Short answer. The cause is the reason the law recognises for each party's obligation — what he is getting in return. It matters because a contract without a cause, or with an unlawful one, produces no effect at all: it is void, and no amount of signing or notarising will save it.
What the law says
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.
Civil Code, Article 1350 — Cause of Contracts. Read the full provision →
Three kinds of contract, three kinds of cause
Article 1350 of the Civil Code sorts contracts into three groups. In an onerous contract — a sale, a lease, a loan at interest — the cause for each party is the thing or service the other promises. The seller's cause is the price; the buyer's cause is the thing. In a remuneratory contract, the cause is the past service or benefit being repaid, as where property is transferred to thank someone for years of care. In a contract of pure beneficence, such as a donation, the cause is simply the giver's liberality. Cause is one of the three essential requisites of every contract, alongside consent and object.
Cause is not the same as motive
This is the distinction that decides cases. The cause is the immediate, direct reason the law looks at, and it is the same for everyone entering that kind of contract — every buyer's cause is the thing bought. The motive is the private, personal reason a particular person had, and it varies from person to person: you bought the lot because you planned to build a resort on it. As a rule the law is indifferent to motive, so a disappointed plan does not undo a sale. The exception is where the motive was the very thing that moved both parties, and it was unlawful — then it can taint the contract itself.
When the cause is absent, false, or unlawful
A contract with no cause, or an unlawful cause — one contrary to law, morals, good customs, public order or public policy — is void. It cannot be ratified, it cannot be cured by lapse of time, and a court can declare it a nullity at any time. A false cause is different: it makes the contract void only if no other true and lawful cause is shown. So the deed of sale stating a price that was never paid may still stand if the parties can prove the real, lawful cause behind it. A cause that is merely inadequate does not by itself invalidate the contract, absent fraud, mistake or undue influence.
How this bites in practice
The Civil Code presumes that a contract has a sufficient cause even where the document does not state one, so the person attacking it carries the burden of proving otherwise. That is why simulated deeds — a sale on paper that was really a mortgage, or a transfer made to put assets out of a creditor's reach — usually fail when challenged: the true cause emerges from the parties' conduct, the payments, and who kept possession. If you are being asked to sign a deed that does not reflect what is really happening, or you are challenging one that does not, this is general legal information rather than advice, and you can book a consultation to have the documents examined.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Perpetua Vda. De Ape vs. The Honorable Court of Appeals, et al, G.R. No. 133638, April 15, 2005 — read the decision on LawPhil →
- SM Land, Inc. vs Bases Conversion and Development Authority and Arnel Paciano D. Casanova, Esp., in his official capacity as President andn CEO of BCSA, G.R. No. 203655, March 18, 2015 — read the decision on LawPhil →
- Hon. Heherson T. Alvarez vs. PICOP Resources, Inc, G.R. No. 162243, December 3, 2009 — read the decision on LawPhil →
- Barceliza P. Capistrano vs. Darryl Limcuando, et al, G.R. No. 152413, February 13, 2009 — read the decision on LawPhil →