OBLIGATIONS AND CONTRACTS
by: Hector S. de Leon
 Obligation – is a JURIDICAL NECESSITY
to give, to do or not to do (a.115)
 “Obligatio” – Latin word meaning tying or binding
 “Obligation is a LEGAL RELATION established between one
party and another whereby the latter is bound to the
fulfillment of a PRESTATION (the conduct which has to be
observed by the Debtor/Obligor) which the former may
demand from him
 Juridical Necessity – in case of non-compliance the courts
may call upon to enforce its fulfillment or, the economic
value it represents.
 Damages – represents the SUM OF MONEY given as a
compensation for the injury or harm suffered by the
creditor/oblige for the violation of his rights.
 Creditor or Obligee – he who has the RIGHT TO THE
PERFORMANCE of the Obligation.
 Debtor or Obligor – he who has the Obligation to comply
otherwise shall be visited by Harmful/ Undesirable Legal
Consequences
NATURE OF OBLIGATIONS (CC):
1. Civil Obligations – obligations which give to the
creditor/obligee a RIGHT OF ACTION in courts of justice
to enforce their performance.
2. Natural Obligations –
 NOT based on Positive Law (Law recognized by
gov’t authority); but on EQUITY and NATURAL LAW
(derived from nature and binding upon society);
 does NOT grant a Right of Action to enforce their
performance; if voluntary fulfillment by debtor,
cannot recover what has been delivered
ESSENTIAL ELEMENTS OF OBLIGATIONS:
(1) Active Subject (Creditor/Obligee) – or the person
who is entitled to DEMAND the fulfillment of the
obligation; he who has the RIGHT <power a person
has under the law to demand from another any
prestation>
(2) Passive Subject (Debtor/Obligor) – person who is
bound to the fulfillment of the obligation; he who
has the DUTY/OBLIGATION <act or performance
which the law will enforce>
(3) Object/Prestation – SUBJECT MATTER of the
obligation or the CONDUCT required to be observed
by the debtor (giving, doing, or not doing)
(4) Juridical Tie/Legal Tie – EFFICIENT CAUSE or that
which BINDS OR CONNECTS the parties to the
obligation. The tie can be be easily determined by
knowing the source of obligation.
Example:
X bound himself to construct a house for Y for 1M, contract
X – is the debtor/obligor/passive subject
Y – is the creditor/oblige/active subject
House – object/prestation
Contract – juridical tie
As a General Rule, the Law does not require any FORM in
Obligations arising from contract nor from other sources
 Wrong/ Cause of Action – ACT OR OMISSION of one party in
violation of the legal right(s) of another, causing injury to the
latter. Example: breach of contract
ESSENTIAL ELEMENTS OF THE CAUSE OF ACTION:
1. Essential Elements:
a. There is a LEGAL RIGHT in favor of a person
b. There is a LEGAL OBLIGATION on the part
of another
c. There is an ACT or OMISSION in breach or
violation of the said right by the defendant
(one being sued in civil action or prosecuted
in a criminal action) with consequential
injury or damage to the plaintiff (one who
brings an action at law) for which he may
maintain an act for damages or appropriate
relief (assistance)
2. If any element is absent, complaint becomes
vulnerable to motion to dismiss on the ground of
failure to state a cause of action
3. A cause of action only arises when the last element
occurs the moment a right has been transgressed
(trespassed).
a. Right of action distinguished from maintain
b. Right of action/Right to commence
<procedural law – laws which establish
procedure and rules of court and the court
system and which matters are conducted>
ii. Right to maintain an action <substantive
law – written law controlling rights and
actions of persons within jurisdiction>
b. For every Right enjoyed by a person, there is a
corresponding obligation on the part of another
to respect such right.
Action per Contracts should be brought within 10 YEARS from the time
the Right of Action Accrues <to exist as legally enforceable claim>
 (Contracts) accrues only when an actual breach or
violation occurs
 Period of Prescription – from the occurrence of breach
 Injury – the ILLEGAL INVASION of a legal right; wrongful
act or omission which causes loss or harm to another
 Damage – Is the LOSS, HURT, or HARM which results
from the injury
 Damages – denotes the SUM OF MONEY recoverable as
amends <compensation for loss or injury> for the
wrongful act or omission
 Injury – is the LEGAL WRONG to be redressed
<remedied/compensated>
 PROOF OF LOSS FOR INJURY:
 There must be
(1) Wrongful Violation of a legal right/ Injury;
(2) Loss or Damage caused to him by such violation
* One who makes use of his legal right does no injury
* Qui jure suo utitur mullum damnum facit
* If damages result from a person’s exercise of legal right
* Damnum absque injuria (damage without injury)
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OBLIGATIONS AND CONTRACTS
by: Hector S. de Leon

Art.19. Every Person must in the exercise of his rights and in

the performance of his duties, act with justice, give everyone
his due and observe honesty and good faith.

KINDS OF OBLIGATIONS (SUBJECT MATTER):

(1) Real Obligations (obligation to give)
The subject matter is a thing which the obligor must
deliver to the oblige;

(2) Personal Obligation (obligation to do or not to do)

The subject matter is an act to be done or not to be done;
a. Positive Personal Obligation – Obligation
to do or to render service;
b. Negative Personal Obligation – Obligation
not to do, includes “not to give”

SOURCES OF OBLIGATIONS:
 Obligations arise from:
1. Law – statutes, legislative enactments;

2. Contracts – meeting of minds between two

persons whereby one binds himself, with
respect to the other to give something or to
render service;

3. Quasi-contracts – obligation arising not from an

agreement between them but from some
relationship between them;

4. Acts/Omissions punished by law – when they

arise from a civil liability as a consequence of
some criminal offense;

5. Quasi-delicts – when they arise from damage

caused to another through an act or omission,
there being fault or negligence, but there’s no
contractual relation

CLASSIFICATIONS OF SOURCES:
(1) Those emanating from LAW
(2) Those emanating from PRIVATE ACTS:
a. Licit Acts – Contracts & Quasi-contracts
b. Illicit Acts –
Punishable-delicts;
not punishable-quasi-delicts

Art. 1158. Obligations derived from LAW are not presumed.

Only those expressly determined in the CC or in special
laws <other laws no in CC> are demandable and shall be
regulated by the percepts of the law which establishes
them; as to what has not been foreseen, by the provisions
of this book.

 LAW (OBLIGATION EX LEGE)

 Legal Obligations or Obligations arising from law:
are not presumed because they are considered a
burden upon the obligor.
 Must be expressly <explicit, defined, clear> set forth
and cannot be presumed.

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