2014-2015 Obligations and Contracts, Consolidated Syllabus

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 accessories1 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 conditionArt. 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 creditorArt. 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 creditorArt. 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 Other Causes 57. II. Payment or Performance

G. 58. 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. 93. 94. 95. 2. 3.

Concept- Art. 1255 Case DBP v. CA, G.R. No. 118342, January 5, 1998 Requisites 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 L103. 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

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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.

F.

G. H.

A.

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. Stages 250. 1. Preparation 2. Perfection 3. Consummation or death 251. As distinguished from a perfected promise and an imperfect promise (policitacion) 252. 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. 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) b) c) d) e) f)

Must be certain – Art. 1319 What may be fixed by the offeror – Art. 1321 When made through an agent – Art. 1322 Circumstances when offer becomes ineffective – Art. 1323 Business advertisements of things for sale – Art. 1325 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

c 283.

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. The consent must be intelligent, free, spontaneous, and real – Arts. 1330-1346 1) Effect – Art. 1330 282. 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.

299.

306. 307.

ii. 300.

305. iii.

2. Error of law 297. a. General rule: Ignorantia legis neminem excusat – Art. 3 298. b. Exception: Mutual error of law – Art. 1334 When one of the parties is unable to read – Art. 1332 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 Inexcusable mistake – Art. 1333 Case 308. Domingo Realty v. CA, G.R. No. 126236, January 26, 2007

309. 310.

b) 311. 312.

Violence and intimidation – Art. 1335 i. Effect – Art. 1336 Cases 313. Martinez v. Hongkong and Shanghai Bank, 15 Phil. 252 (1910) 314. Lee vs. CA (G.R. No. 90423, September 6, 1991)

316. 317. 318. 319. 320. 321.

c)

Undue influence – Art. 1337 Cases Alcasid v. CA, G.R. No. 104571, October 7, 1994 Loyola v. CA, G.R. No. 115734, February 23, 2000

d) 322.

Fraud or dolo – Art. 1338 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

315.

327. 328.

i. 329. 330.

331. 332. 333.

Kinds 1. dolo causante – Art 1338 2. dolo incidente – Art. 1344, 2nd par. Cases Tankeh v. DBP, G.R. No. 171428, November 11, 2013 ECE Realty v. Mandap G.R. No. 196182, September 01, 2014

334. 335.

ii. 336.

Failure to disclose facts; duty to reveal them – Art. 1339 Cases 337. Tuason v. Marquez, 45 Phil. 381 (1923) 338. Rural Bank of Sta. Maria v. CA, 314 SCRA 255 (1999)

339. 340. iii. facts – Art. 1340 341.

Usual exaggerations in trade; opportunity to know the Cases 342. Azarraga v. Gay, 52 Phil. 599 (1928) 343. Laureta Trinidad v. IAC, 204 SCRA 524 (1991)

344. 345.

iv. 346. 347.

Mere expression of an opinion – Art. 1341 1. Effects – Art. 1344 Case 348. Songco v. Sellner, 37 Phil.254 (1917)

349. 350.

358.

e) 351. 352. 353.

Misrepresentation i. By a third person – Art. 1342 ii. Made in good faith – Art. 1343 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. 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. 368. B. Object of Contracts 369.

i. 366. 367. ii.

Kinds – Art. 1345 1. Absolute 2. Relative Effects – Art. 1346

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

A.

B.

C.

A.

B. C. D. E.

383. Chapter 3. Form of Contracts 384. 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. 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. 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. 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. Cases where no reformation is allowed - Art. 1366 401. Implied Ratification – Art. 1367 402. Who may ask for reformation –Art. 1368 403. 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. A.

B.

C.

D.

Chapter 5. Interpretation of Contracts (Compare with Rules on Statutory Construction)

409. 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. How to determine intention – Art. 1371 416. Case 417. Villaflor v. CA, G.R. No. 95694, October 9, 1997 418. 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. Applicability of Rule 123, Rules of Court (now Secs. 10-19, Rule 130) 422.

423. 425.

DEFECTIVE CONTRACTS 424. 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

A.

B.

C.

D.

440. Chapter 7. Voidable or Annullable Contracts 441. 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. 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. 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. 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.

519. A. B. C.

D.

1.

2.

517. Title V. TRUSTS 518. Chapter I. General Provisions 520. Definition Governing rules – Art. 1442 Parties – Art. 1440 1. Trustor 2. Trustee 3. Beneficiary or cestui que trust Kinds – Art. 144 521. Case 522. Salao v. Salao, 70 SCRA 168 (1976) 523. Express Trusts a. Proof required – Art. 1443 b. Form – Art. 1444 c. Want of trustee – Art. 1445 d. Acceptance by the beneficiary – Art. 1441 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.