OBLIGATIONS & CONTRACTS | Sherley Ann T. Feliciano Assignment No.

1. Define diligence. What is meant by “good father of the family”? Define extra-ordinary
diligence. (Art. 1173)

Article 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.

Diligence of a good father of a family. — In obligations to give (real obligations), the obligor
has the incidental duty to take care of the thing due with the diligence of a good father of a
family pending delivery. The phrase has been equated with ordinary care or that diligence
which an average (a reasonably prudent) person exercises over his own property.

Article 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.

In general, extraordinary diligence is that extreme care and caution which very prudent and
thoughtful persons exercise under the same or similar circumstances. As applied to the
preservation of property, the term "extraordinary diligence" means that extreme care and
caution which very prudent and thoughtful persons use in securing and preserving their own
property.

For example, Article 1755 of the Civil Code requires common carriers to exercise
extraordinary diligence which means that common carriers have the obligation to carry
passengers safely as far as human care and foresight can provide, using the utmost diligence
of very cautious persons, with due regard for all the circumstances.

2. Define fruits. What are the different kinds of fruits? Define each kind and give an example.
(Art. 1164)

Article 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.

The fruits mentioned by the law refer to natural, industrial, and civil fruits.

(1) Natural fruits are the spontaneous products of the soil, and the young and other products
of animals

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Example: grass, all trees and plants on lands produced without the intervention of human
labor

(2) Industrial fruits are those produced by lands of any kind through cultivation or labor

Example: sugar cane; vegetables; rice; and all products of lands brought about by reason of
human labor

(3) Civil fruits are those derived by virtue of a juridical relation

Example: rents of buildings, price of leases of lands and other property and the amount of
perpetual or life annuities or other similar income

3. Difference between determinate (specific) things and generic things.

Article 1460. A thing is determinate when it is particularly designated or physical segregated

from all others of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered
into, the thing is capable of being made determinate without the necessity of a new or further
agreement between the parties.

A determinate or specific thing cannot be substituted by any of the same class and same kind.

Examples: a lot with TCT # 14344; car with plate number ABC 123; Rolex Submariner watch
with serial #2021AZX25

A thing is generic or indeterminate when it refers only to a class, to a genus, and cannot be
pointed out with particularity and can be substituted by another thing that is of the same
quality or specifications.

Examples: a 2020 BMW automobile, the sum of P5 million, a cellphone

4. Define accessories and accessions

Accessions are the fruits of, or additions to, or improvements upon a thing or which is
incorporated or attached thereto, either naturally or artificially.

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Examples: plants and trees sown on a parcel of land sold to a buyer; a building or
improvement

Accessories are things joined to, or included with, the principal thing for the latter’s
embellishment, better use, or completion.

Examples: keys to the car or house; machinery in a factory

5. Give the obligations of a debtor in obligation to give a generic thing. What are his
obligations in an obligation to give a determinate thing?

Obligations of debtor to give a specific Obligations of debtor to give a generic

thing
1. To preserve or take care of the
thing due
2. To deliver the thing itself
3. To deliver the fruits of the thing
To deliver its accessories and
4. accessions
To pay for damages in case of
breach
thing
1. To deliver a thing of the quality
intended by the parties taking into
consideration the purpose of the
obligation and other circumstances
2. To be liable for damages in case of
breach
3. Debtor cannot deliver a thing of
inferior quality

6. When may a creditor recover damages from the debtor? (Art. 1170, memorize)

Article 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.

The creditor may recover damages from the debtor when the debtor Is guilty of any of the
following:

1. Fraud (deceit or dolo)- deliberate or intentional evasion of fulfillment of an obligation

2. Negligence (fault or culpa) - 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 (Art. 1173)

It is any voluntary act or omission, there being no malice, which prevents the normal
fulfilment of an obligation.

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Fraud may be distinguished from negligence as follows:

(1) In fraud, there is deliberate intention to cause damage or injury, while in

negligence, there is no such intention;

(2) Waiver of the liability for future fraud is void (Art. 1171.), while such waiver
may, in a certain sense, be allowed in negligence;

(3) Fraud must be clearly proved, mere preponderance of evidence not being
sufficient, while negligence is presumed from the breach of a contractual
obligation; and

3. Default (or mora) if imputable to the debtor

4. Contravention of tenor (violation of the terms) of the obligation unless excused in

proper cases by fortuitous events

7. Define mora or delay. What are the different kinds of delay?

DELAY or DEFAULT (MORA) is failure to perform an obligation on time which constitutes

breach of the obligation

Kinds of delay (mora)

(1) Mora solvendi or the delay on the part of the debtor to fulfill his obligation
(to give or to do) by reason of a cause imputable to him

(2) Mora accipiendi or the delay on the part of the creditor without justifiable
reason to accept the performance of the obligation

(3) Compensatio morae or the delay of the obligors in reciprocal obligations

(like in sale), i.e., the delay of the obligor cancels the delay of the obligee, and vice
versa.

8. When is there a delay? (Art. 1169, memorize).

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Article 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.

General Rule: No demand, no delay

Requisites of delay or default by the debtor:

There are three conditions that must be present before mora solvendi can exist or its
effects arise:

1. failure of the debtor to perform his (positive) obligation on the date agreed
upon
2. the obligation must be due and demandable
3. demand (not mere reminder or notice) made by the creditor upon the
debtor to fulfill, perform, or comply with his obligation which demand, may
be either judicial (when a complaint is filed in court) or extra-judicial
(when made outside of court, orally or in writing)
4. failure of the debtor to comply with such demand

The creditor has the burden of proving that demand has been made. It is incumbent upon
the debtor, to relieve himself from liability, to prove that the delay was not caused by his
fault, i.e., there was no fraud or negligence on his part.

No delay in negative personal obligation.

In an obligation not to do, non-fulfillment may take place but delay is impossible
for the debtor fulfills by not doing what has been forbidden him. (see Art. 1168.)

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9. When is demand not necessary to incur delay? Memorize the article. Give an example for
each exemption on demand.

The demand by the creditor shall not be necessary in order that delay may exist when:

1. When the law so provides.

Example: Failure to pay taxes on time imposes penalty on the taxpayer and
payment of penalty does not require a demand because it is a matter of public
policy.

2. When the obligation expressly so provides.

The mere fixing of the period is not enough; there must be a provision that if
payment is not made when due, default or liability for damages or interests
automatically arises.

Example:
D promised to pay C the amount of 1,000,000 in 24 equal monthly installments.
The first installment must be paid on or before March 1, 2022 and the last
installment must be paid on or before February 1, 2024. In a promissory note, it is
expressly stipulated by D that should he fail to pay two monthly installments, the
entire amount of unpaid obligation plus interest shall be due and demandable
without need of a demand. Hence, D is liable to pay C the full amount of unpaid
obligations plus interest from the time he defaulted two times in paying the
monthly installment.

3. When time is of the essence of the contract (or when the fixing of the time was the
controlling motive for the establishment of the contract).

Examples: The making of a wedding dress, if the wedding is scheduled at the time
the dress is due; delivery of flowers to a certain person on the occasion of her
birthday

4. When demand would be useless, as when the obligor has rendered it beyond his
power to perform.

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Demand is also unnecessary where it is apparent that it would be unavailing, as where

there has been a prior absolute refusal by debtor, or debtor has manifested an intention
not to comply with his obligation.

Example: Pedro died of heart attack after being in ICU for 1 month. Marites, his wife,
had no more money to pay for funeral expenses as all her savings were used in the
hospital. Estella, her good friend came to her rescue and lent Marites money to pay her
obligation with the funeral parlor and build Pedro a nice museleo. The total sum of
money lent by Estella to Marites was 1,500,000.00. Marites promised Estella that she
would pay her as soon as she receives her benefits as a surviving spouse from Pedro’s
insurance. Months passed, Marites received the death benefit from Pedro’s insurance
policy. However, she also found out that Estella and Pedro had an illicit affair. Angry
and upset, Marites told Estella that she would never repay her because of her
adulterous act. Estella can sue Marites and may claim for damages without need of a
demand.

5. When there is performance by a party in reciprocal obligations.

Bong agreed to pay Direk Paul 10 million pesos for every TV commercial he creates for
him for his presidential campaign. A month prior to the campaign period, Direk Paul
was able to create two TV commercials for him and delivered the copies of the ads to
the PR team of Bong. Bong incurs in delay from the time Direk Paul has performed his
obligation. There is no need for a demand from Direk Paul because he already
performed his duty in the reciprocal obligation. He may ask the court to compel Bong
for specific performance and recover damages in the form of penalty interest.

10. Define Fortuitous Event. What are the kinds of fortuitous events? Give 3 examples for
each kind. What are the effects of the happening of a fortuitous event to an obligation?
Memorize Art. 1174.

A fortuitous event is any extraordinary event which cannot be foreseen, or which,

though foreseen, is inevitable. In other words, it is an event which is either impossible to
foresee or impossible to avoid.

The essence of a fortuitous event consists of being a happening independent of the will
of the obligor and which happening, makes the normal fulfillment of the obligation
impossible.

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Kinds of fortuitous events:

1. Act of God: an accident, due directly or exclusively to natural causes without human
intervention, which by no amount of foresight, pains or care, reasonably to have been
expected, could have been prevented.

Examples:
a. Strong typhoon:
As part of its employee benefits, XYZ Corp. paid A for 1,000 sacks of Denorado
Rice. A promised to deliver them on February 14, 2020. However, on February
13, 2020 Typhoon Odette hit the municipality of A where his warehouse
containing the sacks of rice is located. The typhoon was so strong it destroyed
the entire municipality, putting it in rubbles. The warehouse did not withstand
the typhoon, its roof got destroyed and the rice which are bound to be
delivered to XYZ got wet by the heavy rains. A cannot deliver 1,000 sacks of
Denorado rice to XYZ because they got destroyed and are no longer suitable
for human consumption. In the case at bar, A is not liable for nonperformance
of obligation because of such a fortuitous event.

b. Volcanic eruption:
Wil booked a business class flight with PAL Airlines (PAL) from Clark to
Hongkong on June 12, 2021. However, on the day of his flight, Mount
Pinatubo erupted and unrelenting ashfall blanketed Clark Airport, rendering
it inaccessible to airline traffic. Outbound flights from Clark and Manila were
cancelled indefinitely. As a result, Wil missed a very important business
meeting in Hongkong and lost a 40-million contract. Wil sued PAL and would
like to claim for damages. Because of such a force majeure, PAL cannot be
held liable for non-performance of obligation nor for payment of damages.

c. Earthquake:
Engr. Matibay agreed to construct a 3-storey house located in Cebu City for
his client worth P15,000,000.00, Maya Man. In the contact, it is stipulated that
the house shall be capable of withstanding an earthquake with a magnitude
of 5.5 within 3 years from the turn-over of the house. Otherwise, he shall be
liable for the cost of repair, renovation, or reconstruction. Two years after the
turn-over, the Visayas Island was hit by a 7.1-magnitude earthquake that
caused Maya Man’s 3-storey building to collapse. Engr. Matibays shall not be
liable for damages incurred by Maya Man because of the occurrence of the
fortuitous event.

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2. Act of Man: force majeure is a superior or irresistible force, which is essentially an act
of man but independent upon the will of the debtor

Examples:
a. War/military conflict:
Randy and Cody entered into a lease agreement. Randy, the tenant shall pay
monthly rental to Cody every 15th of the month for the use of an office
building located in Marawi City. Failure to pay on time would terminate the
contract. On May 9, 2021, a military conflict between the ISIS and the AFP
took place, and Randy was not able to pay on time because the residents
have been relocated outside the city. Electricity also has been cut off, hence
online bank transfers were also not possible. In the case at bar, Randy did
not breach the contract because of such fortuitous event.

b. Unforeseen law or regulation from the government:

In a contract, China Corp (CC)., a feed mill company located in China, and
Pinas Farmers’ Cooperative (PFC), registered and located in the Philippines,
agreed that for 5 years, PFC would deliver 30,000 tons of yellow corn to CC
every year. However, on the 2nd year after the contract has been entered
into, the president of China ordered that all importations from the
Philippines be banned. Therefore, PFC cannot proceed with the delivery to
China. This order from China’s president is a fortuitous event which absolves
PFC from any liability for non-performance of the obligation in the contract.

c. National emergency:
On March 24, 2020, President Duterte declared the whole Philippines under
a state of national emergency. Because of this, President Duterte signed the
“Bayanihan to Heal as One Act” wherein all banks in the Philippines are
directed to extend a thirty (30)-day grace period for the payment of all loans
falling due within the period of the enhanced community quarantine (ECQ)
from March 18,2020 to May 17, 2020, without incurring interests, penalties,
fees, and other charges. Judith has an auto loan with Loan Dawn Bank which
shall fall due within the ECQ. Her auto loan amortization falls due every 15 th
of the month. She already paid the amortization for the month of March
2020. However, she defaulted in payments for April and May 2020. Because
the country was placed under the state of national emergency and a law has
been enacted granting a 30-day grace period to borrowers, Judith is

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absolved from paying penalties due to late payment of loans up to the 30day
grace period from May 17, 2020.

Requisites of a fortuitous event:

Whether an act of man or an act of God, to constitute a fortuitous event, it is essential that:

1. The event must be independent of the human will or at least of the obligor’s will
2. The event could not be foreseen (unforeseeable), or if it could be foreseen, must
have been impossible to avoid (unavoidable)
3. The event must be of such a character as to render it impossible for the obligor to
comply with his obligation in a normal manner; and
4. The obligor must be free from any participation in, or the aggravation of the injury
to the obligee.

The absence of any of the above requisites (all of which must be proved) would prevent the
obligor from being exempt from liability.

General Rule
There is no liability in case of a fortuitous event.

Exceptions — The debtor is responsible for a fortuitous event in the following cases:

3. When expressly specified by law

a. When the thing is lost due to the obligor’s fraud, negligence, delay or
contravention of the tenor of the obligation (Art. 1170)
b. When the debtor delays (Art. 1165 par. 3)
c. When the debtor has promised to deliver the same thing to two or more
persons who do not have the same interests (Art. 1165 par. 3)
d. The debt of a thing certain and determinate proceeds from a criminal
offense, unless the thing having been offered by the debtor to the
person who should receive it, the latter refused without justification to
accept it. (Art. 1268.)
4. When liability is specified by stipulation
5. When the nature of the obligations requires assumption of risk (Art. 1174)
6. When debtor is guilty of concurrent or contributory fault or negligence (Art.1170)

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7. A possessor in bad faith shall be liable for deterioration or loss in every case, even if
caused by a fortuitous event. (Art.552)
8. When the object is a generic thing because the genus never perishes.

A fortuitous effect will not affect a generic obligation, because a generic object can
always be replaced by another. It will, however, affect a determinate/specific
obligation because the object of the obligation is specified but the exceptions must
still be observed.

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