Syllabus (June 2009)

8/3/2019 Syllabus (June 2009)

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Obligations and Contracts

TITLE I. OBLIGATIONS

Chapter 1. General ProvisionsI. Concept

A. Definition Art. 1156- criticism of definition

B. Elements1. Active Subject2. Passive Subject3. Prestation or Object4. Efficient cause or juridical tie or vinculum juris

C. Distinction Between Natural and Civil Obligations1. As to enforceability2. As to basis

II. Sources of Obligations Art. 1157A. Law Art. 1158B. Contracts Art. 1159, 1305C. Quasi-Contracts Art. 1160, 1305

1. Kindsa. Negotiorum gestio Art. 2144b. Solutio indebitiArt. 2154c. Other quasi-contracts Art. 2164 to Art. 2175

D. Acts or omissions punished by law Art. 1161E. Quasi-Delicts Art. 1162, 2176

1. Distinction between quasi-delicts and crimes2. Liability for fault of others Art. 2180; Art. 218, 219 FC3. Civil liability arising from crime Art. 1161; Rule 111 ROC

Cases

Barredo v. Garcia

Mendoza v. Arrieta

PSBA v. CA

Amadora v. CA

III. Classification of ObligationsA. Primary Classification Under the CC

1. Pure and Conditional (Art. 1179-1192)2. With a period or term (Art. 1193-1198)3. Alternative and Facultative (Art. 1199-1206)4. Joint and Solidary (Art. 1207-1222)5. Divisible and Indivisible (Art. 1223-1225)6. With a penal clause (Art. 1226-1230)

B. Secondary Classification1. 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 Bilateral6. Individual and Collective7. Accessory and Principal8. As to object or prestation:

a. Simpleb. Multiple

1) Conjunctive or2) Distributive

a) Alternativeb) Facultative

9. Possible and Impossible


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Chapter 2. Nature and Effects of Obligations

I. Kinds of PrestationA. Obligation to give

1. A specific thinga. Duties of the obligor

i. To deliver thing itself Art. 1244ii. To preserve thing Art. 1163iii. To deliver the accessions and accessories Art. 1166

- distinction between accession and accessory

iv. To deliver the fruits Art. 1164 par. 12. A generic thing Art. 1246

B. Obligation to do Art. 1244C. Obligation not to do Art. 1244

II. Breach of ObligationA. Concept

1. Distinction between substantial and casual/slight breachCases:

Song Fo v. Hawaiian Phils.

Velarde, et al v. CA

B. Modes of Breach Art. 11701. Fraud (dolo)

a. Concepti. dolo (1171) vs. dolo incidenteii. dolo (1171) vs. dolo causante

Cases

Woodhouse v. Halili

Geraldez v. CA

b. Nonwaiver Art. 1171c. Effects

2. Negligence Art. 1172a. Concept Art. 1173

i. culpa v. doloii. culpa aquiliana v. culpa contractual

Cases

Gutierrez v. Gutierrez

Vasquez v. Borja

b. Standard of care required Art. 1173 par. 2Cases

De Guia v. Manila Electric Co.

Sarmiento v. Sps. CabridoCrisostomo v. CA

c. Effects


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3. Delay (Mora) Art. 1169a. Conceptb. Kinds

i. mora solvendi- requisites

- General Rule: Creditor should make demand before debtor incurs delay Art. 1169Cases

Cetus Development Corp. v. CA

Santos Ventura Hocoma Foundation v. Santos

Vasquez v. Ayala Corporation

- Exceptions Art. 1169Case

Abella v. Francisco

ii. mora accipiendi- requisites

- see also Art. 1268Cases

Vda. de Villaruel v. Manila Motor Co., Inc.

Tengco v. CA

iii. compensation morae- requisitesCase

Central Bank v. CA

c. Effects4. Contravention of the tenor

Cases

Chavez v. Gonzales

Telefast v. Castro

Arrieta v. NARIC

Magat v. Medialdea

5. Non-payment


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III. Remedies of Creditor in Case of BreachA. Action for performance

1. Action for specific performance in obligation to give a specific thing Art. 1165 par. 1; ROC 39, Sec. 102. Action for substituted performance in obligation to give a generic thing Art. 1165 par. 23. Action for substituted performance or undoing of poor work in obligation to do Art. 1167

Cases

Chavez v. Gonzales

Tanguilig v. CA

a. Exception4. Action for undoing in obligation not to do Art. 1168

a. ExceptionB. Action for damages Art. 1170C. Action for rescission Art. 1191, 1192


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IV. Subsidiary Remedies of CreditorA. Accion Subrogatoria Art. 1177

1. Concept2. Requisites3. Exceptions inherent rights of debtor, Art. 772

B. Accion Pauliana Art. 1177, 1381 par. 31. Concept

a. Distinction between accion pauliana and accion subrogatoria2. Requisites

Cases

Khe Hong Cheng v. CASiguan v. Lim

C. Other Specific Remedies Art. 1652, 1729, 1608, 1893


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V. Extinguishment of Liability in Case of Breach Due to Fortuitous Event Art. 1174A. Concept of Fortuitous Event

1. Act of God2. Act of Man

B. Requisites1. Effect of concurrent fault

Cases

Juan Nakpil & Sons v. CA

Republic v. Luzon Stevedoring Co.

Dioquino v. Laureano

Austria v. CA

NPC v. CA

Yobido v. CA

Bacolod-Murcia Milling v. CA

Philcomsat v. Globe Telecom

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


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VI. Usurious Transactions Art. 1175, 1413, 1961A. PD 858; PD 1685; PD 116B. Central Bank Circular 416C. Monetary Board Circular 905 lifting the interest rate ceiling v. Art. 2209

Cases

Eastern Shipping Lines v. CA

Crismina Garments v. CA

Keng Hua Products v. CA

Security Bank v. RTC Makati

Almeda v. CA

First Metro Investment v. Este Del Sol

VII. Fulfillment of ObligationsA. see Chapter 4: PaymentB. Presumptions in payment of interests and installments Art. 1176

VIII. Transmissibility of Rights Art. 1178


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Chapter 3. Different Kinds of Obligations

I. Pure and Conditional ObligationsA. Pure Obligations Art. 1179 par. 1B. Conditional Obligations Art. 1181

1. Conditiona. Conceptb. Condition v. Period/Term

Cases

Gaite v. Fonacier

Gonzales v. Heirs of Thomas2. Kinds of conditions

a. As to effect on obligation Art. 1181Case

Gonzales v. Heirs of Thomas

i. Suspensive (condition precedent)- retroactive effect when condition is fulfilled Art. 1187

- rights of creditor and debtor before fulfillment of condition Art. 1188Case

Coronel v. CA

ii. Resolutory (condition subsequent)Cases

Parks v. Province of Tarlac

Central Philippine University v. CA

Quijada v. CA

Taylor v. Uy Tieng Piaob. As to cause or origin Art. 1182

i. Potestative- effect if fulfillment of condition depends solely on the will of the debtor (Cf. term)

- debtors promise to pay when he can is not a conditional obligation Art. 1180Case

Lim v. CA

ii. Casual Art. 1267Case

Naga Telephone Co, Inc. v. CA

iii. MixedCases

Osmea v. Rama

Hermosa v. Longora

Smith Bell v. Sotelo Matti

Rustan Pulp and Paper Mills v. IACRomero v. CA

c. As to possibility Art. 1183i. Possibleii. Impossible

-effectCase

Roman Catholic Arch of Manila v. CA

d. As to modei. Positive Art. 1184ii. Negative Art. 1185

3. Rules in case of loss, deterioration or improvement pending the happening of the condition Art. 1189, 1190a. Meaning of loss (Art. 1189[2]), deterioration and improvementb. Effect of loss or deterioration

i.

Without debtors faultii. With debtors faultc. Effect of improvement

i. by nature or timeii. at the debtors expense


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4. Effect of prevention of the fulfillment of the condition by the obligor Art. 1186Case

Taylor v. Uy Tieng Piao

Herrera v. Leviste

C. Reciprocal Obligations Art. 1191, 11921. Concept2. Alternative remedies of injured party in case of breach

a. Action for Fulfillmenti. when fulfillment no longer possible; effect

b. Action for Rescissioni. requisitesii. how madeiii. effects

See also Art. 1786, 1788; Arts. 1484-86; RA 6552Cases

Song Fo v. Hawaiian-Philippines

Boysaw v. Interphil Promotions

U.P. v. De Los Angeles

Iringan v. CA

De Erquiaga v. CA

James G. Ong v. CA

Visayan Saw Mill v. CA

Ernesto Deiparine v. CA

Vda. De Mistica v. Sps. Naguiat


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II. Obligation with a Period Art. 1193, 1180A. Period or Term

1. Concept2. Period/Term v. Condition

B. Kinds of Period/Term1. As to effect

a. Suspensive (Ex die) Art. 1193 par. 1b. Resolutory (In diem) Art. 1193 par. 2

2. As to expressiona. Expressb. Implied3. As to definitenessa. Definiteb. Indefinite

4. As to sourcea. Voluntaryb. Legalc. Judicial

C. Rules in case of loss, deterioration or improvement before arrival of period Art. 1194, 1189D. Effect of payment in advance Art. 1195

Note: Art. 1197 par. 3

E. Benefit of Period1. For whose benefit

a. creditorb. debtorc. both

2. Effects3. Presumption Art. 1196

Cases

Ponce de Leon v. Syjuco

Buce v. CA

4. When debtor loses right to make use of period Art. 1198F. When Court may Fix Period Art. 1197

1. Period is implied2. Period depends solely on will of debtor (Cf. condition)

Cases

Araneta v. Philippine Sugar Estate Development Co.

Central Philippine University v. CA


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III. Alternative ObligationsA. Concept Art. 1199B. Right of choice Art. 1200C. Effect of notice of choiceD. When notice produces effect Art. 1201E. Effect of loss or impossibility of one or all prestations Art. 1202 to Art. 1205F. Facultative Obligation Art. 1206

1. Concept2. Distinguished from Alternative Obligation3. Effect of Substitution


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IV. Joint and Solidary ObligationA. Joint Obligations

1. Concepta. Requisitesb. Words used to indicate joint obligations

2. Presumption Art. 1207, 12083. Effects Art. 1207, 1208

a. Extent of liability of debtorb. Extent of right of creditorc. In case of novation, compensation, confusion (Art. 1277), remission

B. Solidary Obligations1. Concepta. Requisitesb. Words used to indicate solidary obligations

2. Kindsa. As to source Art. 1208

i. Legal Art. 1915, 1945, 2194; Art. 119 RPCii. Conventionaliii. Real

b. As to parties boundi. Activeii. Passiveiii. Mixed

c. As to uniformityi. Uniformii. Varied/Non-uniform Art. 1211

- effectsCases

Inchausti v. Yulo

Lafarge Cement Phil. v. Continental Cement

3. Effectsa. Solidary creditor in relation to:

i. common debtor- right to demand- Art. 1215, 1214, 1216, 1217 par. 1

- in case of novation, compensation, confusion, remission by a creditor- Art. 1215 par. 1

ii. solidary co-creditor/s- in case of novation, compensation, confusion, remission Art. 1215 par. 2

- prejudicial acts prohibited Art. 1212

- assignment of righs not allowed Art. 1213b. Solidary debtor in relation to:

i. common creditor- obligation to perform Art. 1207

- in case of novation, compensation, confusion, remission by a creditor Art. 1215 par. 1

ii. solidary co-debtor- in case of payment by a co-debtor Art. 1217, 1218, 1220, 1219

- in case of fortuitous event Art. 1221Cases

Jaucian v. Querol

RFC v. CA

Quiombing v. CA

Inciong v. CA


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4. Defenses available to a solidary debtor against the creditor Art. 1222a. Types

i. Those derived from the nature of the obligationii. Personal defensesiii. Defenses pertaining to his shareiv. Those personally belonging to the other co-debtors

b. EffectsCases

Inchausti v. Yulo

Alipio v. CA

C. Joint Indivisible Obligations1. Concept

a. Distinguished from Joint Obligationsb. Distinguished from Solidary Obligations

2. Indivisibility distinguished from solidarity Art. 12103. Effects Art. 1209

a. Liability for damages in case of breach Art. 1224


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V. Divisible and Indivisible ObligationsA. Divisible Obligations

1. Concept2. Effects Art. 1223, 1233

B. Indivisible Obligations1. Concept

a. Distinguished from solidary obligations2. Kinds

a. Natural Art. 1225 par. 1b. Legal Art. 1225 par. 3c. Conventional Art. 1225 par. 33. Presumptionsa. Of indivisibility Art. 1225 par. 1b. Of divisibility Art. 1225 par. 2

4. Divisibility and indivisibility in obligations not to do Art. 1225 par. 35. Effects Ar. 1223, 1233, 1224

- seeJoint Indivisible Obligations

6. Cessation of indivisibility


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VI. Obligations with a Penal ClauseA. Concept

1. Principal v. Accessory Obligation2. Distinguished from Conditional Obligations3. Distinguished from Alternative Obligations4. Distinguished from Facultative Obligations5. Distinguished from Guaranty

B. Kinds of Penal Clause1. As to effect

a. Subsidiaryb. Complementary2. As to sourcea. Conventionalb. Legal

3. As to purposea. Punitiveb. Reparatory

C. Demandability of Penalty Art. 1226 par. 2D. Effects of Penal Clause

1. Substitute for indemnity for damages and payment of interest Art. 1226a. Exception Art. 1226

Cases

Makati Devt Corp. v. Empire Insurance Co.

Tan v. CA

Country Bankers Insurance v. CA

2. Not exempt debtor from performance Art. 1227a. Exception Art. 1227

3. Creditor cannot demand both performance and penalty at the same time Art. 1227a. Exceptions Art. 1227

4. Creditor cannot collect other damages in addition to penalty Art. 1226a. Exceptions Art. 1226

E. When penalty shall be equitably reduced Art. 1229F. Nullity of Principal Obligation or Penal Clause

1. Effects Art. 12302. Rationale


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Chapter 4. Extinguishment of Obligations

I. Modes of Extinguishment Art. 1231A. Payment or PerformanceB. Loss or ImpossibilityC. Condonation or RemissionD. Confusion or MergerE. CompensationF. NovationG. Other Causes


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II. Payment or PerformanceA. Concept Art. 1232B. Requisites

1. Who can paya. in generalb. third person who is an interested party

i. meaning of interested partyii. effects Art. 1302[3]

c. third person who is not an interested party but with consent of debtori. effects Art. 1302[2], 1236 par. 1

d. third person who is not an interested party and without knowledge or against the will of the debtori. effects Art. 1236 par. 2, 1237, 1236 par. 1e. third person who does not intend to be reimbursed Art. 1238f. in obligation to give Art. 1239, 1427

i. effect of incapacityg. in case of active solidarity Art. 1214

2. To whom payment may be madea. in general Art. 1240

incapacited person Art. 1241 par. 1

i. requisitesb. third person- Art. 1241 par. 2

i. requisitesii. when proof of benefit not required Art. 1241 par. 3, 1242

c. in case of active solidarity Art. 12143. What is to be paid (Identity)

a. in generalb. in obligations to:

i. give a specific thing Art. 1244, Art. 1166, 1164 par. 1ii. give a generic thing Art. 1246iii. pay money Art. 1249, 1250; RA 529, RA 4100

Cases

Arrieta v. NARIC

Kalalo v. Luz

St. Paul Fire and Marine Insurance v. Macondray

Papa v. A.V. Valencia, et al.

PAL v. CA

c. payment of interest Art. 19564. How is payment to be made (Integrity)

a. in general Art. 1233GR: Partial payment is not allowed Art. 1248

Exp: Art. 1248

b. substantial performance in good faith Art. 1234c. estoppel Art. 1235d. presumptions in payment of interests and installments Art. 1176

5. When payment is to be madea. in general Art. 1169b. see Chapter 2: Delay

6. Where payment is to be made Art. 1251 par. 1a. if no place is expressly designate Art. 1251 par. 2 to par. 4

7. Expenses of making payment Art. 1247


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C. Application of Payments1. Concept Art. 1252

Cases

Reparations Commission v. Universal Deep Sea Fishing

Paculdo v. Regalado

2. Requisites3. Rules in application of payments Art. 1252, 1253

a. if rules inapplicable and application cannot be inferred Art. 12541) meaning of most onerous to debtor

D. Payment by Cession1. Concept Art. 12552. Requisites3. Effects

E. Dation in Payment1. Concept Art. 1245

a. Distinguished from Payment by CessionCase

DBP v. CA

2. Requisites3. Effects

Case

Filinvest Credit Corporation v. Philippine Acetylene

F. Tender of Payment and Consignation1. Tender of Payment

a. Conceptb. Requisites

2. Consignationa. Concept

1) Purposeb. Something

1) When tender and refusal not required Art. 1256 par. 22) Two notice requirement Art. 1257 par. 1, 1258 par. 2

- effects of noncompliance

c. Effects Art. 1260 par. 1d. Withdrawal by debtor before acceptance by creditor or approval by court; effects Art. 1260 par. 2e. Withdrawal by debtor after proper consignation Art. 1261

1) With creditors approval; effects2) Without creditors approval; effects

f. Expenses of consignation Art. 1259CasesDe Guzman v. CA

TLG International Continental Enterprising, Inc. v. Flores

McLaughlin v. CA

Meat Packing Corp. v. Sandiganbayan

Pabugais v. Sahijwani


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III. Loss or ImpossibilityA. Loss of Thing Due

1. Concept Art. 1189[2]2. Kinds

a. As to extenti. Totalii. Partial

3. Requisites Art. 12624. Presumption Art. 1265, 1165

a. When not applicable5. Effectsa. In obligation to give a specific thing Art. 1262, 1268

b. In obligation to give a generic thing Art. 1263c. In case of partial loss Art. 1264d. Action against third persons Art. 1269

B. Impossibility of Performance1. Concept Art. 1266, 12672. Kinds

a. As to extenti. Totalii. Partial

b. As to sourcei. Legalii. Physical

3. Requisites Art. 12664. Effects

a. In obligations to do Art. 1266, 1267, 1262 par. 2 (by analogy)i. impossibility distinguished from difficulty

Cases

Occea v. Jabson

Naga Telephone Co. v. CA

PNCC v. CA


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IV. Condonation or RemissionA. ConceptB. Kinds

1. As to extenta. Totalb. Partial

2. As to form Art. 1270 par. 1a. Expressb. Implied

C. Requisites1. When formalities required - Art. 1270 par. 2Case

Yam v. CA

D. Presumptions Art. 1271, 1272, 1274E. Effects

1. In general2. In case of joint or solidary obligations

F. Governing Rules Art. 1270G. Renunciation of Principal or Accessory Obligation

1. Effects Art. 12732. Rationale

V. Confusion or Merger of RightsA. ConceptB.

Requisites

C. Effects1. In general Art. 12752. In case of joint (Art. 1277) or solidary obligations

D. Confusion in Principal or Accessory Obligation Art. 1276


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VI. CompensationA. Concept Art. 1278

1. Distinguished from ConfusionB. Kinds

1. As to extenta. Totalb. Partial

2. As to origina. Legalb. Conventional Art. 1279 inapplicable, 1282c. Judicial Art. 1283d. Facultative

C. Legal Compensation1. Requisites Art. 1279, 1280

a. due distinguished from demandableCases

Gan Tion v. CA

Silahis Marketing Corp. v. IAC

BPI v. CA & Reyes

PNB v. CA & Sapphire Shipping

Mirasol v. CA

2. Effects Art. 1290, 1289D. When Compensation is Not Allowed Art. 1287, 1288E. Effects of Assignment of Credit

1. With consent of debtor- Art. 1285 par. 12. With knowledge but without consent of debtor Art. 1285 par. 23. Without knowledge of debtor Art. 1285 par. 3

a. Rationale


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VII. NovationA. Concept Art. 1291B. Kinds

1. As to forma. Expressb. Implied

2. As to origina. Conventionalb. Legal

3. As to objecta. Objective or Realb. Subjective or Personal

C. Requisites Art. 1292Cases

Magdalena Estate v. Rodriguez

Reyes v. Secretary of Justice

Cochingyan v. RB Surety and Insurance

Broadway Centrum Condominium Corp. v. Tropical Hut

California Bus Lines v. State Investment

D. Effects1. In general Art. 12962. When accessory obligation may subsist Art. 1296

E. Effect of the Status of the Original or New Obligation1. Nullity or voidability of original obligation Art. 12982. Nullity or voidability of new obligation Art. 12973. Suspensive or resolutory condition of original obligation Art. 1299

F. Objective Novation1. Meaning of principal conditions

G. Subjective Novation1. By change of debtor

a. Expromisioni. Requisites Art. 1293ii. Effects Art. 1294

b. Delegacioni. Requisites (vs. Art. 1293)ii. Effects Art. 1295

Cases

Garcia v. Llamas

Quinto v. People

2. By change of creditor: Subrogation of a third person in the rights of the creditor Art. 1300a. Conventional subrogation

i. Requisites art. 1301ii. Distinguished from Assignment of Creditiii. Effects Art. 1303, 1304

Case

Licaros v. Gatmaitan

b. Legal Subrogationi. Requisitesii. When presumed Art. 1302iii. Effects Art. 1303, 1304

Case

Astro Electronics Corp. v. PhilGuarantee


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TITLE II. CONTRACTS

I. General ProvisionsA. Definition Art. 1305B. Elements

1. Essential elements (see Chapter II, infra)a. Consentb. Objectc. Cause

2. Natural elements3. Accidental elements (see D., 3., infra)

C. Characteristics1. Obligatory force Art. 13082. Mutuality Arts. 1308 to Art. 1310 (see also Art. 1473)

Case

GSIS v. CA

3. Relativitya. Contracts take effect only between the parties, their assigns and heirs Art. 1311

Cases

Manila Railroad Co. v. La Compaia Transatlantica

DKC Holdings Corp. v. CA

b. No one may contract in the name of another Art. 1317Case

Gutierrez Hmnos. V. Orense

D. Parties1. Auto-contracts2. Freedom to contract Art. 1306

CasesGabriel v. Monte de Piedad

Pakistan International Airlines v. Ople

a. Special disqualifications1) Art. 87 FC2) Arts. 1490-1491 CC3) Art. 1782 CC

3. What they may not stipulate Art. 1306a. 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 moralsc. Contrary to good customsd. Contrary to public ordere. Contrary to public policy

Cases

Cui v. Arellano

Arroyo v. Berwin

Filipinas Compaia de Seguros v. Mandanas

Bustamante v. Rosel


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E. Classification1. According to subject matter

a. Thingsb. Services

2. According to namea. Nominateb. Innominate Art. 1307

Case

Dizon v. Gaborro

1) Do ut des2)

Do ut facias3) Facio ut facias

4) Facio ut des3. According to perfection

a. By mere consent (consensual) Art. 1315b. By delivery of the object (real) Art. 1316

4. According to its relation to other contractsa. Preparatoryb. Principalc. Accessory

5. According to forma. Common or informalb. Special or formal

6. According to purposea.

Transfer of ownership, e.g., sale

b. Conveyance of use, e.g., commodatumc. Rendition of services, e.g., agency

7. According to the nature of the vinculum produceda. Unilateralb. Bilateralc. Reciprocal

8. According to causea. Onerousb. Gratuitous or lucrative

9. According to riska. Commutativeb. Aleatory

F. Stages1. Preparation2. Perfection3. Consummation or death

G. As distinguished from a perfected promise and an imperfect promise (policitacion)H. With respect to third persons

1. Stipulations in favor of third persons (stipulationspour autrui) Art. 1311, par. 2Cases

Florentino v. Encarnacion

Coquia v. Fieldmens Insurance Cp.

Constantino v. Espiritu

Integrated Packaging Corp. v. CA

2. Possession of the object of contract by third persons Art. 13123. Creditors of the contracting parties Art. 13134. Interference by third persons Art. 1314

Cases

Daywalt v. La Corporacion de los Padres Agustinos RecoletosSo Ping Bun v. CA


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II. Essential Requisites of ContractsA. Consent

1. Requisites Art. 1319a. Must be manifested by the concurrence of the offer and acceptance

Cases

Rosenstock v. Burke

Malbarosa v. CA

1) Offera) Must be certain Art. 1319b) What may be fixed by the offeror Art. 1321c)

When made through an agent Art. 1322d) Circumstances when offer becomes ineffective Art. 1323

e) Business advertisements of things for sale Art. 1325f) Advertisements for bidders Art. 1326

Case

Jardine Davies v. CA

2) Acceptancea) Must be absolute Art. 1319b) Kinds

i. Express Art. 1320ii. Implied Art. 1320iii. Qualified Art. 1319

c) If made by letter or telegram Art. 1319 par. 2i. Four theories on when the contract is perfected

1. Manifestation theory2. Expedition theory3. Reception theory4. Cognition theory Art. 1319 par. 2

d) Period of acceptance Art. 1324Case

Sanchez v. Rigos

e) Contract of option Art. 1324Case

Adelfa Properties v. CA

b. Necessary legal capacity of the parties1) Who cannot give consent Art. 13272) When offer and/or acceptance is made

a) During a lucid intervalb) In a state of drunkennessc) During a hypnotic spell


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c. The consent must be intelligent, free, spontaneous, and real Art 1330 to Art. 13461) Effect Art. 13302) Vices of consent

a) Mistake or errori. Kinds

1. Mistake of facta. As to substance of the objectb. As to principal conditionsc. As to identity or qualification of one of the partiesd. As to quantity, as distinguished from a simple mistake of account

CasesAsiain v. Jalandoni

Theis v. CA

Heirs of William Sevilla, et al v. Leopoldo Sevilla

2. Error of lawa. General rule: Ignorantia legis neminem excusat Art. 3b. Exception: Mutual error of law Art. 1334

ii. When one of the parties is unable to read Art. 1332Cases

Dumasug v. Modelo

Hemedes v. CA

Katipunan v. Katipunan

iii. Inexcusable mistake Art. 1333b) Violence and intimidation Art. 1335

i. Effect Art. 1336CaseMartinez v. Hongkong and Shanghai Bank

c) Undue influence Art. 1337d) Fraud or dolo Art. 1338

Cases

Hill v. Veloso

Woodhouse v. Halili

Geraldez v. CA

i. Kinds1. Dolo causante Art. 13382. Dolo incidente Art. 1344 par. 2

ii. Failure to disclose facts; duty to reveal them Art. 1339Cases

Tuason v. Marquez

Rural Bank of Sta. Maria v. CA

iii. Usual exaggerations in trade; opportunity to know the facts Art. 1340Cases

Azarraga v. Gay

Laureta Trinidad v. IAC

iv. Mere expression of an opinion Art. 13411. Effects Art. 1344

Case

Songco v. Sellner


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e) Misrepresentationi. By a third person Art. 1342ii. Made in good faith Art. 1343iii. Active/Passive

Cases

Mercado and Mercado v. Espiritu

Braganza v. Villa Abrille

f) Simulation of ContractsCases

Rodriguez v. Rodriguez

Suntay v. CA

Blanco v. Quasha

i. Kinds Art. 13451. Absolute2. Relative

ii. Effects Art. 1346


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B. Object of Contracts1. What may be the objects of contracts Art. 1347

a. All things not outside the commerce of manb. All rights not intransmissiblec. All servicers not contrary to law, morals, good customs, public, or public policy

2. Requisite must be determinate as to its kind Art. 13493. What may not be the objects of contracts Art. 1347

a. Future inheritance, except when authorized by lawCases

Blas v. Santos

Tanedo v. CA

b. Impossible things or services Art. 1348C. Cause of Contracts

1. Meaning of cause Art. 1350a. In onerous contractsb. In remuneratory contractsc. In contracts of pure beneficence

2. As distinguished from motive Art. 13513. Defective causes and their effects:

a. Absence of cause and unlawful cause Art. 1352Case

Liguez v. CA

b. Statement of a false cause in the contract Art. 1353c. Lesion or inadequacy of cause Art. 1355

Cases

Carantes v. CA

Sps. Buenaventura, et al v. CA

d. Presumption of the existence and lawfulness of a cause, though it is not stated in the contract Art. 1354


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III. Form of ContractsA. 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

B. Exception: When the law requires that a contract be in some for in order that it may be valid or enforceable. (Anglo-American principle) Art. 1356Case

Hernaez v. De los Angeles

C. Kinds of formalities required by law:1. Those required for the validity of contracts, such as those referred to in Art. 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 Art. 1357,

1358; and3. Those required for the purpose of proving the existence of the contract, such as those under the Statute of Frauds in Art. 1403.


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IV. Reformation of InstrumentsA. Requisites Art. 1359:

1. Meeting of the minds upon the contract;2. The true intention of the parties is not expressed in the instrument; and3. The failure of the instrument to express the true agreement is due to mistake, fraud, inequitable conduct, or accident.

Cases

Garcia v. Bisaya

Bentir v. Leande

B. Cases where no reformation is allowed Art. 1366C. Implied Ratification Art. 1367D.

Who may ask for reformation Art. 1368E. Procedure of reformation Art. 1369Cases

Atilano v. Atilano

Carantes v. CA

Sarming, et al v. Cresencio Dy, et al


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V. Interpretation of Contracts (Compare w/ Rules on StatCon)A. Primacy of intention Arts. 1370, 1372

Cases

Borromeo v. CA

Kasilag v. Rodriguez

B. How to determine intention Art. 1371C. How to interpret a contract

1. When it contains stipulations that admit several meanings Art. 13732. When it contains various stipulations, some of which are doubtful Art. 13743. When it contains words that have different significations Art. 13754.

When it contains ambiguities and omission of stipulations Art. 13765. 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. 1378a. In gratuitous contractsb. In onerous contracts

7. When the doubts are cast upon the principal object so that the intention cannot be known Art. 1378D. Applicability of Rule 123, Rule of Court (now Secs. 10-19, Rule 130)


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DEFECTIVE CONTRACTS

VI. Rescissible ContractsA. Kinds Art. 1381B. Characteristics

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.

C. Rescission Art. 13801. Definition2. As distinguished from rescission under Art. 1191

Case

Universal Food Corp. v. CA

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. 1385e. The action for rescission is brought within the prescriptive period of 4 years Art. 1389

4. Effect of rescission Art. 1385a. With respect to third persons who acquired the thing in good faith Art. 1385, par. 2 & par. 3

5. Extent of rescission Art. 13846. Presumptions of fraud Art. 1387

a. Badges of fraudCases

Oria v. Mcmicking

Siguan v. Lim

Suntay v. CA

7. Liability for acquiring in bad faith the things alienated in fraud of creditors Art. 1388


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VII. Voidable or Annullable ContractsA. Kinds Art. 1390B. 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.

C. Annulment1. As distinguished from rescission2. Grounds Art. 13903. Who may and may not institute action for annulment Art. 1397

CaseSingsong v. Isabela Sawmill

4. Prescription Art. 13915. Effect

a. Mutual restitution Arts. 1398 and 1402Cases

Cadwallader & Co. v. Smith, Bell & Co.

Velarde v. CA

1) When one of the parties is incapacitated Art. 13992) When the thing is lost through the fault of the party obliged to return the same Art. 1400

6. Extinguishment of the actiona. By ratification Art. 1392b. When the thing is lost through the fault of the person who has the right to file the action Art. 1401

D. Ratification1. 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;

2. Formsa. Express or tacit Art. 1393b. By the parties themselves or by the guardian in behalf of an incapacitated party Art. 1394

3. Effectsa. Action to annul is extinguished Art. 1392

Case

Uy Soo Lim v. Tan Unchuan

b. The contract is cleansed retroactively from all its defects Art. 1396


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VIII.Unenforceable ContractsA. 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.

B. Kinds Art. 14031. Unauthorized contracts

a. Governing rules Art. 14042. Contracts covered by the Statute of Frauds

a. Purpose of StatuteCasesPhilippine National Bank v. Philippine Vegetable Oil, Co.

Limketkai Sons Milling Inc. v. CA

Swedish Match v. CA

b. How ratified Art. 1405Case

Carbonnel v. Poncio, et al.

c. Right of the parties when a contract is enforceable but a public document is necessary for its registration Art. 14063. 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 Art. 1407b. Effect of ratification by the parents or guardian of both parties Art. 1407


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IX. Void or Inexistent ContractsA. Characteristics

1. Void from the beginning2. Produces no effect whatsoever3. Cannot be ratified Art. 1409

B. Kinds Art. 14091. Contracts that are void

a. Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy1) When the act constitutes a criminal offense Art. 1411

a) In pari delicto ruleCaseUbarra v. Mapalad

2) When the act is unlawful but does not constitute a criminal offense Art. 1412a) In pari delicto rule

Case

Modina v. CA

3) When the purpose is illegal, and money is paid or property delivered therefor Art. 14144) When the contract is illegal and one of the parties is incapable of giving consent Art. 1415

Cases

Liguez v. CA

Relloza v. Gaw Cheen Hum

5) When the agreement is not illegalper se but is prohibited Art. 1416Cases

Philippine Banking Corp. v. Lui She

Frenzel v. Catito

6) When the amount paid exceeds the maximum fixed by law Art. 14177) 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. 14199) When the contract is divisible Art. 142010) When the contract is the direct result of a previous illegal contract Art. 1422

b. Those whose object is outside the commerce of manc. Those which contemplate an impossible serviced. Those where the intention of the parties relative to the principal object of the contract cannot be ascertainede. Those expressly prohibited or declared void by law

2. Contracts that are inexistenta. Those which are absolutely simulated or fictitious Arts. 1345, 1346b. Those whose cause or object did not exist at the time of the transaction

C. Right to set up defense of illegality cannot be waived Art. 1409D. The action or defense for the declaration of the inexistence of a contract

1. does not prescribe Art. 14102. is not available to third persons whose interest is not directly affected Art. 1421


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TITLE III. NATURAL OBLIGATIONSA. Definition Art. 1423B. As distinguished from civil obligations Art. 1423C. As distinguished from moral obligations

Cases

Villaroel v. Estrada

Fisher v. Robb

D. Conversion to civil obligation1. By novation2. By ratification

E. Examples Art. 1424 1430TITLE IV. ESTOPPELA. Definition Art. 1431

Case

Kalalo v. Luz

B. Kinds1. Technical estoppels

a. By record

b. By deed Art. 1433

2. Equitable estoppels or estoppels in pais Art. 1433

C. Persons bound Art. 1439Case

Manila Lodge No. 761 Benevolent and Protective Order of the Elks v. CA

D.

Cases where estoppels applies Arts. 1434 to 1438CaseMiguel v. Catalino

TITLE V. TRUSTSA. DefinitionB. Governing rules Art. 1442C. Parties Art. 1440

1. Trustor2. Trustee3. Beneficiary or cestui que trust

D. Kinds Art. 1441Case

Salao v. Salao

1.

Express Trustsi. Proof required Art. 1443ii. Form Art. 1444iii. Want of trustee Art. 1445iv. Acceptance by the beneficiary Art. 1441

2. Implied Trustsa. How established Art. 1441b. How proved Art. 1457c. Examples Arts. 1448 to 1456

Cases

Fabian v. Fabian

Bueno v. Reyes

Tamayo v. Callejo

Syllabus (June 2009)

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Transcript of Syllabus (June 2009)