Article 1330- 1355.docx

Article 1330. A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. (1265a)  Characteristics of consent o It is intelligent. — There is legal capacity to act. o It is free and voluntary. o It is conscious or spontaneous. 

Causes of Vitiated Consent o mistake (or error) o fraud (or deceit) o violence o intimidation o undue influence These vices are defects of the will, the existence of which impairs the intelligence, freedom and spontaneity of the party in giving consent to the contract.

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A voidable contract is binding and valid, unless annulled by a proper action in court. It is, however, susceptible of ratification before annulment.

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There must be clear and convincing evidence of the presence of vitiated consent. Mere preponderance of evidence on this matter is not sufficient.

Article 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract. A simple mistake of account shall give rise to its correction. (1266a) 

‘Mistake’ or ‘Error’ Defined o not only as the wrong conception of a thing, but also as the lack of knowledge with respect to a thing

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Requisites for Mistake to Vitiate Consent o the error must be substantial regarding: (if a party would still have entered into the contract even if he had known of the error, the error is not substantial.)  the object of the contract (Example: A person signed a contract of sale thinking it was only a contract of loan.)  the conditions which principally moved or induced one of the parties (error in quality: Examples: A person buys a fountain pen thinking it to be made of solid gold when as a matter of fact, it is merely gold plated; a person buys a CD record thinking it to be Stateside, but it turns out to be merely a local imitation, a pirated one; or in quantity:

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Example: A person desiring to buy land consisting of 100 hectares discovers that the land has only 60 hectares)  identity or qualifications (error in personae), but only if such was the principal cause of the contract. (Examples: Hiring of a pre-bar reviewer, a particular singer for a concert, contracts involving partnership, agency, deposit — since these require trust and confi dence.) the error must be excusable (not caused by negligence) the error must be a mistake of fact, and not of law

Article 1332. When one of the parties is unable to read, or if the contacts is in 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.  Rule in Case of inability to read or understand This rule is especially necessary in the Philippines where unfortunately there is still a fairly Large number of illiterates, and where documents are usually drawn up in English or Spanish.  Presumption The natural presumption, of course, is that one always acts with due care and signs with full knowledge of all the contents of a document. Exceptions o When one of the parties is unable to read (including the blind person) o If the contract is in a language not understood by one of the parties. Note: In both cases, “the person enforcing the contract must show that the terms thereof have been fully explained to the former. 

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Duty of the courts where one is contracting parties at a disadvantage o Article 1332 - The court must be more vigilant for the protection of a contracting party who occupies an inferior position with respect to the other contracting party. o Article 24 under Human Relations – The court must protect the disadvantage parties (disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap) in order to insure that justice and fair play characterize the relationship of the contracting parties.

Article 1333. There is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the contract. Art. 1334. Mutual error as to the legal effect of an agreement when the real purpose of the parties is frustrated, may vitiate consent.

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Knowledge of doubt or risk does not vitiate consent o If the parties are conscious of their ignorance as to the existence of some facts, the non-existence of such facts is of no consequence. o Case example: Wood v. Boynton  Brief Facts: Mrs. Wood not knowing the nature of the stone she found, she sold it to Mr. Samuel Boynton for only one dollar after they discussed their ignorance as to the quality and nature of the stone which they surmised to be probably a Topaz, but which eventually turned to be a Diamond worth about US 1,000.  Issue: Whether there was anything in the sale which entitled the seller to rescind the sale and so return the ownership to her.  Held: The court ruled that the contract cannot be annulled or rescinded. There was legally no mistake as to the nature of the stone because when they transacted the stone, there was conscious uncertainty and that the parties took the risk that it could have been some other valuable object capable of being sold at a higher price.

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Mistake of Law o General Rule: A unilateral mistake of law as to the legal effect of an agreement is not a ground to annul a contract. o This is so because, in such a situation, the document embodying the agreement is drafted the way the parties intended it to be such that only its legal effect is different from what the parties have assumed.

 Exception: When the following concur – Requisites for Mistake to Vitiate Consent: o the mistake must be with respect to the legal effect of an agreement; o the mistake must be mutual; o the real purpose of the parties must have been frustrated. Three requisites are, therefore, necessary in order that such mistake will vitiate consent. Article 1335. There is violence when in order to wrest consent, serious or irresistible force is employed. There is intimidation when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to give his consent. To determine the degree of intimidation, the age, sex and condition of the person shall be borne in mind. A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent.

Article 1336. Violence or intimidation shall annul the obligation, although it may have been employed by a third person who did not take part in the contract. 

What are the vices of consent? o Mistake – substantial mistake and not merely an accidental mistake; must refer to the:  substance of the thing which is the subject of the contract; or  to those conditions which have principally moved one or both parties to enter the contract. Note: Mistake as to identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract.

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Intimidation – An internal moral force operating in the will and inducing performance of an act. 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. There is also an intent to inflict bodily harm in order to gain consent.

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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.

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Fraud – Use of insidious words or machinations in inducing another party to enter into the contract, which without them, he would not have agreed. Example: In De Leon v Court of Appeals, the Court held that in order that intimidation may vitiate consent and render the contract invalid, the following requisites must concur: [1] that the intimidation must be the determining cause of the contract, or must have caused the consent to be given; [2] that the threatened act be unjust or unlawful; [3] that the threat be real and serious, there being an evident disproportion between the evil and the resistance which all men can offer, leading to the choice of the contract as the lesser evil; and [4] that it produces a reasonable and well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury.

Article1337. There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. The following circumstances shall be considered: the confidential, family, spiritual and other relations between the parties, or the fact that the person alleged to have been unduly influenced was suffering from mental weakness, or was ignorant or in financial distress.

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Undue Inluence o Undue influence occurs when one party to a transaction is able to influence the decisions of another party to the transaction. o Undue influence gives one party an advantage over another. In some cases, a party that is the victim of undue influence may be able to void a contract he or she signed while under the effects of that influence.

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While in intimidation there must be an unlawful or unjust act which is threatened and which is consent to be given.

Article 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. (1269) 

Fraud is every kind of deception, whether in the form of insidious words or machinations, manipulations, concealments or misrepresentations, for the purpose of leading another part into error and thus execute a particular act.

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Insidious words or machinations is a deceitful scheme or plot with an evil design, or a fraudulent purpose. It exists where the party who obtains the consent does so by means of concealing or omitting material facts.

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Requisites of Fraud o it must have been employed by one contracting party upon the other (arts. 1342 and 1344) o it must have induced the party to enter into a contract (art. 1338) o it must have been serious (art 1344) o it must have resulted in damage or injury to the party seeking annulment

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Classes of fraud in the perfection of the contract: o Dolo Causante – this is the essential cause of the consent without which the party would not have agreed to enter into the contract. o Dolo Incidente – this kind of fraud which is not the efficient cause for giving the consent to the contract, as it refers merely to an incident therein and, which even if not present the contracting parties would have still agreed to the contract. 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.

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The object must be determinate as to its kind and determinable as to its quantity.

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The object need not be individualized. It must be determinate as to its kind or species. The quantity of the object may be indeterminate, so long as the right of the creditor is not rendered illusory.

When the obligation consists in the delivery of a generic thing, whose quality and circumstances have not been stated, Article 1246 governs. Illustrations: (1) S sold B all the chickens in his poultry. Here, the object itself (chickens) is determinate but the quantity though not yet determined can be ascertained without necessity of entering into a new contract. (2) S agreed to deliver one of his carabaos to B. here, the object is determinable without the need of a new contract between the parties. It becomes determinate the moment it is delivered. 

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. 

The cause of a contract is the “why of the contract,” the immediate and most proximate purpose of the contract, the essential reason which impels the contracting parties to enter into it and which explains and justifies the creation of the obligation through such contract.

 Cause distinguished from Consideration The cause is different from consideration. Consideration in the Anglo-American sense must always be valuable or capable of pecuniary estimation. Cause, on the other hand, need not be material at all, and may consist in a moral satisfaction for the promissor. 

Requisites of Cause o It must exist o It must be true o It must be licit

 Cause distinguished from Motive Cause is different from motive. Cause is the proximate why while motive is the ultimate why. o Illustration: For example, A wants to sell his house for P60 M because A is moving to Canada. B is willing to buy the house for P60 M. In this case, the cause for A is the P60 M while the cause for B is the house. A’s motive is to dispose of the house which he does not need since A is going to Canada.

Effects of failure of Causes Like failure of or lack of object, the failure of cause has an effect on the contract. If there is no cause or the cause is illegal, then the contract is void. This is unlike the lack of consent. When consent is lacking, the contract is not void. The contract is merely voidable. 

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Classification of Contracts according to Cause o In onerous contracts, the cause is the prestation or promise of a thing or service by the other party. It has been held that, as a mortgage is an accessory contract, its cause or consideration is the very cause or consideration of the principal contract, from which it receives its life, and without which it cannot exist as an independent contract (China Bank vs. Lichauco). o In remuneratory contracts, the cause is the service or benefit which is remunerated. A remuneratory contract is one where a party gives something to another because of some service or benefit given or rendered by the latter to the former, where such service or benefit was not due as a legal obligation. o In gratuitous contracts, the cause is the mere liberality of the benefactor. Delivery – for real contracts Form – for formal contracts

Article 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former’s special knowledge. Effect of Expression of Opinion — A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former’s special knowledge.  Example: o A, on buying a watch, was assured by the seller that it was a good watch, and could run without rewinding for one week, in the opinion of the seller. This is a mere expression of opinion that is not fraudulent. But if the seller was a watch expert, and the only reason why A bought the watch was this opinion of the seller, the contract is voidable on the ground of fraud. o If a seller says that in his opinion his land is first class, but it turns out to be second class, the sale is not fraudulent, particularly when the buyer had opportunity to examine the land for himself. 

Reason for the rule on an expert’s opinion: o The opinion of an expert is almost in the same category as a fact, particularly when this expert’s knowledge is relied upon by the other party. Problem:

X, desiring to buy certain property, hired an expert to ascertain its true value. But the expert’s opinion turned out to be wrong and X was, therefore misled. May X ask for the annulment of the contract? Answer: No, because his own expert (and therefore his employee) committed the error. Article 1342. Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual. 

Effect of Misrepresentation by Third Persons. o Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual. o Even without Art. 1342, this rule would still be applicable since it is a logical corollary to the principle that in order to vitiate consent, the fraud must be employed only by one of the contracting parties. Besides, it would be clearly unjust to visit upon a contracting party the disastrous effects of nullity simply because the other contracting party has indiscreetly reposed his confidence upon a third party. o The precept, however, would not be applicable if the third person makes the misrepresentation with the complicity or, atleast, with the knowledge, but without any objection, of the contracting party who is favored. Neither is it applicable if the misrepresentation has created substantial mistake and the same is mutual. Problem C, an old and ignorant woman, was helped by V in obtaining a loan of P3,000.00 from X Rural Bank secured by a mortgage on her house and lot. On the day she signed the promissory note and the mortgage covering the loan, she also signed several documents. One of these documents signed by her was promissory note of V for a loan of P3,000.00 also secured by a mortgage on her house and lot. Several years later, she received advice from the sheriff that her property shall be sold at public auction to satisfy the two obligations. Immediately she filed suit for annulment of her participation as co-maker in the obligation contracted by V as well as of the mortgage in relation to said obligation of V on the ground of fraud and mistake. Upon filing of the complaint, she deposited P3,383.00 in court as payment of her personal obligation including interests. (a) Can be held liable for the obligation of V? Why? (b) Was there a valid and effective consignation considering that there was no previous tender of payment made by C to the Bank? Why? Answer (a) C cannot be held liable for the obligation of V. It is crystal clear that C’s participation in V’s obligation both as co-maker and as mortgagor is

voidable not on the ground of fraud because the Bank was not a participant in the fraud committed by V, but on the ground of mistake. There was substantial mistake on the part of both C and the Bank mutually committed by them as a consequence of the fraud employed by V. (b) Despite the fact that there was no previous tender of payment made directly to the Bank, nevertheless, the consignation was valid and effective. The deposit was attached to the record of the case and the Bank had not made any claim thereto. Therefore, C was right in thinking that it was useless and futile for her to make a previous offer and tender of payment directly to the Bank. Under the foregoing circumstances, the consignation was valid, if not under the strict provisions of the law, under the more liberal consideration of equity. Article 1343. Misrepresentation made in good faith is not fraudulent but may constitute error. 

Rule: Misrepresentation made in good faith is not fraudulent but may constitute error. o Example: Misrepresentation in Good Faith Lester bought an auto part from Jepoy. The auto part was needed for Lester’s car. Jepoy honestly but mistakenly assured Lester that the auto part was the proper one for Lester’s car model. May the contract be annulled? Ans: Yes, not on the ground of fraud, for the misrepresentation was honest, but on the ground of 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.

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Requisites for Fraud to Vitiate Consent As a ground for annulment o The fraud must be serious; o The parties must not be in pari delicto (mutual guilt), otherwise, neither party may ask for annulment. The contract would, therefore, be considered valid. 

Incidental Fraud does not Vitiate Consent o Incidental fraud (dolo incidente) should not be confused with causal fraud (dolo causante). Incidental fraud is not a cause for annulment. o Incidental Fraud: those which are not serious in character and without which the other party would still have entered into the contract.

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Types of Fraud Contemplated in the Performance of Contracts

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The fraud must be “dolo causante” or it must be fraud in obtaining the consent of the party; This fraud must be proven by clear and convincing evidence.

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Effect of Fraud in the Performance of a Contract o Give rise to Damages

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Fraud is Incompatible with Good Faith o Fraud or malice (dolo) has been defined as a “conscious and intentional design to evade the normal fulfillment of existing obligations”, and in this, incompatible with good faith. 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.

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Simulation of a Contract o It is the process of intentionally deceiving others by producing the appearance of a contract that really does exist (absolute simulation) or which is different from the true agreement (relative simulation)

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Requisites of Simulation o An outward declaration of will different from the will of the parties; o The false appearance must have been intended by mutual agreement; o The purpose is to deceive third persons.

Article 1346. An absolute 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. 

Kinds of Simulation o Absolute simulation  when the contract does not really exist and the parties do not intend to be bound at all.  Effect: the contract is void  Example: Dan is indebted to Cy. Upon learning that Cy is going to enforce his credit, Dan pretended to sell his land to Billy, his father-inlaw. Dan did not receive a single centavo for the transaction and he continued in possession of the land as the contract was merely simulated and fictitious. There is no contract of sale in this case as the parties do not intend to be bound at all.

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Relative simulation  when the contract entered into by the parties is different from their true 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.  Effect: the parties are bound to the real or true agreement  Example: Alex and CJ entered into contract of mortgage. But wanting to hide the mortgage, it was made to appear in the form of a deed of sale. As far as Alex and CJ are concerned, the contract entered into between them is a contract of mortgage. As to third persons, the apparent contract, the contract of sale, is the one entered into. Consequently, CJ is the mortgagee but is made to appear as the buyer and CJ sells the land to Bert, the latter will acquire ownership.

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)  What is meant by object of contracts? o The object of a contract may be defined as the thing, right or service which is the subject matter of the obligation which is created or established.  What requisites must concur in order that a thing, right or service may be the object of contracts? o As a general rule, all things, rights or services may be the object of contracts. 

Essential requisites: o The object should be within the commerce of men; in other words, it should be susceptible of appropriation and transmissible from one person to another; o The object should be real and possible; in other words, it should exist at the moment of the celebration of the contract, or at least, it can exist subsequently or in the future; o The object should be licit; in other words, it should not be contrary to law, morals, good customs, public order or public policy; o The object must be transmissible;

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The object should be determinate, or at least, possible of determination, 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

What things, rights or services cannot be the object of contracts? o Things which are outside the commerce of men, including future things; o Rights which are intransmissible; o Future inheritance except in cases expressly authorized by law; o Services which are contrary to law, morals, good customs, public order or public policy (Article 1347); o Impossible things or services (Article 1348); o Objects which are not determinate as to their kind (Article 1349). If the parties enter into a contract with respect to the above contracts, the contract is void or inexistent. These are the exceptions to the rule that future inheritance cannot be the subject of a contract: o In case of marriage settlements, future inheritance may be the object of donation. o In case of partition of property inter vivos made by the deceased himself as long as no legitime is impaired. Article 1348. Impossible things or services cannot be the object of contracts. (1272)

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PHYSICAL- When the thing or service in the very nature of things cannot exist or be performed. The impossibility maybe: a) absolute or b) relative. Absolute or Objective Impossibility Relative or Subjective Impossibility Nobody can perform it Due to the special conditions or qualifications of the debtor it cannot be performed Nullifies the contract If temporary, does not nullify the contract; If permanent, nullifies the contract

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LEGAL- When the thing or service is contrary to the law, morals, good customs, public order, public policy.

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Things are impossible when: o Liability for Damages. If the thing or service is impossible, there is no contract. Can there be any claim for damages against the debtor if the creditor incurred actual damages? The answer is, it depends. If both parties are fully aware of the

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impossibility of the thing or service, there is no liability for damages because both the debtor and creditor are considered in bad faith. If the debtor knew of the impossibility or could have known it by exercising ordinary diligence, he is liable for damages because he is in bad faith or is negligent. But if the debtor is ignorant of the impossibility, and his ignorance is justifiable or unavoidable, he cannot be held liable for the damages suffered by the creditor. Partly Impossible. The divisibility of the thing or service will determine whether the partially possible and partially impossible thing or service will be void or valid. Difficulty of Performance. When there is a mere difficulty or great inconvenience to comply with an obligation that is not impossible, a party who committed himself to do a difficult obligation is not relieved from his responsibility even if he would suffer inconvenience or increased expenses in the fulfillment thereof.

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. 

Object – The thing, right or service which is the subject matter of the obligation arising from the contract.

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Requisites: o Must be within the commerce of man o Should be real or possible o Should be transmissible o Should be licit o Should be determinate, or at least possible of determination as to its kind

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Object of the Contract: o The object must be determinate or determinable (without need for a new agreement). o If the object is not determinate or determinable, the contract is void for want of an essential requisite (the object of the contract).

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 – It is the essential and impelling reason why a party assumes an obligation. Strictly speaking, there is no cause of a contract, but there is a cause for an obligation. 

Essential Requisites of Cause: o Licit or lawful

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Existing at the of the celebration of the contract True

Cause Vs. Object In Remuneratory Contracts In Gratuitous Contracts As to the thing As to Contracting Parties 

Cause The service or benefit which is remunerated The liberality of the donor or benefactor Prestation or promise of a thing or service by the other Different with respect of each party

Object The thing which is given in remuneration The thing which is given or donated The thing or service itself. May be the same for both of the parties

Classification of Contracts According to Cause: o Onerous – both parties promised to each other a prestation of a thing or service. The parties are reciprocally obligated to each other. o Remuneratory or remunerative – is the cause is the service or benefit which the service or benefit which is remunerated. The purpose of the contract is to reward the service that had been previously rendered by the party remunerated. o Gratuitous – the cause is the mere liberality of the benefactor or giver, such as commodatum; pure donation; guaranty or suretyship unless there is a stipulation to the contrary. , mortgage given by a third person to secure an obligation of a debtor unless consideration is paid for such mortgage. Note: The liberality of the benefactor is deemed causa only in those contracts that are pure beneficence. Contracts designed solely and exclusively to procure the welfare of the beneficiary, without any intent of producing any satisfaction for the donor.

Bar Question Sample: If a particular piano is sold for P500,000.00 what is the object and what is the cause? Answers: (Based from two School of thought) o According to Manresa, for the seller the object is the piano and the cause is the price; for the buyer the object is the price and the cause is the piano. o According to others, for both the seller and the buyer, there is just one object – the piano. The cause for the seller is the price; the cause for the buyer is the delivery of the piano. Article 1351. The particular motives of the parties in entering into a contract are different from the cause thereof. 

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Motive and Causes, Difference o The cause of a contract is the objective and juridical reason for the establishment of a contract and is always the same. while motive is the psychological or personal purpose of a party in getting the object and differs

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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. Exception: If the motive predetermines the purpose of the contract, motive may be regarded as cause. EXAMPLE: AMPARO GONZALEZ and ALFREDO TRINIDAD, Petitioners, v. PRIMITIVO TRINIDAD and MARIA YNARES, Respondents.

FACTS: On November 11, 1931, the then plaintiffs executed in favor of the now petitioners a deed of sale of an urban property situated in the City of Manila, for the sum of P10,000. As the property was mortgaged to the Bureau of Lands for P6,500, the purchasers assumed the encumbrance. The sale was simulated and the supposed vendors did not receive the alleged price, the idea being to save the property, which was fictitiously sold, from attachment by Dr. Ramon Papa to whom Lorenzo Perez had endorsed a note for P4,000 executed and signed by Primitivo Trinidad. Dr. Papa, however, died and the credit represented by the note was adjudicated to Carmen Papa with when the said Primitivo Trinidad had a subsequent agreement to the effect that he would pay the note as soon as he had the money. Thus the litigation and attachment which Primitivo Trinidad feared were averted. ISSUES: Is the contract without consideration void and cannot be cured by the presence of motives? HELD: The contract was in itself fictitious and simulated and the supposed vendors did not receive the stipulated price, the consideration being thus lacking, said contract is null and void. The decision of the Court of Appeals is AFFIRMED 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) 

Contract is meeting of the minds. If there is no essential cause for this, there is no contract at all.

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Examples of unlawful contract: A proposal to steel various objects from an event.

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Example of contract contrary to good morals: A legally married couple agrees with themselves to enter into a relationship with a paramour.

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Example of contract contrary to public orders: A proposal to start a riot in the public plaza near the municipal hall.

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 another cause which is true and lawful.  Statement of false cause (false cause is not void, but merely revocable and viodable)  Concepcion vs. Sta. ana, 87 Phil. 787 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.  

Statements that cause exists(the cause exists and is lawful, unless the debtor proves the contrary) The Presumption under this article that the cause exists

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. 

It is inadequacy of cause, like an insufficient price for a thing solid. (Lesion defined)

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Rules of Lesion o General Rule: Lesion or inadequacy of price does not invalidate a contract. o Exception:  When, together with lesion, there has been: 1. Fraud 2. Mistake 3. Or undue influence  In cases expressly provided by law(in the following, the contracts may be rescinded) Art. 1382, par. 1, Civil Code, Art. 1381, Par. 2, Civil Code and Art. 1098, Civil Code

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Lesion as Evidence of Vitiated Consent