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Art. 1309. The determination of the performance Art. 1316. Real contracts, such as deposit, pledge Art. 1322. An offer made through an agent is
may be left to a third person, whose decision shall and Commodatum, are not perfected until the accepted from the time acceptance is communicated
not be binding until it has been made known to both delivery of the object of the obligation. (n) to him. (n)
contracting parties. (n)
Art. 1317. No one may contract in the name of Art. 1323. An offer becomes ineffective upon the
Art. 1310. The determination shall not be obligatory another without being authorized by the latter, or death, civil interdiction, insanity, or insolvency of
if it is evidently inequitable. In such case, the courts unless he has by law a right to represent him. either party before acceptance is conveyed. (n)
shall decide what is equitable under the A contract entered into in the name of another by
circumstances. (n) one who has no authority or legal representation, or Art. 1324. When the offerer has allowed the offeree
who has acted beyond his powers, shall be a certain period to accept, the offer may be
Art. 1311. Contracts take effect only between the unenforceable, unless it is ratified, expressly or withdrawn at any time before acceptance by
parties, their assigns and heirs, except in case where impliedly, by the person on whose behalf it has been communicating such withdrawal, except when the
the rights and obligations arising from the contract executed, before it is revoked by the other option is founded upon a consideration, as
are not transmissible by their nature, or by contracting party. (1259a) something paid or promised. (n)
stipulation or by provision of law. The heir is not
liable beyond the value of the property he received Art. 1325. Unless it appears otherwise, business
from the decedent. A. Essential Requisites of Contracts advertisements of things for sale are not definite
If a contract should contain some stipulation in favor offers, but mere invitations to make an offer. (n)
of a third person, he may demand its fulfillment Art. 1318. There is no contract unless the following
provided he communicated his acceptance to the requisites concur: Art. 1326. Advertisements for bidders are simply
obligor before its revocation. A mere incidental (1) Consent of the contracting parties; invitations to make proposals, and the advertiser is
benefit or interest of a person is not sufficient. The (2) Object certain which is the subject matter of the not bound to accept the highest or lowest bidder,
contracting parties must have clearly and contract; unless the contrary appears. (n)
party has relied on the former's special knowledge.
Art. 1327. The following cannot give consent to a Art. 1335. There is violence when in order to wrest (n)
contract: consent, serious or irresistible force is employed.
(1) Unemancipated minors; There is intimidation when one of the contracting Art. 1342. Misrepresentation by a third person does
(2) Insane or demented persons, and deaf-mutes who parties is compelled by a reasonable and well- not vitiate consent, unless such misrepresentation
do not know how to write. (1263a) grounded fear of an imminent and grave evil upon has created substantial mistake and the same is
his person or property, or upon the person or mutual. (n)
Art. 1328. Contracts entered into during a lucid property of his spouse, descendants or ascendants, to
interval are valid. Contracts agreed to in a state of give his consent. Art. 1343. Misrepresentation made in good faith is
drunkenness or during a hypnotic spell are voidable. To determine the degree of intimidation, the age, sex not fraudulent but may constitute error. (n)
(n) and condition of the person shall be borne in mind.
A threat to enforce one's claim through competent Art. 1344. In order that fraud may make a contract
Art. 1329. The incapacity declared in Article 1327 is authority, if the claim is just or legal, does not vitiate voidable, it should be serious and should not have
subject to the modifications determined by law, and consent. (1267a) been employed by both contracting parties.
is understood to be without prejudice to special Incidental fraud only obliges the person employing it
disqualifications established in the laws. (1264) Art. 1336. Violence or intimidation shall annul the to pay damages. (1270)
obligation, although it may have been employed by a
Art. 1330. A contract where consent is given through third person who did not take part in the contract. Art. 1345. Simulation of a contract may be absolute
mistake, violence, intimidation, undue influence, or (1268) or relative. The former takes place when the parties
fraud is voidable. (1265a) do not intend to be bound at all; the latter, when the
Art. 1337. There is undue influence when a person parties conceal their true agreement. (n)
Art. 1331. In order that mistake may invalidate takes improper advantage of his power over the will
consent, it should refer to the substance of the thing of another, depriving the latter of a reasonable Art. 1346. An absolutely simulated or fictitious
which is the object of the contract, or to those freedom of choice. The following circumstances contract is void. A relative simulation, when it does
conditions which have principally moved one or shall be considered: the confidential, family, not prejudice a third person and is not intended for
both parties to enter into the contract. spiritual and other relations between the parties, or any purpose contrary to law, morals, good customs,
Mistake as to the identity or qualifications of one of the fact that the person alleged to have been unduly public order or public policy binds the parties to
the parties will vitiate consent only when such influenced was suffering from mental weakness, or their real agreement. (n)
identity or qualifications have been the principal was ignorant or in financial distress. (n)
cause of the contract. Art. 1338. There is fraud when, through insidious SECTION 2. - Object of Contracts
A simple mistake of account shall give rise to its words or machinations of one of the contracting
correction. (1266a) parties, the other is induced to enter into a contract Art. 1347. All things which are not outside the
which, without them, he would not have agreed to. commerce of men, including future things, may be
Art. 1332. When one of the parties is unable to read, (1269) the object of a contract. All rights which are not
or if the contract is in a language not understood by intransmissible may also be the object of contracts.
him, and mistake or fraud is alleged, the person Art. 1339. Failure to disclose facts, when there is a No contract may be entered into upon future
enforcing the contract must show that the terms duty to reveal them, as when the parties are bound inheritance except in cases expressly authorized by
thereof have been fully explained to the former. (n) by confidential relations, constitutes fraud. (n) law.
All services which are not contrary to law, morals,
Art. 1333. There is no mistake if the party alleging it Art. 1340. The usual exaggerations in trade, when good customs, public order or public policy may
knew the doubt, contingency or risk affecting the the other party had an opportunity to know the facts, likewise be the object of a contract. (1271a)
object of the contract. (n) are not in themselves fraudulent. (n)
Art. 1348. Impossible things or services cannot be
Art. 1334. Mutual error as to the legal effect of an Art. 1341. A mere expression of an opinion does not the object of contracts. (1272)
agreement when the real purpose of the parties is signify fraud, unless made by an expert and the other
frustrated, may vitiate consent. (n)
Art. 1349. The object of every contract must be B. Form of Contracts C. Defective Contracts
determinate as to its kind. The fact that the quantity
is not determinate shall not be an obstacle to the Art. 1356. Contracts shall be obligatory, in whatever i. Voidable
existence of the contract, provided it is possible to form they may have been entered into, provided all
determine the same, without the need of a new the essential requisites for their validity are present. Art. 1390. The following contracts are voidable or
contract between the parties. (1273) However, when the law requires that a contract be in annullable, even though there may have been no
some form in order that it may be valid or damage to the contracting parties:
SECTION 3. - Cause of Contracts enforceable, or that a contract be proved in a certain (1) Those where one of the parties is incapable of
way, that requirement is absolute and indispensable. giving consent to a contract;
Art. 1350. In onerous contracts the cause is In such cases, the right of the parties stated in the (2) Those where the consent is vitiated by mistake,
understood to be, for each contracting party, the following article cannot be exercised. (1278a) violence, intimidation, undue influence or fraud.
prestation or promise of a thing or service by the These contracts are binding, unless they are annulled
other; in remuneratory ones, the service or benefit Art. 1357. If the law requires a document or other by a proper action in court. They are susceptible of
which is remunerated; and in contracts of pure special form, as in the acts and contracts enumerated ratification. (n)
beneficence, the mere liberality of the benefactor. in the following article, the contracting parties may
(1274) compel each other to observe that form, once the Art. 1391. The action for annulment shall be brought
contract has been perfected. This right may be within four years.
Art. 1351. The particular motives of the parties in exercised simultaneously with the action upon the This period shall begin:
entering into a contract are different from the cause contract. (1279a) In cases of intimidation, violence or undue
thereof. (n) influence, from the time the defect of the consent
Art. 1352. Contracts without cause, or with unlawful Art. 1358. The following must appear in a public ceases.
cause, produce no effect whatever. The cause is document: In case of mistake or fraud, from the time of the
unlawful if it is contrary to law, morals, good (1) Acts and contracts which have for their object discovery of the same.
customs, public order or public policy. (1275a) the creation, transmission, modification or And when the action refers to contracts entered into
extinguishment of real rights over immovable by minors or other incapacitated persons, from the
Art. 1353. The statement of a false cause in contracts property; sales of real property or of an interest time the guardianship ceases. (1301a)
shall render them void, if it should not be proved therein a governed by Articles 1403, No. 2, and
that they were founded upon another cause which is 1405; Art. 1392. Ratification extinguishes the action to
true and lawful. (1276) (2) The cession, repudiation or renunciation of annul a voidable contract. (1309a)
hereditary rights or of those of the conjugal
Art. 1354. Although the cause is not stated in the partnership of gains; Art. 1393. Ratification may be effected expressly or
contract, it is presumed that it exists and is lawful, (3) The power to administer property, or any other tacitly. It is understood that there is a tacit
unless the debtor proves the contrary. (1277) power which has for its object an act appearing or ratification if, with knowledge of the reason which
which should appear in a public document, or should renders the contract voidable and such reason having
Art. 1355. Except in cases specified by law, lesion or prejudice a third person; ceased, the person who has a right to invoke it
inadequacy of cause shall not invalidate a contract, (4) The cession of actions or rights proceeding from should execute an act which necessarily implies an
unless there has been fraud, mistake or undue an act appearing in a public document. intention to waive his right. (1311a)
influence. (n) All other contracts where the amount involved
exceeds five hundred pesos must appear in writing, Art. 1394. Ratification may be effected by the
even a private one. But sales of goods, chattels or guardian of the incapacitated person. (n)
i. Labor Contracts vs Civil Contracts things in action are governed by Articles, 1403, No.
ii. Objects, Cause, and Considerations 2 and 1405. (1280a) Art. 1395. Ratification does not require the
conformity of the contracting party who has no right
to bring the action for annulment. (1312)
Art. 1396. Ratification cleanses the contract from all annulment he is bound to return, the other cannot be criminal offense, the following rules shall be
its defects from the moment it was constituted. compelled to comply with what is incumbent upon observed:
(1313) him. (1308) (1) When the fault is on the part of both contracting
parties, neither may recover what he has given by
Art. 1397. The action for the annulment of contracts ii. Void virtue of the contract, or demand the performance of
may be instituted by all who are thereby obliged the other's undertaking;
principally or subsidiarily. However, persons who Art. 1409. The following contracts are inexistent and (2) When only one of the contracting parties is at
are capable cannot allege the incapacity of those void from the beginning: fault, he cannot recover what he has given by reason
with whom they contracted; nor can those who (1) Those whose cause, object or purpose is contrary of the contract, or ask for the fulfillment of what has
exerted intimidation, violence, or undue influence, to law, morals, good customs, public order or public been promised him. The other, who is not at fault,
or employed fraud, or caused mistake base their policy; may demand the return of what he has given without
action upon these flaws of the contract. (1302a) (2) Those which are absolutely simulated or any obligation to comply his promise. (1306)
fictitious;
Art. 1398. An obligation having been annulled, the (3) Those whose cause or object did not exist at the Art. 1413. Interest paid in excess of the interest
contracting parties shall restore to each other the time of the transaction; allowed by the usury laws may be recovered by the
things which have been the subject matter of the (4) Those whose object is outside the commerce of debtor, with interest thereon from the date of the
contract, with their fruits, and the price with its men; payment.
interest, except in cases provided by law. (5) Those which contemplate an impossible service;
In obligations to render service, the value thereof (6) Those where the intention of the parties relative Art. 1414. When money is paid or property delivered
shall be the basis for damages. (1303a) to the principal object of the contract cannot be for an illegal purpose, the contract may be
ascertained; repudiated by one of the parties before the purpose
Art. 1399. When the defect of the contract consists (7) Those expressly prohibited or declared void by has been accomplished, or before any damage has
in the incapacity of one of the parties, the law. been caused to a third person. In such case, the
incapacitated person is not obliged to make any These contracts cannot be ratified. Neither can the courts may, if the public interest will thus be
restitution except insofar as he has been benefited by right to set up the defense of illegality be waived. subserved, allow the party repudiating the contract to
the thing or price received by him. (1304) recover the money or property.
Art. 1410. The action or defense for the declaration
Art. 1400. Whenever the person obliged by the of the inexistence of a contract does not prescribe. Art. 1415. Where one of the parties to an illegal
decree of annulment to return the thing can not do so contract is incapable of giving consent, the courts
because it has been lost through his fault, he shall Art. 1411. When the nullity proceeds from the may, if the interest of justice so demands allow
return the fruits received and the value of the thing at illegality of the cause or object of the contract, and recovery of money or property delivered by the
the time of the loss, with interest from the same date. the act constitutes a criminal offense, both parties incapacitated person.
(1307a) being in pari delicto, they shall have no action
against each other, and both shall be prosecuted. Art. 1416. When the agreement is not illegal per se
Art. 1401. The action for annulment of contracts Moreover, the provisions of the Penal Code relative but is merely prohibited, and the prohibition by the
shall be extinguished when the thing which is the to the disposal of effects or instruments of a crime law is designated for the protection of the plaintiff,
object thereof is lost through the fraud or fault of the shall be applicable to the things or the price of the he may, if public policy is thereby enhanced, recover
person who has a right to institute the proceedings. contract. what he has paid or delivered.
If the right of action is based upon the incapacity of This rule shall be applicable when only one of the
any one of the contracting parties, the loss of the parties is guilty; but the innocent one may claim Art. 1417. When the price of any article or
thing shall not be an obstacle to the success of the what he has given, and shall not be bound to comply commodity is determined by statute, or by authority
action, unless said loss took place through the fraud with his promise. (1305) of law, any person paying any amount in excess of
or fault of the plaintiff. (1314a) the maximum price allowed may recover such
Art. 1412. If the act in which the unlawful or excess.
Art. 1402. As long as one of the contracting parties forbidden cause consists does not constitute a
does not restore what in virtue of the decree of
Art. 1418. When the law fixes, or authorizes the (d) An agreement for the sale of goods, chattels or Art. 1408. Unenforceable contracts cannot be
fixing of the maximum number of hours of labor, things in action, at a price not less than five hundred assailed by third persons.
and a contract is entered into whereby a laborer pesos, unless the buyer accept and receive part of
undertakes to work longer than the maximum thus such goods and chattels, or the evidences, or some of
fixed, he may demand additional compensation for them, of such things in action or pay at the time
service rendered beyond the time limit. some part of the purchase money; but when a sale is
made by auction and entry is made by the auctioneer
Art. 1419. When the law sets, or authorizes the in his sales book, at the time of the sale, of the
setting of a minimum wage for laborers, and a amount and kind of property sold, terms of sale,
contract is agreed upon by which a laborer accepts a price, names of the purchasers and person on whose
lower wage, he shall be entitled to recover the account the sale is made, it is a sufficient
deficiency. memorandum;
(e) An agreement of the leasing for a longer period
Art. 1420. In case of a divisible contract, if the than one year, or for the sale of real property or of an
illegal terms can be separated from the legal ones, interest therein;
the latter may be enforced. (f) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving
Art. 1421. The defense of illegality of contract is not consent to a contract.
available to third persons whose interests are not
directly affected. Art. 1404. Unauthorized contracts are governed by
Article 1317 and the principles of agency in Title X
Art. 1422. A contract which is the direct result of a of this Book.
previous illegal contract, is also void and inexistent.
Art. 1405. Contracts infringing the Statute of Frauds,
iii. Unenforceable referred to in No. 2 of Article 1403, are ratified by
the failure to object to the presentation of oral
Art. 1403. The following contracts are evidence to prove the same, or by the acceptance of
unenforceable, unless they are ratified: benefit under them.
(1) Those entered into in the name of another person
by one who has been given no authority or legal Art. 1406. When a contract is enforceable under the
representation, or who has acted beyond his powers; Statute of Frauds, and a public document is
(2) Those that do not comply with the Statute of necessary for its registration in the Registry of
Frauds as set forth in this number. In the following Deeds, the parties may avail themselves of the right
cases an agreement hereafter made shall be under Article 1357.
unenforceable by action, unless the same, or some
note or memorandum, thereof, be in writing, and Art. 1407. In a contract where both parties are
subscribed by the party charged, or by his agent; incapable of giving consent, express or implied
evidence, therefore, of the agreement cannot be ratification by the parent, or guardian, as the case
received without the writing, or a secondary may be, of one of the contracting parties shall give
evidence of its contents: the contract the same effect as if only one of them
(a) An agreement that by its terms is not to be were incapacitated.
performed within a year from the making thereof; If ratification is made by the parents or guardians, as
(b) A special promise to answer for the debt, default, the case may be, of both contracting parties, the
or miscarriage of another; contract shall be validated from the inception.
(c) An agreement made in consideration of marriage,
other than a mutual promise to marry;
Property, Ownership, and its Modifications (10) Contracts for public works, and servitudes and (2) Those which belong to the State, without being
other real rights over immovable property. (334a) for public use, and are intended for some public
Art. 414. All things which are or may be the object service or for the development of the national
of appropriation are considered either: CHAPTER 2 wealth. (339a)
(1) Immovable or real property; or MOVABLE PROPERTY
(2) Movable or personal property. (333) Art. 421. All other property of the State, which is not
Art. 416. The following things are deemed to be of the character stated in the preceding article, is
CHAPTER 1 personal property: patrimonial property. (340a)
IMMOVABLE PROPERTY (1) Those movables susceptible of appropriation
which are not included in the preceding article; Art. 422. Property of public dominion, when no
Art. 415. The following are immovable property: (2) Real property which by any special provision of longer intended for public use or for public service,
(1) Land, buildings, roads and constructions of all law is considered as personal property; shall form part of the patrimonial property of the
kinds adhered to the soil; (3) Forces of nature which are brought under control State. (341a)
(2) Trees, plants, and growing fruits, while they are by science; and
attached to the land or form an integral part of an (4) In general, all things which can be transported Art. 423. The property of provinces, cities, and
immovable; from place to place without impairment of the real municipalities is divided into property for public use
(3) Everything attached to an immovable in a fixed property to which they are fixed. (335a) and patrimonial property. (343)
manner, in such a way that it cannot be separated
therefrom without breaking the material or Art. 417. The following are also considered as Art. 424. Property for public use, in the provinces,
deterioration of the object; personal property: cities, and municipalities, consist of the provincial
(4) Statues, reliefs, paintings or other objects for use (1) Obligations and actions which have for their roads, city streets, municipal streets, the squares,
or ornamentation, placed in buildings or on lands by object movables or demandable sums; and fountains, public waters, promenades, and public
the owner of the immovable in such a manner that it (2) Shares of stock of agricultural, commercial and works for public service paid for by said provinces,
reveals the intention to attach them permanently to industrial entities, although they may have real cities, or municipalities.
the tenements; estate. (336a) All other property possessed by any of them is
(5) Machinery, receptacles, instruments or patrimonial and shall be governed by this Code,
implements intended by the owner of the tenement Art. 418. Movable property is either consumable or without prejudice to the provisions of special
for an industry or works which may be carried on in nonconsumable. To the first class belong those laws. (344a)
a building or on a piece of land, and which tend movables which cannot be used in a manner
directly to meet the needs of the said industry or appropriate to their nature without their being Art. 425. Property of private ownership, besides the
works; consumed; to the second class belong all the patrimonial property of the State, provinces, cities,
(6) Animal houses, pigeon-houses, beehives, fish others.(337) and municipalities, consists of all property belonging
ponds or breeding places of similar nature, in case to private persons, either individually or
their owner has placed them or preserves them with CHAPTER 3 collectively. (345a)
the intention to have them permanently attached to PROPERTY IN RELATION TO THE PERSON TO
the land, and forming a permanent part of it; the WHOM IT BELONGS Art. 708. The Registry of Property has for its object
animals in these places are included; the inscription or annotation of acts and contracts
(7) Fertilizer actually used on a piece of land; Art. 419. Property is either of public dominion or of relating to the ownership and other rights over
(8) Mines, quarries, and slag dumps, while the private ownership. (338) immovable property. (605)
matter thereof forms part of the bed, and waters
either running or stagnant; Art. 420. The following things are property of public Art. 709. The titles of ownership, or of other rights
(9) Docks and structures which, though floating, are dominion: over immovable property, which are not duly
intended by their nature and object to remain at a (1) Those intended for public use, such as roads, inscribed or annotated in the Registry of Property
fixed place on a river, lake, or coast; canals, rivers, torrents, ports and bridges constructed shall not prejudice third persons. (606)
by the State, banks, shores, roadsteads, and others of
similar character;
Art. 710. The books in the Registry of Property shall
be public for those who have a known interest in
ascertaining the status of the immovables or real
rights annotated or inscribed therein. (607)