University of the Philippines

College of Law

OUTLINE IN OBLIGATIONS AND CONTRACTS

Labitag/Disini/Casis/Tan

Title I. OBLIGATIONS

Chapter 1. General Provisions

I. Concept
A. Definition- Art. 1156
- criticism of definition

B. Elements
1. Active Subject
2. Passive Subject
3. Prestation or Object
4. Efficient cause or juridical tie or vinculum juris

C. Distinction Between Natural and Civil Obligations

1. As to enforceability
2. As to basis

II. Sources of Obligations- Art. 1157

A. Law- Art. 1158

Case
OSG v. Ayala Land, G.R. No.177056, September 18, 2009

B. Contracts- Art. 1159, 1305

Case
PADCOM v. Ortigas, G.R No. 146807, May 9, 2002

C. Quasi-Contracts- Art.1160, 2142

1. Kinds
a. Negotiorum gestio- Art.2144
b. Solutio indebiti- Art. 2154
Case
Metrobank v. Absolute Management Corp, G.R. No. 170498,
January 09, 2013

c. Other quasi-contracts- Arts. 2164 to 2175

D. Acts or omissions punished by law- Art. 1161

E. Quasi-Delicts- Art.1162, 2176

 1. Distinction between quasi-delicts and crimes
2. Liability for fault of others- Art. 2180; Art. 218, 219 of FC
3. Civil liability arising from crime- Art. 1161; Rules on Criminal Procedure
(2000), Rule 111
Cases
Barredo v. Garcia, 73 Phil. 607 (1942)
Mendoza v. Arrieta, 91 SCRA 113 (1975)
PSBA v. CA, 205 SCRA 729 (1992)
Amadora v. CA 160 SCRA 315 (1988)

BI. Classification of Obligations

A. Primary Classification Under the Civil Code

1. Pure and Conditional (Arts. 1179-1192)
2. With a period or term (Arts. 1193-1198)
3. Alternative and Facultative (Arts. 1199-1206)
4. Joint and Solidary (Arts. 1207-1222)
5. Divisible and Indivisible (Arts. 1223-1225)
6. With a penal clause (Arts. 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) and Negative (not to give, not to do)
5. Unilateral and Bilateral
6. Individual and Collective
7. Accessory and Principal
8. As to object or prestation:
Simple
Multiple
Conjunctive
Distributive / Disjunctive
Alternative
Facultative
9. Possible and Impossible
 Chapter 2. 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 thing itself- Art. 1244
ii. To preserve thing- Art. 1163
iii. To deliver the accessions and accessories-
1 Art. 1166 - distinction between accession and
accessory
iv. To deliver the fruits- Art.1164 par. 1
2. a generic thing- Art. 1246

B. Obligation to do- Art.1244

C. Obligation not to do- Art. 1244

AI. Breach of Obligation

A. Concept
1. Distinction between substantial and casual/slight breach
Cases:
Song Fo v. Hawaiian Phils. 47 Phil 821(1928)
Velarde, et al v. CA 361 SCRA 56 (2001)

B. Modes of Breach- Art.1170

1. Fraud (dolo)
a. Concept
i. dolo (1171) vs. dolo incidente
ii. dolo (1171) vs. dolo causante
Cases:
Woodhouse v. Halili, 93 Phil. 526 (1953)
Geraldez, vs. CA & Kenstar Travel Corporation,
G.R. No. 108253, February 23, 1994.

b. Nonwaiver- Art. 1171

c. Effects
2. Negligence- Art. 1172
a. Concept- Art. 1173
i. culpa v. dolo
ii.culpa aquiliana v. culpa contractual
Cases:
Gutierrez v. Gutierrez, 56 Phil. 177 (1932)
Vasquez v. Borja, 74 Phil. 560 (1944)
b. Standard of care required- Art. 1173 par. 2
Cases:
De Guia v. Manila Electric Co, 40 Phil. 706( 1920)
US v. Barias, 23 Phil. 434 (1912)
Sarmiento v. Sps. Cabrido, 401 SCRA 122 (2003)
 Crisostomo v. CA, 409 SCRA 528 (2003)

c. Effects
3. Delay (Mora)- Art. 1169
a. Concept
b. Kinds
i. mora solvendi
- requisites
- General Rule: Creditor should make demand
before debtor incurs delay- Art. 1169
Cases:
Cetus Development Corp. v. CA , SCRA 72 (1989)
Aerospace Chemical Industries vs. CA, GR No.
108129, September 23,1999, 315 SCRA
Santos Ventura Hocorma Foundation vs. Santos, GR
153064, November 4, 2004
 Vazquez v. Ayala Corporation, G.R. No. 149734,
November 19, 2004.
- Exceptions:- Art. 1169
Cases
Abella v. Francisco, 55 Phil. 447 (1931)

iii. mora accipiendi

- requisites
- see also Art. 1268
Cases
Vda. De Villaruel v. Manila Motor Co., Inc.,
104 Phil. 926 (1958)
Tengco v. CA, G.R. No. 49852, October 18,
1989

iv. compensatio morae

- requisites
Case
Central Bank v. CA, 139 SCRA 46 (1985)

c. Effects

4. Contravention of the tenor

Cases
Chavez v. Gonzales, 32 SCRA 547 (1970)
Telefast v. Castro, 158 SCRA 445 (1988)
Arrieta v. NARIC, 10 SCRA 79 (1964)
Magat vs. Medialdea G.R. No. L-37120, April 20, 1983

BI. Remedies Of Creditor in Case of Breach

A. Action for performance

1. Action for specific performance
in obligation to give a specific thing- Art. 1165 par.1; ROC Rule 39 Sec.
10
2. Action for substituted performance
in obligation to give a generic thing- Art.1165 par. 2
 3. Action for substituted performance or undoing of poor work in obligation to
do - Art. 1167
Cases
Chavez v. Gonzales, supra
Tanguilig v. CA, 266 SCRA 78 (1997)

a. Exception
4. Action for undoing
in obligation not to do- Art. 1168
a. Exception

B. Action for damages- Art.1170

C. Action for rescission- Art. 1191, 1192

IV. Subsidiary Remedies of Creditor

A. Accion Subrogatoria- Art.1177

1. Concept
2. Requisites
3. Exceptions- inherent rights of debtor; Art. 772

B. Accion Pauliana- Art. 1177, 1381 par. 3

1. Concept
a. Distinction between accion pauliana and accion subrogatoria
2. Requisites
Case
Khe Hong Cheng v. CA, 355 SCRA 701 (2001)
Siguan v. Lim, G.R. No. 134685, November 19, 1999

C. Other Specific Remedies (Accion directa)- Art. 1652, 1729, 1608, 1893

V. Extinguishment of Liability in Case of Breach Due to Fortuitous Event- Art. 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 v. CA, 144 SCRA 597 (1986) Republic v.
Luzon Stevedoring Co., 21 SCRA 279 (1967)
Dioquino v. Laureano, 33 SCRA 65 (1970)
Austria v. CA, 39 SCRA 527 (1971)
NPC v. CA, 161 SCRA 334 (1988)
Yobido v. CA, 281 SCRA 1 (1997)
Bacolod -Murcia Milling vs. CA, GR. No. 81100-01, Feb. 7, 1990
Philcomsat vs. Globe Telecom, GR No. 147324, May 25, 2004

C. Extinguishment of Liability; Exceptions- Art. 1174, 1165 par. 3, 552, 1942, 1979,
2001, 2147

VI. Usurious Transactions- Art. 1175, 1413, 1961

A. Act No. 2655; PD 858; PD 1685

B. Central Bank Circular No. 416
C. Central Bank Circular No. 905 (1982) lifting the interest rate ceiling- (vs. 2209)
D. Central Bank Circular No. 799, Series of 2013 (July 1 2013) – legal interest at 6%
Cases
Eastern Shipping Lines v. CA, 234 SCRA 781 (1994)
Crismina Garments v. CA, 304 SCRA 356 (1999) Keng
Hua Products v. CA, 286 SCRA 257 (1998) Security Bank
v. RTC Makati, 263 SCRA 453(1996)
Almeda v. CA, 256 SCRA 292 (1996)
First Metro Investment vs. Este. Del Sol (Nov. 15, 2001, 369 SCRA)
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013

VII. Fulfillment of Obligations

A. see Chapter 4: Payment

B. Presumptions in payment of interests and installments- Art. 1176

VIII. Transmissibility of Rights- Art. 1178

Case
Stronghold Insurance Co., v. Republic-Asahi G.R. No. 147561, June 22, 2006

Chapter 3. Different Kinds of Obligations

I. Pure and Conditional Obligations

A. Pure Obligations- Art. 1179 par. 1

Case
HSBC v. Spouses Broqueza, G.R. No. 178610, November 17, 2010

B. Conditional Obligations- Art. 1181

1. Condition
a. Concept
b. Condition v. Period/Term
Cases
Gaite v. Fonacier, 2 SCRA 830 (1961)
Gonzales v. Heirs of Thomas, 314 SCRA 585 (1999)
2. Kinds of Conditions
a. As to effect on obligation- Art. 1181

i. Suspensive (condition precedent)

- retroactive effect when condition is fulfilled Art. 1187
Cases
Coronel v. CA, G.R. No. 103577, October 7, 1996

- rights of creditor and debtor before fulfillment of condition-

Art. 1188
ii. Resolutory (condition subsequent)
Cases
Parks v. Province of Tarlac, 49 Phil. 142 (1927)
Central Philippine University v. CA, 246 SCRA 511
(1995)
Quijada v. CA, G.R. No. 126444, December 4, 1998.

b. As to cause or origin- Art. 1182

i. Potestative
- effect if fulfillment of condition depends solely on the will
of the debtor (Cf. term)
- debtor’s promise to pay when he can is not a conditional
obligation- Art. 1180
 Case
Lim vs. CA, G.R. No. 87047, October 31, 1990.

ii.Casual
Case
Naga Telephone Co., Inc. v. CA, G.R. No. 107112,
February 24, 1994.

iii. Mixed
Cases
Osmeña v. Rama, 14 Phil. 99 (1909)
Hermosa v. Longora, 93 Phil. 971 (1953)
Taylor v. Uy Tieng Piao, 43 Phil. 873 (1922)
Smith Bell v. Sotelo Matti, 44 Phil. 875 (1922)
Rustan Pulp and Paper Mills v. IAC, 214 SCRA 665
(1992)
Romero vs. CA, G.R. No. 107207, November 23, 1995

c. As to possibility- Art. 1183

i. Possible
ii.Impossible
- effect
Case
Roman Catholic Archbishop of Manila v. CA, 198
SCRA 300 (1991)
Heirs of San Miguel v. CA, G.R. No. 136054,
September 05, 2001

d. As to mode
i. Positive- Art. 1184
ii. Negative- Art. 1185

3. Rules in case of loss, deterioration or improvement pending the happening of the

condition- Art. 1189, 1190
a. Meaning of “loss” (Art. 1189[2]), “deterioration” and “improvement”
b. Effect of loss or deterioration
i. without debtor’s fault
 ii. with debtor’s fault
c. Effect of improvement
i. by nature or time
ii. at the debtor’s expense

4. Effect of prevention of the fulfillment of the condition by the

obligor- Art. 1186
Cases
Taylor v. Uy Tieng Piao, supra
Herrera v. Leviste, G.R. No. 55744, February 28, 1985.
Int’l Hotel Corp v. Joaquin, Jr., G.R. No. 158361, April 10, 2013

AI. Reciprocal Obligations- Art. 1191, 1192

1. Concept

2. Alternative remedies of injured party in case of breach

a. Action for Fulfillment

i. when fulfillment no longer possible; effect
b. Action for Rescission
i. requisites
ii. how made
iii. effects
Cases
Song Fo v. Hawaiian-Philippines, 47 Phil. 821 (1925)
Boysaw v. Interphil Promotions, 148 SCRA 365 (1987)
U.P. v. De Los Angeles, 35 SCRA 365 (1970)
De Erquiaga v. CA, 178 SCRA 1 (1989)
Angeles v. Calasanz, 135 SCRA 323 (1985)
Ong v. CA, 310 SCRA 1 (1999)
Iringan v. CA, 366 SCRA 41 (2001)
Visayan Saw Mill vs. CA and RJ Trading, GR. 83851, March
3, 1993
Deiparine vs. CA and Trinidad, GR. 96643, April 23, 1993
See also Art. 1786, 1788; Arts. 1484-86; RA 6552
AI. Obligation With a Period- Art.1193, 1180

A. Period or Term
1. Concept
Case
Solante v. COA, G.R. No. 207348, August 19, 2014

2. Period/Term vs. Condition

B. Kinds of Period/Term
1. As to effect
a. Suspensive (Ex die)- Art. 1193 par. 1
b. Resolutory (In diem)- Art. 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-Art. 1194,

1189

D. Effect of payment in advance- Art. 1195

Note: Art.1197 par. 3

E. Benefit of Period

1. For whose benefit

a. creditor
b. debtor
c. both
2. Effects
3. Presumption- Art. 1196
Cases
Lachica v. Araneta, 47 OG No. 11, 5699, August 4, 1949
Ponce de Leon v. Syjuco, 90 Phil. 311 (1951)
Buce v. CA, 332 SCRA 151 (2000)
 4. When debtor loses right to make use of period- Art.1198

F. When Court May Fix Period- Art. 1197

1. Period is implied
2. Period depends solely on will of debtor (Cf. condition)
Cases
Araneta v. Philippine Sugar Estate Development Co., 20 SCRA 330
(1967)
Central Philippine University v. CA, supra

BI. Alternative Obligations

A. Concept- Art.1199
Case
Arco Pulp and Paper Co, v. Lim, G.R. No. 206806, June 25, 2014

B. Right of choice- Art. 1200

C. Effect of notice of choice
D. When notice produces effect- Art. 1201
E. Effect of loss or impossibility of one or all prestations- Art. 1202 to 1205
F. Facultative Obligation- Art. 1206
1. Concept
2. Distinguished from Alternative Obligation
3. Effect of Substitution

IV. Joint and Solidary Obligations

A. Joint Obligations
1. Concept
a. Requisites
b. Words used to indicate joint obligations
2. Presumption- Art. 1207, 1208
3. Effects- Art. 1207, 1208
c. Extent of liability of debtor
d. Extent of right of creditor
e. In case of novation, compensation, confusion (Art. 1277), remission
2.
 3.
B. Solidary Obligations
4.
1. Concept
a. Requisites
b. Words used to indicate solidary obligations
2. Kinds
a. As to source- Art. 1208
i. Legal- Art. 1915, 1945, 2194; Art. 119 of RPC
ii. Conventional
iii. Real
b. As to parties bound
i. Active
ii. Passive
iii. Mixed
c. As to uniformity
i. Uniform
ii. Varied/Non-uniform- Art. 1211
- effects
5. Cases
6. Inchausti v. Yulo, 34 Phil. 978 (1916)
7. Lafarge Cement Phil vs. Continental Cement, GR
155173, November 23, 2004
8. 3. Effects
9.
10.
11.
 a. Solidary creditor in relation to:
i. common debtor
- right to demand- Art. 1215, 1214, 1216, 1217 par. 1
- in case of novation, compensation, confusion, remission by a creditor-
Art. 1215 par. 1
ii. solidary co-creditor/s
- in case of novation, compensation, confusion, remission- Art. 1215 par. 2
- prejudicial acts prohibited- Art. 1212
- assignment of rights not allowed- Art. 1213
b. Solidary debtor in relation to:
i. common creditor
- obligation to perform- Art. 1207
- in case of novation, compensation, confusion, remission by a creditor-
Art. 1215 par. 1
ii. solidary co-debtor
- in case of payment by a co-debtor- Art. 1217, 1218, 1220, 1219
- in case of fortuitous event- Art. 1221
12. Cases
13. Jaucian v. Querol, 38 Phil. 718 (1918)
14. RFC v. CA, O.G. No. 6, p. 2467
15. Quiombing v. CA, 189 SCRA 325 (1990)
16. Inciong v. CA, 257 SCRA 578 (1996)
17. Vigilla v. Phil. College of Criminology, Inc., G.R. 200094,
June 10, 2013
18. Cruz v. Sps. Basister, G.R. No. 196576, January 30, 2012
19. Diamond Builders v. Country Bankers, G.R. No. 171820,
December 13, 2007
20.
4. Defenses available to a solidary debtor against the creditor- Art. 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
21. Cases
22. Inchausti v. Yulo, supra
23. Alipio v. CA, 341 SCRA 441 (2000)
24.
 25.
C. Joint Indivisible Obligations
26.
1. Concept
i. Distinguished from Joint Obligations
ai. Distinguished from Solidary Obligations
2. Indivisibility distinguished from solidarity- Art. 1210
3. Effects- Art. 1209
a. Liability for damages in case of breach- Art. 1224
27.
28.
V. Divisible and Indivisible Obligations
29.
A. Divisible Obligations
1. Concept
2. Effects- Art. 1223, 1233
30.
B. Indivisible Obligations
1. Concept
a. Distinguished from solidary obligations
31. Case
32. Capalla v. COMELEC G.R. 201112, October 23, 2012
2. Kinds
a. Natural- Art. 1225 par. 1
b. Legal- Art. 1225 par. 3
c. Conventional- Art. 1225 par. 3
3. Presumptions
a. Of indivisibility- Art. 1225 par. 1
b. Of divisibility- Art. 1225 par. 2
4. Divisibility and indivisibility in obligations not to do- Art. 1225 par. 3
5. Effects- Art. 1223, 1233, 1224
- see Joint Indivisible Obligations
6. Cessation of indivisibility
33.
34.
35. VI. Obligations with a Penal Clause
36.
A. Concept
37.
1. Principal vs. Accessory Obligation
2. Distinguished from Conditional Obligations
3. Distinguished from Alternative Obligations
4. Distinguished from Facultative Obligations
5. Distinguished from Guaranty
38.
 39.
B. Kinds of Penal Clause
40.
1. As to effect
a. Subsidiary
b. Complementary
2. As to source
a. Conventional
b. Legal
3. As to purpose
a. Punitive
b. Reparatory
41.
C. Demandability of Penalty- Art. 1226 par. 2
42.
D. Effects of Penal Clause
43.
1. Substitute for indemnity for damages and payment of interest- Art. 1226
44. a. Exception- Art. 1226
45. Cases
46. Makati Dev’t Corp. v. Empire Insurance Co., 20 SCRA 557 (1967)
47. Antonio Tan v. CA, 367 SCRA 571 (2001)
48. Country Bankers Insurance vs. CA, GR. 85161, Sept 9, 1991
49.
2. Not exempt debtor from performance- Art. 1227
a. Exception- Art. 1227
3. Creditor cannot demand both performance and penalty at the same time-Art. 1227
a. Exceptions- Art. 1227
4. Creditor cannot collect other damages in addition to penalty- Art. 1226
a. Exceptions- Art. 1226
50.
E. When penalty shall be equitably reduced- Art. 1229
51.
F. Nullity of Principal Obligation or Penal Clause
1. Effects- Art. 1230
2. Rationale
52.
 53. Chapter 4. Extinguishment of Obligations
54.
55. I. Modes of Extinguishment- Art. 1231
56.
A. Payment or Performance
B. Loss or Impossibility
C. Condonation or Remission
D. Confusion or Merger
E. Compensation
F. Novation
G. Other Causes
57.
58. II. Payment or Performance
59.
A. Concept- Art. 1232
60.
B. Requisites
61.
1. Who can pay
a. in general
b. third person who is an interested party
i. meaning of “interested party”
ii. effects- Art. 1302[3]
c. third person who is not an interested party but with consent of debtor
i. effects- Art. 1302[2], 1236 par. 1
62. d. third person who is not an interested party and without
knowledge or against the will of the debtor
i. effects- Art. 1236 par. 2, 1237, 1236 par.1
63. e. third person who does not intend to be reimbursed- Art. 1238
f. in obligation to give- Art. 1239, 1427
64. i. effect of incapacity
g. in case of active solidarity- Art. 1214
65.
 2. To whom payment may be made
a. in general- Art. 1240
b. incapacitated person- Art. 1241 par. 1
66. i. requisites
c. third person- Art. 1241 par. 2
67. i. requisites
68. ii. when proof of benefit not required- Art. 1241 par. 3,
1242
d. in case of active solidarity- Art. 1214
69.
3. What is to be paid (“Identity”)
a. in general
b. in obligations to:
70. i. give a specific thing- Art. 1244
71. ii. give a generic thing- Art. 1246
72. iii.. pay money- Art. 1249, 1250; R.A. 529, R.A. 4100
73. Cases
74. Arrieta v. NARIC, supra
75. Kalalo v. Luz, 34 SCRA 377 (1970)
76. St. Paul Fire and Marine Insurance v. Macondray, 70
SCRA 122 (1976)
77. Papa v. Valencia, 284 SCRA 643 (1998)
78. PAL vs. CA 181 SCRA 557 (1990)
79.
c. payment of interest- Art. 1956
80.
4. How is payment to be made (“Integrity”)
a. in general- Art. 1233
81. General Rule: Partial payment is not allowed- Art. 1248
82. Exceptions:- Art. 1248
b. substantial performance in good faith- Art. 1234
83.
 84.
c. estoppel- Art. 1235
d. presumptions in payment of interests and installments- Art. 1176
5. When payment is to be made
a. in general- Art. 1169
b. see Chapter 2: Delay
6. Where payment is to made- Art. 1251 par. 1
a. if no place is expressly designated- Art. 1251 par. 2 to par. 4
7. Expenses of making payment- Art. 1247
85.
C. Application of Payments
86.
1. Concept- Art. 1252
87. Cases
88. Reparations Commission v. Universal Deep Sea Fishing,
83 SCRA 764 (1978)
89. Paculdo v. Regalado, 345 SCRA 134 (2000)
90.
2. Requisites
3. Rules in application of payments- Art. 1252, 1253
a. if rules inapplicable and application cannot be inferred- Art. 1254
i. meaning of “most onerous to debtor”
91.
D. Payment by Cession
92.
1. Concept- Art. 1255
93. Case
94. DBP v. CA, G.R. No. 118342, January 5, 1998
95.
2. Requisites
3. Effects
96.
E. Dation in Payment
97.
1. Concept- Art. 1245
a. distinguished from Payment by Cession
98. Case
99. Development Bank of the Philippines vs. Court Of Appeals,
G.R. No. 118342, January 5, 1998.
100.
 2. Requisites
3. Effects
101. Case
102. Filinvest Credit Corporation vs. Philippine Acetylene, GR L-
103. 50449, Jan 1982
104.
F. Tender of Payment and Consignation
105.
1. Tender of Payment
a. Concept
b. Requisites
2. Consignation
a. Concept
i. purpose
b. Requisites
i. when tender and refusal not required- Art. 1256 par. 2
ii. two notice requirement- Art. 1257 par. 1, 1258 par. 2
106. -effects of noncompliance
c. Effects- Art. 1260 par. 1
d. Withdrawal by debtor before acceptance by creditor or
107. approval by court; effects- Art.1260 par. 2
e. Withdrawal by debtor after proper consignation- Art. 1261
i. with creditor’s approval; effects
ii. without creditor’s approval; effects
f. Expenses of consignation- Art.1259
108. Cases
109. De Guzman v. CA, 137 SCRA 730 (1985)
110. TLG International Continental Enterprising, Inc. v.
Flores, 47 SCRA 437 (1972)
111. McLaughlin v. CA, 144 SCRA
693 (1986)
112. Soco v. Militante, 123 SCRA
160 (1983)
113. Sotto v. Mijares, 28 SCRA 17
(1969)
114. Chan vs. CA (March 3, 1994, 230 SCRA)
115. Meat Packing Corp vs. Sandiganbayan (June 22,
2001, 359 SCRA)
116. Pabugais v. Sahijwani, G.R. No. 156846,
February 23, 2004
117. Spouses Cinco v. CA, G.R. No. 103068, June 22,
2001
118.
 119.
BI. Loss or Impossibility
120.
A. Loss of Thing Due
121.
1. Concept- Art. 1189[2]
2. Kinds
a. As to extent
i. Total
ii. Partial
3. Requisites- Art. 1262
4. Presumption- Art. 1265, 1165
a. when not applicable
5. Effects
a. in obligation to give a specific thing- Art. 1262, 1268
b. in obligation to give a generic thing- Art. 1263
c. in case of partial loss- Art. 1264
d. action against third persons- Art. 1269
122. Case
123. Gaisano v. Insurance Company, G.R. No. 147839, June 8, 2008
124.
B. Impossibility of Performance
125.
1. Concept- Art. 1266, 1267
2. Kinds
a. As to extent
i. Total
ii. Partial
b. As to source
i. legal
ii. physical
3. Requisites- Art. 1266
4. Effects
a. in obligations to do- Art. 1266, 1267, 1262 par. 2 (by analogy) i.
“impossibility” distinguished from “difficulty”
126. Cases
127. Occeña v. CA, 73 SCRA 637 (1976)
128. Naga Telephone Co. v. CA, 230 SCRA 351 (1994)
129. PNCC vs. CA, GR 116896, May 5, 1997
130.
131. b. in case of partial impossibility- Art. 1264
132.
 133.
134. IV. Condonation or Remission
135.
A. Concept
136.
B. Kinds
137.
1. As to extent
a. Total
b. Partial
2. As to form- Art. 1270 par. 1
a. Express
b. Implied
138.
C. Requisites
139. a. when formalities required- Art. 1270 par. 2
140. Case
141. YAM vs. CA, G.R. No. 104726, February 11, 1999.
142.
D. Presumptions- Art. 1271, 1272, 1274
143.
E. Effects
144.
1. in general
2. in case of joint or solidary obligations
145.
F. Governing Rules- Art. 1270
146.
G. Renunciation of Principal or Accessory Obligation
147.
1. effects- Art. 1273
2. rationale
148.
V. Confusion or Merger of Rights
149.
A. Concept
150.
 B. Requisites
151.
C. Effects
152.
1. in general- Art. 1275
2. in case of joint (Art. 1277) or solidary obligations
153.
D. Confusion in Principal or Accessory Obligation- Art. 1276
154.
155. VI. Compensation
156.
A. Concept- Art. 1278
157. Case
158. Bangko Sentral v. COA, G.R. No. 168964, January 23, 2006
1. Distinguished from Confusion
159.
B. Kinds
160.
1. As to extent
a. Total
b. Partial
2. As to origin
a. Legal
b. Conventional- Art. 1279 inapplicable, 1282
c. Judicial- Art. 1283
d. Facultative
161.
C. Legal Compensation
162.
1. Requisites- Art. 1279, 1280
a. “due” distinguished from “demandable”
163. Cases
164. Gan Tion v. CA, 28 SCRA 235 (1969)
165. BPI v. Reyes, 255 SCRA 571 (1996)
166. PNB v. Sapphire Shipping, 259 SCRA 174 (1996)
167. Silahis Marketing Corp vs. IAC (Dec 7, 1989, 180 SCRA)
168. BPI vs. CA (GR 116792, March 29, 1996, 255 SCRA)
169. UCPB v. CA, G.R. No. 126890, April 02, 2009
170.
2. Effects- Art. 1290, 1289
171.
D. When Compensation is Not Allowed- Art. 1287, 1288
172.
E. Compensation of Debts Payable in Different Places- Art. 1286
173.
F. Effect of Nullity of Debts to be Compensated- Art. 1284
174.
G. Effects of Assignment of Credit
175.
1. with consent of debtor- Art. 1285 par. 1
2. with knowledge but without consent of debtor- Art. 1285 par. 2
 3. without knowledge of debtor- Art. 1285 par. 3 a.
rationale
176.
177. VII. Novation
178.
A. Concept- Art. 1291
179.
B. Kinds
180.
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
181.
C. Requisites- Art. 1292
182. Cases
183. Millar v. CA, 38 SCRA 642 (1971)
184. Dormitorio v. Fernandez, 72 SCRA 388 (1976)
185. Magdalena Estate v. Rodriguez, 18 SCRA 967 (1966)
186. Reyes v. Secretary of Justice, 264 SCRA 35 (1996) \
187. Conchingyan vs. RB Surety and Insurance (June 30, 1987)
188. Broadway Centrum Condominium Corp vs.
Tropical Hut (July 5, 1993)
189. California Bus Line vs. State Investment (GR
147950, December 11, 2003
190. Ong v. Bognabal,, G.R. No. 149140, September 12,
2006
191. Sps. Reyes v. BPI Family, G.R. No. 149840, March
31, 2006
192.
D. Effects
193.
1. in general- Art. 1296
2. when accessory obligation may subsist- Art. 1296
194.
E. Effect of the Status of the Original or New Obligation
195.
1. nullity or voidability of original obligation- Art. 1298
2. nullity or voidability of new obligation- Art. 1297
3. suspensive or resolutory condition of original obligation- Art. 1299
 196.
F. Objective Novation
1. meaning of “principal conditions”
197.
G. Subjective Novation
198.
1. By change of debtor
a. Expromision
i. requisites- Art. 1293
ii. effects- Art. 1294
b. Delegacion
i. requisites- (vs. Art. 1293)
ii. effects- Art. 1295
199. Cases
200. Garcia v. Llamas, 417 SCRA 292 (2003)
201. Quinto vs. People, G.R. No. 126712, April 14, 1999.
202.
2. By change of creditor: Subrogation of a third person in the rights of the creditor- Art.
1300
203. a. Conventional subrogation
i. requisites- Art. 1301
ii. distinguished from Assignment of Credit
iii. effects- Art. 1303, 1304
204. Case
205. Licaros v. Gatmaitan, G.R. No. 142838, August 9, 2001.
206.
207. b. Legal subrogation
i. requisites
ii. when presumed- Art. 1302
iii. effects- Art. 1303, 1304
208. Cases
209. Astro Electronics Corp. vs. Philippine Export And Foreign
Loan Guarantee Corporation, G.R. No. 136729, September 23, 2003
210. Metrobank v. Rural Bank of Gerona, G.R. No. 159057, July
5, 2010
 211. Title II. CONTRACTS
212.
213. Chapter 1. General Provisions
214.
A. Definition – Art. 1305
215. Cases
216. Gateway v. Land Bank G.R. 155217, July 30, 2003
217.
B. Elements
218.
1. Essential elements (see Chapter II, infra)
a. Consent
b. Object
c. Cause
2. Natural elements
3. Accidental elements (see D., 3., infra)
219.
C. Characteristics
220.
1. Obligatory force – Art. 1308
2. Mutuality – Arts. 1308-1310 (see also Art. 1473)
221. Case
222. GSIS v. CA, 228 SCRA 183 (1993)
223. Professional Academic Plans, Inc. Francisco Colayco and
Benjamin Dino vs. Crisostomo (G.R. No. 148599, March 14,
2005.)
224.
3. Relativity
a) Contracts take effect only between the parties, their assigns and heirs - Art.
1311
225. Cases
226. Manila Railroad Co. v. La Compañia Trasatlantica,
83 Phil. 875 (1918)
227. DKC Holdings Corp. v. CA, 329 SCRA 666 (2000)
228.
b) No one may contract in the name of another – Art. 1317
229. Case
230. Gutierrez Hmnos. v. Orense, 28 Phil. 571 (1914)
231.
D. Parties
232.
1. Auto-contracts
2. Freedom to contract – Art. 1306
233. Cases
234. Gabriel v. Monte de Piedad, 71 Phil. 497 (1941)
235. Pakistan International Airlines v. Ople, 190 SCRA 90 (1990)
236. Rivera v. Solidbank, G.R. No. 163269, April 19, 2006
a. Special disqualifications
1) Art. 87, Family Code
2) Arts. 1490 and 1491, CC
3) Art. 1782, CC
237.
 3. What they may not stipulate – Art. 1306
a. Contrary to law, e.g.:
1) pactum commissorium (Art. 2088)
2) pactum leonina (Art. 1799)
3) pactum de non alienado (Art. 2130)
b. Contrary to morals
c. Contrary to good customs
d. Contrary to public order
e. Contrary to public policy
238. Cases
239. Cui v. Arellano, 2 SCRA 205 (1961)
240. Arroyo v. Berwin, 36 Phil. 386 (1917)
241. Filipinas Compañia de Seguros v. Mandanas, 17 SCRA 391
(1966)
242. Bustamante v. Rosel, 319 SCRA 413 (1999)
243.
E. Classification
244.
1. According to subject-matter
a. Things
b. Services
2. According to name
a. Nominate
b. Innominate – Art. 1307
1) do ut des
2) do ut facias
3) facio ut facias
4) facio ut des
245. Case
246. Dizon v. Gaborro, 83 SCRA 688 (1978)
247. Corpuz vs. CA (93 SCRA 424)
3. According to perfection
a. By mere consent (consensual) – Art. 1315
b. By delivery of the object (real) – Art. 1316
4. According to its relation to other contracts
a. Preparatory
b. Principal
c. Accessory
5. According to form
a. Common or informal
b. Special or formal
6. According to purpose
248.
 a. Transfer of ownership, e.g., sale
b.Conveyance of use, e.g., commodatum
c. Rendition of services, e.g., agency
7. According to the nature of the vinculum produced
a. Unilateral
b.Bilateral
c. Reciprocal
8. According to cause
a. Onerous
b.Gratuitous or lucrative
9. According to risk
a. Commutative
b.Aleatory
249.
F. Stages
250.
1. Preparation
2. Perfection
3. Consummation or death
251.
G. As distinguished from a perfected promise and an imperfect promise (policitacion)
252.
H. With respect to third persons
253.
1. Stipulations in favor of third persons (stipulations pour autrui) – Art. 1311, 2nd par.
254. Cases
255. Florentino v. Encarnacion, 79 SCRA 192 (1977)
256. Coquia v. Fieldmen’s Insurance Co., 26 SCRA 178
(1968) Constantino v. Espiritu, 39 SCRA 206 (1971)
257. Integrated Packaging Corp v. CA, G.R. No. 115117,
June 8, 2000
258.
2. Possession of the object of contract by third persons – Art. 1312
3. Creditors of the contracting parties – Art. 1313
4. Interference by third persons – Art. 1314
259. Cases
260. Daywalt v. Corp., 39 Phil. 587 (1919)
261. So Ping Bun v. CA, 314 SCRA 751 (1999)
262. Jose Lagon vs. CA and Lapuz (G.R. No. 119107. March
18, 2005)
263.
264. Chapter 2. Essential Requisites of Contracts
265.
A. Consent
266.
1. Requisites – Art. 1319
a Must be manifested by the concurrence of the offer and acceptance
267. Cases
268. Rosenstock v. Burke, 46 Phil. 217 (1924)
269. Malbarosa v. CA, 402 SCRA 168 (2003)
270. Insular Life v. Asset Builders Corp.,
 G.R. No. 147410, February 05, 2004
271. Sps. Paredes v. CA, G.R. No. 147074,
July 15, 2005
272.
1) Offer
a) Must be certain – Art. 1319
b) What may be fixed by the offeror – Art. 1321
c) When made through an agent – Art. 1322
d) Circumstances when offer becomes ineffective – Art. 1323
e) Business advertisements of things for sale – Art. 1325
f) Advertisements for bidders – Art. 1326
273.
2) Acceptance
a) Must be absolute – Art. 1319
b) Kinds
i. Express – Art. 1320
ii. Implied – Art. 1320
iii. Qualified – Art. 1319
c) If made by letter or telegram – Art. 1319, 2nd par.
i. Four theories on when the contract is perfected:
1. Manifestation theory
2. Expedition theory
3. Reception theory
4. Cognition theory – Art. 1319, 2nd par.
d) Period of acceptance – Art. 1324
274. Case
275. Sanchez v. Rigos, 45 SCRA 368 (1972)
276. Tuazon v. Del Rosario-Suarez, G.R. No.
168325, December 13, 2010
277.
e) Contract of option – Art. 1324
278. Case
279. Adelfa Properties v. CA, G.R. No, 111238,
January 25, 1995
280.
b Necessary legal capacity of the parties
1) Who cannot give consent – Art. 1327
2) When offer and/or acceptance is made
a) during a lucid interval
b) in a state of drunkenness
c) during a hypnotic spell
281.
c The consent must be intelligent, free, spontaneous, and real – Arts. 1330-1346
1) Effect – Art. 1330
282.
283. 2) Vices of consent
284. a) Mistake or error
285. i. kinds
286. 1. Mistake of fact
287. a. as to substance of the object
288. b. as to principal conditions
 289. c. as to identity or qualifications of one of
the parties
290. d. as to quantity, as distinguished from a
simple mistake of account
291. Cases
292. Asiain v. Jalandoni, 45 Phil.
296 (1923)
293. Heirs of William Sevilla, et.al
v. Leopoldo Sevilla, 402 SCRA 501
(2003)
294. Spouses Theis vs. CA (GR
126013, Feb 12, 1997)
295.
296. 2. Error of law
297. a. General rule: Ignorantia legis neminem
excusat – Art. 3
298. b. Exception: Mutual error of law – Art.
1334
299. ii. When one of the parties is unable to read – Art. 1332
300. Cases
301. Dumasug v. Modelo, 34 Phil. 252 (1916)
302. Maxina Hemedes v. CA, 316 SCRA (1990)
303. Katipunan vs. Katipunan (G.R. No. 132415.
January 30, 2002)
304. Leonardo v. CA, G.R. No. 125485, September
13, 2004
305.
306. iii. Inexcusable mistake – Art. 1333
307. Case
308. Domingo Realty v. CA, G.R. No. 126236,
January 26, 2007
309.
310. b) Violence and intimidation – Art. 1335
311. i. Effect – Art. 1336
312. Cases
313. Martinez v. Hongkong and Shanghai Bank, 15 Phil.
252 (1910)
314. Lee vs. CA (G.R. No. 90423, September 6, 1991)
315.
316. c) Undue influence – Art. 1337
317. Cases
318. Alcasid v. CA, G.R. No. 104571, October 7, 1994
319. Loyola v. CA, G.R. No. 115734, February 23, 2000
320.
321. d) Fraud or dolo – Art. 1338
322. Cases
323. Hill v. Veloso, 31 Phil. 161 (1915)
324. Woodhouse v. Halili, supra
325. Geraldez v. CA, 230 SCRA 320 (1994)
326. Sps. Tiongson v. Emergency Pawnshop, G.R. No.
167874, January 15, 2010
 327.
328. i. Kinds
329. 1. dolo causante – Art 1338
330. 2. dolo incidente – Art. 1344, 2nd par.
331. Cases
332. Tankeh v. DBP, G.R. No. 171428, November 11, 2013
333. ECE Realty v. Mandap G.R. No. 196182, September
01, 2014
334.
335. ii. Failure to disclose facts; duty to reveal them – Art. 1339
336. Cases
337. Tuason v. Marquez, 45 Phil. 381 (1923)
338. Rural Bank of Sta. Maria v. CA, 314 SCRA
255 (1999)
339.
340. iii. Usual exaggerations in trade; opportunity to know the
facts – Art. 1340
341. Cases
342. Azarraga v. Gay, 52 Phil. 599 (1928)
343. Laureta Trinidad v. IAC, 204 SCRA 524
(1991)
344.
345. iv. Mere expression of an opinion – Art. 1341
346. 1. Effects – Art. 1344
347. Case
348. Songco v. Sellner, 37 Phil.254 (1917)
349.
350. e) Misrepresentation
351. i. By a third person – Art. 1342
352. ii. Made in good faith – Art. 1343
353. iii. Active/passive
354. Cases
355. Mercado and Mercado v. Espiritu, 37 Phil.
215 (1917)
356. Braganza v. Villa Abrille, 105 Phil. 456 (1959)
357.
358. f) Simulation of Contracts
359. Cases
360. Rodriguez v. Rodriguez, 28 SCRA 229 (1914)
361. Suntay v. CA, 251 SCRA 430 (1995)
362. Blanco v. Quasha, G.R. No. 133148, November 17,
1999
363. Manila Banking v. Silverion, G.R. No. 132887,
August 11, 2005
364.
365. i. Kinds – Art. 1345
366. 1. Absolute
367. 2. Relative
368. ii. Effects – Art. 1346
B. Object of Contracts
369.
 1. What may be the objects of contracts – Art. 1347
a. All things not outside the commerce of man
b. All rights not intransmissible
c. All services not contrary to law, morals, good customs, public, or public
policy
2. Requisite - must be determinate as to its kind – Art. 1349
3. What may not be the objects of contracts
a. Future inheritance, except when authorized by law – Art. 1347
370. Case
371. Blas v. Santos, 1 SCRA 899 (1961)
372. J.L.T. Agro, Inc. vs. Balansag and Cadayday (G.R. No.
141882. March 11, 2005)
373.
b. Impossible things or services – Art. 1348
374.
C. Cause of Contracts
375.
1. Meaning of cause – Art. 1350
a. In onerous contracts
b. In remuneratory contracts
c. In contracts of pure beneficence
2. As distinguished from motive – Art. 1351
3. Defective causes and their effects:
a. Absence of cause and unlawful cause – Art. 1352
376. Case
377. Liguez v. CA, 102 Phil. 577 (1957)
378.
b. Statement of a false cause in the contract – Art. 1353
c. Lesion or inadequacy of cause – Art. 1355
379. Cases
380. Carantes v. CA, 76 SCRA 514 (1977)
381. Sps. Buenaventura, et. al. v. CA, 416 SCRA 263 (2003)
382.
4. Presumption of the existence and lawfulness of a cause, though it is not stated in the
contract – Art. 1354
 383. Chapter 3. Form of Contracts
384.
A. General rule: Contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. (“Spiritual system” of
the Spanish Code) - Art. 1356
385.
B. Exception: When the law requires that a contract be in some form in order that it may be valid or
enforceable. (Anglo-American principle) - Art. 1356
386. Case
387. Hernaez v. De los Angeles, 27 SCRA 1276 (1969)
388. Cenido v. Sps. Amadeo, G.R. No. 132474, November 19, 1999
389.
C. Kinds of formalities required by law:
1. Those required for the validity of contracts, such as those referred to in Arts. 748, 749, 1874,
2134, 1771, 1773;
2. Those required, not for validity, but to make the contract effective as against third persons,
such as those covered by Arts. 1357 and 1358; and
3. Those required for the purpose of proving the existence of the contract, such as those
under the Statute of Frauds in Art. 1403.
390. Case
391. Resuena vs.CA, G.R. No. 128338. March 28, 2005
392.
393.
394. Chapter 4. Reformation of Instruments
395.
A. Requisites (Art. 1359):
1. Meeting of the minds upon the contract;
2. The true intention of the parties is not expressed in the instrument; and
3. The failure of the instrument to express the true agreement is due to mistake, fraud,
inequitable conduct, or accident.
396. Cases
397. Garcia v. Bisaya, 97 Phil. 609
(1955)
398. Bentir v. Leande, 330 SCRA 591
(2000)
399. Heirs of Miguel v. Heirs of Miguel,
G.R. No. 158916, March 19, 2014
400.
B. Cases where no reformation is allowed - Art. 1366
401.
C. Implied Ratification – Art. 1367
402.
D. Who may ask for reformation –Art. 1368
403.
E. Procedure of reformation – Art. 1369
404. Cases
405. Atilano v. Atilano, 28 SCRA 2232 (1969)
Carantes v. CA, supra
406. Sarming, et. al. v. Cresencio Dy, et. al., 383 SCRA 131 (2002)
407.
408. Chapter 5. Interpretation of Contracts (Compare with Rules on
Statutory Construction)
409.
A. Primacy of intention – Arts. 1370, 1372
410. Cases
411. Borromeo v. CA, 47 SCRA 65 (1972)
412. Kasilag v. Rodriguez, 69 Phil. 217 (1939)
413. Santi vs. CA (GR 93625, 227 SCRA 541, 1993)
414. Benguet Corp v. Cabildo, G.R. No. 151402, August 22, 2008
415.
B. How to determine intention – Art. 1371
416. Case
417. Villaflor v. CA, G.R. No. 95694, October 9, 1997
418.
C. How to interpret a contract
1. When it contains stipulations that admit several meanings – Art. 1373
2. When it contains various stipulations, some of which are doubtful – Art. 1374
3. When it contains words that have different significations – Art. 1375
4. When it contains ambiguities and omission of stipulations – Art. 1376
5. With respect to the party who caused the obscurity – Art. 1377
6. When it is absolutely impossible to settle doubts by the rules above – Art. 1378
419. a. in gratuitous contracts
420. b. in onerous contracts
7. When the doubts are cast upon the principal object so that the intention cannot be known –
Art. 1378
421.
D. Applicability of Rule 123, Rules of Court (now Secs. 10-19, Rule 130)
422.
 423. DEFECTIVE CONTRACTS
424.
425. Chapter 6. Rescissible Contracts
426.
A. Kinds – Art. 1381
427.
B. Characteristics
428.
1. Their defect consists in injury or damage either to one of the contracting
parties or to third persons.
2. They are valid before rescission.
3. They can be attacked directly only, and not collaterally.
4. They can be attacked only either by a contracting party or by a third person who
is injured or defrauded.
5. They can be convalidated only by prescription, and not by ratification.
429.
C. Rescission – Art. 1380
430.
1. Definition
431. Case
432. Universal Food Corp. v. CA, 33 SCRA 1 (1970)
433. Lalicon v. NHA, G.R. No. 185440, July 13, 2011
1
2. As distinguished from rescission under Art. 1191
3. Requisites:
a. The contract is rescissible;
b. The party asking for rescission has no other legal means to
obtain reparation – Art. 1383;
c. He is able to return whatever he may be obliged to restore if
rescission is granted – Art 1385;
d. The object of the contract has not passed legally to the possession of
a third person acting in good faith – Art. 1385;
e. The action for rescission is brought within the prescriptive period of
four (4) years – Art 1389.
4. Effect of rescission – Art. 1385
a. with respect to third persons who acquired the thing in good faith –
Art. 1385, 2nd and 3rd par.
5. Extent of rescission – Art. 1384
6. Presumptions of fraud – Art. 1387
a. Badges of fraud
434. Cases
435. Oria v. McMicking, 21 Phil.
243 (1912)
436. Siguan v. Lim, 318 SCRA 725
(1999)
437. Suntay v. CA, supra
438. China Banking v. CA, G.R.
No. 129644, March 7, 2000
439.
7. Liability for acquiring in bad faith the things alienated in fraud of creditors – Art.
1388
 440. Chapter 7. Voidable or Annullable Contracts
441.
A. Kinds – Art. 1390
442. Cases
443. Francisco v. Herrera, G.R. No. 139982, November 21, 2002
444. Heirs of Ureta v. Heirs of Ureta, G.R. No. 165748, September 14, 2011
445.
B. Characteristics
1. Their defect consists in the vitiation of consent of one of the contracting parties.
2. They are binding until they are annulled by a competent court.
3. They are susceptible of convalidation by ratification or by prescription.
446.
C. Annulment
1. As distinguished from rescission
2. Grounds – Art. 1390
3. Who may and may not institute action for annulment – Art. 1397
447. Case
448. Singsong v. Isabela Sawmill, 88 SCRA 623 (1979)
449. Malabanan v. Gaw Ching, G.R. No. 74938, January 17,
1990
4. Prescription – Art. 1391
5. Effect
a. Mutual restitution – Arts. 1398 and 1402
450. Cases
451. Cadwallader & Co. v. Smith, Bell & Co., 7 Phil. 461
(1907)
452. Velarde v. CA, supra
1) When one of the parties is incapacitated - Art. 1399
2) When the thing is lost through the fault of the party obliged to return the
same – Art. 1400
6. Extinguishment of the action
b. By ratification – Art. 1392
c. When the thing is lost through the fault of the person who has the right to file
the action – Art. 1401
453.
D. Ratification
1. Requisites:
a. The contract is voidable;
b. The ratification is made with knowledge of the cause for nullity;
c. At the time of the ratification, the cause of nullity has already ceased to exist.
2. Forms
a. Express or tacit – Art. 1393
b. By the parties themselves or by the guardian in behalf of an incapacitated
party – Art. 1394
3. Effects:
a. Action to annul is extinguished – Art. 1392
454. Case
455. Uy Soo Lim v. Tan Unchuan, 38 Phil. 552 (1918)
b. The contract is cleansed retroactively from all its defects – Art. 1396
456.
 457. Chapter 8. Unenforceable Contracts
458.
A. Characteristics
1. They cannot be enforced by a proper action in court.
2. They are susceptible of ratification.
3. They cannot be assailed by third persons.
459.
B. Kinds – Art. 1403
1. Unauthorized contracts
460. a. Governing rules – Art. 1404
2. Contracts covered by the Statute of Frauds
461. a. Purpose of Statute
462. Cases
463. Philippine National Bank v. Philippine Vegetable
Oil Co., 49 Phil. 857 (1927)
464. Limketkai Sons vs. CA (250 SCRA 523)
465. Swedish Match v. CA, G.R. No. 128120, October 20,
2004
466. Sps. Torcuator v. Sps. Bernabe, G.R. No. 134219,
June 8, 2005
467.
b. How ratified – Art. 1405
468. Cases
469. Carbonnel v. Poncio, et al., 103 Phil. 655 (1958)
470.
c. Right of the parties when a contract is enforceable but a public
document is necessary for its registration – Art. 1406
471.
3. Contracts executed by parties who are both incapable of giving consent to a contract
a. Effect of ratification by the parents or guardian of one of the parties
472. – Art. 1407
b. Effect of ratification by the parents or guardian of both parties – Art. 1407
473.
 474. Chapter 9. Void or Inexistent Contracts
475.
A. Characteristics
1. Void from the beginning
2. Produces no effect whatsoever
3. Cannot be ratified – Art. 1409
476. Case
477. Ching v. Goyanko, Jr., G.R. 165879, November 10, 2006

478.
B. Kinds –Art. 1409
1. Contracts that are void
a. Those whose cause, object, or purpose is contrary to law, morals, good
customs, public order or public policy
1) When the act constitutes a criminal offense – Art. 1411
a) in pari delicto rule
479. Case
480. Urada v. Mapalad A.M. MTJ 91-622 (1993)
481.
2) When the act is unlawful but does not constitute a criminal offense –
Art. 1412
a) in pari delicto rule
482. Cases
483. Modina v. CA, G.R. No. 109355, October 29, 1999
484.
3) When the purpose is illegal, and money is paid or property delivered
therefor – Art. 1414
4) When the contract is illegal and one of the parties is incapable of giving
consent – Art. 1415
485. Cases
486. Liguez v. CA, supra
487. Relloza v. Gaw Cheen Hum, 93 Phil. 827 (1953)
488.
5) When the agreement is not illegal per se but is prohibited – Art. 1416
489.
490. Cases
491. Philippine Banking Corp. v. Lui She, 21
SCRA 52 (1967)
492. Frenzel v. Catito, 406 SCRA 55 (2003)
493.
6) When the amount paid exceeds the maximum fixed by law – Art.
1417
7) When by virtue of a contract a laborer undertakes to work longer
than the maximum number of hours of work fixed by law – Art.
1418
8) When a laborer agrees to accept a lower wage than that set by law –
Art. 1419
9) When the contract is divisible – Art. 1420
10) When the contract is the direct result of a previous illegal contract –
Art. 1422
494.
 495.
b.Those whose object is outside the commerce of man
c. Those which contemplate an impossible service
d.Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained
e. Those expressly prohibited or declared void by law
496.
2. Contracts that are inexistent
a. Those which are absolutely simulated or fictitious (see Arts. 1345 and
1346)
b. Those whose cause or object did not exist at the time of the
transaction
497.
C. Right to set up defense of illegality cannot be waived – Art. 1409
498.
D. The action or defense for the declaration of the inexistence of a contract
1. does not prescribe – Art. 1410
2. is not available to third persons whose interest is not directly affected – Art. 1421
499.
500. Title III. NATURAL OBLIGATIONS
501.
A. Definition – Art. 1423
B. As distinguished from civil obligations – Art. 1423
C. As distinguished from moral obligations
502. Cases
503. Villaroel v. Estrada, 71 Phil. 140
(1940) Fisher v. Robb, 69 Phil. 101 (1939)
D. Conversion to civil obligation
1. By novation
2. By ratification
504. E. Examples – Arts. 1424-1430
505.
506. Title IV. ESTOPPEL
507.
A. Definition – Art. 1431
508. Case
509. Kalalo v. Luz, 34 SCRA 337 (1970)
B. Kinds
1. Technical estoppel
a. By record
b. By deed – art. 1433
510. 2. Equitable estoppel or estoppel in pais – Art. 1433
C. Persons bound – Art. 1439
511. Case
512. Manila Lodge No. 761 Benevolent and Protective Order of the Elks
v. CA, 73 SCRA 168 (1976)
D. Cases where estoppel applies – Arts. 1434-1438
513. Case
514. Miguel v. Catalino, 26 SCRA 234
(1969)
515. Read: Annotation, 32 SCRA 542
516.
 517. Title V. TRUSTS
518.
519. Chapter I. General Provisions
520.
A. Definition
B. Governing rules – Art. 1442
C. Parties – Art. 1440
1. Trustor
2. Trustee
3. Beneficiary or cestui que trust
D. Kinds – Art. 144
521. Case
522. Salao v. Salao, 70 SCRA 168 (1976)
523.
1. Express Trusts
a. Proof required – Art. 1443
b. Form – Art. 1444
c. Want of trustee – Art. 1445
d. Acceptance by the beneficiary – Art. 1441
2. Implied Trusts
a. How established – Art. 1441
b. How proved – Art. 1457
c. Examples – Arts. 1448-1456
524. Cases
525. Fabian v. Fabian, 22 SCRA 231 (1968)
526. Bueno v. Reyes, 27 SCRA 1179 (1969)
527. Tamayo v. Callejo, 46 SCRA 27 (1972)
528.