Chapter 2: NATURE AND EFFECT

OF OBLIGATIONS

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
deliver. (1906)

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. (1097a)
 Definition of terms:

1. Determinate thing – a thing is determinate when

it is particularly designated or physically
segregated from all others from the same
class. (Art. 1460, NCC)
2. Indeterminate or generic thing – A thing is generic
when it refers to a class or thing or genus
and cannot be designated with particularity.
(Art. 1460, NCC)
To be liable for damages in case of breach of obligation
(Art. 1170, NCC)

When creditor acquire a right to the thing to be delivered

and its fruits-
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 have
been delivered to him. (Art. 1164, NCC)

Example – A binds himself to sell his horse to B for

P10,000. No date nor condition is stipulated for delivery
of the horse. Later, the horse gave birth to a colt. A has
right to the colt, if B has not paid the horse. Before
delivery, B does not acquire ownership over it.
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. ( 1098 )
 Obligation of the Debtor To Do

Being a personal positive obligation, the

creditor has the right to secure the services of
third person to perform the obligation at the
expense of the debtor under the following
instances:
When the debtor fails to do the obligation;
When the debtor performs the obligation but
contrary to the tenor; or
When the obligor poorly performs the obligation.
ART. 1168. When the obligation consists in
not doing, and the obligor does has been
forbidden him, it shall also be undone at his
expense, (1099a)

Obligation of the Debtor NOT To Do –

This is negative personal obligation which is
consisting of an obligation, of not doing
something. If the debtor does what has been
forbidden him to do, the obligee can ask the
debtor to have it undone. If it is impossible to
undo what was done, the remedy of the injured
party is for an action of damages.
Example-
A bought a land from B. It was
stipulated that A would not construct a
fence in a certain portion of his land
adjoining that land sold by B. Should A
construct a fence in violation of the
agreement, B. can bring an action to
have the fence remove at the expense
of A.
 ART. 1169. Those oblige to deliver or to do
something incur in delay from the time the obligee
judicially or extra - judicially demands from theme
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
declares; or
( 2 ) When from the nature and the circumstances of
the obligation it appears that the destination of
the time when the thing is to be delivered or the
service is to rendered was 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 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. ( 1100a )
 Delay ( Mora )

- means a legal delay or default and it

consists of failure discharge a duty resulting
to one’s own disadvantaged.

The debtor incurred delay if:

The debtor fails to perform his obligation when it falls
due; and
A demand has been made by the creditor
judicially or extra judicially.
 Delay ( Mora )

Example –
A obliged herself to deliver a determinate horse to B on
June 20 this year. A failed to delivered on the agreed date,
Is A already on delay on June 20? only when Tito makes
a judicial or extra-judicial demand and from such date
of demand when Gaya is on default or delay.
 However, there are instances when the
demand by the Creditor is not necessary to
place the debtor on delay:

1. When the obligation expressly so provides

The mere fixing of the period is not sufficient to
constitute a delay. An agreement to the effect that
fulfillment or performance is not made when the
obligation becomes due, default or delay by the
debtor will automatically arise.
2. When the law so provides
The express provision of law that a debtor is in default.
For instance, taxes must be paid on the date prescribed by
law, and demand is not necessary in order that the taxpayer
is liable for penalties.

3. When time is of the essence

Because time is the essential factor in the fulfillment of
the obligation. Example, Gaya binds herself to sew the
wedding gown of Maya to be used by the latter on her
wedding date. Gaya did not deliver the wedding gown on
the date agreed upon. Even without demand, Gaya will be
in delay because time of the essence.
4. When demand would be useless
When the debtor cannot comply his obligation as when it is
beyond his power to perform. Like when the object of the
obligation is lost or destroyed through the fault of the debtor,
demand is not necessary.
5. In a reciprocal obligation, from the moment
one of the parties fulfills his obligation,
delay to the other begins
For instance, in a contract of sale, if the seller delivers the
object to the buyer and the buyer does not pay, then
delay by the buyer begins and vice versa, if the buyer
pays and the seller did not deliver the object, then the
seller is on delay.
Kinds of delay –

Mora solvendi – delay on the part of the debtor.

Mora accipiendi – delay on the part of the
creditor, like when the creditor unjustifiably
refused to accept payment at the time it was
due, is in delay.
Compensatio morae – delay both parties in
a reciprocal obligation.
MORA SOLVENDI Requisites

 Obligation Pertains to the debtor;

 Obligation is Determinate, due and demandable, and
liquidated;
 Obligation has not been performed on its Maturity date;
 There is Judicial or extrajudicial demand by the creditor;
and
 Failure of the debtor to comply with such demand.
MORA ACCIPIENDI Requisites

 Offer of Performance by a capacitated debtor;

 Offer must be to Comply with the prestation as it
should be performed; and
 Refusal of the creditor without just cause (Pantaleon
v. Amex, supra).
ART. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay,
and those whoin any manner contravene the tenor
thereof, are liable for damages. (1101)

ART. 1171. Responsibility arising from fraud is

demandable in all obligations. Any waiver of an action
for future fraud is void. (1120a)

ART. 1172. Responsibility arising from

negligence in the performance of every king of
obligation is also demandable, but such liability may
be regulated by the courts, according to the
circumstances. (1130)
 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 1171and 2201,
paragraph 2, shall apply.

If the law or contract does not state the diligence

of which is to be observed in the performance, that
which is expected of a good father of a family shall be
required. (1104a)
Sources of liability for damages:

1. Fraud (dolo) – is the intentional deception made by

one person resulting in the injury of another.
The fraud referred to is incidental fraud, that
is, fraud incident to the performance of a pre-
existing obligation.
2. Negligence (culpa) – consists in the omission by the
obligor of that diligence which is required by the
nature of the obligation and corresponds with
the circumstances of the person, of the time and
of the place. (Art. 1173,NCC)
3. Delay (Mora) – like when there has been judicial or
extra-judicial demand and the debtor does not comply
his obligation, delay will occur.

4. In contravention of the tenor of the obligation – refers to

the violation of the terms and conditions or defects in
the performance of the obligation, like when a landlord
fails to maintain a legal and peaceful possession of a
tenant being leased by the latter because the landlord
was not the owner and the real owner wants to occupy
the land, there is contravention of the tenor of the
obligation.
 Other sources of liability for
damages

Loss of the thing with the fault of debtor.

Deterioration with the fault of debtor. (Art. 1189)

 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
(1105a)
Fortuitous event – is an event which cannot be
foreseen which though foreseen is inevitable.
Fortuitous event proper are acts of God such as
volcanic eruption, earthquake, lightning, etc. is
now similar with force majuere or acts of man such
as conflagration, war, robbery, etc.
1. Requisite necessary to constitute fortuitous event
The failure of the debtor to comply with the obligation
must be independent from the human will;
The occurrence makes it impossible for the debtor to
fulfill the obligation on a normal manner, and the
obligor did not take part as to aggravate the injury of
the creditor. (Vasquez v.C.A. G.R.
42926)
2. As a general rule, no person shall be held
responsible for fortuitous events

 Example – Angie obliged herself to deliver a

determine car to Tonyo on Dec. 30, 2020. Before
the arrival of the period, the car was struck by
lightning and was totally destroyed. Angie cannot
be held responsible for the destruction of the car,
hence her obligation to deliver is extinguished.
Exceptions (when the person is responsible despite the
fortuitous event).

a. When the law expressly so provides, such as:

The debtor is guilty of fraud, negligence or in
contravention of the tenor of the obligation. (Art, 1170,
NCC)
The debtor has proved to deliver the same thing to two
or more persons who do not have the same interest. (
Art. 1165,NCC )
The thing to delivered is generic.
The debtor is guilty of default or delay. ( Art. 1169,NCC )
The debtor is guilty of concurrent negligence.
Exceptions (when the person is responsible despite the
fortuitous event).

a. When declared bystipulation;

b. When the nature of obligation requires the

assumption of risk. An example of this is a
contract of insurance.
ART. 1175. Usurious transaction shall be governed by
special laws.

Note: C.B. Circular No. 905 suspends the ceilings in the usury law.
Hence, parties can agree as to the rate of interest.

Kinds of interest
1. Conventional *The rate which is agreed upon by the
parties.
2. Legal Interest *The rate which is prescribed by law.
3. Lawful Interest *The rate which is agreed upon by the
parties but which rate is within the
rate authorized by law.
4. Usurious Interest *The rate which is in excess of the
maximum rate of interest allowed by
law.
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. (1110a)

Presumption means “the inference as to the

existence of a certain fact which if not contradicted is
considered as true.”
The presumption in the above article is a disputable
presumption, whereby one which can be contradicted by
presenting proof to the contrary while a conclusive
presumption does not admit any evidence or proof, hence,
it is considered as a fact.

Presumption under this article:

1. Receipt of the principal, without reservation as to the
interest, shall give rise to the presumption that the said
interest has been paid.
2. When the creditor issues a receipt of a later installment of
a debt without reservation as to prior installment is
presumed to have been paid.
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. (1111)
 Rights of Creditors –
In order to satisfy their claims against the debtor,
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 by
law from execution;

2. to exercise all the rights and actions of the debtor,

except, such as are inherently personal to him; and

3. to ask for the rescission of the contracts made by the

debtor in fraud of their rights.
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. (1112)

As a rule, all rights acquired in virtue of an obligation are

transmissible, except in the following cases:
1. When the law so provides.
2. When the parties stipulate otherwise – by agreement of
parties that the rights acquired by them will not be
transmitted to any other person.
3. When the obligation is purely personal in nature.