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Course Code and Title: AE 3 - THE LAW ON OBLIGATIONS AND CONTRACTS

Lesson Number: 1

Topic 1: General concepts of enforceable rights and obligations

Learning Objectives:

At the end of this lesson, the student should be able to:

 Know the meaning of Obligations and the legal concepts of enforceable rights and
obligations.
 Determine whether the activities in our daily lives are within the bounds of the legal
definition of an obligation.

Pre-Assessment:
This is a short quiz to stimulate the curiosity of the student in the study of the topic of
this particular module. The answers are provided in the succeeding page but the student is
required to finish this activity first before going to the answers. It is the duty of the student to
be honest to herself/himself, you can use other sources aside of this module in answering.

Determine whether each statement is true or false and give a short explanation why is
it true/false. Write your answer in no more than two (2) sentences in the lines
provided below each statement.
1. The general concept of an obligation is an action which a person is bound to perform
something in favor another person.

2. The delivery of something or anything may be the object of an obligation.

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3. Legal obligation becomes a natural obligation after prescription.

4. The ultimate source of civil obligations is law, because contracts, quasi-contracts,

delict and quasi-delict, which are the sources of an obligation, are all product of law.

5. A moral obligation is also referred to as an imperfect obligation because it has no

legal consequence.
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Quick discussion
1. The general concept of an obligation is an action which a person is bound to perform
something in favor another person.
The statement is TRUE. In fact, under the law, an obligation is defined as a
juridical necessity, to give to do, or not to do.1
2. The delivery of something or anything may be the object of an obligation.
This is FALSE, the object of an obligation must be a determinate or
determinable thing.
3. Legal obligation becomes a natural obligation after prescription.
This is TRUE. An obligation that lapsed by extinctive prescription by the fact
itself becomes a natural obligation.
4. The ultimate source of civil obligations is law, because contracts, quasi-contracts,
delict and quasi-delict, which are the sources of an obligation, are all product of law.
FALSE, although the sources of civil obligations are derived from law, it is only
when the law itself directly establish and create the obligation. Otherwise, the other
sources are the source. It is irrelevant that the other sources are product of law, to
maintain this argument is to defeat the reason of classifying the other sources.
5. A moral obligation is also referred to as an imperfect obligation because it has no
legal consequence.
TRUE, the non-fulfilment of a moral obligation does not create a legal cause of
action
BEFORE GOING TO THE NEXT PAGE
Congratulations! You just finished your first activity in learning the Law on Obligations and
Contracts. Before proceeding, the student is highly encouraged to study this module together with
other sources such as handbook, etc., NOT READ, as there is a difference in studying and reading.
We want to help you understand the law, but we cannot help you without you studying first.
Teachers/professors will put their best effort in helping students studying amid this new normal
situation and we expect the same from you.

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Article 1156
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Lesson Presentation:
The law on obligations and contracts is the body of rules which deals with the nature
and sources of obligations and the rights and duties arising from agreements and the
particular contracts. The law is found in Republic Act 386, otherwise known as the Civil
Code of the Philippines. When we speak of civil law, we refer to the law found primarily in
our Civil Code.2
There was a time when an obligation was classified into obedential and conventional.
Obedential obligations are those imposed by will of God or the Law of Nature.
Conventional obligations are those resulting from the will or consent of the contracting
parties.3 In our lesson, we will focus on what conventional obligations are.

Article 1156. An obligation is a juridical necessity to give, to do, or not to

do.4
We start with the definition of an obligation: a term derived from the Latin word
obligation which means tying or binding; a juridical necessity, to give to do or not to do. The
legal or civil obligation as provided by the Civil Code of the Philippines is qualified by the
word “juridical”, which sets it apart from moral or natural obligations. It gives a right of action
on the part of the obligee or creditor to compel the performance of the prestation on the part
of the obligor or debtor.
Moral obligations on the other hand are those that cannot be enforced by action,
though binding on the part of the obligor or debtor who makes it in conscience and natural
law. Another kind is natural obligation which is akin (akin means “of similar character”) to a
moral Obligation, it is not based on positive law but on equity and natural law, it does not
give a right of action but the voluntary fulfilment of the obligor or debtor of a prestation is
tantamount to the effect of performance of a civil obligation.

2
The Law on Obligations and Contracts, Hector S. De Leon (1999)
3
Introduction to law, Rolando A. Suarez (2003)
4
Civil Code of the Philippines
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Civil Obligation Moral and Natural Obligation

Based on positive law Based on conscience, natural

law, and/or equity

Enforceable by court action Not enforceable by court action

Subject to prescription Not subject to prescription

The concepts above may be illustrated by this following example:

Britney obliged herself to give Bubbles and Belle one million pesos
(Php1,000,000.00) immediately demandable, as evidenced by a written
contract dated January 1, 2020. Under Article 1144 of the Civil Code, Bubbles
and Belle can bring a legal action to compel Britney to give the sum of money
during the period of ten (10) years from the date the right of action accrues
(January 1, 2020).
Hence, during the ten (10) year period or from January 1, 2020 up to
January 1, 2030, Bubbles and Belle has an enforceable right of action against
Britney. Britney has a civil obligation here to Bubbles and Belle to give the sum
of money.
However, should January 2, 2030 arrived or after the ten year period
from the date the right of action accrued and Britney has not given any amount
yet, Bubbles and Belle cannot anymore bring a legal action against Britney
before the courts of law to collect the money because the obligation of Britney
to give has already prescribed.
Nevertheless, if on January 3, 2030, in case Britney had a sudden
feeling of remorse for Bubbles and Belle and thereafter gave to them the one
million pesos. This time, it is the natural or moral obligation of Britney to give
that is applicable.
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Elements of an Obligation:
As mentioned above, it is the word “juridical” that made Civil Obligation enforceable
before a court of law. In the legal definition of an Obligation we can say that an obligation is
composed of four (4) essential requisites, to wit:

1. Vinculum juris or juridical tie

This is the efficient cause that binds the parties to the obligation and which may arise
either from bilateral or unilateral acts of persons.
2. Active Subject
Also known as the Obligee or Creditor, he/she is the one who can demand the
fulfilment of the obligation.
3. Passive Subject
Also known as the Obligor or Debtor, the person from whom the obligations is
juridically demandable.
4. Object
Also known as the prestation or service required to be fulfilled by the Passive Subject
(to give, to do, or not to do).

e.g. “SKS” entered into a contract with Britney that it will deliver one (1) set of
Samgyupsal Family Pack on December 25, 2020.

Juridical Tie : Contract

Active Subject : Britney
Passive Subject : “SKS”
Object : Delivery of one (1) set of Samgyupsal Family
Pack on December 25, 2020
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Kinds of obligation according to the subject matter

From the viewpoint of the subject matter, obligation may either be real or personal:
(1) Real obligation (obligation to give) is that in which the subject matter is a thing
which the obligor must deliver to the obligee.
e.g. SKS (seller or obligor) binds itself to deliver a budget meal samyupsal
pack to Britney (buyer or obligee).

(2) Personal obligation (obligation to do or not to do) is that in which the subject
matter is an act to be done or not to be done. There are two kinds of personal
obligation:
(a) Positive personal obligation or obligation to do or render some service.
e.g. Candice binds herself to make a painting of Iyana.

(b) Negative personal obligation is obligation not to do (which naturally includes

obligations “not to give”).
e.g. Vernice binds herself not to ride a motorcycle until her driver’s license
has not been renewed.

Different kinds of Civil Obligation

1. Pure and Conditional Obligations (Articles 1179-1192)
An obligation whose performance does not depend upon a future or a certain
event, or upon a past event unknown to the parties, and is demandable at once. 5

Pure obligations - is one that is not subject to any condition, not subject to a term
and is characterized by its immediate demandable nature.

e.g. Bubbles obligates herself to give Belle 1kg of SKS’s Samgyupsal upon
demand.

5
Art. 1179 CC
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Conditional obligation - 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.6

A condition is an uncertain event, it may or may not happen.

e.g. Brad obliges himself to give Britney one (1) sack of Yolks & Grains’ brown rice
if it will rain hail within seven (7) days.

2. Obligation with a period (Articles 1193-1198)

Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when that day comes.7

An obligation with a period is one that depends upon a future and certain fact
or event.

e.g. Bugoy obligates himself to give Belly a Honda Click on or before December 25
2020.

3. Alternative and Facultative (Articles 1199-1206)

Alternative obligation
A person alternatively bound by different prestations shall completely perform
one of them.8

e.g. Bubbles obliged herself to give Belly a particular horse named Mucho or a
particular Cow named Tsok-Ow.

Facultative obligation
When only one prestation has been agreed upon, but the obligor may render

6
Art. 1181 CC
7
Art. 1193 CC
8
Art. 1199 CC
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another in substitution, the obligation is called facultative. 9

e.g. Britney obliged herself to give Belle her Red Honda Click with an option on the
part of Britney to give her Blue Honda Click as a substitute.

4. Joint and solidary (Articles 1207-1222)

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 a solidary liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires solidarity. 10

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 shares as there are creditors or debtors, the
credits or debts being considered distinct from one another.11

Joint obligation (Obligacion Mancomunado)

The whole obligation is to be paid or fulfilled “proportionately” by different
obligors or demanded proportionately by different obligees.

A joint obligation is one where there is a concurrence of several creditors or of

several debtors, or of several creditors and debtors, by virtue of which each of the
creditors has a right to demand, and each of the debtors is bound to render
compliance with his proportionate part of the prestation which constitutes the object
of the obligation; each debtor answers only for a part of the whole liability and to each
obligee belongs only a part of the correlative rights as it is only in solidary obligations
that payment made to any one of the solidary creditors extinguishes the entire

9
Art. 1206 CC
10
Art. 1207 CC
11
Art. 1208 CC
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obligation.12

e.g. A and B obligates themselves to be give C Php100.

A is bound to give Php 50 only to C and B is also bound to give C Php 50 only.
OR
C obligates himself to give A and B Php 100.
A can demand from C Php 50 only and can also demand from C Php 50
only.

Solidary obligation (Obligacion Solidaria)

Each one of the obligor is bound to render and/or each one of the obligees has
a right to demand entire compliance with the presation. The rule is all for one, one for
all.

Solidary liability under Philippine law is not to be inferred lightly but must be
clearly expressed; under Art. 1207 of the Civil Code, there is solidary liability when
“the obligation expressly so states, or when the law or the nature of the obligation
requires solidarity”.13

e.g. A and B solidarily obligates themselves to be give C Php100.

A can be bound to give C Php 100 and B can also be bound to give C
the whole Php 100. But C cannot receive 200 in total, either from A or B only
OR
C solidarily obligates himself to give A and B Php 100.
A can demand from C Php 100 and can also demand from C Php 100. The
first to demand is the priority creditor

5. Divisible and indivisible (Articles 1223-12225)

The general rule is that the obligee cannot be forced or compelled to receive

12
Sps. Ibañez vs. Harper, G.R. No. 194272, Feb. 15, 2017
13
Chiquita Brands, Inc. vs. Hon. Omelio, G.R. No. 189102, June 07, 2017
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partially the prestation in which the obligation consist, neither may the obligor be
required to make partial payments subject to exceptions.

e.g. If A is obliged to give B one (1) kilo of Y&G’s black rice:

B cannot be compelled to received partial delivery of one-half kilo of
Y&G’s black rice
OR
A cannot be compelled to deliver partially one-half kilo of Y&G’s black rice to
B.

6. With a penal clause (Articles 1226-1230)

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 fulfilment of the obligation.
The penalty may be enforced only when it is demandable in accordance with
the provisions of this Code.14

The penal clause may be considered either reparation, compensation or

substitute for damages, on one hand, or as a punishment in case of breach of the
obligation.15

e.g. Belle obliged herself to return to Bubbles the hair razor she borrowed on or
before December 25, 2020 with the agreement that Belle will pay Php 50 penalty per
day in case of delay in the delivery after the due date.

14
Art. 1226 CC
15
D.M. Ragasa Enterprises, Inc. vs. Banco De Oro, Inc., G.R. No. 190512, June 20, 2018
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Generalization
In this module, we learned that civil obligations can be enforced through court action. Yet, if
the creditor or obligee sleeps on his/her rights (in compelling the debtor or obligor in
fulfilling the obligation), the obligation can prescribed but will be converted into a natural
obligation. The four elements of an obligation are: Juridical tie; Active subject; Passive
subject; and Object (JAPO). There are also different kinds of obligations, the meaning of a
condition, period, etc.

Make a brief summary of what you have learned in this topic; write the summary in the
lines below.

List down in the lines below the areas in this topic that you are having difficulty to
understand or if you need more explanation

Remarks (if there is any)

References:
Comments and jurisprudence on Obligations and Contracts (2002) by Justice Desiderio Jurado
The Law on Obligations and Contracts (1999) by Hector S. De Leon
Introduction to Law (2003) by Rolando A. Suarez
Lectures on Obligations and Contracts by Dean Domingo Navarro
Civil Code of the Philippines
Philippine Jurisprudence

END