UNIVERSITY OF MINDANAO

Tagum College

Department of Business Administration Education

Bachelor of Science in Human Resource Management

Physically Distanced but Academically Engaged

Self-Instructional Manual (SIM) for Self-Directed Learning

(SDL)

Course/Subject: ACC 216 – Law on Obligations and Contracts

Name of Teacher: ATTY. SAMUEL DAVE SOLAS

THIS SIM/SDL MANUAL IS A DRAFT VERSION ONLY; NOT

FOR REPRODUCTION AND DISTRIBUTION OUTSIDE OF ITS
INTENDED USE. THIS IS INTENDED ONLY FOR THE USE OF
THE STUDENTS WHO ARE OFFICIALLY ENROLLED IN THE
COURSE/SUBJECT.
EXPECT REVISIONS OF THE MANUAL.
 Course Outline: ACC 216 – Law on
Obligations and Contracts

Course Coordinator : Atty. Samuel Dave O. Solas

Email : samueldave90@yahoo.com
Student Consultation : by appointment
Mobile Number : 0936-185-2411
Phone Number : (084) 655 9591 Local 116
Date of Effectivity : August 2020
Mode of Delivery :Distance Education Delivery (DED)
Time Frame : 54 Hours
Student Workload : Expected Self-Directed Learning
Requisites : None
Credit : 3-unit Lecture
Attendance Requirements : Minimum of 95% attendance in all scheduled
virtual or face to face sessions and the Learning
Management System (LMS)

Course Outline Policy

Areas of Concern Details

Contact and Non-contact This 3-unit course self-instructional manual is designed
Hours for blended learning mode of instructional delivery with
scheduled face to face or virtual sessions. The expected
number of hours will be 54, including the face to face or
virtual meetings. A Learning Management System
(LMS),Quipper, will be used to facilitate your learning.
Other sessions may also be conducted through online
communication channels such as Facebook, Messenger,
WhatsApp, Viber, E-mail, Line, Zoom, Skype, or any
other similar applications. You may also contact the
course coordinator through a mobile number or
telephone.
Assessment Task Submission of assessment tasks shall be on the 3 rd, 5th,
Submission 7th,and 9th week of the term. The assessment paper shall
be attached with a cover page indicating the title of the
assessment task (if the task is a performance), the name
of the course coordinator, date of submission, and the
name of the student. The document should be e-mailed
to the course coordinator. It is also expected that you
 already paid your tuition and other fees before the
submission of the assessment task.

If the assessment task is done in real-time through the

features in the Learning Management System, the
schedule shall be arranged ahead of time by the course
coordinator.
Turnitin submission To ensure honesty and authenticity, all assessment
(if necessary) tasks are required to be submitted through Turnitin with
a maximum similarity index of 30% allowed. This means
that if your paper goes beyond 30%, the students will
either opt to redo her/his paper or explain in writing
addressed to the course coordinator the reasons for the
similarity. Also, if the document has reached a more than
30% similarity index, the student may be called for
disciplinary action following the University’s OPM on
Intellectual and Academic Honesty.

Please note that academic dishonesty such as cheating

and commissioning other students or people to complete
the task for you have severe punishments (reprimand,
warning, expulsion).
Penalties for Late The score for an assessment item submitted after
Assignments / thedesignated time on the due date, without an
Assessments approvedextension of time, will be reduced by 5% of the
possiblemaximum score for that assessment item for
each daythat the assessment item is late.

However, if the late submission of the assessment

paperhas a valid reason, a letter of explanation should
besubmitted and approved by the course coordinator.
Ifnecessary, you will also be required to
present/attachpieces of evidence.
Return of Assignments / Assessment tasks will be returned to you within two (2)
Assessments weeks after the submission. This will be returned through
e-mail or via the Quipper.

For group assessment tasks, the course coordinator will

require some or few of the students for online or virtual
sessions to ask clarificatory questions to validate the
originality of the assessment task submitted and to
ensure that all the group members are involved.
Assignment Resubmission You should request in writing addressed to the course
coordinator your intention to resubmit an
assessmenttask. The resubmission is premised on the
student’sfailure to comply with the similarity index and
 otherreasonable grounds such as academic literacy
hree(3) standards or other reasonable circumstances,
e.g.,illness, accident financial constraints.
Re-marking of You should request in writing addressed to the course
Assessment Papers and coordinator your intention to appeal or contest the score
Appeal given to an assessment task. The letter should explicitly
explain the reasons/points to contest the grade. The
course coordinator shall communicate with you on the
approval and disapproval of the request.

If disapproved by the course coordinator, you can

elevate your case to the program head or the dean with
the original letter of request. The final decision will come
from the dean of the college.
Grading System Your grades will be based on the following:

Examinations
First to Third 30%
Final 30% = 60%
Class Participations
Quizzes 10%
Assignments 5%
Research/Requirements 15%
Oral Recitation 10% = 40%
Total = 100%

Submission of the final grades shall follow the

usualUniversity system and procedures.
Preferred Referencing Use the general practice of the APA 6th Edition.
Style
Student Communication You are required to have ane-mail account, which is a
requirement to access the LMS portal. Then, the course
coordinator shall enroll the students to have access to
the materials and resources of the course.

You may call or send SMS to your course coordinator

through his/her phone number.Online communication
channels, such as those stated above, may be used.

You can also meet the course coordinator in

personthrough the scheduled face to face sessions to
raiseyour issues and concerns.
Contact Details of the Dr. Gina Fe G. Israel
Dean Dean of College
E-mail: deansofficetagum@umindanao.edu.ph
Phone: 09158325092 / 09099942314
 Marck Lester L. Navales, CPA, MBA
Assistant Dean
E-mail:navalesmarck@umindanao.edu.ph
Phone: 0975 0517 851
Contact Details of the John Carlo P. Luzano
Program Head E-mail: johncarloluzano@umindanao.edu.ph
Phone: 09352317666
Students with Special Students with special needs shall communicate with the
Needs course coordinator about the nature of his or her special
needs. Depending on the nature of the need, the course
coordinator with the approval of the program head may
provide alternative assessment tasks or extension of the
deadline for submission of assessment tasks. However,
the alternative assessment tasks should still be in the
service ofachieving the desired course learning
outcomes.
Library Contact Details Clarissa R. Donayre, MSLS
E-mail:lictagum@umindanao.edu.ph
Phone: 0927 395 1639
Well-being Welfare Rochen D. Yntig, RGC
Support Help Desk GSTC Head
Contact Details E-mail: chenny.yntig@gmail.com
Phone: 0932 771 7219

Mersun Faith A. Delco, RPm

Psychometrician
E-mail: mersunfaithdelco@gmail.com
Phone: 0927 608 6037

Alfred Joshua M. Navarro

Facilitator
E-mail: is40fotb@gmail.com
Phone: 0977 341 6064

Course Information – See or download the course syllabus in Quipper

CC’s Voice : Hi there! Good day! Welcome to this course, ACC 216 – Law on
Obligations and Contracts. In this course you will be equipped with the basic laws and
legal concepts about obligations and contracts. It will enable you to be more aware of
the nuances of the law, and in turn, provide you with good foundation for more complex
law courses. This covers two parts, namely, the Obligation and the Contracts, which
includes practical exercises purported to develop your analytical skills and critical
thinking necessary to enable you to resolve legal issues and problems.
CO : As a student of this course, you are expected to Apply legal provision
to specific problem involving contracts as well as being able to
Distinguish each kind of obligations or form of contracts, various
types of extinguishment of obligation, and also unenforceable,
voidable contracts.
Let us begin!

BIG PICTURE A

Week 1-3: Unit Learning Outcomes (ULO): At the end of the unit, you are expected
to:
a. Describe the general provisions and the nature and effects of obligations; and
b. Discuss the differences between the kinds of obligations.

Big Picture in Focus: ULOa. General Provisions and Nature and Effects of
Obligation

Metalanguage

In this section, the essential terms relevant to the study of laws and obligations to
demonstrate ULOa will be operationally defined to establish a standard frame of
reference. You will encounter these terms as we go through this course. Please refer to
these definitions in case you will face difficulty in understanding the educational
concepts.

 Obligation.Article 1156:It is a juridical necessity to give, to do or not to do.

An obligation is a juridical relation whereby a person (called the creditor) may
demand from another (called the debtor) the observance of a determinative
conduct (the giving, doing, or not doing; and in case of breach, may demand
satisfaction form the assets of the latter. (Lawyer’s Journal, 31 January 1951,
p.47)
 Negligence. A failure to observe for the protection of the interest of another
person that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such person suffers injury (Mendoza v. Spouses
Gomez, G.R. 160110, 18 June 2014)
 Real Obligation. An obligation to give.
 Personal Obligation. An Obligation to do or not to do.(Syjuco v. Court of
Appeals, G.R. No. L-80800, 12 April 1989)
 Diligence. It is the attention and care required of a person in a given situation
and is the opposite of negligence.
 Fraud or Malice. A “conscious and intentional design to evade the normal
fulfillment of existing obligations” and is thus incompatible with good faith.
 Caso fortuito or force majeure. Are extraordinary events not foreseeable, or
which, though foreseeable, are inevitable.
 Fortuitous Event. May either be an act of God. Or natural occurrences such as
floods or typhoons, or an act of man, such as riots, strikes, or wars.
Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the first two (2)
weeks of the course, you need to fully understand the following essential knowledge
thatwill be laid down in the succeeding pages. Please note that you are not limited
torefer to these resources exclusively. Thus, you are expected to utilize other
books,research articles, and other resources that are available in the university’s library,
e.g.,e-brary, search.proquest.com, etc.

Essential Elements of an Obligation. An obligation is created upon the concurrence

of the following essential elements:
1. The vinculum juris or juridical tie which is the efficient cause established by the
various sources of obligations (law, contracts, quasi-contracts, delicts, and quasi-
delicts);
2. The object which is the prestation or conduct required to be observed (to give,
to do, or not to do); and
3. The subject-persons who, viewed from the demandability of the obligation, are
the active subject (oblige or creditor) and the passive subject (obligor or debtor)
[Asuncion v. The Honorable Court of Appeals, G.R. No. 109125, 2 December
1994]

Civil Obligations Distinguished from Natural Obligations. Article 1423 classifies

obligations into civil or natural:
 Civil Obligations grant a right of action by which their performance can be
compelled.
 Natural Obligations, not being based on positive law but on equity and natural
law, do not grant such a right. After their voluntary fulfillment by debtor, however,
they authorize the retention of what was delivered or rendered by reason thereof.

ARTICLE 1157

Obligations arise from:

1. Law
 Includes the enactments made by a legislative body in the exercise of its
original or delegated authority.
2. Contracts;
  It is a meeting of minds between two persons in which one binds himself,
with respect to another, to give something or to render some service. (Art.
1305)
3. Quasi-contracts;
 Involves a juridical relation that the law creates on the basis of certain
voluntary, unilateral, and lawful acts of a person to avoid unjust
enrichment.
4. Acts or omissions punished by law; and
 Acts or omissions punished by law are felonies. Felonies or delicts are
committed not only by means of deceit (dolo) but also by means of fault
(culpa).
5. Quasi-delicts.
 Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damages done, and such fault or
negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict (Art. 2176).

OBLIGATIONS ARISING FROM LAW VS. OBLIGATIONS ARISING FROM

CONTRACTS

Law
Obligations arising from law must be
clearly and expressly stated in the law
in order for them to be demandable.
Consent is not necessary to be bound.
Prescriptive period is 10 years.
Contract
Obligations arising from contracts are
based on the stipulations between the
parties which are the law between them
as long as they are not contrary to law,
morals, good customs, public policy, or
public order.
Consent, object, and cause or
consideration are essential requisites.
Prescriptive period is 10 years for
written contracts, 6 years for oral
contracts.

OBLIGATIONS ARISING FROM CONTRACTS VS. OBLIGATIONS ARISING FROM

QUASI-CONTRACTS

Contracts
Obligations arising contracts due to the
stipulations between the parties
Contracts are due to bilateral actions.
Their elements are consent, object, and
cause or consideration.
Quasi-contracts
Obligations arise from quasi-contracts
to prevent unjust enrichment
Quasi-contracts are due to the lawful,
voluntary, and unilateral acts of one
person so that no one shall be unjustly

Prescriptive period is 10 years for
written contracts; 6 years for oral
contracts.
NEGOTIORIUM GESTIO VS. SOLUTIO INDEBITI
Negotiorium Gestio
Voluntary management of the property
of another without authority, resulting in
the unjust enrichment of the owner of
the property
The obligation of the debtor is to pay the
necessary and useful expenses of the
officious manager, as well as the
damages he suffered in the
performance of his duties.
OBLIGATIONS ARISING FROM DELICTS VS. OBLIGATIONS ARISING FROM
QUASI-DELICTS
Delicts
Obligations arising from delicts due to
the crime committed. These offenses
are punishable under the RPC or other
penal laws.
The civil liability arises from the crime or
offenses punishable under the RPC or
penal laws.
The civil liability includes restitution,
reparation, and indemnification for
damages.
Prescriptive periods are those stated in
enriched or benefited at the expense of
another.
Prescriptive period is 6 years.
Solutio Indebiti
Payment made by mistake where there
was no right to receive payment,
resulting in the unjust enrichment of the
payee
The obligation of the debtor is to return
what he received by mistake
Quasi-delicts
Obligations arise from quasi-delicts
because of the damage due to an act or
omission, through fault or negligence,
when there is no pre-existing
contractual relations between the
parties.
Liability arises due to fault or
negligence.
Liability consists in the payment of
damages.
Prescriptive period is 4 years.
 the RPC or penal laws.

NATURE AND EFFECTS OF OBLIGATIONS

ESSENTIAL ELEMENTS OF AN OBLIGATION

1. Juridical tie/Efficient Cause Law

Contracts
Quasi-contracts
Delicts
Quasi-delicts
2. Object/Prestation To give
To do
Not to do
3. Subject-persons Creditor/oblige (active)
Debtor/obligor (passive)

Article 1163

Every person obliged to give something is also obliged to take care of it with proper
diligence of a good father of a family unless the law or the stipulation of the parties
require another standard of care

REMEDIES OF THE CREDITOR IN AN OBLIGATION TO GIVE A SPECIFIC THING

VS. A GENERIC THING

Specific Thing Generic Thing

Demand the delivery of the specific Demand delivery of the generic thing
 thing from the debtor (Specific
performance) (Art. 1165 [1])
Demand damages in case of fraud,
negligence, delay, or contravention of
the tenor of the obligation (Art. 1170)
Rescission with damages in reciprocal
obligations (Art. 1191)
from the debtor (specific performance)
Demand delivery of the generic thing
from a third person at the cost of the
debtor (substitute performance) (Art.
1165 [2])
Creditor may obtain the generic thing
himself and charge the cost to the
debtor (substitute performance)
Demand damages in case of fraud,
negligence, delay, or contravention of
the tenor of the obligation (Art. 1170)
Rescission with damages in reciprocal
obligations (Art. 1191)

Article 1164
The creditor has a right to the fruits of the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it until the same has been delivered
to him.

Article 1165
When what is to be delivered is a determinate thing, the creditor, in addition to the right
granted him by article 1170, may compel the debtor to make the delivery.

If the thing is indeterminate or generic, he may ask that the obligation be complied with
at the expenses of the debtor.

If the obligor delays, or has promised to deliver the same thing to two or more persons
who do not have the same interest, he shall be responsible for any fortuitous event until
he has effected the delivery.

Article 1166
The obligation to give a determinate thing includes that of delivering all its accessions
and accessories, even though they may not have been mentioned.

DUTIES OF THE DEBTOR IN AN OBLIGATION TO GIVE A SPECIFIC THING VS. A

GENERIC THING
 Specific Thing Generic Thing
1. Take care of the thing with diligence 1 Deliver the generic thing (Art. 1165)
of a good father of a family (Art.
1163)
2. Deliver the fruits of the thing (Art. 2 Pay damages in case of fraud,
1164) negligence, delay or contravention of
tenor of the obligation (Art. 1170)
3. Deliver the specific thing (Art. 1165)
4. Deliver the accessions and
accessories of the thing (Art. 1166)
5. Pay damages in case of fraud,
negligence, delay, or contravention
of tenor of the obligation (Art. 1165
and 1170)

Article 1167
If the person obliged to do something fails to do it, the same shall be executed at his
cost.
This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be undone.

Article 1168
When the obligation consists in not doing and the obligor does what has been forbidden
him, it shall also be undone at his expense.

Article 1169
Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may
exist:
(1) When the obligation or the law expressly so declare;
(2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract;
(3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform. In reciprocal obligations, neither party incurs in delay if the other does
not comply or is not ready to comply in a proper manner with what is incumbent upon
him. From the moment one of the

Article 1170
Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof are liable for
damages.

Article 1171
Responsibility arising from fraud is demandable in all obligations. Any waiver of an
action for future fraud is void.

Article 1172
Responsibility arising from negligence in the performance of every kind of obligation is
also demandable, but such liability shall may be regulated by the courts, according to
the circumstances.

Article 1173
The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad faith, the provisions
of articles 1171 and 2201, paragraph 2, shall apply.

FRAUD vs. NEGLIGENCE

Fraud
Intentional evasion of the fulfillment of
the obligation
Liability for past fraud may be waived,
waiver of future is void.
The debtor is liable for all the damages
reasonably attributed to the breach of
the obligation
Negligence
Omission of diligence required by the
nature of the obligation
There is liability of the negligence of the
guilty party is the proximate cause of
the damage; such liability for damages
is mitigated by the contributory
negligence of the injured party.
The debtor is liable for the damages
due to the natural and probable
consequences of the breach of the
obligation, as well as the damages
foreseen, if he is negligent in good faith

The debtor is liable for all the damages

reasonably attributed to the breach of
the obligation, if he is negligent and in
bad faith.

Article 1174
Except in cases expressly specified by law, or when it otherwise declared by stipulation,
or when the nature of the obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which, though foreseen,
were inevitable.

FORTUITOUS EVENTS

General Rule Elements Exceptions

No one is liable 1.Cause of event is independent of 1. Law specifies that a
for fortuitous human will party is liable for
events fortuitous events
2. Event is impossible to foresee 2. Parties declare by
or impossible to avoid stipulation that a party is
liable for fortuitous events
3. Occurrence renders it 3. Nature of obligation
impossible for debtor to fulfill his requires the assumption
obligation in a normal manner of risk
4. Debtor did not participate in the
aggravation of the result due to a
fraud, fault, or negligence

Article 1175
Usurious transactions shall be governed by special laws.

Article 1176
The receipt of the principal by the creditor without reservation with respect to the
interest shall give rise to the presumption that said interest has been paid. The receipt
of a later installment of a debt without reservation as to prior installments, shall likewise
raise the presumption that such installments have been paid.

Article 1177
The creditors, after having pursued the property in possession of the debtor to satisfy
their claims, may exercise all the rights and bring all the actions of the latter for the
same purpose, save those which are inherent in his person; they may also impugn the
acts which the debtor may have done to defraud them.
 Self Help: You can also refer to the sources below to help you further
understand the lesson:

De Leon, H.S. & De Leon, H.M. (2014). The Law on Obligations and
Contracts.Revised Edition. Manila: Rex Bookstore.

Samson, Anna Rhea Valle Esq..(2016). Law on Obligations and Contracts. Quezon
City :C & E Publishing, Inc.

Big Picture in Focus: ULOb. Discuss the differences between the kinds of
Obligations

Metalanguage

For you to demonstrate the ULOb, you need to have an understanding of the
following operational terms.

 Pure Obligation. An obligation is pure if it contains no terms or condition

whatsoever upon which depends the fulfillment of the obligation contracted by
the debtor.
 Conditional Obligation. A very future and uncertain event upon which an
obligation is made to depend. It is a future and uncertain event upon which the
acquisition or resolution of rights is made to depend by those who execute the
juridical act.
  Obligations with a period. A space of time which has an influence on
obligations as a result of a juridical act, and either suspends their
demandableness or produces their extinguishment.
 Alternative Obligation. There is more than one object or prestation, and the
fulfillment of one prestation is sufficient.
 Solidary Obligation. Is one in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand the whole obligation.
 Joint Obligation. Each debtor answers only for the part of the whole liability and
to each creditor belongs only a part of the correlative rights.
 Divisible Obligation. If the obligation is divisible, the valid part of the obligation
may be performed.
 Indivisible Obligation. Is an obligation that cannot be validly performed in parts,
whatever may be the nature of the thing which is the object thereof.
 Obligations with Penal Clause. Under Article 1226, the penalty clause takes
place of the indemnity for damages and the payment of interests in case of non-
compliance with the obligation.

Essential Knowledge

In this section, we will discuss the different kinds of Obligations which are
classified as follows: (1) pure, (2) conditional, (3) with a period, (4) alternative, (5)
facultative, (6) joint, (7) solidary, (8) divisible, (9) indivisible, and (10) with a penal
clause.
SECTION 1: PURE AND CONDITIONAL OBLIGATION
Art. 1179
Every obligation whose performance does not depend upon a future or uncertain event,
or upon a past event unknown to the parties, is demandable at once. Every obligation
which contains a resolutory condition shall also be demandable, without prejudice to the
effects of the happening of the event.

Pure Obligation. An obligation is pure if it contains no terms or condition whatsoever

upon which depends the fulfillment of the obligation contracted by the debtor.

Conditional Obligation. A very future and uncertain event upon which an obligation is
made to depend. It is a future and uncertain event upon which the acquisition or
resolution of rights is made to depend by those who execute the juridical act.

 Suspensive Condition is one which the acquisition of the rights depend upon
the happening of an event which constitutes the condition.

 Resolutory Condition is one which extinguishes rights and obligations already

existing.

Article 1180
When the debtor binds himself to pay when his means permit him to do so, the
obligation shall be deemed to be one with a period, subject to the provisions of article
1197.

Obligations with a period. A space of time which has an influence on obligations as a

result of a juridical act, and either suspends their demandableness or produces their
extinguishment.

PURE OBLIGATIONS, CONDITIONAL OBLIGATIONS, AND OBLIGATIONS WITH A

PERIOD DISTINGUISHED

Pure Obligation Conditional Obligation Obligation with a Period

Contains no condition or Contains a condition – a Contains a period – a
period future and uncertain event future and certain event
– upon which an (day certain) – upon the
obligation is made to arrival of which an
depend obligation is demandable
or is terminated
Demandable at once If the condition is If the period is
suspensive, the obligation suspensive, the obligation
is demandable upon the is demandable upon the
happening of the event arrival of the day certain.
which constitutes the
condition.

If the condition is If the period is resolutory,

resolutory, the obligation
is demandable at once
but terminates upon the
happening of the event
which constitutes the
condition.
obligation is demandable
at once but terminates
upon the arrival of the day
certain.

Article 1181

In conditional obligations, the acquisition of rights, as well as the extinguishment or loss

of those already acquired, shall depend upon the happening of the event which
constitutes the condition.

EFFECTS OF THE HAPPENING OF A SUSPENSIVE CONDITION.

When a contract is subject to a suspensive condition, its birth or effectivity can take
place only if and when the event constitutes the condition happens or is fulfilled.

EFFECTS OF THE HAPPENING OF A RESOLUTORY CONDITION.

When a contract is subject to a resolutory condition, it is immediately effective and
demandable. However, upon the happening of the future and uncertain event which
constitutes the condition, the obligation created by the agreement ceases to exist.

Article 1182
When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third
person, the obligation shall take effect in conformity with the provisions of this Code.

FULFILLMENT OF THE CONDITION. The fulfillment of the condition may depend:

1. Upon the sole will of the debtor;
2. Upon the sole will of the creditor;
3. Upon the sole will of the third person;
4. Upon chance;
5. Partly upon the will of the debtor and partly upon chance or the will of a third
person;
6. Partly upon the will of the creditor and partly upon chance or the will of a third
person; or
7. Partly upon the will of a third person and partly upon chance,

PURELY PROTESTIVE CONDTION. An obligation has a purely protestative

condition if the fulfillment of the condition depends upon the sole will of the debtor or
the creditor. Obligations with purely protestative conditions which are dependent solely
on the will of the debtor are void (Art. 1182). To allow the fulfillment of conditions to
depend exclusively on the debtor’s will would be to sanction illusory obligations.

CASUAL AND MIXED CONDTIONS. Obligations with casual or mixed conditions are
valid.

 Casual conditions depend on chance, hazard, or the will of a third person.

 Mixed conditions depend partly on the will of the debtor or creditor, and partly
on chance, hazard, or the will of a third person.

Article 1183
Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation
is divisible, that part thereof which is not affected by the impossible or unlawful condition
shall be valid. The condition not to do an impossible thing shall be considered as not
having been agreed upon

CONDITIONS WHICH ANNUL THE OBLIGATION. The following obligations are void:
1. Those with impossible conditions;
2. Those contrary to good customs or public policy; and
 3. Those prohibited by law.

DIVISIBLE OBLIGATIONS. If the obligation is divisible, the valid part of the obligation
may be performed. An indivisible obligation is an obligation that cannot be validly
performed in parts, whatever may be the nature of the thing which is the object thereof.

Article 1184
The condition that some event will not happen at a determinate time shall extinguish the
obligation as soon as the time expires or if it has become indubitable that the event will
not take place.

Example: if the debtor promises to give the creditor P3,000 if the creditor marries X by
February 14, 2017, the obligation is extinguished if upon the arrival of the date, the
creditor is not yet married to X. The obligation is also extinguished even before
February 14, 2017 if X dies (before February 14, 2017) as there is no doubt that the
marriage of the creditor and X will not take place.

Article 1185
The condition that some even will not happen at a determinate time shall render the
obligation effective from the moment the time indicated has elapsed, or if it has become
evident that the event cannot occur.
If no time has been fixed, the condition shall be deemed fulfilled at such time as may
have probably been contemplated, bearing in mind the nature of the obligation.

Example:if the debtor promises to give the creditor P3,000 if the creditor does not marry
X by February 14, 2017, the obligation becomes effective if upon the arrival of the date,
the creditor is not married to X. The obligation is also effective even before February 14,
2017 if X dies (before February 14, 2017) as there is no doubt that the marriage of the
creditor and X will not occur.

EFFECTS OF VARIOUS SUSPENSIVE CONDITIONS ON OBLIGATIONS

Potestative Condition Both the condition and the conditional obligation are
(dependent on the void.
sole will of the debtor) If there is a pre-existing obligation, only the condition is
void and the debt is valid. The courts may fix the period
for the payment of the debt.
Potestative Condtion Both the condition and the conditional obligation are
(dependent on the valid.
sole will of the
creditor)
Casual or Mixed Both the condition and the conditional obligation are
 Condition valid.
Impossible condition Both the conditions and the conditional obligations are
(condition contrary to void.
law, good customs, or If there is a pre-existing obligation, only the condition is
public policy) void and the debt is valid. The courts may fix the period
for the payment of the debt.
Positive Suspensive The Obligation is extinguished as soon as the time
Condition expires, or it is indubitable that the event will not take
place.
Negative Suspensive The obligation becomes effective as soon as the time
Condition indicated lapses, or it is evident that the event will not
occur.

Article 1186
The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.

Article 1187
The effects of a conditional obligation to give, once the condition has been fulfilled, shall
retroact to the day of the constitution of the obligation. Nevertheless, when the
obligation imposes reciprocal prestations upon the parties, the fruits and interests during
the pendency of the condition shall be deemd to have been mutually compensated. If
the obligation is unilateral, the debtor shall appropriate the fruits and 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.

In obligations to do and not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.

Article 1188
The creditor may, before the fulfillment of the condition, bring the appropriate actions for
the preservation of his right.

The debtor may recover what during the same time he has paid by mistake in case of a
suspensive condition.

Article 1189
When the conditions have been imposed with the intention of suspending the efficacy of
an obligation to give, the following rules shall be observed in case of the improvement,
loss or deterioration of the thing during the pendency of the condition.
 (1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages;
it is understood that the thing is lost when it perishes, or goes out of commerce, or
disappears in such a way that its existence is unknown or it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be
borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose between the
rescission of the obligation and its fulfillment, with indeminity for damages in either case:
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the
benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that
granted to the usufructuary.

Article 1190
When the conditions have for their purpose the extinguishment of an obligation to give,
the parties, upon the fulfillment of said conditions, shall return to each other what they
have received. In case of the loss, deterioration or improvement of the thing, the
provisions which, with respect to the debtor, are laid down in the preceding article shall
be applied to the party who is bound to return. As for obligations to do and not to do, the
provisions of the second paragraph of article 1187 shall be observed as regards the
effect of the extinguishment of the obligation.

Article 1191
The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him. The injured party may
choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible. The court shall decree the rescission
claimed, unless there by just cause authorizing the fixing of a period. This is understood
to be without prejudice to the rights of third persons who have acquired the thing, in
accordance with articles 1385 and 1388 and the Mortgage Law.

EFFECT OF RESCISSION. Rescission is defined as the “unmaking of a contract, or

its undoing from the beginning, and not merely its termination”

Article 1192
In case both parties have committed a breach of the obligation, the liability of the first
infractor shall be equitably tempered by the courts. If it cannot be determined which of
the parties first violated the contract, the same shall be deemed extinguished, and each
shall bear his own damages.

SECTION 2: OBLIGATIONS WITH A PERIOD

Article 1193
Obligations for whose fulfillment a day certain has been fixed, shall be demandable only
when that day comes. Obligations with a resolutory period take effect at once, but
terminate upon arrival of the day certain. A day certain is understood to be that which
must necessarily come, although it may not be known when. If the uncertainty consists
in whether the day will come or not, the obligation is conditional, and it shall be
regulated by the rules of the preceding Section.

Article 1194
In case of loss, deterioration or improvement of the thing before the arrival of the day
certain, the rules in article 1189 shall be observed.

RULES IN CASE OF THE LOSS, DETERIORATION, OR IMPROVEMENT OF THE

SPECIFIC THING BEFORE THE ARRIVAL OF THE PERIOD

Loss Without the debtor’s fault The obligation is extinguished

Through the fault of the The debtor is liable for
debtor damages
Deterioration Without the debtor’s fault The creditor bears the
impairments
Through the fault of debtor The Creditor may choose
either:
(1) Rescission with
damages; or
(2) Specific performances
with damages
Improvement By nature or time The improvement shall insure
to the benefit of the creditor
Through the expense of the The debtor has the right of
debtor usufructuary

Article 1195
Anything paid or delivered before the arrival of the period, the obligor being unaware of
the period or believing that the obligation has become due and demandable, may be
recovered, with the fruits and interests.

Article 1196
Whenever in an obligation a period is designated, it is presumed to have been
established for the benefit of both the creditor and the debtor, unless from the tenor of
the same or other circumstances it should appear that the period has been established
in favor of one or of the other.

Article 1197
If the obligation does not fix a period, but from its nature and the circumstances it can
be inferred that a period was intended, the courts may fix the duration thereof. The
courts shall also fix the duration of the period when it depends upon the will of the
debtor. In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them.

Article 1198
The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has
promised;
(3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor
agreed to the period;
(5) When the debtor attempts to abscond.

SECTION 3: ALTERNATIVE OBLIGATION

Article 1199
A person alternatively bound by different prestations shall completely perform one of
them. The creditor cannot be compelled to receive part of one and part of the other
undertaking.

Article 1200
The right of choice belongs to the debtor, unless it has been expressly granted to the
creditor. The debtor shall have no right to choose those prestations which are
impossible, unlawful or which could not have been the object of the obligation.

Article 1201
The choice shall produce no effect except from the time it has been communicated.

Article 1202
The debtor shall lose the right of choice when among the prestations whereby he is
alternatively bound, only one is practicable.

Article 1203
If through the creditor's acts the debtor cannot make a choice according to the terms of
the obligation, the latter may rescind the contract with damages.

Article 1204
The creditor shall have a right to indemnity for damages when, through the fault of the
debtor, all the things which are alternatively the object of the obligation have been lost,
or the compliance of the obligation has become impossible. The indemnity shall be fixed
taking as a basis the value of the last thing which disappeared, or that of the service
which last became impossible. Damages other than the value of the last thing or service
may also be awarded.

Article 1205
When the choice has been expressly given to the creditor, the obligation shall cease to
be alternative from the day when the selection has been communicated to the debtor.
Until then the responsibility of the debtor shall be governed by the following rules: (1) If
one of the things is lost through a fortuitous event, he shall perform the obligation by
delivering that which the creditor should choose from among the remainder, or that
which remains if only one subsists; (2) If the loss of one of the things occurs through the
fault of the debtor, the creditor may claim any of those subsisting, or the price of that
which, through the fault of the former, has disappeared, with a right to damages; (3) If
all the things are lost through the fault of the debtor, the choice by the creditor shall fall
upon the price of any one of them, also with indemnity for damages. The same rules
shall be applied to obligations to do or not to do in case one, some or all of the
prestations should become impossible.

Article 1206
When only one prestation has been agreed upon, but the obligor may render another in
substitution, the obligation is called facultative. The loss or deterioration of the thing
intended as a substitute, through the negligence of the obligor does not render him
liable. But once the substitution has been made, the obligor is liable for the loss of the
substitute on account of his delay, negligence or fraud.

SECTION 4: JOINT AND SOLIDARITY OBLIGATIONS

Article 1207
The concurrence of two or more creditors or of two or more debtors in one and the
same obligation does not imply that each one of the former has a right to demand, or
that each one of the latter is bound to render, entire compliance with the prestation.
There is solidary liability only when the obligation expressly so states, or when the law
or the nature of the obligation requires solidarity.

Article 1208
If from the law, or the nature or the wording of the obligations to which the preceding
article refers the contrary does not appear, the credit or debt shall be presumed to be
divided into as many equal shares as there are creditors or debtors, the credits or debts
being considered distinct from one another, subject to the Rules of Court governing the
multiplicity of suits.

Article 1209
If the division is impossible, the right of the creditors may be prejudiced only by their
collective acts, and the debt can be enforced only by proceeding against all the debtors.
If one of the latter should be insolvent, the other shall not be liable for his share.
Article 1210
The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.

Article 1211
Solidarity may exist although the creditors and the debtors may not be bound in the
same manner and by the same periods and conditions.

Article 1212
Each one of the solidary creditors may do whatever may be useful to the others, but not
anything which may be prejudicial to the latter

Article 1213
A solidary creditor cannot assign his rights without the consent of the others.

Article 1214
The debtor may pay any one of the solidary creditors; but if any demand, judicial or
extrajudicial, has been made by one of them, payment should be made to him.

Article 1215
Novation, compensation, confusion or remission of the debt, made by any of the
solidary creditors or with any of the solidary debtors, shall extinguish the obligation,
without prejudice to the provisions of article 1219. The creditor who may have executed
any of these acts, as well as he who collects the debt, shall be liable to the others for
the share in the obligation corresponding to them.

Article 1216
The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be an obstacle to
those which may subsequently be directed against the others, so long as the debt has
not been fully collected.

Article 1217
Payment made by one of the solidary debtors extinguishes the obligation. If two or more
solidary debtors offer to pay, the creditor may choose which offer to accept. He who
made the payment may claim from his co-debtors only the share which corresponds to
each, with the interest for the payment already made. If the payment is made before the
debt is due, no interest for the intervening period may be demanded. When one of the
solidary debtors cannot, because of his insolvency, reimburse his share to the debtor
paying the obligation, such share shall be borne by all his co-debtors, in proportion to
the debt of each.

Article 1218
Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors
if such payment is made after the obligation has prescribed or become illegal.
Article 1219
The remission made by the creditor of the share which affects one of the solidary
debtors does not release the latter from his responsibility towards the co-debtors, in
case the debt has been totally paid by anyone of them before the remission was
effected.

Article 1220
The remission of the whole obligation, obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-debtors.

Article 1221
If the thing has been lost or if the prestation has become impossible without the fault of
the solidary debtors, the obligation shall be extinguished.
If there was fault on the part of any one of them, all shall be responsible to the creditor,
for the price and the payment of damages and interest, without prejudice to their action
against the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the performance has become impossible
after one of the solidary debtors has incurred in delay through the judicial or extrajudicial
demand upon him by the creditor, the provisions of the preceding paragraph shall apply.

Article 1222
A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which
are derived from the nature of the obligation and of those which are personal to him, or
pertain to his own share. With respect to those which personally belong to the others,
he may avail himself thereof only as regards that part of the debt for which the latter are
responsible.

SECTION 5: DIVISIBLE AND INDIVISIBLE OBLIGATION

Article 1223
The divisibility or indivisibility of the things that are the object of obligations in which
there is only one debtor and only one creditor does not alter or modify the provisions of
Chapter 2 of this Title (Nature and Effect of Obligations)

Article 1224
A joint indivisible obligation gives rise to indemnity for damages from the time anyone of
the debtors does not comply with his undertaking. The debtors who may have been
ready to fulfill their promises shall not contribute to the indemnity beyond the
corresponding portion of the pice of the thing or of the value of the service in which the
obligation consists.

Article 1225
For the purposes of the preceding articles, obligations to give definite things and those
which are not susceptible of partial performance shall be deemed to be indivisible.
When the obligation has for its object the execution of a certain number of days of work,
the accomplishment of work by metrical units, or analogous things which by their nature
are susceptible of partial performance, it shall be divisible.
However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be determined by the character of
the prestation in each particular case.

SECTION 6: OBLIGATION WITH PENAL CLAUSES

Article 1226
In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no
stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to
pay the penalty or is guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the
provisions of this Code.

Article 1227
The debtor cannot exempt himself from the performance of the obligation by paying the
penalty, save in the case where his right has been expressly reserved for him. Neither
can the creditor demand the fulfillment of the obligation and the satisfaction of the
penalty at the same time, unless this right has been clearly granted him. However, if
after the creditor has decided to require the fulfillment of the obligation, the performance
thereof should become impossible without his fault, the penalty may be enforced.

Article 1228
Proof of actual damages suffered by the creditor is not necessary inorder that the
penalty may be demanded.

Article 1229
The judge shall equitably reduce the penalty when the principal obligation has been
partly or irregularly complied with by the debtor. Even if there has been no performance,
the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

Article 1230
The nullity of the penal clause does not carry with it that of the principal obligation. The
nullity of the principal obligation carrier with it that of the penal clause.
 Self Help: You can also refer to the sources below to help you further
understand the lesson:

De Leon, H.S. & De Leon, H.M. (2014). The Law on Obligations and
Contracts.Revised Edition. Manila: Rex Bookstore.

Samson, Anna Rhea Valle Esq..(2016). Law on Obligations and Contracts. Quezon
City :C & E Publishing, Inc.