Nature and Effect of Obligations

Articles 1163-1178

Coverage of Discussion:
•Determinate VS. Indeterminate Thing
•Obligations of the Debtor
•Remedies of the Creditor
•Circumstances Affecting Obligations
•Fortuitous events
•Presumptions
•Remedies of creditor to enforce payment of his claims
•Rules on transmissibility of rights and exceptions
DETERMINATE THING?
⚫Other term specific thing
⚫A thing which is particularly designated or
physically segregated from all of the same class.

In tagalog:
In tagalog: Mag-isa Katangiang
Kanya Lamang
Examples:
2015 Toyota Altis with engine no. 123456
My only wristwatch
The house located at 234 Moret St., Sampaloc
Manila
My horse name “Black Stallion”
INDETERMINATE THING?
⚫Other term generic thing
⚫A thing which refers only to a class or
genus to which it pertains and cannot be
pointed out with particularity.
Examples:
A horse
A car
P 10,000.00
Obligations of a Debtor
❖Obligations to give determinate things
✔To take 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.
❑Diligence of a good father of a family – means the
ordinary care that an average person exercises in
taking care of his property.
✔Specific performance/To deliver the thing –
This involves placing the thing in the
possession or control of the creditor either
actually or constructively.
❑When obligation to deliver the thing arise?
Pure Obligation – arises from perfection
Subject to supensive condition/period – upon the
fulfillment of the condition.
✔To deliver all accessions and accessories of the
thing even though they may have bot been
mentioned.
▪ Accessions – fruits of a thing or anything produced by
it, attached or incorporated thereto as an addition or
improvement.
Kinds of Fruits (NIC):
1. Natural Fruits – they are spontaneous products of the
soil and the young and other products of animals
2. Industrial Fruits – they refer to those produced by land
of any kind through cultivation or labor.
3. Civil Fruits – they refer to fruits which are the result
of a juridical relation. E.g rent of a bldg, annuities of
life insurance, interest in a contract of loan.
▪ Accessories – things joined to the principal thing for its
Better use, Embelishment or Completion (BEC).
▪ When COA has a right to the fruits of a determinate thing?
- The creditor (COA) shall be entitled to the fruits of
the thing at the time obligation to deliver the principal
thing arises. The creditor (COA) however, will acquire real
right or ownership over the fruit only after the same has
been delivered to him.
▪ Rights of the Creditor
▪ Personal right – this is a right that may be enforced by one another,
such as the right of the creditor to demand the delivery of the thing
and its fruits from the debtor. (jus in personam)
▪ Real right – this refers to the right or power over a specific thing,
such as possession or ownership, which is a right enforceable against
the whole world. This is the right acquired by the creditor over the
thing and its fruits when they have been delivered to him. (jus in re)
 ✔To pay damages in case of breach of the
obligation by reason of delay, fraud,
negligence or contravention of the tenor
thereof.
❖Obligations to give indeterminate things
✔To deliver the thing which is neither of
superior nor inferior quality.
✔To pay damages in case of breach of the
obligation by reason of delay, fraud,
negligence or contravention of the tenor
thereof.
 Remedies of the Creditor
⚫If the OPD fails to perform his obligation to
deliver a determinate thing.
a) To compel the debtor to make the delivery
b) To demand damages from the debtor.
⚫If the OPD fails to perform his obligation to
deliver a generic thing.
a) To ask that the obligation be complied with at the
expense of the OPD.
b) To demand damages from the debtor.
⚫If the OPD fails to perform his obligationin
obligations to do.
a) If the debtor fails to perform the obligation or
performs it but contravenes the tenor thereof –
1. Creditor may have the obligation executed at the expense
of the debtor
2. He may also demand damages from the debtor.
b) If the debtor performs the obligation but does it
poorly
1. Creditor may have the same be undone at debtor’s
expense
2. Creditor may also demand damages from the debtor
✔ Involuntary Servitude
⚫If the debtor does what has been forbidden him
b) The creditor may demand that what has been done
be undone.
c) He may also demand damages from the debtor.
Circumstances Affecting Obligations
⚫Rule: A person in the performance of his
obligations will be liable to pay DAMAGES
in case he will be guilty of: Delay, Fraud,
Negligence or Contravention of the tenor of
the obligation (breach of obligation)
⚫Damages – refer to the harm done and the
sum of money that may be recovered in
reparation for the harm done.
⚫Injury – refers to the wrongful, unlawful or
tortuous act which causes loss or harm to
another.
Kinds of damages (MENTAL)
⚫MORAL
⚫EXEMPLARY
⚫NOMINAL
⚫TEMPERATE
⚫ACTUAL
⚫LIQUIDATED
Delay/Default (Mora)
⚫Concept: Delay or defult or mora is the non-
fulfillment of an obligation with respect to
time.
⚫Kinds of Mora:
◦ Mora Solvendi – Delay on the part of Debtor
● Ex re – delay in real obligations
● Ex persona – delay in personal obligations
◦ Mora Accipiendi – Delay on the part of the
Creditor
◦ Compensatio Morae – Delay in reciprocal
obligations, i.e.,both parties are in default. Here, it
is as if there is no delay.
⚫When debtor incurs delay in obligation to give or
to do?
◦ General Rule: The debtor incurs delay from the time
the creditor demands fulfillment of the obligation
(either judicially or extra-judicially) but the debtor
fails to comply with such demand (no demand, no
delay, as a rule)
◦ Requisites:
1. That the obligation be demandable and already liquidated.
2. The debtor does not perform the obligation.
3. The creditor demands the performance either judicially or
extra-judicially.
4. The debtor fails to comply with such demand.
Example:
D owes C P 50,000. The obligation is due on May 15. if D
does not pay on May 15, he is not yet in delay. But if C
makes a demand on him to pay on that date or within a
reasonable time thereafter and D does not comply, then D
will be in delay.
⚫ Exceptions: Delay will exist even without demand in the following cases:
◦ When the law so provides
● Thus, where the law provides for the payment of penalty if the obligation
is not performed on due date (such as payment of taxes), then demand
shall not be necessary.
◦ When the obligations expressly so declares.
● No demand is necessary such as lease contract provides that “The rental
shall be paid by the lessee within the first five days of the month in
advance without need of demand.
◦ When time is of the essence of the contract
● Where a rent-a-car company is obliged to provide for the bridal car during
a wedding at a particular date, time and place, the said company is liable
if it fails to perform the said obligation notwithstanding the absence of
demand since time was a controlling motive for the establishment of the
contract.
◦ When demand would be useless
● The debtor will be in delay even without demand from the creditor if the
thing he is obliged to deliver has been destroyed through his fault or he
has delivered it to another person.
◦ In reciprocal Obligation, where the obligations arise out of the same cause
and must be fulfilled at the same time, from the moment one of the parties
fulfill his obligation, delay by the other begins notwithstanding the absence
of demand.
Notes:
⚫In the first two of the previous slide, it is
not sufficient that the law or obligation
fixes a date for performance; it must
further state expressly that after the period
lapses, default will commence.
⚫There is no delay in an obligation not to
do as one cannot be in delay for not doing
something.
Fraud (dolo)
⚫ Concept: the deliberate or intentional evasion by the debtor of
the normal compliance of his obligation. Under 1170, this
actually refers to the fraud committed by the debtor at the time
of the perfomance of his obligation.
⚫Kinds of Fraud:
⚫Fraud in obtaining consent:
◦ Dolo Causante – causal fraud, vitiating consent
● Refers to fraud used to obtain the consent of the other party
that makes the contract voidable.
Example:
B bought a ring from S who told him that the ring was
embellished with diamond. However, S knew all along
that the embellishment was not diamond but ordinary
glass. B here gave his consent because of the fraud
employed by S; hence, the contract is voidable.
o Dolo Incidente – incidental fraud, giving rise to the
right to demand damages
o Refers to fraud without which consent would still be given but
the person giving it would not have agreed but may agree on
different terms. The person employing fraud will be liable for
damages
Example:
C hired D to teach in the school of C. D placed in his
application that he had earned units in MBA.
However, D had actually dropped the subjects for the
said units. If C would have hired D even if D did not
complete the said units but that would have given a
lower salary to D, the fraud committed by D was only
incidental but it would entitle C to recover damages.
⚫Fraud in the performance of obligation
◦ This is the deliberate act of evading fulfillment of
an of an obligation in a normal manner.
◦ This presupposes an existing obligation; hence,
the fraud has no effect on the validity of the
contract since it was employed after perfection.
Example:
B ordered 10 bags of powder soap from S who
agreed to deliver the same after 2 days. On due
date, S deliverd 10 bags of powder soap which he
mixed with soap. This is fraud in the performance
of an obligation which entitles B to recover
damages. The fraud, however, does not have any
effect on the validity of the contract.
Negligence (Culpa)
⚫Concept: Consists in the omission of that
diligence which is required by the nature
of the obligation corresponding to the
circumstances of the person, of the time
and of the place.
⚫Tests: Diligence of a good father of a
family – Standard Care (silent)
⚫Kinds:
a) Culpa Contractual (Contractual Negligence) – this is
negligence in the performance of a contract. e.g., the
negligence committed by the driver of a bus when a passenger
is hurt during a trip because there is here a breach of contract
of carriage.
b) Culpa Aquiliana (Civil Negligence or tort or quasi-delict or
culpa extra contractual) – these are acts or omission that
cause damage to another, there being no contractual relation
between the parties. E.g,. If a pedestrian is hit by a bus
through the reckless driving of the driver, the latter’s
negligence is not the negligence of the owner.
c) Culpa Criminal (Criminal Negligence) – this is negligence
that results in the commission of a crime.
 Fraud
•Deliberate intention to cause
damage or injury
•Waiver of the liability for future
fraud – VOID
•Must be clearly proven
•Liability cannot be mitigated or
reduced by courts
Negligence
•No such intention exists
•Waiver of future negligence may
be allowed in certain cases
•Can be presumed from the
viloation of a contractual obligation
•Liability may be reduced
according to the circumstances.
Fortuitous Events
⚫ Concept: events that cannot be foreseen or although
foreseeable are invetable.
⚫ 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.
⚫ Essential requisites:
1. The cause must be independent of the debtor’s will.
2. There must be impossibility of foreseeing the event or of
avoiding it even if it can be foreseen.
3. The occurence of the event must be of such character as
to render it impossible for the debtor to perform his
obligation in a normal manner.
Liability of Fortuitous Events
⚫ General rule: No person shall be liable for fortuitous
events, i.e., his obligation will be extinguished.
⚫ Exceptions: (SNL)
1. When expressly declared by stipulation
2. When the nature of the obligation requires the
assumption of risk.
3. When expressly declared by law.
a) When the debtor has incurred in delay or is guilty of fraud,
negligence or contravention of tenor of the obligation
b) When the debtor has promised to deliver the same thing to 2 or
more different persons who do not have the same interest
c) When the thing to be delivered is indeterminate/generic
d) When the obligation to deliver a specific thing arises from the
crime
e) When the bailee in commodatum allowed a third person to use
the thing borrowed
Presumptions or 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 the presumption that such prior installments
have been paid.
⚫Note: the above presumptions are disputable;
hence, they may be rebutted by the creditor with
contrary evidence. If the presumption is
conclusive, then no evidence to the contrary may
be admitted.
 The creditor has the following remedies to
satisfy his claims against debtor
A. Exact fulfillment/specific performance
B. Pursue the leviable properties of the
debtor
C. Accion subrogatoria – exercise all the
rights and actions of the debtor except
those which are inherent in his person
D. Accion pauliana – rescind contracts
entered into by the debtor to defraud the
creditor
Rule on transmissibility of rights and
exceptions thereto
⚫General Rule: all the 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