COURSE in BUSINESS LAW

I. OBLIGATIONS

A. General Provisions (Articles 1156 to 1162)

1. Concept, Requisites, Classification of Obligations
2. Sources of Obligations
a. Obligations arising from law
b. Obligations arising from Contracts
c. Obligations arising from Quasi Contracts
d. Obligations arising from Criminal Offenses
e. Obligations arising from Quasi Delicts

B. Nature and Effect of Obligations (Articles 1163 to 1178)

1. Obligations to give
a. Nature or right of creditor
b. Rights of creditor in determinate obligations
c. Rights of creditor in generic obligations
d. Obligations of debtor in determinate obligations
e. Obligations of a debtor in generic obligations
2. Obligations to do; Effects of Breach
3. Obligations not to do; Effects of Breach

C. Breach of Obligations
1. Voluntary breach through default or mora
2. Voluntary breach through fault or dolo
3. Voluntary Breach through Negligence or culpa
4. Voluntary breach through contravention of tenor thereof

D. Concept of Fortuitous Events

1. Classification
2. Effect upon obligation
3. Essential Conditions
4. Exception Usurious Transactions
5. Extinguishment of Interests and Prior Installments

E. Remedies of Creditors to Protect Credit

1. Exhaustion of debtor’s property
2. Accion subrogatoria
COURSE in BUSINESS LAW

3. Accion pauliana

Cases:
 Samson vs CA, 238 SCRA 397;
 Nakpil vs CA, 144 Scra 596;
 Sia vs CA, 222SCRA 24;
 Adorable vs CA, 319 SCRA 2000;
 Fideldia, et al., v. Soncuan, et al., G.R. No. 151352, August 29,
2005;
 Jose et al., v. Novida et al., G.R. No. 177374, July 02, 2014;
 CCC Insurance Corp. v. Kawasaki Steel Corp.,et al., G. R. No.
15616, June 22, 2015;

F. DIFFERENT KINDS OF OBLIGATIONS (Articles 1179 to 1230)

1. Pure and Conditional Obligations (Articles 1179 to 1192)

a. Pure obligation
b. Conditional obligations
c. Classification of conditions
aa. Suspensive and Resolutory conditions
bb. Potestative, Casual and Mixed conditions
cc. Possible and Impossible conditions
dd. Positive and negative conditions
d. Constructive fulfillment of suspensive conditions
Effect of suspensive conditions before fulfillment
Effect of suspensive condition after fulfillment
Effect of loss, deterioration or improvement
e. Effect of resolutory conditions
Before fulfillment
After fulfillment
f. Concept of reciprocal obligations
Necessity of judicial action Nature
of breach
Alternative remedies of injured party Damages
to be awarded
Effect of rescission Effect
upon third person
COURSE in BUSINESS LAW

Effect of breach by both parties

Cases:
 Lao Lim vs CA, 191 SCRA 150;
 Patente vs Omega, G.R. No. L-4433, May 29, 1953, 93 Phil 218;
 Angeles vs CA, 250 SCRA 223;
 UFC vs CA, 33 SCRA 1;
 Ong vs CA, 310 SCRA 1999
2. Obligations With a Period
a. Concept of term or a period
Distinguished from condition
Classification of a term or a period
Effect of fortuitous event
b. Effect of advanced payment or delivery
c. Benefit of term or period
d. Judicial term or period
When court may fix term
Nature of action
Effect of judicial period
c. Extinguishment of debtor’s right to period

3. Alternative and Facultative Obligations

a. Concept
b. Right of choice in alternative obligations
Limitations upon right of choice
When choice takes effect
Effect upon obligation
When only one prestation is practicable
When choice is rendered impossible
c. Effects of loss of objects of obligation
If right belongs to the debtor
If right belongs to the creditor
d. Nature of facultative obligations
Distinguished from alternative obligations
When substitution take effect
Effect of loss of substitute
COURSE in BUSINESS LAW

4. Joint and Solidary Obligations

a. Concept
b. Nature of Collective Obligations in general
c. Joint Divisible obligations
d. Joint Indivisble obligations
Effect of breach
Effect of insolvency of a debtor
Interruption of period of prescription
e. Indivisibility and solidarity
Kinds of solidarity
Effect of active solidarity in general
Effect of passive solidarity in general

f. Effect of varied conditions or periods

Effect of beneficial and prejudicial acts
Effect of assignment of rights
Effect of demand by a creditor
Effect of Novation
Effect of compensation and confusion
Effect of remission
Effect of payment to a creditor
Effect of demand upon a debtor
Effect of payment by a debtor
Effect of loss or impossibility of performance

g. Defense available to a solidary debtor

Cases:
 Lakarge Cement Phils. Vs. Continental Cement Corp., et al.,
G.R. No. 155173, Nov. 23, 2004;
 Agoncillo vs Javier, 38 Phil. 424;
 Ynchausti vs. Yulo, 34 Phils. 978

5. Divisible and Indivisible Obligations

a. Concept
Relation to divisibility and indivisibility of things
COURSE in BUSINESS LAW

b. Effect of divisible or indivisible obligations

Breach of joint indivisible obligations
c. Determination of divisibility and indivisibility
In obligations to give
In obligations to do
In obligations not to do

6. Obligations with Penal Clause

a. Concept
Purpose of penalty
Kinds of penalty
b. Effect of penalty; general rule
Exceptions
Enforceability of penalty
c. Limitation upon right of debtor
Limitation upon right of creditor
d. Proof of actual damages
e. When penalty may be reduced
f. Nullity of obligation or penalty; effect

Cases:
 Garcia vs CA, 167 SCRA 815;
 Insular Bank of Asia and America vs. Sps. Salazar, 159, SCRA,
111;
 Umali vs Miclat, 105 Phil. 1109)

G. Extinguishment of Obligations

General provisions

Modes of extinguishing obligations

1. Payment or performance
a. Concept
b. When obligation is paid or performed
c. Who may pay obligation
c.1. Payment by a third person
COURSE in BUSINESS LAW

c.1.1. Right of creditor

c.1.2. Right of third person
c.1.3. Right of reimbursement
c.1.4. Right of subrogation
c.1.5. Gratuitous payments

c.2. Capacity to make payment

c.3. To whom payment must be made
c.3.1. Persons authorized to receive payment
c.3.2. Payment to unauthorized persons -
Exceptions
c.3.4. Payment to incapacitated persons
c.3.5. Payment to third persons
c.3.6. Payment to possessors of credit
c.3.7. Payment after judicial order of retention
1243
c.4. What must be paid (1246)
c.4.1. Effect of dation in payment
c.4..2. Effect if object is generic
c.5. Expenses of payment (1247)
c.6. Character of payment (1248)
c.7. Rule in monetary obligations (1249)
c.7.1. Effect of R.A. Nos. 529 and 4100
c.7.2. Meaning of legal tender
c.7.3. Payments with negotiable paper
c.8. Effect of extra ordinary inflation and deflation
c.9. Place of payment.

d. Application of payment (Articles 1252 to 1254)

d.1. Concept (1252)
d.1.1. Requisites
d.1.2. Right of debtor to make applications;
Exception
d.1.3. Time when right is exercised
d.2. Limitation upon right to apply payment (1253)
d.3. Legal application of payment (1254)
d.3.1. When debts are not of the same burden
COURSE in BUSINESS LAW

d.3.2. When debts are of same burden

2. Payment by cession (1255)

a. Concept
b. Requisites
c. Kinds
d. Distinguished from dation in payment
e. Effect

Cases:
 Filinvest Credit Corp., vs. Phil. Acetylene Co., 197 Phil. 394;
 Haw Pia vs. China Banking Corp., 80 Phil. 604;

3. Tender of Payment and Consignation (Articles 1256-1261)

a. Concept (1256 – 1258)
a.1. Distinctions
a.2. General requisites of consignation
a.3. Special requisites of Consignation
a.4. Subject matter of consignation

b. Expenses of consignation (1259)

c. Effects of consignation (1260-1261)

c.1. Effect of withdrawal

Cases:
 PNB vs Teves, L-8076, 8813, Dec. 14, 1951;
 New pacific Timber and Supply Co. vs Judge Seneris, 101 SCRA
686; Singson vs. Caltex [Inc.], G.R. No. 1327798, Oct. 4, 2000;
 Hubonhua vs CA, G.R. Nos. 95897 and 102604, Dec. 14, 1999;
 Velasco vs. Manila Electric Co., 42 SCRA 556;
 Lantion vs NLRC, 181 SCRA 513;
 Roman Catholic Bishop of Malolos, Inc. vs IAC, 191 SCRA 411;

4. Loss of the thing due (Articles 1262 – 1269)

a. Concept
a.1. Effect of loss in determinate obligation to give
COURSE in BUSINESS LAW

(1262)
a.2. Effect of fortuitous event; Exception

b. Effect of loss in generic obligation to give

(1263)
b.1. Effect of partial loss (1264)

c. Rule if things is in debtor’s possession (1265)

d. Effect of impossibility of performance in obligation

(1266)
d.1. Effect
d.2. Effect in obligations to do

e. Effect of relative impossibility (1267)

f. Rule if obligations arises from criminal offense (1268)

g. Effect of extinguishment of obligations

Case:
Naga Telephone Co., et al. vs CA, et al., Feb. 24, 1994

5. Condonation or remission of the debt (1270 -1274)

a. Concept
a.1. Requisites Kinds
a.2. Gratuitous character of remission (1270)
a.3. Necessity of acceptance by debtor
a.4. Applicability of rules on donations
a.5. Extent of remission
a.6. Form of express remission
a.7. Form of implied remission
b. Effect of delivery of evidence of credit to debtor (1272)
c. Effect of remission in general (1273 – 1274)
d. Effect upon accessory obligation
e. Rule in pledge
6. Confusion or merger of rights (Articles 1275 – 1277)
COURSE in BUSINESS LAW

a. Concept of Confusion (1275)

b. Requisites
c. Kinds
d. Effect upon accessory obligations (1276)
e. Effect upon collective obligation (1277)
f. Effect of revocation of confusion

Cases:
 Testate Estate of Mota vs. Serra, 40 Phil 464;
 Yek Tong Lin Fire and Marine Insurance Co. vs Yusingco, 46 Phil
473

7. Compensation (Articles 1278 – 1290)

a. Concept of Compensation (1278)
a.1. Distinguish from payment
a.2. Distinguish from confusion
a.3. Distinguish from counterclaim

b. Kinds of compensation
c. Requisites of compensation (1279)
c.1. As to parties Bound as principals
c.2. As to objects
c.3. As to maturity
c.4. As to liquidation and demandability
c.5. As to claims of third persons
d. Right of guarantor to set up compensation (1280)
e. Voluntary compensation (1281-1282)
f. Judicial compensation (1283)
g. Rules in case of rescissible or voidable debts (1284)
h. Effect of assignment of rights (1285)
h.1. When compensation has taken place
h.2. When compensation has not taken place
h1. With consent of debtor
h2. With knowledge, but without consent of debtor
h3. Without knowledge of debtor
i. Debts which cannot be compensated (1286 – 1288)
j. Effect of compensation 91289 – 1290)
 COURSE in BUSINESS LAW

k. When compensation takes effect

Case:
 Gullas vs National Bank, 62 Phil. 519

8. Novation (Articles 1291 – 1304)

a. Concept (1291)
b. Requisites
c. Kinds
d. Form of extinguishment (1292)
d.1. Express novation
d.2. Implied novation
e. Novation by substitution of debtor (1293)
e.1. Necessity of creditor’s consent
f. Effect of payment by new debtor (1294 -1295)
f.1. If substitution is by expromision
f.2. If substitution is by delegacion
g. Effect upon accessory obligations (1296)
h. Effect if new and /or old obligations are void
h.1. Rule if old obligation is voidable
i. Effect if old obligation is conditional (1299)
i. Novation by subrogation (1300)
k. Conventional subrogation (1301)
l. Legal subrogation (1302)
l.1. Effect of total subrogation (1303-1304)
l. 2. Effect of partial subrogation
Cases:
 Emilio Uraca, et al., vs CA, et al., G.R. No. 115158, September 5, 1997;
 Reyes vs CA, et al., G.R. No. 120817, Nov. 4, 1996

II. CONTRACTS

A. General Provisions (Articles 1305 – 1317)

1. Concept
a. Characteristics (1305)
a.1. Elements
a.2. Stages
COURSE in BUSINESS LAW

a.3. Classification
a.4. Auto Contracts
a.5. Contracts of Adhesion
b. Freedom to Contract (1306)
b.1. Validity of stipulations
b.2. Limitations on stipulations
c. Innominate Contracts (1307)
Analogous contracts
d. Mutuality of Contracts (1308)
d.1. Unilateral cancellation
d.2. Express agreement
e. Relativity of contracts (1311)
e.1. Parties bound by contract
e.2. Third persons not bound
e.3. Enforcement of contract
e.4. Annulment of contracts
e.5. Contracts bind heirs
e.6. Stipulations for third persons
e.7. Who may revoke
e.8. Collective contracts
f. Real rights in property (1312)
g. Contracts in fraud of creditors (1313)
h. Interference by third persons (1314)
h.1. Extent of liability
i. Perfection of consensual contracts (1315)
i.1. Binding effect of contract
j. Perfection of real contracts (1316)
k. Ratification necessary (1317) Express or implied
k.1. Effect retroactive
k.2. Status before ratification
k.3. Liability of representative

Cases:
 Sps pascual vs Ramos, G.R. No. 144712, July 4, 2002;
 Cuizon vs CA, 260 SCRA 645;
 Ferrazini vs. Gsell, 34 Phil. 697;
 Del Castillo vs Richmond, 45 Phil. 697;
COURSE in BUSINESS LAW

 Cui vs Arellano University, 112 Phil 135;

 Sy Suan vs. Regala, 105 Phil 1024;
 Constantino vs Espiritu, 39 SCRA 206

2. Essential Requisites of Contracts (Articles 1318 – 1385)

a. General provisions (1318)
a.1. Parties to contract
a.2. Capacity of parties
a.3. Want of consent

CONSENT
b. Concept of consent (1319)
b.1. Elements
b.2. Forms of consent
b.3. Manifestation of consent
b.4. Offer by one party (definite, complete, international, mental)
b.5. Acceptance by offeree
b.6. Amplified acceptance
b.7. Complex offers
b.8. Simultaneous offers
b.9. Successive agreements
b.10. Knowledge of offeror (Through intermediaries, by
correspondence, by telephone)
b.11. Effect of silence
b.12. Withdrawal of offer
b.13. Lapse of time
b.14. Revocation of acceptance
b.15. New contract before acceptance
b.16. Public offers
c. Implied acceptance (1320)
c.1. Waiver of acceptance
c.2. Effect of silence

d. Right of offeror (1321)

d.1. Period for acceptance
d.2. Manner of acceptance
COURSE in BUSINESS LAW

e. Contract through intermediary (1322)

f. Period of acceptance (1324)

f.1. Withdrawal of offer
f.2. Crossing revocation and acceptance
f.3. Effect of delay
f.4. Contract of option

g. Sales advertisements (1325)

h. Effect of bidding (1326)

h.1. Judicial sales

i. Effect of incapacity (1327)

i.1. Unemancipated minors
i.2. Estoppel
i.3. Insane persons
i.4. Deaf mutes

j. Lucid intervals (1328)

j.1. Liquor and drugs
j.2. Hypnotism and somnambulism

k. Other causes of incapacity (1329)

k.1. Special disqualifications

l. Requisites of consent (1330)

l.1. Defects of the will
l.2. Discretion of courts

m. Fraud or mistake alleged (1332)

n. Inexcusable error (1333)

o. Error of law (1334)

p.1. Legal effects of contracts
p.1. Error as to the nature of contract
COURSE in BUSINESS LAW

p. Violence and intimidation distinguished (1335)

q.1. Scope and test
q.2. Requisites of violence
q.3. Requisites of intimidation
q.4. Unjust act
q.4.1. Enforcement of claim
q.4.1.1. When improper
Cause of consent
Moral coercion

q. Duress by third person (1336)

r. Undue influence (1337)

r.1. Circumstances to be considered
r.2. Employed by third persons
r.3. Contracts of adhesion

s. Concept of fraud (1338)

s.1. Kinds of fraud
s.2. Requisites of fraud
s.3. Effects of fraud
s.4. Proof of fraud

t. Concealment of fraud (1339)

t.1. Innocent non-disclosures

u. Tolerated fraud (1340)

u.1. Opportunity to know

v. Expression of opinion (1341)

v.1. Made by expert

w. Fraud by third person (1342)

w.1. Mutual error

x. Magnitude of fraud (1343)

 COURSE in BUSINESS LAW

x.1. Determining cause

y. Fraud by one party on another

y.1. Mutual fraud
y.2. Plurality of subjects
y.3. Dolo incidente

z. Definition of simulation (1345)

z.1. Absolute simulation (1346)
z.1.1. Recovery under contract
z.1.2. Distinguished from fraudulent alienation
z.1.3. Simulation presumed

z.2. Relative simulation

z.2.1. Effect as to third persons
z.2.2. Acquisition of title

Cases:
 ABS-CBN vs CA et al., 301 SCRA 572;
 Palattao vs. CA, et al., G.R. No. 131726, May 7, 2002;
 National Commercial Bank of Saudi Arabia vs. CA, G.R. No. 1242467,
January 17, 2005;
 DBP vs Perez, G.R. No. 14854, Nov. 11,. 2004;
 Sanchez, vs Rigos, 45 SCRA 368;
 Mercado and Mercado vs. espiritu, 37 Phil. 125;
 Braganza vs Villa Abrille, 105 Phil 456;
 Songco vs Sellner, 37 Phil. 254;
 Rosario, et al. v. CA, et al., G.R. No. 127005, July 19, 1999;
 Lee and Asiatrust Development Bank v. Bangkok Bank Public Co.,
G.R. No. 173349, February 09, 2011;
 Philtranco Service Enterprises, Inc., v. Paras and Inland Railways,
Inc., et al., G.R. No. 161909, April 25, 2012;
 Paz v. Environmental Universality. Inc., G.R. No. 203993, April 20,
2015;

OBJECTS OF CONTRACTS
a. Concept of object
COURSE in BUSINESS LAW

a.1. Requisites
a.2. Within commerce of man (1347)
a.3. Existence of object
a.3.1. Future inheritance
a.3.2. Not part of inheritance
a.4. Contrary to law or morals
a.5. Prestation of third party

b. Impossible things or services (1348)

b.1. Liability for damages
Partly impossible Difficulty
of performance

c. Determination of kind (1349)

Determination of quantity

Case:
 Blas vs Santos, 111Phil. 503;

CAUSE OF CONTRACT
a. Concept
Distinguished from object
Distinguished from consideration
Distinguished from motive
Requisite of cause
Onerous contracts (1350)
Mutual promises
Accessory contracts
Accommodation parties
Remuneratory contracts
Contract taken as a whole
b. Purpose of contract (1375)
c. Usages or customs (1376)
d. Obscure terms construed (1377)
Contracts of adhesion
e. Reciprocity of interests (1378)
Least transmission of rights
 COURSE in BUSINESS LAW

f. Partly written contract (1379)

Natural right

Cases:
 Phil. Banking Corp. vs Lui She, 21 SCRA 52;
 Villaroel vs Estrada, 71 Phil. 14;
 Mactal vs melegrito, 111 Phil. 363;

B. Form of Contracts
a. Intent over form (1356)
Contracts valid in any form
Formalities required by law
For validity of contract
Execution of instrument
b. Compliance with formality (1357)
Causes of action
Survival of actions
c. Writing not for validity (1358)
Case:
 Dauden-Hernaez vs Delos Angeles, 27 SCRA 1276;

C. Reformation of Instruments
a. Basis of reformation (1359)
Requisites of reformation
Distinguished from annulment
Operation and effect
Effect on statutes of frauds
b. Requisites of mistake (1361)
Mistake of fact
Must be mutual
Effect of negligence
c. Mistake of one party (1362)
d. Mistake of draftsman (1363, 1364)
e. Deed held to be mortgage (1365)
f. Donations and wills (1366)
g. Void agreements (1367)
 COURSE in BUSINESS LAW

Cases:
 Huibonhua vs COA, 320 SCRA 625;
 Bentir and Formida vs Judge Leanda and Leyte Gulf Traders, Inc.,
G.R. No. 128991, April 12, 2000;
 Rita Sarming, et al., vs Dy, et al., G.R. No. 133643, June 6, 2002;

D. Interpretation of Contracts
a. Interpretation of terms (1370)
Intent of the parties
Proof of intention
Reformation of instruments
b. Determining intention (1371)
c. Scope of general terms (1372)
d. Validity favored (1373)
e. Contract taken as a whole (1374)
f. Purpose of contract (1375)
g. Usages or customs (1376)
h. Obscure terms construed (1377)
Contracts of adhesion
i. Reciprocity of interests (1378)
Least transmission of right
j. Partly written contract (1379)
Natural right

E. Rescissible Contracts
a. Defective contracts
Relative ineffectiveness
Concept of rescission (1380)
Nature of contract
Rescission in reciprocal obligations
Rescission and mutual dissent
Requisites of rescission
Direct proceedings to rescind
b. Rescission on legal grounds 91381)
Contracts with lesion
Contracts of guardians
 COURSE in BUSINESS LAW

Contracts for absentees

Contracts in fraud of creditors Action
pauliana and simulation
Requisites for rescission
Existence of credit
Priority of credit
Exception Creditors
included
Fraudulent conveyance
Test of fraud
Signs of fraud
As to transferee
c. Payment when insolvent (1382)
d. No other remedy (1383)
e. Extent of rescission (1384)
Who may bring action
f. Mutual restitution (1385)
Transfer to third person
Right of transferee
Transferee in good faith
Transferee in bad faith
Right to damages
g. Fraud presumed (1387)
Rebuttal of presumption Proof
of fraud
Effect of fraud
h. Subsequent transfers (1388)
Bad faith of transferee
i. Minority of party (1389)

Cases:
 Rosencor development Corporation and Rene Joaquin vs Paterno
Inquing, et al., G.R. No. 140479, March 8, 2001;
 Khe Hong Cheng vs CA, G.R. No. 144169, March 28, 2001;
 Guzman, Bocaling and Co., Inc. vs Bonnevie, 206 SCRA 668;
 Concepcion vs Sta Anna, 87 Phil.787;
 Rivera vs. Li Tam and Co., 4 SCRA 1072;
 COURSE in BUSINESS LAW

 Oria vs MacMicking, 21 Phil. 243

F. VOIDABLE CONTRACTS
a. Concept

Rescission and annulment

Grounds for annulment
Incapacity to consent
How annulment obtained
b. Prescription of nullity (1391)
Application of period
Registered documents
c. Confirmation and ratification (1392)
Ratification and acknowledgment
Requisites of ratification
Transmission of right
d. Express ratification (1393)
Implied ratification
e. Exercise of ratification (1394)
f. Effect of ratification (1396)
Retroactivity of ratification
g. Personal requisites (1397)
Incapacitated person at fault
Representation of capacity
h. Mutual restitution (1398)
Who may invoke restitution?
Contracts not covered
Restitution of fruits and interest
Liability for damages
i. Incapacitated party (1399)
Profit by incapacitated
Restitution by capacitated party
j. Loss of thing by plaintiff (1401-1402)
Loss of thing by defendant
Loss of fruits and accessories
Cases:
 Bael vs IAC, 169 SCRA 617;
 COURSE in BUSINESS LAW

 Braganza vs Villa Abrille, 105 Phil. 456;

 De Santos vs City of Manila, 45 SCRA 409;
 Talag vs Tankengco, 92 Phil. 1066

G. UNENFORCEABLE CONTRACTS
a. Concept and distinctions
b. Unauthorized contracts (1403)
Statute of frauds
Purpose of statute
Validity of contracts
Action to enforce Note
or memorandum
Performance within one year
Guaranty of another’s debt
Test of guaranty
In consideration of marriage
Sale of personalty
Separable contracts
Partial delivery or payment
Lease or sale of realty
Description of property
Representation as to credit
Parties incapacitated
c. Ratification validates contracts (1404)
d. Failure to object (1405)
Acceptance of benefits
e. Defense is personal (1408)

Cases:
 Rosencor Development Corp. vs Inquing, 354 SCRA 119;
 Factoran vs Sabanal, 81 Phil. 512;
 Diana vs Macalibo, 75 Phil. 71;
 Western Minadanao Lumber Co., vs Medalla, 79 SCRA 702;
 Shoemaker vs La Tondena, 68 Phil 24;

H. VOID OR INEXISTENT CONTRACTS

 COURSE in BUSINESS LAW

a. Void or inexistent contract (1409)

Characteristics of void contracts
Parties affected
Action on contract
Ratification
b. Defect incurable (1410)
Nature of action
c. Illegality common to parties (1411,1412)
Only one party guilty
Cases of usury
d. Recovery of usurious interest (1413)
e. Repudiation of illegal contracts (1414)
f. Divisible or separable contracts (1420)
Nature of contracts
Intention of parties
g. Nullity as defense (1421)

Cases:
 Liguez, vs CA, 102 Phil. 577;
 Mapalo vs Mapalo, 17 SCRA 114; R
 odriguez vs Rodriguez, 20 SCRA 908;
 Angel Jose Warehousing Co., vs Chelda Enterprises, 23 SCRA 119;
Development Bank of the Phil. Vs Perez, G.R. No. 148541, Nov. 11,
2004; Phil. Banking Corp., vs Lui She, 21 SCRA 52

I. NATURAL OBLIGATIONS
a. Basis of natural obligations
b. Types of obligations (1423)
Concept of natural obligations
Natural and imperfect
Natural and moral
Fulfillment of natural obligations
Voluntary fulfillment
Conversion to civil obligation Guaranty
of natural obligations
Illicit obligations
c. Restitution by minor (1426)
 COURSE in BUSINESS LAW

Payment by minor
Good faith of the creditor
Nature of thing
Non-consummable thing
d. Nullity due to form (1430)

J. ESTOPPEL
a. Principle of estoppels (1431)
Concept of estoppels
Illegal act excluded
Distinguished from waiver
Distinguished from ratification
Representations and positive acts
Admissions
Silence or inaction
Nature of laches
Laches and prescription distinguished
Reliance and belief
b. Effect of provision (1432)
c. Kinds of estoppels (1433)
Elements of estoppels in pais
d. Subsequent acquisition of title (1434)
e. Estoppels of tenant (1435, 1436)
f. Estoppels against owner (1437)
g. Estoppels from benefits (1438)
h. Parties affected (1439)
No estoppel against government
Cases:
 Maneclang vs Buan, 208 SCRA 179;
 Heirs of Lacamen vs Heirs of Laruan, 65 SCRA 605;
 Nielson & Co., Inc., vs lepanto Consolidated Mining Co., 18 SCRA
1040; PNB VS Barreto, 52 Phil 818

K. TRUSTS
a. Characteristics of trusts
Distinguished from other relations
b. Mayorazgo as trust (1440)
 COURSE in BUSINESS LAW

Nature of trustee’s liability

Trust property
Existence of cestui que trust
c. Classification of trusts (1441)
Resulting and constructive
d. General law of trust

EXPRESS TRUST
a. Proof of express trust (1443)
b. No particular form required (1444)
c. Want of trustee (1445)

IMPLIED TRUST
a. Trust from payment (1447, 1448)
Exceptions to rule
b. Inheritance in trust (1449-1451)
c. Title in one co-owner (1452)
d. Trust based on promise (1453)
e. Investment of trust funds (1454-1545)
Acquisition of trust property
f. Mutual mistake (1456)
Unilateral mistake

Cases:
 Cuaycong vs Cuaycong, 21 SCRA 1192;
 Fabian vs Fabian, 21 SCRA 213; S
 otto vs Teves, 86 SCRA 154;
 Alarcon vs Bidin, 120 SCRA 390;
 Caragay-Lagno vs CA, 133 SCRA 718;
 Tongoy vs CA, 123 SCRA 99;
 Bueno vs Reyes, 27 SCRA 1179;