USC

School of Law and Governance Course Syllabus on

OBLIGATIONS AND CONTRACTS
2nd Semester of the Academic Year 2015-2016

COURSE NO : LAW 117

CREDIT : 5 units (5 lecture hours per week)

PRE-REQUISITE COURSE : None

COURSE PROFESSOR : Waldemar R. Gravador
Email address: walde8685@gmail.com


COURSE DESCRIPTION

This is a study of the Philippine law on obligations and contracts. The first part of the
course deals with obligations, specifically its nature and effect, the various kinds of
obligations and its mode of extinguishment. The second part is a study of the Philippine law
on contracts, its essential requisites, the forms of contract, the rules of interpretation of
contract and the various kinds of defective contracts under Philippine Law.

The Philippine law on obligations and contracts is primarily based on the provisions of
Book IV of the Civil Code of the Philippines.

The course also includes a study of Natural Obligations under Title III, Book IV and Estoppel
under Title IV, Book IV, also of the Civil Code of the Philippines.

PROGRAM LEVEL LEARNING OUTCOMES1 (PLLO):

Upon completing the law program, Carolinian law graduates will demonstrate the
following:

PLLO 1: KNOWLEDGE
PLLO 2: ETHICS, PROFESSIONAL RESPONSIBILITY, WITNESS TO THE WORD
PLLO 3: THINKING SKILLS which include the skills to identify and articulate legal
issues; apply legal reasoning and research to generate appropriate
responses to legal issues; engage in critical analysis and make a reasoned
choice amongst alternatives; and think creatively in approaching legal issues
and generating appropriate responses.
PLLO 4: RESEARCH SKILLS
PLLO 5: COMMUNICATION AND COLLABORATION
PLLO 6: SELF-MANAGEMENT

1
Based in part on ALTCs Learning and Teaching Academic Standards Program, December 2010.
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Course syllabus on Obligations and Contracts

At the end of the law program, the Carolinian law graduate is expected to be Witness
to the Word and to embody the following Graduate Attributes:

Scientia: A COMPETENT PROFESSIONAL
Critical thinker
Lifelong learner
Skilled researcher
Sound decision- maker
Innovative problem-solver
Effective and articulate communicator
Virtus: A VIRTUOUS EXEMPLAR
Incorruptible servant leader
Ethical and values-driven practitioner

Devotio: A DEDICATED ADVOCATE
Committed peacemaker
Culture- sensitive patriot
Socially- engaged citizen
Passionate worker for the marginalized

COURSE LEVEL LEARNING OUTCOMES (CLLO)

Upon completion of the course Obligations and Contracts, the students should be able
to:

CLLO 1: Know what the law on obligations and contracts is and the jurisprudence
relating thereto, specifically on the nature and effect of obligations, different kinds of
obligations, extinguishment of obligations and the various modes thereof, nature of
contracts and the essential requisites thereof, form of contracts, interpretation of
contracts, various kinds of defective contracts under Philippine law.

CLLO 2: Recognize and reflect upon the ethical issues that may arise involving the
application of the Philippine law on obligations and contracts and its relevance and
relation to the other fields of law; recognize and reflect upon the professional duties
of lawyers in promoting justice, human rights, due process and fairness in the
community; use their knowledge in the course to be Witness to the Word.

CLLO 3: Examine the facts of a given case, find the relevant facts and the key issues,
identify and apply the legal rules and principles involved, and generate appropriate
responses to situations involving the application of the Philippine law on obligations
and contracts and the various aspects thereof.

CLLO 4: Find and use up-to-date primary and secondary legal sources in support of
their evaluation and synthesis of relevant factual and legal issues on cases involving
the application of the law on obligations and contracts and its various aspects.

CLLO 5: Communicate effectively and persuasively the key principles and concepts
involving the law on obligations and contracts and its various aspects; demonstrate
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Course syllabus on Obligations and Contracts

the ability to use appropriate means and form of communication depending on the
educational background and needs of legal or non-legal audiences; render
appropriate opinion after demonstrating the use of active listening skills such as
questioning, summarizing and paraphrasing.

CLLO 6: Demonstrate ability to learn and work independently, as well as the ability
to work in groups or cooperatively with others.


COURSE REQUIREMENTS
1. Attendance
2. Passing grades in major exams
3. Class participation in oral examinations

LEARNING APPROACHES

Lectures will be conducted on the basic and fundamental rules and concepts relating to the
law on obligations and contracts. In the course thereof, some doctrinal rules as culled and
developed from cases assigned in the syllabus as well as other related cases may be
discussed.

Students will be required to discuss the cases assigned and relate them to the principle(s)
under discussion. Ethical issues that may arise in a case under discussion should also be
factored in to the end that the student shall be made cognizant of what the professional
duties of lawyers are in promoting justice and what the ideal professional conduct should
be as witness to the Word.


TEXTBOOK and REFERENCES

De Leon and De Leon, Jr., Comments and Cases on Obligations and Contracts, 2010 ed.
Jurado, Comments and Jurisprudence on Obligations and Contracts
Tolentino, Civil Code of the Philippines, Volume IV
Paras, Civil Code of the Philippines, Vol. IV
Sta. Maria, Obligations and Contracts Text and Cases
Agpalo, Obligations and Contracts

EVALUATIVE MEASURES AND GRADING SYSTEM

The students performance will be measured based on the results of major examinations
which will be administered in the course of the semester. There will be four (4) major
examinations. To adequately prepare the students for every class session, recitations will
be conducted wherein they will be tested as regards their understanding of the law, the
well-settled legal and doctrinal principles on the subject matter, the applicable
jurisprudence, and how they are applied to hypothetical situations that closely resemble
real factual situations. The students performance in the recitation is graded and will form
part of his overall grade.

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Course syllabus on Obligations and Contracts

POLICY ON CLASS RECORDINGS AND COURSE MATERIALS

The course materials are all academic property of the course professor. A student may not
record any part of the class by any means, and in exceptional cases that the student
receives written faculty authorization to record a class, the student may not copy or
download such recording to a computer or any device for distribution. All course materials
are for the students personal education and study. Unauthorized use of the course
materials shall be treated as violation of the University policy on honesty as well as
infringement of copyright laws.


GUIDE AND CORE READING ASSIGNMENTS

CHAPTER I GENERAL PROVISIONS

I. Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. Definition
B. Elements
C. Distinction between Natural and Civil Obligations

II. Sources of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Law
B. Contracts
C. Quasi-Contracts
D. Acts/omissions punished by law- Art. 1161
E. Quasi-Delicts-Art. 1162, 2176

Cases:
Mangonon vs. CA G.R. No. 125041 June 30, 2006
PSBA vs. Court of Appeals G.R. No. 84698 January 4, 1992
YHT Realty Corporation vs. Court of Appeals G.R. No. 126780 February 17,
2005
Manliclic et.al. vs. Calaunan G.R. No. 150157 January 25, 2007
Barredo v. Garcia 73 Phil. 607
Mendoza vs. Arrieta 91 SCRA 113
PSBA vs. CA 205 SCRA 729
Amadora vs. CA 160 SCRA 315

III. Classification of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Primary Classifications under the Civil Code
1. Pure and Conditional ( Arts. 1179-1192)
2. With a Period or term (Arts. 1193-1198)
3. Alternative and Facultative (Arts. 1199-1206)
4. Joint and Solidary (Arts. 1207-1222)
5. Divisible and Indivisible (Arts. 1223-1225)
6. With a Penal Clause( Arts. 1226-1230)
B. Secondary Classifications.
1. Legal ( Art. 1158); Conventional ( Art. 1159); Penal ( Art. 1161)
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2.
Real (to give) and Personal(to do or not to do)
3.
Determinate and Generic (as to subject matter)
4.
Positive (to give, to do) and Negative (not to give, not to do)
5.
Unilateral and Bilateral
6.
Individual and Collective
7.
Accessory and Principal
8.
As to object or prestation:
o Simple/Multiple
o Conjunctive/Distributive
o Alternative/Facultative
9. Possible and Impossible

CHAPTER II NATURE AND EFFECTS OF OBLIGATIONS

I. Kinds of Prestation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 mins.
A. Obligation to Give
B. Obligation to do- Art. 1244
C. Obligation not to do-Art. 1244

II. Breach of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hrs. and 30 mins.
A. Concept

Cases:
Velarde vs. Court of Appeals 361 SCRA 56
Song Fo vs. Hawaiian Philippines 47 Phil. 821
Vermen Realty vs. Court of Appeals 224 SCRA 549

B. Modes of Breach- Art. 1170
1. Fraud (dolo)

Case:
Woodhouse vs. Halili 93 Phil. 526

2. Negligence-Art. 1172

Cases:
Gutierrez vs. Gutierrez 56 Phil. 177 (1932)
Vasquez vs. Borja 74 Phil. 560
De Guia vs. Manila Electric 40 Phil. 706
Sarmiento vs. Sps. Cabrido 401 SCRA 122
Crisostomo vs. CA 409 SCRA 528
NPC vs. CA 211 SCRA 162

3. Delay

Cases:
Cetus Development Corp. vs. CA 176 SCRA 72
Abella vs. Francisco 55 Phil. 447
Vda. de Villaruel vs. Manila Motor 104 Phil. 926
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Central Bank vs. CA 139 SCRA 46

4. Contravention of the tenor

Cases:
Chavez vs. Gonzales 32 SCRA 547
Telefast vs. Castro 158 SCRA 445
Arrieta vs. NARIC 10 SCRA 79

III. Remedies of Creditor in case of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. Action for Performance

Case:
Tanguilig vs. CA 266 SCRA 78
Chavez vs. Gonzales 32 SCRA 547

B. Action for damages-Art. 1170
C. Action for rescission-Art. 1191, 1192

IV. Subsidiary Remedies of Creditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. Accion subrogatoria-Art. 1177
B. Accion Pauliana- Art. 1177, 1381 par. 3

Case:
Khe Hong Cheng vs. CA 355 SCRA 701
Siguan vs. Lim 318 SCRA 725

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

V. Extinguishment of Liability in case of Breach due to fortuitous event . . . . . . . 2 hours
A. Concept of Fortuitous Event
B. Requisites

Cases:
Juan Nakpil & Sons vs. CA 144 SCRA 597
Republic vs. Luzon Stevedoring Co., 21 SCRA 279
[assumption of risk; exception to non-liability for fortuitous event]
Dioquino vs. Laureano 33 SCRA 65 [ common carrier]
Austria vs. CA 39 SCRA 527 [robbery as fortuitous event]
NPC vs. CA 161 SCRA 334
Yobido vs. CA 281 SCRA 1
Phil. Free Press vs. CA G.R. No. 132864 Oct.24,2005
Phil.Com Satellite Corp. vs. Globe Telecom G.R. No. 147324 May 15,
2004
Gaisano Cagayan Inc. vs. Insurance Co. of North
American 490 SCRA 286 [ obligation to pay money, generic obligation,
not extinguish thru fortuitous event]

C. Extinguishment of Liability; Exceptions-
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VI. Usurious Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. PD 858; PD 1685
B. Central Bank Circular 416
C. Monetary Board Circular No. 905 lifting interest rate ceiling

Cases:
Eastern Shipping Lines vs. CA 234 SCRA 781
Crismina Garments v. CA 304 SCRA 356
Security Bank vs. RTC of Makati 263 SCRA 453
Almeda vs. CA 256 SCRA 292

VII. Fulfillment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 mins.
A. Chapter 4, Payment
B. Presumptions in payment of interests and instalments Art. 1176

VIII. Transmissibility of Rights- Art. 1178 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 mins.

Case:
DKC Holdings Corp. vs. CA 329 SCRA 666

CHAPTER III DIFFERENT KINDS OF OBLIGATIONS

I. Pure and Conditional Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Pure Obligations-Art. 1179, par.1
B. Conditional Obligations- Art. 1181
1. Condition
a. Concept
b. Condition v. Period/Term

Cases:
Gaite vs. Fonacier 2 SCRA 830
Gonzales v. Heirs of Thomas 314 SCRA 585
Lim vs. CA 263 SCRA 569

2. Kinds of Conditions
a. As to effect on obligation-Art. 1181
i. Suspensive (condition precedent)
o retroactive effect when condition is fulfilled (Art.
1187)
o rights of creditor and debtor before fulfilment of
condition (Art. 1188)
ii. Resolutory (condition subsequent)

Cases:
Parks v. Province of Tarlac 49 Phil. 142
Central Phil. University vs. CA 246 SCRA 511
Quijada vs. Court of Appeals 299 SCRA 695

b. As to cause or origin- Art. 1182
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i. Potestative
o effect if fulfilment of condition depends solely on
the will of the debtor
o debtors promise to pay when he can is not a
conditional obligation- Art. 1180
ii. Casual
iii. Mixed

Cases:
Osmena vs. Rama 14 Phil. 99
Hermosa v. Longora 93 Phil. 971
Rustan Pulp etc. Vs. IAC 214 SCRA 665
c. As to possibility-Art. 1183
i. Possible
ii. Impossible
o effect

Case:
Roman Catholic Arch. Vs. CA 198 SCRA 300
d. As to mode
i. Positive-Art. 1184
ii. Negative-Art. 1185

3. Rules in case of loss, deterioration, or improvement pending
happening of the condition- Arts. 1189 and 1190
a. Meaning of loss ( Art. 1189 [2]), deterioration, and
improvement
b. Effect of loss or deterioration
i. without debtors fault
ii. with debtors fault
c. Effect of improvement
i. by nature or time
ii. at the debtors expense

4. Effect of prevention of the fulfilment of the condition by the obligor-
Art. 1186

Case:
Herrera vs. Leviste 135 SCRA 129

C. Reciprocal Obligations- Art. 1191, 1192
1. Concept
2. Alternative remedies of injured party in case of breach

Cases:
Song Fo vs. Hawaiian-Phil. 47 Phil. 821
Boysaw v. Interphil Promotions 148 SCRA 365
U.P. v. De los Angeles 35 SCRA 365
De Erquiaga v. CA 178 SCRA 1
Angeles v. Calazanz 135 SCRA 323
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Asuncion v. Evangelista 316 SCRA 848

Solid Homes vs. Spouses Tan et.al. G.R. No. 145156-57 July 29, 2005
Pryce Corp. vs. Phil. Amusement Gaming Corp. G.R. No. 157480 May 6,
2005

II. Obligations with a Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Period or Term
1. Concept
2. Period/Term vs. Condition

B. Kinds of Period/Term
1. As to effect
a. Suspensive (ex die)-Art. 1193 (1)
b. Resolutory (in diem)-Art. 1193 (2)
2. As to expression
a. Express
b. Implied
3. As to definiteness
a. Definite
b. Indefinite
4. As to source
a. Voluntary
b. Legal
c. Judicial

C. Rules in case of loss, deterioration, or improvement before arrival of period-
Art. 1194, 1189
D. Effect of payment in advance- Art. 1195
E. Benefit of Period
1. For whose benefit
a. Creditor
b. Debtor
c. both
2. Effects
3. Presumption- Art. 1196

Cases:
Lachica vs. Araneta August 4, 1949
Ponce de Leon v. Syjuco 90 Phil. 311
Buce vs. CA 332 SCRA 151
4. When debtor loses the right to make use of the period- Art. 1198

F. When Court may fix period- Art. 1197
1. Period is implied
2. Period depends solely on will of debtor

Cases:
Araneta v. Philippine Sugar Estate Devt. 20 SCRA 330
CPU vs. CA supra
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III. Alternative Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hours
A. Concept- Art. 1199
B. Right of Choice- Art. 1200
C. Effect of notice of choice
D. When notice produces effect- Art. 1201
E. Effect of loss or impossibility of one or all prestations-Art. 1202 to 1205
F. Facultative Obligation- Art. 1206
1. Concept
2. Distinguished from Alternative Obligation
3. Effect of substitution

IV. Joint and Solidary Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Joint Obligations
1. Concept
2. Presumption- Art. 1207, 1208
3. Effects- Art. 1207, 1208
a. Extent of liability of debtor
b. Extent of right of creditor
c. In case of novation, compensation, confusion
(Art.1277), remission
B. Solidary Obligations
1. Concept
a. Requisites
b. words used to indicate solidary obligations
2. Kinds
a. As to source- Art. 1208
i. Legal- Art. 1915,1945, 2194; Art. 119 R.P.C.
ii. Conventional
iii. Real
b. As to parties bound
i. Active
ii. Passive
iii. Mixed
c. As to uniformity
i. Uniform
ii. Varied/Non-uniform- Art. 1211
o effects

Case: Ynchausti vs. Yulo 34 Phil. 978

3. Effects
a. Solidary creditor in relation to:
i. common debtor
ii. solidary co-creditor/s
o in case of novation,
o compensation, confusion, Art. 1215,
par. 2
o prejudicial acts prohibited-Art. 1212
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o assignment of rights not allowed-Art.

1213

b. Solidary debtor in relation to:
i. common creditor
o obligation to perform-Art. 1207
o in case of novation, compensation, confusion, remission
by a creditor-Art.1215, par. 1
ii. solidary co-debtor
o in case of payment by a co- debtor-Art.1217,
1218,1220,1219
o in case of fortuitous event- Art. 1221

Cases:
Jaucian v. Querol 38 Phil. 718
RFC v. CA 6 O.G. 2467
Quiombing v. CA 189 SCRA 325
Inciong v. CA 257 SCRA 578

4. Defenses available to a solidary debtor against the creditor-Art. 1222
a. Types
i. those derived from the nature of the obligation
ii. personal defences
iii. defenses pertaining to his share
iv. those personally belonging to the other co-debtors


b. Effects

Case:
Alipio vs. Court of Appeals 341 SCRA 441

C. Joint Indivisible Obligations
1. Concept
2. Indivisibility distinguished from solidarity-Art. 1210
3. Effects-Art. 1209
4. liability for damages in case of breach-Art. 1224

V. Divisible and Indivisible Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Divisible Obligations
1. Concept
2. Effects-Art. 1223, 1233
B. Indivisible Obligation
1. Concept
a. Distinguished from solidary obligations
2. Kinds
a. natural-Art. 1225, par.1
b. legal-Art. 1225, par. 3
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c. conventional-Art. 1225, par. 3

3. Presumptions
a. of indivisibility-Art. 1225, par. 1
b. of divisibility-Art. 1225, par.2
4. Divisibility and indivisibility of obligations not to do-Art. 1225, par. 3
5. Effects- Art. 1223, 1233, 1224
6. Cessation of indivisibility

VI. Obligations with a Penal Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Concept
1. Principal vs. Accessory Obligation
2. Distinguished from Conditional Obligations
3. Distinguished from Alternative Obligations
4. Distinguished from Facultative Obligations
5. Distinguished from Guaranty
B. Kinds of Penal Clause
1. As to effect
a. Subsidiary
b. Complementary
2. As to source
a. Conventional
b. Legal
3. As to purpose
a. Punitive
b. Reparatory
C. Demandability of Penalty-Art. 1226, par. 2
D. Effects of Penal Clause
1. substitute for indemnity for damages and payment of interest

Cases:
Makati Devt. Corp. vs. Empire Insurance 20 SCRA 557 ( reduction of
penalty justified)
Antonio Tan vs. CA 367 SCRA 571

2. Not exempt debtor from performance-Art. 1227
a. exception- Art. 1227
3. Creditor cannot demand both performance and penalty at the same
time-Art. 1227
4. Creditor cannot collect other damages in addition to penalty-Art. 1226
a. Exceptions-Art. 1226

E. When penalty shall be equitably reduced-Art. 1229

Case: Macalinao v. BPI G.R. No. 175490 September 17, 2009

F. Nullity of Principal Obligation or Penal Clause
1. Effects-Art. 1230
2. Rationale

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CHAPTER IV - EXTINGUISHMENT OF OBLIGATIONS

I. Modes of Extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 mins.
A. Payment/Performance
B. Loss/Impossibility
C. Condonation/Remission
D. Confusion/Merger
E. Compensation
F. Novation
G. Other Causes
II. Payment or Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Concept- Art. 1232
B. Requisites
1. Who can pay
2. To whom payment may be made
a. in general- Art. 1240
b. incapacitated person-Art. 1241, par. 1
c. third person- Art. 1241, par. 2
i. requisites
ii. when proof of benefit not required-Art. 1241 par. 3,
1242
d. in case of active solidarity-Art. 1214
3. What is to be paid ( identity)
a. in general-Art. 1233

Cases:
Arrieta v. NARIC supra
Kalalo v. Luz 34 SCRA 377
St. Paul Fire and Marine vs. Macondray 70 SCRA 122
Papa vs. A.V. Valencia 284 SCRA 643
b. in obligations to:
i. give a specific thing-Art. 1244
ii. give a generic thing-Art. 1246
iii. pay money- Art. 1249, 1250; R.A. 529, R.A. 4100
c. payment of interest-Art. 1956
4. How payment to be made (integrity)
a. In general- Art. 1233
o Gen.Rule: Partial payment is not allowed-Art. 1248
Exceptions: Art. 1248
b. substantial performance in good faith-Art. 1234
c. estoppel-Art. 1235
d. presumptions in payment of interests and installments- Art.
1176
5. When payment is to be made
a. In general-Art. 1169
b. See Chapter 2: Delay
6. Where payment is to be made-Art. 1251, par.1
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a. if no place is expressly designated- Art. 1251, par. 2 to par. 4

7. Expenses of making payment

C. Application of Payments
1. Concept- Art. 1252

Cases:
Reparations Commission vs. Universal Deep Sea Fishing 83 SCRA 764
Paculdo v. Regalado 345 SCRA 134
2. Requisites
3. Rules in application of payments- Art. 1252,1253
i. If rules inapplicable and application cannot be inferred-Art. 1254
o meaning of most onerous to debtor
4. Payment by Cession
i. Concept-Art. 1255
ii. Requisites
iii. Effects
5. Dation in Payment
i. Concept-Art. 1245
o Distinguished from Payment by Cession

Case:
Development Bank of the Philippines vs. Court of Appeals
284 SCRA 14 (1998)


ii. Requisites
iii. Effects

Case:
Filinvest Credit Corporation vs. Philippine Acetylene 111 SCRA
421

6. Tender of Payment and Consignation
i. Tender of Payment
a. Concept
b. Requisites
ii. Consignation
a. Concept
o Purpose
b. Requisites
b. 1 when tender and refusal not required- Art. 1256, par. 2

Case:
Co vs. PNB 114 SCRA 842

b. 2 two notice requirement- Art. 1257, par. 1; 1258, par.2
o effects of non-compliance

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c. Effects- Art. 1260, par. 1

Case:
Ramos vs. Sarao 451 SCRA 103

d. Withdrawal by debtor before acceptance by creditor or approval by
court; effects-Art. 1260, par. 2
e. withdrawal by debtor after proper consignation- Art. 1261
i. with creditors approval; effects
ii. without creditors approval; effects
f. Expenses for consignation

Cases:
De Guzman v. CA 137 SCRA 730
TLG International v. Flores 47 SCRA 437
McLaughlin v. CA 144 SCRA 693
Soco v. Militante 123 SCRA 160
Sotto v. Mijares 28 SCRA 17

III. Loss or Impossibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Loss of the Thing Due
1. Concept- Art. 1189 (2)
2. Kinds
a. As to extent
i. Total
ii. Partial
3. Requisites- Art. 1262
4. Presumption- Art. 1265, 1165
a. when not applicable
5. Effects
a. in obligation to give a specific thing- Art. 1262, 1268
b. in obligation to give a generic thing-Art. 1263
c. in case of partial loss- Art. 1264
d. action against third persons- Art. 1269
B. Impossibility of Performance
1. Concept- Art. 1266, 1267
2. Kinds
a. As to extent
i. Total
ii. Partial
b. As to source
i. Legal
ii. Physical
3. Requisites- Art. 1266
4. Effects
a. in obligations to do- Art. 1266, 1267, 1262 par. 2 (by analogy)
i. impossibility distinguished from difficulty

Cases:
 Page 16 of 29
Course syllabus on Obligations and Contracts

Occena v. CA 73 SCRA 637

Naga Telephone Co. v. CA 230 SCRA 351
b. in case of partial impossibility- Art. 1264

IV. Condonation or Remission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. Concept
B. Kinds
1. As to extent
a. Total
b. Partial
2. As to form-Art. 1270 (1)
a. Express
b. Implied
C. Requisites
a. when formalities required- Art. 1270 par. 2

Case:
Yam vs. Court of Appeals 303 SCRA 1

D. Presumptions- Arts. 1271, 1272, 1274
E. Effects
1. in general
2. in case of joint or solidary obligations
F. Governing Rules- Art. 1270
G. Renunciation of Principal or Accessory Obligation
1. Effects- Art. 1273
2. Rationale
V. Confusion or Merger of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. Concept
B. Requisites
C. Effects
1. in general- Art. 1275
2. in case of joint ( Art. 1277) or solidary obligations
D. Confusion in Principal or Accessory Obligation- Art. 1276

VI. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Concept- Art. 1278
1. Distinguished from Confusion
B. Kinds
1. As to extent
a. Total
b. Partial
2. As to origin
a. Legal
b. conventional-Art. 1279 inapplicable, 1282
c. judicial-Art. 1283
d. facultative
C. Legal Compensation
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1. Requisites- Art. 1279,1280

a. due distinguished from demandable

Cases:
Gan Tion v. CA 28 SCRA 235
BPI v. Reyes 255 SCRA 571
PNB v. Sapphire Shipping 259 SCRA 174
Nisce vs. Equitable PCI Bank G.R. No. 167434 Feb. 19, 2007
2. Effects- Art. 1290, 1289
D. When compensation is not allowed- Art. 1287, 1288
E. Compensation of Debts payable in Different Places-Art. 1286
F. Effect of Nullity of Debts to be Compensated- Art. 1284
G. Effects of Assignment of Credit
1. with consent of debtor-Art. 1285 (1)
2. with knowledge but without consent of debtor-Art. 1285, par. 2
3. without knowledge of debtor-Art. 1285, par. 3
3.1 rationale
VII. Novation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Concept- Art. 1291
B. Kinds
1. As to form
a. Express
b. implied
2. As to origin
a. Conventional
b. Legal
3. As to object
a. objective or real
b. subjective or personal
C. Requisites-Art. 1292

Cases:
Millar vs. CA 38 SCRA 642
Dormitorio v. Fernandez 72 SCRA 388
Magdalena Estate v. Rodriguez 18 SCRA 967
Reyes v. Secretary of Justice 264 SCRA 35
D. Effects
1. in general-Art. 1296
2. when accessory obligation may subsist- Art. 1296
E. Effect of the Status of the Original or New Obligation-
1. nullity or voidability of original obligation-Art. 1298
2. nullity or voibability of new obligation-Art. 1297
F. Objective Novation
1. meaning of principal conditions
G. Subjective Novation
1. By change of debtor
a. Expromision
i. requisites-Art. 1293
ii. effects-Art. 1294
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b. Delegacion
i. requisites (vs. Art. 1293)
ii. effects- Art. 1295

Case:
Garcia vs. Llamas 417 SCRA 2003
Quinto vs. People 305 SCRA 709

2. By change of creditor: subrogation of a third person in the rights of
the creditor- Art. 1300
a. conventional subrogation
i. requisites-Art. 1301
ii. distinguished from Assignment of Credit
iii. effects- Art. 1303, 1304
b. legal subrogation
i. requisites
ii. when presumed- Art. 1302
iii. effects- Art. 1303, 1304







CONTRACTS

I. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 hr and 30 mins.

A. DEFINITION
i. Essential Elements
ii. Natural Elements:
iii. Accidental Elements

B. CHARACTERISTICS
i. Obligatory force

ii. Mutuality

Cases:
GSIS vs. Court of Appeals 228 SCRA 183
Professional Academic Plans, Inc. vs. Crisostomo 453 SCRA 342

iii. Relativity

Case:
DKC Holdings Corporation vs. Court of Appeals 329 SCRA 666

Exceptions to principle of relativity:
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a. obligations not transmissible by nature, stipulation, law

b. stipulation pour autrui

Case: ( Florentino vs. Encarnacion Sr. 79 SCRA 195)

c. third person induces another to violation his contract under Art. 1314

Cases:
So Ping Bun vs. Court of Appeals 314 SCRA 751
Lagon vs. Court of Appeals 453 SCRA 616

C. PARTIES
i. Auto-contract
ii. Freedom to contract

Cases:
Cui vs. Arellano University 2 SCRA 205
Pakistan International Airlines vs. Ople 190 SCRA 90

D. CLASSIFICATION:
i. According to subject matter
ii. According to name
iii. According to perfection
iv. According to its relation to other contracts
v. According to the nature of the vinculum produced
vi. According to cause
vii. According to risk

E. STAGES
i. Preparation
ii. Perfection
iii. Consummation or death

II. ESSENTIAL REQUISITES OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 hours
A. MUST BE MANIFESTED BY THE CONCURRENCE OF THE OFFER AND
ACCEPTANCE (1st requisite of Consent)

Case: Malbarossa vs. Court of Appeals G.R. No. 125761. April 30, 2003
1. Offer
a. must be certain

Case: Rosenstock vs. Burke 46 Phil. 217

b. what may be fixed by the offeror

c. Offer when made through an agent

d. Circumstances when offer becomes ineffective
e. Business advertisements of things for sale
f. Advertisement for bidders
2. Acceptance
a. Must be absolute
b. Kinds
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i. Express [Art. 1320. An acceptance may be express or

implied]
ii. Implied e.g. from conduct, or acceptance of unsolicited
services.
iii. Qualified (constitutes a counter-offer)
c. If [acceptance] made by letter or telegram
i. Cognition Theory
ii. Period of acceptance

Cases:
Southwestern Sugar and Molasses Co. vs. Atlantic
Gulf and Pacific Co. 97 Phil. 249
Atkins, Kroll, and Co. vs. B. Cua Hian Tek L-9871,
January 31, 1958
Sanchez vs. Rigos G.R. No. L-25494 June 14, 1972
d. Contract of option
o Distinguish from RIGHT OF FIRST REFUSAL

Case: Equatorial Realty Dev. Inc. vs. Mayfair

Theater, Inc. G.R. No. 106063 November
21, 1996
B. NECESSARY LEGAL CAPACITY OF THE PARTIES

1. Who cannot give consent

2. When offer and/or acceptance is made
a. During lucid interval
b. In a state of drunkenness
c. During a hypnotic spell
C. CONSENT MUST BE INTELLIGENT, FREE, SPONTANEOUS, AND REAL

1. Effect: Voidable
2. Vices of Consent
a. Mistake or error [ vice of consent]
b. Kinds
c. Mistake of Fact
i. Substance of the object
ii. As to principal conditions
iii. As to identity or qualifications of one of the parties
iv. As to quantity, as distinguished from a simple mistake
account e.g. buying land consisting of 100 hectares and
buyer discovers land has only 60 hectares

Cases:
Asiasin vs. Jalandoni 45 Phil. 296
Heirs of William Sevilla vs. Sevilla 402 SCRA 501
Spouses Theis vs. Court of Appeals 268 SCRA 167

d. Error of law: Art. 3. Ignorance of the law excuses no one
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e. Exception: Mutual error of law

f. When one of the parties is unable to read
g. Inexcusable mistake

Case: Alcasid vs. Court of Appeals G.R. No. No.

104751October 7, 1994
h. Violence and intimidation [vice of consent]
Effect of violence and intimidation:

Cases:
DBP vs. Court of Appeals G.R. No. 138703,
June 30, 2006
Lee vs. Court of Appeals 201 SCRA 405

i. Undue influence [vice of consent]

Case: DBP vs. COURT OF APPEALS, ibid

j. Fraud or dolo [vice of consent]
i. 2 kinds of fraud:
1. Dolo causante - one which vitiates a contract
2. Dolo incidente

Case:
Woodhouse vs. Halili 93 Phil. 527.
Geraldez vs. Court of Appeals 230 SCRA 320
Sierra vs. Court of Appeals 211 SCRA 785

ii. Failure to disclose facts; duty to reveal (fraud)
iii. Usual exaggerations in trade: opportunity to know the
facts

Case: Laureta Trinidad vs. IAC 204 SCRA 524 ( no fraud)

iv. Expression of an opinion (fraud)
o Effects:
o Art. 1344, NCC

k. Misrepresentation [vice of consent]
i. By a third person:
ii. Made in good faith:
iii. Kinds of: Article 1345
a) Absolute- no intention to be bound at all
b) Relative- parties conceal their true agreement
o e.g. deed of sale is intention, what is executed is
deed of donation
o Effects; Art. 1346., NCC

Cases:
Manila Banking Corp. vs. Silverio 466 SCRA 458
Suntay vs. Court of Appeals 251 SCRA 430
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Course syllabus on Obligations and Contracts

Umali vs. Court of Appeals G.R. No. 89561 September 13,

1990

III. OBJECT OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
1. What may be the objects of contracts-
a. All things not outside the commerce of man
b. All rights not intransmissible e.g. right to vote and be voted, parental
authority
c. All services not contrary to law, morals, good customs, public policy
2. Requisite- must be determinate as to its kind
3. What may not be the object of contracts
a. Future inheritance, except when authorized by law
o Exceptions:
Marriage settlements, partitions inter vivos under Art.
1080
b. Impossible things/services

Case:
JLT Agro Inc. vs. Balansag G.R. No. 141882 March 11,
2005

IV. CAUSE OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
a. Meaning of cause-
b. Onerous contracts-
c. In remuneratory contracts
d. Contracts of pure beneficence-
o As distinguished from motive- Article 1351
NOTE, HOWEVER, A MOTIVE MAY PREDETERMINE A CAUSE, AND
MOTIVE MAY HAVE AN EFFECT ON THE CONTRACT.

Cases:
Liguez vs. Court of Appeals 102 Phil. 577
Olegario et.al. vs. Court of Appeals G.R. No. 104892 November 14,
1994

e. Defective causes and their effects

i. Absence of cause/unlawful cause- Article 1352

Case: Liguez vs. Court of Appeals 103 Phil. 577.

ii. Statement of a false cause in the contract- Art. 1353
iii. Lesion/inadequacy of cause
o What is lesion? Inadequacy of cause e.g. insufficient price of
the thing sold

Cases:
Ong vs. Ong 139 SCRA 133
Spouses Buenaventura vs. Court of Appeals 416 SCRA 263

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iv. Presumption of the existence and lawfulness of a cause, though not stated
in the contract- Article 1354

V. FORM OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. General rule: contracts shall be obligatory, in whatever form they may have
been entered into, provided all the requisites for their validity are present-
Article 1356

B. Exception: When the law requires that a contract be in some form in order
that it may be valid or enforceable (meaning form must be observed
strictly)

Case:
Hernaez vs. De los Angeles G.R. No. L-27010 April 30, 1969
C. Kinds of formalities required by law:
1. Those required for validity of contracts e.g.
Art. 748
Art. 749
Art. 1874
Art. 2134
Art. 1771
Art. 1773
2. Those required, not for validity, but to make contract effective as
against third persons
Art. 1357
Art. 1358
Note: Before applying Art. 1357 (right to compel execution of
document), it is essential that:
a. Contract is perfected (valid)
b. Enforceable under the Statute of Frauds i.e. Unenforceable
agreements
3. Those required for the purpose of proving the existence of the
contract e.g. those under the Statute of Frauds in Article 1403.

VI. REFORMATION OF INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
Action in personam, not in rem
A. Requisites
1. Meeting of the minds upon the contract
2. True intention of the parties is not expressed in the instrument
3. Failure of the instrument to express the true agreement is due to mistake,
fraud, inequitable conduct, or accident
o Note: In reformation (remedy in equity), the courts do not
make another contract for the parties. They merely inquire
into the intention of the parties and having found it, reform the
written instrument

Case: (Cosio vs. Palileo L-18452, May 31, 1965)

What is reformed is not the contract itself, but the instrument embodying
the contract.

Case: (Naga Telephone Co. Inc. vs. Court of Appeals 250 SCRA 351)

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B. Cases where no reformation is allowed- Art. 1366

C. Implied Ratification- Art. 1367
D. Who may ask for reformation- Art. 1368
E. Procedure of reformation- Art. 1369

VII. INTERPRETATION OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Primacy of Intention-Arts. 1370, 1372
B. How to determine intention- Art. 1371
C. How to interpret a contract
1. When it contains stipulations that admit several meanings- Art. 1373
2. When it contains various stipulations, some of which are doubtful-
Art. 1374
3. When it contains words that have different significations- Art. 1375
4. When it contains ambiguities and omission of stipulations- Art. 1376
5. With respect to the party who cause obscurity-Art. 1377
6. When it is absolutely impossible to settle doubts by the rules above
Art. 1378
7. When the doubts are cast upon the principal object so that the
intention cannot be known-Art. 1378.

D. Applicability of Rule 123, Rules of Court (now Secs. 10-19, Rule 130)





DEFECTIVE CONTRACTS

VIII. RESCISSIBLE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Kinds- Art. 1381
B. Characteristics
C. Rescission- Art. 1380
i. Definition:
ii. Distinguished from rescission under Article 1191

Case:

Universal Food Corp. Vs. Court of Appeals 22 SCRA 1
Spouses Cannu vs. Spouses Galang G.R. No. 139523 May 26, 2005
Rivera vs. del Rosario G.R. No. 144934 January 15, 2004
iii. Requisites:
iv. Effect of Rescission- Art. 1385


v. Extent of Rescission- Art. 1384

Case:

Siguan vs. Lim 318 SCRA 725

vi. Presumption of fraud- Art. 1387
Note:

Case: Adolfo Gaspar vs. Leopoldo Dorado L-1 7884,

November 29, 1965
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COMPARE WITH:
Case: Oria vs. McMicking 21 Phil. 243


Badges of Fraud:

Cases:

Suntay vs. Court of Appeals 251 SCRA 430
China Banking Corporation vs. Court of Appeals G.R. No. 129644
March 7, 2000
MR Holdings Limited vs. Carlos G.R. No. 138104 April 11, 2002

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

IX. VOIDABLE /ANNULLABLE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours
A. Kinds- Art. 1390
B. Characteristics
C. Annulment
i. As distinguished from rescission:
ii. Grounds- Art. 1390 (incapacity to consent and vice of consent)
iii. Who may and may not institute action for annulment- Art. 1397

Cases:
Development Bank of the Philippines vs. CA L-28774-
February 28, 1980
Samahan ng Magsasaka sa San Josep vs. Valisno 430
SCRA 629
Malabanan vs. Gaw Ching 181 SCRA 84

iv. Prescription- Art. 1391
v. Effect (of annulment)
a. Mutual restitution- Arts. 1398 and 1402

Case:
Uy Soo Lim vs. Tan Unchuan 38 Phi. 552
Kapunan vs. Kapunan Jr. G.R. No. 132415. January 30, 2002)
Arra Realty Corporation vs. Guarantee Development Corporation
438 SCRA 441
vi. Extinguishment of the action (i.e. when action to annul is extinguished)
a. By ratification- Art. 1392
b. [action to annul may also be extinguished when] When the thing
is lost through the fault of the person who has the right to file the
action- Art. 1401
D. Ratification
1. Requisites
a. Contract is voidable
b. Ratification is made with knowledge of the cause for nullity
c. At the time of ratification, the cause of nullity has already
ceased to exist.

2. Forms (of ratification)
a. Express or tacit- Art. 1393
b. By the parties themselves or by the guardian in behalf of an
incapacitated party- Art. 1394
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3. Effects
a. Action to annul is extinguished- Art. 1392
b. The contract is cleansed retroactively from all its defects-
Art. 1396

X. UNENFORCEABLE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours
A. Characteristics
1. Cannot be enforced by a proper action in court.
2. Susceptible of ratification
3. Cannot be assailed by third persons
B. Kinds [of unenforceable contracts] - Art. 1403
b.1. unauthorized contracts (1ST kind of unenforceable contract]
governing rules: Art. 1404

Cases: SOME EXAMPLES OF UNAUTHORIZED CONTRACTS:

i. Compromise agreement entered into by a lawyer without
specific (special) authority from his client is unenforceable
(Bumanlag vs. Alzate L-39119, Sept. 20, 1986)
ii. Sale of a property belonging to an estate without authority
from the probate court (Leabres vs. Court of Appeals, L-41847,
December 12, 1986)
iii. Sale of a property by a receiver without authority from the
court (Bisaya Land Trans. Inv. Vs. Sanchez, G.R. No. 74623,
August 31, 1987)

b.2. Contracts covered by statute of frauds [2nd kind of unenforceable
contract]

i. Statute of Frauds
Purpose: prevent fraud, and not to encourage
History
England was first country to adopt statute of frauds (in
1676). English Parliament passed law [requiring certain
agreements to be in writing]
Characteristics

ii. BASIC AND FUNDAMENTAL PRINCIPLES GOVERNING
STATUTE OF FRAUDS:

1. Applies only to executory contracts (no performance
yet). Does not apply to partially or completely
executed contracts. eg
o downpayment is made [not applicable
o delivery of land.
2. Cannot apply if the action is neither for damages
[because of the violation of an agreement] nor for
specific performance.

Case: e.g. Lim vs. Lim 10 Phil. 635 [ agreement

between landlord and tenant
regarding sharing of the crops or
produce in a land]

3. Statute of frauds is exclusive
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o e.g. only those contracts enumerated are

covered. Thus, the following are not:

Cases:
i.Setting up of boundaries [Victorino Hernandez vs.
Court of Appeals, 160 SCRA 321]
ii. Oral partition of real property [Simprosa Vda. De
Espina vs. Abaya, 196 SCRA 312]
iii. Agreement creating right of way [Western
Mindanao Lumber Co. vs. Medalla]
iv. Agreement on right of first refusal (Rosencor
Devt. Corp. vs. Inquing)

4. Defense of statute of frauds may be waived
5. Statute of frauds is a personal defense [available
only to the party affected]
6. They are not void

C. SPECIFIC AGREEMENTS COVERED BY STATUTE OF FRAUDS:
i. What is sufficient memorandum?
ii. Rule: cannot prove contract orally unless evidence by memorandum
o (Note if there is written agreement, but is lost, it may be proven by
secondary evidence.

Case:
(Basa vs. Raquel G.R. No. L-20969 January 29, 1924)
COMPARE WITH:
Paredes vs. Espino L-23351, March 13, 1968

b.3. contracts [entered] by parties [both] are incapable of giving
consent to a contract. [3rd kind of unenforceable contract]

D. Contracts executed by parties who are both incapable of giving consent to a
contract
a. Effect of ratification by the parents/guardian of one of the parties- Art.
1407
b. Effect of ratification by the parents/guardian of both of the parties.

XI. VOID/INEXISTENT CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 hours

A. Characteristics
B. Kinds [of VOID CONTRACTS]- Art. 1409

Case: (Acabal vs. Acabal G.R. No. 148376. March 31, 2005]


i. Pari delicto doctrine does not apply:
1. One party is much less guilty than the other

Case: ( Liguez vs. Lopez, 102 Phil. 577)

2. Does not apply where a superior public policy intervenes ( e.g. sale of a
land under homestead, therefore, homesteader can recover..)
3. Party repudiates a contract (void) before the illegal purpose is
accomplished (Art. 1414)

Case:
 Page 28 of 29
Course syllabus on Obligations and Contracts

Angeles vs. Court of Appeals January 31, 1958 G.R. No. L-11024)
Frenzel vs. Catito G.R. No. G.R. No. 143958 July 11, 2003
COMPARE WITH:
Philippine Banking vs. Lui She 21 SCRA 52

ii. EFFECT OF SALE TO NATURALIZED FOREIGNER:

Case:
Halili vs. Court of Appeals G.R. No. 113539. March 12,
1998

a. Those whose object is outside the commerce of man ( e.g. selling of
rights fishpond applications...because fisheries is owned by the
state or, selling of foreshore lease...
b. Those which contemplate an impossible service
c. Those where the intention of the parties relative to the principal
object cannot be ascertained
d. Those expressly prohibited or declared void by law (contracts of
sale between spouses) ref: Art. 1490
iii. Contracts that are inexistent:
a. Those which are absolutely simulated or fictitious
b. Those whose cause or object did not exist at the time of the
transaction ( exception: sale of future things which is valid)
C. Right to set up defense of illegality cannot be waived- Art. 1409
D. Action or defense for the declaration of the inexistence of a contract
1. Does not prescribe- Art. 1410
2. Is not available to third persons whose interest is not directly affected-
Art. 1421
Compare with:
i. Annulable (voidable) contracts:
Art. 1397. The action for the annulment of contracts may be
instituted by all who are thereby obliged principally or
subsidiarily.
ii. Unenforceable contracts:
Art. 1408. Unenforceable contracts cannot be assailed by third
persons.
E. Issue on Mutual Restitution

Case: Development Bank of the Philippines vs. Court of Appeals

et.al.., G.R. No. 110053, 1995 October 16, 2nd Division

F. Government contracts entered into in violation of law :

Cases: requirements: appropriation, certification of existence of

appropriation, availability of funds
Osmena vs. COA 230 SCRA 585
DOH vs. C.V. Cancela & Associates G.R. Nos. 151373-74.
November 17, 2005


XII. NATURAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour
A. Definition:

Case: (Ansay, et al. vs. Nat'l Development Co., et al. April 29, 1960)
B. Distinguished from civil obligations
C. Distinguished from moral obligations
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Case: Fisher vs. Robb 69 Phil. 101 (promise to return subscription
payments)
D. Examples of natural obligations

XIII. ESTOPPEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hour

Case: Kalalo vs. Luz G.R. No. L-27782 July 31, 1970
A. Definition
B. Kinds
i. Estoppel in pais [ equitable estoppel]-

Case: e.g. De Castro vs. Tang Queen Tan L-31956, 30 April 1984
ii.Estoppel by deed [ technical estoppel]- estoppel by deed [written
instrument]; estoppels by judgment as a court record [ e.g. res judicata]
C. Persons bound- Article 1439
Notes:
state not estopped from the acts of its agents

Case: LBP vs. Republic of the Philippines, G.R. 150824 February 4, 2008

E. Cases where estoppel applies





The foolish may lose all they have to the wise but that does not mean that the law will give it
back to them again. Courts cannot follow one every step of his life and extricate him from bad
bargains, protect him from unwise investments, relieve him from one-sided contracts, or
annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who
are not legally competent. Courts cannot operate not because one person has been defeated or
overcome by another, but because he has been defeated or overcome illegally. Men may do
foolish things, make ridiculous contracts, use miserable judgement, and lose money by then-
indeed, all they have in the world; but not for that alone can the law intervence and restore.

-VALLES VS. VILLA, 35 Phil. 769-


-end-









* Estimated Total Hours of Class: 70 hours
Based on USC Academic Calendar SY 2013-2014