Don Honorio Ventura State University

School of Law
OBLIGATIONS and CONTRACTS
School Year 2023-2024

COURSE OUTLINE

Part One

I. General Provisions: (Articles 1156-1162)

1. Obligations: Definition, Elements, Natural vs. Civil Obligations

2. Sources of Obligations
Light Rail Transit Authority & Rodolfo Roman vs. Marjorie Navidad, et. al., 397 SCRA
75
Barredo vs. Garcia, 73 Phil 607 (1942)
Elcano vs. Hill, 77 SCRA 98
Air France v Carrascoso, G.R. No. L-21438, September 28, 1966

II. Nature and Effect of Obligations: (Articles 1163-1178 and Article 440)

1. Diligence:
Ordinary v. Extraordinary
2. Obligations to Give
a. Generic v. Specific
b. Effects of fortuitous events
c. Accessions v. Accessories
3. Obligations to Do and Not to Do; Remedies in case of Breach
Chavez v. Gonzales, G.R. L-27454, April 30, 1970
Tanguilig vs. CA, 266 SCRA 78
4. Delay in the Compliance
a. Necessity for Demand
b. Exceptions
c. Kinds of Mora
5. Delay in Reciprocal Obligations
Causing v. Bencer, 37 SCRA 417
6. Breach of Obligation
a. Fraud (Dolo): Extent of Liability
b. Negligence (Culpa)
i. Waiver
People v. Verano, Feb 28, 1961
ii. Contributory Negligence:
Picart vs. Smith, 37 Phil 809;
Cangco vs. Manila Railroad, 38 Phil 763;
Rakes vs. Atlantic Gulf, 7 Phil 359;
c. Delay (Mora)
 d. In Contravention (substantial deviation)
e. Kinds of Damages
7. Fortuitous Event
a. Essential Conditions
b. Exceptions
Sia vs. CA, 222 SCRA 24;
RP vs. Luzon Stevedoring, 21 SCRA 279;
NPC vs. Philipp Brothers, 369 S 629
Vasquez vs. CA, 138 SCRA 553
c. Fortuitous But Still Liable
Tan Chiong San v. Inchausti, 22 Phil 152
8. Usury and Interest
9. Other Remedies for Breach of Obligations
a. Extrajudicial and Judicial: Demand, Attachment, Subrogatory Action
b. Principal v. Subsidiary: Accion Pauliana
c. Transmissibility of Obligations and Exceptions

DIFFERENT KINDS OF OBLIGATIONS

III. Pure and Conditional Obligations: (Articles 1179 – 1192)

1. Classifications
a. Suspensive vs. Resolutory
Baluran vs Navarro, 79 SCRA 309
Parks vs Province of Tarlac, 49 Phil 142
b. Potestative, Casual or Mixed Conditions
Osmena vs Rama, 14 Phil 99
Hermosa v Longara, 93 Phil 971
Trillana vs Quezon Colleges, 93 Phil 383
c. Solely Upon the Debtor
d. Possible or Impossible Conditions
2. Constructive Fulfillment of Condition
a. Prevented by the Debtor
b. By Stipulation
3. Rights of Creditors Prior to Condition
4. Rules in Cases of Improvement, Deterioration, or Loss
5. Power to Rescind in Reciprocal Obligations

IV. Obligations with a Period: (Articles 1193 – 1198)

1. Classification
2. Payment or Performance Prior to the Period
3. Benefit of the Period
4. When Courts May Fix a Period
Gregorio Araneta, Inc. vs. The Phil. Sugar Estate Dev’t. Co., 20 SCRA 330
V. Alternative and Facultative Obligations: (Articles 1199 – 1206)

1. Concept and Features

Agoncillo v. Javier, 30 Phil 124
2. Limitations of the Right of Choice
3. Rights of the Creditor Prior to Choice
4. Choice Given to the Creditor
5. Alternative vs. Facultative Obligations

VI. Joint and Solidary Obligations: (Articles 1207 – 1222, 1822-1823; 2088, 2137, 2226)

1. Definition and Distinction

2. Conditions of Solidary Liability
3. Presumption of Joint Liability
4. Joint Divisible Obligations
Agoncillo vs. Javier, 38 Phil 424
5. Indivisibility vs. Solidarity, Passive vs. Active Solidarity
6. Consequences of Solidarity
7. Effect of Payment; Right of Reimbursement
8. Defense by the Solidary Debtor
Philippine National Bank vs. Independent Planters Assoc., Inc., 122 SCRA 113

VII. Divisible and Indivisible Obligations: (Articles 1223 – 1225)

1. Indivisibility of Obligation vs. Indivisible Thing

2. Test of Indivisibility:

VIII. Obligations with a Penal Clause: (Articles 1226 – 1230)

1. Definition; Kinds
2. Purpose of Penal Clause
Manila Racing Club vs. Manila Jockey Club, 69 Phil 55
Caridad Estate vs. Santero, 71 Phil 114
3. Exception to the Purpose of Penal Clause
4. Penalty Plus Fulfillment
Cabarroguis vs. Vicente, 107 Phil 340

EXTINGUISHMENT OF OBLIGATIONS

IX. Payment or Performance: (Articles 1232 – 1261, Rule 57 of the Rules of Civil Procedure,
R.A. 529 Uniform Currency Act, Insolvency Law)

1. Classifications of Extinguishment
2. Definition of Payment
a. Completeness
b. To Whom Made
c. How and When Made; Identity of Payment
 d. Proof of Payment
e. Burden of Proof
Cathay Pacific Airways, Ltd. vs. Sps. Vasquez, 399 SCRA 207
3. Substantial Performance in Good Faith
Pagsibigan vs. Court of Appeals, 221 SCRA 202
4. Completeness by Estoppel
5. Effect of Payment by and to Third Persons:
Tanguilig vs. CA, 266 SCRA 78
6. Dation in Payment
a. Sale v. Dation
b. Dation v. Cesion or Assignment of Rights
7. Effects of Partial Payment
8. Currency of Payment
9. Extraordinary inflation or deflation of currency
10. Place of Payment
11. Application of Payments
12. Cesion
a. Definition
b. Difference with Dation in Payment
c. Application
Lopez vs. Court of Appeals, 114 SCRA 671
13. Tender of Payment and Consignation
a. Definition
b. How Made
c. Proof of Tender
d. When Tender of Payment is not Required
e. Consignation v. Redemption v. Option
f. Requisites of Consignation
g. Notice of Consignation, When Excused
h. Effects of Consignation

X. Loss of the Thing Due: (Articles 1262 – 1269)

1. Generic v. Specific
2. Exceptions
3. Rebus Sic Stantibus
Naga Telephone vs. Court of Appeals, 230 SCRA 351;
Magat v. CA, 337 SCRA 298
XI. Condonation or Remission: (Articles 1270 – 1274 and 748 – 752)

1. Requisites and Classes

2. Waiver v. Condonation
3. Delivery of Private Document

XII. Confusion: (Articles 1275 – 1277)

1. Requisites:
2. Effects:

XIII. Compensation: (Articles 1278 – 1290)

1. Requisites
2. Legal Compensation
a. By Operation of Law
b. When Not Applicable

XIV. Novation: (Articles 1291 – 1304)

1. Concept
2. Requisites
3. Extent
4. Presumption
Martinez v. Cavives, 25 Phil 181
5. Authority
6. Kinds
a. As to Form
i. Express
California Bus Lines vs. State Investment, 418 SCRA 297
ii. Implied
b. As to Effects
c. As to Essence
7. Objective Novation
8. Subjective or Personal Novation
a. Change in the Debtor
i. Delegacion
ii. Expromission
b. Change in the Creditor, Subrogation
9. Legal Subrogation: