PHINMA Education

College of Management and

Accountancy

COURSE SYLLABUS

I. Course Code BAM 026

II. Descriptive Title Law on Obligations and Contracts
III. Credit Unit 3 Units
IV. Time Allocation 54 Hours
V. Pre-requisite None

VI. Course Description

This course is the first in the series of courses that cover the topic on the regulatory
framework governing business transactions and business organizations/associations, and of
business laws including their legal implications.

This course will introduce to the students the legal concepts which are necessary for
properly drafting, analyzing, refining a business contract, and determining the extent of
obligation incorporated therein. This knowledge will aid them in evaluating the implication of
signing a contract or proposing changes on the stated stipulations. First, they will learn the
basic legal ideas and jargon during the discussion on the nature, effects and kinds of
obligations, as well as the modes of extinguishing it. Then, they will learn the essential legal
aspect of a binding agreement. The following topics will be discussed: form, reformation,
interpretation and kinds of defective contracts.

As a whole, the Law on Obligations and Contracts sets forth the basic nature and
kinds of contracts, giving rise to obligations and mutual duties and responsibilities of each
contracting party must observe. In certain cases, the law will also provide remedies for
redress and recovery of losses, if not a liability for damage, as the case may be.

VII: Course Outcomes:

At the end of the semester the students are expected:
• To gain knowledge of the legal provisions governing business transactions in general, and
the law on obligations and contracts in particular.
• To develop analytical skills of applying the law on obligations and contracts on certain
situations or business transactions.

VII: Course Outcomes:

At the end of the semester the students are expected:
• To gain knowledge of the legal provisions governing business transactions in general, and
the law on obligations and contracts in particular.
• To develop analytical skills of applying the law on obligations and contracts on certain
situations or business transactions.

VIII. Course Outline

Unit Topic Title Duration Day/ Remark
Session s
OBLIGATION: GENERAL PROVISIONS Day 1 IN
- Meaning of Obligation
- Requisites of Obligation
- Kinds of Obligation
a. Personal (Obligation To Do or Not To Do)
b. Real Obligation (Obligation to Give)
- Sources of Obligation
a. Law
b. Contracts
c. Quasi Contracts
d. Delicts
e. Quasi-Delicts

NATURE AND EFFECT OF OBLIGATION Day 2 IN

- Determinate and Indeterminate Thing
- Duties of Debtor in Obligation to Give a
Determinate Thing/Specific Thing
- Duties of Debtor in Obligation to Give an
Indeterminate Thing/Generic Thing
- Kinds of Fruits
- Right of the Creditor to the Fruit (Personal &
Real Right Distinguished)
- Remedies of Creditor in case of Non-
Performance of Real Obligation, Positive
Personal Obligation, Negative Personal
Obligation)
Accessions and Accessories
NATURE AND EFFECT OF OBLIGATION Part 2 Day 3 OUT
(Article 1169-1178)
- Delay
- Kinds of Delay
- Effects of Delay
- When Demand is Not Necessary to Put
Debtor in Delay
- Grounds for Liability or Damages (Article
1170)
a. Delay
b. Fraud
c. Negligence
d. Breach of Contract
- Fortuitous Event
- Simple Loan or Mutuum and Recovery of
Interest
- Presumption and Kinds of Presumption
DIFFERENT KINDS OF OBLIGATION Part 1 Day 4 OUT
Pure and Conditional Obligations
- Meaning of Pure Obligation
- Meaning of Conditional Obligation
- Meaning of Condition
- Kinds of Condition (Resolutory,
Suspensive, Impossible, Positive,
Negative)
- Effects of Condition
a. Where Suspensive Condition Depends
Upon the Will of Debtor
b. Where Suspensive Condition Depends
Upon the Will of Creditor
c. Where Resolutory Condition Depends
Upon the Will of the Debtor
d. Where Resolutory Condition Depends
Upon the Will of the Debtor
- Rights Pending Fulfillment of Suspensive
Condition

- Rules on Loss, Deterioration or

Improvement of Thing During Pendency of
Suspensive Condition
DIFFERENT KINDS OF OBLIGATION Part 2 Day 5 IN
Obligation with a Term or Period
- Meaning of Obligation with a Period
- Rules on Loss, Deterioration or
Improvement of Thing Before the Arrival of
the Period
- Effect of Payment Before the Arrival of the
Period
- Computation of Term or Period
- Rules on Fixing of Period
- When Obligation Can Be Demanded Before
Lapse of Period
Alternative Obligation and Facultative Obligation
- Meaning of Alternative and Facultative
Obligation
- Right to Choose Prestation
- Effect When Only One Prestation is
Practicable
- When Debtor May Rescind the Contract
- When Right of Choice Belongs to Creditor
and Rules In Case of Loss of Thing Before
the Creditor has Made a Choice
DIFFERENT KINDS OF OBLIGATION Part 3 Day 6 IN
Joint and Solidary Obligation Part A
- Meaning of Joint Obligation
- Meaning of Solidary Obligation
- Collective Obligation Presumed to be Joint
- Words Used to Indicate Joint or Solidary
Liability
- Rules on Joint Indivisible Obligation
- Indivisibility and Solidarity Distinguished
Effects of Payment of Joint and Solidary
Obligation (Illustrations)
DIFFERENT KINDS OF OBLIGATION Part 4 Joint Day 7 OUT
and
Solidary Obligation Part B
- Effects of Acts of Solidary Creditor
a. Useful Acts
b. Prejudicial to Other Solidary Creditors
c. Assignment by Solidary Creditor of His
Rights
d. Acceptance of Payment by a Solidary
Creditor
- Effects of Acts of Solidary Debtor
a. Payment by a Solidary Debtor
b. Payment after Obligation has Prescribed
or Become Illegal
- Effect of Remission of Share After Payment
- Defenses Available to a Solidary Debtor
DIFFERENT KINDS OF OBLIGATION Part 5 Day 8 OUT
Divisible and Indivisible Obligation
- Meaning of Divisible Obligation
- Meaning of Indivisible Obligation
- Kinds of Division
- Kinds of Indivisibility

- Effect of Non-compliance by a Debtor in a

Joint Indivisible Obligation
Obligation with a Penal Clause
- Meaning of Principal and Accessory
Obligation
- Meaning of Obligation with a Penal Clause
- Penal Clause and Condition Distinguished
- Kinds of Penal Clause
- When Penalty May be Reduced by Court
- Effects of Nullity of Penal Clause
1ST PERIODIC EXAMINATION Day 9 IN
EXTINGUISHMENT OF OBLIGATION Part 1 Day 10 IN
Payment or Performance Part A
- Meaning of Payment
- Persons from Whom the Creditor Must
Accept Payment
- Person to Whom Payment Shall be Made
- Effects of Payment by a Third Person
- Effect of Payment to an Incapacitated
Person and to a Third Person
- When Payment to Creditor Not Valid
- Special Forms of Payment
a. Dation in Payment
b. Application of Payment
c. Payment by Cession
d. Tender of Payment and Consignation
EXTINGUISHMENT OF OBLIGATION Part 2 Day 11 OUT
Payment or Performance Part B: Application of
Payment & Tender of Payment and Consignation
- Meaning of Application of Payment
- Requisites of Application of Payments
- Rules on Application of Payments
- Meaning of Tender of Payment and
Consignation
- Requirements for a Valid Tender of Payment
- Requisites of Valid Consignation
- Withdrawal by Debtor of Thing or Sum
Deposited Effect of Withdrawal with
Authority of Creditor
EXTINGUISHMENT OF OBLIGATION Part 3 Day 12 OUT
Payment or Performance Part C: Dation in Payment
and Payment by Cession
- Meaning of Dation in Payment
- Meaning of Payment by Cession
- Requisites of Payment by Cession
- Effect of Payment by Cession
- Dation in Payment and Payment by
Cession Distinguished

EXTINGUISHMENT OF OBLIGATION Part 4 Day 13 IN

Loss of the Thing Due
- When A Thing Considered Lost
- Effect of Loss of a Generic Thing
- Effect of Loss of a Specific Thing

- Presumption of Fault in Case of Loss

Effect of Impossibility of Performance, Difficulty
of Performance and Fortuitous Event

EXTINGUISHMENT OF OBLIGATION Part 5 Day 14 IN

Condonation or Remission of Debt
- Meaning of Condonation or Remission
- Kinds of Remission
- Effect of Inofficious Remission
- Presumption in Case of Voluntary Delivery
of Document of Indebtedness by Creditor
- Presumption in Case Document or the
Thing Pledged Found in Possession of Debtor
- Effect of Renunciation of the Principal Debt
of the Accessory Obligation
Confusion or Merger of Rights
- Meaning of Confusion or Merger of Rights
- Requisites of Confusion
- Effect of Merger in the Person of Principal
Debtor or Creditor
- Effect of Merger in the Person of Guarantor
- Confusion in a Joint Obligation
EXTINGUISHMENT OF OBLIGATION Part 6 Day 15 OUT
Compensation
- Meaning of Compensation
- Kinds of Compensation
- Requisites of Legal Compensation
- Instances When Legal Compensation is
Not Allowed by Law
- Effect of Compensation to the Guarantor
- Total and Partial Compensation
- Where Compensation has Taken
Place Before/After Assignment
- Compensation Where Debts payable at
Different Places

EXTINGUISHMENT OF OBLIGATION Part 7 Novation Day 16 OUT

- Meaning of Novation
- Requisites of Novation
- Kinds of Novation
a. Expromission
b. Delegacion
- Effect of Novation on Accessory Obligations
- Effect Where the New Obligation is Void or
Voidable
- Effect Where the Old Obligation is Void or
Voidable
- Meaning of Subrogation
- Kinds of Subrogation
- Effects of Subrogation
CONTRACTS: GENERAL PROVSIONS Day 17 IN
- Meaning of Contract
- Freedom and Limitations on
Contractual Agreements
- Classifications of Contract

- Stages in the Life of the Contract

- Perfection of Contract
- Persons Affected by Contract
- Meaning of Stipulation Pour Autrui
- Requisites and Classes of Stipulations Pour
Autrui
2ND PERIODIC EXAMINATION Day 18 IN
ESSENTIAL REQUISITES OF CONTRACTS: CONSENT, Day 19 OUT
OBJECT & CAUSE Part 1
Consent:
- Meaning of Consent
- Meaning of Offer and Acceptance
- Option Contract
- Persons Who Cannot Give Consent
- Effect When Contract is Entered into
Under the State of Drunkenness and
Hypnotic Spell
- Meaning of Lucid Interval
- Vices of Consent
a. Mistake
b. Violence or Force
c. Intimidation
d. Fraud
e. Undue Influence
ESSENTIAL REQUISITES OF CONTRACTS: CONSENT, Day 20 OUT
OBJECT & CAUSE Part 1
Object:
- Concept of Object of a Contract
- Kinds of Object of Contract
- Requisites of Things as Object of
Contract Cause:
- Meaning of Cause
- Requisites of Cause
- Effect of Absence of Cause
- Effect of Failure of Cause
- Effect of Illegality of Cause
- Effect of Falsity of Cause
- Meaning of Lesion
Effect of Lesion or Inadequacy of Cause

FORM OF CONTRACT, REFORMATION OF Day 21 IN

INSTRUMENTS & INTERPRETATION OF CONTRACTS
Form of Contract:
- Meaning of Form of Contracts
- Form for Validity of Contract
- Form for Convenience of Parties
- Contracts Which Must Appear in a
Public Instruments

REFORMATION OF INSTRUMENTS Day 22 IN

& INTERPRETATION OF
CONTRACTS
Reformation of Instruments:
- Meaning of Reformation
- Requisites of Reformation

- Reasons for Reformation

- Party Entitled to Reformation
- Procedure for
Reformation Interpretation of
Contracts:
- Meaning of Interpretation of Contract
- Rules on Interpretation of Contract
 DEFECTIVE CONTRACTS Part 1 Day 23 OUT
Rescissible Contract:
- Meaning of Rescissible Contracts
- Meaning and Requisites of Rescission
- Cases of Rescissible Contract
- Extent of Rescission
Liability of Purchaser in Bad Faith
- Period for Filing Action for Rescission and
Person Entitled to Bring Action
Voidable Contract:
- Meaning of Voidable Contract
- Kinds of Voidable Contract
- Meaning of Annulment, Period for Filing for
Annulment of Contract and Party Entitled to
Bring an Action to Annul
- Meaning and Effect of Ratification
- Duty of Mutual Restitution
- Effect of Loss of Thing to be Returned

DEFECTIVE CONTRACTS Part 2 Day 24 OUT

Unenforceable Contract:
- Meaning of Unenforceable Contract
- Kinds of Unenforceable Contracts
- Statute of Frauds
- Agreements Within the Scope of the
Statute of Frauds
- When Unenforceable Contract Becomes a
Voidable Contract; When Becomes a Valid
Contract
Void Contract:
- Meaning of Void Contract or Inexistent
Contract
- Characteristics of a Void or Inexistent
Contract
- Rules Concerning Void Contracts
3RD PERIOD EXAMINATION Day 25 IN
DEPARTMENTAL EXAMINATION Day 26

Course Requirement: Completed Portfolio

Grading System: The Final Grade is computed as follows:

1st
Period
2nd
Period
3rd
Period
Departmental Examination
Course Policy and Standards:
1. Students are required to attend all class sessions as listed on the school calendar.
Students will be dropped if he/she exceed allowable number of absences. Allowable
absences 20% of IN sessions.
2. Students must take all schedule and unscheduled examinations. No special examinations
will be given except for Periodical Examinations.
3. Assignments, plates and projects designs must be submitted on or before the deadline.
4. Cheating will not be tolerated and will result to Failure grade.
5. Students are required to follow the proper grooming standard and will be marked
absent for non- compliance

Textbook/Reference: Law on Obligations and Contracts by Atty. Andrix D. Domingo

Prepared by:

Approved by: