DIFFERENT KINDS OF OBLIGATION

1. Pure Obligation
2. Conditional Obligation
3. Obligation with a period
4. Joint and Solidary Obligation 5. Alternative Obligation
6. Facultative Obligation

Pure Obligation
• Pure obligation is one whose performance or extinguishment is not subject to any condition or
a period. As a consequence, this kind of obligation is demandable at once.
Conditional Obligation
• On the other hand, conditional obligation is an obligation the performance or extinguishment
of which is dependent upon the happening of the condition. Unlike in pure obligation, this kind of
obligation is not immediately demandable. There is a need for the happening of condition before
the obligation becomes demandable.
Obligation with a Period
• Period is one that has a fixed day certain for its fulfillment. This obligation is demandable only
when that day comes. The term “a day certain” refers to “that which must necessarily come,
although it may not be known when.”

Joint Obligation
• One in which each debtor is liable only for a part of the debt, and the creditor is entitled to
demand only a proportionate part of the credit from each debtor. In joint obligation, each obligor
answers only part of the whole liability and to each obligor belongs only a part of the correlative
rights. The creditor cannot compel one of the debtors to satisfy in full the whole obligation.
Other terms for joint obligation: 1. Pro-rata
2. Proportionate
3. Mancomunada

• Solidary Obligation – it is one in which each of the debtors is liable for the entire obligation,
and each of the creditors is entitled to demand the satisfaction of the whole obligation from any
or all of the debtors. Unlike in joint obligation, a solidary obligation is not presumed, the liability
is solidary only when:
1. The obligation expressly so states;
2. When the law so provides; or
3. When the nature of the obligation so requires.
Other terms for Solidary Obligation:
1. In solidum
2. Jointly and Severally
3. Individually and Collectively
4. Mancomunada Solidaria
5. If the contract states that the persons are liable together or separately.
 ❑EXTINGUISHMENT OF OBLIGATION Obligations are extinguished:
1. By payment or performance;
2. By the loss of the thing due;
3. By the condonation or remission of the debt;
4. By the confusion or merger of the rights of creditor and debtor, 5. By compensation;
6. By novation
Other causes of extinguishment of obligations, such as annulment, rescission, fulfillment of a
resolutory condition, and prescription, are governed elsewhere in the civil Code.

❑CONTRACT
Article 1305 states that, “Contract is a meeting of the minds between two persons, whereby one
binds himself, with respect to the other, to give something or render some service.”
• Contracts are obligations that can lead to legal action if not performed. They are defined as the
meeting of the minds, perfected when parties agree on the object, price, or terms. Contrary to
popular belief, contracts are not paper documents, but rather the meeting of the minds, with the
instrument being the evidence of the contract.
❑ESSENTIAL REQUISITES OF CONTRACT
Article 1318. There is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract;
3. Cause of the obligation which is established.

Consent is manifested by the meeting of the offer and the acceptance of the thing and the
cause, which are to constitute the contract. To create a valid contract, the meeting of the minds
must be free, voluntary, wilful, and with a reasonable understanding of the various obligations
the parties assumed for themselves.”
Object. The object of the contract may be:
1. Things; or
2. Rights; or
3. Service.

❑RULES REGARDING THE OBJECT

1. The object of the contract must be within the commerce of man. This means that
the object is capable of appropriation.
2. The object must be lawful. (Thus, shabu, marijuana and other contrabands cannot be the
object of the contract).
3. Services as an object should not be contrary to law, morals, good customs, public order, or
public policy.
4. Intransmissible rights cannot be the object of the contract.
Cause or Consideration is an essential requisite of a contract; the cause or consideration is the
reason why the parties entered into a contract.

❑FORMALITIES OF CONTRACT
In general, contracts are valid and binding from their perfection regardless of form whether they
be oral or written provided the three essential requisites are present, namely the consent, object
and consideration. To this general rule, the Code admits exceptions, namely:
• When the law requires that a contract be in some form in order that it may be valid or
enforceable which is called solemn contracts.
• Contracts that the law requires to be proved by some writing (memorandum) of its terms, as in
those covered by the Statute of Frauds, under Article 1403 (2) of the Civil Code.

❑STAGES OF CONTRACT
The stages of contract will help the student and industry practitioner to prepare or draft a
contract. In
drafting a contract, just remember the essential requisites.
In general, contracts undergo three distinct stages: negotiation or generation; perfection or birth;
and consummation.
1.Negotiation Stage or Generation Stage. This is the first step. It begins from the time the
prospective contracting parties manifest their interest in the contract and ends at the moment of
agreement of the parties.
2. Perfection or Birth of the Contract. After the bargaining or the terms and conditions. Once it is
accepted then there is a negotiation, the parties shall determine whether to accept, contract
(there is already meeting of the minds). This is the stage where the contract is perfected, and
therefore, both parties must comply.
3. Consummation or Termination. This is the stage where the contract is ended because the
parties have fulfilled with their obligation.

❑ CHARACTERISTICS OF CONTRACT
1. Mutuality of Contract. The mutuality principle aims to nullify a contract whose validity,
performance, or compliance is solely dependent on the uncontrolled will of one party, ensuring
that the contract’s fulfillment or pre-termination is not dependent on any one party’s will.
2. Autonomy of Contract. The parties are free to establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. The presence of any of the limitations mentioned will
render the contract void.
3. Obligatory Force. Contracts are perfected by mere consent, and from that moment the parties
are bound not only to the fulfilment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and
law.
4. Relativity of Contract. This means that the contract entered into by the parties are binding only
between them, their heirs and assigns, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation or by provision of law.

❑ DEFECTIVE CONTRACTS AND THEIR EFFECTS

1.Rescissible Contracts. Contracts which are rescissible are valid contracts having all the essential
requisites of a contract, but by reason of injury or damage caused to either of the parties therein
or to third persons are considered defective and, thus, may be rescinded.
2.Voidable Contracts. Voidable means those contracts which are valid until annulled.
• Article 1390 provides that, “The following contracts are voidable or annullable, even
though there may have been no damage to the contracting parties:
a. Those where one of the parties is incapable of giving consent to a contract;
b. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.

3. Unenforceable Contract. A contract which cannot be enforced unless ratified, due to any of
the following reasons:
a.
b. c.
The contract was entered into the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers.
The Contract did not comply with the Statute of Frauds. Both parties are incapable of giving
consent.
These contracts are binding, unless they are annulled by proper action in court. They are
susceptible of ratification.
4. Void and inexistent contract - unenforceable and lacks civil effects, and cannot be validated
through ratification or prescription. However, if any terms have been performed, an action to
declare its inexistence is necessary for restitution of what has been given under it, even if no
action is taken to set it aside.

The following contracts are inexistent and void from the beginning:
a. Those whose cause, object, or purpose is contrary to law, morals, good customs, public order
or public policy;
b. Those which are absolutely simulated or fictitious;
c. Those whose cause or object did not exist at the time of the transaction;
d. Ald. Those whose object is outside the commerce of men;
e. Those which contemplate an impossible service;
f. Those where the intention of the parties relative to the object of the contract cannot be
ascertained; and
g. Those expressly prohibited or declared void by law.