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OBLIGATIONS AND CONTRACTS

Title One: OBLIGATIONS


Chapter 1. General Provisions
I. Concept
A. Definition Art. 1156
B. Elements
1. Active Subject
2. Passive Subject
3. Presentation of Object
4. Efficient cause or juridical tie (vinculum juris)
C. Distinction among Natural (Art. 1423 - 1430), Civil (Art. 1156 - 1304) and Moral
obligations
1. As to enforceability
2. As to basis
II. Sources of Obligations Art. 1157
A. Law Art. 1158
B. Contracts Art. 1159, 1305
C. Quasi- Contracts Art. 1160, 2142
1. Kinds
a. Negotiorum gestio Art. 2144 - 2153
b. Solutio Indebiti Art. 2154 - 2163
c. Other quasi contracts Art. 2164-2175
D. Acts or omissions punished by law Art. 1161
E. Quasi Delicts Art. 1162, 2176
a. Distinction between quasi-delicts and crimes
b. Liability for fault of others Art. 2180; Art. 218, 219 FC
c. 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 Coconut
Corporation, 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 Code
1. 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 Classification
1. 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 Bilateral
6. Individual and Collective
7. Accessory and Principal
8. As to object or presentation:
a. Simple
b. Multiple
c. Conjunctive
d. Distributive
e. Alternative
f. Facultative
9. Possible and Impossible
Nature and Effects of Obligations
I. Kinds of Prestation
A. Obligation to give
1. a specific thing a. Duties of the obligor
i. to deliver the thing itself- Article 1244
ii. to preserve the thing- Article 1163
iii. to deliver the accessions and accessories- Article 1166 (distinction between
accession and accessory)
iv. to deliver the fruits- Article 1164 par. 1
2. a generic thing- Article 1246
B. Obligation to do- Article 1244
C. Obligation not to do- Article 1244
II. Breach of Obligation
A. Concept
1. Distinction between substantial and casual/ slight breach
CASES:
Song Fo & Co. vs. Hawaiian-Philippine Co., 47 SCRA 821 (1925)
Velarde, et al. vs. Court of Appeals, 361 SCRA 56 (2001)
B. Modes of Breach- Article 1170
1. Fraud (dolo)
a. Concept
i. dolo (Article 1171) vs. dolo incidente
ii. dolo (Article 1171) vs. dolo causante
CASES:
Woodhouse vs. Halili, 93 PHIL 527, G. R. No. L-4811. July 31, 1953
Geraldez vs. Court of Appeals, 230 SCRA 321, G.R. No. 108253. February 23,1994
b. Non-waiver- Article 1171
C. Negligence- Article 1173
1. Concept- Article 1173

a. culpa vs. dolo


b. culpa aquiliana vs. culpa contractual
CASES:
Gutierrez vs. Gutierrez, 56 Phil 177, G.R. No. 34840. September 23, 1931
Vazquez 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.
3.
a.
b.

Effects
Delay (mora)- Article 1169
Concept
Kinds
i.
mora solvendi
requisites
General rule: Creditor should make demand before debtor incurs delayArticle 1169

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, 2004
Vasquez 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. 926
Tengco vs. CA G.R. 49852. October 19, 1989
iii.
compensatio morae
requisites
CASE:
Central Bank of the Philippines vs. Court of Appeals, 139 SCRA 46, G.R. No. L-45710.
October 3, 1985
c. Effects
4. 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 breach
A. Action for performance
1. Action for specific performance in obligation to give a specific thing- Article 1165 par.
1; Rules of Court, Rule 39, Section 10
2. Action for substituted performance in obligation to give a generic thing- Article 1165
par. 2
3. Action for substituted performance or undoing of poor work in obligation to doArticle 1167
CASES:
Chaves vs. Gonzales, 32 SCRA 547, G.R. No. 27454. April 30, 1970
Tanguilig vs. Court of Appeals, 266 SCRA 78, G.R. No. 117190 January 2, 1997
a. Exception
4. Action for undoing in obligation not to do- Article 1168
a. Exception
B. Action for damages- Article 1170
C. Action for rescission- Article 1191, 1192
IV. Subsidiary remedies of creditor
A. Accion subrogatoria- Article 1177
1. Concept
2. Requisites
3. Exceptions- inherent rights of debtor; Article 772
B. Accion Pauliana- Article 1177, 1381 par. 3
1. Concept
a. 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.
V. Extinguishment of liability in case of breach due to fortuitous event- Article 1174
A. Concept of Fortuitous Event
1. Act of God
2. Act of Man
B. Requisites
1. 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. September
29, 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,
1990
Philcomsat 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, 1961
A. PD 858; PD 1685
B. Central Bank Circular 416
C. 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 Obligations
A. Pure obligations- Article 1179, par. 1
B. Conditional obligations- Article 1181
1. Condition
a. Concept
b. 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 Conditions
a. 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, 1926
Central Philippine University vs. Court of Appeals, 246 SCRA 511
Quijada vs. Court of Appeals, 299 SCRA 695, G,R No. 126444. December 4, 1998

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. L5267. 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 1922
Rustan Pulp & Paper Mills, Incorporated vs. IAC, 214 SCRA 665, G.R. No. 70789. October
19, 1992
Romero vs. Court of Appeals, 250 SCRA 223, G.R. No. 107207. November 23, 1995
c. as to possibility- Article 1183
i.
possible
ii.
negative- Article 1185
3. Rules in case of loss, deterioration or improvement pending the happening
of the condition- Article 1189, 1190
a. Meaning of loss (Article 1189 [2]), deterioration and improvement
b. Effect of loss or deterioration
i.
without debtors fault
ii.
with debtors fault
c. Effect of Improvement
i.
by nature or time
ii.
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,
1925
Boysaw vs. Interphil Promotions, 148 SCRA 365, G.R. No. L-22590. March 20, 1987
U.P. vs. De Los Angeles, 35 SCRA 365, G.R. No. L-28602. September 29, 1970
De Erquiaga vs. Court of Appeals, 178 SCRA 1, G.R. No. G.R. No. 47206 September 27,
1989
Angeles vs. Calasanz, 135 SCRA 323, G.R. No. L-42283 March 18, 1985
Jaime Ong vs. Court of Appeals, 310 SCRA 1, G.R. No. 97347. July 6, 1999
Visayan Sawmill Company Inc. vs. Court of Appeals, 219 SCRA 378, G.R. No. 83851. March
3, 1993.
Deparine, 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, 2001
Vda. 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 Term
1. Concept
2. Period/ Term vs. Condition
B. Kinds of Period/Term
1. As to effect
a. Suspensive (ex die)- Article 1193, par. 1
b. Resolutory (in diem)- Article 1193, par. 2
2. As to expression
a. Express
b. Implied
3. As to definiteness
a. Definite
b. Indefinite
4. As to source
a. Voluntary
b. Legal
c. Judicial
C. Rules in case of loss, deterioration or improvement before arrival of period - Article
1194, 1189
D. Effect of payment in advance- Article 1195
1. Note: Article 1197, par. 3
E. Benefit of a Period
1. For whose benefit
a. creditor
b. debtor
c. both
2. Effects
3. Presumption- Article 1196
CASES:
Maria Lachica, etc. vs. Gregorio Araneta, Inc., 47 OG No.11 5699, August 19, 1949
Ponce de Leon vs. Santiago Syjuco Inc., 90 SCRA 311, G.R. No. L-3316. October 31, 1951
Buce vs. Court of Appeals, 332 SCRA 151, G.R. No. 136913. May 12, 2000
4.
F. When
1.
2.

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


court may fix period- Article 1197
Period is implied
Period depends solely on will of debtor

CASES:
Gregorio Araneta, Inc. vs. Phil. Sugar Estates Devt. Co. Ltd., 20 SCRA 330, G.R. No. L22558. May 31, 1967.
Central Philippine University vs. Court of Appeals, 246 SCRA 511
III.

Alternative Obligations

A.
B.
C.
D.
E.
F.

IV.

Concept- Article 1199


Right of choice- Article 1200
Effect of notice of choice
When notice produces effect- Article 1201
Effect of loss or impossibility of one or all prestations- Articles 1202 to 1205
Facultative Obligation- Article 1206
1. Concept
2. Distinguished from Alternative obligations
3. Effect of substitution

Joint and Solidary Obligations


A. Joint Obligations
1. Concept
a. Requisites
b. Words used to indicate joint obligations
2. Presumption- Article 1207, 1208
3. Effects- Article 1207. 1208
a. Extent of liability of debtor
b. Extent of right of creditor
c. In case of novation, compensation, confusion (Article 1277),
remission
B. Solidary Obligations
1. Concept
d. Requisites
e. Words used to indicate solidary obligations
2. Kinds
f. As to source- Article 1208
i. Legal- Article 1915, 1945; Article 119 of Revised Penal Code
ii. Conventional
iii. Real
g. As to parties bound
i. Active
ii. Passive
iii. Mixed
h. As to uniformity
i. Uniform
ii. Varied/ Non-uniform- Article 1211
Effects

CASES:
Inchausti & Co. vs. Yulo, 34 Phil. 978, G.R. No. 7721. March 25, 1914
Lafarge Cement Philippines, Incorporated vs. Continental Cement Corporation, 443 SCRA
522, GR No. 155173. November 23, 2004
3. Effects
a. 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. 1
ii. 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. 1
ii. 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, 1918
R.F.C. vs. Court of Appeals, et al., 94 Phil. 984, G.R. No. L-5942. May 14, 1954
Quiombing vs. Court of Appeals, 189 SCRA 325
Inciong, Jr. vs. Court of Appeals, 257 SCRA 578
4. Defenses available to a solidary debtor against the creditor- Article 1222
a. Types
i.
Those derived from the nature of the obligation
ii.
Personal defenses
iii.
Defenses pertaining to his share
iv.
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 Obligations
1. Concept
a. Distinguished from joint obligations
b. Distinguished from solidary obligations
2. Indivisibility distinguished from solidarity- Article 1210
3. Effects- Article 1209
a. Liability for damages in case of breach- Article 1224
V. Divisible and Indivisible Obligations
A. Divisible Obligations
1. Concept
a. Distinguished from solidary obligations
2. Kinds
a. Natural- Article 1225, par. 1
b. Legal- Article 1225, par. 3
c. Conventional- Article 1225, par. 3
3. Presumptions
a. Of inidivisibility- Article 1225, par. 1
b. Of divisibility- Article 1225, par. 2
4. Divisibility and Indivisibility in obligations not to do- Article 1225,

par. 3
5. Effects- Article 1223, 1233, 1224
See Joint Indivisible Obligations
6. Cessation of Indivisibility
VI. Obligations with a Penal Clause
A. Concept
1. Principal vs. Accessory Obligations
2. Distinguished from Conditional Obligations
3. Distinguished from Alternative Obligations
4. Distinguished from Facultative Obligations
5. Distinguished from Guaranty
B. Kinds of Penal Clause
1. As to effect
a. Subsidiary
b. Complementary
2. As to source
a. Conventional
b. Legal
3. As to purpose
a. Punitive
b. Reparatory
C. Demandability of Penalty- Article 1226, par. 2
D. Effects of Penal Clause
1. Substitute for indemnity for damages and payment of interest - Article 1226
a. Exceptions- Article 1226
CASES:
Makati Development Corporation vs. Empire Insurance Company, 20 SCRA 657, G.R. No. L21780. June 30, 1967
Tan vs. Court of Appeals, 367 SCRA 571, G.R. No. 116285. October 19, 2001
Country Bankers Insurance Corp. vs. Court of Appeals, 201 SCRA 458, G.R. No. 85161.
September 9, 1991
2. Not exempt debtor from performance- Article 1227
a. Exceptions- Article 1227
3. Creditor cannot demand both performance and penalty at the same time - Article
1227
a. Exceptions- Article 1227
4. Creditor cannot collect other damages in addition to penalty- Article 1226
a. Exceptions- Article 1226
E. When penalty shall be equitably reduced- Article 1229
F. Nullity of Principal Obligation or Penal Clause
1. Effects- Article 1230
2. Rationale
Extinguishment of Obligations
I. Modes of Extinguishment- Article 1231
A.
Payment or Performance
B.
Loss or Impossibility

C.
D.
E.
F.
G.

Condonation or Remission
Confusion or Merger
Compensation
Novation
Other Causes

II. Payment or Performance


A.
B.

Concept- Article 1232


Requisites
1. Who can pay
a. in general
b. third person who is an interested party
i. meaning of interested party
ii. effects- Article 1302 [3]
c. third person who is not an interested party but with consent of
debtor
i. effects- Article 1236, par. 2; 1237; 1236, par. 1
d. third person who is not an interested party and without knowledge
or against the will of the debtor
i. effects- Article 1236, par. 2; 1237; 1236 par. 1
e. third person who does not intent to be reimbursed- Article 1238
f. in obligation to give- Article 1239, 1427
g. in case of active solidarity- Article 1214
2. To whom payment may be made
a. in general- Article 1240
b. incapacitated person- Article 1241, par. 1
c. third person- Article 1241, par. 2
i.
requisites
ii.
when proof of benefit not required - Article 1241,par. 3
d. in case of active solidarity
3. What is to be paid (identity)
a. in general
b. in obligations to:
i. give a specific thing- Article 1244
ii. give a generic thing- Article 1246
iii. 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, 1970
St. Paul Fire and Marine Insurance Company vs. Macondray and Co., Inc., 70 SCRA 122, GR
No. L-27796. March 20, 1976.
Papa vs. AV Valencia, et. al., 284 SCRA 643, GR No. 105188. January 23, 1988
PAL vs. Court of Appeals, 181 SCRA 557, GR 49188. Jan 30, 1990
c. payment of interest- Article 1956
4. How is payment to be made (integrity)
a. in general- Article 1233
i.
General Rule: Partial payment is not allowed- Article 1248
b. substantial performance in good faith-Article 1234
c. estoppel- Article 1235

C.

d. presumptions in payment of interests and installments- Article


1176
5. When payment is to be made
a. in general- Article 1169
b. see Chapter 2: Delay
6. Where payment is made- Article 1251, par. 1
a. if no place is expressly designated- Article 1251, par. 2 to par. 4
7. Expenses of making payment- Article 1247
Application of Payments
1. 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 27,1978
Paculdo vs. Regalado, 345 SCRA 134, G.R. No. 123855. November 20,2000
2. Requisites
3. Rules in application of payments- Article 1252, 1253
a. If rules are inapplicable and application cannot be inferredArticle 1254
i. meaning of most onerous to debtor
D. Payment by Cession
1. Concept- Article 1255
2. Requisites
3. Effects
E. Dation in Payment
1. Concept- Article 1245
a. distinguished from payment by cession
CASE:
DBP vs. Court of Appeals, 284 SCRA 14, G.R. No. 118342. January 5, 1998
2. Requisites
3. 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 Consignation


1. Tender of payment
a. Concept
b. Requisites
2. Consignation
a. Concept
i.
Purpose
b. Requisites
i.
when tender and refusal not required- Article 1256, par. 2
ii.
two notice requirement- Article 1257, par. 1; 1258 par. 2
effects of non compliance
c. Effects- Article 1260, par. 1
d. Withdrawal by debtor before acceptance by creditor or approval by
court, effects- Article 1260, par. 2
e. Withdrawal by debtor after proper consignation- Article 1261

i.
with creditors approval; effects
ii.
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, 1972
McLaughlin 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
A.

Loss of thing due


1. Concept- Article 1189 [2]
2. Kinds
a. As to extent
i. Total
ii. Partial
3. Requisites- Article 1262
4. Presumption- Article 1265, 1165
a. When not applicable
5. Effects
a. In obligation to give a specific thing- Article 1261, 1268
b. In obligation to give a generic thing- Article 1263
c. In case of partial loss- Article 1264
d. Action against third persons- Article 1269

B.

Impossibility of performance
1. Concept- Article 1266, 1267
2. Kinds
a. As to extent
i. Total
ii. Partial
b. As to source
i. Legal
ii. Physical
3. Requisites- Article 1266
4. Effects
a. In obligations to do- Article 1266; 1267; 1262, par. 2 (by analogy)
i. impossibility distinguished 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, 1994
Philippine 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.
B.

Concept
Kinds
1. As to extent
a. Total
b. Partial
2. As to form- Article 1270, par. 1
a. Express
b. Implied
Requisites
1. When formalities are required- Article 1270, par. 2

C.

CASE:
Victor Yam & Yek Sun Lent vs. Court of Appeals, G.R. No. 104726. February 11, 1999
D.
E.
1.
2.
F.
G.
1.
2.
V.

Confusion or Merger of Rights


A.
B.
C.
D.

VI.

Presumptions- Article 1271, 1272, 1274


Effects
in general
in case of joint or solidary obligations
Governing rules- Article 1270
Renunciation of principal or accessory obligation
effects- Article 1273
rationale

Concept
Requisites
Effects
1. in general- Article 1275
2. in case of joint (Article 1277) or solidary obligations
Confusion in principal or accessory obligation- Article 1276

Compensation
A.
B.

C.

Concept- Article 1278


1. Distinguished from Confusion
Kinds
1. As to extent
a. Total
b. Partial
2. As to origin
a. Legal
b. Conventional
c. Judicial
d. Facultative
Legal Compensation
1. Requisites- Article 1279, 1280
a. due distinguished from demandable

CASE:
Gan Tion vs. Court of Appeals, et al, 28 SCRA 235, GR No. L-22490. May 21, 1969
Silahis Marketing Corp. vs. Intermediate Appellate Court, 180 SCRA 21, G.R. No. 74027.
December 7, 1989
Bank of the Philippine Islands vs. Court of Appeals, 255 SCRA 571, G.R. No. 116792. March
29, 1996
PNB 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. March
29, 1996
Mirasol vs. Court of Appeals, 351 SCRA 44, G.R. No. 128448. February 1, 2001
2. Effects- Article 1290, 1289
D.
E.
F.
G.

VII.

When compensation is not allowed- Article 1287, 1288


Compensation of debts payable in different places- Article 1286
Effect of nullity of debts to be compensated- Article 1284
Effects of Assignment of Credit
1. with consent of debtor- Article 1285, par. 1
2. with knowledge but without the consent of the debtor- Article 1285, par. 2
3. without knowledge of debtor- Article 1285, par. 3
a. rationale

Novation
A.
Concept- Article 1291
B.
Kinds
1. As to form
a. Express
b. Implied
2. As to origin
a. Conventional
b. Legal
3. As to object
a. Objective or Real
b. Subjective or Personal
C.
Requisites- Article 1292

CASES:
Millar vs. Court of Appeals
Dormitorio vs. Fernandez, 72 SCRA388, G.R. No. L-25897. August 21, 1976
Magdalena Estates, Inc. vs. Rodriguez, 18 SCRA 967, G.R. No. L-18411. December 17,
1966
Reyes vs. Court of Appeals, 264 SCRA 35, G.R. No. 120817. November 2, 1996
Cochingyan, Jr. vs. R & B Surety and Insurance Co., Inc., 161 SCRA 339
G.R. No. L-47369. June 30, 1987
Broadway Centrum Condominium Corporation vs. Tropical Hut Food Market, Inc., 224 SCRA
302, 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.
E.

Effects
1. in general- Article 1296
2. when accessory obligation may subsist- Article 1296
Effect of the Status of the Original or New obligation
1. nullity or voidability of original obligation- Article 1298

F.
G.

2. nullity or voidability of new obligation- Article 1297


3. suspensive or resolutory condition of original obligation- Article 1299
Objective novation
1. meaning of principal conditions
Subjective novation
1. by change of debtor
a. expromision
i. requisites- Article 1293
ii. effects- Article 1295

CASES:
Garcia vs. Llamas, 417 SCRA 293, G.R. No. 154127. December 8. 2003
Quinto vs. People, G.R. No. 126715. April 14, 1999
2. By change of creditor: Subrogation of a third person in the rights of the
creditor- Article 1300
a. Conventional subrogation
i. requisites- Article 1301
ii. 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 subrogation
i. requisites
ii. when presumed- Article 1302
iii. effects- Article 1303, 1304
CASES:
Astro Electronics Corp. vs. Philippine Export and
Foreign Loan Guarantee Corp., 411 SCRA 422, G.R. No. 136729. Sep. 23, 2003
VIII.

Fulfillment of Obligations
A.
B.

IX.

see Chapter 4: Payment


Presumptions in payments of inetersts and installments- Article 1176

Transmissibility of Rights- Article 1178


Title Two: CONTRACTS

General Provisions
I.

Definition- Article 1305

II.

Elements
A.

B.
C.

Essential elements (see Chapter II, infra)


1. Consent
2. Object
3. Cause
Natural elements
Accidental elements

III.

Characteristics
A.
B.

Obligatory force- Article 1308


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.

Relativity
1. Contracts take effect only between the parties, their assigns and heirsArticle 1311

CASES:
The Manila Railroad Co. vs. La Compaia Transatlantica, 38 SCRA 875, G.R. No. 11318.
October 26, 1918
DKC 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-contracts
B.
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, 1941
Pakistan International Airlines vs. Ople, 190 SCRA 90, G.R. No. 61594, September 28, 1990

C.

1. Special disqualifications
a. Article 87 of the Family Code
b. Articles 1490 and 1491 of the Civil Code
c. Article 1782 of the Civil Code
What they may not stipulate - Article 1306
1. Contrary to law, e.g.:
a. pactum commissorium (Article 2088)
b. pactum leonina (Article 1799)
c. pactum de non alienado (Article 2130)
2. Contrary to morals
3. Contrary to good customs
4. Contrary to public order

CASES:
Cui vs. Arellano University, 2 SCRA 205, G.R. No. L-15127. May 30, 1961
Arroyo vs. Berwin, 36 SCRA 387, G.R. No. 10551. March 3, 1917
Filipinas Compania de Seguros vs. Mandanas, 17 SCRA 391, G.R. No. L-19638 June 20,
1966

Bustamante vs. Rosel, 319 SCRA 413, G.R. No. 126800. November 29, 1999
V. Classification
A.
B.

According to subject matter


1. things
2. services
According to name
1. nominate
2. innominate- Article 1307

CASE:
Dizon vs. Baborro, 83 SCRA 688, G.R. No. L-36821. June 22, 1978
a. do ut des
b. do ut facia
c. facio ut facias
d. facio ut des
C.
D.

E.
F.

G.

H.
I.

According to perfection
1. by mere consent (consensual)- Article 1315
2. by delivery of the object (real)- Article 1316
According to its relation to other contracts
1. Preparatory
2. Principal
3. Accessory
According to form
1. Common or Informal
2. Special or Formal
According to purpose
1. Transfer of ownership, e.g. sale
2. Conveyance of use, e.g. commodatum
3. Rendition of services, e.g. agency
According to the nature of the vinculum produced
1. Unilateral
2. Bilateral
3. Reciprocal
According to cause
1. Onerous
2. Gratuitous
According to risk
1. Commutative
2. Aleatory

VI.

Stages
A.
Preparation
B.
Perfection
C.
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 (stipulations pour autrui)Article 1311, par. 2

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

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


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

CASES:
Daywalt vs. Corporacion PP Augustinos Recoletos, 103 Phil 444, G.R. No. 13505. February
4, 1919
So Ping Bun vs. Court of Appeals, 314 SCRA 751, G.R. No. 120554. September 21, 1999
Essential Requisites of Contracts
I.

Consent
A.

Requisites- Article 1319


1. must be manifested by the concurrence of the offer and acceptance

CASES:
Rosenstock vs Burke, 46 Phil. 217, G.R. No. 20732. September 26, 1924
Malabrosa vs. CA, 402 SCRA 168 (2003)
a. Offer
i. must be certain-Article 1319
ii. what may be fixed by the offeror
iii. when made through an agent- Article 1322
iv. circumstance when the offeror has become ineffectiveArticle 1323
v. business advertisements of things for sale-Article 1325
vi. advertisements for bidders- article 1326
CASE:
Jardine Davies vs. Court of Appeals, 333 SCRA 684, G.R. No. 128066. June 19, 2000
b. Acceeptance
i. must be absolute- Article 1319
ii. 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 parties
a. Who cannot give consent- Article 1327
b. When offer and/or acceptance is made
i. during lucid interval
ii. in a state of drunkenness
iii. during a hypnotic spell
3. The consent must be intelligent, free, spontaneous, and realArticles 1330, 1346
a. Effect- Article 1330
b. 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
as to quantity, as distinguished from a
simple mistake of account
CASE:
Dumasug vs Modelo, 34 SCRA 252, G.R. No. L-10462. March 16, 1916
Hemedes 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 mistake
ii. 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 1337
iv. 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, 1953
Geraldez 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 themArticle 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 the


facts- 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 SCRA
908, 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

II.

Kinds- Article 1345


Absolute
Relative
Effects- Article 1346

Object of Contracts
A.

What may be the objects of contracts- Article 1347


1. All things not outside the commerce of man
2. All things not intransmissible
3. All services not contrary to law, morals, good customs, public order,
public policy

B.
Requisite - must be determinate as to its kind- Article 1349
C. 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 14070
Taedo 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.

B.
C.

Meaning of cause- Article 1350


1. In onerous contracts
2. In remuneratory contracts
3. In contracts of pure beneficence
As distinguished from motive- Article 1351
Defective causes and their effects
1. Absence of cause and unlawful cause- Article 1352

Case:
Liguez vs. CA, 102 Phil 577
2. Statement of a false 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 not
stated in the contract- Article 1354
Form of Contracts
I. General Rule: Contracts shall be obligatory, in whatever form they may have been
entered 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 be
valid or enforceable (Anglo- American 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 in
Articles 748, 79, 1874, 2134, 1771, 1773
B.
Those required, not for validity, but to make the contract effective as against
third persons, such as those covered by Articles 1357 and 1358
C.
Those required for the purpose of providing existence of the contract, such as
those under the Statue of Frauds in Article 1403

Reformation of Instruments
I.

Requisites- Article 1359


A.
B.
C.
fraud,

Meeting of the minds upon the contract;


The true intention of the parties is not expressed in the instrument; and
The failure of the instrument to express the true agreement is due to mistake,
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, 1977
Sarming 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, 1972
Kasilag vs. Rodriguez, 69 Phil. 217, G.R. No. 46623. December 7, 1982
II.

How to determine intention - Article 1371

III.

How to interpret a contract


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

1378
G.
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.

Characteristics
A.
Their defect consists in injury or damage either to one of the contracting
parties 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 person
who is injured or defrauded
E.
They can be convalidated only by prescription and not by ratification.

III.

Rescission- Article 1380


A.
Definition
B.
As distinguished from rescission under Article 1191

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

Requisites
1. The contract is rescissible.
2. The party asking for rescission has no other legal means to obtain
reparation.- Article 1383
3. He is able to return whatever he may be obliged to restore if rescission is
granted - Article 1385
4. The object of the contract has not passed legally to the possession of a
third person acting in good faith - Article 1385
5. The action for rescission is brought within the prescriptive period of four
years - Article 1389

D.

Effect of rescission- Article 1385


1. With respect to third persons who acquired the thing in good faithArticle 1385, par. 2 nad par. 3
Extent of rescission- Article 1384
Presumptions of fraud- Article 1387
1. Badges of fraud

E.
F.

CASES:
Oria vs. McMicking, 21 Phi. 243, G.R. No. 7003. January 18, 1912
Siguan 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 contracting
parties.
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.
B.
C.

As distinguished from rescission


Grounds- Article 1390
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.
E.

Prescription- Article 1391


Effect
1. Mutual restitution- Articles 1398 and 1402

CASES:
Cadwallader & Co. vs. Smith, Bell & Co., 7 Phil. 461, G.R. No. 3246. February 9, 1907
Velarde, et al. vs. Court of Appeals, 361 SCRA 56, GR No. 108346. July 11, 2001
a. When one of the parties is incapacitated- Article 1399
b. When the thing is lost through the fault of the party obliged to
return the same- Article 1400
F.

IV.

Extinguishment of the action


1. By ratification- Article 1392
2. When the things is lost through the fault of the person who has the right to
file the action- Article 1401

Ratification
A.

B.

C.

Requisites
1. 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 to
exist.
Forms
1. Express or tacit- Article 1393
2. By the parties themselves or by the guardian in behalf of an incapacitated
party- Article 1394
Effects
1. 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.
B.
C.

II.

They cannot be enforced by a proper action in court.


Theya re susceptible of ratification.
They cannot be assailed by third persons.

Kinds- Article 1403


A.
B.

Unauthorized contracts
1. Governing rules- Article 1404
Contarcts covered by the Statute of Frauds
1. Purpose of Statute

CASES:
Philippine National Bank vs. Philippine Vegetable Oil Co., 49 SCRA 857, G.R. No. 25400.
January 14, 1927
Limketkai 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 is
necessary for its registration- Article 1406
C.

Contracts executed by parties who are both incapable of giving consent to a


contract
1. Effect of ratification by the parents or guardian of one of the partiesArticle 1407
2. Effect of ratification by the parents or guardian of both partiesArticle 1407

Void or Inexistent Contracts


I.

Characteristics
A.
B.
C.

II.

Void from the beginning


Produces no effect whatsoever
Cannot be ratifies- Article 1409

Kinds- Article 1409


A.

Contracts that are void


1. Those whose cause, object or purposes is contrary to law, morals, good
customs, public order, or public policy
a. When the act constitutes a criminal offense- Article 1411
i. 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 delicto rule
CASES:
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 property
delivered therefore- Article 1414
d. When the contract is illegal and one of the parties is incapable of
giving consent- Article 1415
CASES:
Liguez vs. Court of Appeals, 102 SCRA 579, G.R. No. L-11240. December 18, 1957
Rellosa vs. Gaw Chee Hun, 93 Phil. 827, Gr. No. L-1411 September 29, 1953
e. When the agreement is not illegal per se but is prohibitedArticle 1416
CASES:
Philippine Banking Corporation vs. Lui She, 21 SCRA 53
Alfred 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 lawArticle 1417
g. When by virtue of a contract a laborer undertakes to work
longer than the maximum number of hours of work fixed by
law- Article 1418
h. When a laborer agrees to accept a lower wage than that set
by law- Article 1419
i. When the contract is divisible- Article 1420
j. When the contract is the direct result of a previous illegal
contract- Article 1422

B.

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 of
the contract cannot be ascertained.
5. Those expressly prohibited or declared void by law.
Contracts that are inexistent
1. 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.
B.

Does not prescribe- Article 1410


Is not available to third persons whose interest is not directly affectedArticle 1421