LEGAL FORMS

2 Semester, AY 2019-2020
nd

Lyceum of the Philippines University-College of Law

Course description

This course is designed to teach the fundamentals of drafting contracts, pleadings, and other legal
documents. At the end of this course, students are expected to:

1. Understand that being a competent advocate of your client’s interests means, among
others: (a) drafting contracts and other legal documents to reflect such interests and to
prevent litigation; and (b) drafting pleadings to clearly reflect his allegations and defenses
in proceedings before courts, offices, and tribunals, both in accordance with the law;
2. Be able to identify and draft the different parts of certain legal documents;
3. Be able to translate the terms of a transaction into legally enforceable provisions of a
contract;
4. Have gained exposure to and understand the purposes of the legal documents covered by
civil, criminal, and remedial laws.

Credits

Two (2) units

Grading system

40% Recitation
30% Homework
15% Midterms
15% Finals

Instructor

Atty. Sara Mae D. Mawis

saramawis@gmail.com
sara.mae.mawis@pwc.com
 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

PART ONE: CONTRACTS AND OTHER LEGAL DOCUMENTS

I. Contracts

A. Definition (Art. 1305, Republic Act (“R.A.”) No. 386, otherwise known as, “An Act
to Ordain and Institute the Civil Code of the Philippines” (“Civil Code”))

B. Principles
1. Freedom to contract (Art. 1306, Civil Code)
a. Norton Resources and Development Corp. v. All Asia Bank
Corporation, G.R. No. 162523, 25 November 2009
b. Morla v. Belmonte, G.R. No. 171146, 7 December 2011
c. Power Sector Assets and Liabilities Management Corp. v. Pozzolanic
Philippines, Inc., G.R. No. 183789, 24 August 2011

2. Mutuality of contracts (Art. 1308, Civil Code)

a. Spouses Limso v. PNB, G.R. No. 158622, 27 January 2016
b. Allied Banking Corporation v. CA, G.R. No. 124290, 16 January 1998
c. Cf.: Contract of adhesion
i. RCPI v. Verchez, G.R. No. 164349, 31 January 2006
ii. Pilipino Telephone Corporation v. Tecson, G.R. No. 156966, 7
May 2004
iii. PNB v. Spouses Manalo, G.R. No. 174433, 24 February 2014

3. Relativity of contracts (Art. 1311, Civil Code)

a. Integrated Packaging Corporation v. CA, G.R. No. 115117, 8 June 2000
b. Exceptions
i. Stipulations pour autrui (Art. 1311 (1), Civil Code; Spouses
Mamaril v. Boy Scouts of the Philippines, G.R. No. 179382, 14
January 2013)
ii. Contracts creating real rights (Art. 1312, Civil Code)
iii. Contracts in fraud of creditors (Arts. 1313 and 1388, Civil Code)
iv. Unlawful interference (Art. 1314, Civil Code)

4. Perfection by mere consent (Art. 1315, Civil Code)

a. C.F. Sharp & Co., Inc. v. Pioneer Insurance & Surety Corporation, G.R.
No. 179469, 15 February 2012
b. Heirs of Ignacio v. Home Bankers Savings and Trust Company, G.R.
No. 177783, 23 January 2013
c. Exception: Real contracts (Art. 1316, Civil Code)
 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

C. Requisites (Art. 1318, Civil Code; Heirs of Intac v. CA, G.R. No. 173211, 11 October
2012)

1. Consent
a. Definition (Art. 1319, Civil Code; Leonardo v. CA, G.R. No. 125485, 13
September 2004)
b. Offer (Arts. 1319, 1321, 1323, 1325, 1326, Civil Code; Swedish Match v.
CA, G.R. No. 128120, 20 October 2004)
c. Acceptance (Arts. 1319 to 1320, 1870, Civil Code; Insular Life Assurance
Company v. Asset Builders Corporation, G.R. No. 147410, 5 February
2004)
d. Option contract

i. Arts. 1324 and 1479, Civil Code

ii. Ang Yu Asuncion v. CA, G.R. No. 109125, 2 December 1994
iii. Earnest money and option money distinguished (Adelfa
Properties, Inc. v. CA, 240 SCRA 565 (1995))

e. Vitiated consent (Art. 1330, Civil Code)

i. Mistake (Arts. 1331 to 1334, Civil Code)

ii. Violence and intimidation (Arts. 1335 to 1336, Civil Code)
iii. Undue influence (Art. 1337, Civil Code)
iv. Fraud (Arts. 1388 to 1344, Civil Code)

f. Simulated contracts (Arts. 1345 to 1346, Civil Code)

2. Object
a. What may be the object of a contract (Arts. 1347 and 1349, Civil Code)
i. Blas v. Santos, G.R. No. L-14070, 29 March 1961
ii. Cf.: Partition inter vivos (Art. 1080, Civil Code)
b. What may not be the object of a contract (Arts. 1347 and 1348, Civil
Code)
i. Cf.: When the service has become so difficult as to be manifestly
beyond the contemplation of the parties (Art. 1267, Civil Code)

3. Cause/Consideration
a. Consideration in onerous and remuneratory contracts and contracts of
pure beneficience (Art. 1350, Civil Code)
b. Lack of consideration (Art. 1352, Civil Code; Montecillo v. Reynes, G.R.
No. 138018, 26 July 2002)
c. Statement of a false cause (Art. 1353, Civil Code)
 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

d. Failure to state the cause (Art. 1354, Civil Code)

e. Inadequacy of cause (Art. 1355, Civil Code)

4. Form
a. When is form required (Arts. 1356 and 1357, Civil Code)
b. When the contract must appear in a public document (Arts. 1358, 1403
(2), and 1405, Civil C0de)
a. Sappayani v. Gasmen, A.C. No. 7073, 1 September 2015
b. Dela Cruz v. Zabala, A.C. No. 6294, 17 November 2004
c. Ocampo v. Land Bank of the Philippines, G.R. No. 164968, 3 July
2009
d. Jurat and acknowledgment distinguished (Rule II, Sections 1, 2, and
5, Rules on A.M. No. 02-8-13-SC, otherwise known as “2004 Rules
on Notarial Practice;” Gamido v. NBP, G.R. No. 114829, 1 March
1995)

D. Parts (STARK, TINA L., DRAFTING CONTRACTS: HOW AND WHY LAWYERS DO WHAT
THEY DO 45-56, 137-172 (2014 ed.))

1. Introduction

2. Definitions

3. Action sections

4. Closing-related provisions

5. Other substantive business provisions

6. Endgame provisions

7. General provisions

8. Signature lines

9. Schedules and exhibits

10. Representations and warranties

11. Covenants and rights

12. Conditions to an obligation

 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

II. Contract of sale

A. Definition (Art. 1458, Civil Code; Coronel v. CA, G.R. No. 103577, 7 October 1996)

B. Characteristics

1. Nominate
2. Principal
3. Consensual (Art. 1475, Civil Code)
4. Bilateral/Reciprocal (Arts. 1169, 1191, and 1475, Civil Code)
5. Onerous
6. Commutative (Arts. 1355 and 1470, Civil Code)
7. Title (Manongsong v. Estimo, 404 SCRA 683 (2003); San Lorenzo Development
Corp. v. CA, G.R. No. 124242, 21 January 2005)

C. Sale distinguished from other contracts

a. Donation (Arts. 725 and 1471, Civil Code)

b. Barter (Arts. 1468, 1638 to 1641, Civil Code)
c. Contract for piece of work (Arts. 1467, 1713 to 1715, Civil Code)
d. Agency to sell (Art. 1466, Civil Code
e. Dacion en Pago (Arts. 1245 and 1934, Civil Code)
f. Lease (Arts. 1484 and 1485, Civil Code)
g. Contract to sell (Arts. 1458 and 1479, Civil Code; Spouses Torrecampo v.
Alindogan, Sr., G.R. No. 156405, 28 February 2007)

HOMEWORK #1

III. Loan (Art. 1933, Civil Code)

A. Commodatum

1. Definition (Art. 1935, Civil Code)

2. Subject matter of commodatum (Arts. 1936 and 1937, Civil Code; Producers
Bank v. CA, G.R. No. 115324, 19 February 2003)

3. Bailor need not be the owner of the thing (Art. 1938, Civil Code)
 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

4. Purely personal in character (Art. 1939, Civil Code)

5. Obligations of the bailee (Arts. 1941 to 1945, Civil Code)

6. Obligations of the bailor (Arts. 1946 to 1952, Civil Code)

B. Simple loan or mutuum

1. Definition (Art. 1953, Civil Code; Republic v. Grijaldo, G.R. No. L-20240, 31
December 1965)

2. Form of payment (Arts. 1249, 1250, and 1955, Civil Code)

3. Interest (Arts. 1956 to 1961, Civil Code; BSP Circular No. 799, issued on 21 June
2013; Frias v. San Diego-Sison, G.R. No. 155223, 4 April 2007; Lirag v. SSS, G.R.
No. L-33205, 31 August 1987)

HOMEWORK #2

IV. Real Estate Mortgage (REM)

A. Requisites (Arts. 2085 and 2125, Civil Code)

B. Objects of REM

1. Property mortgaged is indivisible (Arts. 2089 and 2090, Civil Code)

2. When property mortgaged may be alienated to the creditor (Art. 2087, Civil
Code)
3. What may be the object of a contract of REM (Art. 2124, Civil Code)
4. Mortgage extends to the improvements, fruits, and accrued income (Art. 2127,
Civil Code)

C. REM secures the fulfillment of the principal obligation (Art. 2126, Civil Code)

1. China Banking Corporation v. Lichauco, G.R. No. L-22001, 4 November 1924.

2. Angelo v. Director of Lands, et al., G.R. No. L-25694, 31 December 1926.
3. Traders Royal Bank v. Castañares, G.R. No. 172020, 6 December 2010.
4. Asia Trust Development Bank v. Tuble, G.R. No. 183987, 25 July 2012.
 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

D. Judicial and extrajudicial foreclosure of REM distinguished (Rule 68, Rules of

Court; Act No. 3135, as amended; Limpin, Jr. v. IAC, G.R. No. 70987, 30 January
1987)

E. Pactum commissorium (Art. 2088, Civil Code; Esguerra v. CA, G.R. No. L-40062,
3 May 1989

F. Stipulation forbidding the owner from alienating the mortgaged property is void
(Art. 2130, Civil Code)

HOMEWORK #3

V. Movable collaterals (R.A. No. 11057, otherwise known as, “An Act Strengthening the
Secured Transactions Legal Framework in the Philippines, which Shall Provide for the
Creation, Perfection, Determination of Priority Establishment of a Centralized Notice
Registry, and Enforcement of Security Interests in Personal Property, and for Other
Purposes”)

A. Creation of security interest (Secs. 5-10)

B. Perfection of security interest (Secs. 11-16)

C. Priority of security interest (Sec. 17)

D. Registration (Secs. 26-34)

E. Enforcement (Secs. 45-50, 53-54)

VI. Agency

A. Definition (Art. 1868, Civil Code; Rallos v. Felix Go Chan & Sons Realty Corp., 81
SCRA 251 (1978); Loadmasters Customs Services, Inc. v. Glodel Brokerage Corp.,
G.R. NO. 179446, 10 January 2011)

B. Characteristics

1. Nominate
2. Principal
3. Consensual (Arts. 1869 to 1873, 1408, 1921, and 1922, Civil Code)
4. Unilateral and primarily onerous (Art. 1875, Civil Code)
 SDM Outline on Contract Drafting
2nd Semester, AY 2019-2020
Lyceum of the Philippines University-College of Law

5. Preparatory and representative (Art. 1897, Civil Code; Victorias Milling Co. v.
CA, 333 SCRA 663 (2000); Eurotech Industrial Technologies, Inc. v. Cuizon, 521
SCRA 584 (2007))
6. Personal, fiduciary, and revocable (Orient Air Services v. CA, 197 SCRA 645
(1991)

C. Kinds of agency

1. General or universal agency v. special or particular agency (Art. 1876, Civil

Code; Siasat v. IAC, 139 SCRA 238 (1985))
2. Attorney-in-fact v. attorney-at-law
3. General power of attorney v. special power of attorney (Arts. 1877, 1878, 1880,
1874, 1879, and 1491 (2) Civil Code; Aggabao v. Parulan, Jr. (629 SCRA 562
(2010); Dominion Insurance Corp. v. CA, 376 SCRA 239 (2002); Veloso v. CA,
260 SCRA 593; Home Insurance Co. v. USL, 21 SCRA 863 (1967); Estate of Lino
Olaguer v. Ongjoco, 563 SCRA 373 (2008); Cosmic Lumber v. CA, 265 SCRA
168 (1996); Vda. De Chua v. IAC, 229 SCRA 99 (1994)

MIDTERMS

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