The obligation to give may refer to either:
The obligation to preserve the thing with due care, provided
● A specific/determinate thing
● A generic/ indeterminate thing
DELIVERY OF A GENERIC THING
➢ ​The object due is DETERMINABLE.
○ The moment it is delivered, it becomes determinate.
➢ When the generic objects are confined to a particular class
→ the class is considered in itself a determinate object;
these are called limited generic obligations.
ILLUSTRATION
An obligation to deliver ​one of my coffee mugs refers to a limited
generic object, because the thing is limited to the coffee mugs owned
by the debtor and the same cannot deliver any coffee mugs not
owned by him.
- Unless limited, the obligation to deliver a generic thing is not
confined to the object which the debtor may own or possess.
He may consume or dispose of the things pertaining to him,
so as long as he can procure others of average quality for
delivery.
DELIVERY OF A DETERMINATE THING
A determinate thing is:
● Individualized
● Can be identified or distinguished from others of its kinds.
E.g. An obligation to deliver my red Montero Mux.
In an obligation to deliver a determinate thing, there three incidental/
accessory obligations:
1.
for in article 1163;
2. The obligation to deliver fruits, provided for in article 1164
and
3. The obligation to deliver the accessions and accessories
provided for in Article 1166.
1163- ​Every person obliged to give something is also obliged to
take care of it with the proper diligence of a good father of a
family, unless the law or the stipulation of the parties requires
another standard of care.
Note: this article only applies to determinate things because in
generic things, the “genus never perishes” thus there is no need for
care.
GENUS = ​ generic thing
● The reason for this provision is that the thing will be
delivered and will pertain to another, this special situation
carries with it a duty to preserve such thing, in a condition
suitable for its enjoyment by the obligee for the purpose
contemplated.
DILIGENCE OF A GOOD FATHER
● The law requires the debtor to exercise the diligence of a
good father of a family.
SEE: ART. 1173 for it’s clearer meaning.
BREACH
● The obligation to preserve the thing to be delivered has its
sanction in the liability for damages imposed upon the debtor
who fails to exercise the diligence of a good father of a
family in preserving the thing.
GILDA FLORES 1J SBU LAW 1
 - But if the failure of the debtor is due to no fault or
negligence of his, but due to fortuitous event or force
majeure = exempted.
1164- ​The creditor has a right to the fruits of the thing from the
time the obligation to deliver it arises. However, he shall acquire
no real right over it until the same has been delivered to him.
Right to fruits - The creditor or obligee in an obligation to deliver a
specific thing, is entitled to the fruits from the time/moment the
obligation to deliver arises.
- There is no specific “moment” It varies in the different types
of obligations.
● In obligations found in Art. 1157 - the specific provisions of
law applicable to the obligation determine when the delivery
should be made.
● In obligations which are subject to a suspensive condition,
the obligation to deliver arises from the moment the
condition happens.
● When there is a suspensive term or period for the
performance of the obligation, the obligation to deliver arises
upon the expiration of the term or period.
● When there is neither term nor conditions, the obligation to
deliver arises from the perfection of the contract or the
constitution or creation of the obligation.
TYPES OF FRUITS
➢ Natural fruits - spontaneous products of soil and the
young or other products of animals.
➢ Industrial fruits - produced by lads of any kind through
cultivation or labor.
➢ Civil fruits - ​ derived by virtue of a juridical relation.
REAL AND PERSONAL RIGHTS
➢ Real right - the right/power of a person over a specific thing
e.g. ownership, possession, mortgage
- There is no definite passive subject against whom
such right may be personally enforced.
- Enforceable against the whole world; prejudices
anybody claiming the same object of the prestation.
- Accrues when the thing or object of the prestation is
delivered to the creditor.
➢ Personal right - the right/power of a creditor to demand a
debtor as a definite passive subject, the fulfillment of a
prestation to give, to do, or not to do.
- This right can be “defeated” by a third person in
good faith who has innocently acquired the property
prior to the scheduled delivery regardless of whether
or not such third person acquired the property after
the right to the delivery of the thing has accrued in
favor of the creditor.
➢ From the time the obligation to deliver a determinate thing
arises the creditor only has a personal right to the thing itself
+ the fruits.
- The creditor can only demand that the debtor deliver
such thing and its fruits.
NOTE: ​non nudis pactis, sed traditione dominia rerum
transferentur (​the ownership is transferred not by mere agreement
but by delivery).
THIS IS IMPORTANT BECAUSE: The delivery or tradition of a
thing constitutes a necessary and indispensable requisite for the
purpose of acquiring the ownership of the same by virtue of a
contract ​(Fidelity & Deposit Co., v. Wilson).
GILDA FLORES 1J SBU LAW 2

- Thus, where there is no delivery yet, the proper action for a
vendee to take against the vendor of a thing is not
reivindicacion but for one specific performance of the sale or
for the delivery of the thing ​(GARCHITORENA v. ALMEDA).
Reinvidicacion - ​a demand for something
which (one says) one owns or has a right to.
Art. 1165. When what is to be delivered is a determinate thing,
the creditor, in addition to the right granted him by Article 1170,
may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the
obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing
to two or more persons who do not have the same interest, he
shall be responsible for any fortuitous event until he has
effected the delivery.
Remedies of a creditor - when a debtor fails to comply with his
obligation, the creditor has the following remedies:
1. Specific performance - to obtain compliance with the
prestation
2. An action to rescind the rescind or resolve the obligation
3. Action for damages, exclusively or in addition to either of the
first actions.
➢ Whether the object is determinate or generic - the creditor
has the right to ask the same be performed (Specific
performance).
○ The difference is that, in generic objects, the delivery
of any object to the species stipulated will be
sufficient; hence, if the debtor does not make the
delivery, the creditor can demand that things of the
kind agreed upon be delivered to him at the expense
of the debtor.
NOTE: the debtor may not avoid the obligation by paying damages
if the creditor insists on the performance ​(Gutierrez Repide v.
Afzelius).
In both cases, the creditor = entitled to damages suffered, even if
this is not expressly mentioned by Art. 1165 with respect to generic
objects.
An action for specific performance implies that its basis is a
contractual relation between plaintiff and defendant.
DEBT - The Constitution provides that a person shall not be
imprisoned for non-payment for debt.
➢ A debtor in a purely civil case cannot be punished with
imprisonment for non-compliance with his obligation.
However this rule is without prejudice to subsidiary
imprisonment for non-payment of the civil liability imposed in
a criminal case, or to imprisonment as a punishment for
contempt.
DELAY AND FORTUITOUS EVENTS
GENERAL RULE
↓
Art. 1174: Obligor is not liable for fortuitous events.
↓
EXCEPTION
Art. 1169: when the obligor delaysor has promised the same
thing to 2 or more persons
↓
REMEDY
Art. 1170 - In such cases, the obligor may be compelled to
effect delivery and give the necessary damages.
GILDA FLORES 1J SBU LAW 3

ADDITIONAL: The damages for which the debtor is liable, however,
may be equitably mitigated under Art. 2215 (4) of this Code:
In contracts, quasi-contracts, and quasi-delicts, the court
may equitably mitigate the damages under circumstances other than
the case referred to in the preceding article, as in the following
instances:
(1) That the plaintiff himself has contravened the terms of the
contract;
(2) That the plaintiff has derived some benefit as a result of the
contract;
(3) In cases where exemplary damages are to be awarded, that the
defendant acted upon the advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant has done his
best to lessen the plaintiff's loss or injury.
Art. 1166. The obligation to give a determinate thing includes
that of delivering all its accessions and accessories, even
though they may not have been mentioned.
➢ Accessories - things included with the principal thing for
embellishment, better use, or embellishment. The accessory
and the principal must go together. E.g., sale of a lot/ land
on which a building is erected.
- Without the mention of the latter, the building cannot
be considered as an accessory of the land under the
provisions of 1166. But it may be considered as an
accession.
➢ Accessions - include everything which is produced by a
thing, or which is incorporated or attached thereto, either
naturally or artificially.
- They are not necessary to the principal thing e.g.
houses or trees on a land.
- This term does not include fruits under (Art. 1164).
Art. 1167. If a person obliged to do something fails to do it, the
same shall be executed at his cost.
This same rule shall be observed if he does it in contravention
of the tenor of the obligation. Furthermore, it may be decreed
that what has been poorly done be undone.
➢ When the debtor does not comply with an obligation to do,
the creditor is entitled to have the thing done in a proper
manner, by himself or by a third person, at the expense of
the debtor.
➢ The court has no discretion to merely award damages to the
creditor when the act can be done in spite of the refusal or
failure of the debtor to do so.
PERSONAL COMPULSION
➢ The law does not authorize the imposition of a personal
force or coercion upon the debtor to comply with his
obligation. There is no imprisonment for debt. The ultimate
sanction for civil obligations is the indemnification for
damages.
INDEMNIFICATION
GILDA FLORES 1J SBU LAW 4

➢ This article presupposes that the act can be done by
persons other than the debtor. When only the debtor can do
the thing the only remedy is to recover damages in case of
non-performance by him.
- He cannot be compelled by public force to comply
with the obligation because it would be violative of
his personal liberty.
ILLUSTRATION
A - ​ famous singer
B- ​ policeman
A did not fulfill his obligation to sing in a concert. He cannot be
forced to go on stage with B, who is a policeman to make him
sing, and nobody may be able to substitute him.
- Again, the only remedy is indemnification.
Art. 1168. When the obligation consists in not doing, and the
obligor does what has been forbidden him, it shall also be
undone at his expense. (1099a)
➢ The right granted by this article does not exclude the right to
indemnity for damages caused by the debtor who has done
what has been forbidden to him. Aside from undoing what is
done in violation of the prohibition, he can be liable for
damages.
➢ If the act cannot be undone, physically or legally, or because
of the rights of third persons, or for some other reason, The
only feasible remedy is indemnification for the damages
caused.
Art. 1169. Those obliged to deliver or to do something incur in
delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in
order that delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when the
thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has
rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment
one of the parties fulfills his obligation, delay by the other
begins.
DELAY
➢ In this article, delay is synonymous to mora or default
(which means delay in the fulfillment of the obligations.
➢ There can be delay only in positive obligations (to do and to
give); there is no delay in negative obligations (not to do and
not to give).
KINDS OF MORA
1. Mora Solvendi ​- default on the part of the debtor which may
refer to
obligations to give or obligations to do
GILDA FLORES 1J SBU LAW 5
 - Presupposes a prestation that is due and
enforceable. There is no mora in natural obligations.
2. Mora accipiendi ​- default on the part of the creditor
3. Compensatio morae - default of both parties in reciprocal
obligations.
The effects of delay only arise when the delay is due to the
causes imputable to the debtor. There is legally no delay if this
is caused by factors not imputable to the debtor.
- The latter has the burden of proof that the cause of the
delay is not immutable to him in order to exempt himself
from responsibility.
In order that the debtor may be in default, it is necessary that
the following requisites be present:
1. That the obligation be demandable and already liquidated.
2. That the debtor delays performance.
3. That the creditor requires the performance judicially or
extrajudicially.
Note: a mere reminder cannot be considered a demand for
performance because it must appear that the tolerance or
benevolence of the creditor must have ended.
DEMAND
Default = generally begins from the moment the creditor demands
for the performance of the obligation.
- The demand may be in any form, provided that it can be
proved.
- The proof of demand = incumbent upon the creditor.
- Without such demand, judicial or extrajudicial, the effects of
default will not arise.
Demand is generally necessary even if a period has been fixed
in the obligation.
Compania General v. Araza - Even though a contract of loan
stipulates that failure to pay any installments therein stipulated would
mature the entire obligation, without expressly stating that the debtor
shall thereafter be in default, there is no justification to hold the
debtor in default upon failure and interest for default cannot be
adjudged in favor of the creditor except from the time that judicial or
extrajudicial demand for payment is made upon the debtor.
NO DEMAND = NO DELAY
Where there has been an extrajudicial demand before action for
performance was filed, the effects of default arise from the date of
such extrajudicial demand.
➢ ​ opez v. Tantioco - where it was agreed that defendant
L
was to sell plaintiff’s sugar and plaintiff’s account would be
credited with the market value of sugar on the day when the
authority to sell would be communicated to defendant, and
the plaintiff in fact communicated such authority, it was held
that and the amount to be credited to plaintiff’s account must
be the market value of the sugar at the time such authority
was communicated, and not the market value at the time of
the filing of the action.
○ But where the evidence does not disclose any
particular date on which the creditor made
extrajudicial demand upon the debtor, the payment
of interest or damages for the default must
commence from the filing of the complaint.
NATURE OF DEMAND
GILDA FLORES 1J SBU LAW 6

➢ The demand must refer to the prestation that is due
and not to another. If the demand varies in some
particular from the prestation (e.g. a larger amount is
demanded or when the payment is demanded at a
place where the debtor does not have to perform),
the sufficiency of the demand is determined by the
circumstances of the case.
➢ There will be delay in such cases, if, even had the
demand been absolutely correct, the debtor would
not have performed the prestation, or if in the light of
good faith, he should have offered the prestation in
the form and manner that it is due.
WHEN DEMAND IS NOT REQUIRED:
1. When there is an express stipulation to that effect
2. Where the law so provides
3. When the period is the controlling motive or the principal
inducement for the creation of the obligation and
4. Where the demand would be useless.
➢ In the first two cases, it is not sufficient that the law
or the obligation fixes a date for the performance, it
must further state expressly that after the period
lapses, default will commence.
The intent of the parties to constitute the debtor in delay upon
maturity of the obligation even without demand, must clearly appear
in the agreement.
- For instance, they may stipulate that the maturity of the
obligation will give rise to the obligation to pay interest or
damages.
- In case of doubt, the doubt should be resolved in favor of the
debtor, because dispensing with demand is an exception to
the general rule.
- UNLESS THE EXCEPTION IS PROVED, THE GENERAL
RULE MUST APPLY.
Tolentino (footnote): the mere statement of a period for
performance does not dispense with the necessity of demand for
purposes of default.
- “The contract clearly fixes the time for the delivery of the
sugar, and therefore, no further demand or notice by the
plaintiff on the defendant was necessary”
- This statement should mean only that performance
should have been made at that time stipulated
without the need for demand.
Laura Adiarte v. CA - If in a contract to sell a subdivision lot there
is not express provision that the failure of the purchaser to pay on
time the monthly installments to the vendor would give rise to the
forfeiture of all that the purchaser has paid and the cancellation of
the contract without the necessity of demand from the vendor, the
purchaser was not in default in making the necessary monthly
installments where the vendor has not made any judicial or
extrajudicial demand upon him to fulfill his obligation.
NATURE OF OBLIGATION
➢ When from the nature and the circumstances of the
obligation, it appears that the period was the determining
GILDA FLORES 1J SBU LAW 7
 motive for the creation of the obligation = demand is not
necessary for the debtor to be in default.
E.g. where the date of payment was fixed because
the creditor was to pay on said date another obligation.
The law does not require expressly that the debtor should know that
the fixing of the date for performance was a controlling motive on
the part of the creditor; but this knowledge is essential in order that it
can be said that the debtor has tacitly consented to incur delay
without the necessity of a demand. ​THIS KNOWLEDGE,
HOWEVER, MAY BE SHOWN BY THE EXPRESS PROVISIONS
OF THE WRITTEN CONTRACT, OR BY THE VERY NATURE OF
THE OBLIGATION, OR FROM THE CIRCUMSTANCES UNDER
WHICH IT WAS CREATED (Abella v. Francisco).
Reyes v. De Leon - delay is not incurred where the alleged default
did not constitute a material breach of the contract, as wehn timely
payment was not the consideration which moved the parties to fix the
period.
WHEN DEMAND IS USELESS
When performance = impossible = demand will be useless
and will not be necessary to constitute the debtor in delay.
1. When the impossibility is caused by some act or fault of the
debtor (such as when is in hiding or absent or has disposed
of the thing to be delivered)
2. When the impossibility is caused by the fortuitous event, but
the debtor has bound himself to be liable in cases of such
events.
De Cortes v. Veturanza - there is no delay if the obligation is not
yet due.
- One cannot admit being delayed in the payment of his
obligation unless he believes that his obligation is already ue
and demandable.
EFFECTS OF MORA SOLVENDI
1. If the object is a determinate thing - the delay places the
risks of the thing on the debtor and
2. He becomes liable for the damage for the delay.
MORA ACCPIENDI
- Delay in the performance based on the omission by the
creditor of the necessary cooperation, especially acceptance
on his part.
- It is necessary, however, that it be lawful for the debtor to
perform and that he can perform.
Generally, the debtor can perform at any time after the obligation
has been created, even before the date of maturity.
- The creditor incurs in delay when the debtor tenders
payment or performance, but the creditor refuses to accept it
without justification.
E.g. there would be mora accipiendi in an obligation to paint
a portrait, if the creditor does not wish to pose for it. It is
essential however, that the prestation offered be due as to
content, time, and place.
TAKE THIS WITH A GRAIN OF SALT
➢ The code does not regulate the effects of mora accipiendi;
but the provisions on congsignation are applicable (this is
the view maintained by most writers).
➢ According to them, the effects are:
GILDA FLORES 1J SBU LAW 8
 ○ The responsibility of the debtor for the thing is
reduced and limited to fraud and gross negligence
○ The debtor is exempted from the risks of loss of the
thing, which automatically pass to the creditor
○ All expenses incurred by the debtor for the
preservation of the thing after the moral shall be
chargeable to the creditor
○ If the obligation bears interest, the debtor does not
have to pay the same from the moment of the mora
○ The creditor himself becomes liable for damages
○ The debtor may relieve himself of the obligation by
the consignation of the thing
PAGE 108 - TOLENTINO BOOK.
COMPENSATIO MORAE
The parties in a bilateral contract can regulate the order in which
they shall comply with their reciprocal prestations (e.g. sale)
- If parties have not determined the order of fulfillment of their
obligations, this fulfillment must be reciprocal and
simultaneous.
- Hence, one cannot demand performance by the other
without offering to comply with his own prestation.
- In reciprocal obligations, neither party incurs in default if the
other does not comply, is not ready to comply in a proper
manner with what is incumbent upon him ​(Agcaoili v. GSIS)
General rule: in reciprocal obligations, the fulfillment by the parties
should be simultaneous
- There may be cases of reciprocal obligations, however, in
which different dates for performance are fixed for the
obligations. In such cases, the default for each obligation
must be determined by the rules given in the first parts of
Arts. 1169.
When one party to such obligation fails duly to carry out his
agreement, he thereby releases the other, who does not thus
become delinquent.
- Delinquency commences when one of the contracting
parties fulfills his obligations and becomes invested with the
power to determine the contract because of failure on the
part of the other to carry out the agreement.
New Zealand Insurance v. Choa Joy - where a contract of carriage
calls for reciprocal obligations, and the carrier fails to comply with its
obligation to carry the cargo to its destination, it cannot demand
fulfillment of the obligation of the shipper.
Cessation of the Effects of Mora
The benefits arising from default or delay may cease upon:
1. Renunciation by the creditor
➢ The renunciation may be express or implied. There
is implied renunciation when after delay has
incurred, the creditor grants an extension of time to
the debtor or agrees to a novation of the obligation.
2. Prescription
➢ prescription of the action on the obligation may also
extinguish the effects of the default.
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.
Non-performance by fraud
GILDA FLORES 1J SBU LAW 9
Fraud may be defined as the voluntary execution of a wrongful act,
or a willful omission, knowing and intending the effect which naturally
and necessarily arise from such act or omission.
➢ The fraud referred to in this article is the deliberate and
intentional evasion of the normal fulfillment of obligations.
➢ Distinguished from negligence by the presence of deliberate
intent which is lacking in negligence.
➢ Any voluntary and willful act or omission which prevents the
normal realization of the prestation, knowing and intending
the effects which naturally and necessarily arise from such
act, is fraud under this article,
➢ It is fraud in the performance or fulfillment of an obligation
already existing, as distinguished from fraud in artc. 1338
which is a cause of nullity of contracts and which exists
before and at the moment of creating the obligation
1170 v. 1338
➢ 1770 - fraud = malice or bad faith
➢ 1338 - fraud = deceit or dolo
GROUND FOR DAMAGES
- Fraud under this article implies some kind of malice or
dishonesty and it cannot cover cases of mistake and errors
of judgment made in good faith.
- The element of intent and not the degree of actual harm
done is the test.
Royal Lines Inc v. CA - Evasion of a legitimate obligation for
benefits admittedly received constitutes unjust enrichment.
By Fault or Negligence
➢ The concept of fault or negligence in the fulfillment of
obligations is known as culpa contractual as distinguished
from the fault or negligence referred to in article 2176, which
is known as culpa aquiliana or extra-contractual.
➢ Culpa contractual - fault or negligence of the debtor as an
incident in the fulfillment of an existing obligation.
➢ Culpa aquiliana - fault or negligence which constitutes an
independent source of obligation between parties not
previously bound ​(Manila Railroad v. Compania
Transatlantica).
- But whether contractual or non-contractual, the
negligence of the defendant should be the proximate
cause of the damage to the plaintiff ​(Valdez v.
Family Clinic).
Not only debtors guilty of fraud, negligence, or default in the
performance of obligations, however, are liable for damages; in
general, every debtor who fails in the performance of his obligation is
bound to indemnify for the losses and damages caused thereby. The
phrase “in any manner contravene the tenor” of the obligation
includes any illicit act which impairs the strict and faithful of the
obligation, or every kind of defective performance
E.g. disconnection of electricity without prior notices or failure of a
telegram company to send plaintiff’s telegram despite payment of the
required charges
- These situations give rise to liability for damages.
NOTE: One who creates a dangerous condition cannot escape
liability although. An act of God may have intervened. Liability of
architect and contractor for the collapse of the building is solidary
(Nakpil v. CA)
GILDA FLORES 1J SBU LAW 10
It is not enough that there be non-performance or delay to hold the
debtor liable for damages; such non-performance or delay must be
imputable to him.
- The delay or contravention of the obligation must either be
malicious or negligent to be actionable; if due to fortuitous
events, such delay or contravention of the obligation must
either be malicious or negligent to be actionable.
- If due to fortuitous events, such delay cannot ordinarily give
rise to damages.
- On the other hand, it is immaterial that the debtor
should act in bad faith or with negligence, if there
results neither delay nor contravention of his
obligation.
See: Acme FIlms v. Theaters Supply.
Excuse for nonperformance
➢ When the failure of the debtor is due to fortuitous events or
force majeure = debtor cannot be held liable for damages.
○ U.S. v. Verardero dela Quinta - Ordinarily, if a
person binds himself unconditionally by contract to
do what later turns out ot be impossible, he will be
held to his bargain, and will be liable for damages
for non-performance, unless the impossibility arises
from a cause which NEITHER PARTY could have
foreseen.
Illustration
A - building contractor; alleged that the rainy season accounted
for his delay in the performance.
- Delay did not rise from an unavoidable cause, and that he
should have provided for such contingency..
NOTE: Mere pecuniary inability to full an engagement does not
discharge an obligation nor constitute a defense to an action for
specific performance ​(Gutierrez Repide v. Afzelius)
Furthermore, mere increase in the cost of performance or
unexpectedly burdensome and oppressive war conditions are
insufficient excuses ​(De la quinta case)
More illustrations
International Harvester Co and Ambury-American Line - The
outbreak of a war does not abrogate a contract between a subject of
a belligerent and a subject of a neutral power. Though such contract
may become impossible of exact performance, it will still be given
effect if it can by any reasonable construction be treated as still
capable of being performed in substance.
Pedret v. Ponce Enrile - A labor strike does not excuse
non-compliance with the terms of a contract, unless expressly
provided for in the agreement.
Labayen v. Talisay -Silay Milling Co., - mere inconvenience,
unexpected impediments, or increased expenses will not relieve a
party from his obligations.
- But the confusion and chaos in Manila due to the battle of
liberation is sufficient excuse for non-payment of obligations
due in said month ​(Manalac v. Garcia)
RECOVERABLE DAMAGES
“Damages” ​- used without any qualification or limitation.
GILDA FLORES 1J SBU LAW 11
 - Includes all damages which a human may suffer.
NOTE- a breach of contractual obligation entitles the other party to
damages even if no penalty for such breach is provided in the
contract (​Boysaw vs. Interphil Productions)
See: Bian Hin & Co and Tan Bomping
NOTE: The responsibility for damages arising from non-fulfillment of
a contractual obligation cannot be divided nor can it be extended to
persons who have nothing to do with the obligation.
E.g., in a contractual obligation of transportation that
driver cannot be sentenced to pay jointly and severally the
damages claimed by the passengers, because the driver is a
mere employee and his employer is the party directly
responsible for the fulfillment of the contract in accordance
with this article.
Damages may be recovered under this article when the
obligation is to do something other than the payment of money.
- But when the obligation consists only in the payment of
money, Art. 2209 will apply.
Art. 2209 -​"if the obligation consists in the payment of a sum of
money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be the
payment of the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six percent per annum."
NOTE: Legal interest in the nature of damages for
non-performance of an obligation to pay sum of money is
recoverable even if not expressly stated in writing
Art. 1171. Responsibility arising from fraud is demandable in
all obligations. Any waiver of an action for future fraud is void.
➢ The renunciation prohibited nii this article is that which is
made in advance of the fraud to permit such advance
renunciations would practically leave the obligation without
effect. But the law does prohibit the renunciation for
damages on the ground of the fraud already committed.
➢ The fraud referred in this article - is that mentioned in Article
1170 (Malice or bad faith in the performance of an
obligation)
Art. 1172. Responsibility arising from negligence in the
performance of every kind of obligation is also demandable, but
such liability may be regulated by the courts, according to the
circumstances.
Illustrative case: Gutierrez v. Gutierrez
Facts: A passenger truck and a private automobile collided while
trying to pass each other on a narrow bridge. The truck was driven
by a chauffeur and was owned by one of the defendants. The
automobile was driven by a young man 18 years of age, the son of
the owner thereof, and the members of the family of the owner were
in the automobile at the time of the collision. The plaintiff, a
passenger in the truck suffered injuries. The court found the injuries
as a result of the negligence of the two drivers.
Held: The owner of the automobile is liable for damages, because
as the father he is responsible for the negligent acts of his minor son,
under the provisions of Art. 2180 of the Civil Code. On the other
hand, the liability of the owner of the passenger truck for the
negligence of his driver, rests on a different basis namely, that of a
contract. Both defendants were held liable jointly and severally
together with the driver of the passenger truck, for the damages
suffered by the plaintiff.
GILDA FLORES 1J SBU LAW 12

Defense of employer
- Always distinguish the two kinds of negligence.
Reason: where the liability arises from culpa aquiliana, not involving
a breach of existing obligations, an employer or master may
exculpate or exempt himself from liability under Article 2180 of the
Civil Code by proving that he had exercised due diligence to prevent
the damage; whereas his defense is not available if the liability of the
master arises from a breach of contractual duty or from culpa
contractual.
Article 2180 ​- ​The obligation imposed by Article 2176 is demandable
not only for one's own acts or omissions, but also for those of
persons for whom one is responsible.
The father and, in case of his death or incapacity, the mother, are
responsible for the damages caused by the minor children who live
in their company.
Guardians are liable for damages caused by the minors or
incapacitated persons who are under their authority and live in their
company.
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the
occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any
business or industry.
The State is responsible in like manner when it acts through a
special agent; but not when the damage has been caused by the
official to whom the task done properly pertains, in which case what
is provided in Article 2176 shall be applicable..
Lastly, teachers or heads of establishments of arts and trades shall
be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage.
Q: When the employer is sued jointly with the negligent employee,
in cases of culpa contractual, may the employee be held liable
solidarily with the employer?
- Gutierrez v. Gutierrez: ​YES. when in a case involving
negligence of the driver of a passenger truck, it held
both driver and owner of the truck jointly and solidarily
liable for the resulting damages.
- Take this with a grain of salt. The CA said no. Looking
into the codal provisions, the correct basis for the
liability of the driver is Article 1170 and not paragraph 4
of Article 2180.
Mitigation of damages
In dealing with culpa contractual, the court is given discretion to
mitigate liability according to the circumstance of the case, under Art.
1172 of the Civil Code.
GILDA FLORES 1J SBU LAW 13
 - No general discretion is given by the code with liability
arising in Article 2176; though possibly the same end is
reached by courts in dealing with the latter form of liability
because of the latitude of the consideration pertinent to
cases rising under this article.
Del Prado v. Manila Electric - ​Contributory negligence
on part of the plaintiff should be treated as a mitigating
circumstance under Art. 1172, notwithstanding the fact that
the plaintiff’s negligence was not the proximate cause of the
injury. It was still contributory to the accident.
Remember: culpa contractual - fault or negligence for in the
performance of an already existing obligation.
Where bad faith is not imputed to the debtor for his failure to pay his
obligation during the war years and that the creditor was indirectly
benefited by the debtor’s inaction, having avoided payment in
military script, the courts have the power to regulate the liability
arising from the negligence of the debtor ​(Warner, Barnes & Co.,
Ltd v. Yasay)
ADDITIONAL:
● Graduating the responsibility of the debtor, by determining
the degree of diligence to be required which may be more or
less than the standard fixed by law. These stipulations are
generally allowed (Art. 1173, par 2).
● Imposing a liability for fault or negligence, where the law
does not impose it. This is a valid stipulation, unless the law
dispenses with fault or negligence as a matter of public
policy (e.g. workmen’s compensations laws)
Exemption from liability
There are two kinds of stipulation exempting from liability for
fault or negligence
● That in which a party to a contract is relieved from the effects
of his fault or negligence by a third person e.g. insurance
contracts
● That in which one party to a contract renounces in advance
the right to enforce liability arising from the fault or
negligence of the other.
- However, stipulations exempting from liability for
gross negligence are VOID, because such
negligence amounts to fraud.
- WIth respect to simple negligence, the absence of
provisions in the Code prohibiting advance
renunciation of liability from negligence, when Article
1171 prohibits advance renunciation of actions for
future fraud has led many writers to conclude that
such renunciation is valid, so as long as the fault or
negligence remains merely a simple fault or
negligence and is not converted in fraud. ​BASIS:
ART. 2232. Also, when the negligence amounts to
recklessness or wanton conduct, it is thus made
equivalent to fraud.
The validity of stipulations exempting from liability for simple
negligence, therefore, can be accepted as a general principle
taking into account the discretionary power of the courts to
regulate such liability.
- But stiplations exemption from liability for negligence
should not be upheld in cases where there are strong
reasons against it. It must be void.
E.g. stipulations where the validity of the
fulfillment of the contract are left to the will of one of the
parties.
GILDA FLORES 1J SBU LAW 14
Such stipulations must be limited to cases where there is real
equality in the bargaining power of the contracting parties, and
should not be allowed in the so-called contracts of adhesion or
in a contract where the parties are manifestly in such an
inequality of positions that one could not freely bargain with the
other in the determination of the contract. E.g. contracts of
employment.
Additional: irresponsibility clauses/stipulations which exempt onep
party from liability for damages due to the other’s negligence should
be taken with great caution. They may open the door to bad faith.
Some authors considered that the obligation in such case is not
really binding and no creditor could have really agreed to such a
stipulation, so that in onerous obligations there would, in effect, be a
want of cause. Such stipulations, therefore are not favored and
should be strictly construed with every intention against the party
claiming the benefit of the exemption of the liability.
Art. 1173. The fault or negligence of the obligor consists in the
omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201, paragraph 2,
shall apply.
If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good
father of a family shall be required.
Degree of diligence required - when neither the law nor the
obligation itself states the degree of diligence required of the obligor
or debtor in the performance or fulfillment of the obligation, the
present article states that the diligence should be that which would
be observed by a good father of the family.
Good father of a family - ​ person of ordinary or average diligence.
- Anyone who uses diligence below this standard is guilt of
negligence.
- A person who holds himself out as being competent to do
work requiring special skill and fails to exhibit the care a
prudent person would exhibit who is reasonably well skilled
in the particular work undertaken = guilty of negligence and
liable for the resulting loss.
There is no fixed standard of diligence applicable to each and every
obligation.
- Each case must be determined upon its particular facts and
circumstances, and the degree of diligence required for the
performance of an obligation must depend upon the
circumstances of the particular obligation.
Opposite of diligence = negligence.
The care required may be great or only slight, but in any case it is
only commensurate with what the circumstances demand.
Art. 1174. Except in cases expressly specified by the law, or
when it is otherwise declared by stipulation, or when the nature
of the obligation requires the assumption of risk, no person
shall be responsible for those events which could not be
foreseen, or which, though foreseen, were inevitable.
FORTUITOUS EVENTS
- An event which takes place by accident and could not have
been foreseen.
GILDA FLORES 1J SBU LAW 15
Causes of fortuitous events
(1) By nature, such as earthquakes, storms, floods, epidemics,
fires, etcc
(2) By the act of man, such as an armed invasion, attack by
bandits, governmental prohibitions, robbery, etc.
Note: in order that acts of man may constitute a fortuitous event, it
is necessary that they have the force of an imposition which the
debtor could not have resisted ​(De Gullaco v. Manila Railroad).
Fortuitous events include unavoidable accidents, even if there has
been an intervention human element, provided, failt or negligence
cannot be imputed to the debtor. E.g., a sudden gun fight due to
personal grudges while inside a train.
Characteristics of fortuitous events:
1. The cause of the unforeseen and unexpected or the failure
of the debtor to comply with his obligation, must be
independent of the human will
2. It must be impossible to foresee the event.
3. If it can be foreseen, it must be impossible to avoid.
4. The obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.
One who creates a dangerous condition cannot escape liability
although an act of God may have intervened.
Force Majeure- an event which we could neither foresee nor
resist; generally applies to natural accidents
- For the defense of force majeure to prosper, the accident
must be due to natural causes and absolutely without
intervention.
See: La Mallorca v. De Jesus.
EFFECT
When a debtor is unable to fulfill obligation because of fortuitous
event or force majeure, the general rule is that he cannot be held
liable for damages for non performance.
Also, ​an obligation to deliver a specific thing shall be extinguished in
cases of fortuitous events
Effect of negligence
In order that fortuitous event or force majeure may exempt a person
from liability, it is necessary that he be free from negligence.
- When the negligence of a person concurs with an act of God
in producing such a loss such person is not exempt from
liability by showing that the immediate cause of damage was
the Act of God.
Express stipulation
The parties may expressly stipulate in their contract that the debtor
shall be liable to the creditor, even if performance is rendered
impossible by fortuitous event of force majeure.
Pacific Vegetable Oil Corporation v. SIngzon - because of the
inability of a vendor to perform hi obligation due allegedly to a force
majeure, a conditional settlement was arrived at after such force
majeure under similar terms as the original contract with the
understanding that should he fail to ship the goods on or before
certain date, he shall pay to the vendee a certain amount as
damages and shall be obliged to fulfill as his obligations under the
original contract, the new obligation assumed by the vendor under
the conditional agreement was contracted after the occurrence of
GILDA FLORES 1J SBU LAW 16
the alleged force majeure, and since he assumed the new liability
with full knowledge of said alleged force majeure, he cannot
afterwards be heard to complain thereof nor evade its
consequences, upon the theory that he is deemed to have waived
such special defense.
NOTE: the provision in a contract imposing liability should be clearly
expressed.
- Where the parties to a contract desire to create an unusual
obligation, the expression of intention to that effect should be
clear ​(Lizares v. Hernaez).
ASSUMPTION OF RISKS - EXCEPTION TO THE GENERAL RULE
IN FORTUITOUS EVENTS
➢ When the nature of the obligation requires the assumption of
risk.
- Laborers. The liability, however, should be limited to
risks and events that are typical of the business. It
cannot extend to dangers which are not typical of the
business, such as lightning or earthquake causing
injury to a train and its passengers.
- If a person, for his convenience or profit creates risk
for the public which formerly did not exists, although
morally his fault or negligence may not be the cause
of the damages resulting therefrom; nevertheless, he
should be liable for such damages (qui sentit
commodum sentire debet et incommodum).
- If he benefits from the means which produced the
loss, it is only equitable that he should bear the
consequences of such loss.
Under Article 2179, “When the plaintiff’s own negligence was the
immediate and proximate cause of his injury, he cannot recover
damages.”
ACTS OF CREDITOR
- The debtor is released from liability ont only when the
non-performance of the obligation is due to a fortuitous event
of force majeure, but also when it is due to the act of the
creditor himself.
Generally, no person shall be liable in cases of fortuitous event
provided that the following elements are present:
1. The cause of the breach of the obligation must be
independent of the will of the debtor;
2. The event must either be unforeseeable or unavoidable;
3. The event must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner; and
4. The debtor must be free from any participation in, or
aggravation of the injury.
In contrast, the debtor is responsible for a fortuitous event:
1. When expressly declared by law;
2. When expressly declared by stipulation or contract;
3. When the nature of the obligation requires the assumption of
risk.
Art. 1175. Usurious transactions shall be governed by special
laws.
INTEREST ​- the income produced by money in relation to its amount
and to the time that it cannot be utilized by its owner.
GILDA FLORES 1J SBU LAW 17

➢ Moratory interests - paid in contractual obligations to pay a
sum of money, either as the price for the use of the money,
or as the stipulated advanced determination of the damages
due to the delay in the fulfillment of the obligation.
➢ Compensatory - interests on obligations which have an
extra-contractual or delictual origin.
USURY - contracting for or receiving something in excess of the
amount allowed by law for the loan or forbearance of money, goods,
or chattels. It is the taking of more interest for the use of money,
goods, or chattels or credits than the law allows.
Special law on Usury - ACT NO. 2655
➢ Legal rate - 6% per annum and
➢ A contractual rate not exceeding 12% per annum if
the loan is secured by duly registered real estate
and 14% if not so secured.
Art. 1176. The receipt of the principal by the creditor without
reservation with respect to the interest, shall give rise to the
presumption that said interest has been paid.
The receipt of a later installment of a debt without reservation
as to prior installments, shall likewise raise the presumption
that such installments have been paid.
RECEIPT OF PAYMENT - Under Article 1253, if the debt produces
interest, payment of the principal shall not be deemed to have been
made until the interests have been covered.
- thus , in relation to this article: receipt of the principal,
without reservation as to interest shall give rise to the
presumption that the interest has been paid.
Hill v. Veloso - Where a bank issued receipts for the payment of
part of an obligation without a reservation with respect to the interest,
it as held that the interest due up to such part payment was
extinguished; but the balance shall continue to bear interest from the
date of such payment.
Note: this article is not applicable to the payment of taxes because
the tax for one year is independent of the taxes for other years. They
are not installments of the same obligation.
Art. 1177. The creditors, after having pursued the property in
possession of the debtor to satisfy their claims, may exercise
all the rights and bring all the actions of the latter for the same
purpose, save those which are inherent in his person; they may
also impugn the acts which the debtor may have done to
defraud them.
RIGHTS OF CREDITORS
In order to satisfy their claims as against the debtors, creditors have
the following successive rights:
(1) To levy by attachment and execution upon all the property of
the debtor except such as are exempt from the law by
execution
(2) To exercise all the rights and actions of the debtor, except
such as are inherently personal to him
(3) To ask for the rescission of the contracts made by the debtor
in fraud of their rights.
LIABILITY OF DEBTOR’S PROPERTY - the property is subject to
liability for his obligation.
GILDA FLORES 1J SBU LAW 18
 Basis: Art. 2236 - ​The debtor is liable with all his property,
present, anf future, for the fulfillment of his obligations, subject to the
exception provided by law.
The liability of the property is the legal guaranty in favor of creditor;
hence, the debtor cannot maliciously reduce such guaranty.
EXCEPTIONS: Property exempt from execution (civil code); ​Art.
223. Art. 302, Art 1708 (civil code).
Debtor’s rights
In order that the creditor may be able to exercise the rights and
actions of the debtor, the following requisites can be said to be
essential: (1) the creditor has an interest in the right or action ot
only because of his credit but because of the insolvency of the
debtor ; (2) Malicious or negligent inaction of the debtor in the
exercise of his right or action of such seriousness as to endanger the
claim of the creditor ; (3) the creditor of the debtor against a third
person is certain, demandable and liquidated (4) the debtor’ right
against the third person must be patrimonial, or susceptible of being
transformed to patrimonial value for benefit of the creditor. It is not
essential that the creditor’s claim be prior to the acquisition of the
right by the debtor.
ACCION SUBROGATORIA (subrogatory action) - the action
which the creditor may exercise in place of his negligent debtor in
order to preserve or recover for the patrimony of the debtor the
product of such action, and then obtain therefrom the satisfaction of
his own credit.
- This has the double function of conserving the patrimony of
the debtor by bringing into it property abandoned or
neglected by him and of making execution on such property
effective thereafter.
- In order to exercise accion subrogatoria, a previous approval
of the court is not necessary.
- The debtor who is sued may set up against the plaintiff the
same defenses he could set up against his own creditor. If
the action succeeds, the plaintiff is entitled only to so much
as is needed to satisfy his credit. If there is any balance, it
shall pertain to his debtor.
Personal rights of the debtor
1. The right to existence, thereby exempting from the reach of
creditors whatever he may be receiving as support
2. The rights ore relations of a public character
3. Rights of an honorary character
4. Rights consisting of powers which have not been used,
including: (a) the power to administer, such was when the
debtor fails to have some property leased the creditor cannot
give it in lease for him, (b) the power to carry out an agency
or deposit, which are purely personal acts, and ( c) the
power to accept an offer a contract;
5. Non-patrimonial rights (e.g., action for legal separation of
marriage and other rights arising from family relations)
6. Patrimonial rights not subject to execution, such as the right
to a government gratuity or pension;
7. Patrimonial rights inherent in the person of the debtor, such
as the right to revoke a donation by reason of ingratitude and
the right to demand the exclusion of an unworthy heir.
Rescission of fraudulent act
- As a last recourse, creditors have the right to set side or
revoke the acts which the debtor may have done to defraud
them; creditors may rescind fraudulent reductions of the
GILDA FLORES 1J SBU LAW 19
 properties of the debtor which constitute the guaranty for his
debts.
- This is called ​accion pauliania. The Code regulates this
actions in articles 1380 to 1389.
- All acts of the debtor which reduce his patrimony in fraud of
his creditors, whether by gratuitous or onerous title, can be
revoked by this action.
- These include alienations of property, payment of debts
which are not due, renunciation of rights. Assignments of
credits, and remission of debts.

The debtor’s renunciation of prescription which has already been

acquired, is also uniformly considered as within the scope of this
action. The creditors are also protected, not only from voluntary
acts of the debtor, but also from judicial acts.

- But payments of pre-existing obligations already due,

whether natural or civil, cannot be impugned by action
pauliana.
New debts
- New debts contracted by the insolvent debtor are not
included although they may make the position of existing
creditors worse, because only acts which impair the assets
of the debtor are covered by the provisions and those which
merely increase his liabilities are not.

Art. 1178. Subject to the laws, all rights acquired in virtue of an

obligation are transmissible, if there has been no stipulation to
the contrary.

➢ When there is no stipulation with regard to the assignment

of an obligation, all rights acquired by virtue of an obligation
are transmissible in accordance with law.

GILDA FLORES 1J SBU LAW 20