LYCEUM

OF THE PHILIPPINES
Cavite Campus

COLLEGE OF LAW

Course Outline
OBLIGATIONS AND CONTRACTS

PART I: OBLIGATIONS


A. Preliminaries

o Definition of Civil Law
o Recall of pertinent provisions under Persons (Arts. 3, 9 & 10 NCC)
o Type of Rights (Art. 6 NCC)
o History of the Civil Code

B. In General
o Nature
i. Definition: 1156
ii. Sources: 1157-1161, 2142, 2144-2175 NCC; 2176-2184 NCC; 100 RPC
218-219; Rule 111 Revised Rules of Court

CASES
§ Ang Yu Asuncion v. CA 238 SCRA 602 (1994
§ Barreto v. Garcia, 73 Phil 607 (1942)
§ Mendoza v. Arrieta, 91 SCRA 113 (1975)
§ PSBA v. CA, 205 SCRA 729 (1992)
§ Amadora v. CA, 160 SCRA 315 (1988)
§ Sagrada Orden v. National Coconut Corporation 91 Phil
504 (1952)
§ OSG v. Ayala Land, Inc. G.R. No. 177056, September 18,
2009

 iii. Difference between an obligation, right and wrong
iv. Transmissibility: 1178
CASE: Stronghold Insurance Co. v. Republic-Asahi G.R. No.
147561 June 22, 2006

o Classifications of Obligations

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


C. Nature and Effects of Obligations

o Obligations to give:
- Specific or determinate thing (1163; 1164; 1165 pars. 1&3; 1166)
- Generic or indeterminate thing (1165, par. 2)

o Obligations to do (1167)
o Obligations not to do (1168)



E. Kinds of Obligations under NCC

o Pure obligations, 1179
CASE
§ Pay v. Palanca 57 SCRA 618
§ HSBC v. Spouses Broqueza GR No. 178610 November 17, 2010
§ Villanueva v. St. Martin GR No. 156746 July 23, 2014

o Conditional obligations, 1181-1192

i. Definition, 1181, 1193

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

ii. When effective/demandable, 1181-1182, 1185-86
iii. Effects when condition fulfilled, 1187
iv. Types of conditions
• As to effect
a. Suspensive (condition precedent), 1188-89; 1184
CASES
§ Gonzales v. Heir of Thomas, 314 SCRA 585
(1999)
§ Colonel v. CA, 253 SCRA 15 (1996)
b. resolutory (condition precedent), 1188-89
CASES
§ Parks v. Province of Tarlac, 49 Phil 142 (1927)
§ Central Philippines University v. CA, 246 SCRA
511 (1995)
§ Quijada v. CA, 299 SCRA 695 (1998)

• As to cause / origin
a. potestative 1180, 1182, 1197
CASES
§ Lim v. CA, 191 SCRA 156 (1990)
§ Rustan Pulp v. IAC GR No. 70789 October 19,
1992

b. casual
CASE: Naga Telephone v. CA, 230 SCRA 351 (1990)

c. mixed
CASES:
§ Osmena v. Rama, 14 Phil 99 (1909)
§ Hermosa v. Longora, 93 Phil 971 (1953)
§ Taylor v. Uy Tieng Piao, 43 Phil 873 (1922)
§ Smith Bell v. Sotelo Matti, 44 Phil 875 (1922)
§ Rustan Pulp and Paper v. IAC, 214 SCRA 665
(1992)
§ Romero v. CA, 250 SCRA 223 (1995)

• As to possibility
a. impossible conditions, 1183
CASES
 § Roman Catholic Archbishop of Manila v. CA, 198
SCRA 300 (1991)
§ Heirs of San Miguel v CA G.R. No. 136054
September 01, 2001

•As to move
a. Positive, 1184
b. Negative, 1184

v. When obligation ineffective
• when condition is not fulfilled, 1184
• when condition is void ab initio, 1182-1183

vi. Events pending happening of condition
• Protective action, 1188
• Loss, deterioration, improvement of the thing, 1190, 1189
• Prevention of fulfillment of the condition by obligator, 1189
CASES
§ Taylor v. Uy Tieng Piao, 43 Phil 873 (1922)
§ Herrera v. Leviste, GR 55744, 28 Feb 1985


o Obligations with a Period (1193-1198)
i. In General
• Definition, 1193, 1197
CASE: Solante v. COA G.R. No. 207348 August 19, 2014

• When considered with a period, 1180
• For whose benefit, 1196, 1198
CASES
§ Lachina 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)
§ LL and Co. v. Huang Chao G.R. No. 142378 March 07, 2002

ii. Kinds of period
• Effect
a. suspensive
b. resolutory
• expression
a. express
b. implied
 • definiteness
a. definite
b. indefinite

• source
a. voluntary
b. legal
c. judicial


iii. Types
• with a suspensive period (ex die), 1193
• with a resolutory period (in diem), 1193

iv. When courts may fix the duration, 1197
CASES
§ Araneta v. Philippine Sugar Estate Development Co., 20
SCRA 330 (1967)
§ Central Philippine University v. CA, 246 SCRA 511
(1998)
v. Incidents before arrival of period

• Loss, deterioration, or improvement of thing, 1194, 1189
• Payment in advance, 1195, 1197


o Joint and Solidary Obligations (1207-22)
i. Joint obligations
• General rule, 1207
• Presumption, 1208
CASE: PH Credit v. CA G.R. No. 155173 November 23, 2004

• In case indivisible, 1209

ii. Solidary obligations
• When solidary, 1207
CASE: Inciong v. CA G.R. No. 96405 June 26, 1996

• Kinds
a. legal, 1915, 1945, 2194, RPC 119
b. conventional
c. real


• parties
a. active
b. passive
c. mixed

• uniformity
a. uniform
b. varied, 1211
CASES
§ Ynchausti v. Yulo, 34 Phil 978 (1961)
§ Lafarge Cement Phil. v. Continental Cement, 443 SCRA 522
(2004)

• Options for solidary creditor 1212-1213; 1216
CASES:
§ Quisumbing v CA G.R. No. 93010 August 30, 1990
§ PNB v. Independent Planters Ass’n. G.R. No. L-28046 May
16, 1983


• Options for solidary debtor
a. pay any one of the solidary creditors, 1214
b. avail of defenses, 1222
CASES
§ Ouano Arrastre Service, Inc. v. Aleonar G.R. No. 97664
October 10, 1991
§ Alipio v. CA, 341 SCRA 441 (2000)


• Extinguishment of solidary obligation (1215)
a. Change in obligation, 1215, 1219
b. Payment, 1217-1220
c. 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)

 o Divisible / Indivisible Obligations (1223-1225)
i. Object not material, 1223
ii. How determined, 1225
iii. Right to damages, 1224
iv. Partial invalidation, 1183
CASE: Velasco Sep. Op. in Capilla v. COMELEC G.R. No. 201112, 201121,
201127, 201413 October 23, 2012


o Alternative Obligations (1199-1206)
i. Kinds
• simple alternative, 1199. Lim G.R. No. 206806 June 25, 2014
CASE: Arco Pulp and Paper Co. Inc. v
• facultative, 1206

ii. Right to choose
• In general, 1200-1201, 1205
• Loss of right to choose, 1200, 1202-03
iii. Loss/Impossibility
• Liability for loss of thing/impossibility of performance, 1205
• Creditor’s right to indemnity for damages, 1204

o Obligations with a Penal Clause (1226-1230)
i. Kinds of penal clause
• effect
a. subsidiary
b. complementary
• source
a. conventional
b. legal
• purpose
a. punitive
b. reparatory
CASE: Florentino v. Supervalue G.R. No. 172384 September 12,
2007

ii. Purpose of penal clause
• Ancillary obligation, 1227
• 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
§ Florentino v. Supervalue G.R. No. 172384 September 12,
2007

iv. When penalty enforceable, 1226-1227
v. Reduction of penalty by the judge, 1229
CASES:
§ Makati Development Corp v. Empire Insurance Co., 20 SCRA 557
(1967)
§ Filinvest Land Inc. v. CA G.R. No. 138980 September 20, 2005
§ Florentino v. Supervalue G.R. No. 172384 September 12, 2007

vi. Nullification of penalty, 1230

F. Non-Performance of Obligation/Breach

o Concept/ Distinction
i. Types of Breach
• substantial
• casual
CASES
§ Woodhouse v. Halili, 93 Phil 526 (1953)
§ Geneldez v. CA, 361 SCRA 56 (2001)

o Modes
i. Fraud (dolo): 1171
CASES
§Legaspi Oil Co. v. CA G.R. No. 96505 July 01, 1993
§Woodhouse v. Halili, 93 Phil 526 (1953)
§Geraldez v. CA, 230 SCRA 329 (1994)

• Standard of care/diligence: 1163, 1173
CASES
§ Picart v. Smith
§ De Guia v. Manila
§ US v. Barias, 23 Phil 434 (1912)
§ Sarmiento v. Sps. Cabrido, 401 SCRA 122 (2003)
§ Crisostomo v. CA, 409 SCRA 528 (2003)

ii. Negligence (culpa): 1171-73, 2201.2
CASES
§ Gutierrez v. Gutierrez, 56 Phil 177 (1932)
§ Vasquez v. Borja, 74 Phil 560 (1944)

iii. Delay (mora)
a. In unilateral obligations: 1169
a.1 mora solvendi

CASES

§ Cetus Development Corp. v. CA, 176 SCRA 72

(1989)
§ Santos Ventura Hocorna Foundation v. Santos, GR
153004, 04 Nov 2004
§ Vasquez v. Ayala Corp., GR 149734, 19 Nov 2004
§ Abella v. Francisco, 55 Phil 447 (1931)
§ RCBC v. CA G.R. No. 133107 March 25, 1999
§ Aerospace v. CA G.R. No. 108129 September 23,
1999

a.2 mora accipiendi
CASES
§ Vda. de Villaruel v. Manila Motor Co., 104 Phil 926
(1958)
§ Tengco v. CA, GR 49852, 19 Oct 1989

a.3 Compensation morae
CASES
§ Central Bank v. CA, 139 SCRA 46 (1985)

b. in reciprocal obligations: 1159, 1192

c. Contravention of tenor of obligation

CASES

§ Chavez v, Gonzales, 32 SCRA 547 (1970)

§ Telefast v. Castro, 158 SCRA 445 (1988)
§ Arrieta v. NARIC, 10 SCRA 79 (1964)
§ Magat v. Madialdea, GR L-37120, 20 Apr 1983

 d. Fortuitous Event 1174; Arts. 1163 par. 3; 552 par. 2; 1942; 1979;
2001; 2147
CASES:
§ Tanguiling v CA G.R. No. 117190 January 2, 1997
§ Nakpil & Sons v CA G.R. No. L-47851 October 3, 1986
§ Dioquino v. Laureano G.R. No. L-25906 May 28, 1970
§ Philippine Communicators v Globe G.R. No. 147324 May 25,
2004

o Remedies for Non-Performance

i. Available actions
• Performance: 1165
a. Obligation to Give
a. 1 specific performance
to deliver
- specific/ determinate thing: 1244, 1170, 1165.1, 1176
- generic thing: 1246

to preserve: 1163
to deliver all its accessions: 1166, 1164
- 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)

a.2 substituted performance: 1165.3

b. Obligation to do: 1167
CASES
§ Chavez v. Gonzales, 32 SCRA 547 (1970)
 § Tanguling v. CA, 266 SCRA 78 (1997)

c. Obligation Not to Do: 1168

• Damages 1170
a. Unilateral obligations: 1171
b. reciprocal obligations: 1192

• Rescission: 1191-1192
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 323 (1989)
§ Angeles v. Calasanz, 135 SCRA 323 (1985)
§ Ong v. CA, 310 SCRA 1 (1999)
§ Visayan Sawmill v. CA, 219 SCRA 378 (1993)
§ Deiparine v. CA, 221 SCRA 503 (1993)
§ Iringan v. CA, 366 SCRA 41 (2001)
§ Vda. de Mistica v. Sps. Naguiat, 418 SCRA 73 (2003)
o See also: 1786, 1788, 1484-86, RA 6552

ii. Subsidiary Remedies
• accion subrogatoria: 1177, 772
• accion pauliana: 1177, 1381
CASES
§ Khe Hong Seng v. CA 355 SCRA 701 (2001)
§ Siguan v. Lim 318 SCRA 725 (1999)
• Others: 1652, 1729, 1608, 1893

iii. Extinguishment of Liability: 1174
• CASES
§ Juan Napkil & 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, GR L-47379, 161 SCRA 334
§ Bacolod-Murcia Milling v. CA, 182 SCRA 24 (1990)
§ Philcomsat v. Globe Telecom, 429 SCRA 153 (2004)

• Exceptions: 1174, cf. 1165, 552, 1942, 1979, 2001, 2147

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


G. Extinguishment of Obligation

o Payment or performance, 1231.1
i. Definition, 132
ii. How made
• Ways, 1233,1248-1250, RA 8183
• No subtitution,14,1246
• Costs of expense, 1247
CASES
§ Arrieta v. NARI, 10 SCRA 79(1964)
§ Kalalo v. Luz, 34 SCRA 377(1940)
§ St. Paul Fire and Marine Insurance v. Macondray, 70
§ Papa v. A.V.Valencia, 248 SCRA643(1998)

iii. By whom
• Debtor
• 3rd person, 236-39,1247

iv. To whom
• Creditor, 1240-41
• 3rd person, 1241-42

v. Where made,1251
vi. Application,1252-54
CASES
§ Reparations Commission v. Universal Deep Sea Fishing, 83 SCRA
764(1978)
§ Paculdo v. Regalado, 345 SCRA 134(2000)

vii. Invalid payment, 1243
viii. Other forms of payment
• Cession, 1255
• Dation in payment, 1245
CASES
 § DBP v. CA, GR 118342, 05 Jan 1998
§ Filinvest Credit Corp. v. Philippine Acetylene, 111 SCRA
421(1982)
• Tender of payment and consignation
a. Requisites, 1256-57
b. How made,1258
c. Effect of withdrawal, 1260-61
d. 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 (1983)
§ Soco v. Militante, 123 SCRA 160 (1983)
§ Soco v. Mijares, 28 SCRA 17 (1969)
§ Meat Packing Corp. v. Sandiganbayan, 359 SCRA 409(2001)
§ Pabugais v. Sahijwani, 423 SCRA 596 (2004)


o Loss of thing due/Impossibility of performance, 1231.2

i. Loss of thing due (obligation to give)
• Obligation to deliver a determinate thing, 1262,1268-69
• Obligation to deliver a generic thing, 1263
• Partial loss, 1264
• Presumptions, 1265, 1165
ii. Impossibility of performance (obligation to do), 1266-67
CASES
Occena v. CA, 73 SCRA 637 (1976)
§
Naga Telephone Co. v. CA, 230 SCRA 351(1994)
§
PNCC v. CA, 272 SCRA 183(1997)
§
PAL v. CA, 18 SCRA 557(1990)
§

o Condonation or remission of the debt, 1231.3
i. Characteristics, 1270
CASE: Yam v. CA, GR 104726, 11 Feb 1999
ii. Creditor’s renunciation of action, 1271-72, 1274
iii. Effect, 1273

 o Compensation, (1231.5)
i. Concept, 1278,1286, 1289-90
ii. Requisites, 1279, 1287-88, 1282-84
CASES
§ Gan Tion v. CA, 28 SCRA 235 (1969)
§ Silahis Marketing v. IAC 180 SCRA 29 (1989)
§ BPI v. Reyes, 225 SCRA 571 (1996)
§ PNB v. Sapphire Shipping, 259 SCRA 174 (1996)
§ Mirasol v. CA, 351 SCRA 44 (2001)
iii. Kinds, 1281
iv. 3rd persons’ interests
a. guarantor (of the debt), 1280
b. assignee (of the credit), 1285

o Novation (1231.6)
i. Concept, 1291-92
• changing their object or principal conditions (objection 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 35 (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 147950, 1
Dec 2003

• substituting the person of the debtor (subjective novation), 1293-95
CASES
§ Garcia v. Llamas 417 SCRA 292 (2003)
§ Quintoy v. People, GR 126715, 14 Apr 1999

• subrogating a 3rd person in rights of the creditor (subrogation), 1303
a. legal, 1300,1303
CASE: Astro Electronics Corp v. Philippine Export and Foreign
Loan Guarantee Corp., GR 136729, 23 Sep 2003

b. conventional, 1300-01
• CASE: Licaros v. Gatmaitan, GR 142838, 09 Aug 2001

 ii. Effects, 1296-99, 130

o Others (1231, p. 2 and others)
i. annulment
ii. rescission
iii. fulfillment of a resolutory condition
iv. prescription, 1106-1116
v. compromise, See generally 2028-41


- oOo-