Syllabus-obligations and Contracts

7/26/2019 Syllabus-obligations and Contracts

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OBLIGATIONS AND CONTRACTS

Title One: OBLIGATIONS

Chapter 1. General Provisions

I. Concept

A. Definition Art. 1156B. Elements

1. Active Subject2. Passive Subject3. Prestation or Object4. Efficient cause or juridical tie (vinculum juris)

C. Distinction between Natural (Art. 1423 - 1430), civil and moral Obligations (Art. 1156 -1304)

1. As to enforceability2. As to basis

II. Sources of Obligations Art. 1157

A. Law Art. 1158B. Contracts Art. 1159, 1305C. Quasi- Contracts Art. 1160, 2142

1. Kindsa. Negotiorum gestio Art. 2144 - 2153b. Solutio Indebiti Art. 2154 - 2163c. Other quasi contracts Art. 2164-2175

D. Acts or omissions punished by law Art. 1161E. Quasi Delicts Art. 1162, 2176

a. Distinction between quasi-delicts and crimes

b.

Liability for fault of others Art. 2180; Art. 218, 219 FCc. Civil Liability arising from crime Art. 1161; Art. 100, Revised Penal Code; Rule 111,

Rules on Criminal Procedure

CASES:Sagrada Orden de Predicadores del Santisimo Rosario Filipinas vs. National CoconutCorporation,91 SCRA 503 (1952)Barredo vs. Garcia, 73 Phil 607 (1942)Mendoza vs. Arrieta, 91 SCRA 113 (1975)PSBA vs. CA, 205 SCRA 729 (1992)Amadora vs. CA, 160 SCRA 315 (1988)

III. Classification of Obligations

A. Primary Classification Under the Civil Code1. Pure and Conditional (Art. 1179-1192)2. With a period or term (Art. 1193-1198)3. Alternative and Facultative (Art. 1199-1206)4. Joint and Solidary (Art. 1207-1222)5. Divisible and Indivisible (Art. 1223-1225)6. With a penal clause (Art. 1226-1230)

B. Secondary Classification1. Legal (Art. 1158); conventional (Art. 1159); Penal (Art. 1161)2. Real (to give) and Personal (to do or not to do)3. Determinate and Generic (as to subject matter of obligation)

4.

Positive (to give, to do); Negative (not to give, not to do)5. Unilateral and Bilateral6. Individual and Collective7. Accessory and Principal8. As to object or presentation:

a. Simpleb. Multiplec. Conjunctive


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d. Distributivee. Alternativef. Facultative

9. Possible and Impossible

Nature and Effect of Obligations

I. Kinds of PrestationA. Obligation to give

1. a specific thing -a. Duties of the obligor

i.to deliver the thing itself- Article 1244ii. to preserve the thing- Article 1163iii. to deliver the accessions and accesosories- Article 1166 (distinction between

accession and accessory)iv. to deliver the fruits- Article 1164 par. 1

2. a generic thing- Article 1246B. Obligation to do- Article 1244C. Obligation not to do- Article 1244

II. Breach of ObligationA. Concept1. Distinction between substantial and casual/ slight breach

CASES:Song Fo & Co. vs. Hawaiian-Philippine Co., 47 SCRA 821 (1925)Vlarde, et al. vs. Court of Appeals, 361 SCRA 56 (2001)

B. Modes of Breach- Article 11701. Fraud (dolo)

a. Concept

i.

dolo(Article 1171) vs. dolo incidenteii. dolo (Article 1171) vs. dolo causante

CASES:Woodhouse vs. Halili, 93 PHIL 527, G. R. No. L-4811. July 31, 1953Geraldez vs. Court of Appeals, 230 SCRA 321, G.R. No. 108253. February 23,1994

b. Nonwaiver- Article 1171C. Negligence- Article 11731. Concept- Article 1173a. culpa vs. dolob. culpa aquiliana vs. culpa contractual

CASES:Gutierrez vs. Gutierrez, 56 Phil 177, G.R. No. 34840. September 23, 1931Vazquez vs. De Borja, 74 PHIL 560, G. R. No. L-48930. February 23, 1944

2. Standard of Care required Art. 1173 par. 2

CASES:De Guia vs. Manila Electric Co., 40 Phil 706 (1920)US vs. Barias, 23 Phil. 434 (1912)Sarmiento vs. Sps. Cabrido, 401 SCRA 122 (2003)Crisostomo vs. CA, 409 SCRA 528 (2003)

a.

Effects3. Delay (mora)- Article 1169a. Conceptb. Kinds

i. mora solvendi requisites General rule: Creditor should make demand before debtor incurs delay-

Article 1169


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CASES:Cetus Development, Incorporated vs. Court of Appeals, 176 SCRA 72, G.R. No. 77647-652.August 7, 1989.Santos Ventura Hocorma Foundation vs. Santos, G.R. No. 153004, November 4, 2004Vasquez vs. Ayala Corporation, 443, SCRA 231

Exceptions: Article 1169

CASE:Abella vs. Francisco, 55 SCRA 447, G.R. No. 32336. December 20, 1930

ii. mora accipiendi requisites see also Article 1268

CASES:Vda. de Villaruel, et al. vs. Manila Motor Co., Inc. and Colmenares, 104 Phil. 926Tengco vs. CA G.R. 49852. October 19, 1989

iii. compensation morae requisites

CASE:

Central Bank of the Philippines vs. Court of Appeals, 139 SCRA 46, G.R. No. L-45710.October 3, 1985

c. Effects4. Contravention of the Tenor

CASES:Chaves vs. Gonzales, 32 SCRA 547, G.R. No. 27454. April 30, 1970.Telefast Communications/ Philippine Wireless, Incorporated vs. Castro, Sr., 158 SCRA 445,G.R. No. L-73867. February 29, 1999.Arrieta vs. National Rice and Corn Corporation, 10 SCRA 79, G.R. No.L-15645. January 31,1964.Magat vs. Medialdea and Guerrero, 121 SCRA 418,G.R. No. L-37120 April 20, 1983

III. Remedies of creditor in cases of breachA. Action for performance1. Action for specific performance in obligation to give a specific thing- Article 1165 par.

1; Rules of Court, Rule 39, Section 102. Action for substituted performance in obligation to give a generic thing- Article 1165

par. 23. Action for substituted performance or undoing of poor work in obligation to do-

Article 1167

CASES:Chaves vs. Gonzales, 32 SCRA 547, G.R. No. 27454. April 30, 1970Tanguilig vs. Court of Appeals, 266 SCRA 78, G.R. No. 117190 January 2, 1997

a. Exception4. Action for undoing in obligation not to do- Article 1168

a. ExceptionB. Action for damages- Article 1170C. Action for rescission- Article 1191, 1192

IV. Subsidiary remedies of creditorA. Accion subrogatoria- Article 1177

1. Concept2. Requisites3. Exceptions- inherent rights of debtor; Article 772

B.

Accion Pauliana- Article 1177, 1381 par. 31. Concepta. Distinction between accion pauliana and accion subrogatoria

2. Requisites

CASES:Khe Hong Cheng vs. Court of Appeals, 355 SCRA 701, GR No. 144169. March 20, 2001.Siguan vs. Lim, 318 SCRA 725, G.R. No. 134685. November 19, 1999.


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V. Extinguishment of liability in case of breach due to fortuitous event- Article 1174A. Concept of Fortuitous Event

1. Act of God2. Act of Man

B. Requisites1. Effect of concurrent fault

CASES:Juan Nakpil & Sons vs. CA, 144 SVRA 597 (1986)Republic vs. Luzon Stevedoring Corporation, 21 SCRA 279, G.R. No. L-21749. September29, 1967.Dioquino vs Laureano, 33 SCRA 65, G.R. No. L-25906. May 28, 1970.Austria vs. Court of Appeals, 31 SCRA 527, G.R. No. L-29640. June 10, 1971.NPC vs. Court of Appeals, 161 SCRA 334,G.R. No. L-47379. May 16, 1988.

Yobido vs. Court of Appeals, 281 SCRA 1, G.R. No. 113003. October 17, 1997.Bacolod-Murcia Milling vs. Court of Appeals, 182 SCRA 24, G.R. Nos. 81100-01. February 7,1990Philcomsat vs. Globe Telecom, 429 SCRA 153, G.R. No. 147324. May 25, 2004

C.

Extinguishment of Liabiltiy; Exceptions- Article 1174, 1165 par. 3, 552, 1942, 1979,2001, 2147

VI. Usurious Transactions- Article 1175, 1413, 1961A. PD 858; PD 1685B. Central Bank Circular 416C. Monetary Board Circular # 905 (lifting the interest ceiling- (vs. 2209)

CASES:Eastern Shipping Lines vs. CA, 234 SCRA 781 (1994)Crismina Garments vs. CA, 304 SCRA 356 (1999)Keng Hua Products vs. CA, 286 SCRA 257 (1998)

Security Bank vs. RTC Makati, 263 SCRA 453 (1996)Almeda vs. CA, 256 SCRA 292 (1996)First Metro Investment vs. Este. Del Sol, G.R. No. 141811, November 15, 2001

Different Kinds of Obligations

I. Pure and Conditional ObligationsA. Pure obligations- Article 1179, par. 1B. Conditional obligations- Article 1181

1. Conditiona. Conceptb. Condition vs. Period/ Term

CASES:Gaite vs. Fonacier, 2 SCRA 831, G.R. No. L-11827. July 31, 1961.Gonzales vs. Heirs of Thomas and Paula Cruz, 314 SCRA 585, G.R. No. L-131784.September 16, 1999.

2. Kinds of Conditionsa. as to effect on obligation- Article 1181

i. Suspensive (condition precedent) retroactive effect when condition is fulfilled - 1187 rights of creditor and debtor before fulfillment of condition- Article

1188

CASE:Coronel vs. Court of Appeals, 263 SCRA 15, G.R. No. 103577. October 7, 1996

ii. Resolutory (condition subsequent)

CASES:Parks vs. Province of Tarlac, 49 PHIL 142, G.R. No. 24190. July 13, 1926Central Philippine University vs. Court of Appeals, 246 SCRA 511Quijada vs. Court of Appeals, 299 SCRA 695, G,R No. 126444. December 4, 1998


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b. as to cause or origin- Article 1182

i. potestative effect if fulfillment of condition depends solely on the will of the debtor debtors promise to pay when he can is not a conditional obligation -

Article 1180

CASE:Lao Lim vs. Court of Appeals, 191 SCRA 151, G.R. No. 87047. October 31, 1990

ii. Casual

CASE:Naga Telephone Co., Inc. (NATELCO) vs. Court of Appeals, 230 SCRA 351, G.R. No 107112.February 24, 1994

iii. Mixed

CASES:Osmea vs. Rama, 14 PHILS 99, G.R. No. 4437. September 9, 1909

Luz Hermosa and Fernando Hermosa Jr. vs. Epifanio M. Longara, 93 Phil. 971, G.R. No. L-5267. October 27, 1953.M. D. Taylor vs. Uy Tieng Piao and Tan Liuan Tan Liuan & Company, 43 Phil. 873, G.R. No.16109. October 2, 1922.Smith, Bell & Co. vs. Sotelo Matti, 44 Phil. 874, G.R. No. 16570. March 9 1922Rustan Pulp & Paper Mills, Incorporated vs. IAC, 214 SCRA 665, G.R. No. 70789. October19, 1992Romero vs. Court of Appeals, 250 SCRA 223, G.R. No. 107207. November 23, 1995

c. as to possibility- Article 1183i. possibleii. negative- Article 1185

3. Rules in case of loss, deterioration or improvement pending the happeningof the condition- Article 1189, 1190a. Meaning of loss (Article 1189 [2]), deterioration and improvementb. Effect of loss or deterioration

i. without debtors faultii. with debtors fault

c. Effect of Improvementi. by nature or timeii. at the debtors expense

4. Effect of prevention of the fulfillment of the condition by the obligor- Article 1186

CASE:Song Fo & Co. vs. Hawaiian-Philippine Co., 47 SCRA 821, G.R. No. 23769. September 16,

1925Boysaw vs. Interphil Promotions, 148 SCRA 365, G.R. No. L-22590. March 20, 1987U.P. vs. De Los Angeles, 35 SCRA 365, G.R. No. L-28602. September 29, 1970De Erquiaga vs. Court of Appeals, 178 SCRA 1, G.R. No. G.R. No. 47206 September 27,1989Angeles vs. Calasanz, 135 SCRA 323, G.R. No. L-42283 March 18, 1985Jaime Ong vs. Court of Appeals, 310 SCRA 1, G.R. No. 97347. July 6, 1999Visayan Sawmill Company Inc. vs. Court of Appeals, 219 SCRA 378, G.R. No. 83851. March3, 1993.Deiparine, Jr. vs. Court of Appeals, 221 SCRA 503, G.R. No. 96643. April 23, 1993.Iringan vs. Court of Appeals, 366 SCRA 41, G.R. No. 129107. September 26, 2001Vda. de Mistica vs. Naguiat, 418 SCRA 73, G.R. No. 137909. December 11, 2003.

a. See also Article 1786, 1788; Articles 1484 to 1486; RA 6552

II. Obligation with a Period- Article 1193, 1180

A. Period or Term1. Concept2. Period/ Term vs. Condition

B. Kinds of Period/Term


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1. As to effecta. Suspensive (ex die)- Article 1193, par. 1b. Resolutory (in diem)- Article 1193, par. 22. As to expressiona. Expressb. Implied

3.

As to definitenessa. Definiteb. Indefinite4. As to sourcea. Voluntaryb. Legalc. Judicial

C. Rules in case of loss, deterioration or improvement before arrival of period - Article1194, 1189

D. Effect of payment in advance- Article 11951. Note: Article 1197, par. 3

E. Benefit of a Period1. For whose benefit

a.

creditorb. debtorc. both

2. Effects3. Presumption- Article 1196

CASES:Maria Lachica, etc. vs. Gregorio Araneta, Inc., 47 OG No.11 5699, August 19, 1949Ponce de Leon vs. Santiago Syjuco Inc., 90 SCRA 311, G.R. No. L-3316. October 31, 1951Buce vs. Court of Appeals, 332 SCRA 151, G.R. No. 136913. May 12, 2000

4. When debtor losses right to make use of period- Article 1189

F.

When court may fix period- Article 11971. Period is implied2. Period depends solely on will of debtor

CASES:Gregorio Araneta, Inc. vs. Phil. Sugar Estates Devt. Co. Ltd., 20 SCRA 330, G.R. No. L -22558. May 31, 1967.Central Philippine University vs. Court of Appeals, 246 SCRA 511

III. Alternative Obligations

A. Concept- Article 1199B. Right of choice- Article 1200

C.

Effect of notice of choiceD. When notice produces effect- Article 1201E. Effect of loss or impossibility of one or all prestations- Articles 1202 to 1205F. Facultative Obligation- Article 1206

1. Concept2. Distinguished from Alternative obligations3. Effect of substitution

IV. Joint and Solidary Obligations

A. Joint Obligations1. Concept

a.

Requisitesb. Words used to indicate joint obligations2. Presumption- Article 1207, 12083. Effects- Article 1207. 1208

a. Extent of liability of debtorb. Extent of right of creditorc. In case of novation, compensation, confusion (Article 1277),

remission


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B. Solidary Obligations1. Concept

d. Requisitese. Words used to indicate solidary obligations

2. Kindsf. As to source- Article 1208

i. Legal- Article 1915, 1945; Article 119 of Revised Penal Codeii. Conventionaliii. Real

g. As to parties boundi. Activeii. Passiveiii. Mixed

h. As to uniformityi. Uniformii. Varied/ Non-uniform- Article 1211

Effects

CASES:

Inchausti & Co. vs. Yulo, 34 Phil. 978, G.R. No. 7721. March 25, 1914Lafarge Cement Philippines, Incorporated vs. Continental Cement Corporation, 443 SCRA522, GR No. 155173. November 23, 2004

3. Effectsa. Solidary creditor in relation to:

i. Common debtor right to demand- Article 1215, 1214, 1216, 1217, par. 1 in case of novation, compensation, confusion, remission

by a creditor - Article 1215, par. 1ii. Solidary co-creditor/s

in case of novation, compensation, confusion, remission

- Artilce 1215, par. 2 prejudicial acts prohibited- Article 1212 assignment of rights not allowed- article 1213

b. Solidary debtor in relation to:i. common creditor

obligation to perform- Article 1207 in case of novation, compensation, confusion, remission

by creditor- Article 1215, par. 1ii. Solidary co-debtor

in case of payment by a co-debtor- Article 1217. 1218,1220, 1219

in case of fortuitous event- Article 1221

CASES:Jaucian vs. Querol, 38 SCRA 707, G.R. No. 11307. October 5, 1918R.F.C. vs. Court of Appeals, et al., 94 Phil. 984, G.R. No. L-5942. May 14, 1954Quiombing vs. Court of Appeals, 189 SCRA 325Inciong, Jr. vs. Court of Appeals, 257 SCRA 578

4. Defenses available to a solidary debtor against the creditor- Article 1222a. Types

i. Those derived from the nature of the obligationii. Personal defensesiii. Defenses pertaining to his shareiv. Those personally belonging to the other co-debtors

b. Effects

CASES:Inchausti & Co. vs. Yulo, 34 Phil. 978, G.R. No. 7721. March 25, 1914.Alipio vs. Court of Appeals, 341 SCRA 441, GR No. 134100. September 29, 2000

C. Joint Indivisible Obligations1. Concept

a. Distinguished from joint obligations


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b. Distinguished from solidary obligations2. Indivisibility distinguished from solidarity- Article 12103. Effects- Article 1209

a. Liability for damages in case of breach- Article 1224

V. Divisible and Indivisible Obligations

A. Divisible Obligations1. Concept

a. Distinguished from solidary obligations2. Kinds

a. Natural- Article 1225, par. 1b. Legal- Article 1225, par. 3c. Conventional- Article 1225, par. 3

3. Presumptionsa. Of inidivisibility- Article 1225, par. 1b. Of divisibility- Article 1225, par. 2

4. Divisibility and Indivisibility in obligations not to do- Article 1225,par. 3

5. Effects- Article 1223, 1233, 1224SeeJoint Indivisible Obligations

6. Cessation of Indivisibility

VI. Obligations with a Penal ClauseA. Concept

1. Principal vs. Accessory Obligations2. Distinguished from Conditional Obligations3. Distinguished from Alternative Obligations4. Distinguished from Facultative Obligations5. Distinguished from Guaranty

B.

Kinds of Penal Clause1. As to effecta. Subsidiaryb. Complementary

2. As to sourcea. Conventionalb. Legal

3. As to purposea. Punitiveb. Reparatory

C. Demandability of Penalty- Article 1226, par. 2D. Effects of Penal Clause

1.

Substitute for indemnity for damages and payment of interest - Article 1226a. Exceptions- Article 1226

CASES:Makati Development Corporation vs. Empire Insurance Company, 20 SCRA 657, G.R. No. L-21780. June 30, 1967Tan vs. Court of Appeals, 367 SCRA 571, G.R. No. 116285. October 19, 2001Country Bankers Insurance Corp. vs. Court of Appeals, 201 SCRA 458, G.R. No. 85161.September 9, 1991

2. Not exempt debtor from performance- Article 1227a. Exceptions- Article 1227

3.

Creditor cannot demand both performance and penalty at the same time - Article1227a. Exceptions- Article 1227

4. Creditor cannot collect other damages in addition to penalty- Article 1226a. Exceptions- Article 1226

E. When penalty shall be equitably reduced- Article 1229F. Nullity of Principal Obligation or Penal Clause

1. Effects- Article 12302. Rationale


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Extinguishment of Obligations

I. Modes of Extinguishment- Article 1231A. Payment or PerformanceB. Loss or Impossibility

C. Condonation or RemissionD. Confusion or MergerE. CompensationF. NovationG. Other Causes

II. Payment or Performance

A. Concept- Article 1232B. Requisites

1. Who can paya. in generalb. third person who is an interested party

i. meaning of interested partyii. effects- Article 1302 [3]

c. third person who is not an interested party but with consent ofdebtor

i. effects- Article 1236, par. 2; 1237; 1236, par. 1d. third person who is not an interested party and without knowledgeor against the will of the debtor

i. effects- Article 1236, par. 2; 1237; 1236 par. 1e. third person who does not intent to be reimbursed- Article 1238f. in obligation to give- Article 1239, 1427g. in case of active solidarity- Article 1214

2. To whom payment may be made

a. in general- Article 1240b. incapacitated person- Article 1241, par. 1c. third person- Article 1241, par. 2

i. requisitesii. when proof of benefit not required - Article 1241,par. 3

d. in case of active solidarity3. What is to be paid (identity)

a. in generalb. in obligations to:

i. give a specific thing- Article 1244ii. give a generic thing- Article 1246iii. pay monthly- Article 1249, 1250, RA 529, RA 4100

CASES:Arrieta vs. National Rice and Corn Corporation, 10 SCRA 79, G.R. No.L-15645. January 31,1964.Kalalo vs. Luz, 34 SCRA 337, G.R. No. L-27782. July 31, 1970St. Paul Fire and Marine Insurance Company vs. Macondray and Co., Inc., 70 SCRA 122, GRNo. L-27796. March 20, 1976.Papa vs. AV Valencia, et. al., 284 SCRA 643, GR No. 105188. January 23, 1988PAL vs. Court of Appeals, 181 SCRA 557, GR 49188. Jan 30, 1990

c. payment of interest- Article 19564. How is payment to be made (integrity)

a. in general- Article 1233

i.

General Rule: Partial payment is not allowed- Article 1248b. substantial performance in good faith-Article 1234c. estoppel- Article 1235d. presumptions in payment of interests and installments- Article

11765. When payment is to be made

a. in general- Article 1169b. see Chapter 2: Delay

6. Where payment is made- Article 1251, par. 1


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a. if no place is expressly designated- Article 1251, par. 2 to par. 47. Expenses of making payment- Article 1247

C. Application of Payments1. Concept- Article 1252

CASES:

Reparations Commission vs. Universal Deep-Sea Surety & Fidelity Co., 83 SCRA 765, G.R.Nos. L-21901 and L-21996. June 27,1978Paculdo vs. Regalado, 345 SCRA 134, G.R. No. 123855. November 20,2000

2. Requisites3. Rules in application of payments- Article 1252, 1253a. If rules are inapplicable and application cannot be inferred-

Article 1254i. meaning of most onerous to debtor

D. Payment by Cession1. Concept- Article 12552. Requisites3. Effects

E. Dation in Payment1. Concept- Article 1245a. distinguished from payment by cession

CASE:DBP vs. Court of Appeals, 284 SCRA 14, G.R. No. 118342. January 5, 1998

2. Requisites3. Effects

CASE:Filinvest Credit Corp. vs. Philippine Acetylene Co., Inc., 111 SCRA 421, G.R. No. L-50449.January 30, 1982

F. Tender of Payment and Consignation1. Tender of payment

a. Conceptb. Requisites

2. Consignationa. Concept

i. Purposeb. Requisites

i. when tender and refusal not required- Article 1256, par. 2ii. two notice requirement- Article 1257, par. 1; 1258 par. 2

effects of non compliancec. Effects- Article 1260, par. 1

d. Withdrawal by debtor before acceptance by creditor or approval bycourt, effects- Article 1260, par. 2e. Withdrawal by debtor after proper consignation- Article 1261

i. with creditors approval; effectsii. without creditors approval; effects

f. Expenses of consignation- Article 1259

CASES:De Guzman vs. Court of Appeals, 137 SCRA 730, G.R. No. L-52733. July 23, 1985.TLG International Continental Enterprising, Inc. vs. Flores, 47 SCRA 437, G.R. No. L-35381.October 31, 1972McLaughlin vs. Court of Appeals, 144 SCRA 693, G.R. No. L-57552. October 10, 1986

Soco vs. Militante, 123 SCRA 160, G.R No. L-58961, 28 June 1983.Sotto vs. Mijares, 28 SCRA 17, G.R. No. L-23563. May 8, 1982.Meat Packing Corporation of the Philippines vs. Sandiganbayan, 359 SCRA 409, G.R. No.103068. June 22, 2001.Teddy G. Pabugais vs. Dave P. Sahijwani, GR No. 156846 (2004), G.R. No. 156846.February 23, 2004

III. Loss or Impossibility


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A. Loss of thing due1. Concept- Article 1189 [2]2. Kinds

a. As to extenti. Totalii. Partial

3. Requisites- Article 12624. Presumption- Article 1265, 1165

a. When not applicable5. Effects

a. In obligation to give a specific thing- Article 1261, 1268b. In obligation to give a generic thing- Article 1263c. In case of partial loss- Article 1264d. Action against third persons- Article 1269

B. Impossibility of performance1. Concept- Article 1266, 12672. Kinds

a. As to extent

i. Totalii. Partial

b. As to sourcei. Legalii. Physical

3. Requisites- Article 12664. Effects

a. In obligations to do- Article 1266; 1267; 1262, par. 2 (by analogy)i. impossibility distibguished from difficulty

CASES:Occena vs. Jabson, 73 SCRA 637, GR No. L-44349. October 29, 1976.

Naga Telephone Co., Inc. (NATELCO) vs. Court of Appeals, 230 SCRA 351, GR No. 107112.February 24, 1994Philippine National Construction Corp. (PNCC) vs. Court of Appeals, GR No. 116896. May 5,1997

b. in case of partial impossibility- Article 1264

IV. Condonation or Remission

A. ConceptB. Kinds

1. As to extenta. Total

b. Partial2. As to form- Article 1270, par. 1

a. Expressb. Implied

C. Requisites1. When formalities are required- Article 1270, par. 2

CASE:Victor Yam & Yek Sun Lent vs. Court of Appeals, G.R. No. 104726. February 11, 1999

D. Presumptions- Article 1271, 1272, 1274E. Effects

1.

in general2. in case of joint or solidary obligationsF. Governing rules- Article 1270G. Renunciation of principal or accessory obligation

1. effects- Article 12732. rationale

V. Confusion or Merger of Rights


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A. ConceptB. RequisitesC. Effects

1. in general- Article 12752. in case of joint (Article 1277) or solidary obligations

D. Confusion in principal or accessory obligation- Article 1276

VI. Compensation

A. Concept- Article 12781. Distinguished from Confusion

B. Kinds1. As to extent

a. Totalb. Partial

2. As to origina. Legalb. Conventionalc. Judicial

d. FacultativeC. Legal Compensation

1. Requisites- Article 1279, 1280a. due distinguished from demandable

CASE:Gan Tion vs. Court of Appeals, et al, 28 SCRA 235, GR No. L-22490. May 21, 1969Silahis Marketing Corp. vs. Intermediate Appellate Court, 180 SCRA 21, G.R. No. 74027.December 7, 1989Bank of the Philippine Islands vs. Court of Appeals, 255 SCRA 571, G.R. No. 116792. March29, 1996PNB vs. Court of Appeals, 259 SCRA 174, G.R. No. 108052. July 24, 1996

Bank of the Philippine Islands vs. Court of Appeals, 255 SCRA 571, G.R. No. 116792. March29, 1996Mirasol vs. Court of Appeals, 351 SCRA 44, G.R. No. 128448. February 1, 2001

2. Effects- Article 1290, 1289

D. When compensation is not allowed- Article 1287, 1288E. Compensation of debts payable in different places- Article 1286F. Effect of nullity of debts to be compensated- Article 1284G. Effects of Assignment of Credit

1. with consent of debtor- Article 1285, par. 12. with knowledge but without the consent of the debtor- Article 1285, par. 23. without knowledge of debtor- Article 1285, par. 3

a. rationale

VII. NovationA. Concept- Article 1291B. Kinds

1. As to forma. Expressb. Implied

2. As to origina. Conventionalb. Legal

3. As to object

a. Objective or Realb. Subjective or PersonalC. Requisites- Article 1292

CASES:Millar vs. Court of AppealsDormitorio vs. Fernandez, 72 SCRA388, G.R. No. L-25897. August 21, 1976Magdalena Estates, Inc. vs. Rodriguez, 18 SCRA 967, G.R. No. L-18411. December 17,1966


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Reyes vs. Court of Appeals, 264 SCRA 35, G.R. No. 120817. November 2, 1996Cochingyan, Jr. vs. R & B Surety and Insurance Co., Inc., 161 SCRA 339G.R. No. L-47369. June 30, 1987Broadway Centrum Condominium Corporation vs. Tropical Hut Food Market, Inc., 224 SCRA302, G.R. No. 79642. July 5, 1993.California Bus Lines, Inc. vs. State Investment House, Inc., 418 SCRA 297, G.R. No.

147950. December 11, 2003

D. Effects1. in general- Article 12962. when accessory obligation may subsist- Article 1296

E. Effect of the Status of the Original or New obligation1. nullity or voidability of original obligation- Article 12982. nullity or voidability of new obligation- Article 12973. suspensive or resolutory condition of original obligation- Article 1299

F. Objective novation1. meaning of principal conditions

G. Subjective novation1. by change of debtor

a. expromisioni. requisites- Article 1293ii. effects- Article 1295

CASES:Garcia vs. Llamas, 417 SCRA 293, G.R. No. 154127. December 8. 2003Quinto vs. People, G.R. No. 126715. April 14, 1999

2. By change of creditor: Subrogation of a third person in the rights of thecreditor- Article 1300

a. Conventional subrogationi. requisites- Article 1301ii. distinguished from assignment of credit

iii. effects- Article 1303, 1304

CASE:Licaros vs. Gatmaitan, 362 SCRA 548, G.R. No. 142838. August 9, 2001

b. Legal subrogationi. requisitesii. when presumed- Article 1302iii. effects- Article 1303, 1304

CASES:Astro Electronics Corp. vs. Philippine Export andForeign Loan Guarantee Corp., 411 SCRA 422, G.R. No. 136729. Sep. 23, 2003

VIII. Fulfillment of Obligations

A. see Chapter 4: PaymentB. Presumptions in payments of inetersts and installments- Article 1176

IX. Transmissibility of Rights- Article 1178

Title Two: CONTRACTS

General Provisions

I. Definition- Article 1305

II. Elements

A. Essential elements (see Chapter II, infra)1. Consent2. Object3. Cause

B. Natural elements


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C. Accidental elements

III. Characteristics

A. Obligatory force- Article 1308B. Mutuality- Articles 1308-1310 (see also Article 1473)

CASE:GSIS vs. CA and Spouses Leuterio, 228 SCRA 183, G.R. No. 195567 November 25, 1993

C. Relativity1. Contracts take effect only between the parties, their assigns and heirs-Article 1311

CASES:The Manila Railroad Co. vs. La Compaia Transatlantica, 38 SCRA 875, G.R. No. 11318.October 26, 1918DKC Holdings Corporation vs. Court of Appeals, 329 SCRA 666, G.R. No. 118248. April 5,

2000

2. No one may contract in the name of another- Article 1317

CASE:Guiterrez Hmnos. vs. Orense, 28 Phil. 571, G.R No. 9188, 4 December 1914

IV. Parties

A. Auto-contractsB. Freedom to contract- Article 1306

CASES:Gabriel vs Monte de Piedad y Caja deAhorros and CA, 71 Phil Reports 497, G.R. No. 47806.April 14, 1941Pakistan International Airlines vs. Ople, 190 SCRA 90, G.R. No. 61594, September 28, 1990

1. Special disqualificationsa. Article 87 of the Family Codeb. Articles 1490 and 1491 of the Civil Codec. Article 1782 of the Civil Code

C. What they may not stipulate - Article 13061. Contrary to law, e.g.:

a.pactum commissorium (Article 2088)b.pactum leonine (Article 1799)

c.pactum de non alienado (Article 2130)2. Contrary to morals3. Contrary to good customs4. Contrary to public order

CASES:Cui vs. Arellano University, 2 SCRA 205, G.R. No. L-15127. May 30, 1961Arroyo vs. Berwin, 36 SCRA 387, G.R. No. 10551. March 3, 1917Filipinas Compania de Seguros vs. Mandanas, 17 SCRA 391, G.R. No. L-19638 June 20,

1966Bustamante vs. Rosel, 319 SCRA 413, G.R. No. 126800. November 29, 1999

V. Classification

A. According to subject matter1. things2. services

B. According to name1. nominate2. innominate- Article 1307


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CASE:Dizon vs. Baborro, 83 SCRA 688, G.R. No. L-36821. June 22, 1978

a. do ut desb. do ut facia

c. facio ut faciasd. facio ut des

C. According to perfection1. by mere consent (consensual)- Article 13152. by delivery of the object (real)- Article 1316

D. According to its relation to other contracts1. Preparatory2. Principal3. Accessory

E. According to form1. Common or Informal2. Special or Formal

F. According to purpose1. Transfer of ownership,e.g. sale2. Conveyance of use, e.g. commodatum3. Rendition of services, e.g. agency

G. According to the nature of the vinculum produced1. Unilateral2. Bilateral3. Reciprocal

H. According to cause1. Onerous2. Gratuitous

I. According to risk1. Commutative2. Aleatory

VI. StagesA. PreparationB. PerfectionC. Consummation or death

VII. As distinguished from a perfected promise and an imperfect promise (policitacion)

VIII. With respect to third persons

A. Stipulation in favor of third persons (stipulationspour autrui)-Article 1311, par. 2

CASES:Florentino vs. Encarnacion, Sr., 79 SCRA 192, G.R. No. L-27696. September 30, 1977Coquia vs. Fieldmens Insurance CO., Inc., 26 SCRA 178, G.R. No. L-23276. November 29,1968Constantino vs. Espiritu, 39 SCRA 206, G.R No. L-22404, 31 May 1971Integrated Packaging Corp. vs. Court of Appeals, 333 SCRA 170, G.R. No. 115117. June 8,2000

B. Possession of the object of contract by third persons- Article 1312

C.

Creditors of the contracting parties- Article 1313D. Interference by third persons- Article 1314

CASES:Daywalt vs. Corporacion PP Augustinos Recoletos, 103 Phil 444, G.R. No. 13505. February4, 1919So Ping Bun vs. Court of Appeals, 314 SCRA 751, G.R. No. 120554. September 21, 1999


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Essential Requisites of Contracts

I. Consent

A. Requisites- Article 13191. must be manifested by the concurrence of the offer and acceptance

CASES:Rosenstock vs Burke, 46 Phil. 217, G.R. No. 20732. September 26, 1924Malabrosa vs. CA, 402 SCRA 168 (2003)

a. Offeri. must be certain-Article 1319ii. what may be fixed by the offeroriii. when made through an agent- Article 1322iv. circumstance when the offeror has become ineffective-Article 1323v. business advertisements of things for sale-Article 1325vi. advertisements for bidders- article 1326

CASE:Jardine Davies vs. Court of Appeals, 333 SCRA 684, G.R. No. 128066. June 19, 2000

b. Acceeptancei. must be absolute- Article 1319ii. kinds

Express- Article 1320 Implied- Article 1320 Qualified- Article 1319

iii. if made by letter or telegram- Article 1319, par. 2 Four theories on when the contract is perfected:

Manifestation Theory Expedition Theory Reception Theory Cognition Theory

iv. Period of acceptance- Article 1324

CASE:Sanchez vs. Rigos, 45 SCRA 369, G.R. No. L-25494. June 14, 1972

v. Contract of Option- Article 1324

CASE:Adelfa Properties Inc. vs. Court of Appeals, 240 SCRA 565, G.R. No. 111238. January 25,

1995

2. Necessary legal capacity of the partiesa. Who cannot give consent- Article 1327b. When offer and/or acceptance is made

i. during lucid intervalii. in a state of drunkennessiii. during a hypnotic spell

3. The consent must be intelligent, free, spontaneous, and real-Articles 1330, 1346

a. Effect- Article 1330b. Vices of consent

i. Mistake or error kinds

Mistake of fact as to substance of the thing of the object

of the obligation as to principal conditions as to identity or qualifications of one of

the parties


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as to quantity, as distinguished from asimple mistake of account

CASE:Dumasug vs Modelo, 34 SCRA 252, G.R. No. L-10462. March 16, 1916Hemedes vs. Court of Appeals, 316 SCRA 347, G.R. No. 107132 & 108472. October 8, 1999

Katipunan vs. Katipunan Jr., 375 SCRA 199, G.R. No. 132415. January 30, 2002

inexcusable mistakeii. Violence and intimidation- Article 1335

- effect- Article 336

CASE:Martinez vs. Hongkong and Shanghai Bank, 15 SCRA 252, G.R. No. 5496 February 19, 1910

iii. Undue influence- Article 1337iv. Fraud or dolo- Article 1338

CASES:

Hill vs. Veloso, 31 Phil 161 (1915)Woodhouse vs. Halili, 93 Phil. 527, G.R. No. L-4811. July 31, 1953Geraldez vs. CA, 230 SCRA 321, G.R. No. 108253. February 23,1994

Kinds Dolo causante- Article 1338 Dolo incidente- Article 1344, par. 2

Failure to disclose facts; duty to reveal them-Article 1339

CASES:Tuason vs. Marquez, 45 SCRA 381, G.R. No. 20659. November 3, 1923.

Rural Bank of Sta. Maria, Pangasinan vs. Court of Appeals, 314 SCRA 255, G.R. No. 110672(1999)

Usual exaggerations in trade; opportunity to know thefacts- Article 1340

CASES:Azarraga vs. Gay, 52 Phil. 599, G.R. No. 29449. December 29, 1928.Trinidad vs. Intermediate Apellate Court, 204 SCRA 524, G.R. No. 65922. December 3,1991

Mere expression of an opinion- Article 1341 Effects- Article 1344

v. Misrepresentation By a third person= Article 1342 Made in good faith- Article 1343 Active/ passive

CASES:Mercado and Mercado vs. Espiritu, 37 Phil. 215, G.R. No. 11872. December 1, 191, Braganza, et al. vs. De Villa Abrille, 105 Phil. 456, G.R. No. L-12471. April 13, 1959

vi. Simulation of contracts

CASES:

CONCEPCION FELIX VDA. DE RODRIGUEZ vs. GERONIMO RODRIGUEZ., ET AL., 20 SCRA908, G.R. No. L-23002. July 31, 1967.Suntay vs. Court of Appeals, 251 SCRA 431, G.R. No. 114950. December 19,1995.J.R. Blanco vs. Quasha, 318 SCRA 373, G. R. No. 133148. November 17,1999

Kinds- Article 1345 Absolute Relative

Effects- Article 1346


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II. Object of Contracts

A. What may be the objects of contracts- Article 13471. All things not outsisde the commerce of man2. All things not intransmisible3. All services not contrary to law, morals, good customs, public order,

public policyB. Requisite - must be determinate as to its kind- Article 1349C. What may not be the objects of contracts

1. Future inheritance, except when authorized by law- Article 1347

CASES:Blas vs. Santos, 1 SCRA 899, G.R. No. L 14070Taedo vs. Court of Appeals, 252 SCRA 80, G.R. No. 104482. January 22, 1996

2. Impossible things or services- Article 1348

III. Cause of Contracts

A. Meaning of cause- Article 13501. In onerous contracts2. In renumenatory contracts3. In contracts of pure beneficence

B. As distinguished from motive- Article 1351C. Defective causes and their effects

1. Absence of cause and unlawful casue- Article 1352

Case:Liguez vs. CA, 102 Phil 577

2. Statement of fa falkse cause in the contract- Article 1353

3. Lesion or inadequacy of cause- Article 1355

Cases:Carantes vs. Court of Appeals, 76 SCRA 514, G.R. No. L-33360. April 25, 1977.Buenaventura vs. Court of Appeals, 416 SCRA 263, G.R. No. 126376. Nov. 20, 2003

D. Presumption of the existence and lawfulness of a cause, though it is notstated in the contract- Article 1354

Form of Contracts

I. General Rule: Contracts shall be obligatory, in whatever form they may have beenentered into, provided all the essential requisites for their valkidity are present.

II. Exception: When the law requires that a contract be in some form in order that it may bevalid or enforceable (Angllo- Amrican principle)- Article 1356

CASE:Dauden-Hernaez vs. De los Angeles, 27 SCRA 1276, G.R. No. L-27010. April 30, 1969

III. Kinds of formalities required by law

A. Those required for thei validity of contracts, such as those referred to inArticles 748, 79, 1874, 2134, 1771, 1773B. Those required, not for validity, but to make the contract effective as against

third persons, such as those covered by Articles 1357 and 1358C. Those required for the purpose of providing existence of the contract, such asthose under the Statue of Frauds in Article 1403

Reformation of Instruments

I. Requisites- Article 1359


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A. Meeting of the minds upon the contract;B. The true intention of the parties is not expressed in the instrument; andC. The failure of the instrument to express the true agreement is due to mistake,fraud, inequitable conduct or accident.

CASES:

Garcia vs. Bisaya, et al., 97 Phil. 609, G.R. No. L-8060. September 28, 1955.Rosello Bentir vs. Leanda, 330 SCRA 591, G.R. No. 128991. April 12, 2000

II. Cases where no reformation is allowed- Article 1366

III. Implied Ratification- Article 1367

IV. Who may ask for reformation- Article 1368

V. Procedure of reformation- Article 1369

CASES:Atilano vs. Atilano, 28 SCRA 231, G.R. No. L- 22487. May 21, 1969

Carantes vs. Court of Appeals, 76 SCRA 514, G.R. No. L-33360. April 25, 1977Sarming vs. Dy, 383 SCRA 131, G.R. No. 133643. June 6, 2002

Interpretation of Contracts(Compare with Rules on Statutory Construction)

I. Primacy of intention- Article 1370, 1372

CASES:Borromeo vs. Court of Appeals, 47 SCRA 65, G.R. No. L-22962. September 28, 1972Kasilag vs. Rodriguez, 69 Phil. 217, G.R. No. 46623. December 7, 1982

II. How to determine intention - Article 1371

III. How to interpret a contractA. When it contains stipulations that admit several meanings - Article 1373B. When it contains various stipulations, some of which are doubtful-Article 1374C. When it contains words that have different significations- Article 1375D. When it contains ambiguities and omission of stipulations- Article 1376E. With respect to the party who caused the ambiguity- Article 1377F. When it is absolutely impossible to settle doubts by rules above- Article

1378G. When the doubts are cast upin the principal object so that the intention

cannot be known- Article 1378

IV. Applicability of Rule 123, Rules of Court (now Sections 10-19, Rule 130)

Rescissible Contracts

I. Kinds - Article 1381

II. CharacteristicsA. Their defect consists in injury or damage either to one of the contractingparties or to third persons.B. They are valid before rescission.

C. They can be attacked directly only and not collaterally.D. They can be attacked only either by a contracting party or by a third personwho is injured or defraudedE. They can be convalidated only by prescription and not by ratification.

III. Rescission- Article 1380A. DefinitionB. As distinguished from rescission under Article 1191


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CASE:Universal Food Corporation vs. Court of Appeals, 33 SCRA 1, G.R. No. L-29155 May 13,1970

C. Requisites1. The contract is rescissible.

2. The party asking for rescission has no other legal means to obtainreparation.- Article 13833. He is able to return whatever he may be obliged to restore if rescission isgranted - Article 13854. The object of the contract has not passed legally to the possession of athird person acting in good faith - Article 13855. The action for rescission is brought within the prescriptive period of fouryears - Article 1389

D. Effect of rescission- Article 13851. With respect to third persons who acquired the thing in good faith-Article 1385, par. 2 nad par. 3

E. Extent of rescission- Article 1384

F. Presumptions of fraud- Article 13871. Badges of fraud

CASES:Oria vs. McMicking, 21 Phi. 243, G.R. No. 7003. January 18, 1912Siguan vs. Lim, 318 SCRA 725, G.R. No. 134685. November 19, 1999.Suntay vs. Court of Appeals, 251 SCRA 431, G.R. No. 114950. December 19,1995

G. Liability of acquiring in bad faith the things alienated in fraud of creditors -Article 1388

Voidable or Annullable Contracts

I. Kinds- article 1390

II. Characteristics

A. Their defect consists in the vitiation of consent of one of the contractingparties.B. They are binding until they are annulled by a competent court.C. They are susceptible of co-validation by ratification or by prescription.

III. Annulment

A. As distinguished from rescissionB. Grounds- Article 1390C. Who may and may not institute action for annulment- Article 1397

CASES:Singsong vs. Isabela Sawmill, 88 SCRA 732, G.R. No. L-27343 February 28, 1979

D. Prescription- Article 1391E. Effect

1. Mutual restitution- Articles 1398 and 1402

CASES:

Cadwallader & Co. vs. Smith, Bell & Co., 7 Phil. 461, G.R. No. 3246. February 9, 1907Velarde, et al. vs. Court of Appeals, 361 SCRA 56, GR No. 108346. July 11, 2001

a. When one of the parties is incapacitated- Article 1399b. When the thing is lost through the fault of the party obliged toreturn the same- Article 1400

F. Extinguishment of the action1. By ratification- Article 1392


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2. When the things is lost through the fault of the person who has the right tofile the action- Article 1401

IV. Ratification

A. Requisites1. The contarct is voidable.2. The ratification is made with knowledge of the cause for nullity.3. At the time of the ratification, the cause of nullity has already ceased toexist.

B. Forms1. Express or tacit- Article 13932. By the parties themselves or by the guardian in behalf of an incapacitatedparty- Article 1394

C. Effects1. Action to annul is extinguished- Article 1392

CASES:

Uy Soo Lim vs. Tan Unchuan, 38 Phil. 552, G.R. No. 12605. September 7, 1918

2. The contract is cleansed retroactively from all its defects- Article 1396

Uneforceable Contracts

I. Characteristics

A. They cannot be enforced by a proper action in court.B. Theya re susceptible of ratification.C. They cannot be assailed by third persons.

II. Kinds- Article 1403

A. Unauthorized contracts1. Governing rules- Article 1404

B. Contarcts covered by the Statute of Frauds1. Purpose of Statute

CASES:Philippine National Bank vs. Philippine Vegetable Oil Co., 49 SCRA 857, G.R. No. 25400.January 14, 1927Limketkai Sons Milling, Inc. vs. Court of Appeals, 250 SCRA 523, G.R. No. 118509.December 1, 1995

Swedish Match vs. Court of Appeal, 441 SCRA 1, G.R. No. 128129. October 20, 2004

2. How ratified- Article 1405

CASE:Carbonnel vs. Poncio, et al. , 103 Phil. 655, G.R. No. L-11231. May 12, 1958

3. right of the parties when a contract is enforceable but a public document isnecessary for its registration- Article 1406

C. Contracts executed by parties who are both incapable of giving consent to acontract

1. Effect of ratification by the parents or guardian of one of the parties-Article 14072. Effect of ratification by the parents or guardian of both parties-Article 1407

Void or Inexistent Contracts

I. Characteristics


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A. Void from the beginningB. Produces no effect whatsoeverC. Cannot be ratifies- Article 1409

II. Kinds- Article 1409

A. Contracts that are void1. Those whose cause, object or purposes is contrary to law, morals, goodcustoms, public order, or public policy

a. When the act constitutes a criminal offense- Article 1411i. in pari delicto rule

CASE:Ubarra vs. Mapalad, 220 SCRA 224, A.M. No. MTJ-91-622. March 22, 1993

b. When the act is unlawful but does not constitute a criminal offense -Article 1412

i. in pari delictorule

CASE:Modina vs. Court of Appeals, 617 SCRA 696, G.R. No. 109355. October 29, 1999

c. When the purpose is illegal and money isa paid or propertydelivered therefore- Article 1414d. When the contract is illegal and one of the parties is incapable ofgiving consent- Article 1415

CASES:Liguez vs. Court of Appeals, 102 SCRA 579, G.R. No. L-11240. December 18, 1957Rellosa vs. Gaw Chee Hun, 93 Phil. 827, Gr. No. L-1411 September 29, 1953

e. When the agreement is not illegalper se but is prohibited-Article 1416

CASES:Philippine Banking Corporation vs. Lui She, 21 SCRA 53Alfred Fritz Frenzel vs. Ederlina Catito, 406 SCRA 55, G.R. No. L-50449. July 11, 2003

f. When the amount paid exceeds the maximum fixed by law-Article 1417g. When by virtue of a contract a laborer undertakes to worklonger than the maximum number of hours of work fixed bylaw- Article 1418h. When a laborer agrees to accept a lower wage than that set

by law- Article 1419i. When the contract is divisible- Article 1420j. When the contract is the direct result of a previous illegalcontract- Article 1422

2. Those whose object is outside the commerce of man.3. Those which contemplate an impossible service.4. Those where the intention of the parties relative to the principal object ofthe contract cannot be ascertained.5. Those expressly prohibited or declared void by law.

B. Contracts that are inexistent1. Those which are absolutely simulated or fictitious (see Articles 1345 and

1346).2. Those whose cause or object did not exist at the time of the transaction

III. Right to set up defense of illegality cannot be waived- Article 1409

IV. The action or defense for the declaration of the inexistence of a contract

A. Does not prescribe- Article 1410B. Is not available to third persons whose interest is not directly affected-


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Article 1421

ALWAYS AIM TO SOAR HIGH, MY STUDENTS- Atty. Melvin A. Matibag

Documents

Syllabus-obligations and Contracts