Course SyllabusOBLIGATIONS AND CONTRACTS

Jay L. Batongbacal2nd Semester SY 2011-2012. MW 830-11am

The basic text is Tolentino, Arturo. Commentaries and Jurisprudence on the Civil Code of the Philippines. Any edition will do.

Unless otherwise indicated, numbers below refer to articles of the New Civil Code. Students are required to read the all commentaries corresponding to the provisions indicated. Students are strongly advised to read all cases in the original.

The schedule of assignments over the course the semester is laid out in the table at the end of these instructions. Such assignments are to be followed strictly unless otherwise instructed by the professor. More than ample allowance has been made for possible holidays, calamities, absences, or other contingencies.

Where the syllabus points to an unfamiliar technical word, phrase, classification, or language, students are expected to exercise due diligence and determine their meaning.

Electronic devices of any kind or any printed material are NOT permitted to be used during class hours. Electronic devices shall be turned OFF, and printed materials (codals and cases) shall be kept HIDDEN. They may be taken out only upon instruction. Only handwritten notes are permitted. During recitation, students may glance at notes, but shall NOT read them. Every violation of this rule merits one failing mark for recitation.

Students shall have ready at all times, at least 2 sheets of yellow intermediate pad paper for quizzes. Each quiz is equivalent to one recitation.

Although attendance is not checked, if a student called for recitation turns out to be absent, s/heshall be given one failing mark for recitation.

The final grade shall have only two components: recitations/quizzes and the final exam.

PART 1: OBLIGATIONS

In Generalo Nature

Definition – 1156 Sources – 1157-61, 2142, 2176-7, 2180, RPC 218-9, RoC Rule 111

CASESo Barredo v. Garcia, 73 Phil 607 (1942)o Mendoza v. Arrieta, 91 SCRA 113 (1979)o PSBA v. CA, 205 SCRA 729 (1992)o Amadora v. CA, 160 SCRA 315 (1988)

Transmissibility - 1178

o Possible Classifications By enforceability

Civil, natural – 1423-9o CASES

Villaroel v. Estrada, 71 Phil 140 (1940) Fisher v. Robb, 69 Phil 101 (1939)

By number of parties: sole I unilateral, joint I bilateral (separate, solidary), collective

By nature of parties' undertaking: unilateral, reciprocal By presence of conditions: unconditional/pure, conditional (period, prestation,

event, penal clause) By variability of obligation: definitive, alternative By divisibility of obligation: divisible, indivisible By relationship: principal, accessory By nature of action to enforce: real, personal By object of the prestation: simple, multiple, conjunctive, distributive, alternative,

facultative By nature of object: generic, specific

o Breach Concept/Distinction

Standard of care/diligence – 1163, 1173o CASES

De Guia v. Manila Electric Co, 40 Phil 706 (1920) US v. Barias, 23 Phil 434 (1912) Sarmiento v. Sps. Cabrido, 401 SCRA 122 (2003) Crisostomo v. CA, 409 SCRA 528 (2003)

Types of Breacho Substantialo Casual

CASES Song Fo v. Hawaiian Philippines, 47 Phil 821

(1925) Velarde v. CA, 361 SCRA 56 (2001)

Modes Fraud (dolo): 1171

o CASES

Woodhouse v. Halili, 93 Phil 526 (1953) Geraldez v. CA, 230 SCRA 329 (1994)

Negligence (culpa): 1171-73, 2201.2o CASES

Gutierrez v. Gutierrez, 56 Phil 177 (1932) Vasquez v. Borja, 74 Phil 560 (1944)

Delay (mora)o In unilateral obligations

Mora solvendi: 1169 CASES

o Cetus Development Corp. v. CA, 176 SCRA 72 (1989)

o Santos Ventura Hocorna Foundation v. Santos, GR 153004, 04 Nov 2004

o Vasquez v. Ayala Corp., GR 149734, 19 Nov 2004

o Abella v. Francisco, 55 Phil 447 (1931) Mora accipiendi

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

104 Phil 926 (1958)o Tengco v. CA, GR 49852, 19 Oct 1989

Compensatio morae CASES

o Central Bank v. CA, 139 SCRA 46 (1985)

o In reciprocal obligations: 1159, 1192 Contravention of tenor of obligation

o CASES Chavez v. Gonzales, 32 SCRA 547 (1970) Telefast v. Castro, 158 SCRA 445 (1988) Arrieta v. NARIC, 10 SCRA 79 (1964) Magat v. Medialdea, GR L-37120, 20 Apr 1983

o Remedies for Breach Available actions

Performance: 1165o Obligation to Give

Specific performance To deliver

o Specific/determinate thing: 1244, 1170, 1165.1, 1176

o generic thing: 1246 To preserve: 1163 To deliver all its accessions: 1166, 1164

o interest: 1176 Exception: Usury: 1175 , 1413 PD 858 PD 1685 Central Bank Circular 416 Monetary Board Circular 905 CASES Eastern Shipping Lines v. CA,

234 SCRA 781 (1994)

Cristina Garments v. CA, 304 SCRA 356 (1999)

Keng Hua Products v. CA, 286 SCRA 257 (1998)

Security Bank v. RTC Makati, 263 SCRA 453 (1996)

Almeda v. CA, 256 SCRA 292 (1996)

First Metro Investment v. Estate of Del Sol, 420 Phil 902 (2001)

To deliver all its accessories: 1166 Substituted performance: 1165.3

o Obligation to Do: 1167 CASES

Chavez v. Gonzales, 32 SCRA 547 (1970) Tanguling v. CA, 266 SCRA 78 (1997)

o Obligation Not to Do: 1168 Damages: 1170

o Unilateral obligations: 1171o Reciprocal obligations: 1192

Rescission: 1191-92o CASES

Song Fo v. Hawaiian Philippines, 47 Phil 821 (1925) Boysaw v. Interphil Promotions, 148 SCRA 365 (1987) U.P. v. de los Angeles, 35 SCRA 365 (1970) De Erquiaga v. CA, 178 SCRA 1 (1989) Angeles v. Calasanz, 135 SCRA 323 (1985) Ong v. CA, 310 SCRA 1 (1999) Visayan Sawmill v. CA, 219 SCRA 3 78 (1993) Deiparine v. CA, 221 SCRA 503 (1993) Iringan v. CA, 366 SCRA41 (2001) Vda. de Mistica v. Sps. Naguiat, 418 SCRA 73 (2003)

o See also: 1786, 1788, 1484-86, RA 6552 Subsidiary Remedies

o Accion Subrogatoria: 1177, 772o Accion Pauliana: 1177, 1381

CASES Khe Hong Seng v. CA, 355 SCRA 701 (2001) Siguan v. Lim, 318 SCRA 725 ( 1999)

o Others: 1652, 1729,1608,1893 Extinguishment of Liability: 1174

o CASES Juan Nakpil & Sons v. CA, 144 SCRA 597 (1986) Republic v. Luzon Stevedoring, 21 SCRA 279 (1967) Dioquino v. Laureano, 33 SCRA 65 (1970) Yobido v. CA, 281 SCRA 1 (1997) Austria v. CA, 39 SCRA 527 (1971) NPC v. CA, GRL-47379, 161 SCRA334 (1988) Bacolod-Murcia Milling v. CA, 182 SCRA 24 (1990) Philcomsat v. Globe Telecom, 429 SCRA 153 (2004)

o Exceptions: 1174, cf. 1165, 552, 1942, 1979, 2001 , 2147o

Effect of loss/deterioration/improvement of thing subject of obligation: 1189, 1194, 566-71

o Extinguishment of Obligations Payment or performance, 1231.1

Definition, 1232 How made

o Ways, 1233, 1248-1250o No substitution, 1244, 1246o Costs/ expenses, 1247

CASES Arrieta v. NARIC, 10 SCRA 79 (1964) Kalalo v. Luz, 34 SCRA 377 (1940) St. Paul Fire and Marine Insurance v.

Macondray, 70 SCRA 122 (1976) Papa v. A.V. Valencia, 284 SCRA 643 (1998) PAL v. CA, 181 SCRA557 (1990)

o By whom Debtor 3rd person, 1236-39, 1427

o To whom Creditor, 1240-41 3rd person, 1241-42

o Where made, 1251o Application, 1252-54

CASES Reparations Commission v. Universal Deep Sea

Fishing, 83 SCRA 764 (1978) Paculdo v. Regalado, 345 SCRA 134 (2000)

o Invalid payment, 1243o Other forms of payment

Cession, 1255 Dation in payment, 1245

CASESo DBP v. CA, GR 118342, 05 Jan 1998o Filinvest Credit Corp. v. Philippine

Acetylene, 111 SCRA 421 (1982) Tender of payment and consignation

Requisites, 1256-57 How made, 1258 Effect of withdrawal, 1260-61 Effect of valid consignation, 1259-60

CASES De Guzman v. CA, 137 SCRA 730 (1985) TLG International Continental Enterprising Inc.

v. Flores, 47 SCRA 437 (1972) McLaughlin v CA, 144 SCRA 693 (1986) Soco v. Militante, 123 SCRA 160 (1983) Sotto v. Mijares, 28 SCRA 17 (1969) Meat Packing Corp. v. Sandiganbayan, 359

SCRA 409 (2001) Pabugais v. Sahijwani, 423 SCRA 596 (2004)

Loss of thing due/Impossibility of performance, 1231.2 Loss of thing due (obligation to give)

o Obligation to deliver a determinate thing, 1262, 1268-69o Obligation to deliver a generic thing, 1263o Partial loss, 1264

o Presumptions, 1265, 1165 Impossibility of performance (obligation to do), 1266-67 CASES

o Occena v. CA, 73 SCRA 637 (1976)o Naga Telephone Co. v. CA, 230 SCRA 351 (1994)o PNCC v. CA, 272 SCRA 183 (1997)

Condonation or remission of the debt, 1231.3 Characteristics, 1270

o CASE: Yam v. CA, GR 104726, 11 Feb 1999 Creditor's renunciation of action, 1271-72, 1274 Effect, 1273

Confusion or merger of rights of the creditor (1231.4) Requisites, 1275

o Effects on guarantors, 1276o Effects on obligation, 1277

Compensation (1231.5) Concept. 1278, 1286, 1289-90 Requisites, 1279, 1287-88, 1282-84

o CASES Gan Tion v. CA, 28 SCRA 235 (1969) Silahis Marketing v. lAC, 180 SCRA 29 (1989) BPI v. Reyes, 255 SCRA 571 (1996) PNB v. Sapphire Shipping, 259 SCRA 174 (1996) Mirasol v. CA, 351 SCRA 44 (2001)

Kinds, 1281 3rd persons' interests

o Guarantor (of the debt), 1280o Assignee (of the credit), 1285

Novation (1231.6) Concept, 1291-92

o Changing their object or principal conditions (objective novation), 1292

CASES Miller v. CA, 38 SCRA 642 (1971) Dormitorio v. Fernandez, 72 SCRA 388 (1976) Magdalena Estate v. Rodriguez, 18 SCRA 967

(1966) Reyes v. Secretary of Justice, 264 SCRA 3 5 (

1996) Conchingyan v. RB Surety and Insurance, 151

SCRA 339 (1987) Broadway Centrum Condominium Corp v.

Tropical Hut, GR 79642, 05 Jul 1993 California Bus Lines v. State Investment, GR 14

79 50, 11 Dec 2003o Substituting the person of the debtor (subjective novation), 1293-

95 CASES

Garcia v. Llamas, 417 SCRA 292 (2003) Quinto v. People, GR 126715, 14 Apr 1999

o Subrogating a 3rd person in rights of the creditor (subrogation), 1303

Legal, 1300, 1303 CASE: Astro Electronics Corp v. Philippine

Export and Foreign Loan Guarantee Corp., GR 136729,23 Sep 2003

Conventional, 1300-01 CASE: Licaros v. Gatmaitan, GR 142838, 09

Aug 2001 Effects, 1296-99, 1304

Others (1231, p. 2) Annulment Rescission Fulfillment of a resolutory condition Prescription

o Kinds of Obligations under NCC

Pure obligations , 1179

Conditional obligations, 1181-92 Definition, 1181, 1193

o CASES Gaite v. Fonacier, 2 SCRA 830 (1961) Gonzales v. Heirs of Thomas, 314 SCRA 585 (1999)

When effective/demandable, 1181-82, 1185-86 Effects when condition fulfilled, 1187 Types of conditions

o As to effect Suspensive (condition precedent), 1188-89

CASESo Gonzales v. Heirs of Thomas, 314

SCRA585 (1999)o Coronel v. CA, 253 SCRA 15 (1996)

Resolutory (condition subsequent), 1189-90 CASES

o Parks v. Province of Tarlac, 49 Phil 142 (1927)

o Central Philippines University v. CA, 246 SCRA 511 (1995)

o Quijada v. CA, 299 SCRA 695 (1998)o As to cause/origin

Potestative, 1180, 1182, 1197 CASE: Lim v. CA, 191 SCRA 156 (1990)

Casual CASE: Naga Telephone v. CA, 230 SCRA 351

(1990) Mixed

CASESo Osmena v. Rama, 14 Phil 99 (1909)o Hermosa v. Longora, 93 Phil 971 (1953)o Taylor v. Uy Tieng Piao, 43 Phil 873

(1922)

o Smith Bell v. Sotelo Matti, 44 Phil 875 (1922)

o Rustan Pulp and Paper v. IAC, 214 SCRA 665 (1992)

o Romero v. CA, 250 SCRA 223 (1995)o As to possibility

Impossible conditions, 1183 CASE: Roman Catholic Archbishop of Manila v.

CA, 198 SCRA 300 (1991)o As to mode

Positive, 1184 Negative, 1185

When obligation ineffectiveo When condition is not fulfilled, 1184o When condition is void ab initio, 1182-83o Rescission of reciprocal obligations, 1191-92, 1189

Events pending happening of conditiono Protective action, 1188o Loss, deterioration, improvement of the thing, 1190, 1189o Prevention of fulfillment of the condition by obligor, 1189

CASES Taylor v. Uy Tieng Piao, 43 Phil 873 (1922) Herrera v. Leviste, GR 55744, 28 Feb 1985

Obligations with a Period (1193-98) In General

o Definition, 1193, 1197o For whose benefit, 1196, 1198

CASES Lachica v. Araneta, 47 OG No. 11, 5699, 04 Aug

1949 Ponce de Leon v. Syjuco, 90 Phil 311 (1951) Buce v. CA, 332 SCRA 151 (2000)

o Kinds of period Effect: suspensive, resolutory Expression: express, implied Definiteness: definite, indefinite Source: voluntary, legal, judicial

Typeso With a suspensive period (ex die), 1193o With a resolutory period (in diem), 1193

When courts may fix the duration, 1197o CASES

Araneta v. Philippine Sugar Estate Development Co., 20 SCRA 330 (1967)

Central Philippine University v. CA, 246 SCRA 511 (1998)

Incidents before arrival of periodo Loss, deterioration, or improvement of thing, 1194, 1189o Payment in advance, 1195, 1197

Alternative Obligations (1199-1206) Kinds

o Simple alternative, 1199

o Facultative, 1206 Right to choose

o In general, 1200-01, 1205o Loss of right to choose, 1200, 1202-03

Loss/Impossibilityo Liability for loss of thing/impossibility of performance, 1205o Creditor's right to indemnity for damages, 1204

Joint and Solidary Obligations (1207-22) Joint obligations

o General rule, 1207o Presumption, 1208o In case indivisible, 1209

Solidary obligationso When solidary, 1207o Kinds

Source Legal, 1915, 1945,2194,RPC 119 Conventional Real

Parties: active, passive, mixed Uniformity

Uniform Varied, 1211

CASES Ynchausti v. Yulo, 34 Phil 978 (1916) Lafarge Cement Phil. v. Continental Cement,

443 SCRA 522 (2004)o Solidary creditors' options

Can be done, 1212, 1216 Cannot be done, 1212-13

o Solidary debtors' options Pay any one of the solidary creditors, 1214 Avail of defenses, 1222

CASESo Ynchausti v. Yulo, 34 Phil 978 (1916)o Alipio v. CA, 341 SCRA 441 (2000)

o Extinguishment of solidary obligation (1215)o Change in obligation, 1215, 1219o Payment, 1217-20o Loss/impossibility, 1221

CASES Jauclan v. Querol, 38 Phil 718 (1918) RFC v. CA, O.G. No. 6, 2457 Quisumbing v. CA, 189 SCRA 325 (1990) Inciong v. CA, 257 SCRA 578 (1996)

Divisible/Indivisible Obligations (1223 -1225) Object not material, 1223 How determined, 1225 Right to damages, 1224 Partial invalidation, 1183

Obligations with a Penal Clause (1226-30)

Kinds of penal clauseo Effect: subsidiary, complementaryo Source: conventional, legalo Purpose: punitive, reparatory

Purpose of penal clauseo Ancillary obligation, 1227o Substitute for damages, 1226, 1228

CASES Makati Development Corp v. Empire Insurance

Co., 20 SCRA 557 (1967) Tan v. CA, 367 SCRA 571 (2001) Country Bankers Insurance v. CA, GR 85161,

09 Sept 1991 When penalty enforceable, 1226-27 Reduction of penalty by the judge, 1229 Nullification of penalty, 1230

PART II: CONTRACTS Concept

o Definition, 1305 CASE

GSIS v. CA, 228 SCRA 183 (1993)

o Kinds By name

Nominate lnnominate, 1307

o CASE Dizon v. Gaborro, 83 SCRA 688 (1978)

By perfection Consensual, 1315 Real, 1316

By subject matter: things, services By relationship to other contracts: preparatory, principal, accessory By nature of the vinculum produced: unilateral, bilateral, reciprocal By cause: onerous, gratuitous

o Essential Requisites, 1318 Consent of contracting parties

Consento Definition, 1319

Offer, 1321, 1323-26 Acceptance, 1320, 1322 CASES

Rosenstock v. Burke, 46 Phil 217 (1924) Malbarosa v. CA, 402 SCRA 168 (2003) Sanchez v. Rigos, 45 SCRA 368 (1972) Adelfa Properties v. CA, 240 SCRA 565 (1995) Jardine Davies v. CA, GR 389 Phil 204 (2000)

State of contracting parties Who cannot give consent, 1327-29

o Vitiated consent, 1328, 1330, State of drunkenness, 13 28 During a hypnotic spell, 1328

Mistake, 1330-34 CASES

o Asiain v. Jalandoni, 45 Phil296 (1923)o Theis v. CA, GR 126013, 12 Feb 1997o Heirs of William Sevilla, et al v. Sevilla,

402 SCRA 503 (2003)o Dumasug v. Modelo, 34 Phil252 (1916)o Hemedes v. CA, 316 SCRA 34 7 (1999)o Katipunan v. Katipunan, 375 SCRA 200

(2002) Violence, 1330, 1335-36

CASEo Martinez v. HSBC, 15 Phil 252 (1910)

Intimidation, 1330, 1335-36 Undue influence, 1330, 1337 Fraud, 1330, 1344

Active fraud, 1338, 1340-43o CASES

Songco v. Sellner, 3 7 SCRA 254 (1917)

Azurraga v. Gay, 52 Phil 599 (1928)

Laureta Trinidad v. IAC, 204 SCRA 524 (1991)

Mercado & Mercado v. Espiritu, 37 Phil 215 (1917)

Braganza v. Villa Abrille, 105 SCRA 456 (1959)

Passive fraud, 1332, 1339o CASES

Tuason v. Marquez, 45 Phil 381 (1923)

Rural Bank of Sta. Maria v. CA, 314 SCRA 255 (1999)

Object certain, 1347-49 CASES

o Bias v. Santos, 1 SCRA 899 (1961)o Tanedo v. CA, 252 SCRA 80 (1996)

Cause of the obligation, 1350-55 CASES

o Liguez v. CA, 102 Phil 577 (1957)o Carantes v. CA, 76 SCRA 524 (1977)o Sps. Buenaventura et al v. CA, 416 SCRA 263 (2003)

o In General

Contracting parties, 1308, 1312, 1317 CASE

o Gutierrez Hermanos v. Orense, 28 Phil571 (1914) Perfection, 1315-16 Privity of contracts, 1309-14

CASESo Florentino v. Encarnacion, 79 SCRA 192 ( 1977)o Coquia v. Fieldmen's Insurance Co., 26 SCRA 178 (1968)

o Constantino v. Espiritu, 39 SCRA 206 (1971 )o Integrated Packaging Corp. v. CA, 333 SCRA 171 (2000)o Daywalt v. La Corporacion de los Padres Agustinos Recoletos, 39

Phil 587(1919)o So Ping Bun v. CA, 314 SCRA 751 (1999)o Manila Railroad Co. v. La Compania Transatlantica, 83 Phil875

(1918)o DKC Holdings Corp. v. CA, 329 SCRA 666 (2000)

o Form & Substance

Form of contract, 1356-58 CASE

o Hernaez v. De los Angeles, 27 SCRA 127 6 ( 1969)

Stipulations Freedom of contract, 1306,1490-91,1782,1799,2088, 2130, Family Code 87

o CASES Gabriel v. Monte de Piedad, 71 Phil 497 (1941) Pakistan International Airlines v. Ople, 190 SCRA 90 (1990) Cui v. Arellano, 2 SCRA 205 (1961) Arroyo v. Berwin, 36 Phil 386 (1917) Filipinas Compania de Seguros v. Mandanas, 17 SCRA 391

(1966) Bustamante v. Rosel, 319 SCRA 413 (1999)

Interpretationo Plain meaning, 1370o Evident intention, 1370-71o Stipulations with different possible meanings, 1375o Interpretation of terms, 1372-73, 1376-77o Settlement of doubts, 1374, 1378o Application of the Rules of Court, 13 79o CASES

Borromeo v. CA, 47 SCRA 65 (1972) Kasilag v. Rodriguez, 69 Phil 217 (1939)

Simulation of contracts, 1345-46o CASES

Rodriguez v. Rodriguez, 28 SCRA 229 (1914) Suntay v. CA, 251 SCRA 430 (1995) Blanco v. Quasha, 318 SCRA373 (1999)

Reformation Requisites, 1359, 1365, 1368

o CASES Garcia v. Bisaya, 97 Phil 609 (1955) Beutir v. Leande, 330 SCRA 591 (2000)

When not allowed, 1365, 1367 Concurrence of grounds, 13 61 -62 3rd party fault, 1364 Applicable law, 1350, 1369

o CASES Atilano v. Atilano, 28 SCRA 2232 (1969) Carrantes v. CA, 76 SCRA 524 (1977) Sarming et al v. Dy et al, 383 SCRA 131 (2002)

Defective Contracts

o Rescissible Contracts Nature, 1383-85 When rescissible, 13 80-82, 13 86-87

CASESo Oria v. Mcmicking, 21 Phil 24 3 (1912)o Siguan v. Lim et al, 318 SCRA 725 (1999)o Suntay v. CA, 251 SCRA 430 (1995)o Universal Food Corp. v. CA, 33 SCRA 1 (1970)

When available, 1385, 1388 Prescription, 1389

o Voidable Contracts Nature, 1390 Parties, 1397, 1402

CASESo Singsong v. Isabela Sawmill, 88 SCRA 623 (1979)o Caldwallader & Co. v. Smith, Bell & Co., 7 Phil 461 (1907)o Velarde v. CA, 361 SCRA 56 (2001)

Ratification, 1392-96 CASE

o Uy Soo Lim v. Tan Unchuan, 38 Phil 552 (1918) Effect of loss of thing due, 1400-01 Effect of annulment, 1398-99 Prescription, 1391

o Unenforceable Contracts Nature, 1317 When unenforceable, 1403, 1405

CASESo Carbonnel v. Poncio, 103 Phil 655 (1958)o PNB v. Philippine Vegetable Oil Co., 49 Phil 857 (1927)o Limketkai Sons Milling Inc. v. CA, 261 SCRA 464 (1995)o Swedish Match v. CA, 441 SCRA 1 (2004)

Who may bring action, 1408 Ratification, 1317, 1407 Form, 1406

o Void/Inexistent Contracts Nature, 1409-10, 1420 When void/inexistent, 1345-46, 1490-91 , 1378, 1409, 1422, 1782, FC 87 Remedies, 1413-16

CASESo Liguez v. CA, 102 Phil 577 (1957)o Rellosa v. Gaw Cheen Hum, 93 Phil 827 (1953)o PNB v. Lui She, 21 SCRA 52 (1967)o Frenzel v. Catitu, 406 SCRA 55 (2003)

Who may bring action/defense, 1411-12, 1421 , CASES

o Ubarra v. Mapalad, AM MT J 91-622 ( 1993)o Modina v. CA, 317 SCRA 606 (1999)

Contracts imbued with public interest, 1417-19