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
 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

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otherwise shall be visited by Harmful/ Undesirable Legal

er as
b. Right of action/Right to commence
Consequences
<procedural law – laws which establish

co
eH w procedure and rules of court and the court
NATURE OF OBLIGATIONS (CC):
system and which matters are conducted>
1. Civil Obligations – obligations which give to the

o.
ii. Right to maintain an action <substantive
creditor/obligee a RIGHT OF ACTION in courts of justice
rs e
law – written law controlling rights and
to enforce their performance.
actions of persons within jurisdiction>
ou urc

2. Natural Obligations –
b. For every Right enjoyed by a person, there is a
 NOT based on Positive Law (Law recognized by gov’t
authority); but on EQUITY and NATURAL LAW
(derived from nature and binding upon society); Action per Contracts should be brought within 10 YEARS from the time
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 does NOT grant a Right of Action to enforce their the Right of Action Accrues <to exist as legally enforceable claim>
aC s

performance; if voluntary fulfillment by debtor,

vi re

cannot recover what has been delivered

ESSENTIAL ELEMENTS OF OBLIGATIONS: corresponding obligation on the part of another

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(1) Active Subject (Creditor/Obligee) – or the person to respect such right.

who is entitled to DEMAND the fulfillment of the
ed d

 (Contracts) accrues only when an actual breach or

obligation; he who has the RIGHT <power a person violation occurs
ar stu

has under the law to demand from another any  Period of Prescription – from the occurrence of breach
prestation>
(2) Passive Subject (Debtor/Obligor) – person who is
 Injury – the ILLEGAL INVASION of a legal right; wrongful
bound to the fulfillment of the obligation; he who
is

act or omission which causes loss or harm to another

has the DUTY/OBLIGATION <act or performance
which the law will enforce>
Th

 Damage – Is the LOSS, HURT, or HARM which results

(3) Object/Prestation – SUBJECT MATTER of the
obligation or the CONDUCT required to be observed from the injury
by the debtor (giving, doing, or not doing)
(4) Juridical Tie/Legal Tie – EFFICIENT CAUSE or that  Damages – denotes the SUM OF MONEY recoverable as
sh

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
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

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respect to the other to give something or to

er as
render service;

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3. eH w
Quasi-contracts – obligation arising not from an
agreement between them but from some

o.
relationship between them;
rs e
ou urc

4. Acts/Omissions punished by law – when they

arise from a civil liability as a consequence of
some criminal offense;
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5. Quasi-delicts – when they arise from damage

caused to another through an act or omission,
aC s

there being fault or negligence, but there’s no

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contractual relation

CLASSIFICATIONS OF SOURCES:
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(1) Those emanating from LAW

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(2) Those emanating from PRIVATE ACTS:

ar stu

a. Licit Acts – Contracts & Quasi-contracts

b. Illicit Acts –
Punishable-delicts;
not punishable-quasi-delicts
is
Th

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
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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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