Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
I. Concept
B. Elements of an Obligation
A. Definition- Article 1156 (CC)
1. Active Subject
Art. 1156. An obligation is a
a. Also known as the obligee,
juridical necessity to give, to do or
or creditor. He possesses a
not to do.
right or credit.
b. He has the right to demand
Sanchez-Roman Definiton:
an object.
An obligation is the creation of a
juridical relation, created by virtue of c. Reyes-Puno: A person
certain facts, between two or more endowed with the optional
persons, whereby one of them, power to demand the
known as the creditor or obligee, observance of a certain
may demand of the other, known as behaviour (activity) by
the debtor or obligor, a definite another, and if necessary,
prestation. coerce such behaviour,
directly or indirectly
Criticism of Definition 2. Passive Subject
a. Also known as the
According to J.B.L. Reyes, this obligor, or debtor
definition is incomplete. It is one- b. He has the duty of
sided because it views obligations giving, doing or not doing.
only from the side of the debts. It is c. The debt is the duty to
imperfect because it only applies to give, to do or not do
all kinds of legal duty. d. Reyes-Puno: A person
who must behave (act or
There is no debt without a credit, not act) in a determined
and the credit is an asset in the way for the satisfaction of
patrimony of the creditor just as the the creditor’s private
debt is a liability of the obligor. interest.
“Also, the new code separates 3. Prestation or Object
responsibility from other elements The object of an obligation is
of the obligation and only establishes the prestation (the conduct, to
its existence way near the end, in give, to do or not to do) that
article 2236.” (Tolentino) the debtor should observe. The
obligation represents a
Finally, this definition only applies to restraint on the liberty of
civil obligations, not natural another, but a restraint limited
obligations. (See C. Distinction in its extent. The object of an
Between Natural and Civil obligation is always a
Obligations) prestation. It must be possible,
determinate and have a
pecuniary value.
1) As to enforceability:
B. Contracts (Art. 1159, 1305)
Civil Obligations: Those which give
a rise to a right of action. They can Art. 1159. Obligations arising from
be enforced by court action. contracts have the force of law
between the contracting parties and
Natural Obligations: Those which should be complied with in good
cannot be enforced by legal action, faith.
but which are binding on the party
who makes them in conscience and Art. 1305. A contract is a meeting
according to equity and natural of the minds between two persons
justice. They are enumerated in whereby one binds himself, with
Articles 1423-1430 of the Civil respect to the other, to give
Code. They depend exclusively on something or to render some service.
the good conscience of the debtor.
-Reyes-Puno: Contracts are
2) As to basis: characterized by a previous
accord of wills or intention.
Civil Obligations: Civil obligations This determines the nature and
derive their binding force from extent of the resulting
positive law. obligation, within legal limits.
(1) Law;
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 3
Art. 2142. Certain lawful, Art. 2154. If something
voluntary and unilateral acts give is received when there is no
rise to the juridical relation of quasi- right to demand it, and it was
contract to the end that no one shall unduly delivered through
be unjustly enriched or benefited at mistake, the obligation to
the expense of another. return it arises.
In the second case, the FACTS: Petitioner is the sole proprietor of the
rules on agency in Title X of Malate Taxi Cab driven by Pedro Fonatilla,
this Book shall be who figured in a head on collision with a
applicable. carratela driven by Pedro Dimapiling. This
resulted in the death of one of the carratela’s
b. Solutio Indebiti passengers, 16 year old Faustino Garcia.
Garcia’s parents filed a case before the CFI of
Manila against Barredo, who employed
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 4
Fontanila. Fontanilla had already been
caught several times in violation of the RATIO:
Automobile Law. Petitioner maintains that, 1) Article 31 of the Civil Code states that
since it was Fontanilla’s negligence that led when the civil action is based on an obligation
to the the death of Garcia, petitioner’s not arising from the act or omission
liability was governed by the RPC, and was complained of as a felony, such a civil action
therefore subsidiary to Fontanilla’s. may proceed independently of the criminal
However, Garcia’s parents, as maintained by proceedings and regardless of the result of
the CA, held that Barredo was liable under the latter.
Art. 1903 of the old Civil Code, which states
that employees, owners or directors are A civil action under quasi-delict may proceed
equally liable for damages caused by their independently of criminal proceedings for
employees. No civil case was filed against criminal negligence, and may prosper
Fontanilla. regardless of the result.
ISSUE: WON Barredo may be charged as 2) The trial court ruled that the collision
the person liable for the negligence of his between Salazar and Mendoza’s vehicles was
employee. YES. a result of the truck hitting Salazar’s jeep in
the rear. It is believed that Salazar cannot be
RATIO: Culpa aquiliana or quasi-delicts held liable for damages sustained by
anchor the responsibility of employers, Mendoza’s car. Petitioner Mendoza based his
under Article 1903 of the old Civil Code. cause of action against Salazar on culpa
There is a distinction between civil liability criminal (under Article 100 of the RPC) and
arising from criminal negligence (governed not under culpa aquiliana (Article 2177 of the
by Article 100 and 103 of the RPC) and CC).
responsibility under Art. 1902-1910 of the
old Civil Code. The employers are primarily PSBA vs. CA, BAUTISTA & BAUTISTA
and directly responsible under Article 1903.
Quasi-delicts are a more expedient way of FACTS: PSBA student Carlitos Bautista was
seeking redress than seeking damages only stabbed by assailants who were not students
by virtue of the civil responsibility arising of the said school) on August 30, 1985. His
from a criminal action. parents filed a case for damages in the RTC of
Manila. Then-respondent (now petitioner)
PSBA and its officials asked that the case be
MENDOZA vs ARRIETA (Judge of dismissed on the grounds that since they
CFI were presumably sued under Article 2180 of
Mla), TIMBOL & SALAZAR the Civil Code, no cause of action exists since
jurisprudence showed that academic
FACTS: Petitioner assails the decision of the institutions such as PSBA, are beyond the
CFI of Manila, dismissing his complaints ambit of the rule. The RTC denied them twice,
against jeepney driver Salazar, and truck as did respondent CA. The CA ruled that
owner Timbol, seeking indemnification for Article 2180 should apply to all institutions of
damages sustained by his Mercedes Benz. learning. Also, the school must prove they
Petitioner, prior to filing the case, actively observed diligence in order to prevent
participated in the criminal prosecution damages.
against Salazar, which was dismissed by the
CFI of Bulacan. Truck driver Montoya was ISSUE:
found guilty of damages to Salazar. No
damages were granted to Mendoza, since he 1) WON petition of PSBA was rightfully
was not a complainant against Montoya, but dismissed by the CA. YES
against Salazar. Petitioner’s cause of action 2) WON CA’s ruling was founded on
was based on quasi-delict, which was a appropriate legal premises. NO.
negligent act causing damages creating a
civil liability arising from a crime. RATIO:
ISSUES:
1) Article 2180 establishes the rule of in loco
1) WON petitioner had a cause of action parentiis, which states that damage caused or
against Timbol. YES. inflicted by pupils or students of an education
institution were liabilities of said institution
2) WON petitioner had a cause of action while in its custody. Remember, Carlito’s
against Salazar. NO. assailants were not from PSBA.
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 5
plaintiff airline forced private respondent to
2) Upon enrolment of Carlitos to PSBA, a abandon his seat because a “white man” had
contract existed between them, resulting in a “better right” to the seat. In the course of a
bilateral obligations. This includes an fracas or commotion, respondent reluctantly
implicit obligation by the school to provide gave up his seat. Petitioner asserts that the
their student with an atmosphere of learning first class ticket given to respondent did not
and safety. represent their complete and full
The rule on quasi-delicts does not apply. intent/agreement, since the respondent knew
The trial court proceedings must continue in that he did not have continued reservation s
order to determine that there was a breach for first class on any specific flight. To them,
of contract between the school and Bautista. it was no guarantee that he would be
accommodated in the first class
AMADORA vs CA, COLEGIO DE SAN compartment. Said ticket was supposedly
JOSE RECOLETOS subject to confirmation in Hong Kong. This
was held by petitioner, despite the ‘written
FACTS: Student Alfredo Amadora was shot evidence’ and the exhibits presented by
by his classmate Pablito Daffon, resulting in private respondent, confirming the payment
his death. Both were students of and receipt of said ticket. Respondent court
respondent school Amadora came to school affirmed the CFI’s award of damages to
to submit a requirement for his physics private respondent, on the basis of private
class. Amadora’s parents, the petitioners in respondent, suffering inconvenience,
this case, were able to win in its case with humiliation, and embarrassment, mental
the CFI of Cebu. The school’s rector, anguish and other conditions which resulted
principal, dean of boys, and physics teacher in moral damages. Petitioner claims that
were ordered to indemnify the parents, since respondent claimed action on the basis
granting them damages. The CA reversed of breach of contract, authorizing such an
the decision, on the basis that Article 2180 award would need to show averment of fraud
of the CC was not applicable since the or bad faith. Petitioner claims respondent
school was not a school of arts and trade, Court of Appeals’ ruling did not show a finding
but an academic institution of learning. of bad faith.
Also, the school claimed the said students
were not in the custody of the school since ISSUE: WON CA failed to show bad faith in
the semester had already ended. They also breach of contract between respondent and
claimed that they exercised necessary petitioner. NO.
diligence in preventing the injury.
Petitioners contend that Amadora was in RATIO: Petitioner entered into a contract
school to submit a physics experiment, and with respondent, wherein respondent was
thus was under their care. entitled to a first class seat on their air
carriage. Granted, there is no mention of bad
ISSUE: WON CA was correct in dismissing faith in the ruling of the CA. But the inference
the petition of Amadora. YES. of bad faith is to be drawn from the facts and
circumstances presented. Said bad faith was
RATIO: The rector, principal and dean of to be drawn based on evidence, which
boys were not liable because none of them petitioner did not object to.
was the teacher-in-charge, who was the one
considered liable under Article 2180. The Liability from tort may exist even if there is a
school itself cannot be held liable; only the contract, for that act breaks the contract and
“teacher-in-charge” or head of the school may also be a tort.
would be liable. The dean of boys would
have been liable, but the evidence regarding
the gun does not link him to the shooting.
1. Mora solvendi
(delay of the
obligor) CETUS DEVT CORP VS .CA
Petitioner Cetus Dev’t demanded payment of
Requisites: the rentals when the obligation matured.
Coupled with the fact that no collector was
sent, the private respondents cannot be guilty
1) A prestation that is
of mora solvendi o delay in the payment of
due and enforceable
rentals. Petitioner failed to show that id not
2) A civil obligation
have to demand from private respondents,
3) Arises only when
under any of the conditions presented in
the delay is due to
Article 1169 of the Civil Code. Petition
causes imputable to
denied.
the debtor
AEROSPACE CHEMICAL INDUSTRIES vs
Reyes-Puno: Delay of
CA & PHIL PHOSPHATE
the obligor may only
come about as a result
Respondent required petitioner to ship out the
of a positive act or
sulphuric acid as agreed, otherwise petitioner
prestation.
would be charged for consequential damages.
Respondent made a categorical demand.
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 15
Respondent, on August 6, informed Requisites:
petitioner of charges of 2,000/day.
Petitioner is guilty of delay after private 1) That the obligation should
respondent made the necessary require an act of
extrajudicial demand by requiring petitioner cooperation of the creditor
to lift the cargo at its designated ports. Its for its fulfilment
failure to comply led to its liabilities. Since 2) That the debtor has done all
petitioners made an advance payment for that is incumbent upon him
the unlifted acid, it is lawful to offset the and has made tender of
amount against the rental expenses performance or payment
incurred by respondent. Petition denied. 3) That the creditor refuses to
CA decision affirmed. accept payment or fails to
carry out an act incumbent
SANTOS VENTURA HOCORMA vs upon him
SANTOS
Art. 1268. When the debt of a thing certain
Respondent’s right to damage is based on and determinate proceeds from a criminal
delay. The payment as stated in the offense, the debtor shall not be exempted
Compromise Agreement, must be made from the payment of its price, whatever may
within 2 years. The compromise was made be the cause for the loss, unless the thing
by the parties to avoid litigation. When having been offered by him to the person who
demand was made on October 28, 1992, should receive it, the latter refused without
the obligation was already due and justification to accept it. (1185)
demandable. It was an extrajudicial demand
done in compliance with the law. Petition VDA DE VILLARUEL vs MANILA MOTOR
denied. CORP
ABELLA vs FRANCISCO.
3. Compensation Morae
The period was an essential element of the
obligation. The local court rightly Requisites:
considered that period was essential in an 1) It must be a bilateral
option to purchase the lots. Decision of obligation
CFI Rizal affirmed. 2) With reciprocal prestations
Vs
Art. 2209. If the obligation consists Cases are rendered moot and academic
in the payment of a sum of money, by virtue of the repeal of CB 416.
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 24
A. Concept – a future and The transfer of the TCT was precisely needed
uncertain event upon which by petitioner to ensure that he would own the
an obligation depends land free of legal encumbrance. Only when
securing the right to dispose of the land for
-dependent on future or the petitioner to give down payment in
uncertain event upon which fulfilment of the contract.
an obligation or provision is
dependent on (the use of “or” 2. Kinds of Conditions
is actually a mistake)
a. As to effect on obligation -
-the acquisition or resolution Art. 1181. In conditional
of rights depend on a future obligations, the acquisition of
and uncertain event, by virtue rights, as well as the
of those who execute the extinguishment or loss of those
juridical act already acquired, shall depend
upon the happening of the
B. Vs. Term event which constitutes the
condition.
Period/Term – an event
which is not uncertain, but (see Gonzales vs Heirs of
must necessarily happen (ex. Tomas)
death of a person)
i. Suspensive (condition
precedent)
Condition Term/Period
-If the suspensive condition
A future and Not uncertain but
happens, the obligation arises.
uncertain event must necessarily
In other words, if the condition
happen
does not happen, the obligation
There is uncertainty It must necessarily
does not come into existence.
as to when the day come.
will come; uncertain
-retroactive effect when
when it will happen
obligation is fulfilled –
Ex. Death of A ahead Ex. Until A dies;
of B; “when I pass “when my means
the bar” permit” Art. 1187. The effects of a
conditional obligation to give,
Note: A past event unknown to the parties once the condition has been
cannot be a condition for the knowledge of fulfilled, shall retroact to the
the parties cannot prevent the obligation day of the constitution of the
from being demandable. obligation. Nevertheless, when
the obligation imposes
reciprocal prestations upon the
GAITE vs FONACIER parties, the fruits and interests
during the pendency of the
The shipment or local sale of iron ore is not condition shall be deemed to
a condition to the payment of the balance of have been mutually
65,000 pesos. It is a period or term. A compensated. If the obligation
conditional obligation’s obligatory force is is unilateral, the debtor shall
subordinated to the happening of a future appropriate the fruits and
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 26
interests received, unless
from the nature and
circumstances of the
obligation it should be
inferred that the intention of
the person constituting the
same was different.
Herrera may not redeem the property. Art. 1192. In case both parties have
Petitioner’s loss was due to his failure to committed a breach of the obligation,
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 32
the liability of the first infractor shall fault or fraud of
be equitably tempered by the courts. defendant, creating
If it cannot be determined which of liability for damages and
the parties first violated the contract, entitling other party to
the same shall be deemed ask for rescission
extinguished, and each shall bear his
own damages. a. one single breach
except in contrary
1. Concept stipulation, or sale in
instalments
Reciprocal Obligations
– those which arise from
the same cause and in
which each party is a b. an action must be
debtor and a creditor of filed or a notarial
the other, such that the demand made
obligation of one is
dependent upon the -damages must be
obligation of the other. adjudicated in the
They are to be performed same action for
simultaneously, so that rescission
the performance of one is
conditioned upon the -rescission may
simultaneous fulfilment. not be for slight or
casual breach, but only
2. Alternative for breaches so
Remedies substantial as to defeat
Of Injured Party in case the object of the parties
of Breach in making the
agreement
a. Action for
Fulfillment ii. How made
-ask for specific
performance of the -rescission takes place
obligation upon declaration of the
injured party
-payment for damages
-party should apply to
-if fulfilment is no courts for a decree of
longer possible, rescission or resolution
rescission with
damages to injured -when injured party has
party may be fulfilled. already performed,
judicial action must be
-it does not affect third undertaken.
parties
iii. Effects
-no partial rescission
and partial fulfilment/ -extinguished obligatory
no simultaneous relation as if it never
specific performance existed
and rescission
-equivalent to unmaking
b. Action for Rescission and invalidating the
juridical tie
-a power, by
declaration of the -it is the duty of the
injured party court to require both
parties to surrender
i. Requisites what they have
1) breach must be by respectively received
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 33
violated may act as if contract were
-rescission abrogates rescinded, but proceeds at its own risk.
the contract in all parts Although only the final judgment may
determine the correctness of the action,
-defendant’s sole duty judicial action is needed to ascertain the final
is to return what he award and resolution. The court erred in
has received, with punishing UP for simply protecting its own
legal interest (no interest.
attorney’s fees);
return to plaintiff as SIR JJ: This case changes the rule
well regarding rescission.
1) Time was not explicitly provided as Petitioner and respondents entered into a
essential to the contract. It was an absolute contract of sale. The vendor obligates himself
contract of sale. to transfer ownership and to deliver a
determinate thing to the buyer, who in turn,
2) Delivery did take place. is obliged to pay a price in money or its
equivalent. Both parties fulfilled their
Article 1191 obligation. It became a contract between
In all mortgagor and mortgagee, and is a perfected
contracts contract of sale. Rescission is not a principal
involving action retaliatory in character, but becomes
reciprocal subsidiary when it is available only in absence
obligations, of any legal remedy. Foreclosure here is a
Article 1191 specific provision found in the contract
is ALWAYS between the parties. Mortgage has the
applied. option of seeking fulfilment or suing for
breach, If the contract is rescinded, property
DEIPARINE vs CA & CARUNGAY & reverts to mortgagee.
TRINIDAD
1. Concept – in facultative
obligations, only one thing is IV. JOINT AND SOLIDARY
due. But the debtor has
OBLIGATIONS
reserved the right to
substitute it with another. In
a facultative obligation, loss of A. Joint Obligations
that which may be given as
substitute does not affect the 1. Concept: A joint obligation
delay. is one in which each of the
debtors is liable only for a
-In facultative proportionate part of the debt
obligations, the choice and each of the creditors is
never falls on the entitled only to a proportionate
creditor. The creditor part of the debt. Each creditor
can never refuse or can only recover his share of
reject the substitution the obligation and each debtor
can be made to pay only his
2. Distinguished from part.
Alternative Obligation
-Obligations existing between
several persons, among whom
ALTERNATIVE FACULTATIVE
the benefit or the burden of the
1. Several 1. Only one principal
obligation is divided.
prestations due; prestation due, but
many constitute accessory only as
prestations that are means to facilitate A. Requisites
part of the payment. 1. Plurality of
obligation. Subjects: More
2. Nullity of one 2. The nullity of the than one creditor or
prestation does not principal prestation debtor or both
invalidate the invalidates the
obligation which is obligation and the 2. Determination of
still in force. creditor cannot shares in the
demand the demandability or
substitute even when the fulfilment of
this is valid.
the obligation:
3. Loss of one 3. Loss of the
Shares may be
alternative substitute due to
unequal, but the
prestation due to debtor’s fault does
presumption is that
debtor’s fault not render him liable
shares are equal, if
renders him liable if for damages
from the law, the
the choice is by the
nature or the
creditor.
wording of the
4. Choice may be 4. Substitution is obligation, the
granted to the always at the
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 41
contrary does not
appear. -When two persons are
liable under a contract
Shares shall be or under a judgment,
considered distinct and no words appear
from one another in the contract or
subject to rules of judgment to make
court governing each liable for the entire
multiplicity of suits obligation,
the presumption is that
B. Words used to their obligation is joint
indicate and each debtor is liable
Joint Obligations only for a proportionate
-“We promise to pay” part of the obligation.
used by two or more
signers -It is not necessary that
the agreement should
use precisely the word
2. Presumption- Art. 1207, 1208 “solidary” for an
obligation to do so.
When a final judgment
Art. 1207. The does not specify that it
concurrence of two or is solidary liability, it is
more creditors or of presumed joint.
two or more debtors in
one and the same
3. Effects- Art. 1207, 1208
obligation does not
imply that each one of
a. Extent of liability of
the former has a right
debtor
to demand, or that
b. Extent of right of creditor
each one of the latter
is bound to render,
1. The demand by one creditor upon
entire compliance with
one debtor, produces the effects of
the prestation. There is
default only with respect to the
a solidary liability only
creditor who demanded and the debtor
when the obligation
on whom the demand was made, but
expressly so states, or
not with respect to the others.
when the law or the
nature of the
2. The interruption of prescription by
obligation requires
the judicial demand of one creditor
solidarity.
upon a debtor, does not benefit other
creditors nor interrupt the prescription
Art. 1208. If from as to other debtors. Partial payment or
the law, or the nature acknowledgment made by one of the
or the wording of the debtors does not stop the running of
obligations to which the statute of limitations against the
the preceding article others.
refers the contrary
does not appear, the 3. The vices of each obligation arising
credit or debt shall be from the personal defect of a
presumed to be particular debtor or creditor does not
divided into as many affect the obligation or rights of the
shares as there are others.
creditors or debtors,
the credits or debts 4. The insolvency of a debtor does not
being considered increase responsibility of his co-
distinct from one debtors nor does it authorize a creditor
another, subject to the to demand anything from his co-
Rules of Court creditors.
governing the
multiplicity of suits.
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 42
5. Res judicata is not extended from equivalent, the creditor
one debtor to another in a joint renounces the
divisible obligation. enforcement of the
obligation, which is
Divisible- each creditor may extinguished in its
independently demand and entirety or in that part
compel performance of his or aspect of the same to
share of the credit which the remission
c. In case of novation, refers. It is gratuitous.
compensation, confusion
(Art. 1277), remission
i. Legal
b. As to parties bound
Art. 1915. If two or i. Active: solidarity of
more persons have creditors, each having
appointed an agent for the right to collect from
a common transaction the common debtor
or undertaking, they
shall be solidarily liable -its essence consists of
to the agent for all the the authority to claim
consequences of the and enforce the rights of
agency. all, with the resulting
-co-principals to obligation of paying
a common anyone what belongs
agent to him.
3. Effects
-with different periods a. Solidary creditor in
and conditions for each relation to:
1. common debtor –
effects right to demand
b. Solidary debtor in
relation to: ii. solidary co-debtor
in case of fortuitous
Art. 1218. Payment event- Art. 1221
by a solidary debtor
shall not entitle him to Art. 1221. If the thing
reimbursement from has been lost or if the
his co-debtors if such prestation has become
payment is made after impossible without the
the obligation has fault of the solidary
prescribed or become debtors, the obligation
illegal. shall be extinguished.
-death of principal
debtor only bars
execution against
debtor’s estate, not
nature of obligation
RFC vs CA itself
ii. personal defenses
The obligation to pay the balance had -partial or total defense
already been assumed by RFC. With no
other conditions other than the title first be -those which annul
conveyed to Dominguez and the lien consent
registered.
iii. defenses pertaining to
QUIOMBING vs CA his share
-integrity: fulfilled
completely
B. Indivisible Obligations
1. Concept: when it cannot be
validly performed in parts
a. Distinguished from
solidary obligations
indivisibility: prestations
or object of the obligation
B. Requisites
1. the person who pays
2. the person to whom 1236 par. 1 The
payment is made creditor is not bound to
3. the thing to be paid accept payment or
4. the manner, time and performance by a third
place of payment, etc. person who has no
interest in the fulfillment
1. Who can pay of the obligation, unless
a. in general: the debtor or there is a stipulation to
his duly authorized agent the contrary.
i. effect of incapacity
7. Expenses of making payment- If the debtor does not declare to which debts
Art. 1247. . Unless it is the payment is to be applied, no payment is
otherwise stipulated, the to be made to a debt that is not yet due. All
extrajudicial expenses payments are to be made and applied to the
required by the payment shall Fairview Wet Market. Consent of the debtor
be for the account of the must be clear and definite. That which is
debtor. With regard to judicial most onerous to the debtor must be applied
costs, the Rules of Court shall to first.
govern.
2. Requisites of Application
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 61
6. liquidated debt >
1. There are several debts owed. unliquidated
2. They are owed by the same debtor 7. default
to the same creditor
3. That the debts be of the same D. Payment by Cession
kind 1. Concept-
4. That the debts are due (or the Art. 1255. The debtor
term may cede or assign his
was for the benefit of the party property to his creditors
making the application in payment of his debts.
5. That the payment made is not This cession, unless
sufficient to cover all the debts. there is stipulation to
3. Rules in application of the contrary, shall only
payments- Art. 1252, release the debtor from
Art. 1253. If the debt responsibility for the net
produces interest, payment of proceeds of the thing
the principal shall not be assigned. The
deemed to have been made agreements which, on
until the interests have been the effect of the cession,
covered. are made between the
debtor and his creditors
a. if rules inapplicable and shall be governed by
application cannot be inferred- special laws.
Art. 1254. When the
payment cannot be applied in
accordance with the preceding
rules, or if application can not
be inferred from other
circumstances, the debt which
is most onerous to the debtor,
among those due, shall be
deemed to have been
satisfied. 2. Requisites
i. Plurality of Debts
If the debts due are of the ii. Plurality of Creditors
same nature and burden, the iii. Partial/relative insolvency
payment shall be applied to iv. Abandonment of the totality
all of them proportionately. of the debtor’s properties for
the benefit of the creditors
i. meaning of “most onerous to v. Acceptance by the creditor
debtor”
-it is assumed that if the 3. Effects
debtor had chosen the debt 1. Assignment liberates the
to be paid, he could have debtor up to the amount of the
relieved himself first of the net proceeds of the sale of his
more burdensome debt. assets.
DBP vs CA 2. Consignation
a. Concept: the deposit of the
What took place was not cession because object of the obligation in a
Article 1255 presupposes a plurality of debts competent court in accordance
and creditors. Nor was it dation because a with rules prescribed by law
mortgage is a security, and not a after the tender of payment
satisfaction of indebtedness. It was not has been refused or because of
pactum commissoriu, because the obligation circumstances which render
to pay a sum of money remained because direct payment to the creditor
the assignment merely served as security impossible or inadvisable.
for the loans covered by the promissory
notes. Tender of payment is a
preparatory act which precedes
2. Requisites consignation. Consignation
Completes the extinguishment
-not a money debt of the obligation if done after
-consent, object certain, cause tender of payment.
2. Kinds 4. Presumption-
a. As to extent Art. 1265. Whenever
i. Total the thing is lost in the
ii. Partial – not imputable possession of the
to the fault or negligence debtor, it shall be
of the debtor but to fortuitous presumed that the loss
events or circumstances was due to his fault,
beyond his control unless there is proof to
the contrary, and
-does not extinguish without prejudice to the
obligation, but the portion provisions of article
lost, if the obligation would 1165. This presumption
not have been constituted does not apply in case of
without it, thus extinguishing earthquake, flood,
the obligation storm, or other natural
calamity.
-intention of parties is Art. 1165
a controlling factor
a. when not applicable
-courts determine these This presumption does not
apply in case of earthquake,
3. Requisites- flood, storm or other natural
Art. 1262. An calamity, EXCEPT FIRE.
obligation which
consists in the delivery 5. Effects
a. in obligation to give a specific
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 66
thing- Art. 1262 the obligation 1. Concept-
shall Art. 1266. The debtor
be extinguished if it should be in obligations to do shall
destroyed without fault of the also be released when
debtor and before he has the prestation becomes
incurred in delay legally or physically
, impossible without the
Art. 1268. When the debt of fault of the obligor.
a thing certain and Art.1267. When the
determinate proceeds from a service has become so
criminal offense, the debtor difficult as to be
shall not be exempted from manifestly beyond the
the payment of its price, contemplation of the
whatever may be the cause parties, the obligor may
for the loss, unless the thing also be released
having been offered by him to therefrom, in whole or in
the person who should receive part.
it, the latter refused without
justification to accept it. -includes not only legal
or physical
impossibility, but also
impracticability because
of extreme difficulty,
b. in obligation to give a generic manifestly beyond the
thing- contemplation of the
parties, must be
Art. 1263. The loss or subsequent to execution
destruction of anything of contract to extinguish
of the same kind does obligation.
not extinguish the
obligation
2. Kinds
a. As to extent
i. Total
c. in case of partial loss- ii. Partial: The rule in Art.
1264 may be applied if at the
Art. 1264. The courts time performance becomes
shall determine impossible, the debtor has
whether, under the already fulfilled part of the
circumstances, the obligation, the creditor must
partial loss of the pay the part done so long as he
object of the obligation benefits from such partial
is so important as to compliance
extinguish the
obligation b. As to source
i. legal: when the act by
d. action against third persons- reason of a subsequent law
Art. 1269. The is prohibited
obligation having been
extinguished by the ii. physical: when the act by
loss of the thing, the reason of its nature cannot be
creditor shall have all accomplished
the rights of action
which the debtor may 3. Requisites- Art. 1266 (same_
have against third 4. Effects: releases the debtor from
persons by reason of his obligation. Because the obligation
the loss. is legitimate in origin, the supervening
impossibility of the prestation,
B. Impossibility of Performance independent of will of the obligor,
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 67
cannot render the latter liable
beyond restitution of what he may Respondents may be released from said
have received in advance from contract, because article 1267 allows one to
creditor, it be released from the difficulty of the “service”
cannot make him liable for damages or “performance” of the obligation.
Also, the courts are authorized to release the
-where, however, it is not the oblgor in whole or in part.
prestation that has become
impossible but the act to be PNCC vs CA
performed after the fulfillment of the
prestation, the obligation is not 1266 is only applicable in obligations “to do”
extinguished. not “to give”. Also, prior to November 18,
1985, when contract was entered into, Ninoy
a. in obligations to do- Aquino had been assassinated and the
Art. 1266. The debtor political climate was such. Despite these,
in obligations to do petitioner still entered into the contract.
shall also be released These unforeseen events did not render the
when the prestation performance of lease contract impractical and
becomes legally or inimical to corporate survival.
physically impossible
without the fault of the b. in case of partial
obligor. impossibility- Art. 1264
-extinguishment of the
principal obligation
through confusion
releases the guarantor
because the obligation
of the latter is merely
accessory
VI. Compensation
A. Concept-
B. Requisites Art. 1278.
Compensation shall take
i. must take place between creditor place when two persons,
and principal debtor in their own right, are
creditors and debtors of
ii. the very same obligation must each other.
be involved (if debtor acquires rights
from creditor, but not obligation in Distinguished from Confusion:
question, no merger takes place) In Confusion/Merger, only
one obligation is involved.
iii. the confusion must be total or as
regards the entire obligation. In compensation, there must
always be two obligations.
-compensation takes
place before
assignment, there had
already been an
extinguishment of one VII. Novation
of the obligations. A A. Concept-
subsequent Art. 1291. Obligations may be
assignment of an modified by:
extinguished obligation
cannot produce any (1) Changing their object or
effect against debtor. principal conditions;
G. Subjective Novation
2. when accessory obligation 1. By change of debtor
may subsist- Art. 1296 a. Expromision
-except in reference to a i. requisites-
stipulation in favor of a third Art. 1293. . Novation which
person, which is subordinated consists in substituting a new
to the principal obligation. It debtor in the place of the
is in reality a distinct original one, may be made
obligation in favor of a third even without the knowledge or
person and cannot be against the will of the latter,
extinguished by novation but not without the consent of
without consent of the latter. the creditor. Payment by the
new debtor gives him the rights
E. Effect of the Status of the mentioned in Articles 1236 and
Original or New Obligation 1237.
1. nullity or voidability of
original obligation- i. consent of two
Art. 1298. The novation is parties – creditor and
void if the original obligation new debtor.
was void, except when ii. knowledge or consent
annulment may be claimed of old debtor is not
only by the debtor or when required
ratification validates acts ii. effects-
which are voidable.
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 75
Art. 1294. If the substitution 2. By change of creditor:
is without the knowledge or
against the will of the debtor, Subrogation of a third person in
the new debtor's insolvency the rights of the creditor-
or non-fulfillment of the Art. 1300. Subrogation
obligations shall not give rise of a third person in the
to any liability on the part of rights of the creditor is
the original debtor. either legal or
conventional. The
i. the old debtor is r former is not presumed,
released from the except in cases
obligation expressly mentioned in
this Code; the latter
ii. insolvency of the must be clearly
new debtor does not established in order that
revive the old it may take effect.
obligation
-subrogation is transfer
b. Delegacion of all the rights of the
i. requisites- (vs. Art. 1293) creditor to a 3rd person
i. consent of: who substitutes him in
-the old debtor all his rights
-the new debtor
-necessarily, of the
old creditor, which a. Conventional subrogation
may be given -requires agreement by the
at any time, or parties, consent and
implied in any intervention of the original
form creditor, the new creditor and
the debtor
i. requisites-
ii. effects- Art. 1301. Conventional
Art. 1295. . The insolvency of subrogation of a third person
the new debtor, who has been requires the consent of the
proposed by the original original parties and of the third
debtor and accepted by the person.
creditor, shall not revive the -original creditor’s right
action of the latter against the is extinguished,
original obligor, except when new creditor becomes a
said insolvency was already part of the new relation
existing and of public and consent of the
knowledge, or known to the debtor is necessary
debtor, when the delegated because the old
his debt. obligation is
extinguished and he
-insolvency of new becomes liable under
debtor revives the old the new obligation
obligation if it was
anterior and public
or anterior and known ii. distinguished from
to the two debtors Assignment of Credit
-consent is necessary
QUINTO vs PEOPLE -extinguishes an obligation
and gives rise to anew one
The changes consist only in the manner of
payment. There really was no substitution of Assignment of credit requires
debtors since Aurelia merely acquiesced to consent, and it
the payment but did not give her consent to refers to the same right which
the contract. passes from one person to
another
LICAROS vs GATMAITAN
The stipulation for the fruits of the land An existing agreement between petitioner and
paying for the expenses of the Church Bankard existed where petitioner shall honor
festivities is a stipulation pour autrui. It is credit cards by Bankard, provided the
in favor of a third person, the Church. The expiration date had not elapsed. Private
Church did accept the stipulation pour respondent may not be a party to the
autrui. The enjoyment of the benefits contract between Mandarin and Bankard, but
flowing from the land for 17 years without the stipulation confers upon him a favor,
question can be construed as an implied constituting a stipulation pour autrio. De
acceptance by the Church of the stipulation Jesus may then demand its fulfillment under
pour autrui. Article 1311.
LUSTAN vs CA
KATIPUNAN vs KATIPUNAN
2. Error of law
Petitioners made use of undue influence in
a. General rule: making Katipunan sign a contract he thought
Ignorantia legisneminem was a labor contract, when it was actually a
excusat – Deed of Absolute Sale.
Art. 3 Ignorance of
the law excuses no one LEONARDO vs CA
from compliance
therewith. The presumption of mistake was not
addressed by private respondent. Petitioner
b. Exception: Mutual error did not understand English, but the document
of law – was not interpreted to her.
-all intransmissible
a. All things not outside the rights, including strictly
commerce of man personal rights such
b. All rights not parental or marital
intransmissible authority
c. All services not contrary to
law, morals, good customs, -in order to be a future
public, or public policy inheritance:
1) succession must not
2. Requisite - must be have been opened
determinate as to its kind – 2) the object of the
Art. 1349. The object contract forms part of
of every contract must the inheritance
be determinate as to 3) that the promissory
its kind. The fact that has an expectancy of a
the quantity is not right which is purely
determinate shall not hereditary of nature.
be an obstacle to the
existence of the
contract, provided it is BLAS vs SANTOS
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 92
the understanding or the
Exhibit A is not a contract on future promise of a thing or service by
inheritance. It refers to existing property the other party
that she will receive by operation upon her
husband’s death. It existed at the time of b. In remuneratory
its celebration on December 26, 1936. contracts
where a party gives something
JLT AGRO vs. BALANSAG to another because of some
service or benefit, where such
Article 1080 of the Civil Code authorizes a service or benefit was no due
testator to execute an instrument of special as a legal obligation
character which is revocable at any time
during his lifetime. Because of this, Lot 63 c. In contracts of pure
is not a future inheritance, since it was beneficence
conveyed. gratuitous contracts are
essentially agreements to give
b. Impossible things or services – donations
Art. 1348. Impossible things
or services cannot be the 2. As distinguished from
object of contracts. motive –
-impossible: not Art. 1351. . The particular
susceptible or existing, motives of the parties in
outside of the entering into a contract are
commerce different from the cause
of man thereof.
GARCIA vs BISAYA
Chapter IV. Reformation of
Instruments An allegation is essential because the object
sought is to make an instrument conform to a
A. Requisites (Art. 1359): real agreement or intention of the parties.
. When, there having been a meeting The function of reformation is to establish and
of the minds of the parties to perpetuate an existing agreement, not to
a contract, their true intention make a new agreement. Appellant’s complaint
is not expressed in the does not ask for annulment.
instrument purporting to
embody the agreement, by BENIR vs LEANDA
reason of mistake, fraud, The complaint for reformation has not
inequitable conduct or prescribed. The prescriptive period of a
accident, one of the parties written contract is within 10 years.
may ask for the reformation SIR JJ: Before you can claim
of the instrument to the end prescription, you should determine
that such true intention may whether or not reformation is possible.
be expressed.
QUIROS vs ARJONA
If mistake, fraud, inequitable
conduct, or accident has The inability of the municipal court to identify
prevented a meeting of the the exact location did not negate the principal
minds of the parties, the object of the contract. This error is
proper remedy is not correctible by reformation, and does not
indicate the absence of the principal object.
The requisites for reformation must concur: a
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 95
meeting of the minds, and an instrument
that does not express the true intention. The mistake did not vitiate the consent. In
this case, the deed of sale executed need not
B. Cases where no reformation is be reformed. The parties retain possession of
allowed – their property and all they should do is
execute mutual deeds of sale.
Art. 1366. There shall be no
reformation in the following cases: SARMING vs DY
Silveria was a party to the contract.
(1) Simple donations inter vivos Remember, she sold the coconut trees, and
wherein no condition is imposed; was also one of the heirs entitled to the
(2) Wills; estate. The mistake in the preparation of the
(3) When the real agreement is void. contract may be privy to reformation.
C. Implied Ratification –
Art. 1367. When one of the
parties has brought an action
to enforce the instrument, he
cannot subsequently ask for
its reformation.
CHUA vs CA
RIGOR vs CONSOLIDATED ORIX
Article 1376 states that the custom of the
Both promissory note and the chattel place shall be used in interpreting ambiguities
mortgage must be treated as a singular of the contract. In this case, “putting one’s
contract, with one complementing the other, papers in order” does not involve payment of
pursuant to Article 1374. The deed of the capital gains tax is not a pre-requisite of
chattel mortgage modified this condition transferring ownership to the buyer.
where the promissory note confined the
proper court to Makati. Since respondent 5. With respect to the party
moved to Dagupan, this is the proper who caused the obscurity –
venue. Art. 1377. The
SIR JJ: Let the acts determine the interpretation of obscure
intention, absent any other possible words or stipulations in
means of interpretation. a contract shall not
favor the party who
3. When it contains words caused the obscurity.
that have different
significations – -the party who draws
Art. 1375. Words up a contract in which
which may have obscure terms or
different significations clauses appear, is
shall be understood in the one responsible
that which is most in
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 98
for the obscurity or Art. 1378 states that there will be an
ambiguity; they must inclination against the least possible
therefore be construed transmission of rights and interests. Hence,
against him. the interpretation will be that Gacos did not
sell her entire share.
RCBC vs CA & ILUSTRE
b. in onerous contracts
There is no evidence that Ilustre acted with -doubts are resolved in favor
malice or negligence, that RCBC claimed he of greater reciprocity/
did when he failed to sing a check which equivalence
they claim violated Paragraph 11 of the
Chattel Mortgage. 7. When the doubts are cast
upon the principal object so
6. When it is absolutely that the intention cannot be
impossible to settle doubts known –
by the rules above – Art. 1378. When it is
Art. 1378. When it is absolutely impossible to
absolutely impossible settle doubts by the
to settle doubts by the rules established in the
rules established in the preceding articles, and
preceding articles, and the doubts refer to
the doubts refer to incidental circumstances
incidental of a gratuitous contract,
circumstances of a the least transmission of
gratuitous contract, rights and interests shall
the least transmission prevail. If the contract is
of rights and interests onerous, the doubt shall
shall prevail. If the be settled in favor of the
contract is onerous, greatest reciprocity of
the doubt shall be interests.
settled in favor of the
greatest reciprocity of If the doubts are cast
interests. upon the principal object
of the contract in such a
If the doubts are cast way that it cannot be
upon the principal known what may have
object of the contract been the intention or
in such a way that it will of the parties, the
cannot be known what contract shall be null
may have been the and void.
intention or will of the
parties, the contract -if the will or intent
shall be null and void. of the parties cannot be
ascertained, the
-construction which contract is null and void.
would amount to
impairment or loss of D. Applicability of Rule 123, Rules
right is not favored; of Court (now Secs. 10-19, Rule
conservation and 130)
preservation, not
waiver, abandonment
or forfeiture of a right
is the rule.
a. in gratuitous contracts
-doubts are resolved in favor
of least resolved in favor of
the least transmission of right
GACOS vs. CA
3. Requisites:
UNIVERSAL FOOD CORP vs. FRANCISCO a. The contract is
rescissible;
In this case, the dismissal of respondent
from his work as head scientist was a b. The party asking for
fundamental and substantial breach of the rescission has no other legal
Bill of Assignment. Hence, respondents- means to obtain reparation
appellees had no alternative but to file the – Art. 1383. The action for
present action for rescission and damages. rescission is subsidiary; it
Hence, what is applicable is rescission or cannot be instituted except
resolution under Article 1191. when the party suffering
damage has no other legal
PRYCE CORP vs PAGCOR means to obtain reparation for
the same.;
When parties pray for payment of rental,
the aggrieved party sought the partial UNION INSURANCE vs CA
enforcement of a lease contract. The Philippine Tugger’s acquisition, albeit
remedy is not rescission but termination. rescissible is valid until legally rescinded.
Termination entails enforcement of its terms Hence, petitioner may ask for value of ships.
prior to the declaration of its cancellation. The vessels are no longer owned by private
respondent. Petitioner should have impleaded
CANNU vs. GALANG Peninsula Tourist Shipping who owned the
vessels.
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 101
together with their
c. He is able to return fruits, and the price with
whatever he may be its interest;
obliged to restore if consequently, it can be
rescission is granted – carried out only when he
Art 1385. Rescission who demands rescission
creates the obligation can return whatever he
to return the things may be obliged to
which were the object restore.
of the contract,
together with their Neither shall rescission
fruits, and the price take place when the
with its interest; things which are the
consequently, it can be object of the contract
carried out only when are legally in the
he who demands possession of third
rescission can return persons who did not act
whatever he may be in bad faith.
obliged to restore.
In this case, indemnity
Neither shall rescission for damages may be
take place when the demanded from the
things which are the person causing the loss.
object of the contract
are legally in the a. with respect to third
possession of third persons who acquired the
persons who did not thing in good faith – Art.
act in bad faith. ; 1385, 2nd and 3rd par.
4. Prescription –
Art. 1391. The action for
annulment shall be brought
within four years. CADWALLER vs SMITH, BELL
This period shall begin: The defendants were not entitled to retain
their commission under the annulled contract,
In cases of intimidation, which was ½ of whatever sum was obtained.
violence or undue influence,
from the time the defect of INES vs CA
the consent ceases. Interest may be allowed in discretion of
damages. The award of legal interest is a
In case of mistake or fraud, necessary consequence the finding that the
from the time of the discovery Contract of Sale is void that Ines existed.
of the same. SIR JJ: It is voidable, because it was
valid until the lower court declared it.
And when the action refers to However, this is dangerous because the
contracts entered into by other party would only want to delay the
minors or other incapacitated case as to incur greater interest.
persons, from the time the
guardianship ceases. VELARDES vs CA
-ratification is merely
declaratory of the
waiver of the right
to ask for annulment
Chapter VIII. Unenforceable
Implied ratification: Contracts
Based on the conduct
of acts or the party
who is entitled to ask A. Characteristics
for annulment. This -an unenforceable contract is one
may include silence, which cannot be enforced unless it
acquiescence or is first ratified in the manner provided
acceptance by law. It is distinguished from the
rescissible contracts and annullable
b. By the parties themselves or contracts in that the latter two
by the guardian in behalf of an contracts produce legal effects
incapacitated party – unless they are set aside by a
Art. 1394. Ratification may competent court
be effected by the guardian of
the incapacitated person. 1. They cannot be enforced by a
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 107
proper action in court. auction and entry is made by the
auctioneer in his sales book, at the
2. They are susceptible of time of the sale, of the amount and
ratification. kind of property sold, terms of sale,
price, names of the purchasers and
3. They cannot be assailed by person on whose account the sale is
third persons. made, it is a sufficient
- contracts that by reason of memorandum;
statutory defects do not
confer any action to enforce (e) An agreement of the leasing for a
the longer period than one year, or for
same until and unless they the sale of real property or of an
are ratified in the manner interest therein;
prescribed by law are called
unenforceable contracts. (f) A representation as to the credit
of a third person.
B. Kinds – Art. 1403. The following
contracts are unenforceable, unless (3) Those where both parties are
they are ratified: incapable of giving consent to a
contract
(1) Those entered into in the name 1. Unauthorized contracts
of another person by one who has - when a person enters into a
been given no authority or legal contact for and in the name of
representation, or who has acted another, without authority to
beyond his powers; do so, the contract does not
bind the latter
(2) Those that do not comply with
the Statute of Frauds as set forth in a. Governing rules –
this number. In the following cases Art. 1404. Unauthorized
an agreement hereafter made shall contracts are governed by
be unenforceable by action, unless Article 1317 and the principles
the same, or some note or of agency in Title X of this
memorandum, thereof, be in writing, Book.
and subscribed by the party charged,
or by his agent; evidence, therefore, 2. Contracts covered by the
of the agreement cannot be received Statute of Frauds
without the writing, or a secondary -the term ‘Statute of Frauds’
evidence of its contents: is descriptive of statutes
which require certain classes
(a) An agreement that by its terms of contracts to be in writing.
is not to be performed within a year It regulates the formalities of
from the making thereof; the contract necessary to
Render it enforceable
(b) A special promise to answer for
the debt, default, or miscarriage of
another; a. Purpose of Statute
-prevent fraud and perjury in
(c) An agreement made in the enforcement of contracts
consideration of marriage, other depending for their evidence
than a mutual promise to marry; upon the unassisted memory
of witnesses by requiring
(d) An agreement for the sale of certain enumerated contracts
goods, chattels or things in action, & transactions to be evidenced
at a price not less than five by a writing signed by the party
hundred pesos, unless the buyer to be charged.
accept and receive part of such
goods and chattels, or the -since the Statute of Frauds
evidences, or some of them, of was enacted for the purpose
such things in action or pay at the of preventing frauds, it should
time some part of the purchase not be made the instrument
money; but when a sale is made by
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 108
to further them. Thus, where – Art. 1407. In a contract
one pary has entirely where both parties are
performed his obligation incapable of giving consent,
under an oral contract, equity would express or implied ratification
agree that all evidence be by the parent, or guardian, as
admitted to prove the alleged the case may be, of one of the
agreement. contracting parties shall give
the contract the same effect as
b. How ratified – if only one of them were
incapacitated.
Art. 1405. . Contracts
infringing the Statute of b. Effect of ratification by the
Frauds, referred to in No. 2 of parents or guardian of both
Article 1403, are ratified by parties – Art. 1407. In a contract
the failure to object to the where
presentation of oral evidence both parties are incapable of
to prove the same, or by the giving consent, express or
acceptance of benefit under implied ratification by the
them. parent, or guardian, as the
case may be, of one of the
-If the parties make no contracting parties shall give
objection to the the contract the same effect as
admissibility of oral if only one of them were
evidence to support incapacitated.
a contract covered by
the Statute of Frauds -Defense is personal
and therein permit to the party of the
such contract to be agreement. It is like
proved orally. It will minority, fraud,
be just and binding mistake or of the
upon the parties as similar defects which
if it had been reduced may be asserted or
to writing. The Statute waived by the parties
of Frauds cannot be to the contract or their
invoked when the representatives, and
contract had been cannot be set up by
partly executed; it only strangers to the
applies to executory agreement.
contracts
B. Kinds
1. Technical estoppel
a. By record
-the preclusion to deny the
truth of matters set for him a
record, whether judicial or
legislative and also to deny
the facts adjudicated by a
court of competent jurisdiction
TITLE V. TRUSTS
(1) There must be fraudulent
Chapter I. General Provisions
representation or wrongful
concealment of facts known to
A. Definition
the party estopped;
Trust is the legal relationship
between one person having an
(2) The party precluded must
equitable ownership in property
intend that the other should
and another person owning the
act upon the facts as
legal title to such property,
misrepresented;
the equitable ownership of the
Simoun Antonio Montelibano Salinas - 2002-24124
[ C 2011 ] [ UP COLLEGE OF LAW ] 115
former entitling him to the any interest therein may be
performance of certain duties proved by parol evidence.
and the exercise of certain
powers by the latter
b. Form –
-a fiduciary relationship with Art. 1444. No particular words
respect to property subjecting are required for the creation of
the person holding the same an express trust, it being
to the obligation of dealing sufficient that a trust is clearly
with the property benefit intended.
of another person
- it is possible to create a
B. Governing rules – trust without using the word
Art. 1442. The principles of ‘trust’ or ‘trustee’. The mere
the general law of trusts, fact that these words are used
insofar as they are not in does not necessarily indicate
conflict with this Code, the an intention to create a trust
Code of Commerce, the Rules
of Court and special laws are c. Want of trustee –
hereby adopted. Art. 1445. No trust shall fail
because the trustee appointed
C. Parties – declines the designation, unless
Art. 1440. A person who the contrary should appear in
establishes a trust is called the instrument constituting the
the trustor; one in whom trust.
confidence is reposed as
regards property for the -equity will not allow a trust
benefit of another person is to fail for want of a trustee is
known as the trustee; and the clearly established
person for whose benefit the
trust has been created is d. Acceptance by the beneficiary
referred to as the beneficiary. – Art. 1441. Trusts are either
express or implied. Express
trusts are created by the
1. Trustor, who establishes or intention of the trustor or of the
creates trust parties. Implied trusts come
2. Trustee, who holds the property into being by operation of law.
in trust
3. Beneficiary or cestui que , 2. Implied Trusts
the person for whose benefit a. How established – Art. 1441
the property is held by the b. How proved –
trustee Art. 1457. An implied trust
4. Trust property, which is held may be proved by oral
by the trustee for the evidence.
beneficiary