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UniversityofthePhilippines

CollegeofLaw

Law101:ObligationsandContracts
CourseOutline
Prof.MaryRoseS.Tan
Semester2,AY20112012

ContactInformation:

CourseSchedule:

maryrose.tan@gmail.com
+639178871555
MondaysandFridays,6:30p.m.to9:00p.m.
Room200(PadillaRoom)

AttendanceRequirement: CollegeofLawrulesonattendanceshallbestrictlyapplied.
Studentsmayonlybeabsentforanycauseforamaximumof8
sessions.

Assessment:

(1)Classparticipation

30%

(2)Midtermexamination
20%

(3)FinalExam

50%

PrescribedTextbook:
Tolentino,CivilCodeofthePhilippines,Vol.IV

INTRODUCTION

A. CourseOverview
B. CommonLawTraditionandtheCivilLawTradition

Agabin,P.A.,Mestizo:TheStoryofthePhilippineLegalSystem(2011),
Chapter7,pp.169216

PARTONE:OBLIGATIONS

A. GeneralProvisions

1. Definition(Article1156,CivilCode)

2. Elements
a. ActiveSubject
b. PassiveSubject
c. ObjectorPrestation
d. EfficientCauseorJuridicalTie

BasedontheCourseOutlineofProf.EduardoLabitag.

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

3. NaturalObligations

a. Definition(Art.1423,CC)
b. Examples(Articles1424to1430)
c. DifferencebetweenNaturalandCivilObligation(Art.1423)
d. Distinguishedfrommoralobligations

Villaroelv.Estrada,71Phil.140(1940)
Fisherv.Robb,69Phil101(1939)

e. ConversiontoCivilObligation
bynovation
byratification

4. SourcesofObligations(Art.1157)

a. Law(Art.1158)
b. Contracts(Art.1159,1305)
c. Quasicontracts(Art.1160,2142)
Kinds:
i. Negotiorumgestio(Art.2144)
ii. Solutioindebiti(Art.2154)
iii. Others(Art.2164to2175)

d. DelictsorCrime(Art.1161)
e. Quasidelicts(Art.1162,2176)
Distinctionbetweencrimesandquasidelicts
Vicariousliability(Art.2180,Art.218219,FamilyCode)
Civilliabilityarisingfromcrime(Art.1161;Rule111,RevisedRulesof
CriminalProcedure)

Barredov.Garcia,73Phil607(1942)
Mendozav.Arrieta,91SCRA113(1975)

5. ClassificationofObligations

a. PureandConditionalObligations(Art.11791192)
b. WithaPeriodoraTerm(Art.11931198)
c. AlternativeandFacultative(Art.11991206)
d. JointandSolidary(Art.12071222)
e. DivisibleandIndivisible(Art.12231225)
f. WithaPenalClause(Art.12261230)

B. NatureandEffectsofObligations

1. KindsofPrestation

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

a. Togive

specificthing
topreservethething(Art.1163)
todelivertheaccessionsandaccessories(Art1166)
todeliverthefruits(Art.1164,par.1)
todeliverthethingitself(Art.1244)
ii. genericthing(Art.1246)

b. Todo(Art.1244)
c. Nottodo(Art.1244)

2. BreachofObligation

a. Concept
SongFov.HawaiianPhilippines,47Phil.821(1928)
Velardeetal.v.CourtofAppeals,361SCRA56(2001)
Angelesv.Calasanz,135SCRA323(1985)
DeltaMotorCorporationv.Genuino,170SCRA29(1989)
VermenRealtyv.CourtofAppeals,224SCRA549(1993)

b. ModesofBreach

Delayormora(Art.1169)
i.
morasolvendi

CetusDevelopmentv.CourtofAppeals,176SCRA72(1989)
AerospaceChemicalIndustriesv.CourtofAppeals,315SCRA92(1999)
SantosVenturaHocormaFoundationv.Santos,441SCRA472(2004)
Vazquezv.AyalaCorporation,443SCRA231(2004)
Abellav.Francisco,55SCRA447(1931)
delaCruzv.Legaspi,98SCRA43(1955)

ii.
moraaccipiendi(Seealso1268)

Villaroelv.ManilaMotorCo.,Inc.,104Phil.926(1958)

iii.
compensationmorae

CentralBankv.CourtofAppeals,139SCRA46(1985)

Fraudordolo(Art.1171)
doloincidenteanddolocausante

Woodhousev.Halili,93Phil.526(1953)
Geraldezv.CourtofAppeals(1994)
i.

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

Negligence(Art.1172,1173)

culpav.dolo
culpaaquilianov.culpacontractual
standardofcarerequired

Gutierrezv.Gutierrez,56Phil.177(1932)
Vasquezv.Borja,74Phil.560(1944)
deGuiav.ManilaElectricCorporation,40Phil706(1920)
USv.Barias,23Phil434(1912)
Sarmientov.SpousesCabrido,401SCRA122(2003)
Crisostomov.CourtofAppeals,409SCRA528(2003)

Contraventionofthetenor(Art.1172)

Chavesv.Gonzales,32SCRA547(1970)
Telefastv.Castro,158SCRA445(1988)
Arrietav.NARIC,10SCRA79(1964)
Magatv.Medialdea,206Phil341(1983)

c. Remediesincaseofbreach

i.
Performance

Specificperformance(Art.1165;Section10,Rule39,RulesofCourt)
Substitutedperformance
inanobligationtogivegenericthing(Art.1165,par.2)
undoingofpoorworkinanobligationtodo(Art.1167)

Chavesv.Gonzales,32SCRA547(1970)
Tanguiligv.CourtofAppeals,266SCRA78(1997)

undoinginanobligationnottodo(Art1168)

ii.
Rescission(Art.11911192)
iii.
Damages(Art.1170)

d. SubsidiaryRemediesofCreditor

i.
AccionSubrogatoria(Art.1177)
ii.
AccionPauliana(Art.1177;1381,par.3)

KheHongChengv.CourtofAppeals,355SCRA701(2001)
Siguanv.Lim,318SCRA725(1999)

iii.
OtherSpecificRemedies(Art.1652,1729,1608,1893)

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

e. FortuitousEvent(Art.1174)

i.
Effect:ExtinguishmentofLiability
ii.
ExceptionstoExtinguishment(Art.1174,1165par.3,552,1942,
1979,2001,2147)

JuanNakpil&Sonsv.CourtofAppeals,144SCRA597(1986)
Republicv.LuzonStevedoringCo.,21SCRA279(1967)
Dioquinov.Laureano,33SCRA65(1970)
Austriav.CourtofAppeals,39SCRA527(1971)
NationalPowerCorporationv.CourtofAppeals,161SCRA334(1988)
Yobidov.CourtofAppeals,281SCRA1(1997)
BacolodMurciaMillingv.CourtofAppeals,182SCRA24
Philcomsatv.GlobeTelecom,430SCRA(2004)

f. UsuriousTransactions(Art.1175,1413,1961)

PD858;PD1685
CentralBankCircular416
MonetaryBoardCircularNo.905;No.2209

EasternShippingLinesv.CourtofAppeals,234SCRA781(1994)
CrisminaGarmentsv.CourtofAppeals,304SCRA356(1999)
KengHuaProductsv.CourtofAppeals,286SCRA257(1998)
SecurityBankv.RegionalTrialCourtMakati,263SCRA453(1996)
Almedav.CourtofAppeals,256SCRA292(1996)
AngelWarehousingv.Chelsea,23SCRA19(1968)
FirstMetroInvestmentv.EstedelSol,369SCRA(2001)

C. DifferentKindsofObligations

1. PureandConditionalObligations

PureObligations(Art.1179,par.1)
ConditionalObligations(Art.1181)
Concept
Conditionv.PeriodorTerm

Gaitev.Fonacier,2SCRA830(1961)
Gonzalesv.HeirsofTomasandPaulaCruz,314SCRA585(1999)

KindsofConditions

a. Astotheeffectontheobligation(Art1181)

Gonzalesv.HeirsofTomasandPaulaCruz,supra.
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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

i.

SuspensiveConditionorConditionprecedent
Retroactiveeffectwhenconditionisfulfilled(Art.1187)

Coronelv.CourtofAppealsandAlcaraz,263SCRA15(1996)
Rightsofthecreditoranddebtorbeforefulfillmentofthe
condition(Art.1188)

ii. ResolutoryConditionorConditionsubsequent

Parksv.ProvinceofTarlac,49Phil.142(1927)
CentralPhilippineUniversityv.CourtofAppeals,245SCRA511(1995)
Quijadav.CourtofAppeals,299SCRA695(1998)

b. Astothecauseororigin(Art1182)

i. Potestative

Effectoffulfillmentofconditiondependssolelyonthewillofthe
debtor
Debtorspromisetopaywhenhecanisnotacondition(Art1180)

LaoLimv.CourtofAppeals,191SCRA150(1990)
ii. Causal

NagaTelephoneCo.v.CourtofAppeals,230SCRA351(1994)

iii. Mixed

Osmenav.Rama,14Phil.99(1909)
Hermosav.Longora,93Phil.971(1953)
Taylorv.UyTiengPiao,43Phil.873(1922)
SmithBellv.Matti,44Phil.875(1922)
RustanPulpandPaperMills,214SCRA665(1993)
Romerov.CourtofAppeals,250SCRA250SCRA223(1995)

c. Astopossibility(Art.1183)

RomanCatholicArchdioceseofManilav.CourtofAppeals,
198SCRA300(1991)

d. Astomode:positiveornegative(Art.11841185)

Rulesincaseofloss,deteriorationorimprovementpendingthehappeningof
thecondition(Art.11891190)
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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

HeirsofTimoteoMorenov.MactanCebuInternationalAirportAuthority,
413SCRA502(2003)

a. Definitionofloss,deteriorationandimprovement
b. Effectoflossordeterioration
Withoutdebtorsfault
Withdebtorsfault

c. Effectofimprovement
Bynatureortime
Duetodebtorseffortandexpense

Effectofpreventionofthefulfillmentoftheconditionbytheobligor(Art
1186)
Taylorv.UyTiengPiao,supra.
Herrerav.Leviste,135SCRA129(1985)

2. ReciprocalObligations(Art.11911192)

a. Concept
b. Alternativeremediesofinjuredpartiesoncaseofbreach

i.
actionforspecificperformance
effectwhenfulfillmentnolongerpossible

ii.
actionforrescission
requisites
howmade
effects

SongFov.HawaiianPhilippines,47Phil.821(1925)
Boysawv.InterphilPromotions,148SCRA365(1987)
UniversityofthePhilippinesv.delosAngeles,35SCRA365(1989)
DeErquiagav.CourtofAppeals,178SCRA1(1989)
Angelesv.Calasanz,135SCRA323(1985)
JamesG.Ongv.CourtofAppeals,310SCRA1(1999)
Iringanv.CourtofAppeals,366SCRA41(2001)
VisayanSawMillv.CourtofAppealsandRJTrading,219SCRA378(1993)
Deiparinev.CourtofAppealsandTrinidad,221SCRA503(2003)
GraceParkEngineeringCo.Inc.v.Dimaporo,107SCRA266(1981)
Roquev.Lapuz,96SCRA741(1980)
Suriav.IntermediateAppellateCourt,151SCRA661(1987)

Read:Art1786,1788,148486,RepublicActNo.6552

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

3. ObligationswithaPeriod(Art.1193,1180)

a. ComparePeriod/Termv.Condition
b. KindsofPeriod

i.
Astoeffect
Suspensive(Art1193,par.1)
Resolutory(Art1193,par.2)
ii.
Astoexpression
Express
Implied
iii.
Astodefiniteness
Definite
Indefinite
iv.
Astosource
Voluntary
Legal
Judicial

c. Rulesincaseofloss,deteriorationorimprovementbeforearrivalofthe
period(Art.1194and1189)

d. EffectofPaymentinAdvance(Art.1195;1197,par.3)

e. BenefitofPeriod(Art1196)
i.
Forwhosebenefit
Creditor
Debtor
Both
ii.
Effects
iii.
Presumption(Art.1196)

Lachicav.Araneta,47OfficialGazetteNo.11,5699(1949)
PoncedeLeonv.Syjuco,90Phil311(1951)
Bucev.CourtofAppeals,332SCRA151(2000)

iv.
Whendebtorlosesrighttomakeuseofperiod(Art.1198)

f. WhenCourtMayFixAPeriod
i.
Periodisimplied
ii.
Perioddependsonsolewillofthedebtor

Aranetav.PhilippineSugarEstateDevelopmentCo.,20SCRA330(1967)
CentralPhilippineUniversityv.CourtofAppeals,supra.
Deudorv.J.M.Tuason,2SCRA129(1961)

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

4. AlternativeObligations

a. Concept(Art.1199)
b. RightofChoice(Art.1200)
c. EffectofNoticeofChoice
d. WhenNoticeProducesEffect(Art.1201)
e. Effectoflossorimpossibilityofoneorallprestations(Art.1202to1205)
f. FacultativeObligation(Art.1206)
i.
Concept
ii.
DistinguishedfromAlternativeObligations
iii.
EffectofSubstitution

5. JointandSolidaryObligations

a. JointObligations

i.
Concept
Requisites
Wordsusedtoindicatejointobligations

ii.
Presumption(Art.1207,1208)
iii.
Effects(Art.1207,1208)
Extentofliabilityofdebtor
Extentofrightofcreditor
Incaseofnovations,compensation,confusion(Art1277)or
remission

b. SolidaryObligations

i.
Concept

Requisites
Wordsusedtoindicatesolidaryobligations

ii.
Kinds
Astosource(Art.1208)
o Legal(Art.1915,1945,2194,Art119oftheRPC)
o Conventional
o Real
Astopartiesbound
o Active
o Passive
o Mixed
Astouniformity
o Uniform
o Varied/nonuniform(Art.1211)

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

Ynchaustiv.Yulo,34Phil.978(1916)
Inciongv.CourtofAppeals,257SCRA578(1996)
RCBCv.CourtofAppeals,178SCRA739(1989)
LafargeCementPhil.V.ContinentalCement,443SCRA522(2004)

iii.
Effects
Solidarycreditorinrelationto:
o commondebtor
righttodemand(Art.12141216;1217,par.1)
incaseofnovation,compensation,confusion,
remissionbyacreditor(Art.1215,par.1)
o solidarycocreditors
incaseofnovation,compensation,confusion,
remissionbyacocreditor(Art1215,par.2)
prejudicialactsprohibited(Art.1212)
assignmentofrightsnotallowed(Art.1213)

Solidarydebtorinrelationto:
o commoncreditor
obligationtoperform(Art.1207)
incaseofnovation,compensation,confusion,
remissionbyacreditor(Art.1215,par.1)
o solidarycodebtor
incaseofpaymentbyacodebtor(Art.12171220)
incaseoffortuitousevent(Art.1221)

Jaucianv.Querol,38Phil.718(1918)
RehabilitationFinanceCorporationv.CourtofAppeals,

OfficialGazetteNo.6,p.2467
Quiombingv.CourtofAppeals,189SCRA325(1990)
Inciongv.CourtofAppeals,257SCRA578(1996)
iv.

DefensesAvailabletoaSolidaryDebtorAgainsttheCreditor(Art.
1222)
Types
o thosederivedfromthenatureoftheobligations
o personaldefenses
o defensespertainingtohisshares
o thosepersonallybelongingtotheothercodebtors

Effects

Ynchaustiv.Yulo,supra.
Alipiov.CourtofAppeals,341SCRA441(2000)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

c. JointIndivisibleObligations

i. Concept
Distinguishedfromjointobligations
Distinguishedfromsolidaryobligations

ii. Indivisibilitydistinguishedfromsolidarity(Art.1210)
iii. Effects(Art.1209,1224)

6. DivisibleandIndivisibleObligations

a. DivisibleObligations

i. Concept
ii. Effects(Art.1223,1233)

b. IndivisibleObligations

i. Concept:distinguishedfromsolidaryobligations

ii. Kinds
Natural(Art.1225,par.1)
Legal(Art.1225,par.3)
Conventional(Art.1225,par.3)

iii. Presumptionsofdivisibilityandindivisibility(Art.1225)

iv. Divisibilityandindivisibilityinobligationsnottodo(Art.1225,par.3)

v. Effects(Art.1223,1223,1224)

vi. CessationofIndivisibility

7. ObligationswithaPenalClause

a. Concept

Principalv.AccessoryObligation
Distinguishedfromconditionalobligations
Distinguishedfromalternativeobligations
Distinguishedfromfacultativeobligations
Distinguishedfromguaranty

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

b. KindsofPenalClause

Astoeffect
o Subsidiary
o Complimentary
Astosource
o Conventional
o Legal
Astopurpose
o Punitive
o Reparatory

c. DemandabilityofPenalty(Art.1226,par.2)

d. EffectsofPenalClause:GeneralRuleandExceptions
Substituteforindemnityfordamagesandpaymentofinterest(Art.1226)

MakatiDevelopmentCorp.v.EmpireInsuranceCo.20SCRA557(1967)
Tanv.CourtofAppeals,367SCRA571(2001)
CountryBankersInsurancev.CourtofAppeals,201SCRA458(1991)

Notexemptdebtorfromperformance(Art.1227)

Creditorcannotdemandbothperformanceandpenaltyatthesametime
(Art.1227)

Creditorcannotcollectotherdamagesinadditiontopenalty(Art.1226)

e. Whenpenaltyshallbeequitablyreduced(Art.1229)

f. NullityofPrincipalObligationofPenalClause(Art.1230)

D. ExtinguishmentofObligations(Art.1231)

1. PaymentorPerformance(Art.1232)

a. Concept(Art.1232)

b. Requisites

i. Whocanpay

GeneralRule

Exceptions:

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

o thirdpersonwhoisaninterestedparty;effects(Art.1302[3])

o thirdpersonwhoisnotaninterestedpartybutwiththeconsentof
debtor(Art.1302[2],1236,par.1)

o thirdpersonwhoisnotaninterestedpartyandwithoutthe
consentofthedebtor,withouttheknowledgeoragainstthewillof
thedebtor(Art.1236,par.2;Art.1237,1236,par.1)

o thirdpersonwhodoesnotintendtobereimbursed(Art1238)

inanobligationtogive(Art.1239,1427)

incaseofactivesolidarity(Art.1214)

ii. Towhompaymentcanbemade

Generalrule(Art.1240)

Exceptions:

o incapacitatedperson(Art.1241,par.1)

o thirdperson(Art.1241,par.2)

o whenproofofbenefitnotrequired(Art.1241,par.3;Art.1242)

o incaseofactivesolidarity(Art.1214)

iii. Whatistobepaid(Identity)

GeneralRule

Specificcases:

o Togiveaspecificthing(Art.1244)

o Togiveagenericthing(Art.1246)

o Topaymoney(Art.1249,1250;R.A.529,R.A.4100,R.A.8183)

Arrietav.NARIC,supra
Kalalov.Luz,34SCRA377(1970)
St.PaulFireandMarineInsurancev.Macondray,70SCRA122(1976)
Papav.A.V.Valencia,284SCRA643(1998)
PhilippineAirlinesv.CourtofAppeals,181SCRA557(1990)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

PaymentofInterest(Art.1956)

iv. Howpaymentistobemade(Integrity)

GeneralRule(Art.1233)

o Partialpaymentisnotallowed;exceptions(Art.1248)

Substantialperformanceingoodfaith(Art.1234)

Estoppel(Art.1235)

Presumptionsinpaymentofinterestsandinstallments(Art.1176)

v. Whenispaymenttobemade

GeneralRule(Art1169)
Nodemand,nodelay;Exceptions

vi. Wherepaymentistomade
Placeexpresslydesignated(Art.1251,par.1)
Whenplaceofpaymentisnotexpresslydesignated(Art.1251,
paragraphs2to4)

vii. Whopaysforexpensesformakingpayment(Art.1247)

c. ApplicationofPayments
i.
Concept(Art.1252)

ReparationsCommissionv.UniversalDeepFishing,83SCRA764(1978)
Paculdov.Regalado,345SCRA134(2000)

ii.

Requisites

iii.
RulesinApplicationofPayments(Art.12521253)
Ifrulesarenotapplicableorcannotbeinferred(Art.1254)
Meaningofthemostonerousdebtor

d. PaymentbyCession

i.
Concept(Art.1255)
ii.
Requisites
iii.
Effects
iv.
ComparedtoAssignmentofReceivables

e. DationinPayment

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

i.

Concept(Art.1245)
DistinguishedfromPaymentbyCession

DevelopmentBankofthePhilippinesv.CourtofAppeals,284SCRA14
(1998)

ii.
Requisites
iii.
Effects

FilinvestCreditCorporationv.PhilippineAcetylene,111SCRA421(1982)

f. TenderofPaymentandConsignation

i.
TenderofPayment
Concept
Requisites

ii.
Consignation
ConceptandPurpose

Requisites
o Whentenderandrefusalnotrequired(Art.1256,par.2)
o Twonoticerequirement(Art.1257,par.1;Art.1258,par.
2);Effectsofnoncompliance

Effects(Art.1260,par1)
o Withdrawalbydebtorbeforeacceptancebycreditoror
approvalofcourt(Art.1260,par.2)
o Withdrawalbydebtorafterproperconsignation(Art.
1261)
Withcreditorapproval
Withoutcreditorapproval

ExpensesofConsignation

DeGuzmanv.CourtofAppeals,137SCRA730(1985)
TLGInternationalContinentalEnterprising,Inc.v.Flores,47SCRA437
(1972)
McLaughlinv.CourtofAppeals,144SCRA693(1986)
Socov.Militante,123SCRA160(1983)
Sottov.Mijares,28SCRA17(1969)
Reisenbeckv.CourtofAppeals,209SCRA657(1992)
RuralBankofCaloocanv.CourtofAppeals,104SCRA151(1981)
Licuananv.Diaz,175SCRA530(1989)
Chanv.CourtofAppeals,230SCRA685(1994)
MeatPackingCorp.v.Sandiganbayan,359SCRA409(2001)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

2. LossorImpossibility

a. LossoftheThingDue

i.
Concept(Art.1189,par.2)

ii.
Kinds
Total
Partial

iii.
Requisites(Art.1262)

iv.
Presumption(Art.1266,1267)

v.

Effects
Inanobligationtogiveaspecificthing(Art.1262,1268)
Inanobligationtogiveagenericthing(Art.1263)
Incaseofpartialloss(Art1264)
Actionagainstthirdpersons(Art.1269)

b. ImpossibilityofPerformance

i.
Concept(Art.1266,1267)

ii.
Kinds
Total
Partial

iii.
Requisites(Art.1266)

iv.
Effects

Inobligationstodo(Art.12661267;Art.1262,par.2)

Impossibilitydistinguishedfromdifficulty

Incaseofpartialimpossibility(art.1264)

Occeav.CourtofAppeals,73SCRA637(1976)
NagaTelephoneCompanyv.CourtofAppeals,230SCRA351(1994)
PNCCv.CourtofAppeals,272SCRA183(1997)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

3. CondonationorRemission

a. Concept
b. Kinds
Totalorpartial
Expressorimplied(Art.1270,par.1)

c. Requisites(Art.1270,par.2)

Yamv.CourtofAppeals,303SCRA1(1999)

d. Presumptions(Art.12711271;1274)

e. Effects
Ingeneral
Incaseofjointorsolidaryobligations

f. GoverningRules(Art.1270)

g. RenunciationofPrincipalorAccessoryObligation(Art.1273)

4. ConfusionorMerger

a. Concept

b. Requisites

c. Effects

Ingeneral(Art.1275)
Incaseofjointorsolidaryobligations(Art.1277)

d. ConfusioninPrincipalorAccessoryObligations(Art.1276)

5. Compensation

a. Concept(Art.1278);distinguishedfromConfusion

b. Kinds

i.
ii.
iii.
iv.
v.

TotalorPartial
Legal
Conventional(Art.1279,Art.1282)
Judicial(Art.1283)
Facultative

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

c. LegalCompensation

i.Requisites(Art.12791280):Duedistinguishedfromdemandable

Gantionv.CourtofAppeals,28SCRA235(1969)
BankofthePhilippineIslandsv.Reyes,255SCRA571(1996)
PhilippineNationalBankv.SapphireShipping,259SCRA174(1996)
CKHIndustrialDevelopmentv.CourtofAppeals,272SCRA333(1997)
Mirasolv.CourtofAppeals,351SCRA44(2001)
AssociatedBankv.Tan,446SCRA282(2004)
Villanuevav.Tantuico,182SCRA263(1990)
Perezv.CourtofAppeals,127SCRA636(1984)
SilahisMarketingCorp.v.IntermediateAppellateCourt,180SCRA21
(1989)
BankofthePhilippineIslandsv.CourtofAppeals,255SCRA___(1996)

ii.Effects(Art.1290,1289)

d. WhenCompensationisnotallowed(Art.12871288)

e. CompensationofDebtsPayableinDifferentPlaces(Art.1268)

f. EffectofNullityofDebtstobeCompensated(Art.1284)

g. EffectsofAssignmentofCredit

i. withconsentofdebtor(Art.1285,par.1)
ii. withknowledgebutwithoutconsentofdebtor(Art.1285,par.2)
iii. withoutknowledgeofdebtor(Art.1285,par.3)

6. Novation

a. Concept(Art.1291)
Changeindebtor
Changeinobject
Changeinthirdpersonwhoissubrogated
Changeincreditorwithitsconsentoratitsinstanceisnotnovation

b. Kinds
i. Astoform:expressorimplied
ii. Astoorigin:conventionalorlegal
iii. Astoobject
objectiveorreal
subjectiveorpersonal
mixed

c. Requisites(Art.1292)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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Millarv.CourtofAppeals,38SCRA642(1971)
Dormitoriov.Fernandez,72SCRA388(1976)
MagdalenaEstatev.Rodriguez,18SCRA967(1966)
Reyesv.SecretaryofJustice,264SCRA35(1996)
Cochingyanv.RBSuretyandInsurance,151SCRA339(1987)
BroadwayCentrumCondominiumCorporationv.TropicalHut,224SCRA
302(1993)
Molinov.SecurityDinersInternational,363SCRA358(2001)
Garciav.Llamas,417SCRA292(2003)
CaliforniaBusLinesv.StateInvestment,418SCRA297(2003)
Babstv.CourtofAppeals,350SCRA341(2001)

d. Effects(Art.1296)

e. EffectsoftheStatusoftheOriginalandNewObligation

i. nullityorvoidabilityoforiginalobligation(Art.1298)
ii. nullityorvoidabilityofnewobligation(Art.1297)
iii. suspensiveorresolutoryconditionororiginalobligation(Art.1299)

f. ObjectiveNovation

g. SubjectiveNovation

i. Bychangeofdebtor

Expromision
o Requisites(Art.1293)
o Effects(Art.1294)

Delegacion
o Requisites(Art.1293)
o Effects(Art.1295)

Garciav.Llamas,417SCRA292(2003)
Quintov.People,305SCRA709(1999)
ii.

Bychangeofcreditorsubrogationofathirdpersonintherightsofthe
creditor(Art.1300)

Conventionalsubrogation
o Requisites(Art.1301)
o Distinguishedfromassignmentofcredit
o Effects(Art.13031304)

Licarosv.Gatmaitan,(2001)
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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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LegalSubrogation

o Requisites
o Whenpresumed(Art.1302)

o Effects(Art.13031304)

AstroElectronicsCorp.v.PhilippineExportandForeignLoanGuarantee
Corporation(2003)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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PARTTWO:CONTRACTS

I.
Introduction

A. ConceptandDefinition(Art.1305)

B. ClassificationofContracts

1. Accordingtosubjectmatter:thingsorservices
2. Accordingtoname:nominateandinnominatecontracts(Art.1307)
3. Accordingtoperfection:bymereconsent(Art.1315)orbydeliveryofobject
(Art.1316)
4. Accordingtoitsrelationtoothercontracts:preparatory;principal;oraccessory
5. Accordingtoform:informalorformal
6. Accordingtopurpose
7. Accordingtonatureoflegaltiecreated:unilateral,bilateralorreciprocal
8. Accordingtocause:onerousorgratuitous
9. Accordingtorisk:commutativeoraleatory

Dizonv.Gaborro,83SCRA688(1978)

C. Characteristics

1. ObligatoryForcebetweentheParties(Art.1308)
a. GeneralRule:FreedomtoContract(Art.1306)

Gabrielv.MontedePiedad,71Phil.497(1941)
PakistanInternationalAirlinesv.Ople,190SCRA90(1990)

b. Exceptions:
i. Whenitisinequitable(Art.1310)
ii. Specialdisqualifications:
Art.87,FamilyCode
Articles1490and1491
Article1782
iii. Whatmaynotbestipulated
ContrarytoLaw
(a) pactumcommisorium(Art.2088)
(b) pactumleonina(Art.1799)
(c) pactumdenonalienado(Art.2130)
(d) otherlimitations:LaborCode,CorporationCode
Contrarytomorals
Contrarytogoodcustoms
Contrarytopublicorder
Contrarytopublicpolicy

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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Cuiv.Arellano,2SCRA205(1961)
Arroyov.Berwin,36Phil386(1917)
FilipinasCompaiadeSegurosv.Mandanas,17SCRA391(1966)
Bustamantev.Rosel,319SCRA413(1999)

c. Effectofcontractastothirdparties

i. Performancemaybedeterminedbythirdparties(Art.1309)
ii. Whenpossessionoftheobjectofthecontractiswithathirdperson(Art.1312)
iii. Creditorsofcontractingparties(Art1313,1177,1381)
iv. Interferencebythirdparties(Art.1314)

Daywaltv.LaCorporacindelosPadresAgustinosRecoletos,etal.,
39Phil.587(1919)
SoPingBunv.CourtofAppeals,314SCRA751(1999)
Lagonv.CourtofAppeals,453SCRA616(2005)

2. Mutuality(Art.1308to1310;1473)

GSISv.CourtofAppeals,228SCRA183(1993)
ProfessionalAcademicPlans,Inc.etal.v.Crisostomo,453SCRA342(2005)

3. RelativityorPrivityofContracts(Art.1311)
a. Contractstakeeffectonlybetweentheparties,theirassignsandheirs

ManilaRailroadCo.v.LaCompaniaTransatlantica,38Phil.875(1918)
DKCHoldingsCorp.CourtofAppeals,329SCRA666(2000)

b. Noonemaycontractinthenameofanother(Art.1317)

GutierrezHermanosv.Orense,28Phil.571(1914)

c. Stipulationsinfavorofthirdpersons(Art.1311,par.2)

Florentinov.Encarnacion,79SCRA192(1977)
Coquiav.FieldmenInsuranceCo.,26SCRA178(1968)
Constantinov.Espiritu,39SCRA178(1968)
Youngv.CourtofAppeals,169SCRA213(1989)
MarmontResortv.Guiang,168SCRA373(1988)
MandarinVillav.CourtofAppeals,257SCRA538(1996)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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II.

EssentialRequisitesofContracts

A. Consent:Requisites(Art.1319)

1.
PerfectionofContract:OfferandAcceptance
a.
Offer
mustbecertain(Art.1319)
whatmaybefixedbytheofferor(At.1321)
whenmadethroughanagent(Art.1322)
whenofferbecomesineffective(Art.1323)
businessadvertisementsofthingsforsale(Art.1325)
advertisementsforbidders(Art.1326)

b.
Acceptance
mustbeabsolute(Art.1319)
kinds:
o express(Art.1320)
o implied(Art.1320)
o qualified(Art.1319)

periodofacceptance(Art.1324)
optioncontract(Art.1324)

Sanchezv.Rigos,45SCRA368(1972)

c.
TerminationofOffer

d.
PerfectionofContract
Fourtheorieswhencontractisperfected:
o Manifestationtheory
o Expeditiontheory
o Receptiontheory
o Cognitiontheory(Art.1319[2])

Rosenstockv.Burke,46Phil.217(1924)
Malbarosav.CourtofAppeals,402SCRA168(2003)
SanLorenzoDevelopmentCorporationv.CourtofAppeals,449SCRA99(2005)
MMDAv.Jancom,G.R.No.147465,January30,2002

2.
LegalCapacityoftheParties

a. Minors,insaneordementedpersons,anddeafmuteswhodonotknow
howtowrite(Art.1327)
b. Whenofferoracceptanceismadeduringalucidinterval,intoxication,
duringhypnoticspell(Art.1328)
c. Corporations(Sections23and36,CorporationCode)
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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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3.

VicesofConsent:ConsentmustbeIntelligent,Free,SpontaneousandReal
(Art.1330to1346)
a. MistakeorError
i. MistakeofFact
Astosubstanceoftheobject
Astoprincipalconditions
Astoidentityorqualificationsoftheparties
Astoquantity,asdistinguishedfromsimplemistakeofaccount

Asiainv.Jalandoni,45Phil296(1923)
HeirsofWilliamSevillav.Sevilla,402SCRA501(2003)
Andresv.ManufacturersHanoverandTrust,177SCRA618
SpousesTheisv.CourtofAppeals,268SCRA167(1997)

ii. MistakeorErrorofLaw
GeneralRule:Ignoranceofthelawexcusesnoone(Art.3)
Exception:MutualErrorofLaw(Art.1334)
iii. Mistakewhenonepartyisunabletoread(Art.1332)

Dumasugv.Modelo,34Phil252(1916)
Hemedesv.CourtofAppeals,316SCRA347(1990)
Lustanv.CourtofAppeals,266SCRA663(1997)
Katipunanv.Katipunan,375SCRA199(2002)
Leonardov.CourtofAppeals,438SCRA201(2004)

iv. Inexcusablemistake(Art.1333)

b. ViolenceorIntimidation(Art.1335)

Martinezv.HSBC,15Phil.252(1910)
Leev.CourtofAppeals,201SCRA405(1991)

c. UndueInfluence(Art.1337)

d. FraudorDolo(Art.1338)

Kinds:
i. Dolocausante(Art.1338)
ii. Doloincidente(Art.1344[2])

Hillv.Veloso,31Phil.161(1915)
Woodhousev.Halili,supra.
Geraldezv.CourtofAppeals,230SCRA320(1994)
Sierrav.CourtofAppeals,211SCRA785(1992)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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FailuretoDiscloseFactswhenthereisadutytorevealthem(Art.1339)

Tuasonv.Marquez,45Phil381(1923)
RuralBankofSta.Mariav.CourtofAppeals,314SCRA255(1999)

Usualexaggerationsintrade:opportunitytoknowthefacts(Art.1340)

Azarragav.Gay,52Phil.599(1928)
Trinidadv.IntermediateAppellateCourt,204SCRA524(1991)

Mereexpressionofopinion(Art.1341);Effects(Art.1344)

Songcov.Sellner,37Phil.254(1917)

e. Misrepresentation
i. byathirdperson(Art.1342)
ii. madeingoodfaith(Art.1343)
iii. activeorpassive

4.

Mercadov.Espiritu,37Phil.215(1917)
Braganzav.VillaAbrille,105Phil.456(1959)

SimulationofContracts

Rodriguezv.Rodriguez,28SCRA229(1914)
Suntayv.CourtofAppeals,251SCRA430(1995)
Pangadiletal.v.CourtofFirstInstance,G.R.No.L32437,August31,1982
Umaliv.CourtofAppeals,G.R.No.89561,September13,1990

a. Kinds:AbsoluteandRelative(Art.1345)
b. Effects(Art.1346)

B. Object
Mustbedeterminateastoitskind(Art.1379)
WhatmayNOTbeobjectsofcontracts(Art.1347)

a. Allthingsoutsidethecommerceofman
b. Allintransmissiblerights
c. Thoseserviceswhicharecontrarytolaw,morals,goodcustoms,public
order,orpublicpolicy
d. Futureinheritance,exceptwhenauthorizedbylaw
e. Impossiblethingsorservices(Art.1348)

Blasv.Santos,1SCRA899(1961)
JLTAgro,Inc.v.Balansag,G.R.No.141882,March11,2005

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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C. Cause
1. MeaningofCause(Art.1350)
a. inonerouscontracts
b. inremuneratorycontracts
c. incontractsofpurebeneficence

2. DistinguishedfromMotive(Art.1351)

3. Presumption:ExistenceandLawfulnessofCause(Art.1354)

4. DefectiveCausesandEffects:
a. AbsenceofCauseorUnlawfulCause(Art.1352)
b. StatementofFalseCause(Art.1355)
c. InadequacyofCauseorLesion(Art.1355)

Liguezv.CourtofAppeals,102Phil.577(1957)
Carantesv.CourtofAppeals,76SCRA514(1977)
SpousesBuenaventurav.CourtofAppeals,416SCRA263

III.

FormofContracts

A. GeneralRule:Contractsareobligatoryinwhateverform,providedallessential
requisitesarepresent(Art.1356)

B. Exception:Whenthelawrequiresthecontracttobeinaspecificforminorderforit
tobevalidorenforceable(Art.1356)

Kindofformalitiesrequiredbylaw:
1. Forvalidity(Articles748,749,1874,2134,1771,1773)
2. Tomakeiteffectiveastothirdparties(Articles1357and1358)
3. Forpurposesofprovingexistenceofcontract(StatuteofFraudsinArt.1403)

Hernaezv.delosAngeles,27SCRA1276(1969)
Resuenav.CourtofAppeals,G.R.No.128338,March28,2005

InterpretationofContracts

IV.

A. ComparewithRulesofStatutoryConstruction
B. PrimacyofIntention(Articles1370,1372)

Borromeov.CourtofAppeals,47SCRA65(1972)
Kasilagv.Rodriguez,69Phil.217(1939)
Santiv.CourtofAppeals,G.R.No.93625,227SCRA541(1993)

C. DeterminingIntention(Art.1371)

Rapanutv.CourtofAppeals,246SCRA323(1995)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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D. RulesofContractInterpretation

1. UndertheCivilCode

a. Whenitcontainsstipulationswhichadmitofseveralmeanings(Art.1373)

OilandNaturalGasCommissionv.CourtofAppeals,G.R.No.114323,
July23,1998

b. Whenitcontainsvariousstipulations,someofwhicharedoubtful(Art.1374)

SpousesRigorv.ConsolidatedOrixLeasingandFinanceCorporation,G.R.
136423,August20,2002

c. Whenitcontainswordswithdifferentmeanings(Art.1375)

V.

d. Whenitcontainsambiguitiesandomissionofstipulations(Art.1376)

Chuav.CourtofAppeals,G.R.No.119255,April9,2003

e. Withrespecttothepartywhocausedtheobscurity(Art.1377)

RizalCommercialBankingCorporationv.CourtofAppeals,G.R.No.
133107,March25,1999

f. Whenitisimpossibletosettledoubtsusingtheabovecitedrules(Art.1378)
Ingratuitouscontracts

Gacosv.CourtofAppeals,G.R.Nos.8596263,August3,1992

Inonerouscontracts

g. Whendoubtsarecastupontheprincipalobjectsothatthetrueintention
cannotbeknown(Art.1378)

2. UndertheRulesofCourt(Rule130,Sections10to19)

ReformationofInstruments
A. Requisites(Art.1359)

1. Meetingoftheminds
2. Trueintentionofthepartiesarenotexpressedintheinstrument
3. Failuretoexpresstrueintentionduetomistake,fraud,inequitableconduct,or
accident

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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B.
C.
D.
E.

VI.
A.

Garciav.Bisaya,97Phil.609(1955)
Bentirv.Leande,330SCRA591(2000)
Quirosv.Arjona,G.R.No.158901,March9,2004

WhenReformationisnotallowed(Art.1366)

ImpliedRatification(Art.1367)

Whomayaskforreformation(Art.1368)

Procedureforreformation(Art.1369)
Atilanov.Atilano,28SCRA2232(1969)
Carantesv.CourtofAppeals,76SCRA514(514)
Sarmingv.Dy,383SCRA131(2002)

DefectiveContracts

RescissibleContracts

1. Kinds(Art.1381)

2. Characteristics
a. Thedefectconsistsininjuryordamageeithertooneofthecontracting
partiesoftoathirdperson
b. Contractisvalidbeforerescission
c. Attackmayonlybedirecton,notcollaterally
d. Attackmaybedonebycontractingpartyorbyathirdpersonwhoisinjured
ordefrauded
e. Validatedonlybyprescriptionandnotbyratification

3. Definition(Art.1380):DistinguishedfromRescissioninArt.1191(Resolution)

UniversalFoodCorporationv.CourtofAppeals,33SCRA1(1970)
SpousesCannuv.SpousesGalang,G.R.No.139523,May26,2005
Iringanv.CourtofAppeals,G.R.No.129107,September26,2001
Riverav.delRosario,G.R.No.144934,January15,2004
EquatorialRealtyv.MayfairTheatre,G.R.No.133879,November21,2001

4. Requisites

a. Contractisrescissible

b. Partyaskingforrescissionhasnootherlegalmeanstoobtainreparation
(Art.1383)

UnionInsuranceSocietyofCantonv.CourtofAppeals,G.R.No.100319,
August8,1996
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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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c. Heisabletoreturnwhathemaybeobligedtorestoreifrescissionisgranted
(Art.1385)

Riverav.delRosario,G.R.No.144934,January15,2004

5. EffectofRescission(Art.1385)

a. Astothirdpersonswhoacquiredthingingoodfaith(Art.1385[2]and[3]
b. Astothirdpersonswhoacquiredthingsinbadfaith,whenalienationwasin
fraudofcreditors(Art.1388)

6. ExtentofRescission(Art.1387)

Siguanv.Lim,318SCRA725(1999)

7. BadgesofFraud(Art.1387)

Oriav.McMicking,21Phil,243(1912)
Siguanv.Lim,318SCRA725(1999)
Suntayv.CourtofAppeals,251SCRA430(1995)
ChinaBankingCorporationv.CourtofAppeals,G.R.No.129644,March7,2000
MRHoldingsLimitedv.Carlos,G.R.No.138104,April11,2002

B. VoidableorAnnullableContracts

1. Kinds(Art1390)
2. Characteristics
a. Thereisadefectinconsentofoneofthecontractingparties
b. Bindinguntilannulledbyacompetentcourt
c. Maybevalidatedbyratificationorprescription

Felipev.HeirsofAldon,120SCRA628(1983)

3. Annulment

a. DistinguishedfromRescission
b. Grounds(Art.1390)
c. WhoMayorMayNotInstituteActionforAnnulment(Art.1397)

Singsongv.IsabelaSawmill,88SCRA623(1979)
SamahanngMagsasakasaSanJosepv.Valisno,430SCRA629(2004)
Malabananv.GawChing,181SCRA84(1990)
Armentiav.Patriarca,18SCRA1253(1966)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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d. Prescription(Art.1391)

Carantesv.CourtofAppeals,76SCRA514(514)

e. Effect:MutualRestitution(Art.1398and1402)

Cadwallader&Co.v.Smith,Bell&Co.,7Phil.461(1907)
Velardeetal.v.CourtofAppeals,361SCRA56(2001)
Inesv.CourtofAppeals,247SCRA312(1995)
ArraRealtyCorporationv.GuaranteeDevelopmentCorporation,438
SCRA441(2004)

i. Whenonthepartiesisincapacitated(Art1399)

Katipunanv.Katipunan,375SCRA199(2002)

ii. Whenthethingislostthroughthefaultofthepartyobligedtoreturnthe
sam(Art.1400)

f. ExtinguishmentofActionforAnnulment
i. byratification(Art.1392)
ii. Whenthethingislostthroughthefaultofthepersonwhohastherightto
filetheaction(Art.1401)

4. Ratification
a. Requisites

i. Contractisvoidable
ii. Ratificationismadewithknowledgethatcontractisvoidable
iii. Atthetimeofratification,thecausefornullityhasalreadyceasedtoexist

b. Forms
i. Expressortacit(Art.1393)
ii. Bythepartiesthemselvesorbytheguardianinbehalfofanincapacitated
party(Art.1394)

c. Effects

i. actiontoannulisextinguished(Art.1392)

UySooLimv.TanUnchuan,38Phil.552(1918)

ii. contractiscleansedretroactivelyfromallitsdefects(Art.1396)

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C. UnenforceableContracts

1. Characteristics
a. Validbutcannotbeenforcesbyaproperactionincourt
b. Canberatified
c. Cannotbeassailedbythirdpersons

2. Kinds(Art.1403)

a. Unauthorizedcontracts(Art.1404)

b. ContractscoveredbyStatuteofFrauds

i. PurposeofStatuteofFrauds

AsiaProductionCo.Inc.v.JudgePano,205SCRA458(1992)
WesternMindanaoCo.v.Medalle,79SCRA703(1977)
Limketkai&Sonsv.CourtofAppeals,250SCRA523(1995)
Babaov.Perez,102Phil.756(1957)
Reissv.Memije,15Phil.350(1910)
Villanuevav.CourtofAppeals,267SCRA89(1997)

ii. HowRatified(Art.1405)

PhilippineNationalBankv.PhilippineVegetableOilCo.49Phil.857(1927)
Carbonnellv.Poncioetal,103Phil.655(1958)
FirstPhilippineInternationalBankv.CourtofAppeals,252SCRA259
(196)

iii. RightofthePartieswhenaContractisenforceablebutapublicdocument
isnecessaryforitsregistration(Art.1406)

c. Contractsexecutedbypartieswhoarebothincapableofgivingconsent

i. Effectofratificationbytheparentsorguardianofoneoftheparties(Art.
1407)
ii. Effectofratificationbytheparentsorguardianofbothparties(Art.1407)

D. VoidorInexistentContracts

1. Characteristics

Voidfromthebeginning
Producesnoeffectwhatsoever
Cannotberatified(Art.1409)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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Tongoyv.CourtofAppeals,123SCRA99(1983)
Cuiv.Arellano,2SCRA205(1961)
Chavezv.PresidentialCommissiononGoodGovernment,307SCRA372(1999)
Guiangv.CourtofAppeals,291SCRA372(1998)
Castillov.Galvan,85SCRA526(1978)

2. Kinds

a. VoidContracts

i. Thosewhosecause,objectorpurposeiscontrarytolaw,morals,good
customs,publicorderorpublicpolicy

Whentheactconstitutesacriminaloffense(Art.1411)
Whentheactisunlawfulbutdoesnotconstituteacriminaloffense
(Art.1412)
o Inparidelictorule

Menchavezv.Teves,449SCRA380(2005)
Angelv.AledoandModales,420SCRA645(2004)

Whenthepurposeisillegalandmoneyispaidorproperty
deliveredtherefore(Art.1414)
Whenthecontractisillegalandoneofthepartiesisincapableof
givingconsent(Art.1415)

Liguezv.CourtofAppeals,102Phil.577(1957)
Rellosav.GawCheenHum,93Phil827(1953)

Whentheagreementisnotperseillegalbutprohibited(Art.
1416)

PhilippineBankingCorporationv.LuiShe,21SCRA52(1967)
Frenzelv.Catito,406SCRA55(2003)
AcabalandNicolasv.Acabal,454SCRA555(2005)

Whentheamountpaidexceedthemaximumfixedbylaw9Art.
1417)
Whenbyvirtueofacontractalabourerundertakestoworklonger
thanthemaximumnumberofhoursofworkfixedbylaw(Art.
1418)
Whenthecontractisdivisible(Art.1420)
Whenthecontractisthedirectresultofapreviouslillegalcontract
(Art.1422)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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ii. Thosewhoseobjectisoutsidethecommerceofman

iii. Thosewhichcontemplateanimpossibleservice

iv. Thosewheretheintentionofthepartiesrelativetotheprincipal
objectofthecontractcannotbeascertained

v. Thoseexpresslyprohibitedbylaw

b. InexistentContracts

i. thosewhichareabsolutelysimulatedorfictitious(Articles1345to
1346)
ii. thosewhosecauseorobjectdidnotexistatthetimeofthetransaction

3. NoWaiverofDefenseofIllegality(Art.1409)

4. ActionorDefensefortheDeclarationoftheInexistenceofaContract
Noprescriptionperiod(Art.1410)
Notavailabletothirdpersonsnotdirectlyaffected(At.1421)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
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PARTTHREE:SPECIFICEXAMPLESOFOBLIGATIONS

ObligationsCreatedbyLaw
A. Estoppel

1. Definition(Art.1431)

Kalalov.Luz,34SCRA337(1970)

2. Kinds

a. Technicalestoppel
i. byrecord
ii. bydeed(Art.1433)

b. Equitableestoppelorestoppelinpais(Art.1433)

3. PersonsBound(Art.1439)

ManilaLodgeNo.761BenevolentandProtectiveOrderoftheElksv.Court
ofAppeals,73SCRA168(1976)

4. Application(Art.1434to1438)
Miguelv.Catalino,26SCRA234(1969)
Read:Annotation32SCRA542
Mendozav.ReyesandCourtofAppeals,G.R.No.L31618,August17,1983

B. Trusts

1. Definition(Art.1442)

2. Parties(Art.1440)

a. Trustor
b. Trustee
c. Beneficiaryorcestuiquetrust

Salaov.Salao,70SCRA168(1976)

3. Kinds(Art.1441)

a. Expresstrusts

i. Proofrequired(Art.1443)
ii. Form(Art.1444)
iii. Wantoftrustee(Art.1445)
iv. Acceptancebythebeneficiary(Art.1441)

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

b. ImpliedTrusts

i. Howestablished(Art1441)
ii. Howproved(Art.1457)
iii. Specificcases(Art.1448to1456)

Fabianv.Fabian,22SCRA231(1968)
Buenov.Reyes,27SCRA1179(1969)
Tamayov.Callejo,46SCRA27(1972)
HeirsofSanjorjov.Quijano,G.R.No.140457,January19,2005)
AznarBrothersRealtyCompanyv.Aying,G.R.No.144773,May16,2005.

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

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Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

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