Tarlac State University School of Law OBLIGATIONS AND CONTRACTS 2nd Semester, School Year 2019-2020 Atty, Mykedox Knoel T. Cuchapin, LLM Course Description: A deep examination of the statutory provisions on obligations and contract, as contained in the New Civil Code of the Philippines. This will include discussion of the different kinds of civil obligations, its sources, and how its extinguishment. It will be followed by discussion of contracts particularly its elements and kinds. As part of obligations and contracts, prescription, estoppel, and laches will also be incorporated. Since obligations and contracts is a prerequisite to different higher law subjects, it shall also be discussed while touching provisions of sales, negotiable instruments, torts and damages, credit transactions, and partnership, agency, and trust among others. Course Objective/s: This course aims to give the students a good foundation to the laws on obligations and contracts. The students will primarily study the New Civil Code including recent and landmark decisions of the Supreme Court. This course also aims to give students basic knowledge of laws and rules needed for their other civil law subjects so that they can appreciate the interplay of between civil aw, political law, criminal law, commercial law, and remedial law. Hence, the students will also study select provisions of the Philippine Constitution, Revised Penal Code, Commercial Laws, and the Rules of Court. Course Requirements and Grading Plan: a. Recitations b. Quizzes c. Case digest d. Others: legal opinion, assignments, class reports e. Periodic/ term examination: midterms and finals The term grade (midterm grade or tentative final grade) shall consist of class standing and term examination. Class standing will include quizzes, recitations, case digests, and other requirements. It will be given 50% weight. Term examination on the other hand will be given 50% weight. The average of the computed midterm grade and tentative final grade will be the periodic final grade. The student should obtain a grade of at least 75 in order to pass the subject.COURSE OUTLINE PART ONE: OBLIGATIONS I. GENERAL PRINCIPLES Art. Definition of Obligation (Art. 1156, Civil Code) B. Classification of Obligations 1. Civil Obligations (Art. 1156) 2. Natural Obligations (Art. 1423) * Conversion to Civil Obligation a. By novation b. By ratification 3, Moral Obligations 4. Distinctions * Villaroel v. Estrada, 71 Phil. 140 (1940) * Fisher v. Robb, 69 Phil 101 (1939) C. Elements / Requisites of Civil Obligations Subjective Elements: 1. Active Subject (creditor/obligee) 2. Passive Subject (debtor/ obligor) Ocampo Ill v. People, 543 SCRA 487 Objective Elements: 3. Object or Presentation (Art. 1156) a. Real obligation i. Purpose b. Personal obligation i. Positive Personal Obligation ii, Negative Personal Obligation 4. Efficient Cause, Legal Tie or Vinculum Juris: D. Sources of Obligations (Art. 1157) 1, Law (Art. 1158) + Hotel Nikko v. Reyes, 452 SCRA 532 = Leung Ben v. O’Brien, 38 PHIL 182 = St. Mary’s Academy v. Carpitanos, 6 February 2004 * Pelayo v. Lauron, 12 PHIL 453 2. Contracts (Art. 1159 and 1305) * Sps Guanio v. Makati Shangri-la Hotel, 7 February 2011TSPI, Inc. v. TSPOC Employees Union, 545 SCRA. 215 Bricktown Development v. Amor Tierra Regino v. Pangasinan College, 18 November 2004 PSBA v. CA, 4 February 1992 3, Quasi-Contracts (Art. 1160 in rel. to Arts. 2142-2175) Kinds a. Negotiorum gestio (Art. 2144) b. Solutio Indebiti (Art. 2154) c. Others (Art. 2164-2175) Locsin v. Mekeni, 9 December 2013 Shinryo (Philippines) Company, Inc. v. RRN Inc. 20 October 2010 Sarte Flores v. Sps Lindo, 13 April 2011 Titan-Ikeda Construction v. Primetown Property, 544 SCRA 466 4, Delicts or Crime (Art. 1161 in re to the Revised Penal Code) Manantan v. CA, 29 January 2001 Bermudez v. Melecio-Herrera, 26 February 1988 People v. Relova, 6 March 1987 People v. Bayotas, 236 SCRA 239 5. Quasi-Delicts (Art. 1162, 2176) a, Distinction between crimes and quasi-delicts b. Vicarious liability (Art. 2180, Art. 218-219, Family Code) c. Civil liability arising from crime (Art. 1161; Rule 111, Revised Rules ofCriminal Procedure) Philippine Hawk Corporation v. Lee, 16 February 2010 Barredo v. Garcia, 73 PHIL 607 Del Carmen, Jr. v. Geronimo Bacoy, 25 April 2012 re: res ipsa loquitor. Dy Teban v. Ching, 543 SCRA 560 Safeguard Security v. Tangco, 511 SCRA 67 Villanueva v. Domingo, 438 SCRA 485 Calalas v.CA, 31 May 2000 Picart v. Smith, 37 PHIL 813 re: last clear chance E, Classification of Obligations 1. Pure and Conditional Obligations (Art. 1179-1192) 2. With a Period or a 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)I. NATURE AND EFFECT OF OBLIGATIONS Art. The Nature of Rights in General 1. Basis of Rights 2. Legal Rights 3. Real Rights (Jus in Rem) vs. Personal Rights (Jus in Personam) B. Kinds of Prestation 1. To give (Real Obligation) a. 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) b. generic thing (Art. 1246) 1. Delivery/ Tradition: Concept 2. Generic Real Obligation / Indeterminate Thing (Art. 1246 in rel. to Art. 1165 par. 2, 1170) 3. Specific Real Obligations/Determinate Thing (Art. 1165) a. To Preserve: Bonus Pater Familias (Art. 1163) b, To Deliver the Thing Itself c. To Deliver the Fruits (Art. 1164) d. To Deliver Accessories and Accessions (Art. 1166) ( Durban Apartments v. Pioneer Insurance, 12 January 2011 4, Time of Delivery: Pure, Conditional Obligations; Obligations with a Term 5. Modes of Delivery a. Actual Delivery b, Symbolic Delivery c. Delivery through Execution of Legal Instruments d. Traditio Longa Manu e. Traditio Brevi Manu f. Traditio Constitutum Possessorium 6. Parties to Delivery © Lagon v. Hooven Comalco, 349 SCRA 363 2. To do (Positive Personal Obligation) Art. 1244 * Francisco v. CA, 401 SCRA 594+ Tanguiling v. CA, 266 SCRA 78 3. Not to do (Negative Personal Obligation) Art. 1244 E. Breach of Obligations: Causes and Effects (Art. 1170) Concept * Song Fo v. Hawaiian Philippines, 47 Phil. 821 (1928) = Vermen Realty v. Court of Appeals, 224 SCRA 549 (1993) * 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) Modes of Breach 1. Delay, Default or Mora Kinds of Delay: a. Ordinary Delay b. Legal Delay/ Default (Art. 1169) i. Demand: Nature ii. Necessity of Demand: Extra-Judicial or Judicial = PNB Madecor v. Uy, 363 SCRA 128 iii, When Demand Not Necessary = Tayag v. CA, 219 SCRA 480 = Barzaga v. CA, 268 SCRA 105 = Tanguiling v. CA, 266 SCRA 78 = Periquet v. CA, 238 SCRA 697 Kinds of Mora: a. Mora Solvendi: Effects = Philippine Charter v. Central Colleges, 22 February 2012 = Racquel-Santos v. CA, 7 July 2009 * Cetus Development v. Court of Appeals, 176 SCRA 72 (1989) = RCBC v. CA, 305 SCRA 449 = Aerospace Chemical Industries v. Court of Appeals, 315 SCRA 92 (1999) = Santos Ventura Hocorma Foundation v. Santos, 441 SCRA 472 (2004) * Titan-Ikeda Construction v. Primetown Property, 544 SCRA 466* Vazquez v. Ayala Corporation, 443 SCRA 231(2004) b. Mora Accipiendi: Effects * Villaroel v. Manila Motor Co,, Inc., 104 Phil. 926 (1958) * State Investment v. CA, 198 SCRA 392 c. Compensatio Morae: Effects i, Bilateral Obligations Mutual Obligations iii, Reciprocal Obligations Concept Alternative Remedies of injured parties Angeles v. Calasanz, 135 SCRA 323 (1985) Leano v. CA, 369 SCRA 36 Heirs of Bacus v. CA, 371 SCRA 295 Integrated Packing v. CA, 333 SCRA 170 Laforteza v. Machuca, 333 SCRA 643 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) Suria v. Intermediate Appellate Court, 151 SCRA 661 (1987) James G. Ong v. Court of Appeals, 310 SCRA 1 (1999) BPI Investment v. CA, 377 SCRA 117 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)2. Fraud (Dolo) : Meaning (Art. 1171) Regala v. Carin, 6 April 2011 a. Dolo Causante and Dolo Incidente: Effects Geraldez v. Court of Appeals (1994) International Corporate Bank v. Gueco, 351 SCRA 516 Republic v. Court of Tax Appeals, 366 SCRA 489 Woodhouse v. Halili, 93 Phil. 526 (1953) b. Malicious Prosecution Diaz v. Davao Light, 4 April 2007 Yasonna v. De Ramos, 440 SCRA 154 2. Negligence (Culpa)Art. 1170, 1172-1173) a. Culpa vs. Dolo b. Degrees of Diligence: Extraordinary, Ordinary or Slight = Asian Terminals v. Philam, 24 July 2013 c. Negligence must be established as a fact (Art. 1173) « Smith, Bell Dodwell v. Borja, 383 SCRA 341 = Yambao v. Zuniga, 418 SCRA 266 * Tlusorio v. CA, 393 SCRA 69 = NPC v.CA, 161 SCRA 334 c. Culpa Contractual = St. Luke's College of Medicine v. Sps. Perez, 28 September 2016 UE v. Jader, 17 February 2000 Muaje-Tuazon v. Wenphil, 511 SCRA 521 RCPI v. Verchez, 481 SCRA 384 FGU v. Sarmiento, 386 SCRA 312 LRTA v. Natividad, 397 SCRA 75 ictory Liner v. Gammad, 444 SCRA 355 d. Culpa Aquiliana * Delsan Transport v. C & A Consortium, 1 October 2003 = SMC and Heirs of Ouana v. CA, 4 July 2002 = PCIB v. CA, 350 SCRA 446 i. Solidary vs. Independent Liability of Employer and/or Employee * Philippine Hawk Corporation v. Tan Lee, 16 February 2010 "= Heirs of Ochoa v. G & SCRA Transport, 9 March 2011* Pacis v. Morales, 25 February 2010 * Mercury Drug v. Sps. Huang, 22 June 2007 = Mendoza v. Soriano, 8 June 2007 Cerezo v. Tuazon, 426 SCRA 167 ii, Presumption of Fault/ Negligence of Employer: Vicarious Liability * Viron v. De los Santos, 345 SCRA 509 = Filcar Transports v. Espinas, 20 June 2012 = FEB Leasing v. Sps Baylon, 29 June 2011 Filipinas Synthetic v. De Los Santos, 16 March 2011 iii, Proof of Employee's Fault/Negligence * Pleyto v. Lomboy, 432 SCRA 329 * Mercury Drug v. Baking, 523 SCRA 184 (2007) * Safeguard Security v. Tangco, 511 SCRA 67 iv. Proof of Due Diligence * Yambao v. Zuniga, 418 SCRA 266 = Sykl v. Begasa, 414 SCRA 237 v. Quasi-delictual liability even in the existence of a contract between parties * Mindanao Terminal v. Phoenix, 587 SCRA 429 * YHT Realty v. CA, 451 SCRA 638 vi, Medical Malpractice / Medical Negligence Cases Ramos v. CA, 321 SCRA 584 and 380 SCRA 467 “res ipsa loquitor”, “captain of the ship” as compared to Reyes v. Sisters of Mercy, 3 October 2000 * Dr. Solidum v. People, 10 March 2014 * Rosit v. Davao Doctors’ Hospital, 7 December 2015 * Nogales v. Capitol Medical Center, 511 SCRA 204 on “apparent authority” and “borrowed servant rule” * Professional Services v. Agana, 513 SCRA 478 on “control test” * Professional Services v. CA, 544 SCRA 170 and 2 February 2010 on “corporate negligence/corporate responsibility” "= Cantre v. Sps. Go, 522 SCRA 547 Dr. Rubi Li v. Sps Soliman, 7 June 2011 on “informed consent”* Dr. Alano v. Lugmao, 7 April 2014 e. Culpa Criminal * People v. Delos Santos, 355 SCRA 415 * LG. Foods v. Agraviador, 503 SCRA 170 4, Contravention of the Terms (Art. 1172) * Telefast v. Castro, 158 SCRA 445 (1988) * Chaves v. Gonzales, 32 SCRA 547 (1970) * Arrieta v. NARIC, 10 SCRA 79 (1964) * Magat v. Medialdea, 206 Phil 341 (1983) F. Remedies in Case of Breach 1, Performance (Art. 1165) a. Specific performance (Art. 1165; Section 10, Rule 39, Rules of Court) = Vda. De Mistica v. Naguiat, 418 SCRA 73 * Cov.CA, 17 August 1999 b. Substituted performance - in an obligation to give generic thing (Art. 1165, par. 2) - undoing of poor work in an obligation to do (Art. 1167) = Tanguilig v. Court of Appeals, 266 SCRA 78 (1997) * Chaves v. Gonzales, 32 SCRA 547 (1970) 2. Resolution/ Rescission (Art. 1191-1192 as compared to Art. 1380-1389) a. Nature as a Remedy « Heirs of Gaite v. The Plaza, 26 January 2011 * Solar Harvest Incorporated vs. Davao Cofrugated, 26 July 2010 = Heirs of Quirong v. DBP, 3 December 2009 b. Right to Resolve/ Rescind: Requisites "= Spouses Sy v. Andok’s Litson, 21 November 2012 = Sanz Maceda v. DBO, 11 August 2010 * Reyes v. Tuparan, 1 June 2011 * GG. Sportswear Mfg. Corp v. World Class Properties, Inc., 2 March 2010 * Movido v. Reyes Pastor, 11 February 2010. = Spouses Tongson v. Emergency Pawnshop, 15 January 2010 = Racquel-Santos v. CA, 7 July 2009 c. Effects* Equatorial Realty v. Mayfair Theater, 370 SCRA 56 Serrano v. CA, 417 SCRA 415 Gil v. CA, 411 SCRA 18 Reyes v. Lim, 408 SCRA 560 Velarde v. CA, 361 SCRA 56 Asuncion v. Evangelista, 13 October 1999 Ong v. Tiu, 1 February 2002 Uy v. CA, 9 September 1999 3. Damages: Kinds and Amounts (Art, 1170) Abellana v. People, 17 August 2011 Tan v. OMC Carriers, 12 January 2011 People v. Jugueta, 5 April 2016 People v. Nurfrashir Hashim, et al. 13 June 2012 People v. Malicsi, 543 SCRA 93 People v. Sia, 21 November 2001 People v. Doctolero, 20 August 2001 People v. Abulencia, 22 August 2001 Tamayo, et al. v. Abad Sefiora, 15 November 2010 on loss of earning capacity Victory Liner v. Heirs, 394 SCRA 341 GSIS v. Labung-Deang, 365 SCRA 341 BPI Investment v. D.G. Carreon, 371 SCRA 58 4, Exhaustion of All Property of the Debtor; Exemptions (Art. 1177 in rel. to Art. 2236) 5. Subsidiary Remedies of Creditor a. Accion Subrogatoria: How, Exceptions (Art. 1177) b. Accion Pauliana (Art. 1177 in rel. to Art. 1380-1389) Siguan v. Lim, 318 SCRA 725 (1999) Khe Hong Cheng v. Court of Appeals, 355 SCRA 701 (2001) 6. Other Specific Remedies (Art. 1652, 1729, 1608, 1893) G. Fortuitous Event / Caso Fortuito (Art. 1174 in rel. to Art. 1165) 1. Kinds a. Fortuitous Event Proper v. Force Majeure b. Ordinary v. Extraordinary 2. Requisites ‘Ace Agro v. CA, 266 SCRA 429 Philippine Realty v. Ley Const. and Dev. Corp., 13 June 2011 Megaworld Globus Asia, Inc. v. Tanseco, 9 October 2009 Sicam v. Jorge, 8 August 2007 Huibonhoa v. CA, 14 December 1999 3, Effects of Fortuitous Event upon ObligationMindez v. Morillo, 12 March 2002 NAPOCOR v. Phillip Bros., 369 SCRA 629 Dioquino v. Laureano, 33 SCRA 65 Bachelor Express v. CA, 193 SCRA 216 Vasquez v. CA, 138 SCRA 558 Juntilla v. Fontanar, 136 SCRA 625 Philamgen Insurance v. MGG Marine, 8 March 2002 Yobido v. CA, 17 October 1997 3. Exception to Extinguishment (Art. 1174, 1165 par. 3, 552, 1942, 1979, 2001, 2147) Philcomsat v. Globe Telecom, 430 SCRA (2004) + Juan Nakpil & Sons v. Court of Appeals, 144 SCRA 597 (1986) * Republic v. Luzon Stevedoring Co., 21 SCRA 279 (1967) Austria v. Court of Appeals, 39 SCRA 527 (1971) National Power Corporation v. Court of Appeals, 161 SCRA 334 (1988) * BacolodMurciaMilling v. Court of Appeals, 182 SCRA 24 H, Transmissibility of Rights and Obligations (Art. 1178) * Union Bank v. Santibanez, 452 SCRA 228 * Ong Genato v. Bayhon, et al., 24 August 24, 2009 = San Agustin v. CA, 371 SCRA 348 * Project Builders, Inc. v. CA, 358 SCRA 626 II. DIFFERENT KINDS OF OBLIGATIONS Art. Pure Obligations (Art. 1179, par. 1) 1. Meaning 2. Characteristics * Hongkong and Shanghai Bank vs. Sps. Broqueza, 17 November 2010 B. Conditional Obligations (Art. 1179) 1. Meaning and Definition of a Condition, Period, or Term 2, Requisites (Art. 1179 in rel. to Art. 1183) = DBP v. CA, 262 SCRA 245 3. Classifications 4, Suspensive Conditions a. Meaning (Art. 1181) = Direct Funders v. Lavina, 373 SCRA 645 * Tomimbang v. Tomimbang, 4 August 2009 * Gonzales v, Heirs, 314 SCRA 585 * Insular Life v. Young, 373 SCRA 626b. Potestative Suspensive Conditions (Art. 1182) * Hermosa v. Longara, 93 PHIL 971 * Vda. De Mistica v. Naguiat, 418 SCRA 73 * Trillana v. Quezon Colleges, 93 PHIL 383 c. Positive Suspensive Conditions (Art. 1184) * Leano v. CA, 369 SCRA 36 * Visayan Sawmill v. CA, 219 SCRA 378 d. Negative Suspensive Conditions (Art, 1185) e. Constructive Fulfillment (Art. 1186) f. Effects Of Non-Fulfillment of Suspensive Condition * DeLeon v. Ong, 2 February 2010 * Heirs of Sandejas v. Lina, 351 SCRA 183 g. Effects Of Fulfillment of Suspensive Condition i. Retroactivity ( Art. 1187) ii, As to Fruits / Interests (Art. 1187) As to Loss (Art. 1189, 1 and 2) iv. As to Deterioration (Art. 1189, 3 and 4) v. As to Improvement (Art. 1189, 5 and 6) h. Rights Pending Condition (Art. 1188) 5. Resolutory Conditions or Condition Subsequent (Art. 1179, 1181, 1190) a. Meaning (Art. 1181) b. Demandability (Art. 1179) c. Constructive Fulfillment (Art. 1186) d. Effects: i. Mutual Restitution (Art. 1190) ii, As to Loss (Art. 1189, 1 and 2) As to Deterioration (Art. 1189, 3 and 4) iv, As to Improvement (Art. 1189, 5 and 6) e. Rights Pending Condition (Art. 1188) * 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) C. Obligations with a Term / Period (Art. 1193-1198) 1. Period or Term, Meaning and Definition (Art. 1193, 1180) * CIR v. Primetown, 28 August 2007 * NAMARCO v. Tecson, 139 PHIL 584 compare to CIR 2, Distinctions: Condition v. Period/Term * Berg v. Magdalena Estates, 92 PHIL 110* Victoria Planters v. Victoria Milling, 97 PHIL 318 = Lirag v. CA, 63 SCRA 375 * Daguhoy v. Ponce, 96 PHIL 15 3. Requisites 4. Kinds of Periods/ Terms a. suspensive (ex die) v. resolutory (in diem) b. legal v. conventional v. judicial c. definite v. indefinite 5. Potestative Period (Art. 1180 in rel. to Art. 1197) * Gonzales v. Jose, 66 PHIL 369 = Jespajo v. CA, 390 SCRA 27 * Borromeo v. CA, 47 SCRA 65 6. Effects (Art. 1195-1197) = Kasapian ng Manggagawa ng Coca-cola v. CA, 487 SCRA 487 = Baluyut v. Poblete, 514 SCRA 370 = Malayan Realty v. Uy, 10 November 2006 = Pacific Banking v. CA, 5 May 1989Santos v. Santos, 441 SCRA 472 * Melotindos v. Tobias, 391 SCRA 299 * LLand Co. v. Huang, 378 SCRA 612 * Brent School v. Zamora, 5 February 1990 = Lim v. People, 21 November 1984 7. Loss, Deterioration, Improvement (Art. 1194 in rel. to 1189) 8. Benefit of Period (Art. 1196) a. For whose benefit b. Effects c. Presumption (Art. 1196) 9. Loss of Benefit of Period/Term (Art. 1198) = 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) 10. When Court may Fix a Period a. Period is implied b. Period depends on the sole will of the debtor * Araneta v. Philippine Sugar Estate Development Co., 20 SCRA 330 (1967) * Deudor v. J.M. Tuason, 2 SCRA 129 (1961) D. Alternative Obligations (Art. 1199-1205) 1. Meaning and Definition (Art. 1199)* Agoncillo v. Javier, 38 SCRA 424 = Ong Guan v. Century, 46 PHIL 592 2. Distinguished from Conjunctive Obligations 3. Effects: a. As to Debtor i, Right of Choice/ Election: Nature and Limitations (Art. 1200, 1202-1203) = Legarda v. Miailhe, 88 PHIL 637 ii, Effectivity of Choice (Art. 1201) = Reyes v. Martinez, 55 PHIL 492 iii, Liability for Loss of Alternatives: Partial v. Total (Art. 1203-1204) b. As to Creditor i, Right of Choice /Election (Art. 1205) Effectivity of Choice iii, Right of Refusal vs. Partial Performance E, Facultative Obligations (Art. 1206) 1. Meaning 2, Alternative v. Facultative Obligations * Quizana v. Redugerio, 94 PHIL 922 3. Effect of Substitution F, Joint Obligations (mancommunada, pro-rata) 1. Concept. Requisites. Words used to indicate joint obligations 2. Nature 3. Joint Obligations, How Created (Art. 1208 in rel. to Art. 1207) + Marsman v. Philippine Geoanalytics, 29 June 2010 * Alipio v. CA, 341 SCRA 441 4, Effects (Art. 1207, 1208) - Extent of liability of debtor - Extent of right of creditor - In case of novations, compensation, confusion (Art 1277) or remission * PH Credit Corp. v. CA, 370 SCRA 155 (joint v. solidary) 5, Presumption (Art. 1207, 1208) G. Solidary Obligations (in solidum, solidaria, joint and several) 1. Concept, Nature and Definition (Art. 1207) 2. Requisites and the words used to indicate solidary obligations 3. Kinds a. As to source (Art. 1208) i. Legal (Art. 1915, 1945, 2194, Art 119 of the RPC). Real b. As to parties bound i. Active Passive iii, Mixed c. As to uniformity i, Uniform ii. Varied /non-uniform (Art. 1211) * Lafarge Cement Phil. V. Continental Cement, 443 SCRA 522 (2004) = 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) 3, Solidarity v. Indivisibility (Art. 1209) 4, How Created (Art. 1207) = CDCP v. Estrella, 501 SCRA 228 + Metro Manila Transit v. CA, 21 June 1993 * Republic Glass Corp. v. Qua, 30 July 2004 «Industrial Management v. NLRC, 331 SCRA 640 5. Active Solidarity or Mutual Agency: Effects (Art. 1211- 1216) = Philippine Blooming Mills v. CA, 15 October 2003 = Inciong v. CA, 257 SCRA 578 6. Passive Solidarity or Mutual Guaranty: Effects (Art. 1217-1222) * Asset Builders v. Stronghold, 18 October 2010 * Queensland-Tokyo v. George, 8 September 2010 * Shrimp Specialist, Inc. v. Fuji-Triumph, 7 December 2009 * Esparwa Security v. Liceo de Cagayan, 508 SCRA 373 * Cerna v. CA, 30 March 1993 * Dimayuga v. PCIB, 5 August 1991 H. Divisible Obligations 1. Nature (Art. 1223) 2. Kinds of Division: Qualitative, Quantitative and Ideal / Intellectual 3. Kinds of Divisible Obligations (Art. 1225, par. 3-4) I. Indivisible Obligations 11. Nature (Art. 1223) 2. Kinds of Indivisibility: Natural, Legal or Conventional ( Art. 1225) = Nazareno v. CA, 343 SCRS 637 3. Presumptions of divisibility and indivisibility (Art. 1225) 4. Divisibility and indivisibility in obligations not to do (Art. 1225, par.3) 5. Effects (Art. 1223, 1223, 1224) 6. Cessation of Indivisibility J. Joint Indivisible Obligations (Art. 1224 and Art. 1209) 1. Nature 2. Effects: a. as to creditors b. as to debtors K. Obligations with a Penal Clause (Art. 1226-1230) 1, Meaning and Definition 2. Penalty Clause, defined (Art. 1226) 3. Purposes 4. Kinds of Penalties a. Legal v. Conventional = David v. CA, 316 SCRA 710 = Alonzo v. San Juan, 451 SCRA 45 b. Compensatory v. Punitive c. Subsidiary v. Joint (Art. 1226 in rel. to 1227-1228) 5. Penalties v. Interest Eastern Shipping v. CA, 234 SCRA 78 RP v. Thi Thu Thuy De Guzman, 15 June 2011 Marques v. Far East Bank, 10 January 2011 Macalalag v. People, 511 SCRA 400 Tan v. CA, 367 SCRA 571 (on monetary v. penalty interest) + Prisma Construction v. Menchavez, 9 March 2010 6. Penalties v. Liquidated Damages 7. Escalation Clause v. Acceleration Clause = New Sampaguita v. PNB, 435 SCRA 565, * Sps. Silos v. PNB, 2 July 2014 = PCI v. Ng Sheung Ngor, 541 SCRA 223 = NSBC v. PNB, 435 SCRA 565 * Polotan v. CA, 296 SCRA 247 8. Legal Rate: Loans and Forbearances of Money v. Other Monetary Obligations = Nacar v. Gallery Frames, 13 August 20139. Reduction of Conventional Penalties: Nullity of Penalties/ Usurious Transactions (Art. 1175 in rel. to Art. 1229-1230) Lo v.CA, 411 SCRA 523 (23 September 2003)Mallari v. Prudential, 5 June 2013 RGM Industries v. United Pacific, 27 June 2012 Prisma Construction v. Menchavez, 9 March 2010 Maceda, Jr. v. DBO / DBP v. Maceda, Jr., 11 August 2010 PNB v. Encina, 544 SCRA 608 Imperial v. Jaucian, 427 SCRA 517 Pabugais v. Sahijwani, 423 SCRA 596 Reformina v. Tomol, 139 SCRA 260 (11 October 1985) Ligutan v. CA, 12 February 2002 Pascual v. Ramos, 384 SCRA 105 First Metro Investment v. Este del Sol, 369 SCRA 99 Domel Trading v. CA, 315 SCRA 13 Medel v. CA, 299 SCRA 481 IV. EXTINGUISHMENT OF OBLIGATIONS (Art. 1231) A. Art, Payment / Performance (Art. 1232-1261) 1, Meaning (Art. 1232)/ Effects Lo v. KJH, 413 SCRA 182 2. Characteristics 3. Kinds: Normal/ Voluntary v. Abnormal /Involuntary 4, Requisites (Art. 1233) 5, Identity of Prestation a. Real Obligatio 1239) PNB v. CA, 256 SCRA 44 Cathay Pacific v. Vazquez, 399 SCRA 207 : General Requirements (Art. b. Specific Real Obligations (Art. 1244) c. Generic Real Obligations (Art. 1246) d. Personal Obligations (Art. 1244) e. Obligations to Pay Money (Art. 1249-1250 in rel to R.Art. 8183) DBP v. CA, 494 SCRA 25 Citibank v. Sabeniano, 504 SCRA 378 CF Sharp v. Northwest Airlines, 381 SCRA 314 Telengton Bros v. US Lines, 483 SCRA 458* Padilla v. Paredes, 328 SCRA 434 = Tibajia v. CA, 223 SCRA 163 i. Currency, defined (Secs. 48-49, R.Art. 7653 or the Bangko Sentral ng Pilipinas Act) iii. Legal Tender, defined (Sec. 52, R.Art. 7653) iv. Demand Deposits, defined (Secs. 58-60, R.Art. 7653) v. Instruments/ Evidences of Credit = Metrobank v. Cabilzo, 510 SCRA 259 = Evangelista v. Screenex, 20 November 2017 = Vitarich v. Locsin, 15 November 2010 vi. Effects of Inflation (Art. 1250) = Almeda v. Bathala Mktng., 542 SCRA 470 * PCI v. Ng Sheung Ngor, 541 SCRA 223 6. Integrity of Prestation a. Strict Payment for the Entire Prestation; Exceptions (Art. 1248) b. Substantial Payment/ Performance (Art. 1234- 1235) * Palanca v. Guides, 452 SCRA 461 7. Who May Demand Payment a. Creditor’s Right of Payment (Art. 1240) * BPlv.CA, 232SCRA 302 * Dela Cruz v. Concepcion, 11 October 2012 PCIB v. CA, 481 SCRA 127 Lagon v. Hooven Comalco, 349 SCRA 363 b, Payment to an Incapacitated (Art. 1241) c. Payment to Third Person (Art. 1241) 8, Who Must Pay a. Debtor (Art. 1236 in rel. to Art. 1243 and Art. 1247) * PCIBv. Franco, 5 March 2014 + RPv. Thi Thu Thuy De Guzman, 15 June 2011 * ‘Audion Electric v. NLRC, 308 SCRA 340 b. Persons Having Interest in the Obligation (Art. 1236) c. Payment by Third Person 18i. as agent of debtor ii, without knowledge / against consent of debtor (Art. 1236 par. 2, 1237-1238) iii. with knowledge/ consent of debtor * Land Bank of the Philippines v. Ong, 24 November 2010 9. Where Payment Must Be Made (Art. 1251) * Binalbagan v. CA, 256 SCRA 44 10. When Payment Must be Made * Lorenzo Shipping v. BJ Marthel, 443 SCRA 163 11. Special Forms of Payment a. Dacion En Pago /Dation in Payment (Art. 1245) = Aquintey v. Tibong, 511 SCRA 414 * Luzon Development Bank v. Enriquez, 12 January 2011 = Estanislao v. East-West Banking Corp., 544 SCRA 369 b. Payment by Cession or Assignment (Art. 1255 in rel to Act No. 1956 or Insolvency Law) = Lov. CA, 411 SCRA 523 c. Application of Payments (Art. 1252-1254 in rel. to Art. 1176) = Mobil v. CA, 272 SCRA 523 = ASI Corp. v. Evangelista, 545 SCRA 300 = Paculdo v. Regalado, 345 SCRA 134 = CBC v. CA, 265 SCRA 327 d. Tender of Payment and Consignation (Art. 1256- 1261) Rayos v. Reyes, 398 SCRA 24 Sps. Bonrostro v. Sps. Luna, 24 July 2013 = Dalton v. FGR Fealty and Development Corp. 19 January 2011 + People’s Industrial v. CA, 24 October 1997 * Eternal Gardens v. CA, 9 December 1997 * Benos v. Lawilao, 509 SCRA 549 B. Loss of the Prestation / Impossibility of Performance (Art. 1262-1269) 1. Kinds of Loss/ Impossibility: Physical, Civil or Legal (Art. 1189 [2]) = Occena v. CA, 29 October 1976 = Ortigas v. Feati Bank, 94 SCRA 533 2. Loss of the Thing Due (Art. 1189, par. 2)a. Concept b. Kinds (Total or Partial) c. Requisites (Art. 1262) d. Presumption (Art. 1266, 1267) e. Effects: i. Inan obligation to give a specific thing (Art.1262, 1268) ii, In an obligation to give a generic thing (Art. 1263) iii. In case of partial loss (Art 1264) iv. Action against third persons (Art. 1269) 3. Impossibility of Performance 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 * Incase of partial impossibility (art. 1264) Occefia 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) 4. When Obligation Extinguished (Art. 1262, 1266-1267) 5, Rebus Sic Stantibus (Art. 1267) * So v. Food Fest Land, Inc.,7 April 2010 * NATELCO v. CA, 230 SCRA 351 = Magat v. CA, 337 SCRA 298 = PNCC v. CA, 272 SCRA 183 6. Remedies of Creditor in Case of Loss (Art. 1269) 7. Liability In Case of Loss (Art. 1262 par, 2; Art. 1265, 1268 in rel. to Art. 1174, Art. 1165) 8, Partial Loss: Effects (Art. 1264 in rel, to Art. 1189 [3] [4]) C.Condonation / Remission of the Debt (Art. 1270-1274) 1, Meaning and Nature = Reyna. v. COA, 8 February 2011 2, Requisites (Art. 1270) 20a. Legal Capacity b. Gratuitousness, defined c. Acceptance d. Form e. Not Inofficious (Art. 1271) = Trans Pacific v. CA, 235 SCRA 494 = Yam v. Court of Appeals, 303 SCRA 1 (1999) 3. Kinds a. Inter Vivos (Art. 725, et. seq.) v. Mortis Causa (Art. 935-937) b. Complete v. Partial (Art. 1273-1274) c. Express v. Implied (Art. 1270) d. Implied Condonation i. Presumption of Condonation / Remission (Art. 1271) ii, Presumption of Delivery (Art. 1272) = Lopez Vito v. Tambunting, 33 PHIL 226 * Dalupan v. Harden, 27 November 1951 D. Confusion or Merger of Rights (Art. 1275-1277) 1. Meaning and Definition (Art. 1275) = Estate of Mota v. Serra, 47 PHIL 464 = Yek Ton Lin v. Yusingco, 64 PHIL 1062 2. Requisites (Art. 1276-1277) 3. Effects E. Compensation (Art. 1278-1290) 1. Meaning and Definition (Art. 1278) 2. Requisites (Art 1279) Silahis Marketing Corp. v. Intermediate Appellate Court, 180 SCRA 21(1989) EGV Realty v. CA, 20 July 1999 Aerospace Chemical v. CA, 23 September 1999 = Perez v. Court of Appeals, 127 SCRA 636 (1984) Apodaca v. NLRC, 172 SCRA 442 * 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) * Mirasol v. Court of Appeals, 351 SCRA 44 (2001) = Associated Bank v. Tan, 446 SCRA 282 (2004) 21* Villanueva v. Tantuico, 182 SCRA 263 (1990) * Bank of the Philippine Islands v. Court of Appeals, 255 SCRA __ (1996) 3. Total v. Partial (Art. 1281) = Sps Chung vs. Ulanday Construction, 11 October 2010 4, Voluntary (Art. 1282) 5, Judicial (Art. 1283-1284) 6. Legal Compensation (Art. 1290 in rel. to Art. 1279) ‘a. Requisites (Art. 1280, 1282) * United Planters Sugar v. CA, 2 April 2009 * Mondragon v. Sola, Jr., 21 January 2013 * Insular Investment v. Capital One, 25 April 2012 = Lao, etal. v. Special Plans, Inc., 29 June 2010 b. How Established c. When Prohibited (Art. 1287-1288) * Trinidad v. Acapulco, 494 SCRA 179PNB Management v. R & R Metal, 373SCRA 1 « Silahis v. IAC, 7 December 1989 = Francia v. CA, 28 June 1988 7. Effects: a. Upon Principal or Upon Several Debts (Art. 1289) b. Upon Guarantor (Art. 1280) c. Of Assignment of Rights (Art. 1285) F, Novation (Art. 1291-1304) 1. Meaning and Definition; How Effected (Art. 1291) + Heirs of Franco v. Sps Gonzales, 27 June 2012 2, Effects (Art. 1296) 3. Kinds (Art. 1292) 4 Objective Novation (Art. 1297-1298) = Reyes v. Secretary of Justice, 264 SCRA 35 (1996) + Hernandez-Nievera v. Hernandez, 14 February 2011 * St. James College v. Equitable PCI Bank,9 August 2010 * Magdalena Estate v. Rodriguez, 18 SCRA 967 (1966) Tomimbang v. Tomimbang, 4 August 2009 Millar v. Court of Appeals, 38 SCRA 642 (1971) Dormitorio v. Fernandez, 72 SCRA 388 (1976) Cochingyan v. RB Surety and Insurance, 151 SCRA 339 (1987)= Broadway Centrum Condominium Corporation v. Tropical Hut, 224 SCRA 302 (1993) 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) * Molino v. Security Diners International, 363 SCRA 358 (2001) 5. Subjective Novation a. Substitution of the Debtor (Art. 1293): Expromision (Art. 1236-1237, 1294) v. Delegacion (Art. 1236-1237, 1295) * Garcia v. Llamas, 417 SCRA 292 (2003) * Mindanao Savings v. Willkom, 20 October 2010 = Aquintey v. Tibong, 511 SCRA 414 * Quinto v. People, 305 SCRA 709 (1999) b. Subrogation to the Rights of the Creditor (Art. 1300, ‘at 1304): Legal v. Conventional (Art. 1301) Azolla Farms v. CA, 11 November 2004 = Asian Terminals v. Philam, 24 July 2013 = Loadmasters v. Glodel Brokerage, 10 January 2011 "Metrobank v. Rural Bank of Gerona, 5 July 2010 Swagman v. CA, 455 SCRA 175 Evadel Realty v. Soriano, 357 SCRA 395 " Bautista v. Pilar Development, 312 SCRA 611 G. Prescription (Art. 1106-1116) 1. Definition (Art. 1106) 2. Right to Prescription a. In favor of / Against (Art. 1107-1108, 1110-1111; 1114) b. Prohibited (Art. 1108-1109;1113) c. Who May Renounce ; How (Art. 1112) 3. Extinctive Prescription (Art. 1139-1155) a. Meaning and Effects (Art. 1139) b. As a Defense; Rationale c, Statute of Limitations/Prescriptive Periods (Art. 1140-1149; Art. 1577, 1542-1543; 1571; Family Code) = Sps Bernales v. Heirs of Sambaan, 15 January 2010 * Rosario v. De Guzman, 10 July 2013* Villeza v. German Management, 8 August 2010 = Insurance of the Philippine Islands v. Sps Gregorio, 14 February 2011 Mariano v. Petron, 21 January 2010 Vector Shipping v. American Home., 3 July 2013 d. Computation of the Period ( Art. 1150-1154) e. Interruption (Art. 1155) = Maestrado v. CA, 9 March 2000 B & I Realty v. Caspe, 543 SCRA 1 Mesina v. Garcia, 509 SCRA 431 Laureano v. CA, 9 March 2000 Banco Filipino v. CA, 30 May 2000 Vda. De Delgado v. CA, 28 August 2001 * Heirs of Gaudiane v. CA, 11 March 2004 H. Estoppel (Art. 1431-1439) 1. Definition and Meaning (Art. 1431) = Mendoza v. CA, 9 March 2000 + E.Art.T. Kee Computer v. Online Networks 2 2. Kinds February 2011 Tanay Recreation v. Fausto, 455 SCRA 436 Lim v. Queensland, 373 SCRA 31 Placewell v. Camote, 26 June 2006 Heirs of Ragua v. CA, 31 January 2000 a. Estoppel by Record; Estoppel by Judgment v. Res Judicata b, Estoppel by Deed (Art. 1436) = Sps. Manuel v. CA, 1 February 2001 + Metrobank v. CA, 8 June 2000 c. Estoppel in Pais : Meaning and Requisites i. by Representation/ Positive Acts (Art. 1434- 1435; Art. 1437) * Hanopol v. SM, 390 SCRA 439 * Cuenco v. Cuenco, 458 SCRA 496 (13 October 2004) = Laurel v. Desierto, 383 SCRA 493 ii. by Admission . by Promise (Promissory Estoppel) * Terminal Facilities v. PPA, 378 SCRA 82 * Mendoza v. CA, 25 June 2001 iv. by Silence 24= Roblett Construction v. CA, 266 SCRA 71 = Marques v. Far East Bank, 10 January 2011 v. by Acquiescence / by Acceptance of Benefits (Art. 1438) d. Estoppel by Laches: Prescription v. Laches = Villanueva-Mijares v. CA, 12 April 2000 Simedarby v. Goodyear , 8 June 2011 Far East Bank v. Borja, 25 January 2010 Metrobank v. Cabilzo, 510 SCRA 259 Mesina v. Garcia, 509 SCRA 431 Pahamatong v. PNB, 31 March 2005 Shopper's Paradise v. Roque, 13 January 2004 = Meatmasters v. Lelis Integrated, 452 SCRA 626 «= Kings Properties Corporation, Inc. v. Galido, 27 November 2009 Larena v. Mapili, 7 August 2003 Santos v. Santos, 2 October 2001 V. CONTRACTS (Art. 1305-1317) A. Concept and Definition (Art. 1305) 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) B. Characteristics / Principles1, Autonomy (Art. 1306 in rel. to Art. IIL, sec. 10 of 1987 Constitution) * Garcia v. Villar, 27 June 2012, and * Sps Edralin v. Philippine Veterans Bank, 9 March 2011 re: pactum commissorium * University Physicians Services v. Marian Clinics, 1 September 2010 * Martin, et al. v. DBS Bank Philippines, Inc., et al., 16 June 2010 Heirs of Zabala, et al. v. CA, 6 May 2010 Duncan v. Glaxo, 438 SCRA 343 as compared to Star Paper v. Simbol, 487 SCRA 228 re: prohibition to marry clause = Tiu v. Platinum Plans, 28 February 2007 re: non-involvement clause * Avon Cosmetics v. Luna, 511 SCRA 376 re: exclusivity clause Del Castillo v. Richmond, 45 PHIL 679 Arwood v. DM Consunji, 394 SCRA 11 Sps. Tecklo v. Rural Bank of Pamplona, 18 June 2010 re: dragnet clause Banate v. Phil. Countryside, 13 July 2010 Pascual v. Ramos, 384 SCRA 105 Chua Tee Dee v. CA, 429 SCRA 418 (2004) re: Deprivacion de derecho v. Deprivacién de mero hecho [Arts. 1654 / 1664] in lease * GQ Garments v. Miranda, 495 SCRA 741 (2006) * Bercero v. Capitol Development, 519 SCRA 484 (2007) * Pactum de non alienando * Pactum leonina 2. Obligatory Force (Art. 1159, Art. 1315) * Hemedes v. CA, 8 October 1999 Right of First Refusal - Meaning and Definition * PUP v. Golden Horizon, 15 March 2010 * Villegas v. CA, 499 SCRA 276 * Equatorial Realty v. Carmelo, 264 SCRA 483 * PUP v CA, 368 SCRA 691 * Litonjua v. L & R, 320 SCRA 405 3. Mutuality (Art. 1308-1310; 1317) = Josefa v. Zhandong, 417 SCRA 269 a. Equality /Contracts of Adhesion = Saludo v. Security Bank, 13 October 2010* PCI v. Ng Sheung Ngor, 541 SCRA 223 * Dio v. St. Ferdinand Memorial, 509 SCRA 453 " PILTEL v. Tecson, 428 378 = PAL v. CA, 255 SCRA 48 Ermitano v. CA, 306 SCRA 218 b. Non Binding as to Third Parties; Exceptions (Art. 1309-1310);Arbitration, Art. 2042-2406 of NCC in rel. to R.Art. 876 and R.Art. 9285 * Uniwide v. Titan-Ikeda, 511 SCRA 335 * Heirs of Salas v. Laperal, 13 December 1999 = Medrano v. CA, 452 SCRA 77 = Tan v. Gullas, 393 SCRA 334 c. Enforceability (Art. 1317) = Gozun v. Mercado, 511 SCRA 305 4. Relativity (Art. 1311-1314) a. Privity: Exceptions (Art. 1311) * Sta. Lucia Realty vs. Sps Buenaventura, 2 October 2009 = Chan v. Maceda, 402 SCRA 352 b. Stipulations Pour Autrui (Art. 1311, par. 2) = Baluyot v. CA, 22 July 1999 c. Contracts Creating Real Rights (Art. 1312) = Cuyco v. Cuyco, 487 SCRA 693 d. Contracts in Fraud of Creditors (Art. 1313 in rel. to Art. 1381 [3]) e. Tortious Interference (Art. 1314) Go, doing business under the name and style of “ACG Express Liner” v. ~ Cordero, 4 May 2010. = Tayag v. CA, 25 March 2004 = Sov. CA, 21 September 1999 f. Collective Contracts C. Stages in the Execution of a Contract = Rockland v. Mid-Pasig Development, 543 SCRA 596 = International Freeport v. Danzas, 26 January 2011 Generation/ Negotiation/Preparation/Conception (Art. 1306) 1. Perfection/ Birth: Obligation Phase 2. Consummation/Termination * MMDA v. JANCOM, 375 SCRA 320 D. Elements1, Essential Elements (Art. 1315-1316): Consensual Contracts; Real Contracts; Formal Contracts 2. Natural Elements 3. Accidental Elements VI. ESSENTIAL REQUISITES OF CONTRACTS Art. Consent/ “Meeting of Minds” 1. Meaning 2, Elements: Offer and Acceptance = Palattao v. CA, 7 May 2002 * Korean Air v. Yuson, 16 June 2010 * Rockland v. Mid-Pasig Land Development, 543 SCRA 596 * Manila Metal v. PNB, 511 SCRA 444 = Montecillo v. Reynes, 385 SCRA 244 = Soler v. CA, 358 SCRA 57 = ABS-CBN v. CA, 21 January 1999 3. Offer: Requisites (Art. 1321-1323; 1325); distinguished from Option (Art. 1324 in rel. to Art, 1479) 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) * Limson v. CA, 357 SCRA 209 4. Acceptance: Requisites; distinguished from Counter- Offer (Art. 1319-1320) Acceptance must be absolute (Art. 1319) Kinds: a. express (Art. 1320) b, implied (Art. 1320) c. qualified (Art. 1319) Period of acceptance (Art. 1324) Option contract (Art. 1324) * Villanueva v. PNB, 6 December 2006 * Sanchez v. Rigos, 45 SCRA 368 (1972) 5. Consent: How manifested (Art. 1319) 6. Vices of Consent a, Vices of Capacity (Art. 1327-1329) i. Minority Insanity/ Imbecility/ Dementia * Catalan v. Basa, 31 July 2007= Domingo v. CA, 17 October 2001 * Heirs of Sevilla v. Sevilla, 30 April 2003 * Mendezona v. Ozamiz, 6 February 2002 Drunkeness/ Hypnotic Spell iv. Special Incapacities b. Vices of Will (Art. 1330) i. Mistake/ Error (Art. 1331- 1334) = Limv. CA, 229SCRA 616 Kinds: 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 * Andres v. Manufacturers Hanover and Trust, 177 SCRA 618 * Asiain v. Jalandoni, 45 Phil 296 (1923) * Heirs of William Sevilla v. Sevilla, 402 SCRA 501 (2003) = 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) * Leonardo v. Court of Appeals, 438 SCRA 201 (2004) = Dumasug v. Modelo, 34 Phil 252 (1916) = Lustan v. Court of Appeals, 266 SCRA 663 (1997) * Katipunan v. Katipunan, 375 SCRA 199 (2002) = Hemedes v. Court of Appeals, 316 SCRA 347(1990) iv. Inexcusable mistake (Art. 1333) 29ii, Violence/ Intimidation (Art. 1335-1336) = Martinez v. HSBC, 15 Phil. 252 (1910) = Lee v. Court of Appeals, 201 SCRA 405 (1991) iii. Undue Influence (Art. 1337) * Ruiz v. CA, 401 SCRA 594 iv. Fraud: Kinds; How Committed (Art, 1338- 1344) * Dela Cruz v. Sison, 451 SCRA 754 + Rural Bank of Sta, Maria v. CA, 314 SCRA 255, 7. Four theories when contract is perfected: a. Manifestation theory b. Expedition theory c. Reception theory d. Cognition theory (Art. 1319 [2]) B. Object / Subject Matter (Art. 1347-1349) 1. Requisites a. Within Commerce of Man b. Existing v. Future Things (Art. 1347) * Carabeo v. Sps Dingco, 4 April 2011 c. Licit (Art. 1347) = Chavez v. PEA, 415 SCRA 403 d. Possible (Art. 1348) e. Determinate (Art. 1349) = Carabeo v. Sps Dingco, 4 April 2011 = Melliza v. City of Iloilo, 23 SCRA 477 2. Distinguished from Object of Obligations 3. 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 C. Cause / Consideration (Art. 1350-1355) 1. Meaning, 2. Requisites a. Existing: Absence of Cause v. Failure of Cause v. Inadequacy of Cause 30* Ordufa, et al. v, Fuentebella, 29 June 2010 = Brobio Mangahas v. Brobio, 20 October 2010 = Golden Apple Realty v. Sierra Grande Realty, 28 July 2010 * Askay v. Cosalan, 46 PHIL 179 = Catindig v. Vda. De Meneses, 2 February 2011 b. Lawful (Art. 1352, 1354) c. True/ Real: Simulation of Contracts (Art. 1353, 1355, 1343-1344) = Heirs of Balite v. Lim, 446 SCRA 56 * Suntay v. CA, 252 SCRA 430 3. Cause v. Motive (Art. 1351) 1, Meaning of Cause (Art, 1350) a. in onerous contracts b. in remuneratory contracts . 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 4. Kinds (Art. 1350) a. Onerous = Pentacapital v. Makilito Mahinay, 5 July 2010 b, Remuneratory = Heirs of Gaite, v. The Plaza, Inc., 26 January 2011 on “quantum meruit” = Catly v. Navarro, et al., 5 May 2010 c. Gratuitous = Liguez v. CA, 102 PHIL 577 = Philbank v. Lui She, 21 SCRA 52 VII. FORM OF CONTRACTS (Art. 1356-1358) Art. Form for Validity / as an Essential Element of Contracts (Art. 1356-1357) = Londres v. CA, 394 SCRA 133 B. Form for Enforceability / Statute of Frauds (Art. 1403, [2]) . a1RA 8792 or the Electronic Commerce Act C. Form for Convenience (Art. 1358) = Sps. Vega v. SSS, 20 September 2010 * Balatbat v. CA, 261 SCRA 128 * Universal Robina v. Heirs of Teves, 389 SCRA 316 VIII REFORMATION OF INSTRUMENTS (Art. 1359-1369) A. As a Remedy (Art. 1359-1360, 1368-1369) B. 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 = Garcia v. Bisaya, 97 Phil. 609 (1955) = Bentir v. Leande, 330 SCRA 591 (2000) * Quiros v. Arjona, G.R. No. 158901, March 9, 2004 C. When Available (Art. 1361-1365) D. When Prohibited (Art. 1366-1367) * Sarming v. Dy, 6 June 2002 = Cebu v. CA, 407 SCRA 154 E. Implied Ratification (Art. 1367) F. Who may ask for Reformation (Art. 1368) G. Procedure in 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) IX. INTERPRETATION OF CONTRACTS (Art. 1370-1379) Art. Literal Interpretation (Art. 1370) = ADR Shipping v. Gallardo, 389 SCRA 82 B. In case of Doubt (Art. 1371-1379) = TSPIC Corp. v. TSPIC Employees Union, 545 SCRA. 215 Aquintey v. Tibong, 511 SCRA 414 Cruz v. CA, 456 SCRA 165 Gonzales v. CA, 354 SCRA 8 Movido v. Pastor, 11 February 2010 Estanislao v. East-West Banking Corp., 544 SCRA. 369 C. Doctrine of “complementary contracts construed together” = Velasquez v. CA, 30 June 1999 = Philbank v. Lim, 455 SCRA 436 = Rigor v. Consolidated Leasing, 387 SCRA 437 D. Rules of Contract Interpretation 1. Under the Civil Code 32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 £, 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) X. DEFECTIVE CONTRACTS Art. Rescissible Contracts (Art. 1380-1389) 1. Requisites (Art. 1380) 2. Rescission v. Resolution «Heirs of Quirong v. DBP, 3 December 2009 Definition (Art. 1380): Distinguished from Rescission in Art. 1191 (Resolution) = Spouses Cannu v. Spouses Galang, G.R. No. 139523, May 26, 2005 = Equatorial Realty v. Mayfair Theatre, G.R. No. 133879, November 21, 2001 * Universal Food Corporation v. Court of Appeals, 33 SCRA 1 (1970) * Iringan v. Court of Appeals, G.R. No. 129107, September 26, 2001= Rivera v. del Rosario, G.R. No. 144934, January 15, 2004 3. Kinds: a. Lesion (Art. 1381[1] [2], 1386) b. In Fraud of Creditors / Accion Pauliana (Art. 1381 [3], 1387-1388 in rel. Art. 1177) c. Contracts for Things Under Litigation (Art. 1381 (4) d. Declared by Law (Art. 1381 [5]) e. Payments in Insolvency (Art. 1382) 4. Nature and Effects (Art. 1383-1385, 1389): Mutual Restitution = Khe Kong v. CA, 355 SCRA 701Lee. v. Bangkok Bank, 9 February 2011 = Equatorial Realty v. Mayfair Theater, 370 SCRA 56 = Siguan v. Lim, 19 November 1999 = Suntay v. CA, 251 SCRA 430 B. Voidable Contracts (Art. 1390-1402) 1. Nature/ Kinds (Art. 1390) = Hernandez v. Hernandez, 9 March 2011 = Fuentes, et al. v. Roca, 21 April 2010 = Brobio Mangahas v. Brobio, 20 October 2010 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 3. Annulment a, Asa Remedy b. Who May Bring (Art. 1397, 1401) c. Prescriptive Period (Art. 1391, 1401) * First Philippine Holdings v. Trans Middle East, 4 December 2009 * Associated Bank v. Sps Montano, 16 October 2010 " Miailhe v. CA, 354 SCRA 675 d. Effects (Att 1398, 1402) * Katipunan v. Katipunan, 30 January 2002 = Sanchez v. Mapalad Realty, 541 SCRA. 397 Oesmer v. PDC, 514 SCRA 228 Vda. De Ape v. CA, 456 SCRA 193 Francisco v. Herrera, 392 SCRA 317 Jumalon v. CA, 30 January 20024, Confirmation/ Ratification (Art. 1392) a. Requisites b. How made: Express v. Implied (Art. 1393) c. Who May Ratify (Art. 1393-1395) d. Effects (Art. 1396) C. Unenforceable Contracts (Art. 1403-1408) 1. Nature 2. Characteristics a. Valid but cannot be enforces by a proper action in court b. Can be ratified c. Cannot be assailed by third persons 3. Kinds: a. Unauthorized Contracts (Art. 1317 in rel. to 1403 [1]; 1404) = Cabales, et. al v. CA, 31 August 2007 b. Both parties Incapacitated (Art. 1403 [3]; Art. 1407) c. Contracts Infringing the Statute of Frauds (Art. 1403 [2]) in rel. to the E-Commerce Law i. Necessity of Writing = Municipality of Hagonoy v. Hon. Dumdum, 22 March 2010 = De Ouano, et al. v. RP, 9 February 2011 * Orduna v. Fuentebella, 29 June 2010 = Shoemaker v. La Tondena, 68 PHIL 24 ii. Parol Evidence Rule (Art. 1405-1406) = Vda. De Ouano, et al. v. RP, 9 February 2011 iii. Executory v. Executed v. Partially Eeseutory Contracts Villanueva-Mijares v. Court of Appeals, 12 April 2000 * Municipality of Hagonoy, v. Dumdum, 22 March 2010 Tan v. Villapaz, 475 SCRA 720 Spouses David v. Tiongson, 25 August 1999 * Cordial v. Miranda, 14 December 2000 4, Effects 5. Remedies = Rosencor v. Inquing, 354 SCRA 119 = Firme v. Buka, 414 SCRA 190 D. Void Contracts (Art. 1409-1422) 1. Characteristics a. Void from the beginningb. Produces no effect whatsoever c. Cannot be ratified (Art. 1409) 2. Kinds a. 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) © 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 (Art. 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 previous illegal contract (Art. 1422) b. Those whose object is outside the commerce of man c. Those which contemplate an impossible service 36d. Those where the intention of the parties relative to the principal object of the contract cannot be ascertained e. Those expressly prohibited by law 2. Void Contract v. Inexistent Contract (Art. 1409; 1422) Inexistent Contracts a, those which are absolutely simulated or fictitious (Articles 1345 to 1346) b, those whose cause or object did not exist at the time of the transaction Querubin v. COMELEC, 8 December 2015 Golden Apple v. Sierra Grande, 28 July 2010 Heirs of M. Doronio v. Heirs of F. Doronio, 541 SCRA 479 Sps Bernales v. Heirs of Sambaan, 15 January 2010 as compared to Heirs of Liwagon v. Heirs of Liwagon, 26 November 2014 Campos v. Pastrana, 8 December 2009 Gurrea v. Suplico, 488 SCRA 332 Frenzel v. Catito, 406 SCRA 55 La Bugg’al-Blaan v. Ramos, 1 December 2004 Agan v. PIATCO, 21 January 2004 Jaworski v. PAGCOR, 14 January 2004 2. Action for Declaration of Nullity a. Prescriptive Period (Art. 1410) b. Divisibility (Art. 1420) c. Who May Bring (Art. 1421) = Cauton v. Salud, 27 January 2004 * Heirs of Balite v. Lim, 446 SCRA 56 * Pineda v. CA, 376 SCRA 222 * Cruz v. Bancom, 379 SCRA 490 3. Prohibited Contracts: Effects and Remedies a. In case of In Pari Delicto (Art. 1411-1412) * Hadja Fatima v. Hadji Abubacar, 2 August 2010 b. In case One Party is Innocent / Disadvantaged (Art. 1411-1412; Art. 1413-1419) = Pabugais v. Sahijwani, 423 SCRA 596 Liguez v. CA, 102 PHIL 577 Mendezona v. Ozamiz, 376 SCRA 482 Philbank v. Lui She, 21 SCRA 52 Vigilar v. Aquino, 18 January 2011 EPG Construction v. Vigilar, 354 SCRA 566 * Infotech v. COMELEC, 13 January 2004 . 37= Go Chan v. Young, 354 SCRA 207 = Francisco v. Herrera, 392 SCRA 317 XI. NATURAL OBLIGATIONS (Art. 1423-1430) Art. Definition and Meaning; Rationale B. Natural Obligations v. Civil Obligations (Art. 1423) C. Kinds (Art. 1424-1430) = Rural Bank of Paranaque v. Remolado, 18 March 1985 =" Manzanilla v. CA, 15 March 1990 XIL TRUST 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, Proof required (Art. 1443) ii, Form (Art. 1444) iii, Want of trustee (Art. 1445) iv. Acceptance by the beneficiary (Art. 1441) b. Implied Trusts i. How established (Art 1441) ii, How proved (Art. 1457) iii. 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, GR. No. 144773, May 16, 2005.