LEGAL ASPECTS IN TOURISM AND HOSPITALITY-lesson

LEGAL ASPECTS IN TOURISM AND HOSPITALITY
TRAINEE’S MANUAL
Legal Aspects in Tourism and

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Prepared by: Arjane B. Cuasay
Module Descriptor: Legal Aspects in Tourism and Hospitality
Introduction:
This instructional material was deliberately established to develop the knowledge and skill of
Hospitality Management students in recognizing the laws and regulations governing the tourism and
hospitality industry. It capitalizes on the concepts and issues that a certain innkeeper, restaurant,
travel agent, customers and guests faces with regards to legal relationship of hospitality and tourism
services. This manual provides array of activities and exercise that are constructed around the
Trainer’s viewpoint of hospitality and tourism law.
Curriculum Guide:
1. Articulate and discuss the latest developments in the specific field of practice
2. Work effectively and independently in multi-disciplinary and multi-cultural teams.
3. Act in recognition of professional, social and ethical teams.
4. Demonstrate corporate citizenship and social responsibility.
5. Exercise high personal moral and ethical standards.
6. Interpret and apply relevant laws related to tourism industry.
General Instruction:
This module contains several lessons. Instruction are explained with activities and examples.
Understand and internalize the learning outcomes. Read well the contents of each lesson. A strategy
used to let you learn and improve your learning ability and to develop your higher order thinking
skills. At the end of each module, there is an assessment/examination. Understand and answer it as
directed.

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TOPIC 2: PHILIPPINE GOVERNMENT AGENCIES GOVERNING TOURISM AND HOSPITALITY
Learning Objective: This unit deals with the skills and knowledge required to recognize
the different government agencies in the Philippines that oversees and administers the operation of tourism and hospitality
industry.
Logo of the Agency/Organization Name of the Agency/Organization

The Department of Tourism
(Filipino: Kagawaran ng Turismo, DOT) is

the executive department of the Philippine
government responsible for the regulation of
the Philippine tourism industry and the
promotion of the Philippines as a tourist
destination.
The Tourism Infrastructure and Enterprise

Zone Authority (TIEZA)
Formerly the Philippine Tourism

Authority (Filipino: Pangasiwaang Pilipino sa
Turismo), is an agency of the Philippine
national government under the
Department of Tourism responsible for
implementing policies and programs of the
department pertaining to the development,
promotion, and supervision of
tourism projects in the Philippines.
The National Parks Development
Committee (NPDC)
An agency of the Department of Tourism of

the Philippines that is mandated to develop,
preserve, and manage Rizal and Paco Parks in
Manila and other parks that may be assigned to
it.
The National Historical Commission of the

Philippines
(Filipino: Pambansang Komisyong

Pangkasaysayan ng Pilipinas,
abbreviated NHCP) is a government agency of
the Philippines. Its mission is "the promotion
of Philippine history and cultural
heritage through research, dissemination,
conservation, sites management and heraldry
works."
The National Commission for Culture and

the Arts of the Philippines
(Filipino: Pambansang Komisyon para sa

Kultura at mga Sining, Cebuano: Nasodnong
Komisyon alang sa Budaya ug mga Arte) is the
official government agency for culture
in the

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Philippines. It is the overall policy making body,

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coordinating, and grants giving agency for the
preservation, development and promotion of
Philippine arts and culture
THE PHILIPPINE CONVENTION & VISITORS

CORPORATION (PCVC)
PCVC is tasked with promoting the country as

an ideal MICE (Meeting, Incentives,
Convention, Expo) travel destination. They also
provide information, assistance and guidance to
meeting planners and travel organizers who
seek venues for meetings and incentive groups.
The Hotel and Restaurant Association of the

Philippines
A non-stock, non-profit organization

represented by Hotel Managers, Restaurant
Owners, University Deans and CEO's. Having a
mission of "Taking the lead roles as the single
voice organization representing the Philippine
private business sector in the hotel and
restaurant industry".
Philippine Amusement and Gaming

Corporation
It is a government-owned and controlled

corporation established through the Presidential
Decree 1869. PAGCOR is the Philippines' largest
contributor of revenue to the government after
the Bureau of Internal Revenue and the Bureau
of Customs. PAGCOR is under the Office of the
President of the Philippines.
Civil Aviation Authority of the

Philippines (CAAP)
It is the national aviation authority of

the Philippines and is responsible for
implementing policies on civil aviation to assure
safe, economic and efficient air travel. The
agency also investigates aviation accidents via
its Aircraft Accident Investigation and Inquiry
Board. Formerly the Air Transportation Office,
it is an independent regulatory body attached to
the Department of Transportation for the
purpose of policy coordination.

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DEPARTMENT OF TRADE AND INDUSTRY
(DTI)
It is the executive department of the Philippine

government tasked as the main economic
catalyst that enables innovative, competitive, job
generating, inclusive business, and empowers
consumers. It acts as a catalyst for intensified
private sector activity in order to accelerate and
sustain economic growth through
comprehensive industrial growth strategy,
progressive and socially responsible trade
liberalization and deregulation programs and
policymaking designed for the expansion and
diversification of Philippine trade – both
domestic and foreign.
DEPARTMENT OF LABOR AND

EMPLOYMENT (DOLE)
It is one of the executive departments of

the Philippine government mandated to
formulate policies, implement programs and
services, and serve as the policy-coordinating
arm of the Executive Branch in the field of labor
and employment. It is tasked with the
enforcement of the provisions of the Labor
Code.
Department of Environment and Natural

Resources
(Filipino: Kagawaran ng Kapaligiran at Likas na

Yaman, DENR or KKLY) is the executive
department of the Philippine
government responsible for governing and
supervising the exploration, development,
utilization, and conservation of the
country's natural resources.
Department of Foreign Affairs
(DFA; Filipino: Kagawaran ng Ugnayang

Panlabas) is the executive department of
the Philippine government tasked to contribute
to the enhancement of national security and the
protection of the territorial integrity and
national sovereignty, to participate in the
national endeavor of sustaining development
and enhancing the Philippines' competitive
edge, to protect the rights and promote the
welfare of Filipinos overseas and to mobilize
them as partners in national development, to
project a positive image of the Philippines, and
to increase international understanding of
Philippine culture for mutually-beneficial
relations with
other countries.
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TOPIC 3: INTRODUCTION TO LAW ON OBLIGATIONS AND CONTRACTS
the different provisions of the law on obligations and contracts that us related in the hospitality and tourism industry.
L.O. 3.1 General Provisions

L.O. 3.2 All about Obligations
L.O. 3.3 Tourism and Travel Law
3.1 GENERAL PROVISIONS

“The law of 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 on obligations and contracts is found in Republic Act No. 386, otherwise known as the
Civil Code of the Philippines. When we speak of civil law, we refer to the law found primarily in Civil
Code.
The Civil Code of the Philippines is based mainly on the Civil Code of Spain which took effect
in the Philippines on December 7, 1889. It was approved as Republic Act No. 386 on June 18, 1949
and took effect on August 30, 1950.
Book IV of the Civil Code deals with obligations and contracts. The general provisions on
obligations are contained, in Title I. Articles 1156-1304, while those one contracts, in Title II, Articles
1305-1422. The general rules of the law governing contracts (like sale, agency, partnership, barter,
etc.) in addition to the special provisions of law governing each type of contacts. Book IV also
contains new provisions dealing with natural obligations which are found in Title III, Articles 1423-
1430.
Conclusive presumption of knowledge of law:
“Ignorance of law excuses no one from compliance therewith. (Article 3, Civil Code)”
everyone, therefore, is conclusively presumed to know the law.
3.2 ALL ABOUT OBLIGATIONS

ARTICLE 1156. An obligation is a juridical necessity to give, to do or not to do.
Obligation
The term obligation is derived from the Latin word “obligatio” which means tying or binding.
It is a legal tie or agreement in which one is obligated to make something to another, which
may be in the form of giving something, performing a certain act, or not performing a certain act.
Civil Code Definition:

The Civil Code defines obligation in its passive form in Article 1156. When it comes to
responsibility as a legal requirement (juridical necessity), our law simply emphasizes the debtor's or
obligor's (he who has the duty of giving, doing, or not doing) duty.
Obligation is a juridical necessity because in case of noncompliance, the courts of justice may
be called upon by aggrieved party to enforces its fulfilment or, in default thereof, the economic value
that it represents. In a proper case, the debtor or obligor may also be made liable for damages, which
represents the sum of money given as a compensation for the injury or harm suffered by the creditor or
obligee (he who has the right to the performance of the obligation) for the violation of his
rights.
In other words, whether the debtor likes it or not, he must meet his obligation; otherwise, his
failure would result in any negative or unfavourable consequences. People may violate obligations
with impunity if they are not considered enforceable. However, there are certain commitments that
cannot be upheld because they are not legally enforceable.

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Essential requisites of an Obligation
Every obligation has 4 essential requisites, namely:

1. Passive subject (called debtor or obligor)- the person who is bound to the fulfilment of the
obligation; he has a duty.
2. Active subject (called creditor or obligee)- the person who is entitled to demand the fulfilment
of the obligation; he who has the right.
3. Object or prestation/benefit (subject matter of the obligation)- the conduct required to be
observed by the debtor or obligor. It may consist in giving, doing, or not doing. Without
prestation, there is nothing to perform.
4. Juridical or legal tie (also called efficient cause)- that which binds or connects the
parties to the obligation. The tie in an obligation can easily de determined by knowing the
source of the obligation.
Example:
Under a building contract, X bound to himself to build a house for Y for Php 1,000,000.00.
Here, X is the passive subject, Y is the active subject, the building of the house is the object or
prestation, and the agreement or contract, which is the source of the obligation, is the juridical tie.
Suppose X had already constructed the house and it was the agreement that Y and X after the
construction is finished, X then becomes the active subject and Y, the passive subject.
Difference of Obligation, Right and Wrong
Obligation- is the act of performance which the law will enforce.

Right- is the power which a person has under the law, to demand from another any
prestation. Wrong (cause of action)- according to its legal meaning, is an act or omission of
one party in violation of the legal right or rights (i.e., recognized by law) of another. In law, the
term “injury” is also used to refer the wrongful violation of the legal right of another.
The essential elements of a legal wrong or injury are:

a. a legal right in favor of a person (creditor/oblige/plaintiff)
b. a correlative legal obligation on the part of another (debtor/obligor/defendant); to respect
or not to violate said right; and
c. an act or omission by the latter in violation of said right with resulting injury or damage to
the former.
At the end of the day, an obligation on the part of a person cannot exist without corresponding right
in favour of another, and vice versa. A wrong or cause of action only arises at the moment a right has
been transgressed or violated.
Kinds of Obligation according to the subject matter
From the viewpoint of the subject matter, obligation may be either real or personal.
1. Real obligation (obligation to give) is that in which the subject matter is a thing the
obligor must deliver to the obligee.
Example: X (a seller) binds himself to deliver a piano to Y (buyer).
2. Personal obligation (obligation to do or not do) is that in which the subject matter is
an act to be done or not to be done. There are 2 kinds of personal obligation.
a. Positive personal obligation- obligation to do or to render service. (Art. 1167)

Example: X binds himself to repair the piano of Y.

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b. Negative personal obligation- obligation not to do (which naturally includes
obligations “not to give”). (Art. 1168)
Example: X obliges himself not to build a fence on a certain portion of his lot in favor of Y
who is entitled to a right of way over said lot.
Sources of obligations
Article 1157. Obligation arise from:

1. Law;
2. Contracts;
3. Quasi-contracts;
4. Acts or omission punished by law;
5. Quasi-delicts
1. Law- when they are imposed by law itself.

Example: Obligation to pay taxes; obligation to support one’s family (legal marriage) (Art. 291)
2. Contracts- when they arise from the stipulations of the parties. (Art. 1306)
Example: The obligation to repay a loan or indebtedness by virtue of an agreement.
3. Quasi-contracts- when they arise from lawful, voluntary and unilateral acts which are
enforceable to the end that no one shall be unjustly enriched or benefited at the expense of
another. (Art. 2142) In a sense, that obligations may be considered as arising from law.
Example: The obligation to return money paid by mistake or which is not due. (Art. 2154)
4. Crimes or acts or omissions punished by law- when they arise from civil liability which is
the consequence of a criminal offense. (Art. 1161)
Example: The obligation of a thief to return the car stolen by him; the duty of a killer to compensate
(someone) for harm or loss of the heirs of his victim.
5. Quasi-delicts or torts- when they arise from damage caused to another through an act or
omission, there being fault or negligence, but no contractual relation exists between the parties.
(Art. 2176)
Example: The obligation of the head of the family that lives in a building or part thereof to answer
for damages caused by things thrown or falling from the same. (Art. 2193); the obligation of the
possessor of an animal to pay for the damage which it may have caused. (Art. 2183 )
Art. 1158. Obligations derives from law are not presumed. Only those expressly determined in this Code or in
special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to
what has not been foreseen, by the provision of this Book.
Legal obligations
Article 1158 refers legal obligations or obligations arising from law. They are not presumed
because they are considered a burden upon the obligor. They are the exception to the rule. Thus:
a. An employer has no obligation to furnish free legal assistance to his employees because no law
requires this, therefore, an employee may not recover from his employer the amount he may
have paid a lawyer hired by him to recover damages caused to said employee by stranger or
strangers while in the performance of his duties.
b. A private school has no legal obligation to provide clothing allowance to its teachers because
there is no law which imposes this obligation upon schools.
Under Art. 1158, special laws refer to all other laws not contained in the Civil Code. Examples of
such laws are Corporation Code, Negotiable Instruments Law, Insurance Code, National Internal
Revenue Code, Revised Penal Code, Labor Code, etc.
Art. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.

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Contractual obligations
The above-mentioned article speaks of contractual obligations or obligations arising from
contracts or voluntary agreements.
A contract is meeting of minds between two persons whereby one binds himself, with
respect to other, to give something or to render some service.
a. Binding force- obligations arising from contracts have the force of law between the
contracting parties, i.e., they have same binding effect of obligations imposed by laws.
b. Requirements of a valid contract- a contract is valid if it is not contrary to law, morals, god
customs, public order, and public policy.
In the eyes of law, a void contract does not exist. Consequently, no obligations will arise. A
contract may be valid but cannot be enforced.
Compliance in good faith

It means compliance or performance in accordance with the stipulations or terms of the
contract or agreement. Sincerity and honesty must be served to prevent one party from taking
unfair advantage over the other.
Non-compliance by a party with his legitimate obligations after receiving the benefits of a
contract would constitute unjust enrichment on his part.
Example:
1. If S agrees to sell his house to B and B agrees to buy the house of S, voluntarily and
willingly, then they are bound by the terms of their contract and neither party may, upon
his own will, and without any justifiable reason, withdraw from the contract or escape from
his obligations thereunder.
That which is agreed upon in the contract is the law between S and B and must be complied
with in good faith.
2. A contract whereby S will kill B in consideration of Php 1000.00 to be paid by C, is void

and non-existent because killing a person is contrary to law. Likewise, an agreement
whereby S will render domestic services gratuitously until his loan to B is paid, is void as
being contrary to law and morals.
Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of
Chapter 1, Title XVII of this book.
Quasi-contractual obligations
Article 1160 treats of obligations arising from quasi-contracts or contracts implied in law.
A quasi-contract is that juridical relation resulting from lawful, voluntary and unilateral
acts by virtue of which the parties become bound to each other to the end that no one will be
unjustly enriched or benefited at the expense of another.
In quasi-contract, there is no consent but the same is supplied by fiction of law. In other
words, the law considers the parties as having entered into a contract, although they have not
actually did so, and irrespective of their intention, to prevent injustice.
Kinds of Quasi-contracts
1. Negotiorum gestio (management of business)- it is the voluntary management of the

property or affairs of another without the knowledge or consent of the latter.
Example:

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X went to Baguio with his family without leaving somebody to look after his house in Manila.
While in Baguio, a big fire broke out near the house of X. Through the effort of Y, a neighbour,
the house of X was saved from being burned. Y, however, incurred expenses.
In this case, X has the obligation to reimburse Y for said expenses, although he did not actually
give his consent to the act of Y in saving his house, on the principle of quasi-contract.
2. Solutio indebiti (payment of what is not owning)- it is the juridical relation which is
created to something is received when there is no right to demand it and it was unduly
delivered through mistake. The requisites are:
a. There is no right to receive the thing delivered
b. The thing was delivered through mistake
Example:
D owes Php 1,000.00. if D paid T believing that T was authorized to receive payment for C, the
obligation to return on the part of T arises. If D paid Php 2,000.00 by mistake, C must return
the excess of Php 1,0000.00.
Art. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of
Chapter 2, Title XVII of this Book, and by special laws.
Obligations arising from quasi-delicts

The above-mentioned article treats of obligations arising from quasi-delicts or torts.
A quasi-delict is an act or omission by a person (tortfeasor) which causes damage to another

in his person, property, or rights giving rise to an obligation to pay for the damage done, there being
fault or negligence but there is no pre-existing contractual relation between the parties.
Requisites of quasi-delict:
a. There must be an act or omission
b. There must be fault or negligence
c. There must be damage caused
d. There must be a direct relation or connection of cause and effect between the act or
omission and the damage
e. There is no pre-existing contractual relation between parties
Example:
While playing softball with his friends, X broke the window glass of Y, his neighbour. The
accident would not have happened had they played a little farther from the house of Y.
In this case, X is under obligation to pay the damage caused to Y by his act although there is
no pre-existing contractual relation between them because he is guilty of fault or negligence.
TOPIC 3: INTRODUCTION TO LAW ON OBLIGATIONS AND CONTRACTS (Continuation)

ACTS or OMISSIONS PUNISHED BY LAW [Ex-Delictu, Ex-Maleficio, Culpa Criminal]
Art 1161 Civil obligations arising from criminal offense shall be governed by the penal laws,
subject to the provisions of Art 2177, and of the pertinent provisions of Chapter 2, Preliminary Title
on Human Relations and of Title XVIII of this Book, regulating damages.
Art 100, RPC (Revised Penal Code): Every person criminally liable for a felony is also civilly liable.
GENERAL RULE: Criminal liability is a necessary consequence of civil liability

Reason: Commission of crime causes not only moral evil but also material damage.

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Art 12, RPC Exempting circumstances; do not incur liability but are NOT EXEMPT from civil
liability
1. Imbecile or insane person, unless acting in a lucid interval
2. Person under 9 years of age
3. Person over 9 years of age and under 15, unless acting with discernment
4. Acting under compulsion of an irresistible force
5. Acting under impulse of an uncontrollable fear of an equal or greater injury
Subsidiary Liability for Crime

1. Innkeepers, tavern keepers and any other persons or corporations shall be civilly liable for
crimes committed in their establishment, in all cases where a violation of municipal
ordinances or some general or special police regulation shall have been committed by them
or their employees.
2. Also applicable to employers, teachers, persons and corporations engaged in any kind of
industry for felonies committed by their servants, pupils, apprentices or employees in
discharge of their duties.
To hold employers subsidiarily liable for CRIME of an employee: committed in the
performance of the functions or duties of the employee.
But if action is based on CONTRACT, and not upon previous conviction of employee
for a crime: employer´s liability is PRIMARY and INDEPENDENT, not merely
subsidiary.
Civil liability arising from Crime
Art 1161 Civil obligations arising from criminal offenses shall be governed by the penal laws,
subject to the provisions of Article 21⁄⁄, and of the pertinent provisions of Chapter 2, Preliminary
Title, on Human Relations, and of Title XVIII of this Book, regulating damages.
Rules on Criminal Procedure Rule 111 When a criminal action is instituted, the civil
action for the recovery of civil liability arising from the offense charged shall be deemed
instituted with the criminal action UNLESS the offended party waives the civil action, reserves
the right to institute it separately or institutes the civil action prior to the criminal action.
Extent of Civil Liability

Art 104, RPC What is included in civil liability
1. Restitution – thing itself is restored (Art 105, RPC)
2. Reparation of damage caused – court determines amount of damage (Art 106, RPC)
3. Indemnification for consequential damages – not only caused the 3rd party but also those
suffered by his family or by a 3rd person by reason of the crime (Art 104, RPC)
Example: Raul stole the car of Paul. If Raul is convicted, the court will order Raul: (1) to return the
car (or to pay its value if it was lost or destroyed); (2) to pay for any damage caused to the car; and
(3) to pay such other damages suffered by Paul as a consequence of the crime.
Civil liability for crimes is extinguished the same causes provided in the CC for the
extinguishment of other obligations.
GENERAL RULE: Criminal action bars civil action for the same offense
Civil action for recovery of civil liability arising from the offense is impliedly instituted with
the criminal action
EXCEPTIONS:
Offended party reserves the right to institute it separately
The law provides for an independent civil action (i.e. civil action may proceed to final
judgment irrespective of result of the criminal action and filing of the criminal action does not
suspend the civil action)
a. obligations arising from the act or omission claimed to be criminal (Art 31)
b. violations of constitutional rights and liberties of individuals (Art 32)

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c. defamation, fraud or physical injuries (Art 33)
d. refusal or failure of members of police force to render protection to life or property (Art
34)
TOPIC 4: NATURE AND EFFECT OF OBLIGATIONS

the nature and effect of obligations and its implication to tourism and hospitality industry.
L.O. 4.1 Types of Obligation according to its prestation
L.O. 4.2 Obligation of the debtor or obligor
L.O. 4.3 Rights and Remedies of creditor/obligee
L.O. 4.4 Breaches in Obligation
L.O. 4.5 Fortuitous Event
L.O. 4.6 Damages
Art. 1163 Every Person obliged to give something is also obliged to take care of it with
proper diligence of a good father of a family unless the law or the stipulation of the parties
requires another standard of care.
L.O. 4.1 Types of Obligations according to its Prestation

1. Real Obligations
Obligations to give
To give specific thing To give generic thing
2. Personal Obligations
Obligations to do and not to do
Positive (to do) Negative (not to do)
Difference of Specific Thing and Generic Thing
Specific thing
- A thing is said to be specific particularly designated or physically segregated others
of the same class. (Art. 1459)
- It is also called as determinate thing. It is identified by its individuality.
Example:
1. The watch I am wearing.
2. The car sold by Mico.
3. My dog named “Pampu”.
4. The motorcycle with plate no. AA 0115
5. The money I gave you.

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Situation example:
Nick bound himself to deliver to you his only dog tomorrow.
Generic thing
- It refers only to a class or genus to which it pertains and cannot be pointed out with
particularity.
- It is also called as indeterminate thing. It is identified only by its specie.
Example:
1. A Rolex calendar watch
2. A 1995 Toyota car.
3. A police dog.
4. A sum of Php 2,500.00.
Situation example:
Bella obliged herself to deliver a pig on John’s birthday.
L.O. 4.2 Obligation of the debtor or obligor
Obligations of the debtor or obligor is determined into four ways:

1. Obligation to give a specific/determinate thing
2. Obligation to give a generic/indeterminate thing
3. Obligation to do
4. Obligation not to do
Duties of debtor/obligor in obligation to give a specific/determinate thing
1. To deliver the thing.

2. To take care of the thing before delivery (Art. 1163)
- The debtor/obligor must preserve the thing. The obligor has the incidental duty to take care
of the thing due with the diligence of good father of a family pending delivery,
“Diligence of good father of a family”- The phrase has been equated with ordinary care or that
diligence which an average person exercises over his property.
“Another standard of care”- if the law or the stipulation of the parties provides for another
standard of care (slight or extraordinary diligence), said law or stipulation must prevail.
3. To deliver the fruits of the thing (Art. 1164)

- As mentioned by law, fruits can be referred to natural, industrial and civil.
a. Natural fruits- the spontaneous products of the soil, and the young and other products of
animals.
Example: Grass; all trees and plants on lands produced without the intervention of
human labor.
b. Industrial fruits- produced by lands of any kind through cultivation or labor.

Examples: sugar cane; vegetables; rice; and all products of lands brought about by reason
of human labor.
c. Civil fruits- derived by virtue of a juridical relation.

Example: rents of buildings, price of leases of lands and other property and the amount of
perpetual or life annuities or other similar income.
4. To deliver accessions and accessories. (Art. 1166)

a. Accessions- the fruits of a thing or additions to or improvements upon a thing (the
principal).
Example: House or trees on a land; rents of a building; air-conditioner in a car; profit or
dividends accruing from shares of stocks.

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b. Accessories- things joined to or included with the principal thing for the latter’s
embellishment, better use, or completion.
Example: Key of the house; frame of the picture; bracelet of the watch
5. To pay damages if guilty of fraud, negligence, delay, or contravention of the terms of the
obligation. (Art. 1170).
Duties of debtor/obligor in obligation to give a general/indeterminate thing
1. To deliver the thing.

2. To bear the expenses of having someone else comply with the obligation (Art. 1165 par. 2)
Duties of debtor/obligor in obligation to do

1. To do the obligation
2. To bear the expenses of having someone else comply with the obligation (Art. 1167 par. 1)
3. To undo what has been poorly done (Art. 1167 par. 2)
4. To bear the expenses of having some else undo what has been poorly done (Art. 1167 par. 2)
Duties of debtor/obligor in obligation not to do

1. Not to do what has been forbidden
2. To undo what has been done that is forbidden (Art. 1168)
3. To bear the expenses of having some else undo what has been done that is forbidden (Art.
1168)
L.O. 4.3 Rights and Remedies of creditor/obligee
There are two types of rights considered:

1. Personal – Right acquired from the time the obligation to deliver arises and is enforceable
against a definite passive subject.
2. Real – Right acquired from delivery and is enforceable against anyone.

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Principal Rights/Remedies
1. Ask specific real performance- this speaks and present to the obligation of the debtor/obligor
in determinate thing
2. Ask performance- this speaks and present to the obligation of the debtor/obligor in generic
thing and obligation to do
3. Substituted Performance- same with no. 3
4. Damages- present in all obligation
5. Rescission- present in specific scenarios only
6. Attachment and Execution of Debtor’s Properties- usually the last remedy
Subsidiary Rights/Remedies
1. Accion Subrogatoria – exercise all the rights of the debtor.
2. Accion Pauliana – To impugn contracts that were entered to defraud the creditor
Example:
A borrowed from B 1,000,000.00. on the due date, A failed to pay despite the demands of B.
B also exhausted all his principle rights. Supposed A has a receivable from C amounting to
500,000.00 and another receivable from D amounting to 500,000.00.
L.O. 4.4 Breaches in Obligation

Art. 1170 Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are liable
for damages.
The above provision gives the 4 grounds for liability which may entitle the injured party to
damages for all kinds of obligations mentioned in Art. 1157. Here, the breach of obligation is
voluntary; in Art. 1174 it is involuntary.
Fraud (Deceit or Dolo)

- As used in Art. 1170, it is the deliberate or intentional evasion of the normal fulfillment of an
obligation. It is synonymous to bad faith in that, it involves a design to mislead or deceive
another.
Example:
Susan (wine seller) obliged herself to deliver to Blake (restaurant owner) 20 bottles of wine of
a particular brand. Subsequently, Susan delivered 20 bottles knowing that they contain cheaper
wine. Susan is guilty of fraud and is liable for damages to Blake.
Two types:
1. Causal Fraud (dolo causante) – Fraud in obtaining consent.
2. Incidental Fraud (dolo incidente) – Fraud in the performance of the obligation

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When is negligence equivalent to fraud?
When there is gross negligence. Gross negligence is defined as carelessness which is in
reckless disregard for the safety or lives of others, and is so great it appears to be a conscious
violation of other people’s rights to safety. It is more than simple inattention, but it is just shy of
being intentionally evil.
Negligence (Fault or Culpa)

- it is any voluntary act or omission, there being no malice, which prevents the normal
fulfillment of an obligation. (Art. 1173,1174)
- According Supreme Court, it is the failure to observe for the protection of the interests of
another person, that degree of care, precaution and vigilance which that circumstances justly
demand, whereby such other person suffers injury.
ELEMENTS OF NEGLIGENCE
a) duty on the part of the defendant to protect the plaintiff from injury of which the latter
complains
b) failure to perform such duty
c) an injury to the plaintiff through such failure
Example:
Pablo is a passenger in a taxi. Here, there is considered a contract of carriage between Paolo
and the owner of the taxi company. In consideration of the fare to be paid by Paolo, the owner of the
taxi company, through the driver, agrees to safely bring Paolo to his destination.
If recklessness of the driver, like for example, driving at an unjustified rate of speed or
entering a one-way street, an accident occurs, as result of which Paolo is injured, there is
negligence which would make the owner liable for damages. If the taxi contained defective parts, the
failure to repair the same constitute also negligence on the part of the owner.
Factors to be considered in Negligence:

Negligence is a question of fact, its existence being dependent upon particular circumstances
of each case. In determining the issue of negligence, the following factors must be considered:
1. Nature of the obligation

Example: Smoking while carrying materials known to be inflammable constitutes negligence.
2. Circumstances of the person

Example: A guard, a man in the prime of life, robust and healthy, sleeping while on duty is
guilty of negligence.
3. Circumstances of time
Example: Driving a car without headlights at night is gross negligence but it does not by
itself constitute negligence when during the day.
4. Circumstances of the place

Example: Driving at 100 km/hr on the superhighway is permissible but driving at the same
rate speed in Rizal Street is gross recklessness.
KINDS OF NEGLIGENCE
1. Culpa aquiliana – also called as civil negligence; negligence as a source of obligation, a quasi-
delict
2. Culpa contractual – also called as contractual negligence; negligence in the performance of a
contract resulting to breach
3. Culpa criminal – also called as criminal negligence; negligence resulting in the commission of
a crime.

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Distinction between Culpa Aquiliana, Culpa Contractual and Culpa Criminal
Yami is the driver of a carefully driven bus owned by the Black Bulls Incorporated. While
traversing a highway, Yami didn’t notice Asta (a pedestrian) while crossing a pedestrian lane. Since
the bus’s speed is not fast, Asta suffered serious but not fatal injuries. Yuno, a passenger of the bus
likewise suffered serious but not fatal injuries.
What action can Asta and Yuno take against Yami and/or Black Bulls Incorporated?
Delay (Mora)
- The word “delay”, as used in the law, is not to be understood according to its meaning in
common parlance. A distinction, therefore, should be made between ordinary delay and legal
delay (default or mora) in the performance of the obligation.
1. Ordinary delay- is merely the failure to perform an obligation on time.
2. Legal delay or default or mora- the failure to perform an obligation on time which failure
constitutes a breach of the obligation.
Kinds of delay or fault:

1. Mora solvendi- the delay on the part of the debtor to fulfill his obligation.
2. Mora accipiendi- the delay on the part of the creditor to accept the performance of the
obligation.
3. Compensatio morae- the delay of the obligors in reciprocal obligations (like in sale)

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Delay Illustrative Problem: Unilateral Obligation
Ruel promised to give his Chef’s knife with a brand “Home Gallery” to Noel to be dilvered on
October 25, 2021.
General rule: NO demand, NO delay.

1. Supposed, on October 25, 2021, Noel did not demand the delivery of the knife and Ruel
did not deliver the knife until October 26, 2021.
Analysis:
Ruel is not yet in delay.
2. Supposed, on October 25, 2021, Noel demanded the delivery of the knife and Ruel did not
deliver the knife until October 26, 2021.
Analysis:
Ruel is in delay.
Under Exceptions:
1. When the obligation or the law expressly so declares:
“Supposed Ruel and Noel agreed that Noel doesn’t need to make demand for Ruel to incur
delay on October 25, 2021” (obligation so provides)
2. Time is the controlling motive for the establishment of obligation:

“Supposed the “Home Gallery” (Chef’s knife) and Ruel obliged himself to deliver the “Home
Gallery” to Noel to be used in Noel’s food preparation for his birthday on October 25, 2021.”
3. Demand would be useless:

“Supposed the “Home Gallery” got broken because of the negligence of Ruel.”
Delay Illustrative Problem: Reciprocal Obligation
Alice sold her only food truck to Betty for Php 1,000,000.00. there was no agreement
regarding the time of delivery and time of payment.
General rule: When one party fulfils his obligation, delay on the other starts.
1. Supposed Betty paid Php 1,000,000.00 the following day, Alice must deliver the food
truck on the same day to avoid incurring delay.
2. Supposed Alice delivered the food truck the following day, Betty must pay the Php
1,000,000.00 on the same day to avoid incurring delay.
L.O. 4.5 Fortuitous Event
A fortuitous event is any event which cannot be foreseen, or which, though foreseen, is
inevitable. Stated otherwise, it is an event which is either impossible to foresee or impossible to
avoid.
The essence of a fortuitous event consists of being a happening independent of the will of the
debtor or obligor and which happening, makes the normal fulfillment of the obligation impossible.
Fortuitous event distinguished from force majeure (unforeseeable circumstances that prevent someone
from fulfilling a contract):
1. Acts of man. - strictly speaking, fortuitous event is an event independent of the will of the
obligor but not of other human wills.
Examples: War, Fire, Robbery, Murder, Rebellion etc.

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Prepared by: Arjane B. Cuasay 20
2. Acts of God. – they refer to what is called “majeure” or those events which are totally
independent will of every human being.
Examples: Earthquake, Flood, Rain, Shipwreck, Lightning, Volcanic Eruption, etc.
Kinds of Fortuitous Event:
1. Ordinary fortuitous events- those events which are common and which the contracting
parties could reasonably foresee.
2. Extraordinary fortuitous events- those events which are uncommon and which the
contracting parties could not have reasonably foreseen.
Requisites of a fortuitous event:

1. The cause of the breach is independent of the debtor’s will
2. The event is unforeseeable or unavoidable
3. The event is such as to render it impossible for the debtor to fulfill his obligation in a
normal manner
4. The debtor did not take part in causing the injury to the creditor
General Rule: No one is liable for fortuitous event
Exceptions to General Rule:

1. Law or stipulation expressly so declare
2. Nature of the obligation requires the assumption of risk
3. Obligation is other than an obligation to give a specific thing
4. Debtor is already in delay
Illustrative Case for Fortuitous Event:

Soledad bound herself to give Martin a specific heavy duty stand-up mixer on November 29,
2021. While on her way to deliver the mixer, she was robbed by a group of armed man. There was
nothing she could do.
Exceptions considered:
1. Law or stipulation expressly so declare
A possessor in bad faith shall be liable for deterioration or loss in every case even if
caused by a fortuitous event. (Art. 552)
The bailee in commodatum is liable for the loss of the thing, even if it should be through
a fortuitous event for certain instances. (Art. 1942)
The officious manager in negotiorum gestio shall be liable for any fortuitous event in
certain instances. (Art. 2147)
2. Nature of the obligation requires the assumption of risk

Example is Insurance contract
3. Obligation is other than an obligation to give a specific thing

Example is Obligation to give a generic thing
4. Debtor is already in delay

Ruel promised to give his Chef’s knife with a brand “Home Gallery” to Noel to be dilvered
on October 25, 2021.
Supposed Ruel did not deliver the Chef’s knife on Oct. 25 when Noel demanded it. In this
case, Ruel incurs delay.

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When Rule decided to deliver the knife on Oct. 25 but before he reach Noel’s house, the
knife was stolen/robbed by a thief and immediately ran it off on the spot.
L.O. 4.6 Damages
The term “damages” was defined by the Supreme Court as the sum of money which the law
awards or imposes as a pecuniary compensation, a recompense, or satisfaction for an injury done
or a wrong sustained as a consequence either of a breach of contractual obligation or a tortious act.
1. Actual or Compensatory
- It refers to the money paid to the plaintiff to cover for the damages caused by the
defendant. (e.g. copyright infringement Art. 2199)
2. Moral
- It includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shocks, social humiliation and similar injury. (e.g. physical
suffering, fright, serious anxiety, etc. Art. 2217)
3. Nominal
- It may be awarded in order that the plaintiff’s right, which has been violated or invaded by
the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered. (to vindicate or recognize a right Art. 2221)
4. Temperate or Moderate
- It may be recovered when pecuniary loss has been suffered but the amount cannot, from the
nature of the case, be proven with certainty. (pecuniary loss cannot be proved with certainty
Art. 2224)
5. Exemplary or Corrective
- It is imposed, by way of example or correction for the public good, in addition to moral,
temperate, liquidated or compensatory damages. (imposed to set an example for the public
good Art. 2229)
6. Liquidated
- These are agreed upon by the parties to a contract, to be paid in case of breach thereof.
(damages agreed upon by parties to a contract Art. 2226)
the nature and effect of obligations and its implication to tourism and hospitality industry.
TOPIC 5: CONTRACTS
L.O. 5.1 General Provisions on Contracts
L.O. 5.2 Essential Requisites of Contracts
Art. 1305. A 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.
L.O. 5.1 General Provisions on Contracts
The above article gives the definition of a contract. It lays emphasis on the meeting of minds
between two contracting parties which takes place when an offer by one party is accepted by the
other (Art. 1319). In a contract, one or more persons bind himself or themselves with respect to
another or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do. In
contract, there must be at least two persons or parties, because it is impossible for one to contract
with himself.
Example:
A hotel agrees to buy a new furniture for its lobby and in exchange agrees to pay a specified
price.

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A guest agrees to rent a room for a weekend and pay the quoted rate. In exchange, the hotel
agrees to reserve the room for the guest and not rent it to anyone else.
An association agrees to hold its annual convention at a hotel and pay the specified costs. In
exchange, the hotel agrees to provide rooms, banquet facilities, food, and related services.
Contract and agreement distinguished:

Art. 1306. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. (1255a)
Contracts are agreements enforceable through legal proceedings. Those agreements which
cannot be enforced by action in the courts of justice are not contracts but merely moral or social
agreements. An agreement is broader than a contract because the former may not have all the
elements of a contract.
So, all contracts are agreements but not all agreements are contracts.
ELEMENTS OF A CONTRACT
1. Essential Elements
a. Consent
b. Object
c. Cause
2. Natural Elements- exist as part of the contract even if the parties do not provide for them,
because the law, as suppletory to the contract, creates them. (e.g. warranty against eviction
and hidden defects in case of sales)
3. Accidental Elements- agreed upon by the parties and which cannot exist without being
stipulated. (e.g. mortgage, guaranty, interest in loan)
CLASSIFICATION OF CONTRACTS:
1. According to perfection:
a. Consensual- perfected by consent, object, cause (COC) (e.g. purchase, sale, partnership)
Art. 1315. Contracts are perfected by mere consent, and from that moment the parties
are bound not only to the fulfillment 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. (1258)
b. Real- perfected by COC + delivery (e.g. pledge, deposit, loan, commodatum)

Art. 1316. Real contracts, such as deposit, pledge and commodatum, are not perfected
until the delivery of the object of the obligation. (n)
c. Formal or Solemn- perfected by COC + formalities required by law (e.g. donation of real
property, chattel mortgage, antichresis)
2. According to relation to other contracts:

a. Principal- can exist on its own (e.g. sales, lease, loan)
b. Accessory- existence depends upon a principal contract (e.g. pledge, mortgage, guaranty)
c. Preparatory- needed for the formation of subsequent contracts (e.g. partnership, agency)
3. According to parties obliged:

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a. Unilateral- only one party is obliged (e.g. commodatum, donation)
b. Bilateral- both parties are obliged (e.g. sales, barter)
4. According to name:
a. Nominate- the law gives it a special name or designation (e.g. sales, loan, partnership,
donation)
b. Innominate- the law does not give it special name or designation
i. Do ut des: I give that you may give
ii. Do ut facias: I give that you may do
iii. Facio ut facias: I do that you may do
iv. Facio ut des: I do that you may give
When dealing with Innominate Contracts, the following reasons must be followed:
a. Stipulations of the parties
b. Rules governing law on obligations and contracts
c. Rules governing the most analogous contract
d. Customs of the place
5. According to risks:
a. Commutative- when the undertaking of one party is considered the equivalent of that of
the other. (e.g. sales, lease)
b. Aleatory- when it depends upon an uncertain event or contingency both as to benefit or
loss (e.g. contract of insurance, sales of hope)
6. According to cause:
a. Onerous- cause has valuable consideration (e.g. sales, lease)
b. Gratuitous- cause is purely generosity (e.g. commodatum, donation)
c. Remuneratory- cause is based on services or benefits already received (e.g. employment
contract
7. According to binding force:

a. Valid
b. Rescissible
c. Voidable
d. Unenforceable
e. Void
STAGES IN THE LIFE OF A CONTRACT:

1. Preparation/Conception/Generation/Negotiation
- This includes all the steps taken by the parties leading to the perfection of the contract. At
this stage, the parties have not yet arrived at any definite agreement.
2. Perfection/Birth/Formation
- This is when the parties have come to a definite agreement or meeting of the minds
regarding the subject matter and cause of the contract.
3. Consummation/Death/Extinguishment
- This is when the parties have performed their respective obligations and the contract may
be said to have been fully accomplished or executed, resulting in the extinguishment or
termination thereof.
CHARACTERISTICS OF CONTRACT:

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The common characteristics of a contract are:
M- Mutuality of contracts
A- Autonomy (Liberty of contracts)
R- Relativity of contracts
C- Consensuality of contracts
O- Obligatory force of contracts
Mutuality of contracts
Validity and performance cannot be left to the will of only one of the parties. Purpose is to
render void contract containing a condition which makes fulfillment dependent exclusively upon the
uncontrolled will of the one of the contracting parties.
Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them. (1256a)
Art. 1309. The determination of the performance may be left to a third person, whose
decision shall not be binding until it has been made known to both contracting parties. (n)
Art. 1310. The determination shall not be obligatory if it is evidently inequitable. In such
case, the courts shall decide what is equitable under the circumstances. (n)
Example:
S sold his parcel of land to B. it was agreed that X, a real estate appraiser, would be the one
to determine the reasonable prices of the land. X, then fixed the price after considering all the
circumstances and factors affecting the value of the land.
Autonomy (Liberty of contracts)

This is the freedom to stipulate in contracts. Entering into contracts is a guaranteed right of
the citizens. They are free to do so as long as it is not contrary to law, good morals, customs, public
order and public safety.
Art. 1306. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. (1255a)
Contract must not be contrary to law:

A contract cannot be given effect if it is contrary to law because law is superior to a contract
(Art. 1409[1]). Acts executed against the provisions of mandatory or prohibitory laws are void, except
when the law itself authorizes their validity. The contracting parties must respect the law which is
deemed to be an integral part of every contract (Art. 1315).
Contract must not be contrary to morals:

Morals deals with norms of good and right conduct evolved in a community. These norms may
differ at different times and places and with each group of people.
Example:
A contract whereby X promised to live as the common-law wife of Y without the benefit of
marriage in consideration of Php 100,000.00 is immoral and, therefore, void,

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An agreement whereby X is to render service as a servant to Y without compensation as long
as X has not paid his debt is reprehensible and censurable. It also contrary to law.
Contract must not be contrary to good customs:

Customs consist of habits and practices which through long usage have been followed and
enforced by society or some part of it as binding rules of conduct. It has the force of law when
recognized and enforced by the law.
Good customs are expressly mentioned although morals are already specified. The spheres of
morals and good customs may frequently overlap each other but sometimes they do not.
Example:
X entered into a contract whereby x binds himself to slap his father. This contract is void
because it is against the good custom of showing respect to our parents.
Contract must not be contrary to public order:
Public order refers principally to public safety although it has been considered to mean also
the public weal.
Example:
A stipulation in a contract of lease whereby the landlord can use force to eject the tenant in
case of failure of the latter to pay the rent agreed upon is void as being against public order.
Contract must not be contrary to public policy:

Public policy is broader than public order, as the former may refer not only to public safety but
also to considerations which are moved by the common good.
A contract which has a tendency to be injurious to the public or is against the public good is
contrary to public policy. Actual injury need not be shown.
Example:
X stole the car of Y. Later, they entered into a contract whereby Y would not prosecute X in the
consideration of Php 50,000.00.
It is to the interest of the society that crimes be punished. The agreement between X and Y is,
therefore, contrary to public policy because it seeks to prevent or stifle the prosecution of X for theft.
To permit X to escape the penalties prescribed by law by the purchase of immunity from Y, a private
individual would result in a manifest perversion of justice.
Relativity of contracts
Binding only upon the parties and their successors. Contracts take effect only between the
parties, their assignments and heirs. No one may contract in the name of another.
Art. 1311. Contracts take effect only between the parties, their assigns and heirs, 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.
There are exceptions to the rule; this follows:

1. Stipulation Pour Autrui

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Art. 1311 par. 2 If a contract should contain some stipulation in favor of a third person,
he may demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third
person. (1257a)
Stipulation Pour Autrui is a stipulation in a contract clearly and deliberately conferring a

favor upon a third person who has a right to demand its fulfillment provided he
communicates his acceptance to the obligor before its revocation.
Requisites of Stipulation Pour Autrui:

1. There must be a stipulation in favor of a third person.
2. The stipulation must be part, not the whole of the contract.
3. The contracting parties must have clearly and deliberately conferred a favor upon a
third person, NOT a mere incidental benefit or interest.
4. The third person must have communicated his acceptance to the obligor before its
revocation.
5. No relation of agency exists between any of the parties and the third person favored.
Example:
D is indebted to C for Php 1,000,000.00 with 12% interest. It was stipulated that X will
receive the 12% interest. This stipulation is accepted by X and duly communicated the
acceptance to D and C.
After a year, D and C decided to change the contract into giving a specific house and lot.
Under relativity of contracts, third person cannot act upon the decisions of the parties in a
contract. However, X in this case is an exemption.
2. Third persons in possession of a property creating real rights.
Art. 1312. In contracts creating real rights, third persons who come into possession of
the object of the contract are bound thereby, subject to the provisions of the Mortgage
Law and the Land Registration Laws. (n)
Third persons who come into possession of the object of a contract over which there is a
real right, are bound thereby even if they were not parties to the contract. Thus, a contract
subjecting certain debts, registered in accordance with the Property Registration Decree,
constitutes a real right, which is produced not by the contract but the publicity given byt
the Registry, such publicity prejudicing the right of third persons.
Example:
S sold to B specific land for Php 1,000,000.00. B occupied the said land but did not
register it. One day, S sold the same land to X. X registered the said property at the
Registry of Deeds.
3. Contract is entered to defraud creditor.

Art. 1313. Creditors are protected in cases of contracts intended to defraud them. (n)
The creditor is given the right to impugn the contracts of his debtor to defraud him.
Example:

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D is indebted to C for Php 1,000,000.00. D fearing that he won’t be able to pay the debt
and ultimately his land being levied, sold the said land at a very low prices to X with the
condition that he can purchase it back.
4. Third person induced a party to a contract to violate the contract.

Art. 1314. Any third person who induces another to violate his contract shall be liable for
damages to the other contracting party. (n)
Example:
After agreeing to sell his parcel of land to B, S sells the land to C instead because of the
inducement of D. in this case, B can sue D for damages.
Consensuality of contracts
Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment 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.
(1258)
Exceptions of the rule in this characteristics are the Real and Formal contracts.
Obligatory force of contracts

Constitutes the laws as between the parties.
Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them. (1256a)
Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
L.O. 5.2 Essential Requisites of a Contract

General Provision
Art. 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;
(3) Cause of the obligation which is established.
CONSENT
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came
to his knowledge. The contract, in such a case, is presumed to have been entered into in the place
where the offer was made.
Meaning of Consent.

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Consent is the conformity or concurrence of wills (offer and acceptance) and with
respect to contracts, it is the agreement of the will of one contracting party with that of another or
others, upon the object and terms of the contract.
Requisites of Consent:
1. It must be manifested by the concurrence of the offer and acceptance. (Arts. 1319-1326)
Meaning of Offer.
Offer is a proposal made by one party to another to enter into a contract. It is more than an
expression of desire or hope.
The offer must be certain or definite so that the liability (or the rights) of the parties
may be exactly fixed because it is necessary that the acceptance be identical with the offer to
create a contract without any further act on the part of the offender.
Example:
Will you buy this watch for Php 10,000.00? This is an offer.
I am willing to consider the sale of my land to you for Php 50,000.00. The offer here is
uncertain.
I am willing to buy your car. There is no offer here.
I am willing to sell my car for Php 240,000.00 cash or for 12 monthly installments of Php
20,000.00. This offer is certain.
However, there are special cases of offers:

1. The person making the offer may fix the time, place, and manner of acceptance, all of
which must be complied with (Art. 1321)
2. An offer made through an agent is accepted from the time acceptance is communicated to
him. (Art. 1322)
3. An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of
either party before acceptance is conveyed. (Art. 1323)
4. Advertisement for bidders are simply invitations to proposals , and the advertiser is not
bound to accept the highest or lowest bidder, unless the contrary appears. (Art. 1326)
Meaning of acceptance.
Acceptance is the manifestation by the offeree of his asset to the terms of the offer. Without
acceptance, there can be no meeting of the minds between the parties.
Note to consider in acceptance:
1. An acceptance must be absolute (Art. 1319)
2. Communicated to the offeror (Art. 1319 par. 2 Acceptance made by letter or telegram does
not bind the offerer except from the time it came to his knowledge; and Art. 1322 An offer
made through an agent is accepted from the time acceptance is communicated to him.)
3. May be express or implied (Art. 1320 An acceptance may be express or implied.)
Example:
S offers B to sell his specific house and lot in Quezon City for Php 1,500,000.00. B
accepted the offer but it is only willing to buy the land.

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2. The contracting parties must possess the necessity legal capacity (Arts. 1327-1329)
There are two kinds of incapacity:

a. Absolute incapacity
- Art. 1327 states that the following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons,
(3) Deaf-mutes who do not know how to write.
b. Relative incapacity
- Those under civil interdiction for transactions (inter vivos) (RPC Art. 34)
- Undischarged insolvents
- Husband and wife; cannot donate (Art. 123 FC) to each other, nor sell if the marriage is
under ACP Art. 1490.
c. Other special disqualifications may be provided by law:

- Persons suffering the accessory penalty civil interdiction
- Hospitalized lepers
- Prodigals (spendthrifts)
- Deaf and dumb who are unable to read and write
- Those who, by reason of age, disease, weak mind and other similar causes, cannot take
care of themselves
Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a
state of drunkenness or during a hypnotic spell are voidable.
Lucid interval is a temporary period of sanity. A contract entered into by an insane or

demented person during lucid interval is valid.
On the other hand, drunkenness and hypnotic spell impair the capacity of a person to
give intelligent consent. This conditions are equivalent to temporary insanity. Hence, the law
considers a contract entered into in a state of drunkenness, or during hypnotic spell voidable.
3. It must be intelligent, free, spontaneous and real (not vitiated) (Arts. 1330-1346)
- Art. 1330 states that a contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable.
Vices of consent:
1. Error or mistake (Art. 1331 In order that mistake may invalidate consent, it should refer to
the substance of the thing which is the object of the contract, or to those conditions which
have principally moved one or both parties to enter into the contract. Mistake as to the
identity or qualifications of one of the parties will vitiate consent only when such identity or
qualifications have been the principal cause of the contract. A simple mistake of account
shall give rise to its correction.)
Mistake or error is the false notion of a thing or a fact material to the contract.
Examples:
- Mistake regarding object
- Mistake regarding condition of the contract

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- Mistake regarding identity or qualifications
2. Violence or force (Art. 1335, par 1 There is violence when in order to wrest consent, serious
or irresistible force is employed.)
Nature of violence or force

Violence requires the employment of physical force. Under Art. 1335, to make consent
defective, the force employed must be either serious or irresistible.
3. Intimidation or threat or duress (Art. 1335, par. 2 There is intimidation when one of the
contracting parties is compelled by a reasonable and well-grounded fear of an imminent and
grave evil upon his person or property, or upon the person or property of his spouse,
descendants or ascendants, to give his consent.)
Nature of intimidation or threat

Intimidation to vitiate the consent of a party to contract, there must produce a
reasonable and well-grounded fear of an evil where the evil must be imminent and grave.
4. Undue influence (Art. 1337 There is undue influence when a person takes improper
advantage of his power over the will of another, depriving the latter of a reasonable freedom
of choice. The following circumstances shall be considered: the confidential, family, spiritual
and other relations between the parties, or the fact that the person alleged to have been
unduly influenced was suffering from mental weakness, or was ignorant or in financial
distress.)
Undue influence is influence of a kind that so overpowers the mind of a party as to

destroy his free will and make him express the will of another, rather than his own.
Circumstances to be considered:
a. Confidential, family, spiritual and other relations between the parties
b. Mental weakness
c. Ignorance
d. Financial distress of the person alleged to have been unduly influenced
5. Fraud or deceit (Art. 1338 There is fraud when, through insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract which, without
them, he would not have agreed to.)
Insidious words and machinations constituting deceit including false promises,

exaggeration of hope and benefits, abuse of confidence, fictitious names, qualifications
or authority.
OBJECT
Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may also be the
object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by
law.
All services which are not contrary to law, morals, good customs, public order or public policy may
likewise be the object of a contract.
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The object of a contract is its subject matter. In reality, the object of every contract is the obligation created. It
may be said that the thing, service, or right which is the object of obligation id also the object of a contract.
Kinds of object of contract:
The object may things (as in contract of sale), rights (as in assignment of credit), or services
(as in agency).
Requisites of things as object of contract:

In order that things may be the object of a contract, the following requisites must be
present:
1. The thing must be within the commerce of men, that is, it can legally be the subject of
commercial transaction.
2. Art. 1348 Impossible things or services cannot be the object of contracts.
3. It must be in existence or capable of coming into existence
4. Art. 1349 The object of every contract must be determinate as to its kind. The fact that the
quantity is not determinate shall not be an obstacle to the existence of the contract, provided
it is possible to determine the same, without the need of a new contract between the parties.
Requisites of things as object of contract:

In order that service may be the object of a contract, the following requisites must be
present:
1. The service must be within the commerce of men.

2. Art. 1348 Impossible things or services cannot be the object of contracts.
3. Art. 1349 The object of every contract must be determinate as to its kind. The fact that
the quantity is not determinate shall not be an obstacle to the existence of the contract,
provided it is possible to determine the same, without the need of a new contract between
the parties.
Rights as object of contract:

As a general rule, all rights may be the object of a contract.
The exceptions are when they are intransmissible by their nature, or by stipulations, or
by provision of law. (Art. 1311, par 1)
Examples:
1. Outside the commerce of men. – clings of public ownership such as sidewalks, public
places, bridges, streets etc; things that are common to everybody such as air, sunlight, rain
etc.
2. Impossible, physically or legally. – prohibited drugs and all illicit objects; to kill a person,
etc.; to get soil from Jupiter; to construct a building in one day, etc.
3. Determinable things. – all the cavans of rice in a bodega; all eggs in a basket; my land with
the smallest area; the land at the corner of a particular street, etc.

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4. Future things or rights. – things to be manufactured, raised, or acquired after the
perfection of the contract such as wine that a vineyard is expected to produced; wool that
shall thereafter grow upon a sheep; rice to be harvested next harvesting season; milk that a
cow may yield; eggs that hens may lay etc.
5. Intransmissible rights. – political rights such as right to vote; family, marital, and parental
rights; right to public office, or to run for public office etc.
CAUSE
Art. 1350. In onerous contracts the cause is understood to be, for each contracting party, the
prestation or promise of a thing or service by the other; in remuneratory ones, the service or benefit
which is remunerated; and in contracts of pure beneficence, the mere liberality of the benefactor.
Meaning of Cause.
Cause (Causa) is the essential or more proximate purpose which the contracting parties
have in view of entering into the contracts.
Cause distinguished from object:

In a bilateral or reciprocal contract like purchase and sale, the cause for one is the
subject matter or object for the other, and vice versa. Hence, the distinction is only a matter of
point of view.
Example:
S sells a roasted pig (lechon) to B for Php 8,000.00. As far as S (seller) is concerned, the
subject matter or object is the roasted pig (lechon) and the cause is the price. As regards B
(buyer), the subject matter or object is the price and the cause is the roasted pig (lechon).
Art. 1351. The particular motives of the parties in entering into a contract are different from
the cause thereof.
Meaning of Motive.
Motive is the purely personal or private reason which a party has in entering into a
contract. It is different from the cause of the contract.
Cause distinguished from motive:

a. Cause is the immediate or direct reason, while motive is the remote or indirect reason.
b. Cause is always known to the other contracting party, while motive may be unknown.
c. Cause is an essential element of a contract, while motive is not
d. The illegality of the cause affects the validity of a contract, while the illegality of one’s
motive does not render the contract void.
Requisites of Cause:

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The following are the requisites of cause:
1. It must exist at the time the contract is entered into. (Art. 1352. Contracts without cause,
or with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to
law, morals, good customs, public order or public policy.)
2. It must be lawful.
3. It must be true or real. (Art. 1353. The statement of a false cause in contracts shall render
them void, if it should not be proved that they were founded upon another cause which is
true and lawful.)
Defective causes:
Absence or want of cause – there is a total lack of any valid consideration for the contract.
Illegality of cause – there is a cause but the same is unlawful or illegal.
Falsity of cause – the contract states a valid consideration but such statement is not true.
Lesion or Inadequacy of cause – any damage caused by the fact that the price is unjust or inadequate.
Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists and
is lawful, unless the debtor proves the contrary.

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LEGAL ASPECTS IN TOURISM AND HOSPITALITY

Legal Aspects in Tourism and

Legal Aspects in Tourism and

Logo of the Agency/Organization Name of the Agency/Organization

(Filipino: Kagawaran ng Turismo, DOT) is

The Tourism Infrastructure and Enterprise

Formerly the Philippine Tourism

An agency of the Department of Tourism of

The National Historical Commission of the

(Filipino: Pambansang Komisyong

The National Commission for Culture and

(Filipino: Pambansang Komisyon para sa

Legal Aspects in Tourism and

Legal Aspects in Tourism and

THE PHILIPPINE CONVENTION & VISITORS

PCVC is tasked with promoting the country as

The Hotel and Restaurant Association of the

A non-stock, non-profit organization

Philippine Amusement and Gaming

It is a government-owned and controlled

Civil Aviation Authority of the

It is the national aviation authority of

Legal Aspects in Tourism and

It is the executive department of the Philippine

DEPARTMENT OF LABOR AND

It is one of the executive departments of

Department of Environment and Natural

(Filipino: Kagawaran ng Kapaligiran at Likas na

Department of Foreign Affairs

(DFA; Filipino: Kagawaran ng Ugnayang

L.O. 3.1 General Provisions

3.1 GENERAL PROVISIONS

Conclusive presumption of knowledge of law:

3.2 ALL ABOUT OBLIGATIONS

Civil Code Definition:

Legal Aspects in Tourism and

Every obligation has 4 essential requisites, namely:

Difference of Obligation, Right and Wrong

Obligation- is the act of performance which the law will enforce.

The essential elements of a legal wrong or injury are:

Kinds of Obligation according to the subject matter

Example: X (a seller) binds himself to deliver a piano to Y (buyer).

a. Positive personal obligation- obligation to do or to render service. (Art. 1167)

Legal Aspects in Tourism and

Article 1157. Obligation arise from:

1. Law- when they are imposed by law itself.

Legal Aspects in Tourism and

Compliance in good faith

2. A contract whereby S will kill B in consideration of Php 1000.00 to be paid by C, is void

1. Negotiorum gestio (management of business)- it is the voluntary management of the

Legal Aspects in Tourism and

Obligations arising from quasi-delicts

A quasi-delict is an act or omission by a person (tortfeasor) which causes damage to another

TOPIC 3: INTRODUCTION TO LAW ON OBLIGATIONS AND CONTRACTS (Continuation)

GENERAL RULE: Criminal liability is a necessary consequence of civil liability

Legal Aspects in Tourism and

Subsidiary Liability for Crime

Civil liability arising from Crime

Extent of Civil Liability