University of the Philippines
College of Law
Law 101: Obligations and Contracts
Course Outline♦
Prof. Mary Rose S. Tan
Semester 2, AY 2011­2012
Contact Information:
maryrose.tan@gmail.com
+639178871555
Course Schedule:
Mondays and Fridays, 6:30 p.m. to 9:00 p.m.
Room 200 (Padilla Room)
Attendance Requirement:
College of Law rules on attendance shall be strictly applied.
Students may only be absent for any cause for a maximum of 8
sessions.
Assessment:
(1) Class participation
(2) Midterm examination
(3) Final Exam
Prescribed Textbook:
Tolentino, Civil Code of the Philippines, Vol. IV
30%
20%
50%
INTRODUCTION
A. Course Overview
B. Common Law Tradition and the Civil Law Tradition
Agabin, P.A., Mestizo: The Story of the Philippine Legal System (2011),
Chapter 7, pp. 169­216
PART ONE: OBLIGATIONS
A. General Provisions
1. Definition (Article 1156, Civil Code)
2. Elements
a. Active Subject
b. Passive Subject
c. Object or Prestation
d. Efficient Cause or Juridical Tie
♦
Based on the Course Outline of Prof. Eduardo Labitag.
Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
3. Natural Obligations
a.
b.
c.
d.
Definition (Art. 1423, CC)
Examples (Articles 1424 to 1430)
Difference between Natural and Civil Obligation (Art. 1423)
Distinguished from moral obligations
Villaroel v. Estrada, 71 Phil. 140 (1940)
Fisher v. Robb, 69 Phil 101 (1939)
e. Conversion to Civil Obligation
• by novation
• by ratification
4. Sources of Obligations (Art. 1157)
a. Law (Art. 1158)
b. Contracts (Art. 1159, 1305)
c. Quasi‐contracts (Art. 1160, 2142)
• Kinds:
i. Negotiorum gestio (Art. 2144)
ii. Solutio indebiti (Art. 2154)
iii. Others (Art. 2164 to 2175)
d. Delicts or Crime (Art. 1161)
e. Quasi‐delicts (Art. 1162, 2176)
• Distinction between crimes and quasi‐delicts
• Vicarious liability (Art. 2180, Art. 218‐219, Family Code)
• Civil liability arising from crime (Art. 1161; Rule 111, Revised Rules of
Criminal Procedure)
Barredo v. Garcia, 73 Phil 607 (1942)
Mendoza v. Arrieta, 91 SCRA 113 (1975)
5. Classification of Obligations
a.
b.
c.
d.
e.
f.
Pure and Conditional Obligations (Art. 1179‐1192)
With a Period or a Term (Art. 1193‐1198)
Alternative and Facultative (Art. 1199‐1206)
Joint and Solidary (Art. 1207‐1222)
Divisible and Indivisible (Art. 1223‐1225)
With a Penal Clause (Art. 1226‐1230)
B. Nature and Effects of Obligations
1. Kinds of Prestation
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
a. To give
i.
specific thing
• to preserve the thing (Art. 1163)
• to deliver the accessions and accessories (Art 1166)
• to deliver the fruits (Art. 1164, par. 1)
• to deliver the thing itself (Art. 1244)
ii. generic thing (Art. 1246)
b. To do (Art. 1244)
c. Not to do (Art. 1244)
2. Breach of Obligation
a. Concept
Song Fo v. Hawaiian Philippines, 47 Phil. 821 (1928)
Velarde et al. v. Court of Appeals, 361 SCRA 56 (2001)
Angeles v. Calasanz, 135 SCRA 323 (1985)
Delta Motor Corporation v. Genuino, 170 SCRA 29 (1989)
Vermen Realty v. Court of Appeals, 224 SCRA 549 (1993)
b. Modes of Breach
•
Delay or mora (Art. 1169)
i.
mora solvendi
Cetus Development v. Court of Appeals, 176 SCRA 72 (1989)
Aerospace Chemical Industries v. Court of Appeals, 315 SCRA 92 (1999)
Santos Ventura Hocorma Foundation v. Santos, 441 SCRA 472 (2004)
Vazquez v. Ayala Corporation, 443 SCRA 231(2004)
Abella v. Francisco, 55 SCRA 447 (1931)
dela Cruz v. Legaspi, 98 SCRA 43 (1955)
ii.
mora accipiendi (See also 1268)
Villaroel v. Manila Motor Co., Inc., 104 Phil. 926 (1958)
iii.
compensation morae
Central Bank v. Court of Appeals, 139 SCRA 46 (1985)
•
Fraud or dolo (Art. 1171)
dolo incidente and dolo causante
Woodhouse v. Halili, 93 Phil. 526 (1953)
Geraldez v. Court of Appeals (1994)
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Law 101: Obligations and Contracts
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Prof. Mary Rose S. Tan
Negligence (Art. 1172, 1173)
­ culpa v. dolo
­ culpa aquiliano v. culpa contractual
­ standard of care required
Gutierrez v. Gutierrez, 56 Phil. 177 (1932)
Vasquez v. Borja, 74 Phil. 560 (1944)
de Guia v. Manila Electric Corporation, 40 Phil 706 (1920)
US v. Barias, 23 Phil 434 (1912)
Sarmiento v. Spouses Cabrido, 401 SCRA 122 (2003)
Crisostomo v. Court of Appeals, 409 SCRA 528 (2003)
•
Contravention of the tenor (Art. 1172)
Chaves v. Gonzales, 32 SCRA 547 (1970)
Telefast v. Castro, 158 SCRA 445 (1988)
Arrieta v. NARIC, 10 SCRA 79 (1964)
Magat v. Medialdea, 206 Phil 341 (1983)
c. Remedies in case of breach
i.
Performance
•
•
Specific performance (Art. 1165; Section 10, Rule 39, Rules of Court)
Substituted performance
‐ in an obligation to give generic thing (Art. 1165, par. 2)
‐ undoing of poor work in an obligation to do (Art. 1167)
Chaves v. Gonzales, 32 SCRA 547 (1970)
Tanguilig v. Court of Appeals, 266 SCRA 78 (1997)
‐
ii.
iii.
undoing in an obligation not to do (Art 1168)
Rescission (Art. 1191‐1192)
Damages (Art. 1170)
d. Subsidiary Remedies of Creditor
i.
ii.
Accion Subrogatoria (Art. 1177)
Accion Pauliana (Art. 1177; 1381, par. 3)
Khe Hong Cheng v. Court of Appeals, 355 SCRA 701 (2001)
Siguan v. Lim, 318 SCRA 725 (1999)
iii.
Other Specific Remedies (Art. 1652, 1729, 1608, 1893)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
e. Fortuitous Event (Art. 1174)
i.
ii.
Effect: Extinguishment of Liability
Exceptions to Extinguishment (Art. 1174, 1165 par. 3, 552, 1942,
1979, 2001, 2147)
Juan Nakpil & Sons v. Court of Appeals, 144 SCRA 597 (1986)
Republic v. Luzon Stevedoring Co., 21 SCRA 279 (1967)
Dioquino v. Laureano, 33 SCRA 65 (1970)
Austria v. Court of Appeals, 39 SCRA 527 (1971)
National Power Corporation v. Court of Appeals, 161 SCRA 334 (1988)
Yobido v. Court of Appeals, 281 SCRA 1 (1997)
Bacolod­Murcia Milling v. Court of Appeals, 182 SCRA 24
Philcomsat v. Globe Telecom, 430 SCRA (2004)
f. Usurious Transactions (Art. 1175, 1413, 1961)
PD 858; PD 1685
Central Bank Circular 416
Monetary Board Circular No. 905; No. 2209
Eastern Shipping Lines v. Court of Appeals, 234 SCRA 781 (1994)
Crismina Garments v. Court of Appeals, 304 SCRA 356 (1999)
Keng Hua Products v. Court of Appeals, 286 SCRA 257 (1998)
Security Bank v. Regional Trial Court Makati, 263 SCRA 453 (1996)
Almeda v. Court of Appeals, 256 SCRA 292 (1996)
Angel Warehousing v. Chelsea, 23 SCRA 19 (1968)
First Metro Investment v. Este del Sol, 369 SCRA (2001)
C. Different Kinds of Obligations
1. Pure and Conditional Obligations
•
•
Pure Obligations (Art. 1179, par. 1)
Conditional Obligations (Art. 1181)
‐ Concept
‐ Condition v. Period or Term
Gaite v. Fonacier, 2 SCRA 830 (1961)
Gonzales v. Heirs of Tomas and Paula Cruz, 314 SCRA 585 (1999)
•
Kinds of Conditions
a. As to the effect on the obligation (Art 1181)
Gonzales v. Heirs of Tomas and Paula Cruz, supra.
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Law 101: Obligations and Contracts
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i.
Prof. Mary Rose S. Tan
Suspensive Condition or Condition precedent
• Retroactive effect when condition is fulfilled (Art. 1187)
Coronel v. Court of Appeals and Alcaraz, 263 SCRA 15 (1996)
•
Rights of the creditor and debtor before fulfillment of the
condition (Art. 1188)
ii. Resolutory Condition or Condition subsequent
Parks v. Province of Tarlac, 49 Phil. 142 (1927)
Central Philippine University v. Court of Appeals, 245 SCRA 511 (1995)
Quijada v. Court of Appeals, 299 SCRA 695 (1998)
b. As to the cause or origin (Art 1182)
i.
Potestative
•
•
Effect of fulfillment of condition depends solely on the will of the
debtor
Debtor’s promise to pay when he can is not a condition (Art 1180)
Lao Lim v. Court of Appeals, 191 SCRA 150 (1990)
ii. Causal
Naga Telephone Co. v. Court of Appeals, 230 SCRA 351 (1994)
iii. Mixed
Osmena 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. Matti, 44 Phil. 875 (1922)
Rustan Pulp and Paper Mills, 214 SCRA 665 (1993)
Romero v. Court of Appeals, 250 SCRA 250 SCRA 223 (1995)
c. As to possibility (Art. 1183)
Roman Catholic Archdiocese of Manila v. Court of Appeals,
198 SCRA 300 (1991)
d. As to mode: positive or negative (Art. 1184‐1185)
•
Rules in case of loss, deterioration or improvement pending the happening of
the condition (Art. 1189 – 1190)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
Heirs of Timoteo Moreno v. Mactan Cebu International Airport Authority,
413 SCRA 502 (2003)
a. Definition of loss, deterioration and improvement
b. Effect of loss or deterioration
• Without debtor’s fault
• With debtor’s fault
c. Effect of improvement
• By nature or time
• Due to debtor’s effort and expense
•
Effect of prevention of the fulfillment of the condition by the obligor (Art
1186)
Taylor v. Uy Tieng Piao, supra.
Herrera v. Leviste, 135 SCRA 129 (1985)
2. Reciprocal Obligations (Art. 1191‐1192)
a. Concept
b. Alternative remedies of injured parties on case of breach
i.
•
action for specific performance
effect when fulfillment no longer possible
•
•
•
action for rescission
requisites
how made
effects
ii.
Song Fo v. Hawaiian Philippines, 47 Phil. 821 (1925)
Boysaw v. Interphil Promotions, 148 SCRA 365 (1987)
University of the Philippines v. de los Angeles, 35 SCRA 365 (1989)
De Erquiaga v. Court of Appeals, 178 SCRA 1 (1989)
Angeles v. Calasanz, 135 SCRA 323 (1985)
James G. Ong v. Court of Appeals, 310 SCRA 1 (1999)
Iringan v. Court of Appeals, 366 SCRA 41 (2001)
Visayan Saw Mill v. Court of Appeals and RJ Trading, 219 SCRA 378 (1993)
Deiparine v. Court of Appeals and Trinidad, 221 SCRA 503 (2003)
Grace Park Engineering Co. Inc. v. Dimaporo, 107 SCRA 266 (1981)
Roque v. Lapuz, 96 SCRA 741(1980)
Suria v. Intermediate Appellate Court, 151 SCRA 661 (1987)
•
Read: Art 1786, 1788, 1484‐86, Republic Act No. 6552
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
3. Obligations with a Period (Art. 1193, 1180)
a. Compare Period/Term v. Condition
b. Kinds of Period
i.
ii.
iii.
iv.
As to effect
• Suspensive (Art 1193, par. 1)
• Resolutory (Art 1193, par. 2)
As to expression
• Express
• Implied
As to definiteness
• Definite
• Indefinite
As to source
• Voluntary
• Legal
• Judicial
c. Rules in case of loss, deterioration or improvement before arrival of the
period (Art. 1194 and 1189)
d. Effect of Payment in Advance (Art. 1195; 1197, par. 3)
e. Benefit of Period (Art 1196)
i.
For whose benefit
• Creditor
• Debtor
• Both
ii.
Effects
iii.
Presumption (Art. 1196)
Lachica v. Araneta, 47 Official Gazette No. 11, 5699 (1949)
Ponce de Leon v. Syjuco, 90 Phil 311 (1951)
Buce v. Court of Appeals, 332 SCRA 151 (2000)
iv.
When debtor loses right to make use of period (Art. 1198)
f. When Court May Fix A Period
i.
Period is implied
ii.
Period depends on sole will of the debtor
Araneta v. Philippine Sugar Estate Development Co., 20 SCRA 330 (1967)
Central Philippine University v. Court of Appeals, supra.
Deudor v. J.M. Tuason, 2 SCRA 129 (1961)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
4. Alternative Obligations
a.
b.
c.
d.
e.
f.
Concept (Art. 1199)
Right of Choice (Art. 1200)
Effect of Notice of Choice
When Notice Produces Effect (Art. 1201)
Effect of loss or impossibility of one or all prestations (Art. 1202 to 1205)
Facultative Obligation (Art. 1206)
i.
Concept
ii.
Distinguished from Alternative Obligations
iii.
Effect of Substitution
5. Joint and Solidary Obligations
a. Joint Obligations
i.
Concept
• Requisites
• Words used to indicate joint obligations
ii.
iii.
Presumption (Art. 1207, 1208)
Effects (Art. 1207, 1208)
• Extent of liability of debtor
• Extent of right of creditor
• In case of novations, compensation, confusion (Art 1277) or
remission
b. Solidary Obligations
i.
Concept
•
•
ii.
Requisites
Words used to indicate solidary obligations
Kinds
• As to source (Art. 1208)
o Legal (Art. 1915, 1945, 2194, Art 119 of the RPC)
o Conventional
o Real
• As to parties bound
o Active
o Passive
o Mixed
• As to uniformity
o Uniform
o Varied/non‐uniform (Art. 1211)
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Law 101: Obligations and Contracts
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Prof. Mary Rose S. Tan
Ynchausti v. Yulo, 34 Phil. 978 (1916)
Inciong v. Court of Appeals, 257 SCRA 578 (1996)
RCBC v. Court of Appeals, 178 SCRA 739 (1989)
Lafarge Cement Phil. V. Continental Cement, 443 SCRA 522 (2004)
iii.
Effects
• Solidary creditor in relation to:
o common debtor
 right to demand (Art. 1214‐1216; 1217, par. 1)
 in case of novation, compensation, confusion,
remission by a creditor (Art. 1215, par. 1)
o solidary co‐creditors
 in case of novation, compensation, confusion,
remission by a co‐creditor (Art 1215, par. 2)
 prejudicial acts prohibited (Art. 1212)
 assignment of rights not allowed (Art. 1213)
•
Solidary debtor in relation to:
o common creditor
 obligation to perform (Art. 1207)
 in case of novation, compensation, confusion,
remission by a creditor (Art. 1215, par. 1)
o solidary co‐debtor
 in case of payment by a co‐debtor (Art. 1217‐1220)
 in case of fortuitous event (Art. 1221)
Jaucian v. Querol, 38 Phil. 718 (1918)
Rehabilitation Finance Corporation v. Court of Appeals,
Official Gazette No. 6, p. 2467
Quiombing v. Court of Appeals, 189 SCRA 325 (1990)
Inciong v. Court of Appeals, 257 SCRA 578 (1996)
iv.
Defenses Available to a Solidary Debtor Against the Creditor (Art.
1222)
• Types
o those derived from the nature of the obligations
o personal defenses
o defenses pertaining to his shares
o those personally belonging to the other co‐debtors
•
Effects
Ynchausti v. Yulo, supra.
Alipio v. Court of Appeals, 341 SCRA 441 (2000)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
c. Joint Indivisible Obligations
i.
Concept
• Distinguished from joint obligations
• Distinguished from solidary obligations
ii. Indivisibility distinguished from solidarity (Art. 1210)
iii. Effects (Art. 1209, 1224)
6. Divisible and Indivisible Obligations
a. Divisible Obligations
i. Concept
ii. Effects (Art. 1223, 1233)
b. Indivisible Obligations
i.
Concept: distinguished from solidary obligations
ii. Kinds
• Natural (Art. 1225, par. 1)
• Legal (Art. 1225, par. 3)
• Conventional (Art. 1225, par. 3)
iii. Presumptions of divisibility and indivisibility (Art. 1225)
iv. Divisibility and indivisibility in obligations not to do (Art. 1225, par.3 )
v. Effects (Art. 1223, 1223, 1224)
vi. Cessation of Indivisibility
7. Obligations with a Penal Clause
a. Concept
•
•
•
•
•
Principal v. Accessory Obligation
Distinguished from conditional obligations
Distinguished from alternative obligations
Distinguished from facultative obligations
Distinguished from guaranty
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
b. Kinds of Penal Clause
•
•
•
As to effect
o Subsidiary
o Complimentary
As to source
o Conventional
o Legal
As to purpose
o Punitive
o Reparatory
c. Demandability of Penalty (Art. 1226, par. 2)
d. Effects of Penal Clause: General Rule and Exceptions
• Substitute for indemnity for damages and payment of interest (Art. 1226)
Makati Development Corp. v. Empire Insurance Co. 20 SCRA 557 (1967)
Tan v. Court of Appeals, 367 SCRA 571 (2001)
Country Bankers Insurance v. Court of Appeals, 201 SCRA 458 (1991)
•
Not exempt debtor from performance (Art. 1227)
•
Creditor cannot demand both performance and penalty at the same time
(Art. 1227)
•
Creditor cannot collect other damages in addition to penalty (Art. 1226)
e. When penalty shall be equitably reduced (Art. 1229)
f. Nullity of Principal Obligation of Penal Clause (Art. 1230)
D. Extinguishment of Obligations (Art. 1231)
1. Payment or Performance (Art. 1232)
a. Concept (Art. 1232)
b. Requisites
i.
Who can pay
•
General Rule
•
Exceptions:
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
o third person who is an interested party; effects (Art. 1302[3])
o third person who is not an interested party but with the consent of
debtor (Art. 1302[2], 1236, par. 1)
o third person who is not an interested party and without the
consent of the debtor, without the knowledge or against the will of
the debtor (Art. 1236, par. 2; Art. 1237, 1236, par. 1)
o third person who does not intend to be reimbursed (Art 1238)
•
in an obligation to give (Art. 1239, 1427)
•
in case of active solidarity (Art. 1214)
ii. To whom payment can be made
•
General rule (Art. 1240)
•
Exceptions:
o incapacitated person (Art. 1241, par. 1)
o third person (Art. 1241, par. 2)
o when proof of benefit not required (Art. 1241, par. 3; Art. 1242)
o in case of active solidarity (Art. 1214)
iii. What is to be paid (Identity)
•
General Rule
•
Specific cases:
o To give a specific thing (Art. 1244)
o To give a generic thing (Art. 1246)
o To pay money (Art. 1249, 1250; R.A. 529, R.A. 4100, R.A. 8183)
Arrieta v. NARIC, supra
Kalalo v. Luz, 34 SCRA 377 (1970)
St. Paul Fire and Marine Insurance v. Macondray, 70 SCRA 122 (1976)
Papa v. A.V. Valencia, 284 SCRA 643 (1998)
Philippine Airlines v. Court of Appeals, 181 SCRA 557 (1990)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
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Prof. Mary Rose S. Tan
Payment of Interest (Art. 1956)
iv. How payment is to be made (Integrity)
•
General Rule (Art. 1233)
o Partial payment is not allowed; exceptions (Art. 1248)
•
Substantial performance in good faith (Art. 1234)
•
Estoppel (Art. 1235)
•
Presumptions in payment of interests and installments (Art. 1176)
v. When is payment to be made
•
•
General Rule (Art 1169)
No demand, no delay; Exceptions
vi. Where payment is to made
• Place expressly designated (Art. 1251, par. 1)
• When place of payment is not expressly designated (Art. 1251,
paragraphs 2 to 4)
vii. Who pays for expenses for making payment (Art. 1247)
c. Application of Payments
i.
Concept (Art. 1252)
Reparations Commission v. Universal Deep Fishing, 83 SCRA 764 (1978)
Paculdo v. Regalado, 345 SCRA 134 (2000)
ii.
Requisites
iii.
Rules in Application of Payments (Art. 1252‐1253)
• If rules are not applicable or cannot be inferred (Art. 1254)
• Meaning of the “most onerous debtor”
d. Payment by Cession
i.
ii.
iii.
iv.
Concept (Art. 1255)
Requisites
Effects
Compared to Assignment of Receivables
e. Dation in Payment
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Law 101: Obligations and Contracts
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i.
Prof. Mary Rose S. Tan
Concept (Art. 1245)
• Distinguished from Payment by Cession
Development Bank of the Philippines v. Court of Appeals, 284 SCRA 14
(1998)
ii.
iii.
Requisites
Effects
Filinvest Credit Corporation v. Philippine Acetylene, 111 SCRA 421(1982)
f. Tender of Payment and Consignation
i.
Tender of Payment
• Concept
• Requisites
ii.
Consignation
• Concept and Purpose
•
Requisites
o When tender and refusal not required (Art. 1256, par. 2)
o Two notice requirement (Art. 1257, par. 1; Art. 1258, par.
2); Effects of non‐compliance
•
Effects (Art. 1260, par 1)
o Withdrawal by debtor before acceptance by creditor or
approval of court (Art. 1260, par. 2)
o Withdrawal by debtor after proper consignation (Art.
1261)
 With creditor approval
 Without creditor approval
•
Expenses of Consignation
De Guzman v. Court of Appeals, 137 SCRA 730 (1985)
TLG International Continental Enterprising, Inc. v. Flores, 47 SCRA 437
(1972)
McLaughlin v. Court of Appeals, 144 SCRA 693 (1986)
Soco v. Militante, 123 SCRA 160 (1983)
Sotto v. Mijares, 28 SCRA 17 (1969)
Reisenbeck v. Court of Appeals, 209 SCRA 657 (1992)
Rural Bank of Caloocan v. Court of Appeals, 104 SCRA 151 (1981)
Licuanan v. Diaz, 175 SCRA 530 (1989)
Chan v. Court of Appeals, 230 SCRA 685 (1994)
Meat Packing Corp. v. Sandiganbayan, 359 SCRA 409 (2001)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
2. Loss or Impossibility
a. Loss of the Thing Due
i.
Concept (Art. 1189, par. 2)
ii.
Kinds
• Total
• Partial
iii.
Requisites (Art. 1262)
iv.
Presumption (Art. 1266, 1267)
v.
Effects
• In an obligation to give a specific thing (Art. 1262, 1268)
• In an obligation to give a generic thing (Art. 1263)
• In case of partial loss (Art 1264)
• Action against third persons (Art. 1269)
b. Impossibility of Performance
i.
Concept (Art. 1266, 1267)
ii.
Kinds
• Total
• Partial
iii.
Requisites (Art. 1266)
iv.
Effects
•
In obligations to do (Art. 1266‐1267; Art. 1262, par. 2)
•
Impossibility distinguished from difficulty
•
In case of partial impossibility (art. 1264)
Occeña v. Court of Appeals, 73 SCRA 637 (1976)
Naga Telephone Company v. Court of Appeals, 230 SCRA 351 (1994)
PNCC v. Court of Appeals, 272 SCRA 183 (1997)
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
3. Condonation or Remission
a. Concept
b. Kinds
• Total or partial
• Express or implied (Art. 1270, par. 1)
c. Requisites (Art. 1270, par. 2)
Yam v. Court of Appeals, 303 SCRA 1 (1999)
d. Presumptions (Art. 1271‐1271; 1274)
e. Effects
• In general
• In case of joint or solidary obligations
f. Governing Rules (Art. 1270)
g. Renunciation of Principal or Accessory Obligation (Art. 1273)
4. Confusion or Merger
a. Concept
b. Requisites
c. Effects
•
•
In general (Art. 1275)
In case of joint or solidary obligations (Art. 1277)
d. Confusion in Principal or Accessory Obligations (Art. 1276)
5. Compensation
a. Concept (Art. 1278); distinguished from Confusion
b. Kinds
i.
ii.
iii.
iv.
v.
Total or Partial
Legal
Conventional (Art. 1279, Art. 1282)
Judicial (Art. 1283)
Facultative
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Law 101: Obligations and Contracts
Semester 2, AY 2011­2012
Prof. Mary Rose S. Tan
c. Legal Compensation
i. Requisites (Art. 1279‐1280): Due distinguished from demandable
Gantion v. Court of Appeals, 28 SCRA 235 (1969)
Bank of the Philippine Islands v. Reyes, 255 SCRA 571 (1996)
Philippine National Bank v. Sapphire Shipping, 259 SCRA 174 (1996)
CKH Industrial Development v. Court of Appeals, 272 SCRA 333 (1997)
Mirasol v. Court of Appeals, 351 SCRA 44 (2001)
Associated Bank v. Tan, 446 SCRA 282 (2004)
Villanueva v. Tantuico, 182 SCRA 263 (1990)
Perez v. Court of Appeals, 127 SCRA 636 (1984)
Silahis Marketing Corp. v. Intermediate Appellate Court, 180 SCRA 21
(1989)
Bank of the Philippine Islands v. Court of Appeals, 255 SCRA ___ (1996)
ii. Effects (Art. 1290, 1289)
d. When Compensation is not allowed (Art. 1287‐1288)
e. Compensation of Debts Payable in Different Places (Art. 1268)
f. Effect of Nullity of Debts to be Compensated (Art. 1284)
g. Effects of Assignment of Credit
i. with consent of debtor (Art. 1285, par. 1)
ii. with knowledge but without consent of debtor (Art. 1285, par. 2)
iii. without knowledge of debtor (Art. 1285, par. 3)
6. Novation
a. Concept (Art. 1291)
• Change in debtor
• Change in object
• Change in third person who is subrogated
• Change in creditor with its consent or at its instance is not novation
b. Kinds
i. As to form: express or implied
ii. As to origin: conventional or legal
iii. As to object
• objective or real
• subjective or personal
• mixed
c. Requisites (Art. 1292)
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Law 101: Obligations and Contracts
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Millar v. Court of Appeals, 38 SCRA 642 (1971)
Dormitorio v. Fernandez, 72 SCRA 388 (1976)
Magdalena Estate v. Rodriguez, 18 SCRA 967 (1966)
Reyes v. Secretary of Justice, 264 SCRA 35 (1996)
Cochingyan v. RB Surety and Insurance, 151 SCRA 339 (1987)
Broadway Centrum Condominium Corporation v. Tropical Hut, 224 SCRA
302 (1993)
Molino v. Security Diners International, 363 SCRA 358 (2001)
Garcia v. Llamas, 417 SCRA 292 (2003)
California Bus Lines v. State Investment, 418 SCRA 297 (2003)
Babst v. Court of Appeals, 350 SCRA 341 (2001)
d. Effects (Art. 1296)
e. Effects of the Status of the Original and New Obligation
i. nullity or voidability of original obligation (Art. 1298)
ii. nullity or voidability of new obligation (Art. 1297)
iii. suspensive or resolutory condition or original obligation (Art. 1299)
f. Objective Novation
g. Subjective Novation
i.
By change of debtor
•
Expromision
o Requisites (Art. 1293)
o Effects (Art. 1294)
•
Delegacion
o Requisites (Art. 1293)
o Effects (Art. 1295)
Garcia v. Llamas, 417 SCRA 292 (2003)
Quinto v. People, 305 SCRA 709 (1999)
ii.
By change of creditor – subrogation of a third person in the rights of the
creditor (Art. 1300)
•
Conventional subrogation
o Requisites (Art. 1301)
o Distinguished from assignment of credit
o Effects (Art. 1303‐1304)
Licaros v. Gatmaitan, (2001)
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Law 101: Obligations and Contracts
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•
Prof. Mary Rose S. Tan
Legal Subrogation
o Requisites
o When presumed (Art. 1302)
o Effects (Art. 1303‐1304)
Astro Electronics Corp. v. Philippine Export and Foreign Loan Guarantee
Corporation (2003)
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Law 101: Obligations and Contracts
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Prof. Mary Rose S. Tan
PART TWO: CONTRACTS
I.
Introduction
A. Concept and Definition (Art. 1305)
B. Classification of Contracts
1. According to subject matter: things or services
2. According to name: nominate and innominate contracts (Art. 1307)
3. According to perfection: by mere consent (Art. 1315) or by delivery of object
(Art. 1316)
4. According to its relation to other contracts: preparatory; principal; or accessory
5. According to form: informal or formal
6. According to purpose
7. According to nature of legal tie created: unilateral, bilateral or reciprocal
8. According to cause: onerous or gratuitous
9. According to risk: commutative or aleatory
Dizon v. Gaborro, 83 SCRA 688 (1978)
C. Characteristics
1. Obligatory Force between the Parties (Art. 1308)
a. General Rule: Freedom to Contract (Art. 1306)
Gabriel v. Monte de Piedad, 71 Phil. 497 (1941)
Pakistan International Airlines v. Ople, 190 SCRA 90 (1990)
b. Exceptions:
i. When it is inequitable (Art. 1310)
ii. Special disqualifications:
• Art. 87, Family Code
• Articles 1490 and 1491
• Article 1782
iii. What may not be stipulated
• Contrary to Law
(a) pactum commisorium (Art. 2088)
(b) pactum leonina (Art. 1799)
(c) pactum de non alienado (Art. 2130)
(d) other limitations: Labor Code, Corporation Code
• Contrary to morals
• Contrary to good customs
• Contrary to public order
• Contrary to public policy
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Cui v. Arellano, 2 SCRA 205 (1961)
Arroyo v. Berwin, 36 Phil 386 (1917)
Filipinas Compañia de Seguros v. Mandanas, 17 SCRA 391 (1966)
Bustamante v. Rosel, 319 SCRA 413 (1999)
c. Effect of contract as to third parties
i.
ii.
iii.
iv.
Performance may be determined by third parties (Art. 1309)
When possession of the object of the contract is with a third person (Art. 1312)
Creditors of contracting parties (Art 1313, 1177, 1381)
Interference by third parties (Art. 1314)
Daywalt v. La Corporación de los Padres Agustinos Recoletos, et al.,
39 Phil. 587 (1919)
So Ping Bun v. Court of Appeals, 314 SCRA 751 (1999)
Lagon v. Court of Appeals, 453 SCRA 616 (2005)
2. Mutuality (Art. 1308 to 1310; 1473)
GSIS v. Court of Appeals, 228 SCRA 183 (1993)
Professional Academic Plans, Inc. et al. v. Crisostomo, 453 SCRA 342 (2005)
3. Relativity or Privity of Contracts (Art. 1311)
a. Contracts take effect only between the parties, their assigns and heirs
Manila Railroad Co. v. La Compania Transatlantica, 38 Phil. 875 (1918)
DKC Holdings Corp. Court of Appeals, 329 SCRA 666 (2000)
b. No one may contract in the name of another (Art. 1317)
Gutierrez Hermanos v. Orense, 28 Phil. 571 (1914)
c. Stipulations in favor of third persons (Art. 1311, par. 2)
Florentino v. Encarnacion, 79 SCRA 192 (1977)
Coquia v. Fieldmen Insurance Co., 26 SCRA 178 (1968)
Constantino v. Espiritu, 39 SCRA 178 (1968)
Young v. Court of Appeals, 169 SCRA 213 (1989)
Marmont Resort v. Guiang, 168 SCRA 373 (1988)
Mandarin Villa v. Court of Appeals, 257 SCRA 538 (1996)
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Law 101: Obligations and Contracts
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II.
Prof. Mary Rose S. Tan
Essential Requisites of Contracts
A. Consent: Requisites (Art. 1319)
1.
Perfection of Contract: Offer and Acceptance
a.
Offer
• must be certain (Art. 1319)
• what may be fixed by the offeror (At. 1321)
• when made through an agent (Art. 1322)
• when offer becomes ineffective (Art. 1323)
• business advertisements of things for sale (Art. 1325)
• advertisements for bidders (Art. 1326)
b.
•
•
•
•
Acceptance
must be absolute (Art. 1319)
kinds:
o express (Art. 1320)
o implied (Art. 1320)
o qualified (Art. 1319)
period of acceptance (Art. 1324)
option contract (Art. 1324)
Sanchez v. Rigos, 45 SCRA 368 (1972)
c.
Termination of Offer
d.
Perfection of Contract
Four theories when contract is perfected:
o Manifestation theory
o Expedition theory
o Reception theory
o Cognition theory (Art. 1319 [2])
•
Rosenstock v. Burke, 46 Phil. 217 (1924)
Malbarosa v. Court of Appeals, 402 SCRA 168 (2003)
San Lorenzo Development Corporation v. Court of Appeals, 449 SCRA 99 (2005)
MMDA v. Jancom, G.R. No. 147465, January 30, 2002
2.
Legal Capacity of the Parties
a. Minors, insane or demented persons, and deaf‐mutes who do not know
how to write (Art. 1327)
b. When offer or acceptance is made during a lucid interval, intoxication,
during hypnotic spell (Art. 1328)
c. Corporations (Sections 23 and 36, Corporation Code)
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Law 101: Obligations and Contracts
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3.
Prof. Mary Rose S. Tan
Vices of Consent: Consent must be Intelligent, Free, Spontaneous and Real
(Art. 1330 to 1346)
a. Mistake or Error
i. Mistake of Fact
• As to substance of the object
• As to principal conditions
• As to identity or qualifications of the parties
• As to quantity, as distinguished from simple mistake of account
Asiain v. Jalandoni, 45 Phil 296 (1923)
Heirs of William Sevilla v. Sevilla, 402 SCRA 501 (2003)
Andres v. Manufacturers Hanover and Trust, 177 SCRA 618
Spouses Theis v. Court of Appeals, 268 SCRA 167(1997)
ii. Mistake or Error of Law
• General Rule: Ignorance of the law excuses no one (Art. 3)
• Exception: Mutual Error of Law (Art. 1334)
iii. Mistake when one party is unable to read (Art. 1332)
Dumasug v. Modelo, 34 Phil 252 (1916)
Hemedes v. Court of Appeals, 316 SCRA 347(1990)
Lustan v. Court of Appeals, 266 SCRA 663 (1997)
Katipunan v. Katipunan, 375 SCRA 199 (2002)
Leonardo v. Court of Appeals, 438 SCRA 201 (2004)
iv. Inexcusable mistake (Art. 1333)
b. Violence or Intimidation (Art. 1335)
Martinez v. HSBC, 15 Phil. 252 (1910)
Lee v. Court of Appeals, 201 SCRA 405 (1991)
c. Undue Influence (Art. 1337)
d. Fraud or Dolo (Art. 1338)
•
Kinds:
i. Dolo causante (Art. 1338)
ii. Dolo incidente (Art. 1344 [2])
Hill v. Veloso, 31 Phil. 161 (1915)
Woodhouse v. Halili, supra.
Geraldez v. Court of Appeals, 230 SCRA 320 (1994)
Sierra v. Court of Appeals, 211 SCRA 785 (1992)
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Law 101: Obligations and Contracts
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•
Prof. Mary Rose S. Tan
Failure to Disclose Facts when there is a duty to reveal them (Art. 1339)
Tuason v. Marquez, 45 Phil 381 (1923)
Rural Bank of Sta. Maria v. Court of Appeals, 314 SCRA 255 (1999)
•
Usual exaggerations in trade: opportunity to know the facts (Art. 1340)
Azarraga v. Gay, 52 Phil. 599 (1928)
Trinidad v. Intermediate Appellate Court, 204 SCRA 524 (1991)
•
Mere expression of opinion (Art. 1341); Effects (Art. 1344)
Songco v. Sellner, 37 Phil. 254 (1917)
e. Misrepresentation
i. by a third person (Art. 1342)
ii. made in good faith (Art. 1343)
iii. active or passive
Mercado v. Espiritu, 37 Phil. 215 (1917)
Braganza v. Villa Abrille, 105 Phil. 456 (1959)
4.
Simulation of Contracts
Rodriguez v. Rodriguez, 28 SCRA 229 (1914)
Suntay v. Court of Appeals, 251 SCRA 430 (1995)
Pangadil et al. v. Court of First Instance, G.R. No. L­32437, August 31, 1982
Umali v. Court of Appeals, G.R. No. 89561, September 13, 1990
a. Kinds: Absolute and Relative (Art. 1345)
b. Effects (Art. 1346)
B. Object
• Must be determinate as to its kind (Art. 1379)
• What may NOT be objects of contracts (Art. 1347)
a. All things outside the commerce of man
b. All intransmissible rights
c. Those services which are contrary to law, morals, good customs, public
order, or public policy
d. Future inheritance, except when authorized by law
e. Impossible things or services (Art. 1348)
Blas v. Santos, 1 SCRA 899 (1961)
JLT Agro, Inc. v. Balansag, G.R. No. 141882, March 11, 2005
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Law 101: Obligations and Contracts
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C. Cause
1. Meaning of Cause (Art. 1350)
a. in onerous contracts
b. in remuneratory contracts
c. in contracts of pure beneficence
2. Distinguished from Motive (Art. 1351)
3. Presumption: Existence and Lawfulness of Cause (Art. 1354)
4. Defective Causes and Effects:
a. Absence of Cause or Unlawful Cause (Art. 1352)
b. Statement of False Cause (Art. 1355)
c. Inadequacy of Cause or Lesion (Art. 1355)
Liguez v. Court of Appeals, 102 Phil. 577 (1957)
Carantes v. Court of Appeals, 76 SCRA 514 (1977)
Spouses Buenaventura v. Court of Appeals, 416 SCRA 263
III.
Form of Contracts
A. General Rule: Contracts are obligatory in whatever form, provided all essential
requisites are present (Art. 1356)
B. Exception: When the law requires the contract to be in a specific form in order for it
to be valid or enforceable (Art. 1356)
•
Kind of formalities required by law:
1. For validity (Articles 748, 749, 1874, 2134, 1771, 1773)
2. To make it effective as to third parties (Articles 1357 and 1358)
3. For purposes of proving existence of contract (Statute of Frauds in Art. 1403)
Hernaez v. delos Angeles, 27 SCRA 1276 (1969)
Resuena v. Court of Appeals, G.R. No. 128338, March 28, 2005
IV.
Interpretation of Contracts
A. Compare with Rules of Statutory Construction
B. Primacy of Intention (Articles 1370, 1372)
Borromeo v. Court of Appeals, 47 SCRA 65 (1972)
Kasilag v. Rodriguez, 69 Phil. 217 (1939)
Santi v. Court of Appeals, G.R. No. 93625, 227 SCRA 541 (1993)
C. Determining Intention (Art. 1371)
Rapanut v. Court of Appeals, 246 SCRA 323 (1995)
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Law 101: Obligations and Contracts
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D. Rules of Contract Interpretation
1. Under the Civil Code
a. When it contains stipulations which admit of several meanings (Art. 1373)
Oil and Natural Gas Commission v. Court of Appeals, G.R. No. 114323,
July 23, 1998
b. When it contains various stipulations, some of which are doubtful (Art. 1374)
Spouses Rigor v. Consolidated Orix Leasing and Finance Corporation, G.R.
136423, August 20, 2002
c. When it contains words with different meanings (Art. 1375)
d. When it contains ambiguities and omission of stipulations (Art. 1376)
Chua v. Court of Appeals, G.R. No. 119255, April 9, 2003
e. With respect to the party who caused the obscurity (Art. 1377)
Rizal Commercial Banking Corporation v. Court of Appeals, G.R. No.
133107, March 25, 1999
f. When it is impossible to settle doubts using the above‐cited rules (Art. 1378)
• In gratuitous contracts
Gacos v. Court of Appeals, G.R. Nos. 85962­63, August 3, 1992
•
In onerous contracts
g. When doubts are cast upon the principal object so that the true intention
cannot be known (Art. 1378)
2. Under the Rules of Court (Rule 130, Sections 10 to 19)
V.
Reformation of Instruments
A. Requisites (Art. 1359)
1. Meeting of the minds
2. True intention of the parties are not expressed in the instrument
3. Failure to express true intention due to mistake, fraud, inequitable conduct, or
accident
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Law 101: Obligations and Contracts
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Garcia v. Bisaya, 97 Phil. 609 (1955)
Bentir v. Leande, 330 SCRA 591 (2000)
Quiros v. Arjona, G.R. No. 158901, March 9, 2004
B. When Reformation is not allowed (Art. 1366)
C. Implied Ratification (Art. 1367)
D. Who may ask for reformation (Art. 1368)
E. Procedure for reformation (Art. 1369)
Atilano v. Atilano, 28 SCRA 2232 (1969)
Carantes v. Court of Appeals, 76 SCRA 514 (514)
Sarming v. Dy, 383 SCRA 131 (2002)
VI.
Defective Contracts
A. Rescissible Contracts
1. Kinds (Art. 1381)
2. Characteristics
a. The defect consists in injury or damage either to one of the contracting
parties of to a third person
b. Contract is valid before rescission
c. Attack may only be direct on, not collaterally
d. Attack maybe done by contracting party or by a third person who is injured
or defrauded
e. Validated only by prescription and not by ratification
3. Definition (Art. 1380): Distinguished from Rescission in Art. 1191 (Resolution)
Universal Food Corporation v. Court of Appeals, 33 SCRA 1 (1970)
Spouses Cannu v. Spouses Galang, G.R. No. 139523, May 26, 2005
Iringan v. Court of Appeals, G.R. No. 129107, September 26, 2001
Rivera v. del Rosario, G.R. No. 144934, January 15, 2004
Equatorial Realty v. Mayfair Theatre, G.R. No. 133879, November 21, 2001
4. Requisites
a. Contract is rescissible
b. Party asking for rescission has no other legal means to obtain reparation
(Art. 1383)
Union Insurance Society of Canton v. Court of Appeals, G.R. No. 100319,
August 8, 1996
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Law 101: Obligations and Contracts
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c. He is able to return what he may be obliged to restore if rescission is granted
(Art. 1385)
Rivera v. del Rosario, G.R. No. 144934, January 15, 2004
5. Effect of Rescission (Art. 1385)
a. As to third persons who acquired thing in good faith (Art. 1385 [2] and [3]
b. As to third persons who acquired things in bad faith, when alienation was in
fraud of creditors (Art. 1388)
6. Extent of Rescission (Art. 1387)
Siguan v. Lim, 318 SCRA 725 (1999)
7. Badges of Fraud (Art. 1387)
Oria v. McMicking, 21 Phil, 243 (1912)
Siguan v. Lim, 318 SCRA 725 (1999)
Suntay v. Court of Appeals, 251 SCRA 430 (1995)
China Banking Corporation v. Court of Appeals, G.R. No. 129644, March 7, 2000
MR Holdings Limited v. Carlos, G.R. No. 138104, April 11, 2002
B. Voidable or Annullable Contracts
1. Kinds (Art 1390)
2. Characteristics
a. There is a defect in consent of one of the contracting parties
b. Binding until annulled by a competent court
c. May be validated by ratification or prescription
Felipe v. Heirs of Aldon, 120 SCRA 628 (1983)
3. Annulment
a. Distinguished from Rescission
b. Grounds (Art. 1390)
c. Who May or May Not Institute Action for Annulment (Art. 1397)
Singsong v. Isabela Sawmill, 88 SCRA 623 (1979)
Samahan ng Magsasaka sa San Josep v. Valisno, 430 SCRA 629 (2004)
Malabanan v. Gaw Ching, 181 SCRA 84 (1990)
Armentia v. Patriarca, 18 SCRA 1253 (1966)
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Law 101: Obligations and Contracts
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d. Prescription (Art. 1391)
Carantes v. Court of Appeals, 76 SCRA 514 (514)
e. Effect: Mutual Restitution (Art. 1398 and 1402)
Cadwallader & Co. v. Smith, Bell & Co., 7 Phil. 461 (1907)
Velarde et al. v. Court of Appeals, 361 SCRA 56 (2001)
Ines v. Court of Appeals, 247 SCRA 312 (1995)
Arra Realty Corporation v. Guarantee Development Corporation, 438
SCRA 441 (2004)
i.
When on the parties is incapacitated (Art 1399)
Katipunan v. Katipunan, 375 SCRA 199 (2002)
ii.
When the thing is lost through the fault of the party obliged to return the
sam (Art. 1400)
f. Extinguishment of Action for Annulment
i. by ratification (Art. 1392)
ii. When the thing is lost through the fault of the person who has the right to
file the action (Art. 1401)
4. Ratification
a. Requisites
i.
ii.
iii.
Contract is voidable
Ratification is made with knowledge that contract is voidable
At the time of ratification, the cause for nullity has already ceased to exist
b. Forms
i. Express or tacit (Art. 1393)
ii. By the parties themselves or by the guardian in behalf of an incapacitated
party (Art. 1394)
c. Effects
i.
action to annul is extinguished (Art. 1392)
Uy Soo Lim v. Tan Unchuan, 38 Phil. 552 (1918)
ii. contract is cleansed retroactively from all its defects (Art. 1396)
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Law 101: Obligations and Contracts
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C. Unenforceable Contracts
1. Characteristics
a. Valid but cannot be enforces by a proper action in court
b. Can be ratified
c. Cannot be assailed by third persons
2. Kinds (Art. 1403)
a. Unauthorized contracts (Art. 1404)
b. Contracts covered by Statute of Frauds
i.
Purpose of Statute of Frauds
Asia Production Co. Inc. v. Judge Pano, 205 SCRA 458 (1992)
Western Mindanao Co. v. Medalle, 79 SCRA 703 (1977)
Limketkai & Sons v. Court of Appeals, 250 SCRA 523 (1995)
Babao v. Perez, 102 Phil. 756 (1957)
Reiss v. Memije, 15 Phil. 350 (1910)
Villanueva v. Court of Appeals, 267 SCRA 89 (1997)
ii.
How Ratified (Art. 1405)
Philippine National Bank v. Philippine Vegetable Oil Co. 49 Phil. 857 (1927)
Carbonnell v. Poncio et al, 103 Phil. 655 (1958)
First Philippine International Bank v. Court of Appeals, 252 SCRA 259
(196)
iii.
Right of the Parties when a Contract is enforceable but a public document
is necessary for its registration (Art. 1406)
c. Contracts executed by parties who are both incapable of giving consent
i.
ii.
Effect of ratification by the parents or guardian of one of the parties (Art.
1407)
Effect of ratification by the parents or guardian of both parties (Art. 1407)
D. Void or Inexistent Contracts
1. Characteristics
•
•
•
Void from the beginning
Produces no effect whatsoever
Cannot be ratified (Art. 1409)
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Tongoy v. Court of Appeals, 123 SCRA 99 (1983)
Cui v. Arellano, 2 SCRA 205 (1961)
Chavez v. Presidential Commission on Good Government, 307 SCRA 372 (1999)
Guiang v. Court of Appeals, 291 SCRA 372 (1998)
Castillo v. Galvan, 85 SCRA 526 (1978)
2. Kinds
a. Void Contracts
i.
Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy
•
•
When the act constitutes a criminal offense (Art. 1411)
When the act is unlawful but does not constitute a criminal offense
(Art. 1412)
o In pari delicto rule
Menchavez v. Teves, 449 SCRA 380 (2005)
Angel v. Aledo and Modales, 420 SCRA 645 (2004)
•
•
When the purpose is illegal and money is paid or property
delivered therefore (Art. 1414)
When the contract is illegal and one of the parties is incapable of
giving consent (Art. 1415)
Liguez v. Court of Appeals, 102 Phil. 577 (1957)
Rellosa v. Gaw Cheen Hum, 93 Phil 827 (1953)
•
When the agreement is not per se illegal but prohibited (Art.
1416)
Philippine Banking Corporation v. Lui She, 21 SCRA 52 (1967)
Frenzel v. Catito, 406 SCRA 55 (2003)
Acabal and Nicolas v. Acabal, 454 SCRA 555 (2005)
•
•
•
•
When the amount paid exceed the maximum fixed by law 9Art.
1417)
When by virtue of a contract a labourer undertakes to work longer
than the maximum number of hours of work fixed by law (Art.
1418)
When the contract is divisible (Art. 1420)
When the contract is the direct result of a previousl illegal contract
(Art. 1422)
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ii. Those whose object is outside the commerce of man
iii. Those which contemplate an impossible service
iv. Those where the intention of the parties relative to the principal
object of the contract cannot be ascertained
v. Those expressly prohibited by law
b. Inexistent Contracts
i. those which are absolutely simulated or fictitious (Articles 1345 to
1346)
ii. those whose cause or object did not exist at the time of the transaction
3. No Waiver of Defense of Illegality (Art. 1409)
4. Action or Defense for the Declaration of the Inexistence of a Contract
• No prescription period (Art. 1410)
• Not available to third persons not directly affected (At. 1421)
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Law 101: Obligations and Contracts
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PART THREE: SPECIFIC EXAMPLES OF OBLIGATIONS
Obligations Created by Law
A. Estoppel
1. Definition (Art. 1431)
Kalalo v. Luz, 34 SCRA 337 (1970)
2. Kinds
a. Technical estoppel
i. by record
ii. by deed (Art. 1433)
b. Equitable estoppel or estoppel in pais (Art. 1433)
3. Persons Bound (Art. 1439)
Manila Lodge No. 761 Benevolent and Protective Order of the Elks v. Court
of Appeals, 73 SCRA 168 (1976)
4. Application (Art. 1434 to 1438)
Miguel v. Catalino, 26 SCRA 234 (1969)
Read: Annotation 32 SCRA 542
Mendoza v. Reyes and Court of Appeals, G.R. No. L­31618, August 17, 1983
B. Trusts
1. Definition (Art. 1442)
2. Parties (Art. 1440)
a. Trustor
b. Trustee
c. Beneficiary or cestui que trust
Salao v. Salao, 70 SCRA 168 (1976)
3. Kinds (Art. 1441)
a. Express trusts
i.
ii.
iii.
iv.
Proof required (Art. 1443)
Form (Art. 1444)
Want of trustee (Art. 1445)
Acceptance by the beneficiary (Art. 1441)
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Law 101: Obligations and Contracts
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b. Implied Trusts
i.
ii.
iii.
How established (Art 1441)
How proved (Art. 1457)
Specific cases (Art. 1448 to 1456)
Fabian v. Fabian, 22 SCRA 231 (1968)
Bueno v. Reyes, 27 SCRA 1179 (1969)
Tamayo v. Callejo, 46 SCRA 27 (1972)
Heirs of Sanjorjo v. Quijano, G.R. No. 140457, January 19, 2005)
Aznar Brothers Realty Company v. Aying, G.R. No. 144773, May 16, 2005.
‐o‐
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Law 101: Obligations and Contracts
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Law 101: Obligations and Contracts
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Prof. Mary Rose S. Tan
37