Law on Obligations

Chapter 2 – Nature and Effect of Obligations

(Articles 1163-1178)
Determinate thing and generic thing
• A thing is determinate when it is particularly designated or physically
segregated from all others of the same class. (Art. 1460).
• Examples: A 2021 Toyota Corolla with engine No 12345, body no. 546611, and plate
no. ABC123; my only wristwatch; the house located at 234 Happy Street, Sampaloc,
Manila; my horse named “Black Stallion.”

• A thing is indeterminate or generic when it is not particularly

designated or physically segregated from all others of the same class, i.e,
one of a class.
• Examples: A horse, a car P10,000.00.
Obligations of one obliged to give a determinate thing
1. To take good care of the thing with the diligence of a good father of a
family unless the law or agreement of the parties requires another
standard of care. (Art. 1163)
• Diligence of a good father of a family means the ordinary care that an average
person exercises in taking care of his property.
2. To deliver the thing. (Art. 1163)
• This involves placing the thing in the possession or control of the creditor either
actually or constructively.
3. To deliver the fruits of the thing. (Art 1164)
4. To deliver its accessions and accessories even if they have not been
mentioned. (Art. 1166)
Fruits
• Kinds of fruits
• Natural Fruits - They are the spontaneous products of the soul and the young and
other products of animals.
• Industrial fruits - They refer to those produced by land of any kind through cultivation
or labor.
• Civil fruits – They refer to fruits which are the result of a juridical relation, such as the
rent of a building, price of lease of land and other property, and the amount of
perpetual or life annuities.
• The creditor has the right to the fruits of a thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it
until the thing has been delivered to him
Fruits
• When obligation to deliver the thing arises
• If the obligation is a pure obligation or one whose performance is not subject to a
suspensive period or suspensive condition, the obligation to deliver arises from
perfection.
• If the obligation is subject to a suspensive period or suspensive condition, the
obligation to deliver arises upon the arrival of the term or the fulfillment of the
condition.
Rights of the creditor
• Personal right -This is a right that may be enforced by one person on
another, such as the right of the creditor to demand the delivery of the
thing and its fruits from the debtor.
• Real right – This refers to the right or power over a specific thing, such as
possession, ownership, or mortgage, which is a right enforceable against
the whole world. This the right acquired by the creditor over the thing and
its fruits when they have been delivered to him.
Obligations of one obliged to give an indeterminate thing
1. To deliver a thing which is of the quality intended by the parties
considering the purpose of the obligation and other circumstances.
2. To be liable for damages in case of fraud, negligence, or delay, in the
performance of his obligations, or contravention of the tenor thereof.
Remedies of the creditor
• If the debtor fails to perform his obligation to deliver a determinate thing
(specific real obligation)
• To compel the debtor to make the delivery + damages;
• To demand rescission or cancellation of the obligation + damages; or
• To demand damages from the debtor (in case this is the only feasible remedy).

• If the debtor fails to perform his obligation to deliver a generic thing

(generic real obligation)
• To ask that the obligation be complied with at the expense of the debtor; and
• To demand damages from the debtor.
Remedies of the creditor
• If the debtor fails to perform is obligation in obligations to do (positive
personal obligation)
• If the debtor fails to perform the obligation or performs it but
contravenes the tenor thereof (in violation of the agreement):
• Creditor may have the obligation executed at the expense of the debtor; and
• Creditor may demand damages from the debtor.

• If the debtor performs the obligation but does it poorly:

• Creditor may have the same be undone at debtor’s expense; and
• Creditor may demand damages from the debtor.
Remedies of the creditor
• If the debtor does what has been forbidden him (negative personal
obligation)

• The creditor may demand that what has been done be undone; and
• The creditor may demand damages from the debtor.
Damages
• Damages signify the money compensation awarded to a party for loss or
injury resulting from breach of contract or obligation.
• 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 (Art. 1170)
• Grounds for liability to pay damages
• Fraud
• Negligence
• Delay
• Contravention the tenor of the obligation.
Fraud
• Fraud is the deliberate or intentional evasion by the debtor of the normal
compliance of his obligation.
• Synonymous with bad faith.
• Fraud under Art. 1170 refers to the fraud committed by the debtor in the
performance of his obligation.
• A waiver of an Action for future fraud cannot be waived. If there is an
agreement for its waiver, the same is void. (Art. 1171) Thus, the debtor
will still be liable for damages if he commits fraud in the performance of
his obligation despite the waiver.
• A waiver of an action for past fraud may be waived, since the commission
of fraud can no longer be encouraged. Such waiver is an act of liberality
on the part of the creditor
Negligence
• It is the omission 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).
• It is the failure to observe for the protection of the interest of another
person, that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury.
• The test of negligence is whether the defendant in doing the alleged
negligent act used that reasonable care and caution which and ordinary
person would have used in the same situation.
• If the law or contract does not state the diligence which is to be observed
in the performance of the obligation, the debtor must observe the
diligence of a good father of a family.
Negligence
• Kinds of negligence
• Contractual negligence (culpa contractual) or negligence in contracts
resulting in their breach. Not a source of obligation.
• Civil negligence (culpa aquiliana/quasi-delict) or negligence which by
itself is the source of an obligation between the parties not so related
before by any pre-existing contract.
• Criminal negligence (culpa criminal) or negligence resulting in the
commission of a crime.
Delay
• Delay or default or mora is the non-fulfillment of an obligation with respect
to time.
• Kinds
1. Mora solvendi – Delay on the part of the debtor
• Ex re – Delay in real obligations (obligations to give)
• Ex persona – Delay in personal obligations (obligations to do)
2. Mora accipiendi – Delay on the part of the creditor. This exist when the creditor
refuses to accept the thing due without justifiable reason.
3. Compensatio morae – Delay in reciprocal obligations. i.e., both parties are in
default. Here, it is as if there is no delay.
Delay (General Rule)
• GR: The debtor incurs in delay from the time the creditor demands
fulfillment of the obligation, but the debtor fails to comply with such
demand (no demand, no delay, as a rule).
• Requisites of delay by the debtor
1. The debtor does not perform his obligation on the date it is due.
2. The creditor demands (judicially or extrajudicially) the performance of the
obligation.
3. The debtor does not comply with the creditor’s demand.
Delay (Exceptions)
• When there is performance by a party in reciprocal obligations
• When the law so provides
• When demand would be useless
• When time is of the essence
• When the obligation so provides
Fortuitous events
• 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).
• Examples: Natural calamities or acts of God such as earthquake, typhoon
and lightning; and acts of man (“force majeure”) such as war and armed
robbery.
Fortuitous events (requisites)
1. The event must be independent of the human will or at least of the
debtor’s will;
2. The event could not be foreseen, or if foreseen, is inevitable;
3. The event must be of such a character as to render it impossible for the
debtor to comply with his obligation in a normal manner; and
4. The debtor must be free from any participation in, or the aggravation of,
the injury to the creditor, that is, there is no concurrent negligence on his
part.
Absence of any of the above requisites would prevent the obligor from being
exempt from liability.
Fortuitous events
• General rule: No person shall be liable for fortuitous events, i.e., his
obligation will be extinguished.
• Exceptions to the rule (Art. 1174):
• When the law expressly provide for liability even in case of fortuitous events (such as
that provided in Art. 1165 where the obligor is liable for fortuitous events if he delays
or has promised to deliver the same thing to two or more persons who do not have
the same interest).
• When the parties have declared liability even in case of fortuitous event.
• When the nature of the obligation requires the assumption of risk (such as the
obligation of an insurer who must pay the policy holder even if the loss is caused by a
fortuitous event if the cause thereof is the risk insured against).
Presumptions on receipt of principal or of later installment
• The receipt of the principal without reservation as to interest, shall give
rise to the presumption that the interest has been paid.
• The receipt of a later installment without reservation as to prior
installments, shall give rise to presumption that such prior installments
have been paid.

• The above presumptions are disputable, hence, they may be rebutted by

contrary evidence. If the presumption is conclusive, then no evidence to
the contrary may be admitted.
Remedies of creditor to enforce
payment of claims against debtor
• Pursue the property in the possession of the debtor, except those exempt
by law.
• Exercise all the rights and bring all the actions of the debtor except those
personal to him (accion subrogatoria).
• Impugn the acts which the debtor may have done to defraud his creditors
(accion pauliana)
Rule on transmissibility of rights and exceptions thereto
• General rule: All rights acquired in virtue of an obligation are
transmissible.

• Exceptions:
• If the law prohibits the transmission of the right.
• If the parties agreed against transmission.
• If the right is by nature not transmissible