Article 1330

WHAT ARE THE VICES OF CONSENT? MEANING AND REQUISITES OF EACH 1.

Mistake

 is

the false notion of a thing or a fact material to the contract

A mistake of fact  is  is just that: a mistake pertaining to some fact. For example, if you are 35 years old but I think you are 34, I have made a mistake of fact. A mistake of fact can serve as a defense. a.

the substance of the thing which is the object of the contract

b.

those conditions which have principally moved one or both parties to enter into the contract

c.

the identity or qualifi cations of one of the parties, provided, the same was the principal cause of the contract

A mistake of law  is  is where you are mistaken or ignorant about the law. For example, if you believe that you don't have to come to a complete stop at a "Stop" sign when there are no other cars at the intersection, you have made a mistake of law. Whether there are cars or not, you must come to a complete stop. In almost every case, you will not be allowed to argue that you didn't know or misunderstood the law. That is, it won't be a defense.

2.

3.

a.

The error must be mutual;

b.

It must be as to the legal effect of an agreement; and

c.

It must frustrate the real purpose of the parties.

Intimidation  An internal moral force operating in the will and inducing performance of an act. a.

It must produce a reasonable and well-grounded fear of an evil;

b.

The evil must be imminent and grave;

c.

The evil must be upon his person or property, or that of his spouse, descendants, or ascendants; and

d.

It is the reason why he enters into the contract

Violence  An external, serious or irresistible physical force exerted upon a person to prevent him from doing something or to compel him to do an act.

4.

a.

Irresistible physical force

b.

Such force is the determining cause for giving consent

Undue influence – Any means employed upon a party which, under the circumstances could not be resisted and has the effect of controlling his volition and inducing him to give his consent to the contract, which otherwise, he would not have entered into. For undue infl uence to be established to justify the cancellation of an instrument, three elements must be present: a.

a person who can be infl uenced;

b.

the fact that improper in fl uence was exerted; and

c. 5.

submission to the overwhelming effect of such unlawful conduct

Fraud – Use of insidious words or machinations in inducing another party to enter into the contract, which without them, he would not have agreed.

FACTORS TO DETERMINE DEGREE OF INTIMIDATION -

Whether or not the fear is reasonable and well-grounded or the evil imminent and grave depends upon the circumstances, including the age, sex, and condition of the person

RELUCTANT CONSENT GENERAL RULE: It is clear that one acts as voluntarily and independently in the eyes of the law when he acts reluctantly and with hesitation as when he acts spontaneously and joyously. Legally speaking, one acts voluntarily and freely when he acts wholly against his better sense and judgment as when he acts in conformity with them. Between the two acts, there is no difference in law.

BURDEN OF PROOF IN CASE OF MISTAKE OR FRAUD -

When a person signs a document, the presumption is that he does so with full knowledge of its contents and consequences. Should he later on allege fraud or mistake, it is incumbent upon him to prove his allegation since it is presumed that a person takes ordinary care of his concerns and that private contracts have been fair and regular. Article 1332 is an exception to this rule.

ART. 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

CAUSAL FRAUD; FRAUD BY CONCEALMENT Causal fraud or dolo causante  is the fraud employed by one party prior to or simultaneous with the creation of the contract to secure the consent of the other. It is the fraud used by a party to induce the other to enter into a contract without which the latter would not have agreed to, taking into account the circumstances of the case Fraud by concealment  intent to deceive or defraud in a contractual arrangement by deliberate hiding, nondisclosure, or suppression of a material fact or circumstance legally or morally bound to reveal

DOLO CAUSANTE & DOLO INCIDENTE Dolo causante (Causal Fraud)  is the fraud employed at the time of the execution of a contract in order to secure consent; remedy is annulment because of vitiation of consent Dolo incidente (Incidental Fraud)  is the fraud committed in the performance of pre-existing obligation; remedy is damages

EXCEPTIONAL CASES IN FRAUD; GENERAL RULE OF FRAUD 1.

2.

Expression of opinion. To constitute fraud, the misrepresentation must refer to facts, not opinions. Ordinarily, a mere expression of an opinion does not signify fraud. In order that it may amount to fraud, the following requisites must be present: a. It must be made by an expert; b. The other contracting party has relied on t he expert’s opinion; and c. The opinion turned out to be f alse or erroneous. Usual exaggerations in trade ART. 1340. The usual exaggerations in trade, when the other party had an opportunity to know

3.

the facts, are not in themselves fraudulent Fraud by a third person. ART. 1342. Misrepresentation by a third person does not vitiate consent, unless such

4.

misrepresentation has created substantial mistake and the same is mutual Misrepresentation made in good faith. ART. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error

FRAUD BY 3RD PERSONS; GENERAL RULE & EXCEPTIONS -

A third person has no connection with a contract. Consequently, a misrepresentation by him does not vitiate consent. However, if the misrepresentation by the third person has created substantial mistake and the same is mutual, that is, it affects both parties, the contract may be annulled but principally on the ground of mistake, even if the deceit was without the complicity with one of the parties. If the misrepresentation has been employed by a third person in connivance with, or at least with knowledge of the party benefi ted by the fraud, it is deemed to have been exercised by such party upon the other contracting party.

CIRCUMSTANCES TO BE CONSIDERED TO DETERMINE UNDUE INFLUENCE 1. 2. 3. 4.

Confi dential, family, spiritual and other relations between the parties, Mental weakness, Ignorance, or Financial distress of the person alleged to have b een unduly infl uenced.

SIMULATED CONTRACTS; PURPOSE & REQUISITES -

Simulated contract,  a contract which is either non-existent or concealed or is different from that which was really executed. Purpose: The purpose of simulation is to hide the parties’ true intent, or to deceive or defraud third persons. Requisites:  1. An outward declaration of will different from the will of the parties; 2. The false appearance must have been intended by mutual agreement; and 3. The purpose is to deceive third persons.

KINDS OF SIMULATED CONTRACTS

1.

2.

Absolute simulation  when the contract does not really exist and the parties do not intend to be bound at all. Absolutely simulated or fi ctitious contracts are inexistent and void and are not susceptible of ratifi cation. The parties may recover from each other what they may have given under t he “contract.’ Relative simulation  when the contract entered into by the parties is different from their true agreement or the parties state a false cause in the contract to conceal their real agreement. The parties are bound by their real agreement, provided, it does not prejudice a third person and is not intended for a purpose contrary to law, morals, good customs, public order, or public policy.

OBJECT OF CONTRACTS; KINDS; REQUISITES -

The object of a contract is its subject matter. In reality, the object of every contract is the obligation created. But since a contract cannot exist without an obligation, it may be said that the thing, service, or right which is the object of the obligation is also the object of the contract. Kinds:  1. things (as in sale of property) a. The thing must be within the commerce of men, that is, it can legally be the subject of commercial transaction b. It must not be impossible, legally or physically c. It must be in existence or capable of coming into existence d. It must be determinate or determinable without the need of a new contract between the parties 2. rights (as in assignment of credit) a. As a general rule, all rights may be the object of a contract. The exceptions are when they are intransmissible by their nature, or by stipulation, or by provision of law. 3. services (as in agency) a. The service must be within the commerce of men; b. It must not be impossible, physically or legally (Art. 1348.); and c. It must be determinate or capable of being made determinate.

THOSE WHICH CANNOT BE THE OBJECTS OF THE CONTRACT 1. 2. 3. 4. 5. 6.

Those outside the commerce of persons Rights which are intransmissible Future inheritance Objects or services which are contrary to law, morals, good customs, public order, etc. Impossible things or services Those incapable of existing in the future

KINDS OF IMPOSSIBILITY 1.

2.

Physical  when the thing or service in the very nature of things cannot exist (e.g., a monkey that talks) or be performed. With particular reference to services, the impossibility may be: a. Absolute  when the act cannot be done in any case so that nobody can perform it (e.g., to fl y like a bird, etc.); or b. Relative  when it arises from the special circumstances of the case (e.g., to make payment to a dead person, to drive a car on fl ooded highways, etc.) or the special conditions or qualifi cations of the obligor (to paint a portrait by a blind person, etc.); or Legal  when the thing or service is contrary to law, morals, good customs, public order, or public policy. An act is contrary to law, either because it is forbidden by penal law (e.g., to sell prohibited drugs, etc.) or a rule of law makes it impossible to be done (e.g., to make a valid donation of real property without a public instrument, to make a valid will, where the testator is under 18 years of age, etc.).

CAUSE OF CONTRACTS; REQUISIITES -

Cause (causa)  is the essential or more proximate purpose or reason which the contracting parties have in view at the time of entering into the contract or, as expressed in another case, it is the “why of the contract, the essential reason which moves the contracting pa rties to enter into the contract.’’ Requisites: 1. It must exist at the time the contract is entered into; 2. It must be lawful; and

3.

It must be true or real.

CAUSES ACCORDING TO TYPE OF CONTRACT 1. 2.

Onerous Contracts  the cause for each party is the prestation or the promise of a thing or service Remuneratory Contracts  the cause is the service or benefit remunerated. It may or may not have been the character of a recoverable debt. Gratuitous Contracts  the cause is the mere liberality (causa liberalitis) of the donor or benefactor; even if there is no consideration, the donation is valid provided it is not in fraud of creditors. Accessory Contracts  the cause is identical with the cause of the principal contract.

3. 4.

* Moral Obligation can be a valid cause for an Onerous Contract – if the obligation arises entirely from ethical consideration, demandable only in conscience and not in law, it cannot constitute a sufficient cause or consideration to support an onerous contract. However, if the moral obligation is based on a previous civil obligation but rendered ineffective due to prescription of the action, it constitutes a sufficient cause or consideration to support a onerous contract. This, in effect is called performance of a natural obligation.

WHEN CAUSE RENDERS A CONTRACT VOID ART. 1353. The statement of a false cause in contracts shall render them void, if it should not be proved that they were founded upon another cause

MOTIVE Motive  is the psychological or personal purpose of a party in getting the object and differs with each person. Each party may have his own personal reasons or motives in entering into a contract. Motive or even with illegal motives does not affect the validity of the contract. Difference between cause & 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; and 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. Exception: If the motive predetermines the purpose of the contract, motive may be regarded as cause. -

FORM OF CONTRACTS -

Form of a contract refers to the manner in which a contract is executed or manifested 1. The contract may be (a) parol or oral, or (b) in writing, or (c) partly oral and partly in writing. If in writing, it may be in a public or a private instrument. 2. A contract need not be contained in a single writing. It may be collected from different writings which do not confl ict with each other and which when connected, show the parties, subject matter, terms and consideration, as in contracts entered into by correspondence. 3. A contract may be encompassed in several instruments even though every instrument is not signed by the parties since it is suf fi cient if the unsigned instruments are clearly identi fi ed or referred to and made part of the signed instrument or instruments. 4. Similarly, a written agreement of which there are two copies, one signed by each of the parties is binding on both to the same extent as though there had been only one copy of the agreement and both had signed.

SPIRITUALITY PRINCIPLE; EXCEPTIONS CONTRACTS REQUIRED TO BE IN A PUBLIC DOCUMENT ART. 1358. The following must appear in a public document: 1.

Acts and contracts which have for their object the creation, transmission, modifi cation or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Articles 1403, No. 2, and 1405;

2.

The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;

3.

The power to administer property, or any other power which has for its object an act appearing or

CASES WHEN THE LAW REQUIRES THAT A CONTRACT BE IN CERTAIN FORM FOR ITS VALIDITY GENERAL RULE — Contracts are binding and, therefore, enforceable reciprocally by the contracting parties, whatever may be the form in which the contract has been entered into provided all the three essential requisites (consent, object, and cause), for their validity are present. EXCEPTIONS — The form, however, is required in the following cases: 1. when the law requires that a contract be in some form to be valid; 2. when the law requires that a contract be in some form to be enforceable or proved in a certain way; or 3. when the law requires that a contract be in some form for the convenience of the parties or for the purpose of affecting third persons. (Art. 1356.)

STATUTE OF FRAUDS Statute of Frauds is a legal concept that requires certain types of contracts to be executed in writing. The precise form of the Statute of Frauds varies between jurisdictions, but generally requires a writing for the following types of contracts: 1. Contracts for the sale of land; 2. Contracts for the sale of goods above a certain dollar amount; 3. Contracts that cannot be completed in less than one year; and 4. Contracts where one party is to pay the debt of another party. In a breach of contract case where the statute of frauds applies, the defendant may r aise it as a defense. In this case, the burden of proof is on the plaintiff to establish that a valid contract was in existence.

ELECTRONIC EVIDENCE & E-COMMERCE ACT -

R.A. No. 8792, otherwise known as the “Electronic Commerce Act  (June 14, 2000) gives legal recognition to any kind of electronic data message and electronic document used in the context of commercial and non-commercial activities to include domestic and international dealings, transactions, arrangements, agreements, contracts and exchanges and storage of information

SALIENT FEATURES OF THE E-COMMERCE ACT 1. 2. 3. 4. 5. 6. 7.

8.

It gives legal recognition of electronic data messages, electronic documents, and electronic signatures. (section 6 to 13) Allows the formation of contracts in electronic form. (section 16) Makes banking transactions done through ATM switching networks absolute once consummated. (section 16) Parties are given the right to c hoose the type and level of security methods that suit their needs. (section 24) Provides the mandate for the electronic implementation of transport documents to facilitate carriage of goods. (section 25 and 26) Mandates the government to have the capability to do e-commerce within 2 years or before June 19, 2002. (section 27) Mandates RPWeb to be implemented. RPWeb is a strategy that intends to connect all government offices to the Internet and provide universal access to the general public. The Department of Transportation and Communications, National Telecommunications Commission, and National Computer Center will come up with policies and rules that shall lead to substantial reduction of costs of telecommunication and Internet facilities to ensure the implementation of RPWeb. (section 28) Made cable, broadcast, and wireless physical infrastructure within the activity of telecommunications. (section 28)

9.

10. 11.

12.

13. 14.

Empowers the Department of Trade and Industry to supervise the development of e-commerce in the country. It can also come up with policies and regulations, when needed, to facilitate the growth of ecommerce. (section 29) Provided guidelines as to when a service provider can be liable. (section 30) Authorities and parties with the legal right can only gain access to electronic documents, electronic data messages, and electronic signatures. For confidentiality purposes, it shall not share or convey to any other person. (section 31 and 32) Hacking or cracking, refers to unauthorized access including the introduction of computer viruses, is punishable by a fine from 100 thousand to maximum commensurating to the damage. With imprisonment from 6 months to 3 years. (section 33) Piracy through the use of telecommunication networks, such as the Internet, that infringes intellectual property rights is punishable. The penalties are the same as hacking. (section 33) All existing laws such as the Consumer Act of the Philippines also applies to e-commerce transactions. (section 33)

RULES ON E-DOCUMENT; WHAT IS THE ELECTRONIC DOCUMENT? E-SIGNATURE? Rules on E-Document  Section 1. Electronic documents as functional equivalent of paper-based documents. – Whenever a rule of evidence refers to the term writing, document, record, instrument, memorandum or any other form of writing, such term shall be deemed to include an electronic document as defined in these Rules.

Section 2. Admissibility. – An electronic document is admissible in evidence if it complies with the rules on admissibility prescribed by the Rules of Court and related laws and is authenticated in the manner prescribed by these Rules. Section 3. Privileged communication. – The confidential character of a privileged communication is not lost solely on the ground that it is in the form of an electronic document. Electronic document  refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored processed, retrieved or produced electronically. Electronic signature  means information in electronic form that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document

ADMISSIBILITY OF ELECTRONIC EVIDENCE Section 2. Admissibility. – An electronic document is admissible in evidence if it complies with the rules on admissibility prescribed by the Rules of Court and related laws and is authenticated in the manner prescribed by these Rules.

IS EMAIL ADMISSIBLE AS EVIDENCE? The answer is YES. Under A.M. NO. 01-7-01-SC.- RE: RULES ON ELECTRONIC EVIDENCE, an email correspondence can be considered evidence under Philippine Courts. A printout copy of such email correspondence may be presented as evidence and can be classified as an original document under the "Best Evidence Rule" if it is a printout or output which is readable, and shown to reflect the data accurately. Accordingly, the person seeking to introduce an email correspondence or electronic document in any legal proceeding has the burden of proving its authenticity. Therefore, before any electronic document offered is received in evidence by the courts, its authenticity must be proved by any of the following means: 1. 2. 3.

by evidence that it had been digitally signed by the person purported to have signed the same; by evidence that other appropriate security procedures or devices as may be authorized by the Supreme Court or by law for authentication of electronic documents were applied to the document; or by other evidence showing its integrity and reliability to the satisfaction of the judge

ARE COMPUTER PRINTOUTS ADMISSIBLE AS DOCUMENTS? A printout copy may be presented as evidence and can be classified as an original document under the "Best Evidence Rule" if it is a printout or output which is readable, and shown to reflect the data accurately.

IS AN MMS PICTURE ADMISSIBLE AS EVIDENCE? Electronic documents include digitally signed documents and any printout or output, readable by sight or other means, which accurately reflects the electronic data message or electronic document. For purposes of the REE, electronic document is the same as electronic data message. Some examples of electronic data message or electronic evidence are files in computer hard drives and diskettes, computer printouts, text messages (SMS), Facebook chats, multimedia messages (MMS) and CCTV footage.

MAY PLEADINGS BE FILED THRU FAX? (GO V. COMELEC CASE MAY 2001) No. A facsimile or fax is not a genuine and authentic pleading. It is, at best, an exact copy preserving all the marks of an original. Without the original, there is no way of determining on its face whether the facsimile pleading is genuine and authentic and was originally signed by the party and his counsel. It may, in fact, be a sham pleading.

MAY PHOTOCOPIES OF DOCUMENTS BE ADMITTED AS E-DOCUMENTS? No. The information in those Xerox or photocopies was not received, recorded, retrieved or produced electronically. Moreover, such electronic evidence must be authenticated (Sections 1 and 2, Rule 5, Rules on Electronic Evidence), which the plaintiff failed to do. Finally, the required Affidavit to prove the admissibility and evidentiary weight of the alleged electronic evidence (Sec. 1, Rule 9, Ibid) was not executed, much less presented in evidence. The Xerox or photocopies offered should, therefore, be stricken off the record. Aside from their being not properly identified by any competent witness, the loss of the principals thereof was not established by any competent proof. When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.

AUTHENTICATION OF PRIVATE ELECTRONIC DOCUMENTS/PUBLIC E-DOCUMENTS SECTION 1. Burden of proving authenticity. – The person seeking to introduce an electronic document in any legal proceeding has the burden of proving its authenticity in the manner provided in this Rule. SEC. 2. Manner of authentication. – Before any private electronic document offered as authentic is received in evidence, its authenticity must be proved by any of the following means: (a) by evidence that it had been digitally signed by the person purported to have signed the same; (b) by evidence that other appropriate security procedures or devices as may be authorized by the Supreme Court or by law for authentication of electronic documents were applied to the document; or (c) by other evidence showing its integrity and reliability to the satisfaction of the judge. SEC. 3. Proof of electronically notarized document. - A document electronically notarized in accordance with the rules promulgated by the Supreme Court shall be considered as a public document and proved as a notarial document under the Rules of Court.

METHOD OF PROVING ELECTRONIC DOCUMENTS SECTION 1. Affidavit of evidence. – All matters relating to the admissibility and evidentiary weight of an electronic document may be established by an affidavit stating facts of direct personal knowledge of the affiant or based on authentic records. The affidavit must affirmatively show the competence of the affiant to testify on the matters contained therein.

SEC. 2. Cross-examination of deponent. – The affiant shall be made to affirm the contents of the affidavit in open court and may be cross-examined as a matter of right by the adverse party.

EPHEMERAL ELECTRONIC EVIDECE Ephemeral electronic communication. – Ephemeral electronic communications shall be proven by the testimony of a person who was a party to the same or has personal knowledge thereof. In the absence or unavailability of such witnesses, other competent evidence may be admitted. A recording of the telephone conversation or ephemeral electronic communication shall be covered by the immediately preceding section.