Document Code: CIHTM–F–CMT

MANUEL S. ENVERGA UNIVERSITY FOUNDATION Document Title: Course Module Template

An Autonomous University Page No: 1 of 8
LUCENA CITY Revision No.: 0
Effectivity Date: 15 August 2022
COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera
QUALITY FORM

NAME OF THE Bachelor of Science in Tourism Management

PROGRAM Bachelor of Science in Hospitality Management
COURSE TITLE Legal Aspects in COURSE HTM121
Tourism and Hospitality CODE
PREREQUISITE/ None COURSE 3 units
CO-REQUISITE UNIT
COURSE CO2: Analyze the legal rights and responsibilities of
OUTCOME business organizations in establishments and its
operations.
MODULE 3 Republic Act 386 – Obligations and Contracts
LESSON After successful completion of this module, the
LEARNING student should be able to:
OUTCOME/S a. determine the applicable provisions of the Law on
Obligations and Contracts;
b. explain the requisites, sources, damages, and
kinds of obligations, and
c. define what is a contract as well as its requisites,
formalities, stages and characteristics.
TOPICS 1. Obligations
2. Contracts
WEEK / 6-7/
INCLUSIVE DATE February 19-March 1, 2024
MODALITY Asynchronous, Synchronous

LESSON PROPER:

Obligation – is a juridical necessity to give to do or not to do.

a. Obligatio

Latin obligationem (nominative obligatio) "an engaging or pledging," literally "a binding"
(but rarely used in this sense), obligare "to bind, bind up, bandage," figuratively "put under
obligation" (oblige). The notion is of binding with promises or by law or duty.

b. Civil, Natural, Real, Personal

Contract – is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.

OBLIGATION

Requisites of Obligation
1. Creditor/Obligee/Active Subject – person who has the power to demand the
fulfilment of the obligation.
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LUCENA CITY Revision No.: 0
Effectivity Date: 15 August 2022
COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera
QUALITY FORM

Example: Mr. X obliged himself to deliver 10 boxes of red wine to XXX restaurant owned
by Mr. A
The oblige is Mr. A because in case of the failure of Mr. X to perform his obligation, Mr. A
may demand the fulfilment of the obligation of Mr. X.
2. Debtor/Obligor/Passive Subject – person has duty to fulfil the obligation or the
prestation.
Example: Mr. X obliged himself to deliver 10 boxes of red wine to XXX restaurant.
Mr. X is the obligor because he is the one who has the obligation.
3. Object/Prestation – is the object of the obligation ether to give, to do, or not to
do.
4. Juridical Vinculum/Legal Tie – is that which binds the debtor and the creditor.

Sources of Obligation
1. Law (Legal Obligations) – Obligations arising from law are not presumed only
those obligations expressly determined by law are demandable.
Examples: Obligation to pay tax.
Obligation to secure a license to operate business from the local
government unit.
Obligation to register the corporation before the Securities and Exchange
Commission.
Obligation to support the child.
Example:
“Mabuhay Hotel Inc.” is earning a lot of income; the trouble is that it does not pay
its taxes. Can Mabuhay Hotel be used in the court?
YES, Mabuhay Hotel can be sued, because it is the obligation of every taxpayer
to pay taxes. This obligation is imposed by the National Internal Revenue Code of the
Philippines which is a law. In short, this obligation is on that arises from the law.
2. Contracts (Contractual Obligation) – Under Article 1305, Contract is a meeting
of the minds whereby one binds himself with respect to other to give something or
render some services. If a person entered into a contract, an obligation will arise.
3. Quasi-Contract – this source of obligation is based on the principle of unjust
enrichment, meaning no one shall be enriched at the expense of other. Unlike in
Contracts, there is no meeting of the minds between parties in this source of
obligation, however, equity and law dictates that the person benefited from the act
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MANUEL S. ENVERGA UNIVERSITY FOUNDATION Document Title: Course Module Template
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LUCENA CITY Revision No.: 0
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COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera
QUALITY FORM

of the other has the obligation to reimburse or pay whatever expenses incurred by
the latter.
2 kinds
a. Solutio Indebiti/Payment by Mistake
b. Negotiorum Gestio/Voluntary Management
4. Delicts/Crime/Felony – Acts or omission punishable by law.
2 liabilities
a. Criminal
b. Civil
Under the Revised Penal Code of the Philippines, any person criminally liable is
also civilly liable. The civil liability pertains to the damages that must be paid arising
from the offense committed.
5. Quasi-delicts/Torts (Culpa Aquiliana) – any act or omission which causes
damage to another, there being no fault or negligence, and there being no pre-
existing contractual relation between the parties. Under the Civil Code whoever
will cause damage or injury to another due to fault or negligence, there being no
pre-existing contractual; obligation shall be held liable for damages.

Sources of Damages (Liability)

The source of damages under the Article 1170 of the New Civil Code are Fraud,
Negligence, Delay, and Contravention of the Tenor of the Obligation.

1. Delay/Default (mora) – this means that when the maturity date within which to
perform the obligation was not performed, the creditor should demand its fulfilment
in order for the debtor to be considered in delay.
The general rule therefore is that “NO DEMAND, NO DELAY” As a
consequence, if the creditor did not demand for the performance of the obligation,
the creditor cannot go to court to sue the debtor. Hence, demand is necessary.
2. Negligence (culpa) – it is the omission of that diligence required by the nature
of an obligation and corresponds to the circumstances of person, time and pace.
One of the obligations of the Obligor is to observe due diligence in the performance
of his obligation. Hence, if the diligence required was not observed there may be
liability. It also may simply mean as lack of diligence or carelessness.
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COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera
QUALITY FORM

2 Kinds of Diligence
a. Diligence of a good father of a family – the ordinary diligence. This kind
of diligence that must be observed by the obligor in general.
b. Utmost diligence or extraordinary diligence – this is the highest degree of
care. This must be observed only when the law so provides or when the
parties so agree.
Example:
Mr. X set a business meeting in Cebu. He boarded Z Pacific Airlines and checked
in his 2 travelling bags. When he reached the airport in Cebu, his two travelling bags were
missing due to the negligence of the crew of Z Pacific Airlines. Is Z Pacific Airlines liable
for damages?
YES, Z Pacific Airlines is negligent. As a common carrier, it has the obligation to
observe utmost diligence in carrying or transporting the goods. Since it failed to observe
that obligation Z was held liable for damages for the loss of the travelling bags.
3. Fraud (dolo) – intent to evade the normal fulfillment of the obligation and cause
damage.
4.Violation of the obligation/Contravention/Breach – it is the failure to perform that
which is incumbent upon him. The non-performance or failure of the party to fulfill
his duty is liable for damages.

Fortuitous Event/Force Majeure/Caso Fortuito – an event which cannot be foreseen or

which, though foreseen, is inevitable.
a. Acts of God v. Acts of Man
b. General Rule – Debtor is not liable, obligation is extinguished.
Exceptions

Distinction GENERIC/INDETERMINATE SPECIFIC/DETERMINATE

Characterized by: Class or specie Individuality
Substitution Allowed Not allowed

This is because generic thing never perishes (genus nunquam perit). The
obligation can still perform whereby: the debtor can deliver a thing of the same class/type
as the one lost, which may be of superior quality but not of inferior quality.
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COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera
QUALITY FORM

Modes of Extinguishing the Obligation

1. Payment
2. Loss of the Thing Due
3. Condonation or Remission
4. Confusion or Merger
5. Compensation
6. Novation -
7. Death of a Party in a personal obligation
8. Fortuitous event

CONTRACTS

Essential Elements of the Obligation

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.
Objects of the contract may be:
a. Things; or
b. Rights; or
c. Service (Example: Catering of food, accounting, event organizing)
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, willful, and with a reasonable understanding of the
various obligations the parties assumed for themselves. Where consent, however, is
given through mistake, violence, intimidation, undue influence, or fraud, the contract is
deemed voidable meaning it is valid until annulled.

Characteristics/Principles of contract
1. Mutuality – both parties must agree. The validity or the performance or compliance of
which cannot be left to the will of only one of the parties.
2. Autonomy / Liberty / Freedom – parties can agree on anything (Exceptions). The
contracting parties may establish such stipulations, clauses, terms and conditions as they
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Approved by: Dr. Maricel D. Herrera
QUALITY FORM

may deem convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy.
Example:
Mr. X is the owner of the restaurant. He entered a Contract of Service with Mr. Y,
an accountant in order to manipulate and conceal some of his income so he could evade
the obligation to pay tax. In the said contract, Mr. X will pay Mr. Y the amount of 50,000.00
pesos. This kind of contract is void because it is contrary to the law.
3. Relativity – contract takes effect only between the parties, their heirs and assigns. This
means that the contract entered by the parties are binding only between them, in 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. The
heir is not liable beyond the value of the property he received from the decedent.
4. Consensual – is a contract that arises from the mere consensus of the parties. It does
not require the performance of any formal or symbolic acts to fix the obligation.
5. Obligatory Force of contract – parties must comply with their obligation. Contracts are
perfected 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.

Form of Contracts (G.R.) – No form is required because it is consensual.

a. Levels
b. Exceptions

Classification of contracts
(1) According to their relation to other contracts
a. Principal – can exist independently from other contracts.
b. Accessory – dependent on another contract

(2) According to their perfection

a. Consensual
b. Real – consent + delivery
Kinds
I. Commodatum - a gratuitous loan of a movable property which is to
be returned undamaged to the lender.
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COLLEGE OF INTERNATIONAL HOSPITALITY AND Prepared by: Instructor
TOURISM MANAGEMENT Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera
QUALITY FORM

II. Depositum - means a naked bailment, without reward, of goods to

be kept for the bailor, by one who is usually called a depositary.
III. Pledge - is a bailment that conveys possessory title to property
owned by a debtor (the pledgor) to a creditor (the pledgee) to secure
repayment for some debt or obligation and to the mutual benefit of
both parties.

(3) According to their cause

a. Onerous - One made for a consideration given or promised, however
small.
b. Gratuitous - is one, the object of which is for the benefit of the person with
whom it is made. It is a contract in which one party promises to do
something without receiving anything in exchange.

(4) According to their name

a. Nominate - is a standardized contractual relationship that has a special
designation attached to it (e.g., purchase and sale, lease, loan, insurance)
b. Innominate - are not standardized and therefore have no set name.

(5) According to their purpose

a. Transfer of ownership – e.g. sale
b. Conveyance of use – e.g. commodatum
c. Rendition of services – agency, lease of services, labor

(6) According to their subject matter

a. Things – e.g. sale, deposit, pledge
b. Services – e.g. agency, lease of services, labor

ASSESSMENTS

1. Take a 20-item quiz in NEOLMS about obligations and contracts.

SUPPLEMENTARY LEARNING MATERIALS:

For your supplementary learning materials to this topic, you may access the following
links:

MANUEL S. ENVERGA UNIVERSITY FOUNDATION
An Autonomous University
LUCENA CITY
COLLEGE OF INTERNATIONAL HOSPITALITY AND
TOURISM MANAGEMENT
QUALITY FORM
Document Code: CIHTM–F–CMT
Document Title: Course Module Template
Page No: 8 of 8
Revision No.: 0
Effectivity Date: 15 August 2022
Prepared by: Instructor
Reviewed by: Dr. Jennifer B. Reyes
Approved by: Dr. Maricel D. Herrera

1. Watch the video presentation via Youtube to gain an in-depth analysis of the
concept of civil obligation through the access link below:
https://www.youtube.com/watch?v=fOpmUzb3LIk
https://www.youtube.com/watch?v=p8H5tZcadmU

REFERENCES:

https://www.etymonline.com
https://philawgov.wikia.org
https://uslegal.com/