Section 3: Cause

of Contracts
 Definition of Cause (Causa)

• The essential reason or purpose which the

contracting parties have in view at the time of
entering into the contract.
 Cause of Contracts

Article 1350
• In onerous contracts the cause is understood to be,
for each contracting party, the prestation or promise
of a thing or service by the other; in remuneratory
ones, the service or benefit which is remunerated;
and in contracts of pure beneficence, the mere
liberality of the benefactor.
 Cause distinguished from object

• In a bilateral or reciprocal contract, the cause for one is the

subject matter or object for the other, and vice versa.
Example:
S sells a watch to B for P10,000.
In any case, each party in a bilateral contract is both a
promisor and a promisee with mutual promises constituting
the cause or consideration.
Classification of contracts according
to cause:
1. Onerous or one the cause of which, for each
contracting party is the prestation or promise of a thing
or service by the other.

Examples:
Sale; lease of thing; partnership
Classification of contracts according
to cause:
2. Remuneratory or remunerative or one the cause of
which is the service or benefit which is remunerated.

Example:
X rendered services as the defense counsel of Y
agreed to pay X P10,000 for said services.
Classification of contracts according
to cause
3. Gratuitous or one the cause of which is the liberality
of the benefactor or giver.

Example:
Commodatum; pure donation; condonation of a debt
 Article 1351

The particular motives of the parties in

entering into a contract are different from the
cause thereof.
 Motive

The purely personal or private reason which a

party has in entering into a contract. It is
different from the cause of the contract.
 Cause distinguished from motive

1. Cause is the immediate or direct reason, while motive is the

remote or indirect reason.
2. Cause is always known to the other contracting party, while
motive may be unknown.
3. Cause is an essential element of a contract, while motive is not.
4. The illegality of the cause affects the validity of a contract,
while the illegality of one's motive does not render the contract
void.
 Article 1352

Contracts without cause, or with unlawful cause,

produce no effect whatever. The cause is
unlawful if it is contrary to law, morals, good
customs, public order or public policy.
 Requisites of cause

1. It must exist at the time the contract is

entered into
2. It must be lawful
3. It must be true or real
 Effect of absence of cause

• Absence or want of cause means that there is a total lack of

any valid consideration for the contract.
1. A contract which is absolutely simulated or fictitious is
inexistent and void.
2. Where there is, in fact, no consideration, the statement of
one in the contract will not suffice to bring it under the rule of
Article 1353 as stating a false consideration.
3. Promises to make a gift, or to render some gratuitous
service in the future are not enforceable as contracts
because they contain no consideration.
4. Promises made in gratitude for good deeds of others
cannot be enforced for they constitute only moral, not
legal, consideration.
 Effect of failure of cause

The failure to pay the stipulated price after the

execution of a contract of sale does not convert the
contract into one without cause or consideration, it not
being essential to the existence of cause that payment
or full payment be made at the time of the contract.
 Effect of illegality of cause

Illegality of cause implies that there is a cause

but the same is unlawful or illegal.
 Article 1353

The statement of a false cause in contracts shall

render them void, if it should not be proved
that they were founded upon a cause which is
true and lawful.
 Effect of falsity of cause

Falsity of cause is meant that the contract states a valid

consideration but such statement is not true.
A false cause may be:
• Erroneous - contract is void
Example:
D promised to give to C P1,000 as payment for past services
allegedly rendered by C which in truth and in fact have not been
rendered.
 Effect of falsity of cause

• Simulated - if the parties can show that there is another

cause and that cause is true and lawful, then the parties
shall be bound by their true agreement.
Example:
S sells to B a parcel of land. In the deed of sale,
P1,000,000 is stated as the price of the land. If this
statement is false, then there is no contract of sale.
However, if S can prove that the contract is founded
upon another consideration, then the contract of barter
or exchange shall be valid.

Otherwise stated, there is in fact a real consideration

but the same is not the one stated in the contract.
 Article 1354

Although the cause is not stated in the contract,

it is presumed that it exists and is lawful, unless
the debtor proves the contrary.
 Cause presumed to exist and lawful

• It is presumed that the cause exists and is

lawful unless the debtor proves the contrary.
Note: The presumption is not conclusive but
only prima facie and may be contradicted by
contrary evidence.
 Article 1355

Except in cases specified by law, lesion or

inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake
or undue influence.
 Lesion

any damage caused by the fact that the price is

unjust or inadequate.

• General rule:
Lesion or inadequacy of cause does not of
itself invalidate a contract.