CHAPTER 2: Nature and Effect of Obligations against public policy and good customs.

To
answer for damages in case of non-
ART 1163: Every person obliged to give
fulfillment or breach.
something is also obliged to take care of it with
- C. Factors to be considered
the proper diligence of a good father of a family,
- The debtor is not liable if his failure to
unless the law or the stipulation of the parties
preserve the thing is not due to his fault or
requires another standard of care.
negligence but to fortuitous events or force
- These provisions refer to an obligation majeure
specific or determinate thing
force majeure - unforeseeable
A thing is said to be specific or determinate circumstances that prevent someone from
particularly designated or physically segregated fulfilling a contract.
others of the same class
EXAMPLES: the watch I am wearing, the car sold d. Reason for debtor’s obligation - the
by X, my dog named “Terror” debtor must exercise diligence to insure that
the thing to be delivered would subsist in
Meaning of generic or indeterminate thing the same condition as it was when the
obligation was contracted.
- it refers only to a class or genus to which it
pertains and cannot be pointed out with the
2. Deliver the fruits of the thing
particularity.
3. Deliver the thing itself
- Examples: A Bulova calendar watch, a
4. Answer for damages in case of non-
police dog, a cavan of rice
fulfillment or breach
Specific thing and generic thing distinguished.
Duties of debtor in obligation to deliver a
Determinate thing generic thing

- Identified by its individuality 1. To deliver a thing which is of the quality

- The debtor cannot substitute it with another intended by the parties taking into
although the latter is of the same kind and consideration the purpose of the obligation
quality without the consent of the creditor. and other circumstances
2. To be liable for damages in case of fraud,
Generic Thing negligence, or delay, in the performance of
- Identifies only by its specie his obligation, or contravention of the tenor
- The debtor can give anything of the same thereof.
class as long as it is of the same kind. ART 1164:
Duties of debtor in obligation to give Different kinds of fruits
determinate thing
1. Natural fruits – products of the soil, and the
1. Preserve the thing – the obligor has the young and other products of animals.
incidental duty to take care of the thing due Examples: Grass, all trees and plants on
with the diligence of a good father of a lands without the intervention of human
family pending delivery labor
a. Diligence of a good father of a family 2. Industrial fruits – produced by lands of any
- Having an ordinary care. Just like a father of kind though cultivation or labor. Examples:
a family, it is a care that an average person Sugar cane; vegetables rice; all products of
would do in taking care of his property lands brought about by reason of human
b. Another standard of care labor
- The degree of diligence must not be inferior 3. Civil fruits - are those derived by virtue of a
to the diligence of a good father of the juridical relation. Examples: Rents of
family. Anything lower than this would be buildings, price of leases of lands and other
 property and the amount of perpetual or life In obligation to deliver a determinate thing, the
annuities or other similar income very thing itself must be delivered.
Right of creditor of the fruits A generic real obligation (obligation to deliver a
generic thing) can be performed by a third person
- The creditor has a right to the fruits of the
since the object is expressed only according to it
thing from the time the obligation to deliver it
family or genus. It is, thus, not necessary for the
arises. However, he shall acquire no real
creditor to compel the debtor to make the delivery,
right over it until the same has been
although he may ask for performance of the
delivered to him.
obligation. The creditor has the right to recover
When obligation to deliver fruits arises damages (ART 1170) in case of breach or violation
of the obligation.
- There is perfection or a meeting of minds.
Generally, the obligation to deliver the thing When debtor delays or has promised delivery to
arises only there. If it is in suspensive separate creditors
condition or period, the effect of that is to
When a fortuitous event does not exempt the
suspend fulfillment of an obligation. Even if
debtor from responsibility. It likewise refers to a
that obligation has a suspensive condition
determinate thing. An indeterminate thing cannot
or suspensive period, the parties can still
be the object of destruction by a fortuitous event
stipulate the right of the creditor the delivery
because genus nunquam perit.
of the fruits of the thing.
genus nunquam perit. -The law adheres to the
Meaning of personal right and real right
principle that “genus never perishes”. This means
Personal right – the right or power of a person that the loss of a generic thing shall not exempt a
(creditor) to demand from another (debtor) party for complying with the obligation.

Real right - the right or interest of a person over

a specific thing (like ownership, possession,
ART 1166
mortgage) without a definite passive subject
against whom the right may be personally Accessions and accessories
enforced.
Accessions - are the fruits of a thing or additions to
Personal right and real right distinguished or improvements upon a thing
In personal right, there is a definite active Examples: house or trees on a land; rents of a
subject and a definite passive subject building; air conditioner in a car
In real right, there is only a definite active Accessories - things joined to or included with the
subject without any definite passive subject. principal thing for the latter’s embellishment, better
use, or completion.
ART 1165:
Examples: Key of a house; frame of a picture;
Remedies of creditor in real obligation
bracelet of a watch
In specific real obligation (obligation to deliver a
determinate thing ) the creditor may exercise :
Right of creditor to accessions and accessories
a. Demand specific performance or fulfillment
of the obligation with a right to indemnity for The general rule is that all accessions and
damages or accessories are considered included in the
b. Demand recission or cancellation of the obligation to deliver a determinate thing although
obligation also with a right to recover they may not have been mentioned.
damages
c. Demand payment of damages only, where it
is the only feasible remedy.
 3. Compensatio more or the delay of the obligor in
reciprocal obligations, the delay of the obligor
cancels the delay of the oblige, and vice versa
No delay in negative personal obligation
ART1167
In
Refers to an obligation to do, to perform an act or
render a service.
1. The debtor fails to perform and obligation to
do
2. The debtor performs an obligation to do but
contrary to the terms thereof; or
3. The debtor performs an obligation to do but
in but in poor manner.
Remedies of creditor in positive personal
obligation
1. If the debtor fails to comply with his
obligation to do, the creditor has the right:
a. To have the obligation performed by
himself, or by another, unless personal
considerations are involved, at the
debtor’s expense; and
b. To recover damages

ART1168: When the obligation consists in not

doing, and the obligor does what has been
forbidden him, it shall also be undone at his
an obligation not to do, non-fulfillment may take
expense.
place but delay is impossible for the debtor to fulfill
ART1169 by not doing what has been forbidden him.(Art.
1168)
Meaning of Delay
Requisites of the delay or default by the debtor.
1. Ordinary Delay- is merely the failure to perform
an obligation on time. 1. Failure of the debtor to perform his
(positive)obligation on the date agreed upon.
2. Legal Delay or default or mora is the failure to
perform an obligation on time which constitutes a 2. Demand made by the creditor upon the debtor to
breach of the obligation. comply with his obligation which demand may
either be judicial or extrajudicial.
Kinds of delay or Default
3. Failure of the debtor to comply with such
1. Mora solvendi or the delay on the part of the
demand.
debtor to fulfill his obligation (to give or to do);
Effects of delay
2. Mora accipiendi or the delay on the part of the
creditor to accept the performance of the obligation; (1) Mora solvendi
and
(a) The debtor is guilty of breach or violations of the
obligation;
(b) He is liable to the creditor for interest or Incidental fraud (dolo incidente) -committed in the
damages performance/ fulfillment of an obligation already
existing because of contract.
(c) He is liable even for fortuitous event when the
obligation is to deliver a determinate Causal fraud (dolo causante) - fraud employed in
the execution of a contract under Article 1338,
(2) Mora accipiendi
which vitiates consent.
(a) The creditor is guilty of breach of obligations.
(b) He is liable for damages suffered, if any.
By the debtor;
(c) He bears the risk of loss of the thing due;
2. Negligence (fault or culpa) - It is any voluntary
(d) Where the obligation is to pay money, the act or omission, there being no bad faith or malice,
debtor is not liable for interest from the time of which prevents the normal fulfillment of an
creditor's delay; and obligation. (Art. 1173, 1174.)

(e) The debtor may release himself from the • Contractual negligence (culpa contractual) -
obligation by the consignation or deposit in court of negligence in contracts resulting in their breach.
the thing or sum due.
• Civil negligence (culpa contractual) -
(3) Compensatio morae negligence which by itself is the source of an
obligation between the parties not so related before
Legally speaking, there is no default or delay on the by any pre-existing contract.(tort or quasi-delict)
part of both parties.(if it cannot be determined
which of the parties is guilty of delay, the contract • Criminal negligence - negligence resulting in the
shall be deemed extinguished and each shall bear commission of a crime.
his own damages (Art.1192))
3. Delay (mora) - already mentioned above.
When demand is not necessary to put debtors
4. Contravention of the terms of the obligation -
in delay.
This is the violation of the terms and conditions
(1) When the obligation so provides. stipulated in the obligation. The contravention must
due to a fortuitous event or force majeure.
(2) When the law so provides.
(3) When time is of the essence.
(4) When demand would be useless.
(5) When there is performance by a party in
reciprocal obligation
Article 1170.
Grounds for liability
1. Fraud (deceit or dolo) - is the deliberate or
intentional evasion of the normal fulfillment of an
obligation.
ART. 1171. Responsibility arising from fraud is
-implies some kind of malice or dishonesty
demandable in all obligations. Anywaiver of an
- it involves design to mislead or deceive another. action for future fraud is void.
Responsibility arising from fraud is
demandable
This article refers to incidental fraud which is Ex. A guard, a man in the prime of life, robust and
employed in the fulfillment of an obligation. (Art. healthy, sleeping while on is guilty of negligence
1170.)Responsibility arising from fraud can be
3. Circumstances of time
demanded with respect to all kinds of obligation
and unlike in the case of responsibility arising from Ex. Driving a car without headlight at night is gross
negligence (Art. 1172.), the court is not given the negligence but u does not by itself constitule
power to mitigate or reduce the damages to be negligence when driving during the day.
awarded. This is so because fraud is deemed
seriousand evil that its employment to avoid the
fulfillment of one’s obligation should be 4. Circumstances of the place
discouraged.
Ex. Driving at 100 kilometers per hours on the
superhighway is permissible but driving at the same
Waiver of action for future fraud void. rate of speed in Ayala Avenue, Makati is gross
recklessness
According to the time of commission, fraud may be
past or future.A waiver of an action for future fraud Kinds of diligence required
is void (no effect, as if there is no waiver) as being 1. That agreed upon by the parties, orally or in
against the law and public policy. (Art. 1409[1].) A writing.
contrary rule would encourage the perpetration of
fraud because the obligor knows that even if he 2. In the absence of stipulation, that required by the
should commit fraud he would not be liable for it law in the particular case (like extraordinary
thus making the obligation illusory. diligence required for common carriers)

Waiver of action for past fraud valid. 3. If both contract and law are silent, then the
diligence expected of a good father of the family.
What the law prohibits is waiver anterior to
the fraud and to the knowledge thereof by Article 1174
the aggrieved party.A past fraud can be the subject
Fortuitous Event - is any event which cannot be
of a valid waiver because the waiver can be
foreseen or which, though foreseen, is inevitable.
considered as an act of generosity and
magnanimity on the part of the party who is the - It is an event which is either impossible to foresee
victim of the fraud. Here, what is renounced is the or impossible to avoid.
effects of the fraud, that is, the right to indemnity of
the party entitled thereto. Fortuitous event distinguished from force
majeure
Article 1172
1. Acts of Man - Fortuitous event - is an event
Responsibility arising from negligence independent of the will of the obligor but not of
demandable. other human wills. Ex. War, fire, robbery, murder,
insurrection etc.
In the performance of every kind of obligation, the
debtor is also liable for damages resulting from his 2. Acts of God - Majeure - Events which are totally
negligence. independent will of every human being
Article 1173 Kinds of fortuitous events.
Factors to be considered in negligence: 1. Ordinary fortuitous events -those events which
are common and which the contracting parties
1. Nature of the obligation
could reasonably foresee. Ex. Rain
Ex. Smoking while carrying materials known to be
2. Extra-ordinary fortuitous events - those events
inflammable constitutes negligence.
which are uncommon and which the contracting
2. Circumstances of the person.
parties could not have reasonably foreseen ex. 1. The payment of interest must be expressly
Earthquake, fire, war, pestilence, unusual flood. stipulated.
Requisites of a fortuitous events. 2. The agreement must be in writing
1. The event must be independent of the human 3. The interest must be lawful
will or at least of the debtor's will;
Stipulation for the payment of usurious interest is
2. The event could not be foreseen, or if foreseen, void.
is inevitable;
Note: Usury Law is now legally non-existent
3. The vent must be of such a character as to
Article 1176
render it impossible for the debtor to comply with
his obligation in a normal manner; Presumption - the inference of a fact not actually
known arising from its usual connection with
4. The debtor must be free from any participation
another which is known or proved.
in, or the aggravation of, the injury to the creditor;
that is, there is no concurrent negligence on his Two kind of presumption: pg. 74
part.
(1) Conclusive presumption - one which cannot
Rules as to liability in case of fortuitous event. be contradicted, like the presumption that everyone
Exceptions: is conclusively presumed to know the law.
1. When expressly specified by the law. (2) Disputable (or rebuttable) presumption - one
which can be contradicted or rebutted by
(a) The debtor is guilty of fraud, negligence, or
presenting proof to the contrary, like presumption
delay, or contravention of the tenor of the
established in article 1176
obligation.
When presumptions in Article 1176 do not
(b) The debtor has promised to deliver the same
apply. pg.75
(specific) thing to two (2) or more persons who do
not have the same interest 1. with reservation as the interest
(c) The obligation to deliver a specific thing arises 2. Receipt without indication of particular
from a crime. installment
(d) The thing to be deliver is generic paid.
2. When declared by stipulation –the basis for this 3. Receipt for a part of the principal
is the freedom of contract.
4. Payment of taxes
3. When the nature of obligation requires the
assumption of risk. Ex. Insurance 5. Non-payment proven

Article 1175 Article 1177

Simple Loan or Mutuum – is a contract whereby Remedies available to creditors for the
one of the parties delivers to another, money satisfaction of their claims. pg. 76
or other consumable thing, upon the 1. Exact fulfillment (specific performance) with the
condition that the same amount of the same right to damages
kind and quality shall be paid. It May be gratuitous
or with a stipulation to pay interest. 2. Pursue the leviable (not exempt from the
attachment under the law) property of the debtor.
Usury – is contracting for or receiving interest in
excess of the amount allowed by the law for loan, 3. "After having pursue the property in possession
or use of money, goods, chattels or credits. of the debtor;" exercise all the rights (like the right
to redeem) and bring all the actions of the debtor
Requisites for recovery of the interest.
(like the right to collect from the debtor of his
debtor) except those inherent in or personal to the
person of the latter (such as right to vote, to hold
office, to receive legal support)
4. Ask the court to rescind or impugn acts or
contracts which the debtor may have done to
defraud him when he cannot in any other manner
recover his claim.
Article 1178
Transmissibility of rights. pg. 78
All rights acquired in virtue of an obligation are
generally transmissible or assignable. The
exception to this rule are the following.
(1) Prohibited by law - when prohibited by law like
the rights in partnership, agency, and commodatum
which are purely personal in character.
(a) By the contract of partnership
(b) By the contract of agency
(c) By the contract of commodatum
(2) Prohibited by stipulation of the parties -
when prohibited by stipulation of the parties, like
the stipulation, that upon the death of the creditor;
the obligation shall be extinguished, or that the
creditor cannot assign his credit to another