TARLAC STATE UNIVERSITY

SCHOOL OF LAW

OBLIGATIONS AND CONTRACTS

Atty. Esmeralda M. Valerio-Morada

I. Method of Instruction. – The Socratic method of instruction will be used

i.e., recitation-lecture method. Each meeting, the students will be called to recite
within the assigned topic and the professor shall amplify/supplement what has
been recited by the students.

1. Laws/Cases assigned. – All pertinent provisions of the laws (with

annotations) assigned must be understood and/or memorized. All cases assigned
must be read in the original and the students called to recite are expected to
explain/recite the same.

II. Prescribed book. – The students may use any book on Obligations and
Contracts. The professor will use COMMENTS and JURISPRUDENCE on
OBLIGATIONS and CONTRACTS by Justice DESIDERIO P. JURADO and Civil Law
Obligations and Contracts by Justice Jose C. Vitug and Atty. Marianne Beltran-
Angeles.

III. Syllabus:

Title I. Obligations

1. General Provisions (Arts. 1156-1162)

a. Concept of Obligations
b. Sources of Obligations

i. Law
ii. Contracts
iii. Quasi-Contracts
iv. Delicts
v. Quasi-delicts

Cases:
Pelayo vs. Lauron, G.R. No. L-4089, January 12, 1909
Macasaet vs. COA, G.R. No. 83748 May 12, 1989
Agcaoili vs. GSIS G.R. No. L-30056 August 30, 1988
Traders Royal Bank Employees Union vs. NLRC, GR No. 120592, March 14, 1997
Barredo vs Garcia 73 Phil. 607
Elcano vs. Hill G.R. No. L-24803. May 26, 1977
Mendoza vs. Araceta, 91 SCRA 113
Air France vs. Carrascoso G.R. No. L-21438. September 28, 1966
Chavez vs. Gonzales, 32 SCRA 547

Chapter 2. Nature and Effect of Obligations (Arts. 1163- 1178)

a. Obligations to give
b. Obligations to do
c. Obligations not to do
d. Breach of Obligations

i. Mora
1. Necessity of demand
2. Default in reciprocal obligations
 ii. Dolo
iii. Culpa

1. Test of Negligence
iv. Contravention of Tenor

e. Fortuitous event
f. Presumption of payment of interest and prior installments
g. Remedies of creditors
h. Transmissibility of rights

Cases:

Art. 1167
Taguilig vs. CA, G.R. No. 117190. January 2, 1997
Chavez vs. Gonzales, GR No. L-27454, April 30, 1970
Continental Cement Corp. vs. Asea Brown Boveri, GR No. 171660, October 17, 2011

Art. 1169 to 1170

Telefast vs. Castro, G.R. No. 73867. February 29, 1988
Cathay Pacific vs. Vasquez, G.R. No. 150843. March 14, 2003
Japan Airlines vs. Sinangan, 552 SCRA 341
Radio Communications vs. Rodriguez, G.R. No. 83768. February 28, 1990
Eastern Shipping vs. CA, G.R. No. 97412. July 12, 1994
BSP Circular No. 799, Series of 2013
Reyes vs. Sisters of Mercy Hospital, GR 130547 Oct. 3, 2000
Security Bank and Trust Company vs. RTC Makati, G.R. No. 113926. October 23,
1996

Art. 1173
Cangco vs. Manila Railroad Co., 38 Phil. 763
Republic vs. Luzon Stevedoring, G.R. No. L-21749. September 29, 1967
Africa vs. Caltex, G.R. No. L-12986. March 31, 1966
Rakes vs. Atlantic, Gulf and Pacific Co, 7 Phil 359
Fabre vs. CA, G.R. No. 111127. July 26, 1996
Metro Manila Transit vs. CA, G.R. No. 104408. June 21, 1993

Art. 1174
Necesito vs. Paras, G.R. No. L-10605. June 30, 1958
Southeastern College vs. CA, G.R. No. 126389. July 10, 1998
MIAA vs. ALA Industries, G.R. No. 147349. February 13, 2004
Austria vs. CA, G.R. No. L-29640. June 10, 1971
Bacolod-Murcia vs. CA, G.R. No. 81100-01. February 7, 1990
Philcomsat vs. Globe Tel., G.R. No. 147324. May 25, 2004
Saludaga vs. FEU, 553 SCRA 741
Sicam vs. Jorge, 529 SCRA 443
Taguilig vs. CA, G.R. No. 117190. January 2, 1997
Co vs. CA, G.R. No. 124922. June 22, 1998
Tugade vs. CA, G.R. No. L-47772. August 31, 1978
Vasquez vs. CA, 138 SCRA 553
Juntilla vs. Fontanar, G.R. No. L-45637. May 31, 1985

Art. 1175 to 1176

MTSC vs Medina, GR No. L-16477, May 31, 1961

Chapter 3. Different Kinds of Obligations (Arts 1179 – 1230)

 a. Pure and Conditional Obligations
b. Suspensive and Resolutory
c. Kinds of conditions

Parks vs. Province of Tarlac, 49 Phil. 142

Osmena vs. Rama, 14 Phil. 99
Smith Bell & Co. vs. Sotelo Matti, 44 Phil 875
Hermosa vs. Longara, 93 Phil 971

i. Potestative, casual and mixed

ii. Possible and impossible
iii. Positive and negative

d. Constructive fulfillment of suspensive conditions

e. Effect of suspensive condition before/after fulfillment

i. Loss, deterioration or improvement

f. Effect of Resolutory condition before/after fulfillment

g. Reciprocal obligations

i. Tacit resolutory condition

ii. When rescission stipulated
iii. Effect of rescission

h. Breach of both parties

Art. 1182
Lao Lim vs. CA vs. CA, GR No. 87047, October 31, 1990
Security Bank vs. CA, G.R. No. 117009. October 11, 1995
Rustan Pulp vs IAC, GR No. 79789, October 19, 1992

Patente vs. Omega, 93 Phil. 218, May 29, 1953

Romero vs. CA, GR No. 107207, Nov. 23, 1995
Art. 1187
Republic vs. Holy Trinity Realty Corp., G.R. No. 172410, April 14, 2008

Cases: Catungal vs. Rodriguez, GR No. 146839, March 23, 2011

Art. 1191

Cases:
Cordero vs. FS Mgt., 506 SCRA 451
Maceda Law, RA 6552
Rios vs. Jacinto, 49 Phil. 7
Laperal vs. Solid Homes, 460 SCRA 375
Song Fo & Co. vs. Hawaiian-Phil, 47 SCRA 821
Pangilinan vs. CA, GR No. 279 SCRA 590
Iringan vs. CA, GR No. 129107, Sept. 26, 2001
Bacolod-Murcia vs. CA, G.R. No. 81100-01. February 7, 1990
Jison vs. CA, GR L-45349, Aug. 15, 1988
Songcuan vs. IAC, G.R. No. 75096. October 23, 1990
Ayson-Simon vs. Adamos, G.R. No. L-39378. August 28, 1984
Roque vs. Lapuz, G.R. No. L-32811. March 31, 1980.
Angeles vs. Calasanz, G.R. No. L-42283. March 18, 1985
Barredo vs. Leano, G.R. No. 156627. June 4, 2004
Palay vs. Clave, G.R. No. L-56076. September 21, 1983
Romero vs. CA, G.R. No. 107207. November 23, 1995
Ang vs. CA, 170 SCRA 286
Agustina Tan vs. CA, GR No. 80479, July 28, 1989

Congregation of Religious of Virgin Mary vs. Orola, GR No. 169790, Apr. 30, 2008
Korean Technologies vs. Lerma, 542 SCRA 1

Art. 1192 to 1198

Cases: Victoria’s Planters vs. Victoria’s Milling Company

Borromeo vs. CA, G.R. No. L-22962. September 28, 1972
Gaite vs. Fonacier, 2 SCRA 830
Central Philippine University vs. CA, G.R. No. 112127. July 17, 1995

i. Obligations with a Period

i. Effect of advanced payment or delivery

j. Effect of fortuitous event
k. Benefit of term or period
l. When court may fix term
m. When debtor loses benefit of term or period

j. Alternative Obligations and Facultative Obligations

k. Joint and Solidary Obligations
i. Joint indivisible obligations
ii. Joint divisible obligations
iii. Indivisibility and solidarity
iv. Kinds of solidarity
v. Effect of beneficial and prejudicial acts
vi. Effect of assignment of rights
vii. Effect of novation, compensation, confusion, remission, payment

l. Divisible and Indivisible Obligations

m. Obligations with a Penal Clause

i. kinds of penalty
ii. Effect of penalty
iii. when penalty may be reduced

Makati Devt Corp. vs. Empire Insurance Co., 20 SCRA 557

Medel vs. CA, 299 SCRA 481
Arrofo vs. Quino, 449 SCRA 284
Ruiz vs. CA, 401 SCRA 410
Chapter 4. Extinguishment of Obligations (Arts. 1231-1304)

a. Payment or Performance
i. who may pay
ii. to whom payment should be made
iii. what must be paid
iv. Dation in payment
v. Monetary Obligations
vii. Extraordinary inflation or deflation
vii. Application of Payments
viii. Payment by Cession

ix. Dation in Payment

x. Tender of Payment and Consignation

 b. Loss of the Thing Due

i. Loss in generic obligation

ii. Partial loss
iii. Relative impossibility

Arts. 1252 to 1269

Cases:
Roman Catholic Bishop of Malolos vs. IAC, G.R. No. 72110. November 16, 1990
Rural Bank of Caloocan vs. CA, G.R. No. L-32116. April 21, 1981
Naga Tel. Co vs. CA

c. Condonation or Remission of the Debt

i. Express remission
ii. Implied remission
Villarica Pawnshop vs Social Security Commission, GR No. 228087, January 24, 2018

d. Confusion or Merger of Rights

Arts. 1270 to 1277

Chittick vs. CA, G.R. No. L-25350 October 4, 1988
Trans Pacific vs. CA, G.R. No. 109172 August 19, 1994

e. Compensation

i. Kinds
ii. Requisites of legal compensation
iii. Effect of assignment of rights
iv. Facultative compensation

Montemayor vs. Millora, GR No. 168251, July 27, 2011

f. Novation
i. Kinds
ii. Express and implied
iii. Expromision and delegacion
iv. Legal and conventional subrogation
Union Bank vs. Spouses Tiu, GR No. 173090-91, September 7, 2011
Philippine Realty and Holdings Corporation vs. Ley Construction and Development
Corporation, GR No. 165548 and 167879, June 13, 2011
Republic Flour Mills Corporation vs. Forbes Factors, Inc., GR No. 152313, October
19, 2011

Title II. Contracts

Chapter 1. General Provisions (Arts. 1305-1317)

a. Concept
b. Characteristics
c. Limitation on right to contract
d. Nominate and innominate contracts
e. Mutuality
f. Relativity
g. Interference with contractual relations
h. Perfection of contracts
i. Contracts in name of another

Ysmael & Co. vs. Barretto, 51 Phil. 90

Avon Cosmetics vs. Lerma, 511 SCRA 376
Cui vs. Arellano University, 2 SCRA 205
Rustan Pulp vs IAC, GR No. 79789, October 19, 1992
Sps. Florendo vs. CA, GR No. 101771, Dec. 17, 1996
Uy vs. CA, GR No. 120465, Sept. 19, 1999
Uy vs. Leonard, 30 Phil. 471
Coquia vs. Fieldman’s Insurance Co., GR No. L-23276, Nov. 29, 1968
Kaufmann vs. PNB, 42 Phil. 182

6. Essential Requisites of Contracts (Arts. 1318-1355)

General Provisions
a. Consent

i. Complex offers
ii. Acceptance by letter or telegram
iii. Effect of death, insanity, insolvency or civil interdiction
iv. Legal capacity of parties
v. Vices of consent

Laudico vs. Rodriguez, GR No. 16530, March 31, 1922

Sanchez vs. Rigos, 45 SCRA 368
Guzman, Bocaling & Co. vs. Bonnevie, GR No. 86150, March 2, 1992
Asiain vs. Jalandoni, 45 Phil. 296
Martinez vs. Hongkong Shanghai Bank, 15 Phil. 252

b. Object of Contracts

Intestate Estate of Concepcion Arroyo vs. Gerona, 58 Phil. 266

Blas vs. Santos, 1 SCRA 899

c. Cause of Contracts

Liguez vs. CA, 102 Phil. 577

Rodriguez vs. Rodriguez, 20 SCRA 908
Phil. Banking Corp. vs. Lui She, 21 SCRA 52
Bercero vs. Capitol Dev. Corp., GR No. 154765, March 29, 2007
Carantes vs. CA, 76 SCRA 514
Ladanga vs. CA, 131 SCRA 361

7. Form of Contracts (Arts. 1356-1358)

Recio vs. Heirs of Altamirano, GR No. 182349, July 24, 2013
BF Corp. vs. CA, 288 SCRA 267
Dauden-Hernaez vs. De los Angeles, 27 SCRA 1276
Quiros vs. Arjona, GR No. 158901, March 9, 2004

8. Reformation of Instruments (Arts. 1359-1369)

9. Interpretation of Contracts - excluded
10. Rescissible Contracts (Arts. 1380-1389)

a. Kinds of rescissible contracts

b. Subsidiary character of action
c. Parties who may institute
d. Extent of rescission
e. Proof of fraud

Laperal vs. Solid Homes, 460 SCRA 375

Cabaliw vs. Sadorra, 64 SCRA 310
11. Voidable Contracts (Arts. 1390-1402)
a. Kinds of voidable contracts
b. Ratification
c. Prescriptive period
d. Effect of annulment
e. Obligation of mutual restitution

Carantes vs. CA, 76 SCRA 514

Teves vs. People’s Homesite & Housing Corp., 23 SCRA 1141

12. Unenforceable Contracts (Arts. 1403-1408)

a. Kinds of unenforceable contracts
i. Statute of Frauds
Litonjua vs. Fernandez, GR No. 148116, April 16, 2004
Atienza vs. Castillo, 71 Phil. 589
Hernandez vs. CA, 160 SCRA 821
Vda. De Reyes vs. CA, 199 SCRA 646
Cruz vs. J.M. Tuason, GR No. L-23749, April 29, 1977
Inigo vs. Estate of Maloto, 21 SCRA 246
Mactan Cebu International Airport vs. CA, 263 SCRA 736

13. Void or Inexistent Contracts (Arts. 1409-1422)

a. Characteristics of void contracts
b. Pari delicto rule and exceptions

Aguinaldo vs. Esteban, 135 SCRA 645

Aznar Brothers Realty vs. Heirs of Augusto, GR No. 140417, May 28, 2004
Liguez vs. CA, 102 Phil. 577
Rodriguez vs. Rodriguez, 20 SCRA
Philbanking vs. Lui She, 21 SCRA 52
Castillo vs. Galvan, 85 SCRA 526
Briones vs. Cammayo, 41 SCRA 404
Frenzel vs. Catito, GR No. 143958, July 11, 2003
Hulst vs. PR Builders, GR No. 156364, Sept. 3, 2007
Ramirez vs. Ramirez, GR No. 165088, March 17, 2006

14. Natural Obligations (Arts. 1423-1430)

15. Estoppel (Arts. 1431-1439)
a. Concept
b. Kinds
c. Requisites of laches
Heirs of Lacamen vs. Heirs of Laruan, 65 SCRA 605
Fabian vs. Fabian, 22 SCRA 231
Buston vs. Gabar, 55 SCRA 499