SECTION 2 – Loss of the Thing Due

ART.1262 An obligation which consists in the delivery of determinate thing shall be

extinguished if it should be lost or destroyed without the fault of the debtor, and before he has
incurred in delay.

When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing
does not extinguish the obligation, and he shall be responsible for damages. The same rule
applies when the nature of the obligation requires the assumption of risk. (1182a)

If a determinate thing is loss without the fault of the debtor and his not guilty of delay the
obligation shall be extinguished. But if the thing is loss through the fault of the debtor and he is
guilty of delay the obligation is not extinguished. What is meant by “the obligation is not
extinguished” is that the debtor is not under the obligation to deliver the thing that was lost but
his obligation will be converted into monetary obligation for damages.

The debtor is liable even for fortuitous event because the law say so and because the nature of
the obligation requires the assumption of risk.

EXAMPLES:

(1) Ms. Ulanday promised to deliver the Toyota Car with the plate number of AAV 316 (2008)
worth 100,000 to Ms. Simundac. The Toyota Car with the plate number of AAV 316 (2008)
which Ms. Ulanday intended to deliver was carnapped without his fault.

• Ms. Ulanday is not liable to Ms. Simundac because she is not at fault, so her obligation is
extinguished.

(2) Suppose the obligation of Ms. Ulanday to deliver the Toyota Car with the plate number of
AAV 316 (2008) worth 100,000 to Ms. Simundac was lost because of her negligence, is the
obligation of Ms. Ulanday is extinguished?

• The obligation to deliver Toyota Car with the plate number of AAV 316 (2008) worth 100,000
to Ms. Simundac is extinguished, but her obligation will be on a monetary obligation. She is
oblige to pay the equivalent value of the car.
Kinds of loss (PLC)

1. Physical loss- when it perishes. (Ex. When a house is burned and reduced to ashes)

2. Legal loss- goes out of commerce or disappears. (Ex. When legal becomes illegal)

3. Civil loss- disappears in such a way that its existence is unknown or it cannot be recovered.
(Ex. When a diamond ring dropped into the sea)

ART. 1263. In an obligation to deliver generic thing, the loss or destruction of anything of the
same kind does not extinguish the obligation.

If the loss thing is generic or indeterminate, the obligation is not extinguished. It is based on the
principle that a generic thing never perishes (genus nunquam perit). The debtor can still be
compelled to deliver a thing of the same kind.

EXAMPLE:

Mr. Nuñez order 100 cavans of rice to Mr. Abucay, but the 100 cavans of rice that supposed to
be delivered was lost in a flood.

• Mr. Abucay is still liable to Mr. Nuñez because his obligation is to deliver a generic thing and
he is liable even for fortuitous event. It can still be paid from other resources.

ART. 1264. The courts shall determine whether, under the circumstances, the partial loss of the
object of the obligation is so important as to extinguish the obligation.

The court will decide whether the partial loss is such as to be equivalent to a complete or total
loss. If the partial loss of the thing is important then the obligation is not extinguished, but if it’s
not important the obligation is extinguished.

EXAMPLE:

Sheila has obligation to Haidee that she will give a specific pentel pen to Haidee. If the pentel
pen excluding the cover is lost, the obligation is extinguished. But if the cover is the one lost and
not the pentel pen, the obligation shall subsist.
ART. 1265. Whenever the thing is lost in the possession of the debtor, it shall be presumed that
the loss was due to his fault, unless there is proof of the contrary, and without prejudice to the
provisions of article 1165. This presumption does not apply in case of earthquake, flood, storm,
or other natural calamity.

The debtor has to proves that his not at fault. Under the third paragraph of Art. 1165 the obligor
who is not at fault is still liable in case he is guilty of delay. Presumption is not applicable in
natural calamities or fortuitous events.

EXAMPLE:

Mr. Bedaña borrowed the car of Mr. Fabros. On the due date of the obligation, Mr. Bedaña told
Mr. Fabros that the car was stolen and that he has not at fault.

• The car is loss in the custody of Mr. Bedaña and it presumed that the loss of the car is because
of Mr. Bedaña. Hence, he is liable unless he proves the contrary.

Article 1266 – The debtor in obligations to do shall also be released when the prestation
becomes legally or physically impossible without the fault of the obligor. (1184a)

Explanation: Two kinds of impossibility are tackled in this article, the legal and physical
impossibility.

Kinds of Impossibility: (PL)

Physical Impossibility (PI) – When the prestation can no longer be performed due to incapacity
or death of the debtor, although it is still legally possible.

Legal Impossibility (LI) – Legal impossibility arises when the act stipulated to be performed is
subsequently prohibited by law.

EXAMPLES:

Emman has obligation to Benjie that he will make paint portrait and they have an agreement that
Emman will give it to Benjie on May 30, 2020. But on May 15, 2020 there’s a fortuitous event
that happened to Emman, he is involved on a car accident. By that, Emman can release on their
obligation. But if the accidents happen on June 1, 2020, there’s delay on the obligation and
Emman will pay for the damages for non-performance

Emman wants to have commercial building in Alasasin, Mariveles, Bataan but the government
refuses to give him a building permit because the area/location is declared by the law as a
residential zone. Here, the obligation is void. Physically, the obligation is possible to make but
legally impossible.