Obligations and Contracts PDF

OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER  Contracts must not also be confused with pa...

OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER  Contracts must not also be confused with pacts or CONTRACTS stipulations.  Pact – an incidental part of the contract which can General Provisions be separated from the principal agreement  Stipulation – an essential and dispositive part of ------------------------------------------------------------------------------- the contract (hence, not the contract itself) which Art. 1305. A contract is a meeting of minds between two cannot be separated from such principal persons whereby one binds himself, with respect to the agreement. other, to give something or to render some service. ------------------------------------------------------------------------------- Elements of Contracts Contract – meeting of the minds between two persons 1. Essential – those without which there can be no whereby one binds himself with respect to the other to give contract. Essential elements, in turn are subdivided something or to render some service (Art. 1305, NCC) into: a. Common (communes) – those which are present – A juridical convention manifested in legal form, by virtue in all contracts, such as consent of the contracting of which one or more persons bind themselves in favor of parties, object certain which is the subject matter another or others, or reciprocally, to the fulfilment of a of the contract, and cause of the obligation which prestation to give, to do or not to do (Sanchez Roman) is established Distinguished from the Special Contract of Marriage b. Special (especiales) – those which are present only in certain contracts, such as delivery in real Ordinary Contract Marriage contracts or form in solemn ones; and As to Parties c. Extraordinary or peculiar (especialisimos) – Parties are two or more The parties must be one those which are peculiar to a specific contract, persons whether of the man and one woman, both such as the price in a contract of sale or same or different sexes of legal age insurable interest in a contract of insurance As to what Governs 2. Natural – those which are derived from the nature of The nature, consequences The nature, consequences, the contract and ordinarily accompany the same. and incidents of the contract and incidents of the They are presumed by law although they can be are governed primarily by marriage are governed by excluded by the contracting parties if they so desire. the agreement of the parties law Example is warranty against eviction in a contract of As to Result sale which is implied although the contracting parties Once executed, the result is Once executed, the result is may increase, diminish or even suppress it. a contract a status 3. Accidental – those which exist only when the parties As to Termination expressly provide for them for the purpose of limiting Can be dissolved or Cannot be dissolved or or modifying the normal effects of the contract. terminated by mere terminated by mere  Parties to a contract – from the definition under agreement of the parties agreement of the parties Article 1305, it would seem that it is necessary that As to Remedy in Case of Breach there must be two persons in order that a contract The injured party may The injured party may may exist. This is however not accurate for what is institute an action against institute a civil action really required is that there must be two different the other party for damages against the other party for parties. What is therefore necessary is the existence legal separation or a of two distinct and autonomous wills. The criminal action for adultery existence of a contract is not determined by the or concubinage number of persons who intervene in it, but by the  Contracts must also not be confused with perfected number of parties thereto. Hence, there are certain promises, or to policitacion (imperfect promise) which cases where a juridical relation, known as an auto- is a mere unaccepted offer. contract, may be created wherein, apparently, there 73 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER is only one party involved, but in reality, said party 1. Generation – comprehends the preliminary or merely acts in the name and for the account of two preparation, conception, or generation, which is the distinct contracting parties. period of negotiation and bargaining and ending at the  Auto-contract may take place (1) when a person, in moment of the agreement of the parties. his capacity as representative of another, contracts 2. Perfection – the birth of the contract. It is the moment with himself, or (2) when as a representative of two when the parties come to agree on the terms of the different persons, he brings about a contract between contract. his principals by contracting with himself, unless there 3. Consummation – comprehends the consummation or is conflict of interests or when the law expressly the death of the contract, which is the fulfilment or prohibits it in specific cases. performance of the terms agreed upon in the contract. Illustration: R is an agent of P for the sale of a parcel Classification of Contracts of land owned by the latter. P however authorized R 1. According to their relation to other contracts to buy for himself the parcel of land if he so desires. In a. Preparatory – those which have for their object this case, R may enter into a contract of sale wherein the establishment of a condition in law which is R, in a representative capacity, sells to R, in a necessary as a preliminary step towards the principal capacity, the parcel of land. This R can do celebration of another subsequent contract without violating the element of contract which states (examples: partnership, agency) that there must be two different parties into a contract. b. Principal – those which can subsist independently The law speaks of two different parties not two from other contracts and whose purpose can be persons. fulfilled by themselves (examples: sale, lease) Characteristics of Contracts (OMAR) c. Accessory – those which can exist only as a 1. Obligatory force or character of contracts (Articles consequence of, or in relation with, another prior 1159, 1308, 1315, and 1356) – it refers to the contract. (examples: guaranty, pledge, mortgage) principle that once the contract is perfected, it shall be 2. According to their perfection of obligatory force upon both of the contracting a. Consensual – those which are perfected by the parties. The contracting parties are bound, not only to mere agreement of the parties (examples: sale, the fulfilment of what has been expressly stipulated, lease) but also to all the consequences thereof. b. Real – those which are perfected by the delivery of 2. Mutuality of contracts (Article 1308) – refers to the the object of the obligation (examples: position of essential equality that is occupied by both commodatum, deposit, pledge) contracting parties in relation to the contract. The 3. According to their form contract must be binding upon both of the parties. a. Common or informal – those which require no Consequently, its validity or compliance cannot be left particular form (example: loan) to the will of one of them b. Special or formal – those which require some 3. Autonomy of contracts (Article 1306) – under this particular form (examples: donations, chattel principle, the contracting parties may establish such mortgage) agreements as they may deem convenient provided 4. According to their purpose they are not contrary to law, morals, good customs, a. Transfer of ownership (example: sale) public order, or public policy. b. Conveyance of use (example: commodatum) 4. Relativity of contracts (Article 1311) – this principle c. Rendition of services (example: agency) states that contracts take effect only between the 5. According to their subject matter parties, their assigns and heirs. Consequently, they a. Things (examples: sale, deposit, pledge) cannot, as a general rule, produce any effect upon b. Services (examples: agency, lease of services) third persons. 6. According to the nature of the vinculum which they produce Life of Contracts 74 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER a. Unilateral – those which give rise to an obligation The freedom to contract provided it is not contrary to law, for only one of the parties (examples: morals, good customs, public order or public policy, is both commodatum, gratuitous deposit) a constitutional and a statutory right. b. Bilateral – those which give rise to reciprocal Limitations obligations for both parties (examples: sale, lease) 1. Law – the laws referred to in the article are (1) those 7. According to their cause which are mandatory or prohibitive in character; (2) a. Onerous – those in which each of the parties those which, without being mandatory or prohibitive, aspires to procure for himself a benefit through the nevertheless, are expressive of fundamental giving of an equivalent or compensation (example: principles of justice, and, therefore cannot be sale, lease) overlooked by the contracting parties; and (3) those b. Gratuitous – those in which one of the parties which impose essential requisites without which the proposes to give to the other a benefit without any contract cannot exist. equivalent or compensation (example: Illustration: S sold to B 20 kilograms of marijuana. In commodatum) this case the object of the contract or the sale itself is c. Remuneratory – prohibited by law. Since the sale is prohibited by law, 8. According to the risks involved the contract of sale here between S and B is invalid. a. Commutative – those where each of the parties acquires an equivalent of his prestation and such Illustration: D acquired a loan of P 50,000.00 from C. equivalent is pecuniarily appreciable and already The loan is secured by a property owned by D. determined from the moment of the celebration of However, under the stipulations of the contract, C will the contract (examples: sale, lease) acquire the property constituted as security if D failed b. Aleatory – those where each of the parties has to to pay the loan. The contract in this case is invalid as his account the acquisition of an equivalent of his it is against the law. The stipulation of the parties prestation but such equivalent, although partake the nature of a pactum commissorium which pecuniarily appreciable is not yet determined at is prohibited by law. the moment of the celebration of the contract, 2. Morals – those principles which are incontrovertible since it depends upon the happening of an and are universally admitted and which have received uncertain event, thus charging the parties with the social and practical recognition. risk of loss or gain (example: insurance) Illustration: D acquired a loan of P 1,000.00 from C 9. According to their names or norms regulating them payable within two months. The parties stipulated that a. Nominate – those which have their own D will pay P 20.00 a day in case of non-payment of individuality and are regulated by special the debt at maturity. The stipulation in this case is void provisions of law (examples: sale, lease) for being contrary to morals as the penalty is clearly b. Innominate – those which lack individuality and excessive, unconscionable, and shocking to the are not regulated by special provisions of law. senses. However, in this case, what is void is the Breach of Contract stipulation to pay the penalty and not the principal Breach of contract – the failure, without legal reason, to contract. The stipulation to pay the penalty in this comply with the terms of the contract; the failure, without case shall be deemed not have been agreed upon. legal excuse, to perform any promise which forms the 3. Good customs – the spheres of morals and good whole or part of the contract. customs frequently overlap each other but sometimes ------------------------------------------------------------------------------- they do not. It must be admitted however that if a Art. 1306. The contracting parties may establish such moral precept pr custom is not recognized universally, stipulations, clauses, terms and conditions as they may but is sanctioned by the practice of a certain deem convenient, provided they are not contrary to law, community, then it shall be included within the scope morals, good customs, public order or public policy. or sphere of good customs. ------------------------------------------------------------------------------- 4. Public order – public order can only refer to the Autonomy of Contracts safety, as well as to the peace and order, of the 75 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER country or of any particular community. Public order is Nominate Contracts – those which have their own not as broad as public policy. The latter may refer not distinctive individuality and are regulated by special only to public safety but also to considerations which provisions of law. (ex. Sale, Barter of Exchange, Lease, are moved by the common good. Partnership, Agency, Loan, Deposit, Aleatory contracts, 5. Public policy – a principle of law which holds that no Compromise and Arbitration, Guaranty, Pledge, Mortgage, person can lawfully do that which has a tendency to and Antichresis be injurious to the public or against the public good. Innominate Contracts – those which lack individuality and Illustration: T stole goods belonging to O. T was are not regulated by special provisions of law. however caught. T and O agreed that O will stifle (suppress) the prosecution of T if T will give him P Kinds of Innominate Contracts 10,000.00. The agreement in this case is against a. Do ut des – I give and you give public policy and therefore void. b. Do ut facias – I give and you do c. Facio ut des – I do and you give Illustration: Bus Co., a bus company, posted notices d. Facio ut facias – I do and you do that the bus will not be liable for any loss or damage ------------------------------------------------------------------------------- to passengers or their properties occasioned by their Art. 1308. The contracts must bind both contracting own negligence, and that the passengers will be parties; its validity or compliance cannot be left to the will deemed to have accepted the condition upon buying a of one of them. bus ticket and boarding their bus. The agreement in this case is invalid for being contrary to public policy. Art. 1309. The determination of the performance may be Common carriers cannot escape liability by posting left to a third person, whose decision shall not be binding notices that they will not be liable for any loss to their until it has been made known to both contracting parties. passengers by reason of their (Bus Co.) own Art. 1310. The determination shall not be obligatory if it is negligence. evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances. Compromise Agreements; effects ------------------------------------------------------------------------------- Compromise – a contract whereby the parties, by Mutuality of Contracts making reciprocal concessions, avoid a litigation or put an The validity or fulfilment of a contract cannot be left to the end to one already commenced. It is an agreement will of one of the contracting parties. It must be observed between two or more persons, who, for preventing or however that what is prohibited by law from being putting an end to a lawsuit, adjusts their difficulties by delegated to one of the contracting parties are: mutual consent in the manner which they agree on, and 1. The power to determine whether the contract shall be which everyone of them prefers in the hope of gaining, valid; and balanced by the danger of losing. 2. The power to determine whether the contract shall be General rule: a compromise has upon the parties the fulfilled. effect and authority of res judicata, with respect to the Illustration: L and O entered into a contract of lease matter definitely stated therein, or which by implication whereby O leased to L the former’s house. It was from its terms should be deemed to have been judicially stipulated in the contract that L can continue approved. occupying the house indefinitely as long as they ------------------------------------------------------------------------------- should faithfully fulfil their obligation to pay rentals. In Art. 1307. Innominate contracts shall be regulated by the this case, the characteristic of mutuality is violated. stipulations of the parties, by the provisions of Titles I The continuance and fulfilment of the contract would and II of this Book, by the rules governing the most depend solely and exclusively upon L’s uncontrolled analogous nominate contracts, and by the customs of the choice between continuing paying the rentals or not, place. completely depriving O of all say on the matter. -------------------------------------------------------------------------------  However, there are certain agreements which will in Nominate and Innominate Contracts effect render the mutuality of contracts illusory 76 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER because one of the contracting parties is placed in a Exceptions: An assignee or heir shall not be bound by the position of superiority with regard to the determination terms of the contract if the rights and obligations arising of the validity or fulfilment of the contract over that from the contract are not transmissible: occupied by the other party, but which do not fall 1. By their nature, as when the special or personal within the purview of the prohibition under Article qualification of the obligor constitutes one of the 1308. principal motives for the establishment of the contract; or Determination by Third Person or by Chance – The validity or fulfilment may be left to the will of a third person. 2. By stipulation of the parties, as when the contract expressly provides that the obligor shall perform an However, it is necessary that the determination made by the third person should not be evidently inequitable. If it is act by himself and not through another; or evidently inequitable, it shall not have any obligatory effect 3. By provision of law, as in the case of those arising upon the contracting parties. from a contract of partnership or of agency  The validity or fulfilment can also be left to chance Effect of Contract on Third Persons – As a general rule, When Stipulated – it is important to note however that an a contract cannot produce any effect whatsoever as far as third persons are concerned. Consequently, he who is not agreement of the parties that either one of them may terminate the contract upon reasonable period of notice is a party to a contract, or an assignee thereunder, has no valid. Judicial action for the rescission of a contract is not legal capacity to challenge its validity. necessary where the contract provides that it may be Exceptions: revoked and cancelled for the violation of any of its terms 1. Where the contract contains a stipulation in favor of a and conditions. This right of rescission, however, may be third person; waived. 2. Where the third person comes into possession of the ------------------------------------------------------------------------------- object of a contract creating a real right; Art. 1311. Contracts take effect only between the parties, 3. Where the contract is entered into in order to defraud their assigns and heirs, except in case where the rights a third person; and and obligations arising from contract are not 4. Where the third person induces a contracting party to transmissible by their nature, or by stipulation or by violate his contract provision of law. The heir is not liable beyond the value of the property he received from the decedent. Stipulations in Favor of Third Persons (Stipulation pour autrui) If a contract should contain some stipulation in favor of a Stipulation pour autrui – a stipulation in a contract, third person, he may demand its fulfilment provided he clearly and deliberately conferred by the contracting parties communicated his acceptance to the obligor before its as a favor upon a third person, who must have accepted it revocation. A mere incidental benefit or interest or a person is not sufficient. The contracting parties must before it could be revoked. have clearly and deliberately conferred a favor upon a Kinds of Beneficial Stipulations in Favor of Third third person. Persons ------------------------------------------------------------------------------- 1. Those where the stipulation is intended for the sole Relativity of Contracts benefit of the third person; and A contract can only bind the parties who had entered into it 2. Those where an obligation is due from the promise to or their successors who have assumed their personality or the third person which the former seeks to discharge their juridical position, and that, as a consequence, such by means of such stipulation. contract can neither favor nor prejudice a third person (in conformity with the axiom res inter alios acta aliis neque Requisites (FP-CAN) nocet prodest) 1. There must be a stipulation in favor of a third person; 2. The stipulation must be a part, not the whole, of the General rule: contracts can take effect only between the contract; parties, their assigns and heirs. 77 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER 3. The contracting parties must have clearly and A real right is a right belonging to a person over a specific deliberately conferred a favor upon a third person, thing, without a passive subject individually determined, not a mere incidental benefit or interest; against whom such right may be personally enforced. 4. That the favorable stipulation should not be Consequently, a third person who might come into conditioned or compensated by any kind of obligation possession of the object of a contract creating real right will whatever; have to be bound by such right subject to the provisions of 5. The third person must have communicated his the Mortgage Law and the Land Registration Laws. acceptance to the obligor before its revocation; and Illustration: A mortgaged his house and lot to the 6. Neither of the contracting parties bears the legal PNB in order to secure an obligation of P 50,000.00. representative or authorization of the third party The mortgage is registered in the Registry of Property.  The acceptance by the third person or beneficiary The effect of such of registration is to create a real does not have to be done in any particular form. It right which will be binding against the whole world. may be done expressly or impliedly. Hence, if A subsequently sold the property to S, the Illustration: Insurance Co. issued in favor of Bus Co. contract of mortgage between A and PNDB will be an accident insurance policy for a period of 1 year. It binding upon S. was stipulated in the policy that Insurance Co. will ------------------------------------------------------------------------------- indemnify Bus Co. in the event of accident against all Art. 1313. Creditors are protected in cases of contracts sums which the insured (Bus Co.) will become legally intended to defraud them. liable to pay for death or injury to any fare-paying ------------------------------------------------------------------------------- passenger, driver, conductor, or inspector, who is Contracts in Fraud of Creditors riding the vehicle at the time of the accident. In this A third person who is a creditor of one of the contracting case, the heirs of D, a driver of Bus Co. may sue parties may ask for the rescission of the contract if it can be Insurance Co. and demand the fulfilment of the established that the contract was entered into with the contract in case D died in an accident while driving a intention of defrauding him. bus owned by Bus Co. notwithstanding the fact that D  However, it is necessary to proved that such creditor is not a party to the contract. The stipulation in this has no other legal means to obtain reparation. case is a stipulation pour autrui. (Note: the heirs of D Illustration: On December 25, 2011, D borrowed P may sue by virtue of relativity of contracts). 50,000.00 from C payable on February 25, 2012.  A stipulation may validly be made in favor of Upon maturity, C demanded payment of the debt but indeterminate persons, provided that they can be D refused to pay. On February 28, 2012, D donated a determined in some manner at the time when the parcel of land to X. In this case, C may ask for the prestation from the stipulation has to be performed. rescission of the contract between D and X. However,  The stipulation can also be in favor of future persons, C must first establish that no other legal remedy is or one who is to be born after perfection of the available to him in order that D’s obligation to him is to contract containing the stipulation. be satisfied.  The acceptance is optional upon the third person ------------------------------------------------------------------------------- Art. 1314. Any third person who induces another to Test of Beneficial Stipulation – The test is to rely upon violate his contract shall be liable for damages to the the intention of the parties as disclosed by their contract. other contracting party. ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Art. 1312. In contracts creating real rights, third persons Doctrine of Contractual Interference who come into possession of the object of the contract A third person who induces another to violate his contract are bound thereby, subject to the provisions of the shall be liable for damages to the other contracting party. Mortgage Law and the Land Registration Laws. The right to perform a contract and to reap the profits ------------------------------------------------------------------------------- resulting from such performance, and also the right to Contract Creating Real Rights performance by the other party, are property rights which 78 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER entitle each party to protection and to seek compensation The principle enunciated in Article 1317 is a logical by an action in tort for any interference therewith. corollary to the principles of the obligatory force and the Requisites relativity of contracts.  The contract illustrated by the second paragraph is an 1. There is a valid contract; 2. The third person has knowledge of the existence of unenforceable contract or one which cannot be enforced by a proper action in court, unless they are the valid contract; and ratified, because either they are entered into without 3. There is interference by such third person without legal justification or excuse or in excess of authority.  The effect of the ratification is retroactive. Hence, Illustration: Sharon is an actress. Sharon and TV5 ratification validates the contract from the moment of entered into a contract whereby Sharon shall be its celebration, and not merely from the time of its exclusively a TV5 actress for a period of 5 years in ratification. consideration of P 1,000,000,000.00. Before the  If the contract is not ratified by the person expiration of the contract, GMA7 induced Sharon to represented, the representative becomes liable in violate her contract with TV5 by appearing in GMA7 damages to the other party. shows, without the consent of TV5. In this case, GMA7 is liable for damages in favor of TV5. ------------------------------------------------------------------------------- Essential Requisites of Contracts Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the General Provisions fulfilment of what has been expressly stipulated but also ------------------------------------------------------------------------------- to all the consequences which, according to their nature, Art. 1318. There is no contract unless the following may be in keeping with good faith, usage and law. requisites concur: 1. Consent of the contracting parties; Art. 1316. Real contracts, such as deposit, pledge and 2. Object certain which is the subject matter of the commodatum, are not perfected until the delivery of the contract; object of the obligation. 3. Cause of the obligation which is established. ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Perfection of Contracts Common Essential Elements Perfection of a contract refers to that moment in the life of The elements of contracts enumerated under Article 1318 the contract when there is finally a concurrence of the wills are those which are referred to us common essential of the contracting parties with respect to the object and the elements. As already stated, common essential elements cause of the contract. are those elements which are present in all contracts and General rule: contracts are perfected by mere consent. without which there can be no contract.  The law imposes the essential elements (not just the Exceptions: real contracts. common essential elements), presumes the natural, ------------------------------------------------------------------------------- Art. 1317. No one may contract in the name of another and authorizes the accidental. without being authorized by the latter, or unless he has  The will of the contracting parties conforms to the by law a right to represent him. essential, accepts or repudiates the natural, and establishes the accidental. A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless Consent it is ratified, expressly or impliedly, by the person in whose behalf it has been executed, before it is revoked ------------------------------------------------------------------------------- by the other contracting party. Art. 1319. Consent is manifested by the meeting of the ------------------------------------------------------------------------------- offer and the acceptance upon the thing and the cause Contracts in Name of Another which are to constitute the contract. The offer must be 79 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER certain and the acceptance absolute. A qualified is such a manifestation of the concurrence of the wills acceptance constitutes a counter-offer. of the contracting parties, the period or stage of Acceptance made by letter or telegram does not bind the negotiation is terminated. The contract, if consensual, offerer except from the time it came to his knowledge. is finally perfected. The contract, in such a case, is presumed to have been Character of Offer and Acceptance entered into in the place where the offer was made. Offer – a proposal to make a contract; a unilateral Art. 1320. An acceptance may be express or implied. proposition which one party makes to the other contracting party for the celebration of the contract. Art. 1321. The person making the offer may fix the time, place, and manner of acceptance, all of which must be In order to constitute a binding proposal, the offer must be complied with. certain or definite. Art. 1322. An offer made through an agent is accepted Requisites of Offer from the time acceptance is communicated to him. 1. Definite – the offer must be definite, so that upon ------------------------------------------------------------------------------- acceptance an agreement can be reached on the Consent whole contract. Consent – the concurrence of the wills of the contracting 2. Complete – the offer must be complete indicating with parties with respect to the object and the cause which shall sufficient clearness the kind of contract intended and constitute the contract. definitely stating the essential conditions of the proposed contract, as well as the non-essential ones In its derivative sense, consent means the agreement of desired by the offeror. wills. 3. Intentional – an offer without seriousness made in Requisites of Consent (CC-IFSR) such manner that the other party would not fail to 1. Consent must be manifested by the concurrence of notice such lack of seriousness, is absolutely without the offer and the acceptance juridical effects and cannot give rise to a contract. 2. The contracting parties must possess the necessary Illustration: A, in a letter, told B that the former is legal capacity willing to entertain the purchase of a house belonging 3. Consent must be intelligent, free, spontaneous, and to B. In this case, the acceptance by B will not result real in a perfected contract as the offer of A to buy is not definite. Perfection of Contracts In general, contracts are perfected from the moment that Illustration: A offered to B the sale of an animal. In there is a manifestation of the concurrence between the this case, the acceptance by B would not result in a offer and the acceptance with respect to the object and the perfected contract as the offer was not complete. The cause which shall constitute the contract. object of the contract, which is an essential element,  However, if the acceptance is made by letter or is not clear. telegram: Illustration: A told B that the former will give the latter General rule: the contract is perfected from the the moon in consideration of P 1,000,000.00. In this moment that the offeror has knowledge of such case, it is obvious that the offer was not serious. acceptance (Art. 1319, par. 2) A visited the house of B. B, in welcoming A, told A Exception: In purely commercial contracts, such as that “my house is yours.” In this case, the acceptance joint accounts, maritime contracts, etc. contract is by B would not result in a perfected contract (donation perfected from the moment an answer is made in this case) as the offer was merely a customary way accepting the offer (Art. 54, Code of Commerce) of accepting guests (Also, donation of immovables  It must be noted that before there is consent, it is must be in a public document). essential that it must be manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Once there 80 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER Withdrawal of Offer – the offeror may still withdraw his contract. Perfection of contract requires the offer so long as he still has no knowledge of the concurrence of offer and acceptance. There is no acceptance by the offeree. concurrence of offer and acceptance if the Illustration: A, through a letter, told B that he is acceptance is not made known to the offeror. offering his house for sale for P 500,000.00. The letter  A qualified acceptance constitutes a counter-offer. is to be received by B the following day. The following day, B received the letter and thereafter wrote a reply Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance stating his acceptance. The letter of acceptance is to is not sufficient to generate consent because any be received by A the following day. However, A modification or variation from the terms of the offer changed his mind and he is not willing to sell his annuls the offer. house anymore. Hence, a day after he wrote his letter-offer (same day when B accepted the offer), A  Right of the Offeror – the offeror has the right to prescribe the manner, conditions, and terms of the called B using a telephone and told him that he is contract, and where these are reasonable and are withdrawing his offer. The withdrawal in this case is made known to the offeree, they are binding upon the valid because the acceptance made by B has not latter; an acceptance which is not made in the manner come to the knowledge of A yet. Hence, at the time of prescribed by the offeror is not effective, but the withdrawal, there is no perfected contracted yet. constitutes a counter-offer which the offeror may Acceptance – the signification of the assent of the offeree accept. to the proposition of the offeror. Acceptance may be Acceptance of Complex Offers – to a certain extent the express or implied. rules regarding acceptance are modified in case of  Implied acceptance – implied acceptance may arise complex offers. from acts or facts which reveal the intent to accept, Illustration: S offered to sell Blue House and to lease such as the consumption of the things sent to the Red House (both houses are owned by A) to B. B offeree. accepted the sale of Blue House. There is a perfected  Lapse of Time – an offer without a period must be contract of sale in this case as its acceptance is not considered as becoming ineffective after the lapse of dependent upon the acceptance of the contract of more than the time necessary for its acceptance, lease. However, if S told B that he is not willing to sell taking into account the circumstances and social Blue House if B would not also lease Red House, then conditions. there is no perfected contract of sale. The sale was Requisites of Acceptance made to depend upon the acceptance of the lease as 1. Certain or definite well. 2. Absolute or unconditional  However, the prospective contracts which are 3. Directed to the offeror comprised in a single offer may be so interrelated in 4. Made known to the offeror within a reasonable time such a way that the acceptance of one would not at all 5. Communicated to the offeror and learned by him result in a perfected contract. Illustration: A told B that he is offering his house for Illustration: D asked C if the latter could extend to the sale for P 1,000,000.00. B accepted but told A if he former a loan for P 50,000.00. C told D that he is, can reduced the price to P 850,000.00. In this case provided that a mortgage to secure the proposed loan there is no perfected contract. The “acceptance” by B is constituted. D accepted the loan but not the is not absolute. mortgage. In this case there is no perfected contract Illustration: A, through a letter, told B that he is of loan. The acceptance of the mortgage is an offering his car for sale for P 100,000.00. Upon essential condition for the perfection of the loan in this reading the letter, B said “Yes! I accept!” but B did not case. write a reply stating his acceptance nor called A to say his acceptance. In this case there is no perfected 81 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER Withdrawal of Acceptance – acceptance may be revoked place. before it comes to the knowledge of the offeror because in ------------------------------------------------------------------------------- such a case there is still no meeting of the minds. Art. 1324. When the offeror has allowed the offeree a Acceptance by Letter or Telegram (MERC) certain period to accept, the offer may be withdrawn at 1. Manifestation theory – contract is perfected from the any time before acceptance by communicating such moment the acceptance is declared or made (followed withdrawal, except when the option is founded upon a by the Code of Commerce) consideration, as something paid or promised. 2. Expedition theory – the contract is perfected from ------------------------------------------------------------------------------- the moment the offeree transmits the notification of Option Contract acceptance to the offeror, as when the letter of Option Contract – a preparatory contract in which one acceptance is place in the mailbox. party grants to the other, for a fixed period and under 3. Reception theory – the contract is perfected from the specified conditions, the power to decide whether or not to moment that the notification of acceptance is in the enter into a principal contract. It must be supported by an hands of the offeror in such a manner that he can, independent consideration and the grant must be exclusive under ordinary conditions, procure the knowledge of Like other contracts, an option contract must be supported its contents, even if he is not able to actually acquire by a consideration which is separate and distinct from the such knowledge due to some reason. consideration in the principal contract (i.e., sale). If the 4. Cognition theory – the contract is perfected from the option is without a separate consideration, it is void as a moment the acceptance comes to the knowledge of contract. Consequently, the promissor-offeror is not bound the offeror (followed by the Civil Code) by his promise and may, accordingly, withdraw it. -------------------------------------------------------------------------------  However, pending notice of his withdrawal, his Art. 1323. An offer becomes ineffective upon the death, promise partakes of the nature of a continuing offer civil interdiction, insanity, or insolvency of either party which, if accepted before withdrawal, results in the before acceptance is conveyed. perfection of the principal contract. ------------------------------------------------------------------------------- Illustration: S offered to B his car for P 500,000.00. Effect of Death, Civil Interdiction, Insanity, or As B had insufficient funds at that moment, he asked Insolvency S if he could give him a time to think about it. S An offer becomes ineffective upon the death, civil granted the request and granted B an option to buy interdiction, insanity, or insolvency of either party before the car for 2 months in consideration of P 1,000.00. B the offeror has knowledge of the acceptance by the accepted the option but did not pay the P 1,000.00. offeree. Before the expiration of the 2-month period, B told S  The word “conveyed” in the article refers to that that he is accepting the offer to buy the car. In this moment when the offeror has knowledge of the case, the contract of the sale of the car is already acceptance by the offeree. perfected. This is true notwithstanding that the option Illustration: S called B and offered to the latter the contract is void for lack of separate consideration. His sale of the former’s car for P 500,000.00. B could not promise partake the nature of a continuing offer. accept that time so he asked S some time to think Illustration: S offered to B his car for P 500,000.00. about it which S granted. 2 days thereafter, B decided As B had insufficient funds at that moment, he asked to accept the offer. Thus, he wrote a letter of S if he could give him a time to think about it. S acceptance. The letter is to be received by S the granted the request and granted B an option to buy following day. However, upon mailing the letter, a the car for 2 months in consideration of P 1,000.00. B speeding car hit B causing his death. In this case accepted the option but did not pay the P 1,000.00. there is no perfected contract of sale as one of the Before the expiration of the 2-month period and parties (B, the offeree) died before acceptance is before acceptance by B, S withdrew the offer to sell conveyed to the offeror. Hence, the heirs of B cannot the car. The withdrawal of the offer in this case is compel S to sell the car and invoke the relativity of valid. B cannot invoke the option granted to him by S contracts as there is no contract to speak of in the first 82 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER as the same was void. Option Contract Right of First Refusal Can stand on its own Cannot stand on its own Withdrawal of Offer under a Valid Option (principal contract) (accessory contract) There are two conflicting views as regards this subject Requires a separate Does not require a separate matter: consideration distinct from consideration  First view: if the option is founded upon a separate that of the principal contract consideration (and therefore valid), the offeror cannot in order to be valid withdraw the principal offer. Not conditional Conditional  Second view: in an option contract, with or without a Not subject to specific Can be subjected to specific separate consideration, the offeror may still withdraw performance since there is performance the principal offer, provided the withdrawal is made no perfected principal before the acceptance of the principal offer. This is contract yet. because there is no perfected principal contract yet. However, if the option is with a separate Option Money and Earnest Money, Distinguished consideration, the offeror shall be liable for damages. Option Money Earnest Money  In this case, the offeree cannot compel the Money given as a distinct Money which is part of the offeror to enter into the principal contract. To do consideration for an option purchase price so would partake to an “obligation to do” or contract personal obligation. In a personal obligation, the Applies to contract of sales Applies to contract of sales debtor cannot be compelled to comply with his not yet perfected already perfected obligation. The only remedy of the obligee is to The would-be buyer who The buyer who gives the file an action for damages against the obligor. gives the option money is earnest money is bound to  The case should be distinguished to a case not bound to buy pay the balance where acceptance of the principal contract was ------------------------------------------------------------------------------- made known to the offeror before the withdrawal. Art. 1325. Unless it appears otherwise, business In this case there is already a perfected principal advertisements of things for sale are not definite offers, contract. The obligee can therefore compel the but mere invitations to make an offer. obligor (offeror) to comply with his obligation Art. 1326. Advertisements for bidders are simply under the principal contract (except of course if invitations to make proposals, and the advertiser is not the prestation under the principal contract bound to accept the highest or lowest bidder, unless the consists in an obligation to do) contrary appears.  The second view is more in accordance with the ------------------------------------------------------------------------------- principles of contract. Sales Advertisements Illustration: S offered to B his car for P 500,000.00. A business advertisement of things for sale may or may not As B had insufficient funds at that moment, he asked constitute a definite offer. It is not a definite offer when the S if he could give him a time to think about it. S object is not determinate. granted the request and granted B an option to buy  When the advertisement does not have the necessary the car for 2 months in consideration of P 1,000.00. B specification of essential elements of the future accepted the option and paid the P 1,000.00. contract, it cannot constitute an offer. However, before the expiration of the 2-month period, Illustration: While watching her television, A chanced S sold the car to X. In this case the withdrawal of the upon a shampoo commercial by Pantene. The offer to sell the car is valid as there was no perfected advertisement stated the suggested retail price of a contract of sale notwithstanding the existence of a sachet of a Pantene shampoo. In this case, the valid option contract. However, S is liable for damages advertisement is merely an invitation to make an offer in favor of B. because although the suggested retail price was Option Contract and Right of First Refusal, specified (and this is true even if the actual price, not Distinguished merely suggested, was shown) because the quantity 83 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER to be sold was absent. The advertiser therefore is free majority commences at the age of eighteen years.” to reject any offer that may be made. the “unemancipated minors” referred to in Article 1327 merely pertains to “minors” as there can be no Illustration: While reading an issue of Philippine Daily “emancipated minors” in this jurisdiction anymore. Inquirer, A saw an advertisement which read states:  A minor is without capacity to give consent to a “For sale, 500 m2 lot located at Mendiola, Manila contract, and since consent is an essential corner J.P. Laurel street (just beside San Beda requisite of every contract, the absence thereof College) for P 1,000,000.00. Just contact “Acong” at cannot give rise to a valid contract. The contract 800-6969.” In this case the offer is definite. A may call in this case is a voidable contract (unless the Acong and tell the latter that he (A) is accepting the other contracting party is also incapacitated to offer. give consent, in which case the contract is Illustration: Hotel Co. published in a newspaper an unenforceable). “Invitation to Bid” inviting proposals to supply labor Exceptions: and materials for a construction project described in i. Where the contract involves the sale and the invitation. A Co., B Co., and C Co. C Co. delivery of necessaries to the minor. submitted the lowest bid. However, Hotel Co. awarded Requisites: the contract to A Co. on the ground that he was the 1. Perfection of the contract (sale); most experienced and responsible bidder. In this 2. Delivery of the subject matter. case, C Co. cannot compel Hotel Co. to award the Necessaries – necessaries are those which are contract in its favor. The awarding of the contract in indispensable for sustenance, dwelling, clothing, favor of A Co. was within the rights of Hotel Co. as the medical attendance, education and transportation, general rule that advertisements for bidders are in keeping with the financial capacity of the family. simply invitations to make proposals. It would have ii. Where the contract is entered into by a minor been different if in the advertisement, it was clearly who misrepresents his age, applying the stated that the lowest (or highest) bidder shall be doctrine of estoppel. awarded the contract. iii. When it involves a natural obligation and such ------------------------------------------------------------------------------- obligation is fulfilled voluntarily by the minor, Art. 1327. The following cannot give consent to a provided that such minor is between eighteen contract: and twenty-one years of age (No longer 1. Unemancipated minors; applicable as an exception) 2. Insane or demented persons, and deaf-mutes who iv. When it is a marriage settlement or donation do not know how to write. propter nuptias, provided that the minor is ------------------------------------------------------------------------------- between twenty and twenty-one years of age, if Legal Capacity of Contracting Parties male, or between eighteen and twenty-one The capacity of the contracting parties is an indispensable years of age, if female (No longer applicable requisite of consent. as an exception) Incapacitated Persons – contracts entered into by the v. When it is a life, health, or accident insurance following incapacitated persons are voidable, if only one of taken on the life of the minor, provided that the the contracting parties is incapacitated, or unenforceable if minor is eighteen years old or more and the both contracting parties are incapacitated to give consent beneficiary appointed is the minor’s estate, or to a contract. the action for annulment cannot be instituted the minor’s father, mother, husband, wife, child, by the person who is capacitated since he is disqualified brother, or sister (No longer applicable as an from alleging the incapacity of the person whom he exception) contracts. 2. Insane or demented persons – any person, who, at 1. Minors – by virtue of Article 234 of the Family Code, the time of the celebration of the contract, cannot which states that: “Emancipation takes place by the understand the nature and consequences of the act or attainment of majority. Unless otherwise provided, transaction by reason of any cause affecting his 84 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER intellectual or sensitive faculties, whether permanent manage their property becoming thereby an or temporary. However, a contract entered into during easy prey for deceit and exploitation. a lucid interval is valid. -------------------------------------------------------------------------------  In order to avoid a contract because of mental Art. 1328. Contracts entered into during a lucid interval incapacity, it is necessary to show that at the are valid. Contracts agreed to in a state of drunkenness time of the celebration of the contracting parties or during a hypnotic spell are voidable. was not capable of understanding with Art. 1329. The incapacity declared in Article 1327 is reasonable clearness the nature and effect of the subject to the modification determined by law, and is transaction in which he was engaged. understood to be without prejudice to special  Hence, such circumstances as age, sickness, or disqualifications established by laws. any other condition as such will not necessarily ------------------------------------------------------------------------------- justify a court of justice to interfere in order to set Disqualifications to Contract aside a contract voluntarily entered into. Persons specially disqualified are those who are prohibited  Mental incapacity to enter into a contract is a from entering into a contract with certain persons with question of fact which must be decided by the regard to certain property under certain circumstances and courts. There is however a prima facie not to those who are incapacitated to give their consent to presumption that every person of legal age a contract. possesses the necessary capacity to execute a contract. Incapacity and Disqualification, Distinguished 3. Deaf-mutes who do not know how to write – the Incapacity Disqualification case must be distinguished from a contract entered (Absolute Incapacity) (Relative Incapacity) into by a deaf-mute who knows how to write, which is As to Nature perfectly valid. On the other hand, contracts entered Impairs the exercise of the Prohibition to contract into by a deaf-mute who do not know how to write right to contract; the restrains the very right itself; may either be voidable or unenforceable. incapacitated person may the disqualified person 4. Other Incapacitated Persons still enter into a contract but cannot enter into a contract a. Married women in cases specified by law; with consent of his parent or with respect to certain types b. Persons suffering from civil interdiction; guardian of properties c. Incompetents who are under guardianship As to Basis “Incompetents” include: Based upon subjective Based upon public policy i. Persons suffering from civil interdiction circumstances of certain and morality (does not require guardianship to be persons which compel the incapacitated); law to suspend for a definite ii. Hospitalized lepers; period, their right to contract iii. Prodigals; As to Defect iv. Deaf and dumb who are unable to read and Contract entered into by an Contract entered into by a write (deaf-mutes who do not know how to incapacitated person is disqualified person is void write does not require guardianship to be merely voidable incapacitated); Disqualified Persons – contracts entered into in the v. Those who are of unsound mind, even following cases by the following persons are void (not though they have lucid intervals (insane or merely voidable). demented persons does not require 1. Spouses – the spouses cannot donate properties to guardianship to be incapacitated); each other except donation of moderate gifts on the vi. Those who by reason of age, weak mind, occasion of any family rejoicing (Art. 87, Family and other similar causes, cannot, without Code). The spouses cannot also sell property to each outside aid, take care of themselves and other, except when a separation of property was agreed upon in the marriage settlements, or when 85 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER there has been a judicial separation of property (Art. of the contract must be the property entrusted to the 1490) principal. Hence if the principal owns two parcels of  Prohibition applies to common-law spouses. land and the agent was entrusted with one these  Contracts entered into in violation of Article 1490 properties, the agent can acquire from the principal of the Civil Code (and Article 87 of the Family the other property Code) are null and void (not merely voidable). Illustration: Boy Abunda is a talent agent of Kris However, not anyone is given the right to assail Aquino. Kris Aquino sold one of her houses to Boy the validity of the transaction Abunda. The contract in this case is valid as Boy Examples of Persons who cannot assail the Validity of Abunda is not the “agent” as referred to in the Contracts in Violation of the Prohibition: prohibition. a. The spouses themselves cannot assail the Illustration: O owns two parcels of land, L1 and L2. O validity of the contract since they are parties to entrusted to A, agent, the sale of L1. A purchased an illegal act under the principle of pari delicto, from O L2. The sale in this case is valid because A the courts will generally leave them as they are. has not been entrusted with the sale of the property b. The creditors who became such only after the he acquired (L1 is what has been entrusted to him, transaction (the illegal contract of sale), for it not L2 which is the one he purchased). It would have cannot be said that they have been prejudiced by been different if the administration or sale of L2 has the transaction also been entrusted to A. Persons who can assail the Validity of Contracts in 4. Executors and Administrators with respect to the Violation of the Prohibition: property of the estate under administration a. The heirs of either of the spouses who have Note: But an executor can acquire the hereditary been prejudiced rights of an heir to the estate under his administration b. Creditors who became such prior to the 5. Public Officers and Employees with respect to the transaction property of the State or any of its subdivisions, any c. The State when it comes to payment of the Government-owned and controlled corporations, or proper taxes due on the transaction institution the administration of which has been 2. Guardians with respect to the property of the person entrusted to them under guardianship – Prohibition applies even if the 6. Justices, judges, prosecuting attorneys and other guardian did not acquire the property of the ward from court officers and employees connected with the the ward directly as when there was a third person administration of justice with respect to property who bought the property from the ward and that third and rights in litigation or levied upon on execution person sold the property in question to the guardian before the court within whose jurisdiction or territory Illustration: G, guardian of W, purchased a property they exercise their respective functions worth P 1,000,000.00 owned by W for P  The object is considered in litigation upon filing 10,000,000.00. In this case, the purchased is void of an answer. The property is in litigation from notwithstanding the fact that in the said contract is the moment it became subject to the judicial more beneficial to W. The prohibition is absolute. action of the judge, such as levy on execution 3. Agents with respect to property to whose 7. Lawyers – Prohibition applies only to a sale to a administration or sale may have been entrusted to lawyer of record, and does not cover assignment of them the property given in judgment made by a client to an attorney, who has not taken part in the case nor to a Exception: when the consent of the principal has been given. lawyer who acquired property prior to the time he intervened as counsel in the suit involving such An agent of a principal is not automatically disqualified property from acquiring property from the principal. For the prohibition to apply, the property which is the subject Exceptions to prohibition: 86 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER a. To sale of a land acquired by a client to satisfy a qualifications have been the principal cause of the judgment in his favor, to his attorney as long as contract. the property was not the subject of the litigation; A simple mistake of account shall give rise to its or correction. b. To a contingency fee arrangement which grants ------------------------------------------------------------------------------- the lawyer of record proprietary rights to the Mistake property in litigation since the payment of said Mistake – mistake is not only the wrong conception of a fee is not made during the pendency of litigation thing, but also the lack of knowledge with respect to a but only after judgment has been rendered thing. 8. Aliens – aliens are disqualified from acquiring agricultural lands (Secs. 3 and 7, Art. XII, 1987 Kinds of Mistake Constitution). a. Mistake of Fact – when one or both of the contracting  “agricultural lands” should not be interpreted parties believe that a fact exists when in reality it does literally. Under the Constitution, only agricultural not or that such fact does not exist when in reality it lands may be alienated. Hence, “agricultural does. This is the mistake which vitiates consent. lands” are those lands which can be alienated b. Mistake of Law – when one or both of the contracting and hence does not include lands of the public parties arrive at an erroneous conclusion regarding domain. Thus, a land is “agricultural land” even if the interpretation of a question of law or the legal it is located in an industrial center or is used for effects of a certain act or transaction. residential purposes as long as it does not Different Kinds of Mistakes of Fact belong to the public domain. 1. Mistake as to Object (error in re) – mistake which is ------------------------------------------------------------------------------- referred to in the first paragraph of Article 1331. Art. 1330. A contract where consent is given through a. Mistake as to the identity of the thing (error in mistake, violence, intimidation, undue influence, or fraud corpore), as when the thing which constitutes the is voidable. object of the contract is confused with another ------------------------------------------------------------------------------- thing; Vices of Consent b. Mistake as to the substance of the thing (error in Intelligent consent is vitiated by mistake or error; free substantia); consent by violence, intimidation, and undue influence; c. Mistake as to the conditions of the thing, spontaneous consent by fraud. provided such conditions have principally moved a. Vices of the will – comprehends mistake, violence, one or both parties to enter into the contract; and intimidation, undue influence, and fraud. d. Mistake as to the quantity of the thing (error in b. Vices of declaration – comprehends all forms of quantitate), provided that the extent or the simulated contracts. dimension of the thing was the principal reasons  Defect or lack of valid consent, in order to make the of one or both of the parties for entering into the contract voidable, must be established by full, clear, contract. and convincing evidence, and not merely by a  It is necessary that such mistake should refer not preponderance thereof. only to the material out of which the thing is ------------------------------------------------------------------------------- made, but also to the nature which distinguishes Art. 1331. In order that mistake may invalidate consent, it it, generally or specifically, from all others, such should refer to the substance of the thing which is the object of the contract, or to those conditions which have as when a person purchases a thing made of principally moved one or both parties to enter into the silver believing that is made of gold. contract.  If mistake refers only to accidental or secondary qualities (error in qualitate), the contract is not Mistake as to the identity or qualifications of one of the rendered voidable. parties will vitiate consent only when such identity or 87 MAGHIRANG, Ariel | REFERENCES: Jurado, Tolentino | 2011 Civil Law Reviewer: Obligations and Contracts.  OBLIGATIONS AND CONTRACTS CIVIL LAW REVIEWER 2. Mistake as to Person (error in persona) – mistake 1. The mistake must be with respect to the legal effect which may refer either to the name or to the identity or of an agreement; to the qualification of a person. 2. The mistake must be mutual; and Requisites: 3. The real purpose of the parties must have been i. The mistake must be either with regard to the frustrated. ------------------------------------------------------------------------------- identity or with regard to the qualification of one Art. 1335. There is violence when in order to wrest of the contracting parties; consent, serious or irresistible force is employed. ii. Such identity or qualification must have been the principal consideration for the celebration of the There is intimidation when one of the contracting parties contract. is compelled by a reasonable and well-grounded fear of  The only mistake with regard to persons which an imminent and grave evil upon his person or property, will vitiate consent are mistakes with regard to or upon the person or property of his spouse, the identity or the qualifications of one of the descendants or ascendants, to give his consent. contracting parties. To determine the degree of the intimidation, the age, sex  Hence, mistake with regard to the name of one and condition of the person shall be borne in mind. or both of the contracting parties will not A threat to enforce one’s claim through competent invalidate the contract. authority, if the claim is j