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Obligations and Contracts

By: Zamora, L.A

Art. 1378

When it is absolutely impossible to settle doubts by the rules eatablished in the preceeding articles and the doubts refers to incidental circumstances of a gratuitous contracts, the least transmission of rights and interests shall prevail. If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests.

If the doubts are cast upon the principal object of the contract in such a way that it cannot be known what may have been the intention or will of the parties the contract shall be null and void.

When despite the application of the preceeding rules, certain doubts still exist, such doubts shall be resolved in accordance with the supplementary rules stated in the article 1378.

CASE ILLUSTRATION

MARIN

vs.

ADIL

Aquino, J:.

FACTS:

Brothers Manuel and Ariston Armada were first cousin of Mrs. Marin. They were expecting to inherit some lots from their uncle, however, the property was adjudicated to Soledad Elevencionado, sister of Mrs. Marin who claimed to be the sole heir of their uncle. The brothers and other heir sued Soledad, the litigation ending in a compromise to which the brothers were awarded some lots. However, Mrs. Marin five years after the deed, conveyed the lots of her sister Aurora Collado. Judge Adil rescinded the deed of exchange and ordered for the restitution and payment of damages by Mrs. Marin to which she appealed.

ISSUE:

WON the Deed of exchange is valid.

RULING:

No. It is evident from the deed of exchange that the intention of the parties relative to the lots which are the objects of the exchange cannot be definitely ascertained. This circumstance renders the exchange void or inexistent.

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Obligations and Contracts

Art. 1346

An absolutely simulated and 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.

Concept of Simulation

Simulation of a contract is the deliberate act of making a fictitious agreement by the parties for the purposes of deception, when in fact the juridical act that appears on the contract does not really exist or different from what is actually agreed upon.

Case Illustration

February 6, 2002

Mendezona

vs.

Ozamiz

De Leon, J.:

FACTS:

Petitioner alleges that they were the owners of three parcels of land in Cebu City. The deed of sale thereto dated April 28, 1989 was executed in their favor by Carmen Ozamiz for and in consideration of the sum P1,040, 000.00. However, Ozamiz was allegedly became an invalid and could no longer take care of herself or manage her properties as alleged in the special proceedings for guardianship filed by her nephews. The guardianship was granted. On appeal, however, the decision was reversed and the Deed of Sale was considered to be simulated since the respondent failed to establish payment and at the time of execution of the contract, the mental faculties of Carmen were already seriously impaired.

ISSUE:

WON the Court of Appeals erred in ruling that the Deed of Sale was simulated contract.

RULING:

Simulation is defined as the declaration of a fictitious will deliberately made by agreement of the parties in order to produce for the purpose of deception the appearance of juridical act which does not exist or is different from what really executed. The requisites of simulation are: a) an outward declaration of will different from the will of the parties; b.) the false appearance must have been intended by mutual agreement; and c.) the purpose is to deceive third person. None of these were clearly shown to exist in the case at bar. Likely, simulation cannot be inferred from the alleged absence of payment.

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Obligations and Contracts

Art. 1314

Any third person who induces another to violate his contract shall be liable for damages to the other contracting party.

This article contemplates that the third person may be held liable for damages because he has induces a party to the contract to violate the terms thereof.

Case Illustration

Gilchrist

vs.

Cuddy

Trent, J.:

FACTS:

Cuddy was the owner of the film Zigomar. He rented it to Gilchrist for a week for P125.00. A few days to the date of delivery, Cuddy sent the money back to Gilchrist. Cuddy rented the film to Espejo and his partner Zaldarriaga for the amount of P350.00 for the week knowing that it was rented to someone else and accepted it because he was paying about 3 times as much as he had contracted Gilchrist, but they did not know the identity of the other party. Gilchrist filed for injunction against these parties.

ISSUE

WON Espejo and Zaldarriaga should be liable for damages though they do not know the identity of Gilchrist.

RULING

Yes. The parties were liable in an action for damages for the breach of that contract. The mere right to compete could not justify the appellants in intentionally inducing Cuddy to take away the contractual rights. The liability of the appellants arises from unlawful acts and not from contractual obligations as they were under no such ibligation to induce Cuddy.

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Lanie Zamora

Obligations and Contracts

Art. 1282. The parties may agreed upon the compensation of debts which are not yet due

Discussion:

As a general rule, compensation becomes effective when both mutual debts are due. This provisions is an exception to the rule.

Voluntary compensation is not limited to obligation which are not yet due. The parties may compensate by agreement any obligations in which the objective requisites provided for legal compensation are not present.

Case Illustration

G.R. No. 172020 Dec. 6, 2010

Traders Royal Bank

vs

Norberto Castañares and Milagros Castañares

Villarama, J.:

FACTS

Spouses Castañares were engaged in exporting shell crafts and handicrafts. Between 1977 to 1978 they obtained various loans and credit accomodations from Traders Royal Bank, mortgaging their real estates. As evidence by promisory note, petitioner releaaed only P35,000.00 although the mortgage deeds indicated the principal amount as P86,000.00 and P60,000.00. Respondents were further granted additional funds on various dates under promisory note they executed in favor of the petitioner. The loans began to mature and letters of credit started to expire. For failure of the respondents to pay their loan, the petitioner proceeded with the extrajudicial foreclosure of real estate mortgages. Thereafter, the Certificate of Sale was issued by in favor of the petitioner. After instituting civil case the respondents were still indebted to the petitioner. However, respondents filed a case for recovery of the sum debited to their savings account equivalent to $4,220.00 (30, 930.49)

ISSUE

WON the payment of $4,220.00 by the bank by way of compensation is valid.

RULING

Yes. Agreement for compensation of debts or any obligations when the parties are mutually creditors and debtors are allowed under Art. 1282 of Civil Code even though not all the legal requisites for legal compensation are present. Voluntary or conventional compensation is not limited to obligations which are not yet due. The only requirement for conventional compensation are that each parties can fully dispose of the credit he seeks to compensate and that they agree to the extinguishment of their mutual credits.

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Zamora, Lanie A.

Obligations and Contracts

Art. 1250

In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary.

Example

Delta barrowed from Charlie the amount of P5,000.00 payable after 5 years. On the maturity of the obligation, the value of 5,000.00 drop to 2,500.00 because of inflation or increase to 10,000.00 because of deflation. In this case, assuming there is extraordinary inflation and deflation the basis of payment shall be the equivalent value of the currency today to that 5 years ago. Hence, Delta is liable to pay Charlie 10,000.00 or 2,500.00 unless there is an agreement to the contrary.

APPLICATION OF THE LAW

This article applies only where a contract or agreement is involved. It dies not apply where the obligation to pay arises from law.

Example:

The taking of private property of the government in the exercise of its power of eminent domain.

EXTRAORDINARY INFLATION OR DEFLATION

*Applies to cases where extraordinary inflatiin or deflation of stipulated currency takes place.

*Extraodinary inflation or deflation is unusual or beyond common fluctuation.

INFLATION

is a sharp sudden increase of money or credit or both without a corresponding increase in business transaction.

DEFLATION

reduction in volume and circulation of the available money or credit resulting in a decline of the general price level.

CASE ILLUSTRATION

Filipino Pipe and Foundry Corporation (FPFC)

vs.

National Water and Sewerage Authority (NAWASA)

Griño-Aquino, J.:

May 3, 1988

FACTS

In 1961, NAWASA entered into a contract with FPFC for the supply of pressure pipes. After the delivery and failure of NAWASA to pay in full, FPFC initiated a collection suit on 1967 at CFI of Manila. The trial court ruled in favor of FPFC however, NAWASA failed again to pay. On 1971 FPFC filed another complaint, this tine aeeking an adjustment of the unpaid balance in accordance with the value of the Philippine peso when the decision was rendered in 1967.

ISSUE

Whether or not there was extraordinary inflation within the meaning of Art. 1250 of the NCC.

RULING

No. Extraordinary inflation exist when there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the common fluctuation in the value of the said currency and such decrease or increase could not have reasonably forseen or was manifestly beyond contemplation of the parties at the time of establishment of the obligation.

While FPFC voluminous records and statistics prove that there has been a decline in the purchasing power of the Philippine peso, this downward fall of the currency cannot be considered extraordinary. It is simply a universal trend that has not spared our country.

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Lanie Zamora

Obligations and Contracts

Case Illustration Art. 1218

Macias &Co

vs.

The China Fire Insurance & Co

Ostrand, J.,

FACTS

During the period of September 1918 to February 1919 the plaintiff corporation applied for and obtained the policies of insurance against loss by fire in its mercantile establishment. On March 25,1919, while the policies were still inforce, a fire occured in the plaintiff's place of business, as a result the insured property was more or less damaged and partly destroyed. Appellant maintains that the contractual limitation begun to run on April 7, 1919 the date on which the appellant claim for damage was rejected. However the defendant defenses that the plaintiff had not instituted action or suit against these within the time required by the aforesaid policies of insurance.

ISSUE

Whether the circumstance of a three months contractual limitation of action is reasonable.

RULING

It seem obvious that if a contractual limitation prevails over the statutory limitatiin it must also prevail over the exceptions to the statutory limitation the necessarily superseded the statute and the limitation is in all its phases governed entirely by the former.

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Zamora, L.A.

Student#31

CIVIL CODE OF THE PHILIPPINES

OBLIGATIONS AND CONTRACTS

Article 1218

Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors if such payment is made after the obligation has prescribed or become illegal.

In cases where the debtor has co-debtors and they were obliged to pay solidarily, under the following situations, the payor is not entitled to reimbursement.

Effect of Payment of Prescribed Debt

Effect of Payment of Prescribed Debt

A and B are solidary debtors of C to the amount of P1,000,000. The debt prescribed. But A voluntarily paid C, nevertheless, because A felt morally obliged to so pay.

A cannot recover from C what he has paid because it was voluntarily given after A knew of the prescription of the debt. A cannot get any reimbursement from B because A paid the debt after it had prescribed.

Effect of Payment of an Illegal Obligation

A and B are solidarily bound to give C some drugs worth P1,000,000. Later, the law prohibits the transaction of said drugs, and declares the drugs to be outside the commerce of man. Knowing this, A nevertheless delivers the drugs to C. Therefore, A cannot get any reimbursement from B because A made the payment after the obligation had become illegal.

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Lanie Zamora

G.R. No. L-13602 April 6, 1918

Leung Ben vs P.J. O' Brien

Street, J.,

FACTS

Upon December 12, 1917 an action instituted by P.J O' Brien to recover of Leung Ben the sum of P15,000.00 alleged to have been lost by the plaintiff to the defendant in a series of gambling, banking and percentage games conducted ruing the two or three months prior to the institution of the suit. in his verified conplaint, the plaintiff asked for an attachnent under section 424 and 412(1) of the Code of Civil Procedure against the property of the defendant on the ground that the latter was about to depart from the Philippine Islands with the intent to defraud his creditor.

ISSUE

Is the statutory obligation to restore money won at gaming an obligation arising from contract, express or implied?

RULING

Yes. Upon general principle, recognize both the civil and common law, money lost in gaming and voluntarily paid by the loser to the winner can not in the absence of statue, be recovered in a civil action. The cause arising upon contract, express or implied as this term used in Sec. 412 of the Code of Civil Procedure, therefore speak the language of the common law and for the most part reflect its ideas.

The characteristics feature of these obligations is that upon certains states of facts the law imposes an obligation to pay a sum certain money. The preposition that no one shall allowed to enrich himself unduly at the expense of another embodies the general principle here lying at the basis of obligation. Therefore, the application of writ of certiorari denied and the proceedings dismissed.

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Civil Code of the Phil (Obligation and Contracts)

Article 1186

The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Constructive fulfillment of suspensive condition.

There are three (3) requisites for the application of this article:

The condition is suspensive;

The obligor actually prevents the fulfillment of the condition; and

He acts voluntarily.

The law does not require that the obligor acts with malice or fraud as long as his purpose is to prevent the fulfillment of the condition. He should not be allowed to profit from his own fault or bad faith to the prejudice of the obligee. In a reciprocal obligation like a contract of sale, both parties are mutually obligors and also obligees.

Pastoral vs. Mutual Security Insurance Corp., 14 SCRA 1011 [1965]

FACTS

The surety bond requires the lessor (creditor) to report to the surety any violation of the lease contract by the lessee (debtor) within five (5) days, otherwise the bond will be null and void. The lessee defaulted on November 5. The five-day period to notify expired, therefore, on November 10. However, the lessor received a copy of the bond from the surety only on November 21 when the lessor learned of the existence of the condition.

ISSUE:

Is the surety absolved of its liability to the lessor?

RULING

No. By not notifying the lessor earlier, the surety must be deemed to have waived the condition as to rentals already due, since a condition is deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Constructive fulfillment of resolutory condition.

Article 1186 applies also to an obligation subject to a resolutory condition with respect to the debtor who is bound to return what he has received upon the fulfillment of the condition.

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Lanie Zamora

FAMILY CODE OF THE PHILIPPINES

ARTICLE 17

Student #22

Article 17. The local civil registrar shall prepare a notice which

shall contain the full names and residences of the applicants for a

marriage license and other data given in the applications. The notice

shall be posted for ten consecutive days on a bulletin board outside

the office of the local civil registrar located in a conspicuous place

within the building and accessible to the general public. This notice

shall request all persons having knowledge of any impediment to

the marriage to advise the local civil registrar thereof. The marriage

license shall be issued after the completion of the period of

publication.

After the receipt of the application for marriage license, the local

civil registrar shall prepare a notice which shall be posted for at least

ten (10) days at the bulletin board outside of his office in conspicuous

places or even in places accessible to the public. It calls upon anyone

who has any knowledge of any legal impediment of either or both of

the contracting parties to report to the local civil registrar

DUTY OF THE LOCAL CIVIL REGISTRAR. After the marriage application has been properly filled up and submitted to the local civil registrar, the latter shall post a notice to inform everybody of the impending marriage. This notice shall be posted for ten consecutive days on a bulletin board outside the office of the local civil registrar located in a conspicuous place within the building and accessible to the general public.

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CIVIL CODE OF THE PHILIPPINES

By: Lanie Zamora

Student#22

Article 46. Juridical persons may acquire and possess property of all kinds, as well as incur obligations and bring civil or criminal actions, in conformity with the laws and regulations of their

organizations.

Juridical persons may acquire properties. They may enter into

contracts. Without such capacity, they cannot fulfill or attain their

aims. They may sue or be sued but they cannot be prosecuted

criminally. The officers may however, be prosecuted criminally.

JURIDICAL PERSON. A juridical person is a being of legal existence susceptible of rights and obligations, or of being the subject of judirical relations.

STATE. The State and its political subdivisions are juridical persons. The state is a sovereign person with the people composing it viewed as an organized corporate society under a governmentwith the legal competence to exact obedience of its commands. As a juridical person, the state can enter into treaties and contracts.The Civil Code even provides that, in default of persons entitled to succeed to the estate of a deceased person, the State shall inherit his whole estate.

POLITICAL SUBDIVISIONS. Political subdivisions are municipal corporations and, in the Philippines, consist of the provinces,cities and municipalities.

Case

FELIPE M. ROLDAN vs. PHILIPPINE VETERANS BOARD, ET AL

FACTS

Roldan was a first grade Civil Service eligible. On March 26, 1953, he was appointed clerk in the Philippine Veterans Board and he entered upon the performance of his duties. Defendant Antonio F. Garcia, acting Administrative Officer of the Philippine Veterans Board of which he was a member and signing for the Chairman, in a letter dated March 10, 1954 addressed to Roldan, among other things, said:

"In this connection, attention may be invited to the provision of section 2 of Act 2589 and the Cabinet Resolution dated December 23, 1946, reiterating its former policy against the reinstatement in the service of officers and employees of the Government who have retired under existing retirement Acts and also to the provision of Sec. 6 of Republic Act 728, which states that ‘no person shall be appointed or reinstated in the service when he is already fifty seven years of age."

So, Roldan was separated from the service on March 25, 1954 and in his place Juan Domingo was appointed. 

ISSUE

Whether or not the Philippine Veterans Board considered juridical entity and the separation of Roldan has been illegal.

RULING

In the present case, the Philippine Veterans Board was created and functioned under the Department of National Defense. It is also a mere agency of the government. It is not a body corporate and politic in deed and in law, incapable of suing or being sued.

The trial court in said case decided in favor of Roldan, declaring his ouster to have been illegal. The dispositive part of the decision reads thus:

IN VIEW WHEREOF, granted; judgment is rendered declaring Juan Domingo not entitled to said office, and declaring plaintiff, Felipe M. Roldan, as the person legally entitled and with authority to exercise the same; and the Court orders that plaintiff be restored to said position. Costs against defendant.

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PERSONS AND FAMILY CODE

ARTICLE 22

Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

COVERAGE OF THE LAW

The law was designed to place equity and justice over and above legalism or form. Uphold the spirit that giveth life rather than the letter killeth. A well-known principle in legislation that a law is intended to furnish a just solution or an equitable settlement to any injustice committed or grievance done. Progressive principle of law

ILLUSTRATION

A certain property left and temporarily forgotten by the owner is not lost but is mislaid property, of which the owner is still constructively in possession, although its custody maybe in another on whose premises it has been left The law is founded on the principle of placing equity and justice above strict legalism or form. For, it is iniquitous and unconscionable to even think that one who is benefited by an act or event of another should appropriate said benefit without paying the price for the same.

PRINCIPLE OF SOLUTIO INDEBITI

This is the legal basis for the principle that no one shall enrich himself at the expense of another. Supreme Court said that the government is not exempt from its application. Hence the government cannot collect taxes twice on the same transaction; otherwise it would unduly enrich itself at the expense of the taxpayer.

OBAÑA vs Court of Appeals, G.R. No L-36249, March 5, 1985

Petitioner seeks a review of the Decision of respondent Appellete Court ordering him in an action for Replevin to return to Aniceto Sandoval, private respondent, 170 cavans of rice or to pay its value in the amount of P37.25 per cavan SANDOVAL is the owner and manager of “Sandoval and Sons Rice Mill” located at Rosales, Pangasinan and he is engage in buying and selling of palay. On November 21, 1964, a certain Chan Lin approached him and offered to purchased from him 170 cavans of clean rice at the price of P37.26 per cavan. The delivery made the following day at petitioner’s store located at San Fernando La Union with payment to made thereat by Chan Lin to Sandovals’s representative. As agreed, the 170 cvans of rice were tranported at San Fernando La Union. Upon arrival thereat the goods unloaded but when the truck driver attempted to collect the purchase price the latter nowhere to be found. The driver tried to collect the purchase from petitioner but the latter refuse stating that he had purchase the goods from Chan Lin at P33.00 per cavan and that the price therefore had already been paid.

ISSUE

Whether or not Sandoval still had the right to take back the rice from Petitioner considering that it was feloniously acquired from the former by Chan Lin.

RULING

No. Sandoval no longer had the right to take back the rice because the sale between him and Chan Lin

had already been perfected. Ownership of the rice was effectively transferred to Chan Lin upon delivery

to him in San Fernando La Union. At the very least, Chan Lin had a rescissible title to the goods forthe non payment of the purchase price, but which had not been rescinded at the time of sale to Obaña.

SOLUTIO INDEBITI- juridical relation which arises when something is received when there is no right to demand it and was unduly delivered through mistake Requisites; Payment is made by one person There is no duty to pay and there is no right to received The payment made through mistake and not through liberality or other cause.

Article 22 as Principle of Unjust Enrichment

The principle of unjust enrichment finds application unjust enrichment exist when a person unfairly retains a benefit to the loss of another or when a person retain money or property of another against the fundamental principles of justice equity and good conscience

Two conditions of Principle of unjust enrichment under Article 22

1. That a person is benefited without a valid basis or justification 2. That such benefit is derived at another’s expense or damage.

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FAMILY CODE OF THE PHILIPPINES

Lanie Zamora

Student #22

Article 46. Any of the following circumstances shall constitute

fraud referred to in Number 3 of the preceding Article:

1) Non-disclosure of a previous conviction by final judgement of the other party of a crime involving moral turpitude;

2) Concealment by the wife of the fact that at the time of

the marriage, she was pregnant by a man other than her husband;

3) Concealment of a sexually-transmissible disease, regardless of its nature, existing at the time of the marriage; or

4) Concealment of drug addiction, habitual alcoholism or

homosexuality or lesbianism existing at the time of the marriage.

No other misrepresentation or deceit as to character, health,

rank, fortune or chastity shall constitute such fraud as will give

grounds for action for the annulment of marriage.

EXISTENCE AT THE TIME OF MARRIAGE

The grounds for annulment of the marriage under Article 46

must be existing at the time of the marriage because one cannot hide

something that was not existing at the time of the marriage. The judgment referred to in paragraph 1 of Article 46 must be

final, otherwise, it would not constitute a ground for the annulment

of the marriage. Paragraph 2 of Article 46 refers only to a woman, the latter

having concealed from her spouse the fact of pregnancy by a man

other than her husband. Concealment of pre-marital sex by the wife however, is not

a ground for legal separation in view of the fact that the law says

that no other misrepresentation or deceit as to character or chastity

shall constitute such fraud as will give grounds for action for

annulment of the marriage. What is fraudulent is the

concealed pregnancy.

Case:

Aurora A. Anaya vs. Fernando O. Palaroan

G.R. No. L-27930, November 26, 1970

Reyes, J.B.L.,J

Facts:

The marriage between Aurora Anaya and defendant Fernando

Palaroan was celebrated on December 4, 1953. Thereafter, on January

7, 1954, defendant Fernando filed an action for annulment of the

marriage on the ground of force or intimidation. The CFI (now RTC)

on September 23, 1959, dismissed the case, upholding the validity of

the marriage and granted plaintiff’s counterclaim. However, while a counterclaim was being negotiated,plaintiff herein prayed for the annulment of the marriage and for moral damages alleging that Fernando had divulged

to her the fact that several months prior to the marriage, he had pre-marital relationship with a close relative of his and that the non-divulgement of such to her had definitely wrecked their marriage.

Issue:

Whether or not the non-disclosure to a wife by her husband of

his pre-marital relationship with another woman is a ground for the

annullment of marriage.

Held:

For fraud as a vice of consent in marriage, which may be a cause

for its annulment, it is limited exclusively by law in Article 86, New

Civil Code (Now Article 46, Family Code), referring to

misrepresentation, non-disclosure of a previous conviction involving

moral turpitude and concealment of pregnancy. Further, the intention of Congress to confine the circumstances

that constitute fraud to those above enumerated is clearly shown by

the interdiction that: “No other misrepresentation or deceit as to

character, rank, fortune or chastity shall constitute such fraud as

will give grounds for action for the annulment of marriage.’’

REASON FOR THE LAW

If a wife has concealed a pregnancy by a man other than her

spouse, it is believed that in her actual present condition, the wife is

not fit to take on herself the duties of a chaste and faithful wife. She

is incapable of bearing a child to her husband at the time of the

marriage. Her concealment of her pregnancy by another man is a

fraud going into the essentials of the marriage relation.

Case:

Reynolds vs. Reynolds

3 Allen (85 Marc), 605

Facts:

It appears that at the time of the marriage on Oct 11, 1956,

appellant was only 17 years of age and the respondent was 30 years

or over. It was alleged among others, that the man was induced to

marry the woman by means of her fraudulent misrepresentations

that she was a chaste and virtuous woman; that her friends

represented her to him, at her procurement, that she was honest

and was a virgin, when in truth she was at the time of the marriage

pregnant with a child.

Held:

While marriage by our law is regarded as a purely civil contract,

which may well be avoided and set aside on the ground of fraud, it

is not to be supposed that every error or mistake into which a person

may fall concerning the character or qualities of a wife or a husband,

although occasioned by disingenuous or false statements or practices,

will afford sufficient reason for annulling an executed contract of

marriage.

In the absence of force or duress, and where there is no

mistake as to the identity of the person, any error or misapprehension

as to the personal traits or attributes, or concerning the position or

circumstances in life of a party, is deemed wholly immaterial and

furnishes no good cause for annullment.

The last paragraph of Article 46 clearly provides that

fraudulent acts enumerated in the law are exclusive, for

no other misrepresentation or deceit as to character, health,

rank, fortune or chastity shall constitute fraud as will give

grounds for the annulment of marriage.

What constitutes fraud? The New Civil Code provides:

Art. 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.

Art. 1339. Failure to disclose facts, when there is a duty to reveal

them, as when the parties are bound by confidential relations,

constitutes fraud.

Art. 1340. The usual exaggerations of trade, when the other party

had an opportunity to know the facts, are not in themselves fraudulent.

Art. 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.

Art. 1342. Misrepresentation by a third person does not vitiate

consent, unless such misrepresentation has created substantial

mistake and the same is mutual.

Art. 1343. Misrepresentation made in good faith is not fraudulent

but may constitute error.

Art. 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.