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A. Course Overview
B. Common Law Tradition and the Civil Law Tradition
A. General Provisions
1. Definition (Article 1156, Civil Code)
2. Elements
a. Active Subject
b. Passive Subject
c. Object or Prestation
d. Efficient Cause or Juridical Tie
3. Natural Obligations
a. Definition (Art. 1423, CC)
b. Examples (Articles 1424 to 1430)
c. Difference between Natural and Civil Obligation (Art. 1423)
d. Distinguished from moral obligations
e. Conversion to Civil Obligation
by novation
by ratification
4. Sources of Obligations (Art. 1157)
a. Law (Art. 1158)
b. Contracts (Art. 1159, 1305)
c. Quasicontracts (Art. 1160, 2142)
i. Negotiorum gestio (Art. 2144)
ii. Solutio indebiti (Art. 2154)
iii. Others (Art. 2164 to 2175)
d. Delicts or Crime (Art. 1161)
e. Quasidelicts (Art. 1162, 2176)
Distinction between crimes and quasidelicts
Vicarious liability (Art. 2180, Art. 218219, Family Code)
Civil liability arising from crime (Art. 1161; Rule 111, Revised Rules of Criminal Procedure)
5. Classification of Obligations
a. Pure and Conditional Obligations (Art. 11791192)
b. With a Period or a Term (Art. 11931198)
c. Alternative and Facultative (Art. 11991206)
d. Joint and Solidary (Art. 12071222)
e. Divisible and Indivisible (Art. 12231225)
f. With a Penal Clause (Art. 12261230)
B. Nature and Effects of Obligations
1. Kinds of Prestation
a. To give
i. specific thing
to preserve the thing (Art. 1163)
to deliver the accessions and accessories (Art 1166)
to deliver the fruits (Art. 1164, par. 1)
to deliver the thing itself (Art. 1244)
ii. generic thing (Art. 1246)
b. To do (Art. 1244)
c. Not to do (Art. 1244)
2. Breach of Obligation
a. Concept

b. Modes of Breach
Delay or mora (Art. 1169)
i. mora solvendi
ii. mora accipiendi (See also 1268)
iii. compensation morae
Fraud or dolo (Art. 1171)
dolo incidente and dolo causante
Negligence (Art. 1172, 1173)
- Culpa v. dolo
- Culpa aquiliano v. culpa contractual
- Standard of care required
Contravention of the tenor (Art. 1172)
c. Remedies in case of breach
i. Performance
Specific performance (Art. 1165; Section 10, Rule 39, Rules of Court)
Substituted performance
in an obligation to give generic thing (Art. 1165, par. 2)
undoing of poor work in an obligation to do (Art. 1167)
undoing in an obligation not to do (Art 1168)
ii. Rescission (Art. 11911192)
iii. Damages (Art. 1170)
d. Subsidiary Remedies of Creditor
i. Accion Subrogatoria (Art. 1177)
ii. Accion Pauliana (Art. 1177; 1381, par. 3)
iii. Other Specific Remedies (Art. 1652, 1729, 1608, 1893)
e. Fortuitous Event (Art. 1174)
i. Effect: Extinguishment of Liability
ii. Exceptions to Extinguishment (Art. 1174, 1165 par. 3, 552, 1942, 1979, 2001, 2147)
f. Usurious Transactions (Art. 1175, 1413, 1961)
PD 858; PD 1685
Central Bank Circular 416
Monetary Board Circular No. 905; No. 2209
C. Different Kinds of Obligations
1. Pure and Conditional Obligations
Pure Obligations (Art. 1179, par. 1)
Conditional Obligations (Art. 1181)
Condition v. Period or Term
Kinds of Conditions
a. As to the effect on the obligation (Art 1181)
i. Suspensive Condition or Condition precedent
Retroactive effect when condition is fulfilled (Art. 1187)
Rights of the creditor and debtor before fulfillment of the condition (Art. 1188)
ii. Resolutory Condition or Condition subsequent
b. As to the cause or origin (Art 1182)
i. Potestative
Effect of fulfillment of condition depends solely on the will of the debtor
Debtors promise to pay when he can is not a condition (Art 1180)
ii. Causal
iii. Mixed
c. As to possibility (Art. 1183)
d. As to mode: positive or negative (Art. 11841185)
Rules in case of loss, deterioration or improvement pending the happening of the condition (Art.

1189 1190)
a. Definition of loss, deterioration and improvement
b. Effect of loss or deterioration
Without debtors fault
With debtors fault
c. Effect of improvement
By nature or time
Due to debtors effort and expense
Effect of prevention of the fulfillment of the condition by the obligor (Art1186)
2. Reciprocal Obligations (Art. 11911192)
a. Concept
b. Alternative remedies of injured parties on case of breach
i. action for specific performance
effect when fulfillment no longer possible
ii. action for rescission
how made
Read: Art 1786, 1788, 148486, Republic Act No. 6552
3. Obligations with a Period (Art. 1193, 1180)
a. Compare Period/Term v. Condition
b. Kinds of Period
i. As to effect
Suspensive (Art 1193, par. 1)
Resolutory (Art 1193, par. 2)
ii. As to expression
iii. As to definiteness
iv. As to source
c. Rules in case of loss, deterioration or improvement before arrival of the period (Art. 1194 and 1189)
d. Effect of Payment in Advance (Art. 1195; 1197, par. 3)
e. Benefit of Period (Art 1196)
i. For whose benefit
ii. Effects
iii. Presumption (Art. 1196)
iv. When debtor loses right to make use of period (Art. 1198)
f. When Court May Fix A Period
i. Period is implied
ii. Period depends on sole will of the debtor
4. Alternative Obligations
a. Concept (Art. 1199)
b. Right of Choice (Art. 1200)
c. Effect of Notice of Choice
d. When Notice Produces Effect (Art. 1201)

e. Effect of loss or impossibility of one or all prestations (Art. 1202 to 1205)

f. Facultative Obligation (Art. 1206)
i. Concept
ii. Distinguished from Alternative Obligations
iii. Effect of Substitution
5. Joint and Solidary Obligations
a. Joint Obligations
i. Concept
Words used to indicate joint obligations
ii. Presumption (Art. 1207, 1208)
iii. Effects (Art. 1207, 1208)
Extent of liability of debtor
Extent of right of creditor
In case of novations, compensation, confusion (Art 1277) or remission
b. Solidary Obligations
i. Concept
Words used to indicate solidary obligations
ii. Kinds
As to source (Art. 1208)
o Legal (Art. 1915, 1945, 2194, Art 119 of the RPC)
o Conventional
o Real
As to parties bound
o Active
o Passive
o Mixed
As to uniformity
o Uniform
o Varied/nonuniform (Art. 1211)
iii. Effects
Solidary creditor in relation to:
o common debtor
- right to demand (Art. 12141216; 1217, par. 1)
- in case of novation, compensation, confusion, remission by a creditor (Art. 1215, par. 1)
o solidary cocreditors
- in case of novation, compensation, confusion, remission by a cocreditor (Art 1215, par. 2)
- prejudicial acts prohibited (Art. 1212)
- assignment of rights not allowed (Art. 1213)
Solidary debtor in relation to:
o common creditor
- obligation to perform (Art. 1207)
- in case of novation, compensation, confusion, remission by a creditor (Art. 1215, par. 1)
o solidary codebtor
- in case of payment by a codebtor (Art. 12171220)
- in case of fortuitous event (Art. 1221)
iv. Defenses Available to a Solidary Debtor Against the Creditor (Art.1222)
o those derived from the nature of the obligations
o personal defenses
o defenses pertaining to his shares
o those personally belonging to the other codebtors

c. Joint Indivisible Obligations
i. Concept
Distinguished from joint obligations
Distinguished from solidary obligations
ii. Indivisibility distinguished from solidarity (Art. 1210)
iii. Effects (Art. 1209, 1224)
6. Divisible and Indivisible Obligations
a. Divisible Obligations
i. Concept
ii. Effects (Art. 1223, 1233)
b. Indivisible Obligations
i. Concept: distinguished from solidary obligations
ii. Kinds
Natural (Art. 1225, par. 1)
Legal (Art. 1225, par. 3)
Conventional (Art. 1225, par. 3)
iii. Presumptions of divisibility and indivisibility (Art. 1225)
iv. Divisibility and indivisibility in obligations not to do (Art. 1225, par.3 )
v. Effects (Art. 1223, 1223, 1224)
vi. Cessation of Indivisibility
7. Obligations with a Penal Clause
a. Concept
Principal v. Accessory Obligation
Distinguished from conditional obligations
Distinguished from alternative obligations
Distinguished from facultative obligations
Distinguished from guaranty
b. Kinds of Penal Clause
As to effect
o Subsidiary
o Complimentary
As to source
o Conventional
o Legal
As to purpose
o Punitive
o Reparatory
c. Demandability of Penalty (Art. 1226, par. 2)
d. Effects of Penal Clause: General Rule and Exceptions
Substitute for indemnity for damages and payment of interest (Art. 1226)
Not exempt debtor from performance (Art. 1227)
Creditor cannot demand both performance and penalty at the same time (Art. 1227)
Creditor cannot collect other damages in addition to penalty (Art. 1226)
e. When penalty shall be equitably reduced (Art. 1229)
f. Nullity of Principal Obligation of Penal Clause (Art. 1230)
D. Extinguishment of Obligations (Art. 1231)
1. Payment or Performance (Art. 1232)
a. Concept (Art. 1232)
b. Requisites
i. Who can pay
General Rule

o third person who is an interested party; effects (Art. 1302[3])

o third person who is not an interested party but with the consent of debtor
(Art. 1302[2], 1236,
par. 1)
o third person who is not an interested party and without the consent of the
debtor, without the
knowledge or against the will of the debtor (Art. 1236,
par. 2; Art. 1237, 1236, par. 1)
o third person who does not intend to be reimbursed (Art 1238)
in an obligation to give (Art. 1239, 1427)
in case of active solidarity (Art. 1214)
ii. To whom payment can be made
General rule (Art. 1240)
o incapacitated person (Art. 1241, par. 1)
o third person (Art. 1241, par. 2)
o when proof of benefit not required (Art. 1241, par. 3; Art. 1242)
o in case of active solidarity (Art. 1214)
iii. What is to be paid (Identity)
General Rule
Specific cases:
o To give a specific thing (Art. 1244)
o To give a generic thing (Art. 1246)
o To pay money (Art. 1249, 1250; R.A. 529, R.A. 4100, R.A. 8183)
Payment of Interest (Art. 1956)
iv. How payment is to be made (Integrity)
General Rule (Art. 1233)
o Partial payment is not allowed; exceptions (Art. 1248)
Substantial performance in good faith (Art. 1234)
Estoppel (Art. 1235)
Presumptions in payment of interests and installments (Art. 1176)
v. When is payment to be made
General Rule (Art 1169)
No demand, no delay; Exceptions
vi. Where payment is to made
Place expressly designated (Art. 1251, par. 1)
When place of payment is not expressly designated (Art. 1251, paragraphs 2 to 4)
vii. Who pays for expenses for making payment (Art. 1247)
c. Application of Payments
i. Concept (Art. 1252)
ii. Requisites
iii. Rules in Application of Payments (Art. 12521253)
If rules are not applicable or cannot be inferred (Art. 1254)
Meaning of the most onerous debtor
d. Payment by Cession
i. Concept (Art. 1255)
ii. Requisites
iii. Effects
iv. Compared to Assignment of Receivables
e. Dation in Payment
i. Concept (Art. 1245)
Distinguished from Payment by Cession
ii. Requisites
iii. Effects
f. Tender of Payment and Consignation
i. Tender of Payment

ii. Consignation
Concept and Purpose
o When tender and refusal not required (Art. 1256, par. 2)
o Two notice requirement (Art. 1257, par. 1; Art. 1258, par. 2); Effects of noncompliance
Effects (Art. 1260, par 1)
o Withdrawal by debtor before acceptance by creditor or approval of court (Art.
1260, par. 2)
o Withdrawal by debtor after proper consignation (Art. 1261)
- With creditor approval
- Without creditor approval
Expenses of Consignation
2. Loss or Impossibility
a. Loss of the Thing Due
i. Concept (Art. 1189, par. 2)
ii. Kinds
iii. Requisites (Art. 1262)
iv. Presumption (Art. 1266, 1267)
v. Effects
In an obligation to give a specific thing (Art. 1262, 1268)
In an obligation to give a generic thing (Art. 1263)
In case of partial loss (Art 1264)
Action against third persons (Art. 1269)
b. Impossibility of Performance
i. Concept (Art. 1266, 1267)
ii. Kinds
iii. Requisites (Art. 1266)
iv. Effects
In obligations to do (Art. 12661267; Art. 1262, par. 2)
Impossibility distinguished from difficulty
In case of partial impossibility (art. 1264)
3. Condonation or Remission
a. Concept
b. Kinds
Total or partial
Express or implied (Art. 1270, par. 1)
c. Requisites (Art. 1270, par. 2)
d. Presumptions (Art. 12711271; 1274)
e. Effects
In general
In case of joint or solidary obligations
f. Governing Rules (Art. 1270)
g. Renunciation of Principal or Accessory Obligation (Art. 1273)
4. Confusion or Merger
a. Concept
b. Requisites
c. Effects
In general (Art. 1275)

In case of joint or solidary obligations (Art. 1277)

d. Confusion in Principal or Accessory Obligations (Art. 1276)
5. Compensation
a. Concept (Art. 1278); distinguished from Confusion
b. Kinds
i. Total or Partial
ii. Legal
iii. Conventional (Art. 1279, Art. 1282)
iv. Judicial (Art. 1283)
v. Facultative
c. Legal Compensation
i. Requisites (Art. 12791280): Due distinguished from demandable
ii. Effects (Art. 1290, 1289)
d. When Compensation is not allowed (Art. 12871288)
e. Compensation of Debts Payable in Different Places (Art. 1268)
f. Effect of Nullity of Debts to be Compensated (Art. 1284)
g. Effects of Assignment of Credit
i. with consent of debtor (Art. 1285, par. 1)
ii. with knowledge but without consent of debtor (Art. 1285, par. 2)
iii. without knowledge of debtor (Art. 1285, par. 3)
6. Novation
a. Concept (Art. 1291)
Change in debtor
Change in object
Change in third person who is subrogated
Change in creditor with its consent or at its instance is not novation
b. Kinds
i. As to form: express or implied
ii. As to origin: conventional or legal
iii. As to object
objective or real
subjective or personal
c. Requisites (Art. 1292)
d. Effects (Art. 1296)
e. Effects of the Status of the Original and New Obligation
i. nullity or voidability of original obligation (Art. 1298)
ii. nullity or voidability of new obligation (Art. 1297)
iii. suspensive or resolutory condition or original obligation (Art. 1299)
f. Objective Novation
g. Subjective Novation
i. By change of debtor
o Requisites (Art. 1293)
o Effects (Art. 1294)
o Requisites (Art. 1293)
o Effects (Art. 1295)
ii. By change of creditor subrogation of a third person in the rights of the creditor (Art. 1300)
Conventional subrogation
o Requisites (Art. 1301)
o Distinguished from assignment of credit
o Effects (Art. 13031304)

Legal Subrogation
o Requisites
o When presumed (Art. 1302)
o Effects (Art. 13031304)
I. Introduction
A. Concept and Definition (Art. 1305)
B. Classification of Contracts
1. According to subject matter: things or services
2. According to name: nominate and innominate contracts (Art. 1307)
3. According to perfection: by mere consent (Art. 1315) or by delivery of object (Art. 1316)
4. According to its relation to other contracts: preparatory; principal; or accessory
5. According to form: informal or formal
6. According to purpose
7. According to nature of legal tie created: unilateral, bilateral or reciprocal
8. According to cause: onerous or gratuitous
9. According to risk: commutative or aleatory
C. Characteristics
1. Obligatory Force between the Parties (Art. 1308)
a. General Rule: Freedom to Contract (Art. 1306)
b. Exceptions:
i. When it is inequitable (Art. 1310)
ii. Special disqualifications:
Art. 87, Family Code
Articles 1490 and 1491
Article 1782
iii. What may not be stipulated
Contrary to Law
(a) pactum commisorium (Art. 2088)
(b) pactum leonina (Art. 1799)
(c) pactum de non alienado (Art. 2130)
(d) other limitations: Labor Code, Corporation Code
Contrary to morals
Contrary to good customs
Contrary to public order
Contrary to public policy
c. Effect of contract as to third parties
i. Performance may be determined by third parties (Art. 1309)
ii. When possession of the object of the contract is with a third person (Art. 1312)
iii. Creditors of contracting parties (Art 1313, 1177, 1381)
iv. Interference by third parties (Art. 1314)
2. Mutuality (Art. 1308 to 1310; 1473)
3. Relativity or Privity of Contracts (Art. 1311)
a. Contracts take effect only between the parties, their assigns and heirs
b. No one may contract in the name of another (Art. 1317)
c. Stipulations in favor of third persons (Art. 1311, par. 2)
II. Essential Requisites of Contracts
A. Consent: Requisites (Art. 1319)
1. Perfection of Contract: Offer and Acceptance
a. Offer
must be certain (Art. 1319)
what may be fixed by the offeror (At. 1321)

when made through an agent (Art. 1322)

when offer becomes ineffective (Art. 1323)
business advertisements of things for sale (Art. 1325)
advertisements for bidders (Art. 1326)
b. Acceptance
must be absolute (Art. 1319)
o express (Art. 1320)
o implied (Art. 1320)
o qualified (Art. 1319)
period of acceptance (Art. 1324)
option contract (Art. 1324)
c. Termination of Offer
d. Perfection of Contract
Four theories when contract is perfected:
o Manifestation theory
o Expedition theory
o Reception theory
o Cognition theory (Art. 1319 [2])
2. Legal Capacity of the Parties
a. Minors, insane or demented persons, and deafmutes who do not know how to write (Art. 1327)
b. When offer or acceptance is made during a lucid interval, intoxication, during hypnotic spell (Art.
c. Corporations (Sections 23 and 36, Corporation Code)
3. Vices of Consent: Consent must be Intelligent, Free, Spontaneous and Real (Art. 1330 to 1346)
a. Mistake or Error
i. Mistake of Fact
As to substance of the object
As to principal conditions
As to identity or qualifications of the parties
As to quantity, as distinguished from simple mistake of account
ii. Mistake or Error of Law
General Rule: Ignorance of the law excuses no one (Art. 3)
Exception: Mutual Error of Law (Art. 1334)
iii. Mistake when one party is unable to read (Art. 1332)
iv. Inexcusable mistake (Art. 1333)
b. Violence or Intimidation (Art. 1335)
c. Undue Influence (Art. 1337)
d. Fraud or Dolo (Art. 1338)
i. Dolo causante (Art. 1338)
ii. Dolo incidente (Art. 1344 [2])
Failure to Disclose Facts when there is a duty to reveal them (Art. 1339)
Usual exaggerations in trade: opportunity to know the facts (Art. 1340)
Mere expression of opinion (Art. 1341); Effects (Art. 1344)
e. Misrepresentation
i. by a third person (Art. 1342)
ii. made in good faith (Art. 1343)
iii. active or passive
4. Simulation of Contracts
a. Kinds: Absolute and Relative (Art. 1345)
b. Effects (Art. 1346)
B. Object

Must be determinate as to its kind (Art. 1379)

What may NOT be objects of contracts (Art. 1347)
a. All things outside the commerce of man
b. All intransmissible rights
c. Those services which are contrary to law, morals, good customs, public order, or public policy
d. Future inheritance, except when authorized by law
e. Impossible things or services (Art. 1348)
C. Cause
1. Meaning of Cause (Art. 1350)
a. in onerous contracts
b. in remuneratory contracts
c. in contracts of pure beneficence
2. Distinguished from Motive (Art. 1351)
3. Presumption: Existence and Lawfulness of Cause (Art. 1354)
4. Defective Causes and Effects:
a. Absence of Cause or Unlawful Cause (Art. 1352)
b. Statement of False Cause (Art. 1355)
c. Inadequacy of Cause or Lesion (Art. 1355)
III. Form of Contracts
A. General Rule: Contracts are obligatory in whatever form, provided all essential requisites are
present (Art. 1356)
B. Exception: When the law requires the contract to be in a specific form in order for it to be valid or
enforceable (Art. 1356)
Kind of formalities required by law:
1. For validity (Articles 748, 749, 1874, 2134, 1771, 1773)
2. To make it effective as to third parties (Articles 1357 and 1358)
3. For purposes of proving existence of contract (Statute of Frauds in Art. 1403)
IV. Interpretation of Contracts
A. Compare with Rules of Statutory Construction
B. Primacy of Intention (Articles 1370, 1372)
C. Determining Intention (Art. 1371)
D. Rules of Contract Interpretation
1. Under the Civil Code
a. When it contains stipulations which admit of several meanings (Art. 1373)
b. When it contains various stipulations, some of which are doubtful (Art. 1374)
c. When it contains words with different meanings (Art. 1375)
d. When it contains ambiguities and omission of stipulations (Art. 1376)
e. With respect to the party who caused the obscurity (Art. 1377)
f. When it is impossible to settle doubts using the abovecited rules (Art. 1378)
In gratuitous contracts
In onerous contracts
g. When doubts are cast upon the principal object so that the true intention cannot be known (Art.
2. Under the Rules of Court (Rule 130, Sections 10 to 19)
V. Reformation of Instruments
A. Requisites (Art. 1359)
1. Meeting of the minds
2. True intention of the parties are not expressed in the instrument
3. Failure to express true intention due to mistake, fraud, inequitable conduct, or accident
B. When Reformation is not allowed (Art. 1366)
C. Implied Ratification (Art. 1367)
D. Who may ask for reformation (Art. 1368)
E. Procedure for reformation (Art. 1369)

VI. Defective Contracts

A. Rescissible Contracts
1. Kinds (Art. 1381)
2. Characteristics
a. The defect consists in injury or damage either to one of the contracting parties of to a third person
b. Contract is valid before rescission
c. Attack may only be direct on, not collaterally
d. Attack maybe done by contracting party or by a third person who is injured or defrauded
e. Validated only by prescription and not by ratification
3. Definition (Art. 1380): Distinguished from Rescission in Art. 1191 (Resolution)
4. Requisites
a. Contract is rescissible
b. Party asking for rescission has no other legal means to obtain reparation (Art. 1383)
c. He is able to return what he may be obliged to restore if rescission is granted (Art. 1385)
5. Effect of Rescission (Art. 1385)
a. As to third persons who acquired thing in good faith (Art. 1385 [2] and [3]
b. As to third persons who acquired things in bad faith, when alienation was in fraud of creditors (Art.
6. Extent of Rescission (Art. 1387)
7. Badges of Fraud (Art. 1387)
B. Voidable or Annullable Contracts
1. Kinds (Art 1390)
2. Characteristics
a. There is a defect in consent of one of the contracting parties
b. Binding until annulled by a competent court
c. May be validated by ratification or prescription
3. Annulment
a. Distinguished from Rescission
b. Grounds (Art. 1390)
c. Who May or May Not Institute Action for Annulment (Art. 1397)
d. Prescription (Art. 1391)
e. Effect: Mutual Restitution (Art. 1398 and 1402)
i. When on the parties is incapacitated (Art 1399)
ii. When the thing is lost through the fault of the party obliged to return the sam (Art. 1400)
f. Extinguishment of Action for Annulment
i. by ratification (Art. 1392)
ii. When the thing is lost through the fault of the person who has the right to file the action (Art. 1401)
4. Ratification
a. Requisites
i. Contract is voidable
ii. Ratification is made with knowledge that contract is voidable
iii. At the time of ratification, the cause for nullity has already ceased to exist
b. Forms
i. Express or tacit (Art. 1393)
ii. By the parties themselves or by the guardian in behalf of an incapacitated party (Art. 1394)
c. Effects
i. action to annul is extinguished (Art. 1392)
ii. contract is cleansed retroactively from all its defects (Art. 1396)
C. Unenforceable Contracts
1. Characteristics
a. Valid but cannot be enforces by a proper action in court
b. Can be ratified
c. Cannot be assailed by third persons

2. Kinds (Art. 1403)

a. Unauthorized contracts (Art. 1404)
b. Contracts covered by Statute of Frauds
i. Purpose of Statute of Frauds
ii. How Ratified (Art. 1405)
iii. Right of the Parties when a Contract is enforceable but a public document is necessary for its
registration (Art. 1406)
c. Contracts executed by parties who are both incapable of giving consent
i. Effect of ratification by the parents or guardian of one of the parties (Art. 1407)
ii. Effect of ratification by the parents or guardian of both parties (Art. 1407)
D. Void or Inexistent Contracts
1. Characteristics
Void from the beginning
Produces no effect whatsoever
Cannot be ratified (Art. 1409)
2. Kinds
a. Void Contracts
i. Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy
When the act constitutes a criminal offense (Art. 1411)
When the act is unlawful but does not constitute a criminal offense (Art. 1412)
o In pari delicto rule
When the purpose is illegal and money is paid or property delivered therefore (Art. 1414)
When the contract is illegal and one of the parties is incapable of giving consent (Art. 1415)
When the agreement is not per se illegal but prohibited (Art. 1416)
When the amount paid exceed the maximum fixed by law 9Art. 1417)
When by virtue of a contract a labourer undertakes to work longer than the maximum number of
hours of work fixed by law (Art. 1418)
When the contract is divisible (Art. 1420)
When the contract is the direct result of a previous illegal contract (Art. 1422)
ii. Those whose object is outside the commerce of man
iii. Those which contemplate an impossible service
iv. Those where the intention of the parties relative to the principal object of the contract cannot be
v. Those expressly prohibited by law
b. Inexistent Contracts
i. those which are absolutely simulated or fictitious (Articles 1345 to 1346)
ii. those whose cause or object did not exist at the time of the transaction
3. No Waiver of Defense of Illegality (Art. 1409)
4. Action or Defense for the Declaration of the Inexistence of a Contract
No prescription period (Art. 1410)
Not available to third persons not directly affected (At. 1421)
Obligations Created by Law
A. Estoppel
1. Definition (Art. 1431)
2. Kinds
a. Technical estoppel
i. by record
ii. by deed (Art. 1433)
b. Equitable estoppel or estoppel in pais (Art. 1433)
3. Persons Bound (Art. 1439)

4. Application (Art. 1434 to 1438)

B. Trusts
1. Definition (Art. 1442)
2. Parties (Art. 1440)
a. Trustor
b. Trustee
c. Beneficiary or cestui que trust
3. Kinds (Art. 1441)
a. Express trusts
i. Proof required (Art. 1443)
ii. Form (Art. 1444)
iii. Want of trustee (Art. 1445)
iv. Acceptance by the beneficiary (Art. 1441)
b. Implied Trusts
i. How established (Art 1441)
ii. How proved (Art. 1457)
iii. Specific cases (Art. 1448 to 1456)