Article 1341.

A mere expression of an opinion does not signify fraud, unless made by an

Mere Expression of opinion

Illustration:

Aribal an antique expert sold to Abad an Antique blue and white porcelain vase. Abad relying
on Aribal’s expertise bought the said vase. If it turned out that such vase was fake, the contract shall
be voidable.

But if Aribal is a mere salesman and has no expertise about antiques, and was asked by
Abad if such vase is real antique, and the former based on his mere opinion thinks that the vase is
real, such expression of opinion is not fraudulent.

Article 1342. Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual. (n)

Misrepresentation by third person

Illustration:

Gran and Quidet bought a new car from Sumiog. Gran convinced Quidet that the car was in
good condition. Later it was found out that the car was not in good condition. If Gran was in
connivance with Sumiog in misrepresenting Quidet, the contract is void. Otherwise, the contract is
valid.

Article 1343. Misrepresentation made in good faith is not fraudulent but may constitute error.
(n)

Misrepresentation by third person

Illustration:

Acosta bought one sack of sugar from Gran. Gran mistakenly thought that the one sack he
sold was sugar, but was in fact one sack of salt.

The Contract may be annulled but not due to fraud but due to substantial error.

Article 1344. In order that fraud may make a contract voidable, it should be serious and
should not have been employed by both contracting parties.

Incidental fraud only obliges the person employing it to pay damages. (1270)

Requisite for fraud to vitiate consent

Gutierrez a travel agent, despite knowledge that no trip to Europe was offered by his
company, offered to sell a trip to Europe to Macasa. Macasa, accepted the offer and issued a check.
The account however was already closed by the bank with full knowledge of Macasa. In this case
although the fraud committed by Gutierrez is serious, the contract cannot be annulled as Macasa
was also guilty of Fraud.

However, supposed there was indeed a Europe trip being offered by the company, but
merely includes a hotel accommodation to a four-star hotel and Gutierrez, knowing such fact, offered
the trip to Macasa but claimed that the trip includes an accommodation to a five-star-Hotel. Such
fraud will not annul the contract, unless Macasa entered the contract in consideration of the five-star
hotel accommodation, then the contract shall be annulled.

Article 1345. Simulation of a contract may be absolute or relative. The former takes place
when the parties do not intend to be bound at all; the latter, when the parties conceal their
true agreement. (n)

Simulation of Contract Defined.

Article 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when
it does not prejudice a third person and is not intended for any purpose contrary to law,
morals, good customs, public order or public policy binds the parties to their real agreement.
(n)

Kinds of Simulated Contract

Illustration:

Absolute Simulation

Quiachon and Aglosolos entered into a contract of sale of a piece of land. The contract was
not entered into public instrument and was entered without a consideration. The contract entered is
void for lack of consideration.

Relative

Macasa donated to his son, Gran, one house and lot. Macasa executed a contract of sale of
the said land for an inadequate consideration. The real contract entered was donation instead of a
contract of sale. The contract is still valid.

Article 1347. All things which are not outside the commerce of men, including future things,
may be the object of a contract. All rights which are not intransmissible may also be the
object of contracts.

No contract may be entered into upon future inheritance except in cases expressly
authorized by law.
All services which are not contrary to law, morals, good customs, public order or public
policy may likewise be the object of a contract. (1271a)

Object of a contract

Illustarion:

Outside of commerce of men

The city of Tagum sold to Acosta a piece of land where a public plaza is located. The
Contract is not valid as a public plaze is public owned property and cannot be a subject of any sale
contract as it’s out of the commerce of men.

Transmissible rights

Quidet sold her corporate shares to Gran. Corporates shares are transmissible rights. Quidet
however cannot sold her right to vote in favor of Gran. Such right is not transmissible, it being a
personal right.

Not contrary to law, Morals etc. and Future inheritance

Sumiog, after the death of his father sold his share of his inheritance to Macasa. The sale is
Valid as there was transfer of right upon death on Sumiog’s father.

However, during the life time of his father, Sumiog cannot sell his share to Macasa.

Article 1348. Impossible things or services cannot be the object of contracts. (1272)

Impossible things of serevices

Illustarion:

Absolute Impossibility

Aribal and Abad entered into contract to build a five-star hotel in 1 one day. The contract is
not valid as it is impossible to build a hotel in one day.

Article 1349. The object of every contract must be determinate as to its kind. The fact that the
quantity is not determinate shall not be an obstacle to the existence of the contract, provided
it is possible to determine the same, without the need of a new contract between the parties.
(1273)

The Object of a contract must be determinate or determinable

Illustration:
 Aribal sold to Gran one sack of rice which was stored in a particular place and separated
with other sack of rice. Such subject is determinate as it is separated with other kinds. However, if
the sack of rice was stored together with other sack of rice owned by different persons, the subject is
determinable.

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. (1274)

Cause defined

Illustration:

Onerous

Gran sold to Macasa a new watch for twelve thousand pesos.

As to Gran, the cause is the Twelve Thousand pesos

Remuneratory

Quidet gave Abad a house and lot for taking care of her during her sickness.

As to Quidet the cause is Abad’s services to her when she was sick.
As to Abad, the cause is the house and lot

Pure Beneficence

Gutierrez out of his generosity gave a new car to Sumiog without asking for anything in
return.

The cause is mere liberality of Gutierrez.

Article 1351. The particular motives of the parties in entering into a contract are different from
the cause thereof. (n)

Motives of Parties in entering into a contract

Illustration:

Quaichon bought from Aglosolos a machine gun to kill her mortal enemy.

As to Quaichon, the cause is the machine gun, while her motive is to kill her mortal enemy.

As to Aglosolos, the cause is the purchased price, while her motive is to earn profit.
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. (1275a)

Valid Cause

Illustration:

True Cause

Gutierrez entered into a contract of sale of his car to his daughter Aglosolos. The said
contract was entered without any consideration. There was no true cause as to the sale, but the real
intention of the parties was to enter a contract of donation.

Lawful Cause

Sumiog sold to Acosta a new car for 2 million pesos, the case however was not owned by
Sumiog and was stolen by the latter. The contract is not valid as there was no lawful cause.