COMPREHENSIVE REVIEWER

OBLIGATION AND CONTRACTS

(BAM 026)

EXTINGUISHMENT OF OBLIGATIONS:
LOSS OF THE THING DUE

GROUP 4 (BSA2-02)
Leader:
Gerilee Joy Urgelles
Members:
Abegail Faustino
Gertrude Luisse Gomez
Julyana Rovic Cua
Ricka Denzel Jane Poquiz
Danica Bea Castronuevo
Raiza Jean Cave
Jessica Paula Gacutan
 Extinguishment of Obligation
Section 2: Loss of the Thing Due

Article 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 event, 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)

Specific or Determinate thing

A thing is determinate when it is particularly designated or physically segregated from
all other of the same class.
If a specific or determined thing is lost or destroyed without the debtor's fault and
before he has incurred delay, the obligation to provide the thing is extinguished.
However, there are a few instances where this rule does not apply:

1. If the debtor is liable for a fortuitous event, the loss of the thing does not
extinguish the obligation.
2. If the nature of the obligation calls for the assumption of risk, losing the thing
does not make the obligation extinguish.
3. If the debtor has already incurred a delay, the loss of the item does not
extinguish the obligation.

Kinds of Loss

Physical Loss – when a thing perishes.

Legal Loss – when a thing goes out of commerce or when a thing becomes illegal.
Civil Loss – when a thing disappears in such a way that its existence is unknown, or
even if known, it cannot be recovered.

General Rule: The Obligation to deliver a determinate thing is extinguished if it should be

lost or destroyed.
Exceptions:
1.When the law so provides.
2.When the stipulation so provides.
3.When the nature of the obligation requires the assumption of risk.
4.When the loss of the thing occurs with the fault of the debtor.
5.When the loss of the thing occurs after the debtor has incurred in delay.
6. When the debtor promised to deliver the same thing to two or more persons who do not
have the same interest.
7.When the obligation is to deliver a generic thing; and
8.When the obligation is to deliver a specific thing arises from a crime.

Illustration:
Bea promised to deliver to Abegail a particular bicycle on September 20, 2021. But
the bicycle was lost on September 15, 2021, because of a typhoon.Take note that the
loss was not Bea's fault and that she is not in delay.The obligation of Bea is
extinguished.

ARTICLE 1263. In an obligation to deliver a generic thing, the loss or destruction of

anything of the same kind does not extinguish the obligation.

Generic or Indeterminate thing

The object thereof is designated merely by its class or genus without any particular
designation or physical segregation from all others of the same class.
The loss or destruction of a generic thing does not extinguish the obligation, even
without the debtor’s fault and before he has incurred in delay. This rule is based on
the principle that the “genus of a thing can never perish” (Genus nunquan perit).
Illustration:
Denzel bound herself to deliver fifty sacks of rice to Rovic. However, all of these
were lost through a fortuitous event. Is Ricka still liable?Yes, because the object of the
obligation are generic things.

Article 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.

General Rule: Partial loss of the object of the obligation does not extinguish the obligation.
Exception: When the courts determine that the partial loss of the object of the obligation is
so important as to extinguish the obligation.

Partial Loss
When only a portion of the thing is lost or destroyed or when it suffers depreciation or
deterioration. Partial loss is the equivalent of difficulty of performance in obligations
to do. (Art. 1267.)
In case of partial loss, the court is given the discretion, in case of disagreement
between the parties, to determine whether under the circumstances it is so
important in relation to the whole as to extinguish the obligation. In other words, the
court will decide whether the partial loss is such as to be equivalent to a complete or
total loss.

When is partial loss considered total loss?

-If loss is so significant.
Example: Loss of the body of a ballpen.
When the loss is so mate and the remaining portion of the object is insignificant or
immaterial, partial loss of the thing may be considered as total.

Article 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 to the contrary, and without
prejudice to the provisions of Article 1165. This presumption does not apply in case of
earthquake, flood, storm, or others natural calamity.

The provision creates a rebuttable presumption of fault whenever the thing to be

given is lost in the debtor’s possession. This is a legitimate assumption because the
debtor, who has custody and care of the thing, she/he can simply explain the
circumstances of the loss. While the creditor is under no obligation to demonstrate
that the debtor was at fault.
According to the third paragraph of Article 1165, 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 affected the
delivery.
 The presumption of fault does not apply in the case of natural disasters. It is more
likely that the debtor is not at fault. As a result, assuming negligence on his behalf is
unreasonable.

General rule: If 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 to the contrary.
Exceptions: The general rule does not apply in case of earthquake, flood, storm, or other
natural calamity.
Illustration:
Jay borrowed the motorcycle of Jake. However, on the due date of the obligation, Jay
told Jake that the motorcycle was stolen and that there is no fault at him.There is not
enough proof to the contrary to extinguish the obligation, thus it was not enough to
extinguish obligation. It is presumed that the loss was due to his fault. Thus, he is
responsible for any fortuitous event 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.

This article talks about the effect of loss or impossibility of the performance in the
personal obligation. The impossibility should also exist after the constitution of the
obligation. Because if the impossibility exists before, then there should be no obligation
at all.
Obligation Impossibility Without the fault of the debtor The
obligation is extinguished.
Legal Impossibility
Arises when the acts stipulated to be performed is subsequently prohibited by law.
Physical Impossibility
Arises when the act is supposed to be performed by the obligor due to reasons
subsequent to the execution of the contract, could not be physically performed by
the obligor.
Illustration:
X obliged himself to build B a house in a particular area, but after a month the area
has been declared by law as residential zones so legally it is impossible.
Article 1267. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in
part.

This article is another exemption to the obligatory force of a valid or forceable

contract. (This article is a doctrine of unforeseen events).This article states that the
performance of the service becomes so different as to be manifested beyond
contemplation of both parties.The court is authorized to release the obligor in whole
or in part.

Illustration:
A has a duty to construct a road but an earthquake happened to the point it changes
the condition of land. The construction of it is possible but very dangerous to the
drive a vehicle after it is done. In this case, both parties never expected of the said
earthquake. So, the obligor must be release but one should ask for release.

Article 1268. When the debt of a thing certain and determinate proceeds from a criminal
offense, the debtor shall not be exempted from the payment of its price, whatever may be
the cause for the loss, unless the thing having been offered by him to the person who should
receive it, the latter refused without jurisdiction to accept it. (1185)

The provision only applies to a real obligation, to deliver a specific thing, that
emerged as a result of the debtor's commission of a criminal violation. If the thing is
lost for any reason, the debtor must pay the item's value.
If the obligor offered or tendered delivery of the object to the obligee, but the latter
unjustifiably refused to accept it, and the thing went missing, the obligor is no longer
accountable because the latter is in mora accipiendi (delay on the part of creditor).

General rule: The debtor shall not be exempted from the payment of the price of the
determinate thing, whatever may be the cause for the loss.Thus, even if the cause for the loss
of the determinate thing is through fortuitous event.
Exemption: The thing having been offered by the debtor to the person who should receive it,
the creditor, refused without justification to accept it.
Illustration:
D stole C’s watch, D has the obligation to return it to C.The obligation of D arises
from an act punishable by law. Even if the watch is lost without the fault of D, he
shall be liable for the payment of the price of the watch.The exception to the rule is
when C is in mora accipiendi (delay of the creditor). In either case, D is liable if the
loss is due to his fault.

Article 1269. The obligation having been extinguished by the loss of the thing; the creditor
shall have all the rights of action which the debtor may have against third persons by reason
of the loss. (1186)

Right of action – The right to bring specific case to court.

Under this article, the creditor is given the right to proceed against the third persons
who is responsible for the loss, there is no need for an assignment by the debtor.
The right of action of the debtor are transferred to the creditor from the moment the
obligation is extinguished by the operation of the law to protect the interest of the
creditor by the reason of loss.

If the specific thing had/has been loss then the obligation is extinguished and if the
loss of the specific thing is due to the to the debtor, then the debtor is reliable for the
damages, if it is due to fortuitous events, it is extinguished at all.

If the generic thing had/has been loss even if it is because of fortuitous event or by
fault there is still have an obligation to deliver that exact same thing.

Illustration:
B promised to deliver a Ferrari car to C. The car was lost due to the fault of a third
personY. C has a right to recover the price of the car plus damages fromY.