Scribd
Upload
2K views2 pages

Art. 1471-Sales

1. The document discusses simulation, which occurs when a contract appears valid but the parties do not intend to be legally bound and aim to deceive others. 2. There are two types of simulation - absolute, where no intent to be bound exists, and relative, where the true agreement is concealed but not illegal. 3. If the price in a contract is simulated, meaning no payment was intended, the contract is void, but it may be valid as a donation depending on the parties' intent.

Uploaded by

Ofel Jemaimah Oblan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
2K views2 pages

Art. 1471-Sales

1. The document discusses simulation, which occurs when a contract appears valid but the parties do not intend to be legally bound and aim to deceive others. 2. There are two types of simulation - absolute, where no intent to be bound exists, and relative, where the true agreement is concealed but not illegal. 3. If the price in a contract is simulated, meaning no payment was intended, the contract is void, but it may be valid as a donation depending on the parties' intent.

Uploaded by

Ofel Jemaimah Oblan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

TOPIC NOTES

Article 1471. • Simulation occurs when an apparent contract is a declaration of a


If the price is fictitious will deliberately made by agreement of the parties, in
simulated, the order to produce, for the purpose of deception, the appearance of a
sale is void, but juridical act which does not exist or is different from that which
the act may be was really executed.
shown to have
been in reality a • Requisites of simulation:
donation, or 1. An outward declaration of will different from the will of the parties;
some other act 2. The false appearance must have been intended by mutual agreement;
or contract. and
3. The purpose is to deceive third persons.

• Simulation of contract may be absolute or relative.


1. Absolute Simulation- when the parties do not intend to bound at
all and there is colorable contract but it has no substances as the
parties have no intention to be bound by it. The main characteristic
of an absolute simulation is that the apparent contract is not really
desired or intended to produce legal effect or in any way alter the
juridical situation of the parties. The result of an absolutely
simulated or fictitious contract is void and the parties may recover
from each other which they may have given in contract.

Example:
In the sale of a fishpond, it was made to appear that the price
was paid when in fact it was not. The sale being without
consideration is fictitious.

2. Relative Simulation- when the parties conceal their true


agreement; it does not prejudice a third person and not intended
for any purpose contrary to law, morals, good customs, public
order or public policy binds the parties to their real agreement.

Example:
A donor is donating a property to a donee. Instead of
executing a deed of donation, the donor instead executed a deed of
sale to conceal the donation intended.

• Effect where price is simulated.


1. If the price is simulated such for example when A intended to
transfer the thing gratuitously, then sale is void but the contract
shall be valid as donation.
2. If the contract is not a donation or any other act or contract of
transferring ownership because the parties do not intend to bound
at all, the contract will be void and inexistent.
 Effect when purchase price stated as paid but not actually
paid.

*When the deed of sale states that the purchase price has been
paid, but in fact has never been paid, the deed of sale is null and
void for lack of consideration. Thus, if no payment was made, this
fact indicates that its price paid is simulated.

*The non-payment of the price by the supposed buyer and the


deed of sale illustrates defects, it may show that the price is
simulated.

 Effect when the contract does not reflect the real price.

*When the parties intended to be bound by the contract of sale,


except the deed did not reflect the actual purchase price of the
property, the contract remains valid and enforceable. It cannot be
declared null and void since it does not fall under the category of
an absolutely simulated or fictitious contract.

*If the price stated in the contract is false, the contract is valid but
subject to reformation. However, if the price stipulated in the
contract is simulated, then the contract is void.

• Difference of False price and Simulated price.

False price- there is a false price if the parties agreed on the price
but the true price is not reflected in the contract of sale and still
the parties intended to be bound by the true price.

Simulated price- it is when the parties did not intend that the
purchase price be paid.

You might also like