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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)

Chavezv.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)

Chavezv.Gonzales,supra
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)

18

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

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)
19

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

LegalSubrogation

o Requisites
o Whenpresumed(Art.1302)

o Effects(Art.13031304)

AstroElectronicsCorp.v.PhilippineExportandForeignLoanGuarantee
Corporation(2003)

20

Law101:ObligationsandContractsProf.MaryRoseS.Tan
Semester2,AY20112012

Active(Debtor)
Subject
Passive(Creditor)
Obligations

Elements

Sources

Law;Contract;Quasi
Contracts;Delicts;
QuasiDelicts

Cause
GenericThing
Object
SpecimicThing

Breach

How
committed

Kinds

Substantial
breach

Casualor
slight
breach

Fraud

Negligence

Delay

Contraventi
onoftenor

Mora
solvendi

Mora
accipiendi

Compensati
omorae

Specimic
performanc
e

Rescission

Damages

Accion
Subrogatori
s

Accion
Pauliana

Subsidiary
Remedies

Remedies

21