Republic of the Philippines

CAMARINES NORTE STATE COLLEGE

F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600, Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

LAW ON OBLIGATIONS AND CONTRACTS

Handout No. 2

Primary classification of obligations under the Civil Code:

a. Pure and conditional obligations
b. Obligations with a period
c. Alternative and facultative obligations
d. Joint and solidary obligations
e. Divisible and indivisible

Secondary classification of obligations under the Civil Code:

a. Unilateral and bilateral obligations
b. Real and personal obligations
c. Determinate and generic obligations
d. Civil and natural obligations
e. Legal, conventional, and penal obligations

PURE AND CONDITIONAL OBLIGATIONS

ARTICLE 1179. Every obligation whose performance does not depend upon a future uncertain event, or
upon a past event unknown to the parties, is demandable at once.

Every obligation which contain a resolutory condition shall also be demandable, without prejudice to
the effects of the happening of the event.

Pure vs conditional obligation

a. Pure obligation – one which is not subject to any condition and no specific date is mentioned for
its fulfillment, and is therefore immediately demandable;
b. Conditional obligation – one whose consequences are subject in one way or another to the
fulfillment of a condition

Condition – a future and uncertain event, upon the happening of which, the effectivity or extinguishment
of an obligation (or right) subject to it depends.

Period – a future and certain event upon the arrival of which the obligation subject to it either arises or
extinguished
Example: When the debtor binds himself to pay:
a. “little by little”
b. “as soon as possible”
c. “at any time I have money”

Principal kinds of condition:

1. Suspensive condition – the fulfillment of which will give rise to an obligation (or right)
2. Resolutory condition – the fulfillment of which will extinguish an obligation (or right) already
existing

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.

Potestative condition – a condition suspensive in nature and which depends upon the sole will of one of
the contracting parties

 When the suspensive condition depends upon the will of:

 a. Debtor:
General rule: Obligation is VOID.
Examples:
a. I will pay you if I want.
b. I will pay you after I harvested corn.
c. I will pay you upon the sale of my house.

Exception: When such obligation is pre-existing, and therefore, does not depend for its existence, the
fulfillment by the debtor of the potestative condition, only the condition is void. The obligation itself
will remain valid.

Example: On January 2, 2019, D borrowed P10,000 from C payable within two (2) months.
Subsequently, D promised to pay C “after D sells his car”, to which C agreed.
Effect: Only the condition is void, but not the pre-existing obligation of D to pay D.

b. Creditor: The obligation is VALID.

Art. 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.

Two kinds of impossible conditions:

1. Physically impossible – when they, in the nature of things, cannot exist or cannot be done.
Examples:
a. I will pay you P10,000 if it will not rain for one year in the Philippines.
b. I will pay you P10,000 if you can carry 20 sacks of rice on your left shoulder.

2. Legally impossible – when they are contrary to law, morals, good customs, public order, or public
policy

Examples: D will give C P500,000 if C–

a. Will kill Z (against the law); or
b. Will slap his father (against good customs); or
c. Will publicly advocate the overthrow of the government (against public order); or
d. Will not appear as witness against D in a criminal case (against public policy)

Effect of Impossible Conditions:

1. Impossible conditions annul the obligation which depends upon them. Both the obligation and
the condition are void.

2. If the condition is negative (i.e., not to do an impossible thing), it is disregarded and the obligation
is rendered pure and valid.

Examples:
“I will sell you my land if you do not carry 20 sacks of rice on your shoulder.”
“I will sell you my land if you do not give me a dog that talks.”

3. If the obligation is divisible, the part not affected by the impossible condition shall be valid.

Example:
“I will give you P10,000 if you sell my land, and a car, if you kill X.”

4. If the obligation is a pre-existing obligation, and therefore, does not depend upon the fulfillment
of the condition which is impossible, for its existence, only the condition is void.

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 Example:
On January 8, 2019, D borrowed P10,000 from C. If C later agrees to kill X before D pays
him, the condition “to kill X” is void, but not the pre-existing obligation of D “to pay C.”

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

Art. 1189. Rules in case of loss, deterioration, or improvement of determinate thing before the
fulfillment of the suspensive condition
1. Loss of the thing
a. Without debtor’s fault – Obligation is extinguished.
b. With debtor’s fault – Debtor is obliged to pay damages.

Note: A thing is considered 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.

2. Deterioration
a. Without debtor’s fault – The impairment shall be borne by the creditor (i.e., no liability on the
part of the debtor to pay damages)
b. With debtor’s fault – The creditor may choose between:
i. Rescission, plus damages, and
ii. Fulfillment, plus damages

3. Improvement
a. By nature or by time – The improvement shall inure to the benefit of the creditor.
b. At the debtor’s expense – The debtor will have the rights granted to a usufructuary (i.e., he can
have enjoyment of the use of the improved thing and its fruits)

Rules in case of fulfillment of resolutory condition (Art. 1190)

1. Upon the fulfillment of the resolutory condition, the obligation is extinguished.
2. The parties shall return to each other what they have received.
3. In case of loss, deterioration, or improvement of the thing, the provisions in Art. 1189 which
pertain to the debtor shall be applied to the party who is bound to return.

OBLIGATIONS WITH A PERIOD

Obligation with a period – is one whose effects or consequences are subjected in one way or another to
the expiration or arrival of said period or term.

Kinds of period according to effect:

a. Suspensive period – The obligation begins only from a day certain upon the arrival of the period.
Examples:
“I will pay you 30 days from today.”
“I will support you from the time your father dies.”
“I will pay you when my means permit me to do so.”

b. Resolutory period – The obligation is valid up to a day certain and terminates upon arrival of the
period.
Examples:
“I will give you P500 per month until the end of the year.”
“I will support you until you die.”

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Presumption as to who has the benefit of the period

Whenever a period is designated in an obligation, it shall be presumed to have been established

for the benefit of both the creditor and the debtor, unless from the tenor of the obligation or other
circumstances, it should appear that it has been established for the benefit of only one of the parties. (Art.
1196)

Therefore, the debtor cannot be compelled to perform, and the creditor cannot be compelled to
accept performance, before the term expires.

Example: D borrowed P20,000 from C on January 9, 2019. The loan bears interest at 10% per annum with
both principal and interest being due on December 31, 2019.

Question: Can C demand payment from D before December 31, 2019? Can D compel C to accept
his payment in case he wants to pay on June 1, 2019?

When period is for the benefit of one of the parties

1. For the benefit of the debtor – He cannot be compelled to perform his obligation before the
expiration of the term, but he may choose to perform before such expiration at his option.

Example: D is obliged to pay C P10,000 on or before March 31, 2019. D cannot be compelled to
pay before March 31, 2019. However, he may pay at any time before March 31, 2019 or on March
31, 2019 at his option.

2. For the benefit of the creditor – He cannot be compelled to accept performance before the
expiration of the term, but he may choose to demand performance before such expiration, at his
option.

Example: On November 1, 2018, D borrowed from C P10,000 collectible on or before June 30,
2019. C may demand payment on June 30, 2019 or at any time before the said date. However, D
cannot compel him to accept the payment at any time before June 30, 2019.

When the debtor loses his right to make use of the period if it is for his benefit (Art. 1198)
1. When he becomes insolvent, unless he gives a guaranty or security for the debt
2. When he fails to furnish the guaranties or securities that he has promised
3. When he impairs the said guaranties or securities by his own acts, or when through a fortuitous
event they disappear, unless he gives new ones equally satisfactory
4. When he violates any undertaking in consideration of which the creditor agreed to the period
5. When he attempts to abscond

END
_________________________
“Don’t downgrade your dream just to fit your reality;
upgrade your conviction to match your destiny.”

Prepared by:

Maria Carla R. Mañago, CPA

Instructor

References:
De Leon, H. and De Leon Jr. H. (2011). The Law on Obligations and Contracts
Soriano, F. (2016). Notes in Business Law

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