", however, * became insolvent. n Mne 12, * received the lettero acceptance. as the contract perected/

0 he contract was not perected becase the insolvency o * occrred beore he came to learn othe acceptance o his o3er. It is well settled rle that an o3er becomes ine3ective pon the insolvencyo either party beore acceptance is conveyed. (1!2!)

C. e an o3er, (rt. 1!2#) $%ample 1& @or sale& !"" s4are meters lot atadislawa or : 9-+ontact Menny, !""A9A#. his is not a defnite o3er. $%ample 2F @or *ale !""s4are meters lot at adislawa *bdivision, 292, +attleya *treet, :hase 1, 'hangin Davao +ity or : 9 non-negotiable. +ontract Nelma, !""A9A#. his is a defnite o3er.

B. dvertisements or bidders are simply invitations to ma>e proposals and the advertiser is notbond to accept the highest or lowest bidder, nless the contrary appears. (rt. 1!2?)

C,A"AC&E"%&C% !F C!%E&

1. Intelligent 5 which means that the person giving consent mst be capacitated. hs a person whois incapacitated de to minority or insanity cannot give intelligent consent.

2. @ree and volntary- which means person who are nder threat and intimidation cannot give reeand volntary consent.

!. +onscios and spontaneos 5 persons nder nde inOence, rad and mista>e cannot givethese characteristics o consent.

&,E $A "E/U"E% &,A& C!%E& MU%& #E &E$$GE& F"EE A 2!$U&A"C!%C!U% A %P!&AE!U%. +onsent is intelligent i the person giving consent iscapable o doing so and is thereore capacitated. It is ree and volntary i it is devoid o orceand intimidation. It is conscios and spontaneos i there is absence o rad, mista>e or error,or nde inOence.

wo (2) classes o voidable contracts&a) hose where one party is incapacitated to give consent. (rt.1!2C)

- now how to write (and read).- hose in the state o drn>enness (rt.1!2B)- hose entered into dring a hypnotic spell- *pecial dis4alifcations (those nder civil interdiction, insolvent etc.)

0 =ardians, agents and e%ector and administrators nless athoriGed by the cort areincapacitated to

enter into a contract o sale nder rticle 19A1 paragraphs 1 to ! becase private interests area3ected. +ontracts entered in violation o this prohibition are only NID'$. he deect can becred by ratifcation.

b) hose where consent o one party has been vitiated. (rts. 1!!"-1!!9)

+ases o Nitiated +onsenta) ista>e (or error) 5 @alse belie abot somethingb) @rad (or deceit) reerring to D +


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- $rror mst be e%csable- he error mst be mista>e o act and not o law. (rt. 1!!1)- tal error as to the legal e3ect o an agreement when the real prpose o the parties is

rstrated may vitiate consent (rt. 1!!9)Illstration&' prchased 1"" pieces o noteboo> rom * at :91.A#. hen ' reached home, he discovered thatthe invoice showed a total amont de o :9,A1# instead o :9,1A#. Is the contract valid/

0he contract is valid. he mista>e is a simple mista>e o accont and does not render the

consent o the parties vitiated. his shall only give rise to correction. ista>e to vitiate consentmst reer to the sbstance o the thing which is the ob6ect o the contract or to a principalcondition which moved the parties to enter into a contract (1!!1) 0he e%cess :C2"."" shold beretrned by '.0

1". ;e4isites or violence to vitiate consent&- $mployment o serios or irresistible orce to secre consent o the other partyF- It mst have been the reason why the contract was perected. (rt. 1!!#)

11. ;e4isites or intimidation to vitiate consent&- ;easonable and well-gronded ear- an imminent and grave evil- e part in the contract.

12. ;e4isites o ness- ignorance- fnancial distress

Illstration&D has been or more than 1" years the personal physician o :, a sic>ly man o C" years. D tal>ed to :almost everyday in the corse o giving medical service to : to convince : to donate his lot to D since Dtold him that he was the only one who cold ta>e care o him. 'ecase o the persistence o D, : fnallysigned the deed o donation o the lot in Ds avor with all the ormalities re4ired by law. Is the deed odonation valid/

0he deed o donation is voidable on the grond o nde inOence. (1!!C)

1!. Jinds o @;


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- he rad shold not have been employed by both o the contracting parties or by thirdpersons.(rt. 1!99)

:ertinent provisions&a) now the act are

not themselves radlent. (rt. 1!9") he law allows certain degree o e%aggeration topromote trade or indstry. +stomers are e%pected to >now how to veriy acts. (+aveatemptor or let the byer beware) Dealers tal> or traders tal> are representations that are notradlent nless they appear on the ace o the contract.

b) isrepresentation by a third person does not vitiate consent, nless sch misrepresentationhas created sbstantial mista>e and mista>e is mtal. s sch contract is voidable on thegrond o mista>e and not rad.

c) isrepresentation made in good aith is not radlent bt may constitte error.(rt. 1!9!)d) eaning o nciental Fra45 (D I7+ID$7$) reers to those incidental deceptions or

misrepresentations employed by one party withot which the other party wold still haveentered into the contract. Incidental rad only obliges the person employing the same to payAMAGE%(rt. 1!99, 2ndparagraph)

Illustration:

, who >new that his ring was embellished with glass, told ' that the embellishment wasemerald. ', who >new that his watch was gold-plated, told that it was made o pre gold.'elieving that s ring was embellished with emerald and , believing that 's watch wasmade o pre gold, then entered into a contract whereby they e%changed their respectivearticles. wee> later, ' discovered that the ring was adorned only with an ordinary glass. +an' as> or annlment o the contract/

0 7either party can as> or annlment since both are gilty o rad. he contractthereore is valid. In order that a contract may be considered voidable and be annlled radmst not be committed by both parties. (1!99)

19. *imlation o a contract 5 it is a process o intentionally deceiving others by prodcing theappearance o a contract that really does not e%ist (absolte simlation) or which is di3erent rom thetre agreement (relative simlations) (rticle 1!9#)

$3ects&a) bsolte *imlation or fctitios contracts, e3ect is void, as the parties do not intend to be

bond.b) ;elative *imlation 5 8ere parties conceal their tre agreement. $3ect& he parties are

bond to the real or tre agreement e%cept i the contract shold pre6dice third person ori the prpose is contrary to law, morals, good cstoms, pblic order, pblic policy. (art.1!9?)

Illstration&* and ' entered into a contract where they made it appear that * was selling his lot and bilding to '.he trth, however was that * was donating his lot and bilding to '. hat is the stats o thecontract/

0 he contract is a relative simlated contract. hereore the parties are bond by the contract odonation, their tre intention, since no third person is pre6diced and their prpose is not contrary tolaw, moral, good cstoms, pblic order or pblic policy. (1!9?)

!#9EC& (Arts.137-13')

1. eaning o ob6ect 5 as the thing, right or service, which is sb6ect matter o the obligation, which iscreated or established.

;e4isites or a valid ob6ect&

a. It mst be within the commerce o man in other words ssceptible o appropriation andtransmissible to one person to another.

b. he ob6ect mst real and possible, meaning it shold e%ist at the moment o thecelebration o the contract or at least, it can sbse4ently e%ist or in the treF

c. he ob6ect shold be licit, it shold not be contrary to law, morals, good cstoms, orpblic order and pblic policy andF

d. he ob6ect shold be determinate, or at least, possible o determination as to its >ind.:ins of o;ind- st not be legally or physically impossible.

b) ;ights 5 nly rights which are transmissible may be valid ob6ects o contracts.c) *ervices - mst not be contrary to law, pblic morals, pblic policy, pblic order and good

cstoms.- mst not be physically impossible o perormance- mst be determinate and certain as to its natre.

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;les&

1. @tre inheritance cannot be a valid ob6ect o a contract. @tre inheritance is any property orright, not in e%istence or capable o determination at the time o the contract that a person mayinherit in the tre. +ontracts involving tre inheritance is void e%cept

a) in the case o donations by reasons o marriage between tre sposes with respect to theirtre property to ta>e e3ect, only in the event o death, to the e%tent laid down by law intestamentary sccession (rt. B9 @amily +ode)

b) In case o partition o property by act inter vivos by a person (owner or sorce o property) tota>e e3ect pon his death.

Illstrations&. * and ' orally entered into a contract whereby * sold his one-year prodction o mangoes to ' or:1"",""". ' gave a downpayment o :2",""" or which * issed a receipt. hat is the stats o thecontract between * and '/

0 he contract is valid. @tre things may be the ob6ect o contracts. (1!9C par 1)

'. died leaving properties estimated at :1 to his sons * and . *bse4ently, * sold throgh a privateinstrment one-hal o his inheritance to ' or :!"",""", althogh his share was still to be delivered. hatis the stats o the contract/

0he contract is valid since the inheritance is an e%isting inheritance. (1!9C par 2)

2. ype o Impossibility o b6ect

s to natre&a) egal Impossibility 5 i the ob6ect to be delivered or the service to be perormed is contrary to

law, pblic order, pblic morals, pblic policy and good cstoms.b) :hysical Impossibility- i the service is incapable o physical perormance

s to e%tent&a) bsolte Impossibility- hen the prestation is totally incapable o perormance either becase

it is physically or legally impossible. 8ence, the contract is void.b) ;elative Impossibility 5 when the obligor cannot perorm it de to certain special

circmstances, conditions or 4alifcations. he contract is not void bt rather becomese3ective only rom the time the relative impossibility ceases or only to the e%tent o what theobligor is capable o perorming.

CAU%E !" C!%E"A&! (Arts.1350-1355)

1. eaning o +ase or consideration 5 the essential reason, which moves the contracting, parties toenter into the contract. he immediate, direct or most pro%imate reason, which e%plains and6stifes the creation o an obligation throgh the will o the contracting parties.

2. Di3erence between case and motives&- he case is the direct or appro%imate reason o a contract, whereas the motives are the indirect

or remote reasons.- he case is the ob6ective or 6ridical reason o a contract, whereas the motives are the

psychological or personal reasonsF- he case or a certain contract is always the same, whereas the motives will di3er or vary

depending pon who are the partiesF- he case can a3ect the validity o a contract, whereas the motives cannot.

Illstration& * sold his car to ' or :1"",""" so that he can have money to prchase shab. ' >newnothing o the motive o *. as the contract valid/0he contract is valid becase the illegal motive o * does not a3ect its validity. otive is di3erent

rom the case o the contract. (1!#1)

!. ;e4isites o a valid case&- case shold be in e%istence- case shold be licit or lawl and- case shold be tre

:resmption in case&


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a. I the inade4acy o the case or price was cased by vitiated consent (rad, mista>e,nde inOence, violence or intimidation), then the contract is voidable on the lattergrond and not becase o gross inade4acy o the price.

b. o any valid consideration or the

contract. It is void.2. @ailre o case 5 +ase agreed pon did not materialiGe. his will not the render the contract

void.!. Illegality o the case - here is a case bt the same is nlawl. lso nll and void.9. @alsity o the case- It is meant that the contract states a valid consideration bt sch statement

is not tre. alse case may be erroneos which will render the contract voidable or it may besimlated. I simlated absoltely, the contract is. Noid. I the tre case is 6st hidden, it can beenorceable as to its tre case provided said case is not contrary to law, morals, good cstoms,pblic policy and pblic order.

F!"M% !F C!&"AC&%8

1. "4le& hatever may be the orm in which a contract may have been entered into according tort.1!#? o the +ivil +ode, is that it shall be obligatory provided all o the essential re4isites orvalidity are present. 8ence, nder or legal system, the orm in which a contract is e%ected hasno e3ect, as a general rle, pon its obligatory orce, provided all o these essential re4isites orits validity are present.

E>ce+tion& It does not inclde contract or which the law prescribed a certain orm either or validity oror enorceability or convenience. It is evident that there are two e%ceptions to the rle&

a) hen the law re4ires that the contract be in a certain orm to be validFb) hen the law re4ires that contract mst be in writing to be enorceableFc) hen the law re4ires that contract mst be in writing or convenience.

?. hat are the di3erent >inds o ormalities prescribed by law or a certain contracts&- hose that are or convenience or or the prpose o binding third persons (rts.1!#? to

1!#B)- hose which are necessary or the validity o the contractsF (scattered provisions in the +ivil

+ode and other special law)- hose necessary or the enorcement o the contract (*tatte o @rad).

3. +ontract that mst appear in pblic instrment& (Convenience)- cts and contracts which have or their ob6ect the creation, transmission, modifcation or

e%tingishments o real rights over immovable property, sales o real property or o aninterest therein governed by rts. 19"!, 7. 2 and 19"#F

- he cession, repdiation or rennciation o hereditary rights or o those o the con6galpartnership o gainsF

- he power to administer property or any other power which has or its ob6ect an actappearing or which shold pre6dice a third personF

- ll other contracts were the amont involved e%ceeds fve hndred pesos mst appear inwriting, even a private one. 't sales o chattel or things in action are governed by rts.19"!, 7o. 2 and 19"#.

. +ontracts that mst appear in writing to be vali&- Donation o personal property whose vale e%ceeds : #,""". ccording to rt. C9B o the

+ivil +ode, the donation and the acceptance shall be made in writingF otherwise it shall bevoidF

- *ale o a piece o land or any interest therein by an agent. ccording to 1BC9 o the +ivil+ode, i the athority o the agent is not in writing, the sale is voidF

- ntichresis. ccording to rt. 21!9 o +ivil +ode, in contract o antichresis, the amont othe principal and o the interest shall be specifed in writing, otherwise the contract shall bevoidF

- greement regarding payment o interest in contract o loans. ccording to rt. 1A#? o the

+ivil +ode, no interest shall be charged in the same is not e%pressly stiplated in writingF5. +ontracts that mst appear in pblic instrment to be vali

- Donation o ;eal :roperty (rt. C9A)- :artnership were immovable property or real right are contribted to the common nd

*. +ontracts that mst be registered or valiit&- +hattel mortgage to the +hattel ortgage ;egistry o the ;egistry o Deeds (rt. 219")F- *ale and transer o arge +hattel

7. +ontracts that mst be in writing to be enorceable. (


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2. :romise to answer or the debt, dealt or miscarriage o another.!. greement in consideration o marriage other than a mtal promise to marry.9. greement or sale o goods, chattels or things in action, at a price not less than fve

hndred pesos#. greement or leasing or a longer period than one year.?. greement or the sale o real property or o an interest thereinC. ;epresentation as to the credit o a third person.

"EF!"MA&! !F %&"UME&% (A"&%. 135'-13*')

1. hat is the doctrine o reormation o instrments nder the +ivil +ode/

hen the tre intention o the parties to a perected and valid contract are not e%pressed in theinstrment prporting to embody their agreement, by reason o mista>e, rad, ine4itable condct oraccident, one o the parties may as> or the reormation o the instrment so that sch tre intentionmay be e%pressed. In order that there can be a reormation o the instrment, the ollowing re4isitesmst, thereore, occr&

a.) here mst be a meeting o the minds o the partiesFb.) heir tre intention is not e%pressed in the instrmentF andc.) *ch ailre to e%press their tre intention is de to mista>e, rad, ine4itable condct or

accident.7ote& I the frst re4isite is missing, the remedy is not reormation bt annlment o the contract.

2. $%amples o instrments which maybe reormed&- hen a mtal mista>e o the parties cases ailre o the instrment to disclose their real

agreement (rt. 1!?1). $ither o the parties may bring the action.- I one o the party was mista>en and the another acted radlently or ine4itably in sch a

way their instrment does not show their tre intentionF (rt. 1!?2) he in6red party canbring the action.

- I one party was mista>en and the other >new or believed that the instrment did not statetheir real agreement bt concealed the act rom the ormerF (rt. 1!?!). he in6red partycan bring into action.

- hen throgh ignorance, lac> o s>ill, negligence, or bad aith on the part o the persondrating the instrment or the cler> or typist, the instrment does not e%press the treintention o the partiesF (rt. 1!?9) he in6red party can bring into action.

- I two parties agreed pon the mortgage or pledge o real or personal property, bt theinstrment states that the property is sold absoltely, or with a right to prchase. (rt. 1!?#)

the in6red party can bring into action.

!. here will be no reormation in the ollowing cases (rticle 1!??)a) *imple donations intervivos wherein nio condition is imposedFb) ills ( inter vivos or mortis casa)c) hen the real agreement is void.d) hen one party has broght an action to enorce the instrment, he cannot as> or

reormation. (rt. 1!?C). his is based on estoppel or ratifcation.

&E"P"E&A&! !F C!&"AC&% (Arts. 1370-137')

In interpretation o contracts, as well as in ;eormation o contracts, the most importantconsideration is whether or not the contract e%presses the tre intention o the parties. he ollowingrles that may apply&

a. I the literal meaning o the word or term sed in the contract is sQciently clear as to e%pressthe tre intent o the parties, then sch literal meaning will control.

b. I a word or term is capable o several meanings, the nearest meaning, which will e%press thetre intent o the parties and give sbstance to the contract, will be sed to interpret thecontract.

c. I the word or term sed is entirely at variance with the intent o the parties, then the latterwill prevail in the interpretation o the contract.

d. $ven i the contract may be coched in general terms, it shall not inclde things, which aredi3erent and not intended to be covered by the parties.

otes8

1. In order to determine the intention o the parties, their contemporaneos and sbse4ent actsshall be principally considered. (rt. 1!C1)

2. In case the contract may have several meanings, the rle says that the meaning which will

give sbstance and e3ect to the contract shall prevailF (rt. 1!C!)!. In case o any ambigities in the contract, the cstom or sage o the place where the

contract is e%ected may be availed o to ma>e a reasonable interpretation o the contract.(rt. 1!C?)F

9. In gratitos contracts, the interpretation which will give the least transmission o rights andinterest will prevail. (rt. 1!CB) $%ample between commodatm and donation, the ormer isavored.

#. In oneros contracts, the interpretation o the contract which will give the greatest reciprocityo interests will govern. $%ample between a loan payable in ? months and one year, the latteris avored.

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?. I the ob6ect o the contract is not clearly described and cannot be ascertained rom theintention or will o the parties, the contract shall be considered nll and void.

EFEC&2E C!&"AC&%

1. "escissi;le Contracts& (rts. 1!B"-1!BA)

eaning o "escission& ;escission is a remedy granted by law to the contracting parties and even to

third persons, to secre the reparation o damages cased to them by a contract, even i the same sholdbe valid, by means o restoration o their condition prior to the celebration o the contract. (B anresaC9B-C9A)

2. ho may fle action or rescission/a. he contracting party who may have s3ered in6ry or damage by virte by the e%ection o

the contract, orb. 'y a third person who may have s3ered in6ry or damage by virte o the contract

!. "e@4isites of "escission&a. here mst be a case established by law&

1. here mst be in6ry or damage to the one o the contracting parties o to a thirdperson.

2. here is no other legal remedy available to the in6red party. It is a sbsidiary remedy!. he party who has the right o rescission mst be able to retrn what he has received

nder the contract.9. he ob6ect o the contract mst not be legally in the possession o a third person who

ac4ired it in good aith.#. ction or rescission mst be fled within the legal prescriptive period.

Gro4ns8 Arts. 131-13?a) hose which are entered into by gardians whenever the wards whom they represent

s3er lesion by more than one orth o the vale o the things which are the ob6ectthereoF

b) hose agreed pon in representation o absentees, i the latter s3er the lesion more thanone orth o the vale o the things which are ob6ect o the contractF

c) hose nderta>en in rad o the creditors when the latter cannot in any other mannercollect the claims de themF

d) hose which reer to things nder litigation i they have been entered into by thedeendant withot the >nowledge and approval o the litigants or o a competent 6dicialathorityF

e) ll other contracts especially declared by law to be sb6ect to rescission.- partition, 6dicial or e%tra-6dicial, may also be rescinded on accont o lesion,

when any one o the co-heirs received things whose vale is less than at least oneorth than the share to which he is entitled considering the vale o the thing atthe time they were ad6dicated. (rt. 1"AB)

- I the lessor or the lessee shold not comply with the obligation in a contract olease, the aggrieved party may as> or the rescission o the contract andindemnifcation or damages, or only the latter the contract to remain in orce. (rt.1?#A)

- he vendee may e%ercise the remedy o rescission when the lac> o area o the realestate sold be not less than one tenth o that stated, or when the inerior vale othe thing sold e%ceeds one tenth o the price agreed pon. (*ee rticles 1#2?,1#!9,1#92,1##?,1#?",1#?C, 1#AA)

) :ayment made in a state o insolvency or obligation to whose lfllment the debtor coldnot be compelled at the time they were e3ected, are also ;escissible. (rt. 1!B2)

%!ME APP$CA#$E "U$E%8

- he deect consists o economic in6ry or damage (esion) either to one o the contractingparties or third personsF

- 'eore rescission, the contract is valid and thereore legally e3ectiveF- It can be ssceptible o convalidation only by prescription and not by ratifcationF- It can attac> directly not collaterallyF and- It can be attac>ed directly by a contracting party who s3ers in6ry or third person who is

deraded.- ;escission shall only be to the e%tent necessary to cover the damaged cased.

- I mtal restittion cannot be nderta>en as the ob6ect is already in a person whoac4ires the same in good aith, rescission is cannot be made possible.

- he action to claim rescission mst be commenced within or years rom the celebrationo the contract. For +ersons 4ner B4arianshi+ an for a;sentees the +erio offo4r() ears shall not ;eBin 4ntil the ter=ination of the for=ers inca+acit or4ntil the o=icile of the latter is Dno6n.

Circ4=stances eno=inate as ;aBes of fra48

In the consideration o whether or not certain transers are radlent, corts have laid downcertain rles by which the radlent character o the transaction may be determined. he ollowing are

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some o the circmstances attending sales, which have been denominated by the corts as badges orad&

a) he act that the consideration o the conveyance is fctitios or inade4ateFb) transer made by a debtor ater sit has been begn and while it is pending against

himFc) sale pon credit by an insolvent debtorFd) he transer o all his property by a debtor, especially when he is insolvent or greatly

embarrassed fnanciallyF

e) he act that the transer is made between ather and son, when there are presentsome or any o the above circmstancesF

) he ailre o the vendee to ta>e e%clsive possession o all the propertyFg) It was >nown to the vendee that the vendor had no properties other than that sold to

him

ote8 A contract entere ; the e;tor 6ith a thir +erson to efra4 the for=ers creitor=4st ;e a vali contract. n this case the +ro+er re=e is rescission if no other re=e can;e availe of. f the contract is ctitio4s or a;sol4tel si=4late it is voi.Illstrations&. =, the gardian o , a minor sold the fsh harvested rom the fshpond o or :2",""". he fsh,however had a vale o :!",""". hat is the stats o the sale/

0he sale is rescissible becase s3ered the minimm amont o lesion re4ired by law toma>e the contract rescissible. (1K9 % !","""R C,#"", the lesion is 1","""). (1!B1 par 1)

'. D owes the ollowing creditors& H, :#","""F , :?","""F and S, :A",""". 8e has assets valed at:9"",""". *bse4ently, D donated, among his assets, a parcel o land valed at :2#",""" to +. hedonation and acceptance were made in a pblic instrment. hat is the stats o the donation o the landmade by D to +/

0 he donation is rescissible. It is presmed to have been made in rad o creditors. heremaining vale o the assets ater donation wold be insQcient to cover the debts contracted by Dbeore the donation. (1!BC par 1)

+. + fled a complaint in cort against D to collect a money debt amonting to :#"",""". ter dehearing, the cort rendered 6dgment in avor o +. *hortly ater the rendition o the 6dgment and beore+ has collected Ds debt, D sold a parcel o land to H. S, another creditor, learned o the sale made by D toH and now fles an action to rescind the sale. ho has a better right to rescind the sale o D to H/

0'oth + and S have a right to rescind the sale since the sale is presmed in rad o creditorshaving been made by the party against whom 6dgment has been rendered.(1!BC par 2

D. ;, the representative o , an absentee sold the corn with a vale o :!",""" and the palay with avale o :#",""", harvested rom s agricltral arm or a total price o :#",""". , whose domicile wassbse4ently >nown, was inormed o the sale made by =. ay see> rescission/

0 may see> rescission o the total sale to recover the damages he s3ered. (1!B1 par 2)

?. 2oia;le Contracts8 (Articles 13'0-10?)

Noidable or annllable contracts are those which possess all the essential re4isites o a valid contractbt one o the parties is incapable o giving consent or consent is vitiated by mista>e, violence,intimidation, nde inOence or rad.

=ronds&

a) hose where one party is incapacitated to give consent. (rt.1!2C)- now how to write (and read).- hose in the state o drn>enness (rt.1!2B)- hose entered into dring a hypnotic spell- *pecial dis4alifcations (those nder civil interdiction, insolvent etc.) 0 =ardians, agents and e%ector and administrators nless athoriGed by the cort areincapacitated to

enter into a contract o sale nder rticle 19A1 paragraphs 1 to ! becase private interests area3ected. +ontracts entered in violation o this prohibition are only NID'$. he deect can becred by ratifcation.

b) hose where consent o one party has been vitiated. (rts. 1!!"-1!!9)

+ases o Nitiated +onsenta) ista>e (or error) 5 @alse belie abot somethingb) @rad (or deceit) reerring to D +


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- ;atifcation cleanses the contract rom all its deects rom the moment it was constitted. - 'inding ntil annlledF - nnlment brings abot the dty o mtal restittion. - It cannot be attac>ed or assailed by third persons. -&he action for ann4l=ent shall ;e ;ro4Bht 6ithin ears. n case of inti=iation violenceor

4n4e in4ence fo4r ears is co4nte fro= the ti=e the efect of the consent ceases. ncase of

=istaDe or fra4 fo4r ears fro= the ti=e of iscover of the sa=e. hen the actionrefers to

contracts entere ; =inor or other inca+acitate +ersons fo4r ears fro= the ti=e theB4arianshi+ ceases.

Illstration&*, 1C T years old sold his bicycle to ', 29, or :12,""". he price is payable in 12 monthlyinstalments. ter reaching 1B, * contined to collect the remaining si% installments ntil the pricewas paid in ll. +an * annl the contract/

0* may no longer annl the contract. here was implied ratifcation when * pon reaching the ageo ma6ority contined to collect the remaining instalments. (1!A!)

-

. Unenforcea;le Contracts8 (Articles 103-10)

MeaninB of Unenforcea;le contract are those that cannot be enorced in cort or sedpon by reason o deects provided by law ntil and nless they are ratifed according to law.

Jinds o the ollowing day to give the company chec> or theprchase price as well as the written contract. hen retrned to the place o *, * resed to sign thecontract and accept the chec>. * told that at any rate, or the electric company cold not enorce thecontract since it was not in writing. Is * correct/

0he contract mst be in writing or it to be enorceable against *. his is a sale o real property.

'. n Mne 1, 2""#, ', a bsinessman, met by chance +, a bilding contractor at the lobby o a hotel. vera cp o co3ee, ' inormed + that he wold be needing the services o + or the constrction o a three-storey bilding that ' was planning to pt p beginning gst 1, 2""?. ' added that he wold be paying+ the amont o :9 or the constrction. + agreed to 's proposal. In the meantime, ' gave + a chec> or:#"",""" representing the downpayment on the contract price. $%cept or the table nap>in on which 'made some s>etches o the bilding, no written contract was signed by the parties. n gst 1, 2""?, 'called p + to inorm him that the constrction wold begin within the ne%t two wee>s. + told ' that hewold no longer want to proceed with the contract and that he wold be retrning the downpayment. ay' enorce the contract/

0' may enorce the contract against + althogh there was no ormal agreement signed by theparties becase + was deemed to have ratifed the contract by his acceptance o the downpayment.

+. D was chec>ing ot o a hotel when he ond ot that he had lost his wallet. *ince he had no money topay his bills, he te%ted =, a bsinessman riend to help him. new = since = was a re4ent gest at the hotel whenever he visited the area.he te%t message read& :lease let D leave. I he does not pay, I will be the one to pay.E 7o otherinormation was contained in the te%t message. hereater, D signed a promissory note in avor o thehotel. Is the promise o = enorceable/

0I D cannot pay, cannot enorce the promise o = since =s promise is not the writing re4iredby law. (19"! 2b)

D. *, insane, orally sold his radio to ', 1C years old or :9"". hen , the mother o * learned abot the

sale, she as>ed * to give to her the amont that he had received. * obediently gave the amont o :9""which his mother sed to by their ood. hat is the stats o the contract/

0he contract is voidable becase the mother o * is deemed to have ratifed the contract. (19"C)

5. 2oi or ne>istent Contracts8 (Art. 10'-1??)

MeaninB of 2oi Contracts are those, which, becase o certain deects, generally prodce noe3ect at all. hey are considered as ine%istent rom the very beginning.

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MeaninB of ne>istent Contracts reer to agreements, which lac> one or some or all o theelements (i.e., consent, ob6ect and case) or do not comply with the ormalities, which are essentialor the e%istence o a contract.

Characteristics of a voi or ine>istent contract.

1. =enerally, it prodces no e3ect whatsoeverF2. It cannot be ratifed (rt. 19"A par. 2)

!. he right to set p the deense o illegality cannot be waivedF9. he action or deense or declaration o its ine%istent does not prescribe (rt.191")F#. he deense o illegality is not available to third persons whose interests are not directly a3ected.?. It cannot give rise to a valid contract.

nstances of voi or ine>istent contracts

1. +ontracts whose case, ob6ect or prpose is contrary to law, morals, good cstoms, pblicorder or pblic policyF

2. hose which are absoltely simlated or fctitiosF!. hose whose case or ob6ect did not e%ist at the time o the transactionF9. hose whose ob6ect is otside the commerce o menF#. hose which contemplate impossible serviceF?. hose where the intention o the parties relative to the principal ob6ect o the contract cannot

be ascertainedC. hose e%pressly prohibited or declared void by law.

:roblems&@rancis promised to give :1",""" by way o spport to itch, i itch agrees to live with@rancis as his wie withot the beneft o marriage. itch becase she trly loves @rancisaccepted his promise. ter ? months, becase itch was seen with $dgar, her e%-boyriend,@rancis let their home and never came bac>. +an itch now still receive the spport promisedby @rancis/0he contract between @rancis and itch is illegal and constittes an o3ense, thereore it isvoid.

7otes&

"4les 6here contract is illeBal an the act constit4tes a cri=inal oense8

here both are in pari delicto (at alt)

a. he parties shall have no action against each otherb. 'oth shall be prosected.c. he things or the price o the contract, as the e3ects or instrments o the crime, shall be

confscated in avor o the government.

here only one party is gilty.I only one party is gilty or both parties are not e4ally gilty, the innocent one or less

gilty may claim what he has given and shall not be bond to comply with his promise. (rt. 1911)

"4les 6here the contract is illeBal ;4t the act oes not constit4te a cri=inal oense.

here both parties are in pari-delicto. - I the case o the contract is nlawl or orbiddenbt there is no criminal o3ense, the rles are as ollows&a) 7either party may recover what he has given by virte o the contractF andb) 7either party may demand perormance o the others nderta>ing.

here only one is gilty&a) he gilty party loses what he has given by reason o the contract.b) he gilty party cannot as> or the lfllment o the others nderta>ing.c) he innocent party may demand the retrn o what he has givenF andd) he innocent party cannot be compelled to comply with his promise.

"ecover 6here contract entere into for illeBal +4r+osehen money is paid or property delivered or an illegal prpose, the contract may be repdiated

by one o the parties beore the prpose has been accomplished, or beore the damage has been casedto a third person. In sch case, the corts, may, i the pblic interest will ths sbserved, allow the partyrepdiating the contract to recover the money or property. (rt. 1919)

"ecover 6here contracts are =erel +rohi;ite ; not illeBal

hen the agreement is not illegal per se bt is merely prohibited, and the prohibition by the law isdesigned or the protection o the plainti3, he may, i pblic policy is thereby enhanced, recover what hehas paid or delivered. (rt. 191?)

$3ect o illegality where contract is divisible

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a. hen the consideration is entire and single, the contract is indivisible so that i part o schconsideration is illegal, the whole contract is void and nenorceable.

b. hen the contract is divisible or severable, that is, the consideration made p o several parts,and the illegal ones can be ta>en rom the legal portions, the latter may be enorced. his rle however issb6ect to the evident intention o the parties.

nterest +ai in e>cess of the interest allo6e ; the 4s4r la6s =a ;e recovere ; the

e;tor 6ith interest thereon fro= ate of +a=ent.s re-priced their loan rates higher than the -bills.

't the high cort, in its rling said stiplations athoriGing ini4itos or nconscionable interests havebeen invariably strc> down or being contrary to morals, i not against the law.E he high cort pointedot that nder rticle 19"A o the +ivil +ode sch contracts are considered ine%istent and void ab initioE(void rom the beginning) and thereore cannot be ratifed nor may the right to set p their illegality as adeense be waived. *till, the high cort said, i interest rates are e%cessive, lenders are still protectedbecase it will not a3ect the other terms o the credit. he debt de is considered as withot thestiplated e%cessive interest and a legal interest o 12 percent ( now ? percent) per annm will be addedin place o the e%cessive interest ormerly imposed,E the high cort said.

"ecover 6here contract entere into for illeBal +4r+ose

hen money is paid or property delivered or an illegal prpose, the contract may berepdiated by one o the parties beore the prpose has been accomplished, or beore thedamage has been cased to a third person. In sch case, the corts, may, i the pblic interestwill ths sb-served, allow the party repdiating the contract to recover the money or property.(rt. 1919)

$%ample&

D contracted the services o + or the latter to >ill H. D gave him :hp #"",""" or the said prpose.'eore + cold >ill H, D changed his mind and told + not to >ill H. 8ere, D be allowed torecover the amont he gave to + i pblic interest is sbserved at the discretion o the cort. I+ has already >illed H, any repdiation made by D will serve no prpose. D will be prosectedas principal by indcement and + as principal by direct participation

"ecover 6here contracts are =erel +rohi;ite ; not illeBal

hen the agreement is not illegal per se bt is merely prohibited, and the prohibition by thelaw is designed or the protection o the plainti3, he may, i pblic policy is thereby enhanced,recover what he has paid or delivered. (rt. 191?)

@, a @ilipino sold his lot to M, a Mapanese national. he latter not >nowing that owning real property

by alien in the :hilippines is prohibited and so transaction shall be void. M, by reason o pblicpolicy, may be allowed to recover the payment made.

"ecover of a=o4nt +ai in e>cess of ceilinB +rice. hen the price o any article or commodity isdetermined by statte, any person paying in e%cess the price is allowed to recover the e%cess.

ssming an $%ective rder is passed f%ing the price o 7@ rice to only : !2."" and it was sold at :hp9"."", the e%cess o the ma%imm price can be recovered.

hen the la6 >es or a4thoriHes the >inB of the =a>i=4= n4=;er of ho4rs of la;or an acontract is entere into 6here; a la;orer 4nertaDes to 6orD lonBer than the

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=a>i=4= th4s >e he =a e=an aitional co=+ensation for service renere;eon the ti=e li=it. (Art. 11)

ing hors per day is B hors.$mployees who rendered wor> beyond eight hors a day is entitled o overtime pay.

8ors wor>ed inclde&a. ll the time dring which an employee is re4ired to be on dty or to be at the prescribed

wor>place, and

b. ll the time dring which he is s3ered or permitted to wor>. ;est periods o short drationdring wor>ing hors shall be conted as hors wor>ed. (rt. B9, abor +ode)c. hen the employee perorms wor> beyond B hors a day, he is entitled to an additional

compensation o e4ivalent to his reglar wage pls at least 2#U thereo. or> beyond B hors on aholiday or rest day shall be paid additional compensation e4ivalent to rate o the frst B hors on a

holiday or rest day rate pls !"U thereo.

$%ample& hs i a wor>er agreed to wor> or 1" hors withot compensation or the e%cess o 2 horswor>ed, he shall be entitled to recover additional compensation or sch e%cess 2 hors. his is treeven i he and the employer are in pari-delicto.

hen the la6 sets or a4thoriHes a =ini=4= 6aBe for la;orers if the latter receive less thanthe =ini=4= is entitle of ierential.

CU""E& A$ MMUM AGE "A&E%"EG! I avao "eBion a/Per aBe !rer o. "&P#-I-1 b/

Eective 94ne 1 ?01UP! EFFEC&2& !F &,% AGE !"E"8

%ectorJn4str 7ewinimm age

on-ABric4lt4re P 31?.00

ABric4lt4re P 30?.00

"etailJ%ervice

E=+loinB =ore than 10 6orDers P 31?.00

E=+loinB not =ore than 10 6orDers P ?1.00

Eective ece=;er 1 ?01

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%ectorJn4str 'asic age+ e6

Mini=4=

on-ABric4lt4re P 31?.00 P 5.00 P 317.

ABric4lt4re P 30?.00 P 5.00 P 307.

"etailJ%ervice

E=+loinB =ore than 10 6orDers P 31?.00 P 5.00 P 317.

E=+loinB not =ore than 10 6orDers P 30?.00 P 5.00 P ?*.

Covers the Cities of avao iBos slan Garen of %a=al &aB4= Pana;o Ma

the Provinces of avao el %4r avao el orte avao !riental an Co=+os2alle.,P 11.00 ;asic 6aBe increase +er a

C!$A of P15.00Ja 4ner ! o. "#I-17 6as inteBrate into the ;asic +aA ne6 C!$A of P5.00Ja eective ece=;er 1 ?01

ate of Eectivit8 94ne 1 ?01P4;lishe in %4nstar avao on Ma 17 ?01

PA"& . "E2E !&E% ! A&U"A$ !#$GA&!%

rticle 192! provides&

bligations are civil or natral. +ivil obligations give aright o action to compel their perormance.7atral obligations, not being based on positive law, do not grant a right o action to enorce theirperormance, ;4t after vol4ntar f4lll=ent ; the o;liBor the a4thoriHe the retention of 6hathas ;een elivere or renere ; reason thereof.

7atral obligation is based on e4ity or natral law while civil obligation is based in positive law.he latter gives right o action to compel their perormance (6ridical necessity) while natral obligationdo not grant sch right o action to enorce their perormance.

rticle 1929& hen the right to se pon a civil obligation has lapsed by e%tinctive prescription, theobligor who volntarily perorms the contract cannot recover what he has delivered or the vale o theservice he has rendered.

he ollowing actions mst be broght within 1" years rom the time the right o action accres&(1)


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rticle 192A& hen a testate or intestate heir volntarily pays a debt o the decedent e%ceeding thevale o his property which he received by will or by the law o intestacy rom the estate o the deceased,the payment is valid and cannot be rescinded by the payer.

rticle 19!"& hen a will is declared void becase it has not be e%ected in accordance with theormalities re4ired by law, bt one o the intestate heirs, ater the settlement o the debts o thedeceased, pays a legacy in compliance with a clase in the deective will, the payment is e3ective andirrevocable.

PA"& - %UMMA" ! &,E $A ! AMAGE%(Articles ?1'5-??35)

General Provisions on a=aBes

atin erm is AMUMor EM!which means to ta>e away.

MeaninB of a=aBes& It is the sm o money which the law awards or imposes as pecniarycompensation or satisaction or an in6ry done or wrong sstained as a conse4ence o the breach osome dty or the violation o some right. ( 1# m. Mr. !BC)

It is compensation in money imposed by a cort or loss or in6ry cased by the alt o another.(8emphills Dictionary o :ractical aw).

'*I* ; ;I7$&

he ndamental principal o the law on damages is that one in6red by a breach o contract or bya wrongl or negligent act or omission shall have a air and 6st compensation commensrate with theloss sstained as a conse4ence o the deendants act. 8ence actal pecniary compensation is thegeneral rle, whether the action is based on contract or in tort, e%cept where the circmstances warrantthe allowance o other >inds o damages. In general the damages awarded shold be e4al to, andprecisely commensrate with the in6ry sstained. 8owever, rles o law respecting the recovery odamages are ramed and reerence to 6st rights o '8 :;I$*, not merely what may be right or anin6red person to receive, bt also what is 6st to compel the other party, to accord 6st compensation orthe in6ry.

Distinction between AMAGE%and 9U"

1) In6ry denotes the illegal act, while damages mean the total amont recoverable or the in6rycommitted.

2) Damages are measre o recovery while In6ry is the legal wrong to be redressed.!) here may be damages withot an in6ry, and an in6ry withot damages.

7ote& here can be damage withot in6ry (Damnm abs4e in6ria)

rticle 21A#

his provision provides that the +hapter on Damages shall be applicable to all obligationsmentioned in rticle 11#C. bligations arise rom the ollowing sorces in accordance with said provision&

a. awb. +ontractsc. Lasi-contractsd. cts or omission pnishable by lawF ande. Lasi-delicts

rticle 12A?& It is to be observed that in case o conOict between the +ivil +ode and the *pecial aws, it isthe +ivil +ode that prevails insoar as damages are concerned. $%ception in the case o compensation orwor>men and other employees.

rticle 21AC& Damages are the ollowing&

a. ctal or compensatoryFb. oralc. 7ominald. emperate or moderatee. i4idatedF or

. $%emplary or corrective

rticle 12AB he principle o the general law on damages are hereby adopted insoar as they are notinconsistent with the +ivil +ode.

AC&UA$ !" C!MPE%A&!" AMAGE%(rticles 21AA-221#)

hey are those recoverable becase o pecniary loss (in bsiness, trade, property, proession, 6obor occpation. hey inclde&

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a. he vale o the loss s3ered (aKo E=erBente)b. :rofts which were not obtained or realiGed ($4cro Cesante)

he above are also identifed as the >inds o actal or compensatory damages. (rticle 22"")

$%amples o DaVo $mergentea. Destrction o thingsb. @ines or penalties that had to be paid

c. edical and hospitaliGation e%penses

$%amples o $4cro Cesante

a. :rofts that cold have been earned had there been interrption in the plainti3s bsinessevidenced by the redced receipts o the enterprise.

b. Interest on rentals that were not paid.

rticle 22"1 provides fr the liability o debtor in contracts and 4asi-contracts&

iability o debtor i there is good aith bt damages are sstained by the in6red party& It isessential that the damages be the 7, social hmiliation and similar in6ry. hoghincapable o pecniary comptation, moral damages may be recovered i they are the pro%imate reslt othe deendants wrongl act or omission.

oral damages may be awarded to compensate one or maniold in6ries sch as physicals3ering, mental angish, serios an%iety, besmirched reptation, wonded eelings and socialhmiliation. hese damages mst be nderstood to be in the concept o grants, not pnitive or corrective

in natre, calclated to compensate the claimants or the in6ry s3ered. lthogh incapable oe%actness and no proo o pecniary loss is necessary in order that moral damages may be awarded, theamont o indemnity being let to the discretion o the cort, it is imperative nevertheless, that (1) in6rymst have been s3ered by the claimant and (2) sch in6ry mst have been sprng rom any casese%pressed in rticles 221A and 222" o the +ivil +ode. casal relation mst e%ist between the actoromission reerred in the +ode which nderlines or gives rise to, the case or proceeding, on the one hand,and the reslting in6ry, on the otherF i.e. the frst mst be the pro%imate case and latter the directconse4ence thereo. (Del ndo v. +ort o ppeals, =.;. 7o. 1"9#C?, Manary 2", 1AA#).

In the ad6dication o moral damages, the sentimental vale o the property, real or personal, maybe considered. (rt. 221B)

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oral damages may be recovered on the ollowing and analogos cases&1. criminal o3ense reslting to physical in6riesF2. Lasi-delicts casing physical in6riesF!. *edction, abdction, rape and other lascivios actsF9. dltery or concbinageF#. Illegal or arbitrary detention or arrestF?. Illegal searchFC. libel, slander, or any other orm o deamationF

B. alicios prosectionFA. cts mentioned in rticle !"AF1". cts and action reerred to in rticles 21, 2?, 2C, 2B, 2A, !", !2, !9 and !#.

he spose, descendants, ascendants, and brothers and sisters may bring the action mentionedin no. A o this article, in the order named. (rt. 221B)

illl in6ry to the property may be a legal grond or awarding moral damages i the cortshold fnd that, nder the circmstances, sch damages are 6stly de. he same rle applies tobreaches o contract where the deendant acted radlently or in bad aith.

;eerences& he below stated articles indicate instances where moral damages may be claimed inaddition to the indemnity which the cort may grant&

rticle !"A & ny person who shows disrespect to the dead, or wronglly intereres with a neralshall be liable to the amily o the deceased or damages, material and moral.

rticle 21& ny person who willlly cases loss or in6ry to another in a manner that is contraryto morals, good cstoms or pblic policy shall compensate the latter the damage.

rticle 2?& $very person shall respect the dignity, personality, privacy and peace o mind o hisneighbors and other persons. he ollowing and similar acts, thogh they may not constitte criminalo3ense, shall prodce a case o action or damages, prevention and other relie&

1. :rying into the privacy o anothers residenceF2. eddling with or distrbing the private lie or amily relations o anotherF!. Intriging to case another to be alienated rom his riendsF9. Ne%ing or hmiliating another on accont o his religios belies, lowly station in lie, place

o birth, physical deect or other personal condition..

rticle 2C& ny person s3ering material or moral loss becase a pblic servant or employee

reses or neglects withot 6st case, to perorm his oQcial dty may fle an action or damages andother relie against the latter, withot pre6dice to any disciplinary administrative action that may beta>en.

rticle 2B& e part in a peacel assembly to petition the government or redress o

grievancesF19. he right to be ree rom involntary servitde to any ormF

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1#. he right o the accsed against e%cessive bailF1?. he right o the accsed to be heard by himsel and consel, to be inormed o the natre

and case o the accsation against himF to have a speedy and pblic trialF to meet thewitnesses ace to ace and to have complsory process to secre the attendance owitness in his behalF

1C. @reedom rom being compelled to be a witness against ones sel, or rom being orced toconess gilt, or rom being indced by a promise o immnity or reward to ma>e schconession, e%cept when the person conessing becomes a state witnessF

1B. @reedom rom e%cessive fnes or crel and nsal pnishment, nless the same isimposed or inOicted in accordance with a statte which has not been 6dicially declarednconstittionalF and reedom o access to the corts.

In any o the cases reerred to in this article, whether or not the deendants act or omissionconstittes a criminal o3ense, the aggrieved party has the right to commence an entirely separate anddistinct civil action or damages and other relie. *ch civil action shall proceed independently o anycriminal prosection (i the latter be institted), and may be proved by a preponderance o evidence.

he indemnity shall inclde moral damages. $%emplary damages may also be ad6dicated.he responsibility herein set orth is not demandable rom a 6dge nless his act or omission

constittes a violation o the :enal +ode or other penal statte.

rticle !9& hen a member o a city or mnicipal police orce reses or ails to render aid orprotection to any person in case o danger to lie or property, sch peace oQcer shall be primarily liableor damages and the city or mnicipality shall be sbsidiarily responsible thereore. he civil action hereinrecogniGed shall be independent o the criminal proceedings and a preponderance o evidence shallsQce to spport sch action.

rticle !#& hen the person claiming to be in6red by a criminal o3ense, charges another withthe same, or which no independent civil action is granted in this +ode or any special law, bt the 6sticeo peace fnds no reasonable gronds to believe that a crime has been committed, or the prosectingattorney reses or ails to institte criminal proceedings, the complainant may bring a civil action ordamages against the o3ender. *ch civil action may be spported by a preponderance o evident.


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. $/UA&E AMAGE% (Articles ???*-???)

rticle 222? - i4idated damages are those agreed pon by the parties to a contract, to be paid in caseo breach thereo.

In e3ect, li4idated damages and penalty are the same. 7either re4ires proo o actaldamages. ter all, they had been previosly agreed pon.

rticle 222C - i4idated damages, whether intended as an indemnity or a penalty, shall be e4itablyredced i they are ini4itos or nconscionable.

rticle 222B - hen the breach o the contract committed by the deendant is not the one contemplatedby the parties in the agreeing pon the li4idated damages, the law shall determine the measre odamages, and not the stiplation.

E. EIEMP$A" !" C!""EC&2E AMAGE% (Articles ???'-??35)

rticle 222A- $%emplary or corrective damages are imposed, by way o e%ample or correction, or thepblic good, in addition to moral, temperate, li4idated or compensatory damages.

$%emplary damages are also called as pnitiveE damages. hey are re4ired by pblic policy orwanton acts mst be sppressed.

In the absence o moral, temperate, li4idated or compensatory damages, no e%emplary damagescan be granted, or e%emplary damages are allowed only in addition to any o the or >inds o damagesmentioned.

$%emplary damages are designed to provide e%ample or correction or the pblic good.

$%amples&

1. corporation which persisted in oppressively invading anothers rights despite cease anddesist orders rom the :blic *ervice +ommission. he imposition o e%emplary damages wold be areminder that economic power will never 6stiy a rec>less disregard o the rights o others.

2. . $%emplary damages may be awarded i the dismissal is e3ected in a wanton, oppressive ormalevolent manner. (opeG vs. 7;+, 2AC *+; #"B)

$%emplary damages may be imposed as part o the civil liability in criminal o3enses, when thecrime committed is accompanied with one or more aggravating circmstances. It is separate and distinctrom the other damages or fne the o3ender has to pay (rt. 22!"). It can also be granted in 4asi-delictsin case deendant acted with gross negligence (rt. 22!1) and in contracts and 4asi contracts, i thedeendant acted in a wanton, radlent, rec>less, oppressive or malevolent manner (rt. 22!2).

$%emplary damages cannot be recovered as a matter o rightF the cort will decide whether or notthey shold be ad6dicate. (rt. 22!!)

Jgbdf revised /2014

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Documents

Review Notes_contracts, Natural Obligations and Damages 2014