Beruflich Dokumente
Kultur Dokumente
-OBLIGATIONS
AND CONTRACTS
JOEMER C. PEREZ
I
'
by
Chapter
Joemer C. Perez
A l l rights reserved.
. '
199
------
ISBN 978-971-0ll-217-3
Published by
I: Introduction to Obligations
Chapter 2:
10
Chapter 3:
Remedies
26
Chapter 4:
Kinds of Obligations
35
Chapter 5:
Extinguishment of Obligations
75
Chapter
Serial No.
TABLE OF CONTENTS
6: Introduction to Contracts
131
Chapter 7:
150
Chapter 8:
Form of Contracts
1 89
Chapter 9:
Reformation of lnstruments
194
Chapter I 0:
Interpretation of Contracts
200
Chapter
1 1 : Defective Contracts
207
Chapter
247
250
257
Preface
Everything should be made as simple as possible,
but not any simpler.
- Einstein
Civil law is an enonnous subject, which covers a wide range of
A student of civil law is
JCP
2010
\
Nani
and Alfonso.
To
Chapter
Introduction to Obligations
I. IN GENERAL
A.
DEFINITION:
do or not to do.
(Art. 1156)
The definition in
Art. 1156
is incomplete as it considers
natural obligations,
which are not enforceable by the courts under the law, but
when performed, they are binding, under the prh1ciples of
conscience or moral justice. A common example of a natural
obligation is a prescribed debt which cannot be enforced in
courts; however, when it is paid by the debtor, the payment
becomes binding on the said debtor.
B. CONCEPTS:
2
concepts :
1.
Cre dit
' Id.
pp. 47-50,
A. LAW
I.
obligations,
b.
The
be
1 158)
b.
d.
SOURCES OF OBLIGATION
cam10t
(obligor) subjects.
' See Sps. Adorable v. CA, G.R. No. 1 1 9466, November 25, 1999.
Ang Yu Asuncion v. CA, 238 SCRA 602 (1994).
obligation
Such
presumed.6
II.
2.
daughter-in-law.
1 1 58)
easements;
etc.
1 157)
5 Batchelder v. Central Bank, G.R. No. L-25071, July 29, 1972.
' Pelayo v. Lauron, 12 Phil. 453 (1909).
3
B. CONTRACTS
1. Obligations arising from contracts have the force of law
between the contracting parties and should be complied
with in good faith. (Art. 1159)
2. Definition. A contraci is a meeting of minds between two
persons whereby one binds himself, with respect to the
other, to give something or to render some service. (Art.
1305)
C. QUASI-CONTRACTS
l..
a. Article 2177;
a
there is no consent in the sense of
In quasi-contracts,
.
meeting of minds between the parties; thus there is no
contract. However, in view of the peculiar
circumstances or factual environment, consent is
presumed, to tho end that a recipient of benefiis or
favors resulting from lawful, voluntary and unilateral
acts of. another may not be unjustly enriched at the
expens of another.7
3. Examples:
1 Philippine National Bank v. CA. G.R. No. 97995, January 21, 1993.
4
2. Civil Lia bil ity Arising From Crime. Under Art. 100 of
the Revised Penal Code, every person criminally liable for
a felony is also civilly liable. The Civil Code also provides
that in crimes, the defendant shall be liable for all damages
which are the natural and probable consequences of the act
or omission complained of.' (Art. 2202) It is not necessary
that such damages have been foreseen or could have
reasonably been foreseen by the defendant. (Art. 2202)
Civil liability arising from crime may be proved by
preponderance of evidence. (Arts. 29, 30, 35) Thus, it
5
(Art. 34)
5. No Double Recovery. In no case (even in independent
b.
c.
E. QUASIDELICTS
a.
(Art. 32)
c.
b.
'
a.
Culpa contractual
serves to
contractual obligation.15
b.
criminal),
sources of obligation.
the parties).1 6
c.
quasi-delict.17
niay
negligence.
The foregoing liabilities (and the corresponding liabilities)
are independent of each other, provided that the offended
party cannot recover more than once.18
Thus, e.g., a taxi passenger who became a victim of a
vehicular accident may sue the taxi operator under their
contract of carriage (this is
the driver of the other vehicle which collided with the taxi
for quasi-delict, since they had no pre-existing contractual
obligations (this is
culpa aquiliana).
14
See First Philippine International Bank v. CA, G.R. No. 1 1 5849, January 24, 1996.
Sps. Batal v. Sps. Tomina9a, G.R. No. 164601, September 27, 2006.
" Sps. Batal v. Sps. Tominaga, G.R. No. 164601, September 27, 2006.
11 Air France v. Carrascoso, 18 SCRA 155 (1966), Singson vs. Bank of the Philippine Islands, 23
SCRA 1 1 1 7 (1968), Coca-Cola Bottlers Philippines, Inc. v. CA, G.R. No. 1 1 0295, October 18,
1993.
" See First Philippine International Bank v. CA, G.R. No. 1 15849, January 24, 1996. .
15
.
" Manliclic v. Calaunan, G.R. No. 150157, January 25, 2007. Safeguard Security Agency v.
Tangco, G.R; No. 165732, December 14, 2006.
9
Chapter 2
OBLIGATION TO GIVE
A. OBLIGATION TO GIVE A DETERMINATE THING
20
21
Seven Brolhers Shipping Corp. v. CA, G.R. No. 109573, July 13, 1995.
Sps. Adorable v. CA, G.R. No. 1 1 9466, November 25, 1999.
11
1 1 65)
b.
1 178)
B. EXCEPTIONS: Rights
and
transmissible -
I. By nature; (Art. 1 3 1 1)
obligations
which
are
not
300), parental
authority (Article 327), usufruct (Article 603),
contracts for a piece of work (Article 1726),
partnership (Article 1830) and agency (Article 1 919).
Examples:
legal
support
(Article
the
to do
doing, and the obligor does what has been forbidden him, it
1 168)
consists must be
(Art.
1 176)
demolished.'2
22 C.ajardo Jr. v. Freedom to
" Estate of Hemady v. Luzon Surety Co., 100 Phil. 388 (1956).
13
A. DELAYORMORA
of
debt
without
reservation
as
to
(mora
That
the
obligation
be
demandable
and
already
liquidated;
Circular No.
December
a.
(Art. 1 176)
D. USURIOUS TRANSACTIONS:
laws. (Art. 1 175)
prior
solvendi),
b.
c.
to
be
iniquitous
or
unconscionable
under the
2'
circumstances (such as 66% per annum , 72% per
26
27
annum, or 1 08-120% per annum ).
(Art. 1 1 65)
2 . General rule o n demand requirement.
Those obliged to
V. NON-PERFORMANCE OF OBLIGATION
(BREACH OR DEFAULT)
Those who in the performance of their obligations are guilty of
(Art. 1 1 69)
31
(Art. 1 1 69)
Phil. 962; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v. Chong, 49 Phil. 1003; Pando v.
Gimenez, 54 Phil. 459; Acme Films v. Theaters Supply, 63 Phil. 657.
" Social Security System v. Moonwalk Developmenl and Housing Corp., G.R. No. 73345, April
7, 1993; Santos Ventura Hocorma Foundation, Inc. v. Santos, G.R. No. 153004, November 4,
2004.
" Malayan Insurance Co., Inc. v. CA, G.R. No. L59919, November26, 1 966.
" United Coconut Planters Bank v. Sps. Beluso, G.R. No. 159912, August 17, 2007.
14
15
a.
1169)
controlling
contract; .?r
establishment of the
i.
ii.
conditioned on the
other obligation.36
B. FRAUD
perform.
For example,
when the
fulfillment of the
c.
simultaneous
to
refuses to accept
See Social Security System v. Moonwalk Development and Housing Corp., G.R. No. 73345,
April 7, .1993.
"Maersk Line v. CA, G.R. No. 94761, May 17, 1993.
"'Vda. De Villaruel v. Manila Motor Co., Inc., 104 Phil. 926 (1958).
" Vda. De Villaruel v. Manila Motor Co., Inc., 104 Phil. 926 (1958).
" Abaya vs. Standard Vacuum Oil Co., 101 Phil. 1262 (1957). Boysaw v. lnterphil Promotions,
Inc., 148 SCRA 643 (1987).
"Luzon Brokerage Co., Inc. vs. Maritime Building Co., Inc. and Myers Building Co., G.R. No. L25885, January 31, 1972, 43 SCRA 93
16
17
32
b.
extra-contractual or quasi-delict)
the parties).41
117 1)
i.
1 17 1)
b.
(or
a.
Culpa aquiliana
will.38
Thus, it
was held
that
also be a quasi-delict.42
a stipulation completely
culpa aquiliana,
void.39
In culpa
the family. (Art. 2180)
contractual, this defense is not available.43
C. NEGLIGENCE
I. Liability for Negligence. Responsibility ansmg from
negligence in the performance of every kind of obligation
c.
obligation
and
corresponds
with
1 173)
the
a.
culpa
Culpa contractual.
(Art.
365
negligence.
1 172)
Culpa criminal
Art.
and construction of
building
is
serves to
contractual obiigation.40
41
Sps. Batai v. Sps. Torninaga, G.R. No. 164601, September 27, 2006.
Carrascoso, 18 SCRA 155 (1966), Singson vs. Bank of !he Philippine Islands, 23
SCRA 1 1 17 (1968),
Coca-Coia Bottlers Philippines, Inc. v. CA, G.R. No.110295, October 18,
.
1993.
43 el Pardo v. Manila Eler.lrtc Co., 52 Phil. 900, 904 (1929); De Gula v. Manila Electric Railroad
and Light Co., 40 Phil. 706, 710 (1920); Manila Railroad Co. v. Compania Transatlanlica, 38 Phil.
875, 889-890 (1918); Herbosa v. CA, G.R. No. 1 190867, January 25, 2002.
44 Nakpil & Sons v. CA, G.R. No. L-47851, Oclober3, 1986.
"Air France v.
1951, p. 47.
Philippine Commercial international Bank v. CA, G.R. No. 97785, March 29, 1996.
)' Sps. Batai v. Sps. Tominaga, G.R. No. 164601, September 27, 2006.
39
18
19
5. Extraordinary
Diligence.
Certain
businesses
or
required.
a.
(Art 1173)
a.
b.
b.
Examples:
i.
Placing
Common Carriers
property. 50
because of the fiduciary nature of their
relationship with their depositors.5 1
Banks
c. Pharmacies
life.52
I.
was
manned
by
competent
and
a.
c.
50
45
20
Tiu v. Arriesgado, G.R. No. 138060, September 1, 2004; Calaias v. Court of Appeals, 332
SCRA 356 (2000); Kapalaran Bus Line v. Coronado, 176 SCRA 792 (1 989);
51 Bank of the Philippine islands v. CA, G.R. No. 102383, November 26, 1992, 216 SCRA 51;
Far East Bank and Trust Company v. Quirimil, G.R. No. 148582, January 16, 2002.
5 2 Mercury Drug Corp. v. De Leon, G.R. No. 165622, October 17, 2008.
53 Arrieta vs. National Rice & Corn Corp., 10 SCRA 79 (1964); Magat vs. Medialdea, 121 SCRA
418 (1983).
54 Acme Films, Inc. vs. Theaters Supply Corporation, 63 Phn. 657 (1936)
55 Maersk Line v. CA, G.R. No. 94761, May 17, 1 993.
21
Supplier
FORTUITOUS EVENT
stopped
terminating
an
deliveries,
existing
thereby
unilaterally
distributorship agreement
f.
1. "Act of God" if caused by nature, such as earthquakes, epidemics or pestilence,62 floods or storms,63 fire, etc., or
2. "Act of man"
breached,
quasi-contracts,
damages.60
a.
the
contravenor
delicts or quasi-delicts),
can
be
held
liable
goodfaith, he shall be
is
for
liable for
B. GENERAL RULE
(Art. 1174)
To exempt the
2.
(Art. 2200)
b.
and specifications."
2.
In case
(Art. 2201)
C. EXCEPTIONS:
111,
or
so
3.
(Art. l 174)
interest. (Art.
defective. 71
l 165)
v.
(Art. 1 170)
vi.
i.
vii.
ii.
fortuitous event.74
25
Chapter 3
Remedies
Note:
I. IN GENERAL
I. Performance.
a. In obligation to give a determinate thing, the creditor
may demand specific performance, or to compel
delivery of the thing due. (Art. 1165)
b. In obligation to give a generic thing, the creditor may
demand substituted peiformance, i.e., that the
obligation be complied with at the expense of the
debtor.
c. In obligation to do, the creditor may demand
substituted performance, i.e., that the obligation be
executed at the cost of the cost of the debtor. The
creditor may also demand that what has been poorly
done be undone. (Art. 1167)
d. In obligation not to do, the creditor may demand
desistance (or "negative performance," as it were) by
the debtor from doing the forbidden thing. The creditor
may ask for an injunction for this purpose. If the
forbidden thing has already been done, the creditor
B.
2. Exercise all the rights and actions of the debtor, save those
personal to him (accion subrogatoria); and
27
b.
Thus,
accion subrogatoria
and
accion pauliana
are
c.
merely apparent.
I.
Examples: (1)
years; in
JBL Reyes & Ricardo Puna, Outlineof Philippine Civil Law, Vol. IV (1958 ed.) (hereafter "IV
Reyes .& Puna"), pp. 34-35.
78 IV Reyes & Puna 38 (citing Puig Pena and Manresa).
28
(2)
(3)
n. REMEDIES IN BREACH OF
RECIPROCAL OBLIGATIONS
11
Reciprocal
required.
1191)
intent is required.
v.
damages
n.
is for breach
29
suffered by the
lesion
c.
oi economic damage
he suffered).
exists.
prestation.
1 191)
perform his
own
simply withhold
to
a buyer can
Thus,
Practically speaking,
b.
a.
c.
a demand for
act,
1 592)
"Universal Food Corporation v. CA, G.R. No. L29155, May 13, 1970, 33 SCRA 1 (JBL Reyes,
concurring); Ong v. CA, G.R. No. 97347, July 6, 1999.
" Pan Pacific Industrial Sales Co., Inc. v. CA, G.R. No. 125283, February 10, 2006.
"Universal Food Corporation v. Court of Appeals, 33 SCRA 1, May 13, 1 970; Roque v. Lapuz,
96 SCRA 741, March 31, 1 980; Multinational Village Homeowners Association, Inc. vs. ARA
Security & Surveillance Agency, Inc., G.R. No. 154852, October 21, 2004.
" IV Tolentino 180, citing Mina v. Rodriguez, (CA) O.G. Supp., August 30, 1941, p. 65.
' Tan v. CA, G.R. No. 80479, 28 July 1989, 175 SCRA 656, 661-662. Ong v. Bognalbal, G.R.
No. 149140, September 12, 2006.
" UP v. Delos Angeles, 35 SCRA 102 (1970); Cruz v. IAC, G.R. No. 72313, December 29, 1989.
" IV Tolentino 177-178.
30
31
in a
contract to sell
unfinished. 94
'
means bringing the parties back to their original status
prior to the inception of the contract.96 They must return to
each other. what they respectively reserved (less damages,
if proper).
b.
3. Where the plaintiff is t11e party who did not perform his
undertaking under the contract, he is not entitled to insist
upon the performance of the contract by the defendant, or
recover damages by reason of his own breach.101
B. SPECIFIC PERFORMANCE
2.
e.g.,
Example:
Thus,
191 1).98
1 191)
1 9 1 1 is the obligor's
faith.
32
33
C. DAMAGES
I.
in
either
Chapter 4
case of specific
Kinds of Obligations
.those
which
performance.
effectively
amount
to
specific
2.
221 0)
a.
J.
a.
b.
The
necessity
considered
time.
b.
nothing
not
can
102
34
because
is
a.
demand
Examples:
1 192)
condition,
actual
!OS
(Art.
of an
1 1 79)
1 1 92)
condition
35
1 1 79)
to "future
or
and
uncertain.
If the
period,
B. KINDS OF CONDITIONS
a.
1 193)
Thus, a
b.
Resolutory
subsequent)
condition
-
(also
known
as
condition
Potestative
always
certain.
It
knowledge
of that
uncertain.
Example:
is
only
the
parties'
be
i.
void
1 1 82)
If the condition is
suspensive,
(1)
meant to be fulfilled.1'
c.
If the
condition is
resolutory,
the obligation
is
1 179)
(2)
'' Ruperto v. Kosea, 26 Phil 227, December 4, 1913; Gonzales v. Heirs of Cruz, G.R. No,
131784, September 16, 1999.
36
'' Vda. De Mistica v. Spouses Nagial, G.R. No. 137909, December 1 1 , 2003.
''Trillana v. Quezon College, Inc., 93 Phil. 383 (1953).
37
with a
.l
It is subject to the
Art. 1 1 97,
11.
suspensive. 110
ii.
if
the
sole
The
conditional
obligation
is
valid
ii.
Conditions which
impossible,
impossible
are
unlawful
give birth;
or
juridically
1 1 83)
i.
ii.
wife.
1 1 82)
b.
obligation which
1 183)
onerous obligations.
i.
only the
(Arts.
In gratuitous obligations
persons.
111
110
c.
condition
1 1 82)
testator.
11'
condition that they will not marry each other. until they
are both 25 years old - the obligation becomes
effective if they both reach their 25th birthday without
marrying each other, or if Y dies before her 25th
birthday.
second is not.
d. The condition not to do an impossible thing shall be
considered as not having been agreed upon. (Art. 1 183)
The obligation remains valid and becomes a pure one.
C. CONSTRUCTIVE FULFILLMENT
1 14
Nielson & Company, Inc. v. Lepanto Consolidated Mining, G.R. No. L-21601, Decembe r 17,
1966.
m 1v Tolentino 162.
11' Taylo r v. Uy Tieng Piao, 43 Phil. 873 (1922).
4t
c.
(a) when it
{c) when it
Fulfillment of
Suspensive Condition.
Before the
govern:
creditor; (Art.
sale or mortgage.
v.
1 1 88)
(2)
its
fulfillment,
with
(Art. 1 1 89)
If the thing is
creditor; (Art.
1 1 89)
he
usufructuary.
(Art. 1 189)
The debtor
42
and
vi. If it is
obligation
In case of obligation
If the thing is
ii.
If the thing is
1 1 89)
same. (Art.
1.
c.
disappears
b.
D. EFFECTS
a.
I. Before
perishes
down), or
1 11
Mactan Cebu International Airport Authority v. Tudtud, G.R. No. 174012, November 14, 2008.
Heirs of Tito Moreno v. Mactan Cebu International Airport Authority, G.R. No. 156273, October
15, 2003.
43
-- '
44
In obligations to give
upon the fulfillment of
resolutory condition, the obligation is extinguished and
the parties shall return to each other what they have
received. (Art. 1 190)
-
45
Otherwise put, a
event, as
3. Retroactivity.
1 195)
- they
Examples:
January
In General.
1 193)
A promissory note payable ,on
a.
1 196)
they
Example:
b.
1 1 93)
January
2025.
2. Exception.
B. EFFECTS
In case of loss,
1 1 96)
1 1 89 on conditional
1 1 94)
a.
obligor is unaware
may
validly do so (pre
payment) if he so wishes.
Example:
When
the
debtor
violates
any
undertaking,
in
period; or
may
D. FIXINGOF PERIOD
validly demand
performance if he so wishes.
a._ If the obligation does not fix a period, but from its
'
1.
ii.
the right to make use of the period (i.e., the creditor may
(Art. 1 198)
b.
12
soon as possible,"1 24 or as soon as he has money, 5
126
or when his means permit
or "little by little",
.
him to do so. (Art. 1 1 80)
1
In one case, 28 the Supreme Court held that
50
period.
Example:
123
1"
49
Art.
I. Alternative Obligation.
b.
(Art.
1 1 97)
But if the performance of the obligation depends
upon
the
sole
will
of. the
debtor
In case of
a.
1 1 91)
or
1 1 82)
the court
Examples:
(purely
'
b.
Example:
refrigerator.
c.
determine
such
period
as
may
under
the ,
1 1 97)
There is only
4.
(Art. 1 199)
The creditor cannot be compelled to receive part of one
and part of the other undertaking. (Art.
129 SPJ dissent of J. Davide In Central Philippine University v. CA, 246 SCRA 511 (1995).
"' Ungson vs. Lopez, 50 Off. Gaz. 4297; Concepcion vs. People of the Philippines, 74 Phil. 63;
Gonzales vs. De Jose, 66 Phil .. 369; Pages v. Basilan Lumber Company, G.R. No. L10679, November29, 1958,
131 Spouses Vasquez v. Ayala Corp.. G.R. No. 149734, November 19, 2004; Spouses Edrada v.
Spouses Ramos, G.R. No. 154413, August 31, 2005.
50
1 1 99)
"'See Chavez v. PEA-Amari, G.R. No. 133250, May 6, 2003. J. Ynares-Santiago, dissenting.
"' Ong Guan Can v. Century Insurance Co., Ltd., 46 Phil. 592 (1924).
"' IV Tolentino 203.
51
(Art.
1200)
rescind
a.
creditor.
Loss ofAll
i.
2. Limitations .
a.
compliance
of
the
obligation
has
become
1204)
1 200)
(Art.
1204)
1 204)
ii.
If the loss or
1 202)
(A1ts.
b.
Loss ofSome
i.
52
1 1 74, 1203)
due
l).
l.
n.
c. If all the things are lost through the fault of the debtor,
the choice by the creditor shall fall upon the price of
any one of them, also with indemnity for damages.
i.
lill.C'llLTll.1:WE OBLlGll.TlONS
136
a.
A, B, and C say
"We promise to pay P300 to X'. A, B, and C are liable
only for P 100 each.
In a
or
b.
2. Exception.
following instances
a.
(Art. 1207):
(Art. 1208)
juntas o
B.
from one
2.
distinct
When the
Examples:
(Art. 2194)
(Art. 1 10, RPC).
927, 1824, 1 9 1 1 , 1915, 2157 of the
1 36
Solidbank Corp. v. Mindanao Ferroalloy Corp., G.R. No. 153535, July 28, 2005, citing PH
Credit Corporation v. CA, 421 Phil . 821, 832, November 22, 2001; Inciong, Jr. v. CA, 327 Phil.
364, 373, June 26, 1996; Quiombing v. CA, 189 SCRA 325, 328, August 30, 1990; The Imperial
Insurance, Inc. v. David, 218 Phil. 298, 302, November 21, 1984.
"'Ouiombing v. CA, 189 SCRA 325, 328, August 30, 1990.
138 Inciong, Jr. v. CA. G.R. No. 96405, June 26, 1996.
139 Quiombing v. CA, 189 SCRA 325, 328, August 30, 1990.
'" Ronquillo v. CA, G.R. No. L-55138, September 28, 1984.
"' "Juntos o separadamenre: Parot v. Gemora, 7 Phil. 94 (1906).
"' Paro\ v. Gemora, 7 Phil. 94 (1906).
56
143
57
a.
1210)
joint.
1 208) Thus, because tl)e shares are distinct from each other
i.
a.
1209) and
1209)
The effect of a
demand
or interruption ofprescription
c.
d.
e.
The
co-debtors.
1209)
1 209)
joint (X
"' Worcester v. Ocampo, 22 Phil. 42 (1912). Lafarge Cement v. Continental Cement
Corporation, G.R. No. 155173, November 23, 2004, 443 SCRA 522.
"' IV Tolentino 222.
"' Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos, G.R. No. 1 13907, 20
April 2001, 357 SCRA 77, 93-94.
1" Sembrano v. City of Butuan, G.R. No. 1 63605, September 20, 2006.
1so Agoncillo v. Javier, 36 Phil. 424 (1916).
58
indivisible
Classification a s to
as:
a.
b.
guaranty. 153
mutual
2. Varied Solidarity.
Thus,
solidary
creditor
1211)
Example:
1212)
may
P30,000.
may
effect
the
only for
2) .1 54
novation,
2,
(the
J may
1213)
This is
P20,000
In general,
The
paying
debtor
is
1214, 1217)
generally
entitled
to
151
Pl0,000
In Year
152
1215, a solidary
1,
creditor
3.
scenario. In Year
interrupt
(2)
(1)
ii.
c.
mutual
1 217)
61
1214)
4. Payment by Solidary Debtors
a. Payment made by one of the solidary debtors
extinguishes the obligation. (Art. 1217)
ii. In case the remission was made after the. debt had
already been totally paid, apply Art. 1219 (infra).
iii. Novation. - generally, a mere extension of time
for payment given to some of the solidary debtors
does not constitute a novation which will
62
34 Phil. 978.
"' El Banco Espanol Filipino v. Donaldson Sim & Co., 5 Phil. 418 (1905); Radio Corp. of the
Philippines v. Roa, G.R. No. 42829, September 30, 1935; Cochingyan v. R & B Surety and
.
Insurance Co., 151 SCRA339 (1987). See also Art. 2079.
157 Palmares v. CA, G.R. No. 126490, March 31, 1998; Filipinas Textile Mills, Inc. v. CA, G.R.
No. 1 19800, November 12, 2003.
155 Quiombing v. CA, 189 SCRA 325, 328, August 30, 1990.
63
Example:
i.
1"
See Inciong, Jr. v. CA, G.R. No. 96405, June 26, 1996.
64
65
extinguished. (Art.
b.
1 2 1 6)
(Art.
6. Remission of Debt
a.
i.
ii.
the solidary debtors does not release the latter from his
responsibility towards the co-debtors, in case the debt
1.
ii.
a.
1 220)
b.
(Art. 1221)
simultaneously. (Art.
in delay through
payment
b.
1221)
1219)
1221)
The remission
1221)
'" Republic Glass Corp, v. Qua, G.R. No. 144413, July 30, 2004.
66
'" Inciong, Jr. v. CA, G.R. No. 96405, June 26, 1996.
164 Quiombing v. CA, G.R. No. 93219, 30 August 1990, 189 SCRA 331; Amor de Castro v. CA,
G.R. No. 1 15838, July 18, 2002; Cerezo v. Tuazon, G.R. No. 141538, March 23, 2004.
'" Lafarge Cement v. Continental Cement Corporation, G.R. No. 1 55173, November 23; 2004,
443 SCRA 522.
67
1.
169
68
D. DETERMINING DIVISIBILITY
1 . Indivisible. (a) Obligations to give definite things and (b)
those which are not susceptible of partial performance
shall be deemed to be indivisible (see Art. 1233)
Example: A, B, and
"'.Makati Tuscany Condominium Corp. v. Court of Appeals, G.R. No. 95546, 6 November 1992,
215 SCRA 462, 466.
70
71
172
a.
3. Limitations.
a.
B. EFFECT
(Art. 1 227)
i2
Piyce Corporation v. PAGCOR, G.R. No. 157480, May 6, 2005, citing Ligutan v. CA, G.R. No.
138671, Februaiy 12, 2002.
17' Piyce Corporation v. PAGCOR, G.R. No. 157480, May 6, 2005.
73
(Art. 1227)
Chapter 5
Extinguishment of
C. REDUCTION OF PENALTY
1 . Partial or Irregular Compliance.
The judge
Obligations
shall
(Art. 1228)
1. IN GENERAL
A. Art.
1.
2.
3.
4.
ii.
v.
123 1
V of
Payment or performance;
Loss of the thing due;
5.
6.
Novation.
I.
Annulment;
2.
Rescission;
4.
Prescription.
(Art. 1231)
1.
1 23 1 :
Pryce Corporation v. PAGCOR, G.R. No. 157480, May 6, 2005, citing Ligutan v. CA, G.R. No.
138677, February 12, 2002.
181 Lapuz Sy v. Eufemlo, 43 SCRA 177, January 31, 1972; Javier Security Special Watchman
Agency v. Shell.Craft & Button Corp., 1 1 7 Phil. 218, January 31, 1963.
"' Republic v. Cojuangco, Jr., G.R. No. 139930, April 17, 2006.
74
75
1ao
2.
3.
made by one who has: (a) the free disposal of the thing
parties.
II.
1236)
PAYMENT OR PERFORMANCE
A. IN GENERAL
2.
payment or performance
I . Definition.
Requisites.
a.
paid unless
b.
3.
a.
1233)
discussion below):184
Exception:
(Art. 1236)
a.
the debtor b.
infra)
i:
c.
d.
Payee
Saura Import & Export Co., Inc. v. DBP, G.R. No. L-24968 April 27, 1972.
"' See Alonzo v. Sps. San Juan, G.R. No. 137549, February 1 1 , 2005.
1"
76
1236)
'" Art. 1239 provides that the rule is without prejudice to Art. 1427, which provides for payments
made by a "minor between 18 and 21 years of age." Since the age of minority is now 18 years,
Art. 1427 may be considered inoperative.
186 Agoncillo v. Javier, 38 Phil. 424 (1918).
77
his authority),
ii.
1302[1])
b.
1 . In General.
i.
following:
a.
(1)
1236)
78
1240)
1 240)
"' Carandang v. Heirs ofDe Guzman. G.R. No. 160347, November 29, 2006.
"' PCIB v. CA, G.R. No. 121989, January 31, 2006; Phil. Export and Foreign Loan Guarantee
Corp.v. V. P. Eusebio Construction, Inc.. G.R. No. 140047, July 13, 2004.
'" PCIB v. CA, G.R. No. 121989, January 31, 2006.
(2)
1237)
1237;
get
agent may
1238)
such
but
3. Capacity.
79
However a.
found it.
ii.
1241)
ii.
If the creditor
person;
ratifies
acquirs
'
the
to believe
4.
Example:
K should
"' Orala v.
D. IDENTITY OF PRESTATION
81
. 1244)
thingI.
196
A!onzo v. Sps. San Juan, G.R. No. 137549, February 11, 2005.
82
83
c.
2. Exceptions/Qualifications.
(animo solvendz)
which may
a.
b.
There must be
that
which
prestation
due
substitution
is
given
c.
in
'
i.
ii.
d.
is
97 ,5%
1 1 9 1 is not proper.209
perfonnance, . knowing
its
incompleteness
or
(Art. 1248)
which
The
Examples:
construction
b.
Example:
a.
(Art. 1234)
complete.207
(Art. 1 248)
1248)
construct
a house,
the
i.
construction must be
207
20
completed.
20s
(Art. 1235)
..
Diesel Conslruclion Co., Inc. v. UPSI Property Holdings, Inc. G.R. No. 1 54885, March 24,
2008.
we See Sps, Buenaflorv. CA, G.R. No. 142021, November29, 2000.
209 Angeles v. Calasanz, G.R. No. L42283, March 18, 1985.
85
ii.
iii.
F.
0THER PROVISIONS
I.
or defect; and
2.
from
the
payment
to
the
stipulated,
the
1247)
R.A.
1249)
unfinished
otherwise
is
8 i 83 removed this
Examples:
it
iv.
Unless
incomplete performance;
intention to
Expenses.
"' Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc., G.R. No.
168074, September 26, 2008.
'" Hanjin Heavy Industries & Construction Co., Ltd. v. Dynamic Planners & Construction Corp.,
G.R. Nos. 169408 & 170144, April 30, 2008
215 C.F. Sharp & Co. v. Northwest Airlines, Inc., G.R. No. 133498, 18 April 2002, 381 SCRA 314;
BPI v. Leobrera, G.R. No. 137147, November 18, 2003.
21 6
C.F. Sharp & Co. v. Northwest Airlines, Inc., G.R. No. 133498, 1 8 April 2002, 381 SCRA 314;
BPI v. Leobrera, G.R. No. 137147, November 18, 2003. Note that this is the same rule even
when R.A. 529 was in effect. Kalalo v. Cruz, 34 SCRA 337 11970]; Ponce v. Court of Appeals, et
al., 90 SCRA 53311979]; General Insurance & Surety Corporation v. Union Insurance Society of
87
1249)
c.
National Marketing Corp. v. Federation of United NAMARCO Distributors, Inc., G.R. No. L22578. January 31, 1973, citing Compania General de Tabacos v. Molina, 5 Phil. 142.
'" Quiros v. Tan-Guinlay, 5 Phil. 675 (1906). See, however, Papa v. A. U. Valencia & Co., G.R.
No. 105188, January 23, 1998, involving checks drawn by the debtor himself.
221 Siana v. Gimenez, G.R. No, 132768, September 9, 2005; Fortunado vs. CA, 196 SCRA 269,
279 (1991).
210
89
i.
c.
1980's (50.34%
might be
For Art.
constituted. (Art.
ii.
inflation
1 . In General.
b.
creditor. (Art.
1252)
4. Place of Payment.
1251)
G. APPLICATION OF PAYMENTS
Bangko Sentral.227
a.
1251)
d.
1251)
2. General
Rule
- Debtor's
Right.
The
debtor
who has
various debts of the same kind in favor of one and the same
223
Singson v. Caltex, G.R. No. 137798, October 4, 2000; Huibonhua vs. Court of Appeals, G.R.
Nos. 95897 and 102604, December 14, 1999; Sierra vs. Court of Appeals, 229 SCRA 60; Hahn
vs. Court of Appeals, 173 SCRA 675; Filipino Pipe and Foundry Corporation vs. NAWASA, 161
SCRA32.
,,. Fiiipino Pipe and Foundry Corporation vs. NAWASA, 161 SCRA 32; Singson v. Caltex, G.R.
No. 137798, October 4, 2000; Citibank, N.A. v. Sabeniano, G.R. No. 156132, February 6, 2007.
220 Filipino Pipe and Foundry Corporation vs. NAWASA, 161 SCRA 32.
"' Singson v. Caltex, G.R. No. 137798, October 4, 2000; Citibank, N.A. v. Sabenlano, G.R. No.
156132, February 6, 2007.
221 Citibank, N.A. v. Sabeniano, G.R. No. 156132, February 6, 2007; Telengtan Bros. & Sons v.
U.S. Lines, Inc., G.R. No. 132284, February 28, 2006; Ramos v. Court of Appeals, G.R. No.
1 1 9872, 7 July 1997, 275 SCRA 167, 175; Mobil Oil Philippines, Inc. v. Court of Appeals, 180
SCRA 651 (1989).
.
90
1252) In
'29
Exceptions/Limitations:
a.
1252)
b.
not
ii.
(Art.
1252)
c.
receipt
in
debt.234
(Art. 1252)
b.
H.
(Art. 1253)
3. In
Default
of
the
Foregoing Rules.
I.
b.
if application
can
not
be
inferred from
a.
other
or
PAYMENT BY CESSION
If the debts due are of the same nature and burden, the
(Art. 1253)
d.
without interest.231
c.
1253)
i.
In general -
'" Swagman Hctels and Travel In v. CA, G.R. No. 161 135, April 6, 2005; Al)ama v. CA, G.R.
No. 126609; January 29, 2004.
93
(Art. 1258)
i.
'
ii.
Tender
is
the
antecedent
of
I . In General.
be
released
from
responsibility
by
the
be valid. 237
b.
(Art. 1255)
a.
the obligation:
b.
c.
d.
e.
236 Ramos v. Sarao, G.R. No. 149756, 1 1 February 2005, 451 SCRA 103, 118119.
'" Sooo v. Militante, 208 Phil. 151, 160 (1983); see also Philippine Airlines, Inc. v. Court of
Appeals, G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568; Citibank, N.A. v. Sabeniand,
G.R. No. 156132, October 16, 2006.
23e Saco v. Militante, 208 Phil. 151, 160 (1983); Pabugais v. Sahijwanl, G.R. No. 156846,
February 23, 2004.
.
239 Vda. De Zuluela v. Octaviano, G.R. No. L-55350, March 28, 1983.
.
94
a.
1256,
time it is due;
collect;
1256)
(Art.
must
show
compliance
with
the
following
reqllisites:243
a.
d.
244;
or
e.
instead of performing an
obligation.
right
disposal of the
Tender of
prior to
and
after
the
which dispenses
Notes:
i.
1256, 1258)
Strict compliance.
not proper.248
Previous
the
notice of the
person
obligation; (Art.
1257)
1257)
iii.
Applicability.
do not
Soco v. Militante, 208 Phil. 151, 160 (1983); Pabugais v. Sahijwani, G.R. No. 156846,
February 23, 2004.
244 Ascue v. CA, G.R. No. 84330, May 8, 1991.
245 Villanueva v. Malaya, G.R. No. 94617, April 12, 2000, citing Co. vs. Philippine National Bank,
1 14 SCRA 842; De Castro vs. Intermediate Appellate Court, 165 SCRA 654; Enage vs. De
Escano, 38 Phil. 687.
246 Legaspi v. CA, 142 SCRA 82, 88 (1986), citing Asturias Sugar Central v. .Pure Cane
Molasses Co., 60 Phil. 255 (1934), Villegas v. Capistrano, 9 Phil. 416; Rosales v. Reyes, et al.,
25 Phil. 495; Paez, eta\. v. Magno, 46 O.G.,p, 5425.
247 Vda. de Quirino v. Pa\arca, 29 SCRA 1 [196g] citing Asturias Sugar Central v. Pure Cane
Molasses Co., 60 Phil. 255 and Conejero v. CA, L-21812, April 29, 1966.
"' Roman Catholic Bishop of Malolos, Inc. v. \AC, G.R. No. 72110, November 16, 1990.
Cabanos v. Calo, G.R. No. L-10927, October 30, 1958, 104 Phil. 1058; Limkako vs. Teodoro.
74 Phil. 313; Socov. Militante, 208 Phil. 151, 160 (1983).
Cabanas v. Calo, G.R. No. L-10927, October 30, 1958, 104 Phil. 1058; Saco v: Militante, 208
Phil. 151, 160 (1 g83).
251 Saco v. Militante, 208 Phil. 151, 160 (1983);
252 Pabugais v. SShijwanl, G.R. No. 156846, February 23, 2004.
96
97
243
249
4. Effect of Consignation.
After
the
creditor
consignation,
a.
or
has
after
already
accepted
the
already
Expenses.
The
expenses
of
consignation,
withdrawal -
when
c.
1261)
Withdrawal.
1.
DETERMINATE THING
1.
the
requisites
for
consignation
are
a.
of the obligation)
refers to the
impossibility
of
1990.
Cruz, 88 Phil. 236 (1951): Francisco v. Bautista, G.R. No. 44167, December 19,
255
after the
creation of
Presumption
b. A thing is considered Jost when it: (i) perishes; (ii)
goes out of commerce; or (iii) disappears in such a way
that its existence is unlmown or it cannot be recovered
(Art. 1 1 89, S;tpra).
d.
: ;
100
10, 1971.
101
all the rights of action which the debtor may have against
third persons by reason of the loss. (Art.
a.
1 269)
In
impossible.'"
reciprocal
b.
puction
manifestly beyond
1267)
1263)
a.
1267 is
stantibus,
of the debtor.260
C. IN OBLIGATIONS TO Do
exceptional
1.
It
is
changes
therefore
only
in
of circumstances
absolutely
that equity
1 266) .
"'A. Urrutia & Co. v. Saco River Plantation, Inc., 26 Phil. 632 (1913).
2ss IV Tolentino 337, 346, citing Colin & Capitant; Von Tuhr; Perez Gonzalez & Alguer; and
Enneccerus1 Kipp & Wolff.
259 Gaisano Cagayan, Inc. v. Insurance Company of North America, G.R. No. 147839, June 8,
2006, citing Bunge Corp. and Universal Comm. Agencies v. Elena Camenforte & Company, 91
Phil. 861, 865 (1952).
"" Gaisano Gagayan, Inc. v. Insurance Company of North America, G.R. No. 147839, June 8,,
2006, citing Ramirez v. Court of Appeals, 98 Phil. 225, 228 (1956).
i02
application of Art.
b.
1267262
donations
with
respect . to
acceptance,
amount,
and
(Art.
revocation:265
a.
1 270)
A. IN GENERAL
l.
Definition.
the creditor still does not enforce the debt, the debt
Gratuitous.
Condonation
or rem1ss10n is
b.
(Art.
1 270, in
Art. 752)
1 270)
4. Effect on Accessory
(Art.
It may become
creditor receives
dation in payment
a thing
It may become a
novation,
b.
104
(Art. 1274)
and in
receives.
'
3 . Governing Rules.
changed; or
Thus, the
pledge.
compromise,
(Art. 1273 )
that
when the
different from
stipulated; or
ii.
a.
1273)
Express condonation
donation. (Art. 1271)
105
may be made
2. Implied
V.
CONCEPT
1 . The obligation i s extinguished from the time the characters
1275)
a. The
2.
1.
Example:
X borrowed
Pl0,000
from
(Art. 1271)
Pl0,000
shall be
in the person of X.
presumed
1272)
3.
ii.
1271)
B.
An
when the
Example:
the
1.
1276)
enefits
1274)
a.
1276)
intended.
b.
'" Yek Tong Lin Fire & Marine Insurance v. Yusingco, 64 Phil. 473 (1937).
106
107
b. According to Cause
i.
x.
If the obligation
V. COMPENSATION
A. IN GENERAL
! . Definition. Compensation (or offsetting) is a mode of
extinguishing (to the concurrent amount) the obligations of
persons who, in their own right and as principals, are
reciprocally debtors and creditors of each other.267 (Art.
1278)
2. Kinds of Compensation.
a. According to Extent
when the two debts are of the same
amount, in which case both debts are totally
extinguished. (Art. 1281)
Total
1283)
B. LEGAL COMPENSATION
ii. Partial when the two debts are not of the same
amount, in which case the debts are extinguished
only to the concurrent amount. (Art. 1281)
I.
168
201
129596, August 15, 2001; see also Francia v. IAC, G.R No. L
108
i.
Legal
PNB Madecor v.
June 28, 1968.
169 PNB Madecor v.
Francia
v.
L-67649,
(Art.
(4)
Taxes
cannot
taxpayer's
because
be
claim
taxes
compensated
against the
are
not
"debts"
2. Requisites.
with
the
Government,
and the
cannot be
(Art.
b.
1279):
a.
stated;
the other;
Compensation is also possible for fungible things
(not necessarily consumable) because, by their
(2)
(3)
c.
d.
of the
ABC).275
the
corporation.
Thus,
determined,
as
opposed
to
Compensation
cannot extend to
are
disputed
determined.
debt
of contract.'79
stock.276
Bank of the Philippine Island v. Court of Appeals, 325 Phil. 930, 938 (1996).
212 Republicv. Court of Appeals, G.R. No. 25012, July22, 1975, 65 SCRA 186, 190.
2n
PNB Madecor v. Uy, G.R. No. 129598, August 15, 2001; see also Francia v. IAC, G.R. No. L
67649, June 28, 1988.
274 See CKH Industrial and Development Corp. v. CA, G.R. No. 1 1 1890, May 7, 1997, 272 SCRA
333.
210 Escano v. Heirs of Escano, 28 Phil. 73 (1914).
276 Garcia v. Lim Chu Sing, 59 Phil. 562 (1934).
211
110 .
21s
1il
a.
Note, _however, that when one or both debts are
or
rescissib/e
voidable,
they
may
be
If
1284)
'
They are considered valid until annulled or
Exception:
rescinded.
if
the
debtor
consented
to
the
compensation.
iii. Legal compensation is possible even though the
debts may be payable at different places, but there
e.
b.
If
(Art. 1286)
or liquidated) -
retention or
i.
controversy,
commenced
by
third
perspns
and
If the debtor
(1196)
Example:
1285)
(execution or attachment).
2. Who May
Invoke
(Art.
1285)
ii. Jf the
debtor. (Art.
1280)
(Art. 1285)
iii. If the
principal
obligation
which
results
from
such
compensation.
3. Assignment of Credit.280
Note:
1285)
1 13
4. Plurality of Debts. If
a.
b.
(Art. 1289)
shall
proportionately.
be
applied
to
all
of
them
I.
2.
a.
1290)
b.
In General.
C. CONVENTIONAL COMPENSATION
I.
The
c.
1 980),
Thus, the parties may agree upon the compensation of
(Art. 1282)
3.
(Art.
2. Requisities.
(Art. 1287)
1287)
obligations to
the
1287)
co1npensation are:284
a.
282
PNB Madecor v. Uy, G.R. No. 129598, August 15, 2001; Francia v. IAC, G.R. No. L67649,
June 28, 1988.
283 CKH Industrial and Development Corp. v. CA, G.R. No. 1 11890, Mar 7, 1997, 272 SCRA
205)
333.
'" CKH Industrial and Development Corp. v. CA G.R No. 111890. May 7, 1997, 272 SCRA
333.
1 14
285
Sps. Nlsce v. Equitable PC/ Bank, G.R. No. 167434, February 19, 2007,
115
b.
4.
1287)
(M ,,
offended party.
and
set
up
compensation
Obligation to,pay
Novation has
d.
2. Classification.
a.
According to Manner
i.
1291)
extinctive,
that
the
new
that it be so
to
IN GENERAL
a.
(i)
VII. NOVATION
(Art.
extinguish an
to substitute a new one in
dual function:
benefit
the
I.
(facultative).
A.
5.
lb.at ta;,es t'tl.e \)\ace cit t'tl.e fo=et. h ne>'1at\C>n t\\at .\s
ii.
declare in unequivocal
obligation
novates
or
(Art. 1292)
1292)
irreconcilable,
i.e., an old
Francia v. IAC, G.R. No. L-67649, June 28, 1988, citing Republic v. Mambulao Lumber Co., 4
SCRA 622.
"' Garcia v. Llamas, G.R. No. 1 54127, December 8, 2003.
i 16
117
266
b.
According to Cause
1.
Objective
Subjective
1291
[l])
b.
1291 [2]
i.
ii.
& [ 3 ])
3.
1298)
ulment may
If
the
original
suspensive
1298)
the
d.
i.
condition,
the new
'" Garcia v. Llamas, G.R. No. 154127, December 8, 2003; Sueno v. Land Bank, G.R. No.
174711, September 17, 2008.
293 Villaroel v. Estrada, 71 Phil. 140 (1940).
1299)
1297)
ii.
1390),
deemed
void,
so
the
novation
ineffective as well.
118
to
1298)
novation is valid.
subject
m.
resolutory
was
Exception: in
or
obligation
be claimed
original
Exception: when a
only by the
animus
novandi.
becomes
4.
animus novandi
{Art. 1296)
essential change.301
incidental
conditions
distinct obligations.299
B. OBJECTIVE NOVATION
object
Objective
or in the
b.
"' Evadel Realty & Dev't Corp. v. Sps. Soriano, G.R. No. 144291, April 20, 2001.
"' Philippine Savings Bank v. Manalac, Jr., G.R. No. 145441, 26 April 2005, 457 SCRA 203,
218.
'" IV Tolentino 395.
299 IV Tolentino 396.
'" See Ligutan v. CA, G.R. No. 138677, February 12, 2002.
120
a.
121
c.
i.
C.
SUBJECTIVE
307
315 Kabankalan Sugar Co. vs. Pacheco, No. 33654, 29 December 1930, 55 Phil. 555; Tible v.
Aquino, G.R. No. L-28967, 22 July 1975, 65 SCRA 207, 218; Pascual v. Lacsamana, 100 Phil.
381, 385 (1956).
316 Sps. Reyes v. BPI Family Savings Ban G.R. Nos. 149840-41, March 31, 2006.
" 7 California Bus Lines, lnc.. v. State Investment House, Inc., G.R. No. 147950, December 1 1
'
2003.
"' Bank of P.I. vs. Abaladejo, No. 30490, 27 March 1929, 53 Phil. 14; Sps. Aguilar v. Manila
Banking Corp., G.R. No. 1579 1 1 , September 19, 2006. '
319 Sps. Reyes v. Court of Appeals, G.R. No. 147758, 26 June 2002, 383 SCRA 471, 482.
320 Gammon Phil., Inc. v. MRTDC, G.R. No. 1 44792, January 31, 2006.
122
123
''
1.
Necessity of Consent
i.
(1)
(1) Expromision
(2) Deliigacion
necessary.'27
is
without
the
124
(substitution
required.
expromision
322
In
321
and the
ii.
(3)
1293)
(2)
always
1293)
not
In
delegacion
1294)
exceptions
125
(I)
of
when
public knowledge,
the
debtor
(2)
a.
already existing
when he delegated
1236
and
In
expromision
(1)
(2)
(Art. 1236)
1237)
ii.
In
delegacion
(1)
(2)
1236)
1301)
1.
clearly
Conventional
subrogation
established in
1300)
ii.
must
be
Distinguished from
Assignment
Conventional subrogation is
.
.
assignment of erectt
t , thus330:
not
of Credit.
identical
to
a new one;
(Art.
"' Astro Electronics Corp. vs. Philippine Export and Foreign Loan Guarantee Corp., G.R. No.
136729, September 23, 2003. Philippine National Bank vs. Court of Appeals, G.R. .No. 128661,
August 8, 2000, 337 SCRA 381, 404.
3i9 Astra Electronics Corp. vs. Philippine Export and Foreign loan Guarantee Corp., G.R. No.
136729, September 23, 2003.
"' Licaros v. Gatmaitan, G.R. No. 1 42838, August 9, 2001; Leoonio v. Capitol Dev't Corp., G.R.
No. 149040, July 4, 2007.
126
1 300)
1302[2])
b.
(Art. 1303)
Thus:
i.
127
i.
(Art. 1302)
(1)
Example:
(Art.
(2)
take
place
even
without
the
(3)
Legal Subrogation
1 626) .
passes from one person to another;
debtor's
knowledge. 333
debtor's
senior security.
the
without
1302)
even
preferred,
c.
1 300)
1302)
co
guarantor
2067,
the
Ledonio v. Capitol Dev'\ Corp., G.R. No. 149040, July 4, 2007, citing Sison v. Yap Tico, 37
Phil. 584, 587-588 (1918) and Aquintey v. Spouses Tibong, G.R. No. 166704' 20 December
2006.
332 Astra Electronics Corp. vs. Philippine Export and Foreign Loan Guarantee Corp., G.R. No.
136729, September 23, 2003. Chemphil Import & Export Corp. vs. Court of Appeals, G.R. Nos.
1 12438-39, December 12, 1 995, 251 SCRA 257, 279.
333 Astra Electronics Corp. vs. Philippine Export and Foreign Loan Guarantee Corp., G.R. No.
.
136729, September 23, 2003.
128
insurer
who
pays
claim
for
129
The
Chapter 6
Introduction to Contracts
I. IN GENERAL
\.
"Two persons"
"' Federal Express Corp. v. American Home Assurance Co., G.R. No. 150094, August 18, 2004.
citing Philippine Americen General Insurance Co., Inc. v. Sweet Lines, Inc., 212 SCRA 194.
August 5, 1992
130
"' National Irrigation Administration v. Gamit. G.R. No. 85869, November 6, 1992.
1.00 Phil. 351 (1956).
337 A. Magsaysay, Inc. v. Cebu Portland Cement Co., 100 Phil. 351 (1956).
3" A. Magsaysay. Inc. v. Cebu Portland Cement Co.,
131
autocontrac.ts
8
prohibited.33
Article
1941
ii.
obligation. (Art.
1 3 1 6) Examples:
commodatum.
However, this rule does not apply to administrators
m.
property. .
2.
3.
Stages of Contract.340
a.
Classification of Contracts.
a.
According to dependence:
i.
ii.
b.
According to perfection:
In
i.
general, contracts are
mere consent
(Art. 1 315),
ii.
iii.
Example: sale
(e.g.,
donation
property)
1 458).
c.
According to cause:
or
mortgage
of real
i.
onerous
property
sale); and
ii.
gratuitous
d.
(3)
bilateral
unilateral -
ii.
1306)
However, this
four types:
(a)
(b)
(c)
(d)
(2)
AUTONOMY OF CONTRACT
The contracting parties may establish such stipulations, clauses,
According to name:
i.
II.
Innominate
following:
contracts
are
regulated
A.
"LAW''
I.
by
the
(Art. 1307)
2.
Applicable laws form part of and are read into the contract
without needfor any express reference.346
Examples of contracts or stipulations prohibited by law:
a.
Pactum commissorium
The
creditor
cannot
'" Perez v. Pomar, 2 Phil. 682 (1903); Corpusv. CA, G.R. No. L-40424, June 30, 1980.
134
.
343 Caolbes, Jr. v. Caoibes-Pantoja, G.R. No. 162873, July 21, 2006.
344 Santos v. Acuna, 100 Phil. 230 (1956)
34' People v. Pomar, 46 Phil. 440 (1924).
346. lntra-Strata Assurance Corp. v. Republic, G.R. No. 156571, July 9, 2008; Maritime Company
of the Philippines v. Reparations Commission, G.R. No. L-29203, July 26, 1971, 40 SCRA 70.
135
a.
137
d.
a stipulation by a
Void:
common carrier
exempting
h.
automatic
Valid:
forfeiture
clause
sale
in
by
i.
i.
carriage,
dues.369
j.
k.
3. "Non-involvement clauses"
f.
Valid:
Valid:
trade and place, and if they .are not greater than is necessary
a.
workmanship.
g.
guarantee
366
on
all
materials
and
perpetual
years.370
strictly involved.364
stipulation for the commission of an agent in the
Valid:
Void:
e.
Valid
(Art. 1750)
afford
fair
and
reasonable
protection
to
the
employer.372 Examples:
Clause prohibiting the employee from working for any
years
138
139
36"
b.
!.
d.
2. The mere fact that one has made a poor bargain may not be
a ground for setting aside the agreement. 378 The law does
not relieve a party from the effects of an unwise, foolish or
disastrous contract, entered into with full awareness of
what he was doing and entered into and carried out in good
faith. Courts have no jurisdiction to look into the wisdom
of the contract entered into by the parties or to render a
decision different therefrom. 3 79
e.
valid.371
D.
III. CHARACTERISTICS
A. AUTONOMY: (see discussion above)
140
'" Fernandez v. Manila Electric Railroad, etc., Co., 14 Phil. 274 (1909).
Sanchez v. Court of Appeals, 345 Phil. 155, 190-191 (1997).
379
141
2.
b.
2. Transmissibility.
3.
a.
absolute
(Art. 1 3 1 1)
. (1)
parental
authority,
action
for
nullity
or
(such
as
cohabitation);
(2)
UnderArt.
by their nature.
E. RELATIVITY:
(3)
Those arising
from public
law
characteristics,
qualifications
or
or
(4)
"' HDMF v. CA, G.R. No. 118972, April 3, 1 998: Professional Academic Plans, Inc. v.
Crisostomo, G.R. No. 148599, March 14, 2005.
381 Cruz v. Puna, G.R. No. L-50998, January 31, 1983.
"' Philippine National Bank v. Court of Appeals, G.R. No. 107569, November 8, 1994, 238
SCRA 20; Sps. Florendo v. CA, G.R. No. 101771 , December 17, 1996; New Sampaguita
Buflders Construction, Inc. v. Philippine National Bank, G.R. No. 148753, July 30, 2004;
Fioirendo v. Metrobank, G.R. No. 148325, September 3, 2007; Equitable PCI Bank v. Ng Sheung
Ngor, G.R. No. 171545, December 19, 2007.
363 MWSS v. Bautista, G.R. No. 171351, March 14, 2008; Sps. Borromeo v. CA, G.R. No.
169846, March 28, 2008.
384 Sps. Tan v. G.V.T. Engineering Services,,G.R. No. 1 53057, August 7, 2006.
"' Integrated Packaging Corp. v. CA, G.R. No. 115117, June 8;2000.
142
portrait
commissioned
distinguished painter);
Code)
from
3" Sps. Borromeo v. CA, G.R. No. 169846, March 28, 2006.
3" Estate of K. H. Hemady v. Luzon Surety Co., 100 Phil. 388 (1956).
368
Note:
..
Baluyot v. CA, G.R. No, 122947, July 22, 1999; Sps. Ramos v. CA, G.R. No. 132196,
December 9, 2005.
392 Limitless Potentials, Inc. v, Quilala, G.R. No. 157391, July 15, 2005.
393 Uy v, CA, G.R. No, 120465, September 9, 1999.
145
(2)
acceptance of a donation.394
Laws. (Art.
1312)
party's
enjoyment
of benefits
under
the
stipulationpour autrui.
v.
'
Examples:
a.
1313)
b.
1387)
intended to defraud
him. (Art.
1 314)
In contracts creating
i.
ii.
394 Florentino v. Encarnacion, Sr., G.R. No. L-27696, 30 September 1 977, 79 SCRA 193;
Limitless Potentials, Inc. v. Quilala, G.R. No. 157391, July 15, 2005.
"' Florentino v. Encarnacion, Sr., G.R. No. L-27696, 30 September 1977, 79 SCRA 193.
"' Tabar v. Becada, 44 Phil 619 (1923).
397 Limitless Potentials, Inc. v. Ouilala, G.R No. 157391, July 15, 2005.
"' Baluyot v. CA, G.R. No. 122947, July 22, 1999.
399 Florentino v. Encarnacion, Sr., G.R. No. L-27696, 30 September 1977, 79 SCRA 193.
<00
Mandarin Villa, Inc. v. CA,.G.R. No. 1 19850, June 20, 1996.
146
''
IV Tolentino 438.
Sps. Paderes v. CA, G.R. No. 147074, July 15, 2005.
403
So Ping Bun v. CA, G.R. No. 120554, September 21, 1999.
4o2
147
b.
Unless it is
J,
Remedies:
Injunction is also
unlawful interference.'07
8. Accion directa.
IV.
(A1t. 1729)
UNAUTHORIZED CONTRACTS
I.
(Art. 13 17)
city.405
i.
for the
c.
ratified,
(Art. 1 317)
(Art. 1317)
404 So Ping Bun v. CA, G.R. No. 120554, September 21, 1999.
405 Gilchrist v. Cuddy, 29 Phil. 542 (1915);
406 Daywalt v. Corporaclon de PP. Agustinos Recoletos, 39 Phil. 587 (1919).
148
1993.
40' De
Chapter 7
Essential Requisites of
a.
b.
Contract
1 3 1 9)
1319)
L GENERAL PROVISIONS
1319)
B. OFFER
1. Definition.
Contract. 4J I
1 3 1 9 only if
II. CONSENT
A.
IN GENERAL
I.
Concept.
.
An. invitation to negotiate,4" or an offer to
Consent is the conformity of the parties to the
2. Manifestation.
"" A. Magsaysay, Inc. v. Cebu Portland Cement Co 100 Phil. 351 (1 956); Bugatti v. CA, G.R.
No. 138113, October 17, 2000.
41 1 Sps. Paderes v. CA, G.R. No. 147074, July 15, 2005.
41 2 Sps. Paderes v. CA, G.R. No. 1 47074, July 15, 2005.
413 Sps. Paderes v. CA, G.R. No. 147074, July 15, 2005.
41 4 Rosenstock v. Burke, 46 Phil. 217
150
151
the offer and the acceptance upon the thing and the cause
1 3 1 9)
a.
(2)
by
the
its mailing,
offeree
learns
when
ii.
and not
of
Ji!,
its
As an
exception, the
bilateral
consideration, as
(Art. 1324) The
In such a
(1)
for
distinct
and
sep'arate
(2)
at any time.416
(1)
is
first
promise to
becomes
and B
i.
accepted,
1479,
certain,
necessarily
price
par.)
such as
the
manifestation,
and
determinate
b.
1 9 on abuse
4"
41'
152
The option
419
153
option.422
(3)
main
perfected.423
contract
Thus,
an
conld
be
(Art. 1482)
A
party).
"earnest money" in a
(4)
deemed
4. Advertisements.
a.
X decide.to sell
b,
refusal
does
not
need
. .
prmc1pa1 contract.'2'
separate
1325)
c.
1326)
advertiser.428
of Appeals, G.R. No. 1 173!i5, Aprtl 5, 2002, 380 SCRA 245, 259-260; Tanay Recreation Center
and Development Corp. v. Fausto, G.R. No. 140182. April 12, 2005.
421 Equatorial Realty Developmen\ Inc. v. Mayfair Theater, Inc., 264 SCRA 483, 509-10 (1996);
Paranaque Kings Enterprises, Inc. v. CA, 268 SCRA 727 (1997); Riviera Filipina, Inc. vs, Court
of Appeals, G.R. No. 117355, April 5, 2002, 380 SCRA 245, 259-260; Tanay Recreation Center
and Development Corp. v. Fausto, G.R. No. 140182. April 12, 2005.
Note that in Ang Yu Asuncion v. CA, 238 SCRA 602, 614615 (1994), the Supreme Court
(through J. Vitug) held that a right of first refusal is not governed by the law of contracts, and
violation cannot give rtse to action for specific pertormance. It Is covered by the provisions of
human relations and violation may give rtse to damages for abuse of rights under Art. 19. In
Equatortal, J. Vitug dissented and reiterated that a right of first refusal cannot be considered a
contract because the basic terms (particularly the consideration for the future sale) wou1d have
yet to be determined and fixed.
429 Dela Rosa v. BPI, 51 Phil. 926 (1924).
154
155
C.
ACCEPTANCE
1. Definition. Acceptance is the conformity by the offeree to
the proposition of the offerer.
2. Absolute.
a. The acceptance must be absolute. (Art. 1319)
To produce a contract, the acceptance must not
qualify, modify or vary the terms of the offer.
There is no acceptance sufficient to produce
consent, when a condition in the offer is removed,
.or a pure offer is accepted with a condition, or
when a term is established, or changed, in the
acceptance, or when a simple obligation is
converted by the acceptance into an alternative
one; in other words, when something is desired
which is not exactly what is proposed in the
offer.429
b. A qualified acceptance constitutes a counter-offer.
(Art. 1 3 1 9)
Any modification or variation from the terms of
the offer annuls the latter and frees the offerer.430
The original offerer is free to accept or refuse the
counter-offer.
3. Knowledge of the Acceptance. The acceptance of an offer
must be made known to the offerer.431 The contract is
perfected only from the time the acceptance of the offer is
made known to the offerer.432 Unless and until the offerer
"' Malbarosa v. CA, G.R. No. 125761, April 30, 2003, citing Enriquez v. Sun Life Assurance, 41
Phil. 269. Laudico v. Arias, 43 Phil. 270 (1922).
"4 Laudico v. Arias, 43 Phil. 270 (1922).
4" Laudico v. Arias, 43 Phil. 270 (1922); Malbarosa v: CA, G.R. No. 125761, April 30, 2003.
i56
157
430
b.
I . Capacity.
acceptance.437
an
As
exception,
however,
2. Incapacity.
(Art. 1321)
contract:
a.
b.
(Art. 1321)
Family Code
marriage to
n.
immediately. 439
436 Jardine
158
emancipated minor.
before
18
44 Calalan v. Basa, G.R. No. 159567, July 31, 2007, citing Miguela Carillo v. Justimiano Jaojoco
46 Phil. 957, 960 (1924), Vitalista, el al. v. Perez, et al., G.R. No. 164147, June 16, 2006, 49 {
SCRA 127.
441 Mercado v. Espiritu, 37 Phil. 215 (1917); Suan v. Alcantara, 85 Phil. 669 (1950).
442 J. Padilla, concurring, in Suan v. Alcantara, 85 Phil. 669 (1950). J. Padilla cited Young vs.
Tecson, 39 O.G. 953.
159
b.
valid. (Art.
ii.
1328)
c.
Deaf-mutes
1328)
3. Other Grounds for Incapacity/Disqualification.
Notes:
(!)
1327
The
contract.443
a.
several
days
after
1329)
The word
"incompetent" includes:446
the
schizophrenia
i.
ii.
Hospitalized lepers;
iii. Prodigals;
iv. Persons who are deaf and dumb who are unable to
v.
(2)
(Art.
1327)
incapacitated
and
placed
on
cannot,
160
without
outside
aid,
take
care
of
lucid
b.
land or
the
disqualification of spouses
to sell to each
other.
4. Effect of lncapacity.
b.
1. Mistake.
1407)
If a party is disqualified by law, the cqntract is
void,
a.
1 3 3 1), or
E. VICES OF CONSENT
441
absent, the contract is non-existent.
1331)
(I)
free;
Identity
spontaneous.448
(2)
can
usually
These
qualifications
it
or
1331)
(2)
(Art. 1331)
'" Lim, Jr. v. San, G.R. No. 159723, 9 September 2004, 438 SCRA 102, 106-107; Leonardo v.
CA, G.R. No. 125485, 13 September 2004; Vda. De Ape v. CA, G.R. No. 133638, April 15, 2005.
450 Lim, Jr. v. San, G.R. No. 159723, 9 September 2004, 438 SCRA 102; Acabal v. Acabal, G.R.
No. 148376, March 31, 2005.
451 Heirs of Zambas v. CA, G.R. No. L-54070, February 28, 1983.
162
163
This
refers
computation.
to
error in mathematical
govern.
instrument.
Notes:
(1)
ignorance,
Art. 1331
b.
includes
mistake
knew the
his contract.457
which
the
seller
thought
represented to be
out to be only
(2)
30 hectares,
18 hectares454
ii.
and
thereon
may
be
considered
but turned
c.
Mutual error
as to the
legal effect
of an agreement
i.
1334)
consent.
ii.
(3)
Art.
1334
is
mutual;
legal effect
of the
164
jiustrated.
iii. Art.
e.
d.
2. Violence.
a.
1332
1332)
i.
creates a presumption of
(!) one of
If these
b.
3.
Intimidation.
a.
v.
1 335)
166
of the
third person
take part in the contract. (Art. 1336)
determining cause
to).464
ii.
24)
determining cause of
'" Baranda v. Baranda, G.R. No. L-73275, 20 May 1987, 150 SCRA 59.
"' De Leon v. CA, G.R. No. 80965, June 6, 1990.
167
u.
groundedfear fro1n
claim through
b.
(Art. 1335)
mortgage
foreclose
to
or
so.467
check,'69
spurious
c.
third person
1336)
4. Undne lnflnence.
iii. The threat must be real and serious, there being an
evident disproportion between the evil and the
a.
"' Lee v. CA. G.R. No. 90423, September 6, 1991, Berg v. National City Bank of New York, 102
Phil. 309, 316.
466 Callanta v. NLRC, G.R. No. 105083, August 20, 1993.
'" Lee v. CA, G.R. No. 90423, September 6, 1991.
"' Development Bank of the Phils. v. CA, G.R. No. 138703, June 30, 2006; 'Development Bank
of the Phils. v. Perez, G.R. No. 148541, November 11, 2004.
471 Ruiz v. Atienza, CA, 40 O.G. 1903.
168
1337)
473
169
24)
aside
advantages
venue).479
or
disadvantages
of
proposed
prejudicial
stipulations
in
an
adhesion
contract.474
The following
1337):
i.
The
confidential,
family,
spiritual
and
other
'
so
in
contracts
entered
This is
particularly
into by
per se
cannot be
Contracts ofAdhesion
affixing
his
signature
or his
'adhesion'
to
the
contract.476
i.
Corporation vs. Ray Burton Development Corporation, 294 SCRA 48, 6869 (1998).
Sweet Lines, Inc. v. Teves, 83 SCRA361 (1978).
"' Sweet Lines, Inc. v. Teves, 83 SCRA 361 (1978).
481 Rizal Commercial Banking Corporation v. Court of Appeals, 305 SCRA 449, 454 (2002);
Ayala Corporation vs. Ray Burton Development Corporation, 294 SCRA 48, 67-68 (1998).
482 Development Bank of the Philippines vs. National Merchandising Ccrporation, 40 SCRA 624
(1971); Spouses Liton)ua v. L&R Corp., 328 SCRA 796 (2000); Pilipino Telephone Corporation v.
Tecson, 428 SCRA 378 (2004); Dia v. St. Ferdinand Memorial Park, Inc., 509 SCRA 453 (2006);
Spouses Panlilio v. Citibank, N.A., 539 SCRA 69 (2007); Uy v. People, G.R. No. 174899,
September 1 1, 2008.
'" Development Bank of the Philippines vs. National Merchandising Corporation, 40 SCRA 624
(1971); Pilipino Telephone Corporation v. Tecson, 428 SCRA 378 (2004); Spouses Panlilio v.
Citibank, N.A., 539 SCRA 69 (2007); Uy v. People, G.R. No. 174899, September 1 1 , 2008.
170
171
47' Ayala
419
third person
who did
b.
Art.
488
1336)
i.
5. Fraud.
a.
1338)
(Art. 1338)
(2)
and
simultaneous to the
1344);
or obligation
1342
1344);
the
normal
fulfillment
of
existing
obligations.486
iii. Good faith is presumed, and allegations of fraud
must
be
proved
.
evidence.487
by
clear
and
convincing
..
489
173
remained
unimpaired
regardless of
the
ii.
(Art. 1344)
(Art. 1 340)
Determination ofFraud.
(1) The law allows considerable latitude to seller's
i.
1339)
The buyer is
Examples: (1) X,
controlling
stockholder
of company
ABC
seller's
Y.
to mislead.
It
X .had the
duty to disclose
Also, Art.
(3)
prohibits
shares. 493
(2)
"false,
deceptive
or
misleading
such
4" Geraldez v.
493
disclosure;
"4 Rural Bank of Sta. Maria, Pangasinan v. CA, G.R. No. 1 10672, September 14, 1999.
4" Songco v. Sellner, 37 Phil. 254; Trinidad v. IAC, G.R. No. 65922, December 3, 1991.
496 "ARTICLE 1 10. Fatsa Deceptive or Misleading Advertisement. - It shall be unlawful for any
t75
ii.
1341)
1342)
Unless (1)
2. Requisites of simulation501:
1342)
v.
d.
aeceived
a.
b.
(Art. 1343)
c.
Effects of Fraud.
i.
Dula causante
makes
the
t<Ontract voidable,
renders
the
serious
impress, or to lead
of the parties;
provided that it is: (a) serious, an4 (b) has not been
Dalo causante
1344)
person
a.
Absolute simulation
to be bound at all.
i.
176
when it is sufficient , to
an
(Art. 1345)
ordinarily prudent
n.
Villaflor v. Court of Appeals, 280 SCRA 297, 337 (1997): Mendezona v. Ozamiz, G.R. No.
143370, February 6, 2002; Sps. Payongayong v. CA, G.R. No. 144576, May 28, 2004.
501 Loyola v. Court of Appeals, 326 SCRA 285, 294 (2000); Penalosa v. Santos;363 SCRA 545,
556 (2001); Sps. Payongayong v. CA, G.R. No. 144576, May 28, 2004.
500
(Art. 1344)
F. SIMULATED CONTRACT
consent. (Art.
it to pay damages.
1341)
knowledge. (Art.
Dalo incidente
177
iii. An
absolutely
from
distinguished
alienation. 502
(I)
simulated
contract
fraudulent
must
contract
be
or
object of contracts:
(2)
If intended
I 3 1 8 and 1347)
I.
fraudulent
to defraud a creditor, it
(Art. 1347)
a.
Relative Simulation
true agreement.
i.
Example:
b.
(Art. 1345)
When
c.
so2
1346)
or
private
relations;
and
(iii)
(Art.
Examples:
of appropriation
properties of public
dominion, such town plaza,'05 airport lands and
8
buildings,'06 forest lands,5 07 roads and highways,50
1
0
foreshore land,'09 watershed,'1 submerged lands. 51
(2)
susceptible
are not
ownership. 503
four years.
b.
the contract.
See Land Bank v. Republic, G.R. No. 150824, February 4, 2008 and Republic v. CA. G.R.
No. 126316, June 25, 2004.
504 Collantes v. CA, G.R. No. 169604, March 6, 2007.
505 Municipality of Cavite v. Rojas, 30 Phil. 602 (1915); Espiritu v. Municipal Council, 102 Phil.
866 (1958).
5" Manila International Airport Authority v. CA, G.R. No. 155650, July 20, 2006.
"' Land Bank v. Republic, G.R. No. 150824, February4, 2008.
50 Villarico v. Sarmiento, G.R. No. 136438, November 1 1 , 2004.
'' Republic v. CA, G.R. No. 126316, June 25, 2004.
"' Santa Rosa Realty Dev't Corp. v. CA, G.R. No. 112526, October 12, 2001.
51 1 Chavez v. Public Estates Authority, G.R. No. 133250, May 6, 2003 an<! November 1 1 , 2003.
503
179
(2)
Thus, a person may sell "future goods", i.e., those
(3)
1462)
hereditary in nature.
d.
No
contract may be
inheritance except
law. (Art. 1 347)
i.
entered
into
upon
future
(2)
the
following
reqnisites
must
concur:515
(I)
3.
1 347)
2.
(1)
1347 is a partition
1347)
B. POSSIBLE
Impossible things or services cannot be the object of contracts.
(Art.
1 348)
over
their
shares
in
the
C. CERTAIN
I . As to Kind. The object of every contract must be
determinate as to its kind. (Art.
1349)
512 Blas v.
Santos, 1 1 1 Phil. 503 (1961); J.L.T. Agro, Inc. v. Balansag, G.R. No. 141882, March
1 1 , 2005.
"' Uson v. Del Rosario, G.R. No. L-4963, January 29, 1953.
514 Tordilla v. Tordilla, 60 Phil. 162 (1934).
515 J.L.T. Agro, Inc. v. Balansag, G.R. No. 141882, March 1 1 , 2005.
51' Osorio v. Osorio, 41 Phil. 531 (1921).
517 J.L.T. Agro, Inc. v. Balansag, G.R. No. 141882, March 1 1 , 2005.
'" Guevent Industrial .Dev't Corp. v. Phil. Lexus Amusement Corp., G.R. No. 159279, July
. 11,
2006.
180
181
2.
Cause of Contracts.
1 1 65)
a.
i.
guaranty
or
b.
Bonuses granted
legal
concept),
as
(an
surety,
mortgage,
IN GENERAL
I.
1349)
A.
to
service or
"causa"
(Art.
1350)
121
'" General Enterprises Inc. vs. Lianga Bay Logging Co., 1 1 SCRA 733 (1964); Basic Books
(Phil.), Inc. vs. Lopez, et al., 1 6 SCRA 291 (1966); Uy v. CA, G.R. No. 120465, September 9,
1999; Roxas v. De Zuzuarregui, Jr., G.R. No. 152072, January 31, 2006, 481 SCRA 258, 276;
Camacho v. CA, G.R. No. 127520, February 9, 2007.
520 IV Tolentino 530-531.
Pyle v. Johnson, 9 Phil. 249 (1907); China Banking Corporation v. Lichauco, 46 Phil. 460
(1924); Acuna v. Veloso, 50 Phil. 241 (1927); Severino v. Severino, 56 Phil. 185 (1931); Sps.
Carpo v. Chua, G.R. Nos. 150773 & 153599, September 30, 20Q5:
522 China Banking Corporation v. Lichauco, 46 Phil. 460 (1924); Acuna v. Veloso, 50 Phil. 241
(1927);
'" Philippine Long Distance Co. vs. Jeturlan, G. R. L-7756, July 30, 1955, cited in Liguez v. CA,
102 Phil. 577 (1957).
182
183
i.
a.
This
covers
exclusively
contracts
to
procure
designed
the
welfare
of the
b.
c.
Example 3:
ii.
Example I:
and
solely
C.
I. Presumption.
do not affect the contract. A party's motive does not even
no effect
contract,
(Art. 1354)
5"
Philippine Long Distance Co. vs. Jeturian, G. R. L-7756, July 30, 1955, cited in Liguez v. CA,
102 Phil. 577 (1957).
52' Although donation is referred to as an act of liberality under Art. 725, it Is actually a contract,
since it requires the consent of both parties. See concurring opinion of J. Antonio In Alejandro v.
Geraldez, G.R. No. L-33849, August 18, 1977.
5" Republic vs. Claribel, 36 SCRA534 (1970); Uyv. CA, G.R. No. 120465, September 9, 1999.
527 Llguez v. CA, 102 Phil. 577 (1957); E. Razon Inc. vs. Philippine Ports Authority, 151 SCRA
233 (1987); Philippine National Construction Corp. vs. Court of Appeals, 272 SCRA 183 (1997);
Uyv. CA, G.R. No. 120465, September9, 1999.
184
185
v.
administration ofjustice.536
has been paid but in fact has never been paid, the ded
c.
(illegal) cause.'37
n. LEGALITY
with
3. False Cause.
Presumption.
i.e., void.
I.
'
(Art. 1353)
Although
E. ADEQUACY OF CAUSE
(Art. 1354)
2. Unlawful Cause.
I.
General Rule.
b.
lesion
(injury) or
(Art.
1355)
As a general rule,
bargain.'40
consequences of an unprofitable
2.
532
Ocejo Perez & Co. vs. Flores, 40 Phil. 921; Mapalo vs. Mapalo, G.R. No. L21489, May 19,
1966, 1 7 SCRA 114, 122; Vda. De Catindig v. Heirs of Catalina Roque, 74 SCRA 83;
Montecillo v. Reynes, G.R. No. 138018, July 26, 2002.
533 Amado v. Salvador, G.R. No. 17140.1 , December 13, 2007, citing Marnelego v. Banco Filipino
Savings and Mortgage Bank, G.R. No. 161524, 27 January 2006, 480 SCRA 399, 408; Co v.
Court of Appeals, G.R. No. 123908, 9 February 1998, 286 SCRA 76, 85; Velasco v. Court of
Appeals, 151-A Phil. 868, 887 (1973).
534 Amado v. Salvador, G.R. No. 171401, .December 13, 2007, citing Toyota Shaw, Inc. v. Court
of Appeals, G.R. No, 1 1 6650, 23 May 1995, 244 SCRA 320, 328; R.F. Navarro and Co. v. Sugar
Producers Cooperative Marketing Association, 1 1 1 Phil. 820, 828 (1961).
'35 De Leon v. CA, G.R. No, 80965, June 6, 1990.
186
Exceptions a.
53 S
contract or bad
(Art. 1355)
187
Under
. 1.
Art. 1381,
Chapter 8
Form of Contracts
ii.
contracts.
Also, inadequacy of price may indicate an intent to
I. IN GENERAL
1381.
obligatory, in
present.
1355)
1.
2.
13 15)
inter partes
of a contract
(Art. 1356)
ii.
Contracts shall be
1470)
i.
ii.
..
oral:
sale; 542
lease;543
iv. partition;'" .
541
'
188
189
3.
contributed
Article
1356
of
(Art.
a.
which the law
b.
(Art. 748);
(4)
Stipulation
or para! evidence.
ii.
1956); and
to a
requirement
with.
190
1744);
'" See Campillo v. CA, G.R. No. 56483, May 29, 1984.
1403(2)
(3)
2134)
shall be void"
(Art. 749)
1773);
The law
(inter partes).
Domalagan v. Bolifer, 33 Phil. 471 (1915-1916); Swedish Match, AB v. CA, G.R. No. 128120,
October 20, 2004.
547
191
II.
c.
FORMAL REQUIREMENT
AS A MATTER OF CONVENIENCE
A. IN GENERAL:
observe that fonn, once the contract has been perfected. (Art.
1357)
2.
1.
2.
1358
enforceability. 549
1357)
is
only for
convenience,
not for
validity
or
appearance
been perfected.550
1356,
before
the
notary
public)
does
not
supra)
c. PRIVATE DOCUMENT (AT LEAST): Contracts Art.
Under Art.
1358,
document:
a.
governed by Articles,
P500
not enough that the law should require that the contract
1403,
No. 2, and
1405,
1 358.
i.e.,
548
1358
193
Chapter
Reformation of Instruments
of the parties."
3.
the
C.
accident, one of the parties may ask for the reformation of the
instrument to the end that such true intention may be expressed.
1.
2.
REQUISITES557
1.
2.
I. IN GENERAL
expressed
One of the
(Art. 1359)
553
v. Arjona, G.R. No. 158901, March 9, 2004, 425 SCRA 57, 65; MultiVentures Capital
& Mgl Corp. v. Stalwart Mgt. Seivices Corp., G.R. No. 157439, July4, 2007.
Rule 130, Section 9. National lrngation Administration v. Gamit, G.R. No. 85869, November 6,
1992.
554 National Irrigation Administration v. Gamit, G.R. No. 85869, November 6, 1992; Quiros v.
Arjona, G.R. No. 158901, March 9, 2004, 425 SCRA 57, 65; MulU-Ventures Capital & Mgl Corp.
v. Stalwart Mgt. Services Corp., G.R. No. 157439, July 4, 2007.
555 National Irrigation Administration v. Gamit, G. R. No. 85869, November 6, 1992.
556 National Irrigation Administration v. Gamit, G.R. No. 85869, November 6, 1992.
557 National Irrigation Administration v. Gamit, G.R. No. 85869, November 6, 1992; Tuazon v.
CA, G.R. No. 1 19794, October 3, 2000.
194
195
upon and there can be, between the parties and their
successors in interest, no evidence of such tenns other than
.
ss2 Quiros
3.
or accident.
1363)
intention of the parties, the courts may order that the instrument
. be reformed.
1361)
I
If two
I.
instrument is proper.
Example
1362)
b.
1.
2.
"' BA Finance Corporation v. Intermediate Appellate Court, G.R. No. 76497, January 20, 1993,
217 SCRA 261, 277; MultlVentures Capital & Mgt. Corp. v. Stalwart Mgt. Services Corp., G.R.
. No. 157439, Ju 4, 2007.
"' Huibonhoa v. Court of Appeals, 378 Phil. 386, 407 (1999); Multi-Ventures Capital & Mgt.
Corp. v. Stalwart Mgt. Services Corp., G.R. No. 157439, July 4, 2007.
550 National Irrigation Administration v. Gamit, G.R. No. 85869, November 6, 1992.
Simple <;ionations
imposed; and
196
inter vivas
wherein no c.ondition is
Wills.
Donations and wills are purely gratuitous dispositions
561
1.
property.
Att.
789
2.
if the
:B.
B. PROCEDURE
I. D'eclaratory Relief. The procedure for the reformation of
instrument shall be governed by rules of court to be
promulgated by the Supreme Court. (Art.
(Art. 1 366)
2.
1369)
C. ESTOPPEL:
1 360)
1 360)
1367)
(Art. 1368)
D. NO MEETING OF MINDS:
198
l99
Chapter
(Art. 1370)
10
Interpretation of Contracts
I.
IN GENERAL
be assigned to
2.
Intention Prevails.
over the former.
(Art. 1370)
their
1371)
extrinsic
written contract.
b.
PRINCIPLES. OF INTERPRETATION
IT.
should be
130,
Section
9,
A. PRIMACY OF INTENTION
upon and there can be, between the parties and their
'" National Irrigation Administration v. Gamit, G.R. No. 85869, November 6, 1992.
'" Olivares v. Sarmiento, G.R. No. 158384, June 12, 2008, c1ling Heirs of the Late Spouses
Aurelio and Esperanza Balite v. Lim, G.R. No. 152168, 10 December 2004, 446 SCRA 56:
Tuazon v. Court of Appeals, 396 PM. 32 (2000)..
'"Abad v. Goldloop Properties, Inc., G.R. No. 168108, April 13, 2007.
200
569 Olivares v. Sarmiento, G.R. No. 158384, June 12, 2008, citing Heirs of the Late Spouses
Aurelio and Esperanza Bal:te v. Lim, G.R. No. 152168, 10 December 2004, 446 SCRA 56;
Tuazon v. Court of Appeals, 396 Phil. 32 (2000)..
"' Bautista v. CA, 379 Phil. 386, 399 (2000): Abad v. Goldloop Properties, Inc., G.R. No.
168108, April 13, 2007.
201
1 376)
ii.
An intrinsic
C. CONTRA PROFERENTUM:
1.
(Art. 1377)
contra proferentum,
i.e.,
2.
obscurity
2. Scope of Terms.
or
doubt
exists,
no
such
construction
is
warranted.573
1372)
incidental circumstances
(Art. 1373)
a.
Where contract is
4. Holistic Interpretation.
(Art, 1 3 78)
(Art. 1 374)
Words which
1375)
6. Usage or Custom.
571 Orient Air Services and Hotel Representatives vs. Court of Appeals; 197 SCRA 645 [1991];
Nacu vs. Court of Appeals, 231 SCRA 237 [1994]; De Leon vs. Court of Appeals, 186 SCRA 345
[1990]; Equitable Banking Corporation vs. Intermediate Appellate Court, 161 SCRA 518 [1988];
Eastern Assurance and Surety Corp. vs. IAC, 179 SCRA 562 [1989]; Prudential Bank v. Alviar,
G.R. No. 150197, July 28, 2005.
512 Sps. Panlilio v. Citibank, NA, G.R. No. 156335, November 28, 2007, citing Bay View Hotel v.
Ker and Co., Ltd., G.R. No. L28237, Atigust 31, 1982, 116 SCRA 327, 334; Eastern Shipping
Lines Inc. v. Margartne.Verkaufs-Union GmbH, G.R. No. L31087, September 27, 1979, 93
SCRA 257, 262; Eastern Assurance and Surety Corp. v. Intermediate Appellate Court, G.R. No.
69450, November 22, 1989, 179 SCRA 561, 568; Orient Air Services and Hotel Representatives
v. Court of Appeals, G.R. No. 76931, May 29, 1991, 197 SCRA645, 655.
"' Sps. Panlilio v. Citibank, N.A., G.R. No. 156335, November 28, 2007.
203
1378)
'
Chapter
11
Defective Contracts
17)
18)
I.
IN GENERAL
5
The Civil Code classifies defective contracts into four 75:
They are
both parties.
'" See J. Vilug's dissent in Equalorial Realty Development, Inc. v. Mayfair Theater, Inc., 370
SCRA 56, 90 (2001). See also Balane, Defective Contracts in Philippine Civil Law, Journal of the
IBP, Vol. 30, No. 2 (3rd and 4th Quarters 2004).
206
207
b.
srs
See J. Vitug's dissent in Equatorial R,ealty Development, Inc. v. Mayfair Theater, Inc., 370
SCRA 56, 90 (2001 ).
577 See J. Vitug's dissent in Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., 370
SCRA 56, 90 (2001).
.
'" Universal Food Corporation v. CA, 144 Phil. 1 (1970); lringan v. Court of Appeals, 418 Phil.
286, 296297 (2001); Rivera v. Del Rosario, G.R. No. 144934, January 15, 2004.
208
iv. Evidence
when the latter cannot in any other manner
Alienations by
onerous title
circumstances.
1387)
are
also
presumed
1387)
property
alienated,
1387)
5 . By Provision of Law.
creditors
may
be proved
in any
other manner
fraud in a sale579:
(Art.
1382)
For Art.
fictitious or is inadequate.
ii.
and (b)
following persons580:
560
210
1387) The
i.
1381)
c.
complete
not res.erve
b.
v.
1381)
or
insolvency.
of creditors
of large indebtedness
IV Tolentino 587.
2il
(1) if the
transferee
acquired
the
property
transferee
acquired
the
property
(Art.
1385)
D.
REQUISITES
f.
a.
1380, 1381)
b.
Since rescission is a
subsidiary
action, it can be
(Art. 1383)
c.
d.
extent necessary
(Art. 1384)
to
a.
(Art. 1385)
b.
c.
subsequent contract
conveying a patrimonial benefit to a third person;
no other legal remedy to
satisfy
581
Siguan v. Um, G.R. No. 134685, November 19, 1999; Khe Hong Cheng v. CA, G.R. No.
144169, March 28, 2001.
property,
2i2
e.
I. General Requisites -
2i3
i.
in thefraud.
I.
'" Khe Hong Cheng v. CA, G.R. No. 144169, March 28. 2001.
"' Khe Hong Cheng v. CA, G.R. No. 144169, March 28. 2001.
"' Siguan v. Lim. G.R. No. 134685, November 19, 1 999.
"' Khe Hong Cheng v. CA, G.R. No. 144169, March 28, 2001.
'" Union Bank of the Philippines v. Sps. Ong, G.R. No. 152347, June 21, 2006.
2i4
"' China Banking Corp. v. CA, G.R. No. 129644, September 7, 2001; MR Holdings v. Bajar,
G.R.No. 138104, April 1 1 , 2002.
"'Union Bank of the Philippines v. Sps. Ong, G.R. No. 152347, June 21; 2006.
"' Union Bank of the Philippines v. Sps. Ong, G.R. No. 152347, June 21, 2006.
215
3.
them on
b.
account
c.
1 388)
(Art. 1388)
legal representation,
2. Vitiated Consent.
A. IN GENERAL
(Art. 1 390).
Before annulment,
(Art. 1390)
judgments594).
1391)
1327) is voidable.
590
Lack of Capacity.
a.
1 390).
I.
of
B. CAUSES :
(Art. 1391)
4. A
3.
no authority or
l ; Art. 1 3 1 7)
2.
contract is
I.
the
If
subsidiarity.
Art.
(Art. 1 397)
592 MWSSv.
"' Vda. De Jacob v. CA, G.R. No. 135216, August 19, 1999.
594 Gomez v. Concepcion, 47 Phil. 717 (1925).
217
1.
i.
(Art. 1397)
a.
voidability
owner).'98
b.
the portion
of the
(Art.
1391)
it
Persons who
plaintiff
b.
1391)
Discovery
2001.
601 Sps. Dela Cruz v. Sps. Segovia, G.R. No. 149801, June 26, 2008.
602 MWSS v. CA, G.R. No. 126000, October 7, 1998, citing Pascua
ii.
c.
Examples of ratification:
i.
(Art. 1391)
voidable contract;''
D. RATIFICATION
ii.
a.
on him.604
lack of capacity,
b.
b.
1393)
Fcir
voidable
1394)
contracts
due
to
vice of consent,
implied)
1395)
4. Effect of Ratification.
right. (Art.
(Art.
1393)
1396)
FiEstate Golf & Development, Inc. v. Navarro, G.R. No. 152575, June 29, 2007, citing Heirs
of Rosa Dumaliang v. Damiano Serban, G.R. No. 155133, 21 February 2007 and Baranda v.
Baianda, G.R. No. L-73275, 20 May 1987, 150 SCRA 59.
6"' MaglucotAw vs. Maglucot. 329 SCRA 78, 94 (2000).
220
221
603
606
made.
E. EFFECT OF ANNULMENT
1.
a.
1399)
proper.609
(Art. 1401)
contract, with their fruits, and the price with its nterest,
(Art. 1398)
b.
a.
(Art. 1401)
obliged by the
decree of
(Art. 1398)
has been lost through his fault, he shall returri the fruits
b.
(Art. 1402)
c.
apply:
i.
of the plaintiff
'' Katipunan v. Katipunan, Jr., G.R. No. 132415, January 30, 2002; Villanueva v. Ctiiong, G.R.
No. 159889, June 5, 2008.
"' IV Tolentino 607608.
222
223
1400);
a.
barred;
UNENFORCEABLE CONTRACTS
4. Types.
There
contracts (Art.
a.
are
(Art. 1408)
three
categories
of unenforceable
1403):
capacity.611
b.
b.
.
.
'
15
Rat1'fi1catton 1 s generaIIy retroact1ve.6
3. Who May
A. IN GENERAL
a.
IV.
Ratification may be
'
c.
. B. LACK OF AUTHORITY
contract.)
1.
Unauthorized
Contracts.
The
first
613
Mercado v. Allied Banking Corp., G.R. No. 171460, July 27, 2007.
612 Rule 16, Section 1 (i).
224
of
611
category
225
unless -
a.
'
Example
i.
Example
house to
1 898),
lease
1 897),
sold
void). (Art.
it
1 898)
C. STATUTE OF FRAUDS
Governing
Law. Unauthorized
Article 1 3 1 7 and the principles
Code. (Art. 1404)
2.
a.
Under Art.
I.
The second
1403.
on the
(Art.
unenforceable.
1 3 17)
Unless it is
(Art.
b.
(Art.
b.
1317)
617 Swedish Match, AB v. CA, G.R. No. 128120, October 20, 2004; Sps. Torcuator v. Sps.
Bernabe, G.R. No. 134219, June 8, 2005.
227
a.
b.
2, subpar. a)
I.
'
by
1 year.
ii.
on both sides
within
1 year. It
c.
perfonned
2, subpar. c)
a.
b.
5
A mutual promise to marry is not enforceable, 62
even if written.
1403, par.
defendant's
d.
i.
623
618
229
a.
shall be void.
f.
subpar. d)
actually not ex
Thus,
contractu
tort.
was
improperly
included.631
it
unenforceable
e.
(Art. 1 784)
statute of frauds.628
a.
pai1ition is valid.630
828
Rosencor Development Corporation v. lnqulng, G.R. No. 140479, 8 March 2001, 354 SCRA
119; Barbosa v. Hernandez, G.R. No. 133564, July 10, 2007.
829 PadaKilario v. CA, G.R. No. 134329, January 19, 2000; Vda. de
Reyes v, Court of Appeals
199 SCRA 646, 657 (1991), citing Thunga Chui v. Que Bentec, 2 Phil. 561, 563-564 (1903)
and
Barcelona, et al. v. Barcelona and Court of Appeals, 100 Phil. 251, 255 (1956).
"' Tan v.lim, G.R. No. 128004, September 25, 1998.
,
230
'32
231
a.
connected
may be
considered together,
b.
signature. 635
sufficient
wi'iting
to
4. Evidence.
1405)
may
1405), or
parties
enforceable
barred.
1405)
1357, i.e.,
deemed
1406)
evidence.637
634 Swedish Match, AB v. CA, G.R. No. 128120, October 20, 2004.
"' Limketkai Sons Milling, Inc. v. CA, G.R. No. 1 1 8509, December 1, 1995.
636 City of Cebu v. Heirs of Rubi, 306 SCRA 408 (1999).
"'Abrenica vs. Gonda, 34 Phil. 739 (1916); Taloslg vs. Vda. de Nieba, 43 SCRA 472 (1972);
Limkelkai Sons Milling, Inc. v. CA, G.R. No. 1 18509, December 1, 1995.
232
'" Sps. Camara v. Sps. Maiabao, G.R. No. 154650, July 31, 2003.
.
233
b.
The third
type
of
both parties
are
2. Ratification.
1409).
be ratified (Art
1410)
b.
cannot
(Art. 1407)
contract
A void contract
a.
voidable
extended to
valid
IN GENERAL
1. Rescissible Contracts.
a.
Rescissible contracts
a.
641
. 642
b.
Rescissib/e contracts
y by the
Void contracts
directly affected.
c.
Rescissible contracts
Void contracts
years.
e.
a.
can
be
attacked
directly
or
b.
c.
Unenforceable
contracts
the
defense
of
be waived.
Voidable contracts
directly affected.
years.
directly affected.
Unenforceable contracts
essential elements.
c.
Void contracts
or
b.
directly
collaterally.
a.
attacked
2. Unenforceable Contracts.
Void contracts
can be
coJlateraJly.
d.
d.
In general,
'" See Leonardo v. CA, G.R. No. 125485, September 13, 2004.
236
2'37
a.
b.
(Art.
1354)
b.
ii.
a.
b.
Examples:
family
relations;
dominion,
and
(iii)
properties
of public
contracts.
is impossible for a
238
644
What is
the transaction;
(Art. 1461)
# '
delicto, no
In case of pari
object
It is
Exceptions:
a.
Example:
The law
contracts uponfuture
Note:
generally
generally
rohibits
Example:
The pari
delicto
D. RULES ON RECOVERY
b.
1. General Rule.
the aid of the law; the courts leave them as they are,
in pari delicto or "in equal
The pari delicto rule does not apply ,if it would violate
public policy.665
a.
Example
acts.660
delicto.
To deny a squatter
661
Guevent Industrial Dev'! Corp. v. Phil. Lexus Amusement Corp., G.R. No. 159279,j July 1 1 ,
2006.
65' Bercero v. Capitol D,ev't Corp., G.R. No. 154765, March 29, 2007; Hulst v. P.R. Builders, Inc.,
G.R. No. 156364, September 3, 2007.
660 Bercero v. Capitol Dev't Corp., G.R. No. 154765, March 29, 2007.
Silagan v. Intermediate Appellate Court, 196 SCRA 774, 765 (1991); Acabal v. Acabal, G.R.
No. 148376, March 31, 2005; Bercero v. Capitol Dev't Corp., G.R. No. 154765, March 29, 2007;
Hulst v. P.R. Builders, Inc., G.R. No. 156364, September 3, 2007.
662 Acabal v. Acabal, G.R. No. 146376, March 31, 2005.
"' Gonzales vs. Trinidad, 67 Phil. 682 (1939); Vasquez v. Porta, 98 Phil. 490 (1956); Madina v.
CA, G.R. No. 109355, October 29, 1999
664 Gonzales vs. Trinidad, 67 Phil. 662 (1939); Vasquez v. Porta, 96 Phil. 490 (1956).
6" Silagan v. IAC, 274 Phil. 182 (1991); Acierto v. De las Santos, 95 Phil. 887, 889 (1954).
240
241
656
i.
actid. ,,
141 1)
ii. When only one of the parties is guilty - they shall
143
Notes:
"' Uguez v. CA, 1 02 Phil. 577 (1957). See, however, Tala Realty Services Corp. v. Banco
Filipino Savings and Mortgage Bank. G.R. No. 137533, November 22, 2002.
'" Liguez v. CA, 102 Phil. 577 (1957).
010 Ramirez v. Ramirez, G.R. No. 165088, March 17, 2006.
244
671 Hulst v. P.R. Builders, Inc., G.R. No. 156364, September 3, 2007.
'" De Leon v. CA, G.R. No. 60965, June 6, 1990.
245
Chapter 1 2
Natural Obligations
I. IN GENERAL
B. RATIONALE
The law recognizes certain instances wherein there is a moral,
but not a lega duty to perform or pay. If the obligor performs
or pays, out of his honor or conscience, he will not be
permitted to change his mind and recover what he has paid.
The law requires him to abide by his honor or conscience. 674
C. VOLUNTARINESS
I.
2.
as by writ of execution).675
II.
18
years old. (Art. 234, FC, as amended by RA 6809)
Thus, Arts. 1426 and 1427 may be deemed inoperative.
A. PRESCRIBED OBLIGATIONS
I.
2. Reimbursement
Obligations.
of
(Art. 1424)
Payments
for
Precribed
rendered. (Art.
(Art. 1425)
1426)
Performance by
1428)
B. OBLIGATIONS OF A "MINOR"
2.
1427)
"Minor."
. (Art.
1430)
"' Manila Surety & Fidelity Co. v. Lim, 106 Phil. 771 (1959).
248
249
Chapter
13
Estoppel
I. IN GENERAL
A. CONCEPT
616
Philippine National Bank vs. Intermediate Appellate Court, et al., 189 SCRA 680 (1990);
Caltex v. CA, G.R. No. 97753, August 10, 1992.
m Rules of Court, Rule_131, Sec. 2(a). Caltex v. CA, G.R. No. 97753, August 10, 1992.
"' British American Tobacco v. Camacho, G.R. No. 163583, August 20, 2008, citing Philippine
Bank of Communications v. Court of Appeals, 352 Phil. 1, 9 (1998).
679 Philippine Savings Bank v. Chowklng Food Corp., G.R. No. 177526, July 4, 2008, citing Vega
v. San Caos Milling Company Limited, G.R. No. 21549, October 22, 1924.
680 United Coconut Planters Bankv. Beluso, G.R. No. ,159912, August 17, 2007 citing Eugenio v.
Perdido, 97 Phil. 41, 44 (1955); Auyong Hian v. Court of Tax Appeals, G.R. No. L-26782, 12
September 1974, 59 SCRA 110, 133-134.
250
251
b.
i.
ii.
estoppel. 68
C. PARTIES ESTOPPED
I.
officers.689
former state.
injustice.690
252
(Art. 1439)
'" Ganzon v. Honorable Court of Appeals, 385 SCRA 399, 411-412 (2002).
'" Sps. Chien v. Sta. Lucia Realty & Dev't Inc., G.R. No. 162090, January 31, 2007.
'"Lopez v. CA, G.R. No. 127627, March 5, 2003.
''"' Sps. Del Campo v. CA, G.R. No. 108228, February 1 , 2001
ees Lopez v. CA, G.R. No. 127827, March 5, 2003.
"' Lopez v. CA, G.R No. 127627, March 5, 2003.
2. Estoppel generally does not lie against the State. The State
a.
3 . Estoppel by /aches
b.
253
D. GOVERNING LAW:
after
2.
(Art. 1432)
When a person
who is not the owner of a thing sells or alienates and delivers it,
and later the seller or grantor acquires title thereto, such title
passes by operation of law to the buyer or grantee.
1.
third
persons
concerning
When in a
immovable
2.
between
(Art. 1434)
Thus, e.g., if. at the time of the sale, the seller ownyd only
to the
landlord. 694
I.
2.
The party precluded must intend that the other should act
In one case, it was held ihat if at the time of the sale, the
seller was not yet the owner of the thing sold, but he later
3.
If ,a
4.
The party misled must have been unaware of the true facts;
and .
(Art. 1437)
(Art. 1435)
E. OWNER MISLEADS PLEDGEE:
(Art. 1436)
693
I.
692
254
of
255
sum for which a pledge has been constituted, set up his own
title to defeat the pledge of the property, made by the other to a
pledgee who received the same in good faith and for value.
(Art. 1438)
Chapter 1 4
Trusts
I.
GENERAL PROVISIONS
A. DEFINITION: A trust is a legal relationship with respect to
property, between one person having an equitable ownership of
property and another person owning the legal title to such
property, in which the equitable ownership of the former
entitles him to the performance of certain duties and the
exercise of certain powers by the latter.695
1 . Note that in a trust relation, there is a separation of the
legal title and equitable ownership of the property. Legal
title is vested in one party (the trustee) while equitable
ownership is vested in another (the beneficiary).696
B. PARTIES TO A TRUST
I.
Trustor
2. Trustee
'" Caneza v. Rojas, G.R. No. 148788, November 23, 2007, citing Tigno v. Court of Appeals, 345
Phil. 486, 497 (1997) and Morales v. Court of Appeals, 274 SCRA 282 (1997).
"' Caneza v. Rojas, G.R. No. 148788, November 23, 2007
697 Tala Really Services Corp. v. Banco Filipino Savings & Mortgage Bank, 392 SCRA 506
(2002), citing Huang v. CA, 236 SCRA 420 (1994).
256
257
3. Beneficiary
been created.
1442)
ELEMENTS OF A TRUST :
trust
res,
(1)
the
(4) beneficiarY.698
(2)
2. Implied trusts
1441) Implied
I.
infra).
in
acquiring
702
F. GOVERNING LAW:
insofar as they are not in conflict with the Civil Code, the Code
immovable
or any
1443)
restrictions
(Art. 1444)
B. PROOF:
2.
(Art. 1441)
performed.704
C. ACCEPTANCE
I.
By Trustee
(Art.
1445)
2. By
Beneficiary
'' Ramos v. Ramos, 61 SCRA 284 (1974); Estate of Grimm v. Estate of Parsons, G.R. No.
159810, October9, 2006, 504 SCRA 67, 81.
7"' Ringor v. Ringor, G.R. No. 147863, August 13, 20d4, 436 SCRA 4% 496.
258
259
1446)
a.
,.
711
a.
b.
705
Palma vs. Cristobal, 77 Phil. 712; Manalang vs. Canlas, 94 Phil. 776; Cristobal vs. Gomez, 50
Phil. 810; Sevilla vs. de los Angeles, 97 Phil. 875; Marabils vs. Quito, 100 Phil. 64; Bancairen
vs. Diones, 98 Phil. 122, 126; Juan vs: Zuniga, 62 O.G. 1351; 4 SCRA 1221; Jacinto vs. Jacinto,
L-17957, May 31, 1962. See Tamayo vs. callejo, 147 Phil. 31, 37; Canezo v. Rojas, G.R. No.
148788, November 23, 2007.
1oe Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266; Laguna vs. Levantino, 71 Phil. 566;
Sumira vs. Vistan, 74 Phil . .138; Golfeo vs. Court of Appeals, 63 O.G. 4895, 12 SCRA 199;
Caladiao vs. Santos, 63 0.G. 1956, 10 SCRA 691.
101 Diaz v. Gorricho, 54 O.G. p. 8429; Escay v. CA, G.R. No. L-37504, December 18, 1974, 61
SCRA 369, 388; Secuya v. De Selma, G.R. No. 136021, February 22, 2000, 326 SCRA 244,
.
254.
100 Canazo v. Rojas, G.R. No. 148788, November 23, 2007.
Morales v. CA, G.R. No. 117228, June 19, . 1997, 274 SCRA 282; Aznar Brothers Realty
Company v. Aying, G.R. No. 144773, 16 May 2005, 458 SCRA 496; Lopez v. CA, G.R. No.
'
157784, December 16, 2008.
710 Lopez v. CA, G.R. No. 157784, December 16, 2008.
711
Morales v. CA, G.R. No. 1 1 7228, June 19, 1997, 274 SCRA 282; Aznar Brothers Realty
Company v. Aying, G.R. No. 144773, 16 May 2005, 458 SCRA 496; Lopez v. CA, G.R. No.
157784, December 16, 2008.
712 Lopez v. CA, G.R. No. 157784, December 16, 2008.
260
261
709
b.
D. PRESCRIPTION
I.
to quiet
not adverse.
2. In Constructive Trusts
relationship.716
a.
1450, 1454,
c.
enforcement
may be barred by
E. EXAMPLES
The holding of a
(Art.
118
713
its
constructive,
/aches. 723
I.
1447) -
(also known as
There is an implied
' 262
263
7"
12o
The following
(Art: 1448)
1450)
property to him.
(Art. 1454)
(Art. 1451)
a trust
each.
(Art. 1452)
264
265
a.
Example
b.
Example 2:
266