SYLLABUS

Obligations and Contracts

Avelino M. Sebastian, Jr., A.B., Ll.B., Ll.M.

OBLIGATIONS

I. GENERAL PROVISIONS
• Definition of an obligation
• Concept of “juridical necessity”
• Reciprocity of rights and obligations
• Elements of an Obligation
• Types of prestation
• Limitation on the remedy of specific performance
• Requisites of a valid prestation
• Concept of efficient cause
• Distinguished from natural obligation

• Sources of obligations
• Law (Art. 1158)
• Contracts (Art. 1159; principle of “autonomy of the will”)
• Art. 1267 – doctrine of “rebus sic stantibus”
• Art. 19 - Liability for pre-contractual obligations
• Quasi-contracts (Art. 2142)
• Delicts (Art. 100, RPC)
• Civil liability under Art. 11 RPC - justifying circumstance
• Civil liability under Art. 12 RPC - exempting circumstance
• Quasi-delicts (Art. 2167)
• Test of Negligence
• Damnum absque injuria

• Liability arising from unilateral promise (Art. 19)

II. NATURE AND EFFECTS OF OBLIGATIONS

• Accessory obligations in prestation to give:
• Diligence of good father (Art. 1163)
• Exemption from liability due to force majeure (1174)

• Obligation to deliver fruits (Art. 1164)

• Difference between real right and personal right

• Delivery of accessions and accessories (Art. 1166)

• Accessories as embellishments
• Natural and industrial fruits

• Remedies for breach of prestation to give (Art. 1165):

• Specific performance plus damages
• Generic object
• Responsibility for force majeure
 • Rescission with damages
• Non-imprisonment for non-payment of debts

• Breach of prestation to do (Art. 1167)

• Remedies

• Breach of prestation not to do

• Remedies

• Causes of breach of obligation (Art. 1170)

• Delay or mora
• Mora solvendi
• Mora accipiendi
• Compensatio morae
• Deceit or dolo
• Negligence of culpa

• Demand (Art. 1169)

• Delay is not caused by the debtor
• Performance of natural obligations

• Requisites of mora solvendi

• Concept of “anticipatory delay”
• Effects of mora solvendi

• Requisites and effects of mora accipiendi

• Responsibility arising from fraud

• Distinction between fraud in contracting and fraud in performance
• Advance waiver (Art. 1171)

• Responsibility arising from negligence (culpa contractual)

• Distinguished from culpa aquiliana and culpa criminal
• Concept of proximate cause
• Impossibility of performance
• Difficulty of performance (rebus sic stantibus)
• Mitigation of liability (contributory negligence)
• Exculpatory clauses:
• From acts of third persons through insurance cover
• From acts of debtor himself for simple negligence

• Concept of Diligence and Negligence

• Bonus pater familias
• When negligence indicates bad faith

• Concept of force majeure

• Exceptions:
• When specified by law (see Art. 1165)
 • Nature of obligation requires assumption of risk
• Doctrine of created risk
• When debtor agrees to assume the risk

• Remedies of an unpaid judgment creditor

• Writ of execution (exempt properties)
• Accion subrogatoria
• Accion pauliana (Art. 1381 par. 3)

III. DIFFERENT KINDS OF OBLIGATIONS

• Pure and Conditional
• Definition of pure obligation
• Definition of conditional obligation

• Kinds of Conditions
• Suspensive
• Positive suspensive condition (Art. 1184)
• Negative suspensive condition (Art. 1185)
• Resolutory
• Provoking resolutory condition
• Casual
• Potestative
• Passive suspensive (Art. 1182)
• Active resolutory
• Simple potestative
• Pure potestative
• Mixed
• Divisible
• Indivisible
• Alternative
• Positive
• Negative
• Express
• Implied
• Possible
• Impossible (Art. 1183).
• Effects of impossible condition
• Time of impossibility
• Divisibility of obligation (severability)
• Negative impossible conditions

• Nature and Effects of Conditions

• Indivisibility of a condition
• Plurality of conditions
• Retroactivity of obligation
• Rules on loss, deterioration of improvement (Art. 1189):
• Mutual restitution upon the fulfillment of resolutory condition (Art. 1190)
• Protection prior to the fulfillment of the resolutory condition
 • Tacit resolutory condition in reciprocal obligations (Art. 1191)
• Nature of rescission
• Limitation on the right to rescind
• Reciprocal breach

• Obligation with a term

• Requisites of a term
• Kind of Terms
• In diem
• Ex die
• Ex die in diem
• Demand note
• Payable when able (Art. 1197)
• Effects of Moratorium Laws
• Rutter v Esteban (18 May 1953) - reasonableness of extension
• Non-impairment clause
• Premature performance and waiver of the term
• Benefit of the term (Art. 1196)
• Loss of benefit of term (Art. 1189)

• Alternative obligations (Art. 1199)

• Objective
• Obligations with multiple objects
• Conjunctive
• Alternative
• Facultative
• Right of choice (Art. 1200) and limitations
• Enforcement and form of action
• Conversion to pure obligation (Art. 1201)
• Debtor’s delay in making a choice
• French Rule
• German Rule
• Loss of choice (Art. 1202)
• Loss of things by debtor’s fault (Art. 1204
• Debtor’s responsibility for loss (Art. 1205)

• Facultative obligations (Art. 1206).

• Right of choice
• Delay in making the substitution
• Distinguished from alternative obligations

• Joint and Solidary Obligations

• Nature of solidarity
• Sources of solidarity
• Disjunctive obligations
• Presumption of joint liability
• Effects of Joint Liability
• Demand of joint creditor on one of the joint debtors
 • Interruption of prescription
• Vices of consent affecting a particular debtor
• Insolvency of a joint debtor
• Application of res judicata

• Joint indivisible obligation

• Indivisibility vs. solidarity (Art. 1210)
• Types of solidarity
• Active solidarity (mutual agency)
• Death of a solidary creditor
• Mutual representation of creditors
• Rule on condonation, novation, confusion and compensation under
Art. 1215
• Division of credit and benefits
• Pay to any creditor (Art 1214)
• Payment to creditor who made a demand
• Assignment of solidary creditor’s rights to third parties
• Adverse judgment against one solidary creditor
• Passive solidarity – solidarity among debtors (mutual guarantee)
• Who may be compelled to pay (Art. 1217)
• Right of subrogation
• Reimbursement right of a paying debtor
• Reimbursement obligation of the non-paying solidary debtors
• Payment of a prescribed/illegal debt
• Rights of a paying debtor to compensation
• Total remission of debt in favor of a debtor
• Remission of the share of a solidary debtor (Art. 1219).
• Insolvency after partial remission
• Liability for loss of the thing due
• Interruption of prescription
• Adverse judgment against one of the solidary debtors
• Judgment favorable to one solidary debtor
• Loss of the thing due without fault of solidary debtors
• Defenses available to solidary debtors (Art. 1222)
• Mixed solidarity
• Creditor’s demand
• Creditor’s right to proceed against any debtor
• Solidary debtors bound by different terms or conditions

• Divisible and Indivisible Obligations

• Joint indivisible obligation (Art. 1224)
• Solidary indivisible obligation
• Distinguished from solidary obligation
• Test of indivisibility (Art. 1225)
• Factors determining divisibility
• Nature of the object
• Intention of the parties
• Purpose of the prestation
 • Law affecting the prestation
• Partial performance of indivisible obligation
• Art. 1234 - substantial performance in good faith
• Art. 1235 – waiver of complete performance

• Obligations with Penal Clause (Art. 1226)

• Nature of penalty
• Dual purpose
• Reparation
• Punitive
• Penalty as an accessory obligation
• Nullity of the principal obligation and limitations
• Limit of liability
• Penalty that is contrary to law, morals or public order.
• Irregular performance and unconscionable penalties
• Grounds for imposition of penalty
• Divisibility of penalty
• Distinguished from alternative obligations
• Distinguished from facultative obligations

IV. EXTINGUISHMENT OF OBLIGATIONS

• Modes of Extinguishing an Obligation (Art. 1231)

• Payment or Performance
• Guiding principles
• Principle of “identity of payment”
• Principle of “integrity of payment
• Substantial performance (Art. 1234)
• Waiver of defect of performance (Art. 1235)
• Timeliness of payment
• Proof of payment
• Requisites of payment
• Payment by debtor
• Third party payment
• Payment made by third person interested in the obligation (Art. 1236)
• Recovery of a third party payor
• Right of subrogation (Art. 1237)
• Payment by a disinterested person (Art. 1238)
• Debtor capacity and free disposal of the thing (Art. 1239)
• Payment to the creditor (Art. 1240)
• Payment to third party (Art. 1241)
• Rule in Negotiable Instruments Law
• Juridical order to retain the debt (Art. 1243)
• Capacity of creditor (Art. 1241)
• Thing to be paid (Art. 1244)
• Dation in Payment
• Form of novation
• Restrictive statutory definition
 • Distinguished from assignment of property
• Governing law
• The manner, time and place of payment
• Expenses of payment (Art. 1247)
• Partial performance (Art. 1248)
• Currency of payment (Art. 1249)
• Concept of legal tender
• Payment in foreign currency (Uniform Currency Law)
• Extraordinary inflation or deflation of the currency (Art. 1250)
• Concept of inflation and deflation
• What constitutes extraordinary inflation or deflation
• Place of payment (Art. 1251)
• Application of payments
• Limitations on application of payments
• Debts which are not due
• Application by the debtor
• Prohibition on partial payment (Art. 1248)
• Capital prior to interest (Art. 1253)
• Unliquidated debts
• Term for the benefit of the creditor
• Stipulated order of payment
• Irrevocability of application
• Effect of application if properly made
• Application by operation of law
• Proportionate application
• Payment by Cession
• Concept
• Exemption
• Compared to Insolvency Law
• Distinguished from dacion en pago:
• Tender of Payment
• Consignation
• Consignation with prior tender (Art. 1256)
• Requisites of consignation
• Cost of consignation (Art. 1259)
• Effects of consignation (Art. 1260)
• Withdrawal of the thing consigned
• Preference over the thing

• Loss of the thing due

• Concept
• Subsequent impossibility (Art. 1266)
• Objective subsequent impossibility
• Subjective subsequent impossibility
• Loss of the thing
• Effect
• Requisites
• Loss without debtor’s fault (Art. 1262) exception:
 • Stipulation that debtor is liable for loss
• Nature of obligation requires debtor to assume risk of loss
• Debtor liable for loss due to force majeure (Art. 1174)
• Debtor promises to deliver to two or more persons (Art. 1165)
• Obligation to deliver arose from a criminal act (Art. 1268)
• Loss of generic thing (genus nunquam perit) (Art. 1263)
• Loss is total
• Loss is due to fortuitous event (Art. 1265)
• Rebus sic Stantibus (Art. 1267)
• Requisites:
• Event or change in circumstance beyond what could have been
foreseen at the time of the execution of the contract;
• Performance of the contract has become extremely difficult but not
impossible
• Event is not due to the acts of any of the parties
• Contract is for a future prestation excluding purely speculative
contracts

• Condonation or remission of debt (Art. 1270)

• Governing law as to form
• Effective mortis causa – form of a will (Art. 728)
• Notarial – Art. 804, 805, 806, 807, 808
• Holographic – Art. 810
• Effective inter vivos – form of a donation
• Movable property (Art. 748)
• Immovable property – (Art. 749)
• Gratuitous nature of condonation
• Acceptance of condonation (Art. 745)
• Limitation as to amount condoned (Arts. 750 and. 752)
• Revocation of condonation
• Art. 760 (BAR Rule)
• Art. 761
• Art. 764
• Art. 765
• Requisites of remission
• Implied condonation (Art. 1271)
• Presumption of condonation (Art. 1272)
• Rule 131(3)(k), Rules of Court
• Condonation of an accessory obligation (Art. 1273)

• Confusion or merger or rights (Art. 1275

• Concept
• Requisites
• Extinguishment of real rights
• Revocation of merger
• Release of guarantors (Art. 1276)
• Merger in joint obligations (Art. 1277)
• Compensation (Art. 1279)
• Concept
• Distinguished from payment
• Distinguished from merger
• Distinguished from counterclaim
• Types of compensation
• Legal (Art. 1286)
• Facultative
• Conventional (Art. 1282)
• Judicial (Art. 1283)
• Total (Art. 1281)
• Partial
• Elements of legal compensation (Art. 1279)
• Each of the obligors is bound to the other principally
• Rights of guarantor (Art. 1280)
• Both debts consist of money, or if the things are fungible, they be of the same
kind and quality
• Both debts are due
• Both debts are demandable
• Compensation between obligations with suspensive condition or term
• Compensation between prescribed debts
• Compensation between rescissible or voidable obligations
• Rescission or annulment post compensation
• Both debts are liquidated
• No right of retention
• Assignment after compensation (Art. 1285)
• Consent to assignment of credit
• Non-compensable debts (Art. 1287)
• Application of Compensation (Art. 1289)

• Novation (Art. 1291)

• Concept
• Classification of novation
• As to Nature
• As to form
• As to effect
• Requisites of novation
• Previous valid obligation
• Agreement of parties to the new contract
• Extinguishment of the old contract
• Validity of the new contract
• Implied Novation
• Test of implied novation
• Concept of substantial change
• Debtor Substitution (Art. 1293)
• Expromission
• Delegacion
• Requisite consent
 • Release of the old debtor
• Rights of the new debtor (Art. 1236)
• old debtor consented to the substitution (Art. 1237)
• the old debtor did not know or did not consent to the substitution
• Insolvency of new debtor
• In case of expromission or where the debtor did not know or did not consent
to novation (Art. 1294)
• In the case of passive subjective novation
• Effect of novation on accessory obligation (Art. 1296)
• New valid obligation (Art. 1297)
• New obligation void
• New obligation voidable
• New obligation is unenforceable
• New obligation is rescissible
• Conditional old obligation (Art. 1299)
• Subrogation of Creditor (Art. 1300)
• Conventional subrogation (Art. 1301)
• Distinguished from assignment of rights
• Legal subrogation (Art. 1302)
• Effect of subrogation (Art. 1303)
• Partial Subrogation (Art. 1304)

CONTRACTS

V. GENERAL PROVISIONS
• Definition (Art. 1305)
• Meaning of “two persons”
• Validity of auto-contracts
• Elements of a contract:
• Essential elements
• Natural elements
• Accidental elements
• Stages of a Contract
• Preparation or conception
• Perfection
• Consummation
• Freedom to contract (Art. 1306)
• Stipulations contrary to law
• Stipulations contrary to morals
• Stipulations contrary to public order
• Contract of adhesion
• Characteristics of a contract
• Obligatory force (Art. 1305)
• Mutuality (Art. 1308)
• Unilateral cancellation of a contract
• Basis of the rule of mutuality
• Determination of the performance by third person (Art. 1309)
• Relativity (Art. 1311)
 • Basis of the rule
• Status of an heir (Art. 776)
• Exceptions to the rule on relativity
• Stipulation pour autrui (Art. 1311)
• Contracts creating real rights (Art. 1312)
• Contracts in fraud of creditors (Art. 1313)
• Unlawful interference by a third party (Art. 1314)
• Consensuality of Contracts (Art. 1315)
• Formal contracts
• Real contracts
• Unauthorized contracts (Art. 1317) (See also Art. 1403 par 1)
• Effect of ratification
• Status before ratification
• Liability of the unauthorized person

VI. ESSENTIAL REQUISITES OF CONTRACTS (Art 1318)

• Consent (Art. 1319)

• Concept
• Requisites
• Form of consent
• Offer and Acceptance
• Requisites of an offer
• Definite
• Complete
• Intentional
• Time, place and manner of acceptance (Art. 1321)
• Offer through an agent (Art. 1322)
• Loss of capacity (Art. 1323)
• Capacity to give consent (Art. 1237)
• Both parties lack capacity (Arts. 1403 par. 3 and 1407)
• One of the parties lack capacity (Art. 1390)
• Capacity during a lucid Interval (Art. 1328)
• Withdrawal of an offer
• Crossing of revocation and acceptance
• Offers without a period
• Public offers
• Sales advertisements (Art. 1325)
• Invitation to bid (Art. 1236)
• Simultaneous offers
• Successive agreements
• Option contract (Art. 1324)
• Rationale
• Nature
• Essential requisites
• Acceptance of an offer
• Withdrawal of an acceptance
• Express or implied acceptance (Art. 1320)
 • Amplified acceptance
• Acceptance by correspondence
• Acceptance by silence
• Complex offers
• Defect or vice of consent (Art. 1330)
• Mistake (Art. 1331)
• Concept
• Mistake as to object
• Mistake as to nature of contract
• Mistake as to the rights of the parties
• Mistake as to principal condition
• Mistake as to accessory conditions
• Mistake as to person
• Mistake as to solvency of a person
• Mistake as to motive of a party
• Mistake as to account
• Mistake as to estimates
• Mistake of an illiterate person (Art. 1332)
• Mistake due to inexcusable error (Art. 1333)
• Mistake arising from error of law (Art. 1334)
• Violence (Art. 1335)
• Requisites
• Intimidation (Art. 1335)
• Requisites
• Concept of an unjust act
• Concept of serious evil or wrong
• Imminence of the evil
• Object of evil
• Nature of evil
• Reasonable fear
• Cause and effect
• Distinction between violence and intimidation
• Duress by third person (Art. 1336)
• Undue Influence (Art. 1337)
• Distinguished from intimidation
• Test of undue influence
• Undue influence exerted by a third party
• Fraud (Art. 1338)
• Concept
• Concept of insidious words and machinations
• Kinds of fraud
• Art. 1117 - fraud in the performance of an obligation
• Art. 1338 - fraud committed prior or simultaneous to a contract
• Dolo causante
• Dolo incidente
• Fraud compared to mistake
• Requisites of fraud
• Employed by one party upon the other (see Art. 1342
 • Induced the other party to enter into the contract (Art. 1338);
• Serious and not employed by both parties (Art. 1344)
• Determining cause of the contract
• Damage or injury to the party seeking annulment of contract
• Concealment as fraud (Art. 1339)
• Exaggeration as fraud (Art. 1340)
• Opinion (Art. 1341)
• Misrepresentation by third person (Art. 1342)
• Misrepresentation in good faith (Art. 1343)
• Magnitude of fraud (Art. 1344)
• Fraud in multi-party transaction
• Simulated Contracts (Art. 1345)
• Absolute - contract is void (Art. 1346)
• Purpose is licit
• Purpose is illicit
• Distinguished from fraudulent alienation
• Relative - contract is conditionally valid
• Basis of validity
• Governing law
• Illicit intention
• Effect on third persons

• Object of Contract (Art. 1347)

• Concept
• Requisites
• within the commerce of man (Art. 1347)
• Existing thing or right
• Future things or future rights
• Exclusion of future inheritance
• Object is licit (Art. 1347)
• Object is possible (Art. 1348)
• Time of impossibility
• Kinds of impossibility
• Absolute or objective
• Relative or subjective
• Liability for damages
• Partial impossibility
• Difficulty of performance
• Object is determinate as to its kind (Art. 1349)
• Indeterminate quality

• Cause (Art. 1350)

• Concept
• Distinguished from the object of the contract
• Confusion between object and cause in onerous contracts or contracts that
give rise to bilateral obligations
• Distinguished from motive
• Effect of motive on the validity of a contract; exceptions:
 • Motive in alienating property is to defraud creditors
• Motive in giving consent is to avoid threatened injury (intimidation)
• Motive induced a person to act on the basis of fraud or misrepresentation
by the other party
• Adequacy of the consideration (see exception in Art. 1381 on lesion)
• Gross inadequacy of consideration suggests fraud
• Hard bargain plus inadequate price not basis to cancel a contract
• Natural obligation as sufficient consideration
• Cause of an accessory contract
• Accommodation party
• Want of cause (Art. 1352)
• False cause (Art. 1353)
• Unstated cause (Art. 1354)

VII. FORM OF CONTRACTS

• Intent over Form (Art. 1356)
• General rule: A contract with all essential requisites is valid between the parties
in whatever form it is entered into.
• Form is absolute and indispensable in 2 cases
• Essential to its validity
• Essential to enforceability
• Form required to bind third persons (Art. 1358)
• Right to compel execution of proper instrument (Art. 1357)

VIII. REFORMATION OF INSTRUMENTS

• Definition (Art. 1359)
• Objective of the law
• Requisites of reformation
• Distinguished from annulment of contract
• Retroactive effect of reformation
• Reformation of an unenforceable contract
• Reformation based on a mistake (Art. 1361)
• Proof of mistake
• Unilateral mistake based on fraud or inequitable conduct (Art. 1362)
• Unilateral mistake based on concealment (Art. 1363)
• Mistake of the draftsman (Art. 1364)
• Instruments that cannot be reformed (Art. 1366)
• Ratification of defective instrument (Art. 1367)
• Parties to an action for reformation (Art. 1368)

IX. INTERPRETATION OF CONTRACTS

• Interpretation based on literal meaning (Art. 1370)
• Intention should prevail
• Section 9 Rule 130 – Parol Evidence Rule
• Reformation of instrument as a remedy
• Determination of intent (Art. 1371)
• Scope of general terms (Art. 1372)
• Preference for validity (Art. 1373)
 • Contract taken as a whole (Art. 1374)
• Purpose of the contract (Art 1375)
• Interpretation based on usage and customs (Art. 1376)
• Interpretation cannot favor the party that caused the ambiguity (Art. 1377)
• Reciprocity of interest (Art. 1378)
• Applicability of Sections 10 to 19, Rule 130 of the Rules of Court (Art. 1379)

X. DEFECTIVE CONTRACTS
• Rescissible Contracts
• Concept
• Dispensation of a valid contract
• Distinguished from rescission in Art. 1191
• Requisites of rescission
• Types of rescissible contracts
• Rescission based on lesion
• Concept of lesion
• Lesion under Arts. 1098, 1359 and 1542
• Authority of the guardian and/or representative
• Acts of administration
• Alienations in fraud of creditors (accion pauliana)
• Requisites of accion pauliana
• Prior unsatisfied judgment
• Prior conveyances
• Post transaction creditors
• Extent of benefit of accion pauliana
• Creditors benefited by accion pauliana
• Evidence of fraud
• Test of fraud
• Presumption of fraud (Art. 1387)
• Badges of fraud
• Gratuitous vs. onerous alienations
• Liability of subsequent transferors in bad faith (Art. 1388)
• Conveyance of things under litigation
• Nature of litigation
• Limitation to the right to bring accion pauliana
• Other contracts declared by law to be rescissible
• Payment by an insolvent (Art. 1382)
• Ownership of property post rescission
• Limitations to the right to institute accion pauliana
• Subsidiary action (Art. 1383)
• Extent of rescission (Art. 1384)
• Ability to restitute (Art. 1385)
• Property in the possession of person in good faith
• Judicially approved contracts (Art. 1386)
• Prescriptive period (Art. 1399)
• Who may bring the action

• Voidable Contracts (Art. 1390)

 • Concept
• Binding effect of voidable contract
• Distinction between voidable and rescissible contract
• Grounds for annulment
• Incapacity of one of the parties
• Vice of consent
• Direct attack vs collateral attack
• Mutual restitution
• Prescriptive period
• Ratification of voidable contract (Art. 1392)
• Requisites of ratification
• Transmissibility of the right to ratify voidable contract
• Types of ratification (Art. 1393)
• Who may ratify (Art. 1394)
• Effects of ratification (Art. 1396)
• Who may institute an action for annulment (Art. 1397)
• Restitution following annulment (Art. 1398)
• Principle of unjust enrichment
• Restitution by the incapacitated (Art. 1399)
• Restitution by the capacitated party
• Liability for damages
• Loss of thing through fraud or negligence (Art. 1401)
• Doctrine of res perit domino
• Loss of thing by plaintiff
• Loss of thing by defendant

• Unenforceable Contracts
• Concept
• Remedy of specific performance
• Types of unenforceable contracts
• Unauthorized contract
• Liability of the unauthorized person
• Contracts violating the Statute of Frauds
• Nature and purpose of the Statute of Frauds
• Consequences of breach of the Statute of Frauds
• Limitation on the application of the Statute of Frauds
• Partly executed contracts
• Actions other than for specific performance
• Minimum requirements for the note or memorandum
• Remedy under Art. 1357
• Agreements covered by the Statute of Frauds
• Contracts not to be performed within 1 year
• Reference to time
• Contractual prohibition to perform
• Rationale for coverage
• Promise to answer for the default of another
• Concept and rationale
• Test of guaranty
 • Agreement made in consideration of marriage
• Concept and rationale
• Inclusions to the covered agreement
• Agreement for the sale of goods priced not less than P500
• Sale of several items
• Excluded sales
• Leases for period longer than 1 year
• Representation as to credit of another
• Test of representation
• Consequence of misrepresentation
• Excluded misrepresentations
• Contracts between incapacitated parties
• Ratification of contract
• Conversion from unenforceable to voidable contract

• Void Contracts
• Concept
• Types of void contracts
• Distinction between void and rescissible contracts
• Distinction between void and unenforceable contracts
• Distinction between void and voidable contracts
• Characteristics of void contracts
• Contracts with illegal cause or subject matter (Arts. 1411 and 1412)
• Criminal acts
• Unlawful but not criminal acts
• Recovery under a void contract
• Repudiation of an illegal contract (Art. 1414)
• Recovery of usurious interest (Art. 1413)
• Recovery by an incapacitated person (Art. 1415)
• Recovery under a prohibitive statute (Art. 1416)
• Recovery under price control law (Art. 1417)
• Recovery for underpayment of wages (Art. 1418)
• Effect of severability clause (Art. 1420)
• Availability of defense of nullity of contract (Art. 1421)
• Subsequent void contract (Art. 1422)

XI. NATURAL OBLIGATIONS

• Definition (Art. 1423)
• Concept of natural obligations
• Requisites of natural obligations
• Conversion of a natural obligation to a civil obligation
• Guaranty of natural obligations (Art. 2052)
• Examples of natural obligations
• Payment of a prescribed debt (Art. 1424)
• Reimbursement to payor of a prescribed debt (Art. 1424)
• Payment after a failed action (Art. 1428)
• Payment by an heir in excess of hereditary rights (Art. 1429)
• Payment of a legacy in a will void as to form (Art. 1430)
XII, ESTOPPEL
• Concept and purpose of estoppel
• Estoppel under Section 2(a), Rule 131 Rules of Court
• Estoppel predicated upon an illegal act
• Concept of promissory estoppel
• Types of Estoppel
• Estoppel by deed
• Equitable estoppel
• Estoppel by laches (silence)
• Definition and elements of laches
• Estoppel by acquiescence
• Application of Estoppel
• Subsequent acquisition of title (Art. 1434)
• Sale by agent (Art. 1435)
• Estoppel of a lessee or bailee (Art. 1436)
• Estoppel against owner (Art. 1437)
• Estoppel from benefits (Art. 1438)
• Availability of defense of estoppel (Art. 1439)

XIII TRUSTS
• Definition and concept
• Characteristics of a trust
• Transfer of legal title to the trustee
• Parties to a trust (Art. 1440)
• Mayorazgo as a trust
• Nature of trustee’s functions
• The trust estate
• Express trusts
• Elements of express trust
• Proof of express trust (Art. 1443)
• Form of express trust (Art. 1444)
• Implied trusts
• Proof of implied trust (Art. 1447)
• Examples of implied trust
• Trust from payment (Art. 1448)
• Donation with reservation (Art. 1449)
• Lender made to appear as buyer (Art. 1450)
• Inheritance in trust (Art. 1451)
• Consolidation of title to one co-owner (Art. 1452)
• Trust based on a promise (Art. 1453)
• Trust constituted as a security (Art 1454)
• Investment of trusteed funds (Art. 1455)
• Property acquired through vice of consent (Art. 1456)
• Governing law of trusts (Art. 1442)
• Acceptance of beneficiaries (Art. 1446)

Note: Prescribed book- Tolentino

**The assignment for the first day of class is from Article 1156 to 1178 inclusive.