CHAPTER 2 (c) Factors to be considered – the

diligence required necessarily

NATURE AND EFFECT OF
depends upon the nature of the
OBLIGATIONS
obligation and corresponds with
Article 1163. Every person obliged to the circumstances of the person,
give something is also obliged to take of the time, and of the place.
care of it with the proper diligence of a (d) Reason for the debtor’s obligation
good father of a family, unless the law (2) Deliver the fruit of the thing
or the stipulation of the parties requires (3) Deliver the accessions and
another standard of care. accessories
(4) Deliver the thing itself
Specific or Determinate designated or
(5) Answer for damages in case of non-
physically segregated others of the same fulfillment or breach
class.
Article 1164. The creditor has a right to
Generic or Indeterminate refers only to the fruits of the thing from the time the
a class or genus to which it pertains and obligation to deliver it arises. However,
cannot be pointed out with particularity.
he shall acquire no real right over it
Illustration: until the same has been delivered to him.

If A’s obligation is to deliver to B one of Different kinds of fruits

his cars, the object refers to a class which Natural Fruits are the spontaneous
in itself is determinate. products of the soil, and the young and
If A’s obligation is to deliver to B A 2002 other products of animals.
Toyota car, A can deliver any car as long Industrial Fruits are those produced by
as it is a 2002 Toyota car. lands of any kind through cultivation or
Duties of Debtor in Obligation to give a labor.
determinate thing Civil Fruits are those derived by virtue
(1) Preserve the thing – the obligor has of a juridical relation.
the incidental duty to take care of the Illustration:
thing with the diligence of a good
father of a family pending delivery. If X sold his land to Y, All fruits of the
(a) Diligence of a good father of a land (trees, pants, etc.) is entitled to Y
family – ordinary care or that from the time the obligation to make
diligence which an average delivery arises.
person exercises over his own
2 kinds of right
property.
(b) Another standard of care – (1) Personal Right is the right or power
extraordinary care ( utmost of a person to demand from another,
diligence of very cautious as a definite passive subject, the
persons, with a due regard for all fulfillment of the latter’s obligation to
the circumstances). give, to do, or not to do.
(2) Real Right is the right or interest of a Illustration:
person over a specific thing, without
X sells his piano to Z for P20,000. If
a definite passive subject against
X refuses to comply with his
whom the right may be personally
obligation to deliver the piano, Z can
enforced.
bring an action for fulfillment or
The meaning of the phrase “ he shall recession of the obligation with the
acquire no real right over it until the payment of damages in either case.
same has been delivered to him” is that
(2) Generic real obligation on the other
the creditor does not become the owner
hand, can be performed by a third
until the specific thing has been delivered
person since the object is expressed
to him.
only according to its family or genus
Article 1165. When what is to be
Illustration:
delivered is a determinate thing, the
creditor, in addition to the right A oblige himself to deliver to B 10
granted him by Article 1170, may galloons of oil on September 25 for
compel the debtor to make the P30,000.
delivery.
If A does not comply with his
If the thing is indeterminate or generic, he obligation, B may buy oil from C, a
may ask that the obligation be complied third person. If B paid P35,000, he
with at the expense of the debtor. may recover P5,000 from A.
If the obligor delays, or has promised to Delay on the other hand is discussed
deliver the same thing to two or more in Article 1169, and fortuitous events
persons who do not have the same in Article 1174.
interest, he shall be responsible for
fortuitous event until he has effected the Article 1166. The obligation to give a
delivery. determinate thing includes that of delivering
all its accessions and accessories, even
Remedies of creditor in real obligation though they may not have been mentioned.
(1) Specific real obligation, the creditor ACCESSIONS – fruits of the thing or
may exercise the following remedies additions to or improvements upon the
in case the debtor fails to comply with principal. (e.g., House on Land)
his obligation:
(a) Demand specific performance or ACCESSORIES – things included with the
fulfillment of the obligation with principal for the latter’s embellishment,
a right to indemnity for damages better use, or completion (e.g., bow of a
(b) Demand recession or cancellation violin)
of the obligation also with a right
to recover damages
(c) Demand payment for damages
only
NOTE: Accessions are not necessary to the  Obligation may be performed
principal while accessories are necessary by the creditor or by another at
because without it the principal cannot be use the expense of the debtor
or complete.  Creditor may recover damages
(2) Performance was contrary to the
Rights of creditor to accessions and
terms agreed upon.
accessories. All accessions and accessories
 Ordered (by the court) that it be
are considered included in the obligation to
undone if it is still possible to
deliver a determinate thing although they
undo what was done
may not have been mentioned. In order that
(3) Performance was done in a poor
they will be excluded, there must be a
manner.
stipulation to that effect.
 Ordered (by the court) that it be
Accession as a right. The right pertaining to undone if it is still possible to
the owner of a thing over its products and undo what was done
whatever is incorporated or attached thereto,
Illustration:
either naturally or artificially.
Entity A bounds himself to install tiles for
Illustration:
Entity B’s house. Supposed that Entity A
Entity A bounds himself to deliver his only failed to do his obligation or the performed it
Husky dog to Entity B. A day after the poorly, then Entity B or another party could
agreement, the Husky got pregnant. In perform it at the expense of Entity A or it
ordinance to Art. 1166, the husky’s puppies could be undone (ordered by the court).
are Entity B’s right since the obligation to
Article 1168. When the obligation consists
deliver the dog aroused before the husky got
in not doing, and the obligor does what has
pregnant.
been forbidden him, it shall also be undone
Article 1167. If a person obliged to do at his expense.
something fails to do it, the same shall be
Illustration:
executed at his cost.
Entity A leased his house to Entity B. Both
This same rule shall be observed if he does
entities stipulated that Entity B should not
it in contravention of the tenor of the
reconstruct a part of the Entity A’s house. If
obligation. Furthermore, it may be decreed
Entity B reconstructs a part of the house, the
that what has been poorly done be undone.
same shall be undone at his expense.
NOTE: PERFORMANCE BY A THIRD PERSON Article 1169. Those obliged to deliver or to
can be done if the thing to be delivered or to do something incur a delay from the time
do is a generic thing, and is non licet when it the obligee judicially or extra-judicially
is a specific thing. demands from them the fulfillment of their
Situations contemplated: obligation.

(1) Debtor’s failure to perform an However, the demand by the creditor shall
obligation not be necessary in order that delay may
exist:
 (1) When the obligation or the law Illustration:
expressly so declares; or
Entity A obliged himself to construct
(2) When from the nature of the
Entity B’s store on July 1.
contract, time us the essence and
motivating factor for its If by July 1 Entity A does not start the
establishment; construction in absence of demand from
(3) When demand would be useless; Entity B, then it is an ordinary delay.
In reciprocal obligations, neither party If by July 10 Entity A failed to start the
incurs in delay if the other does not comply construction at the demand of Entity B,
or is not ready to comply in a proper manner then delay is on the part of Entity A.
with what is incumbent upon him. From the
moment one of the parties fulfills his Article 1170. Those who in the performance
of their obligations are guilty of fraud,
obligation, delay by the other begins.
negligence, or delay, and those who in any
ORDINARY DELAY – merely the failure manner contravene the tenor thereof, are
to perform an obligation on time. liable for damages.

LEGAL DELAY – the failure to perform an GENERALLY

obligation on time which failure, constitutes - Gives the grounds for liability to entitle the
a breach of the obligation. plaintiff to recover damages
- Contemplates that the obligation was
Kinds of delay (mora): performed but the obligor is guilty of breach
(1) Mora solvendi – failure on the part of thereof
the debtor - Applies to all kinds of voluntary obligations
(2) Mora accipiendi – failure on the part GROUNDS
of the creditor (to FRAUD (dolo) - Deliberate intentional evasion
of the faithful fulfilment of an
receive the performance of the obligation
obligation) - Refers to incidental fraud
(3) Compensatio morae – delay of - Implies malice or dishonesty
- Civil fraud which gives rise to
obligors in reciprocal obligations civil liability
(i.e., delay of the debtor cancels the
delay of the creditor) NEGLIGENCE (culpa Any voluntary act or omission of
or fault) diligence, there being no malice,
which prevents the normal
NOTE: In an obligation not to do, non- fulfilment of an obligation
fulfillment may take place but delay is
impossible for the debtor fulfills by not doing DELAY (mora) Default or tardiness in the
performance of obligation after
what has been forbidden him.
it has been due and demandable
Requisites of delay (mora): CONTRAVENTION Violation of terms and
OF TERMS OF conditions stipulated in the
(1) Failure to perform OBLIGATION obligation this must not be due
(2) Demand by the creditor (violation) to a fortuitous event.
(3) Failure to comply such demand (e.g. unilateral act of terminating
the contract without informing
the other party)
 Article 1171. Responsibility arising from
fraud is demandable in all obligations. Any Article 1172. Responsibility arising from
waiver of an action for future fraud is void. negligence in the performance of every kind
of obligation is also demandable, but such
GENERALLY liability may be regulated by the courts,
- Refers to incidental fraud employed in according to circumstances.
fulfilment of an obligation
- Courts cannot mitigate or reduce the GENERALLY
damages to be awarded because fraud is - Courts have a wide discretion in fixing the
serious and evil measure because:
a) Negligence depends upon the
WAIVER circumstances of a case – good or
Waiver of To allow such waiver will
necessarily render the obligatory
bad faith of the obligor may be
future fraud is
void force of contracts illusory. considered as well as the conduct or
misconduct of the obligee.
Waiver of past The law does not prohibit waiver of b) It is not as serious as fraud.
fraud is valid an action for damages based on
fraud already committed.
Negligence – lack of foresight or knowledge
Imprudence – lack of skill or precaution
FRAUD
INCIDENTAL - Committed in the
TEST OF NEGLIGENCE
FRAUD performance of an Did the defendant, in doing the alleged
(applicable obligation already existing negligent act, use the reasonable care and
provisions are Arts. because of a contract caution which an ordinary prudent man
1170 & 1344) - Incidental fraud obliges would have used in the same situation?
the person employing it to
pay for damages.
KINDS OF NEGLIGENCE ACCORDING TO
CAUSAL FRAUD - Employed in the execution
SOURCE OF OBLIGATION
(Art. 1338) of contract in order to
secure consent Culpa Contractual
- Remedy is annulment Culpa Aquiliana
Basis (Breach of
because of vitiation of (Quasi-delict)
contract)
consent DEFINITION Negligence Negligence in the
Illustration: between parties performance of
not so related contractual
You obliged yourself to deliver 100 kg of by pre-existing obligation
premium sugar. Before actual delivery, you contract
decided to mix 50 kg of low quality sugar to NATURE OF Direct, substantive Incidental to the
NEGLIGENCE and independent performance of the
cut cost. If the buyer bought the pack based obligation.
on false representation of its labels, it is GOOD Complete and Not complete and
causal fraud. Without the fraud, the buyer FATHER proper defense proper defense in
OF THE (parents, guardian, the selection of
would not have given her consent to the FAMILY employers) employees
contract. She has the right to have the DEFENSE
contract annulled. If the fraud employed to PRESUMPTION No presumption. There is
OF Injured party must presumption.
get the buyer’s consent was not the principal NEGLIGENCE prove negligence Defendant must
inducement that led the buyer to enter into the of the defendant. prove that there was
contract, the fraud is also incidental under no negligence in the
carrying out of the
Article 1344 and will likewise give rise only terms of the
to an action for damages. contract.
 Culpa Culpa Culpa
Aquiliana Contractual Criminal
Object/source Negligence Breach of Criminal This provision provides for a negative
of liability contract due to negligence definition of “proper diligence of a good
negligence father of a family”
Evidence Preponderance Preponderance Proof
of evidence of evidence beyond
reasonable GENERALLY
Existence of No Yes No - This provision defines fault and
pre-existing
contract
negligence
required? - Test to determine negligence (Art.
Who may take Asta, Yuno Yuno only Asta, 1172)
action? Yuno
Action taken Yami, Black Black Bulls Yami
against? Bulls Inc., or Inc FACTORS
both - Nature of the obligation
Defense of Exercise Exercise Black
diligence in diligence in Bulls Inc
- Circumstances of the person
Black Bulls
Incorporated the selection the selection is - Circumstances of time
and and subsidiary - Circumstances of the place
supervision of supervision of liable if
the driver is the driver is Yami FRAUD NEGLIGENCE
available unavailable cannot pay
There is deliberate There is no deliberate
damages.
intention to cause intention to cause damage.
damage.
Liability cannot be Liability may be mitigated.
IIlustration: mitigated.
Waiver for future Waiver for future
Yami is the driver of a carefully driven bus owned fraud is void. negligence may be allowed
by the Black Bulls Incorporated. While traversing in certain cases:
a highway, Yami didn’t notice Asta (a pedestrian)
while crossing a pedestrian lane. Since the bus’s FRAUD distinguished from
speed is not fast, Asts suffered serious but not NEGLIGENCE
fatal injuries. Yuno, a passenger of the bus
likewise suffered serious but not fatal injuries. DILIGENCE – the attention and care
required of a person in a given situation and
What action can Asta and Yuno take against Yami is opposite of negligence.
and/or Black Bulls incorporated? NEGLIGENCE – consists in the omission
of that diligence which is required by the
Article 1173. The fault or negligence of the nature of the particular obligation and
obligor consists in the omission of that corresponds with the circumstances of the
diligence which is required by the nature of persons, of the time, and of the place.
the obligation and corresponds with the
circumstances of the persons, of the time KINDS of DILIGENCE:
and of the place... If the law or contract does
not state the diligence which is to be 1. DILIGENCE OF A GOOD FATHER –
observed in the performance, that which is a good father does not abandon his family,
expected if a good father of a family shall be he is always ready to provide and protect his
required. family; ordinary care which an average and
reasonably prudent man would do.
2. Diligence required by the law governing
the particular obligation
3. Diligence stipulated by the parties
Article 1174. Except in cases expressly Rules as to liability in case of fortuitous
specified by the law, or when it is otherwise event:
declared by stipulation, or when the nature 1. When expressly specified by law
of the obligation requires the assumption of 2. When declared by stipulation
risk, no person shall be responsible for those 3. When the nature of the obligation
events which could not be foreseen, or requires the assumption of risk
which, though foreseen, were inevitable. Effect of obligor’s negligence upon his
(1105a) liability:
1. Negligence contributed to the loss or
Fortuitous event- extraordinary event which damage
cannot be foreseen, or which, though 2. Negligence not contributory to the
foreseen, is inevitable loss or damage
Fortuitous event distinguished from force Illustration:
majeure: Danica is obliged to deliver a specific
 Acts of man- an event independent of cat to Jan on November 9. Danica did not
the will of the obligor but not of other deliver the horse on the said date. If, on
human wills, example, war, fire, November 10, the cat died because it was
robbery, murder, insurrection hit by lightning, Danica is not liable if no
 Acts of God- events which are totally demand was made by Jan. Her obligation
independent of the will of every was extinguished. If Jan made a demand
human being. Also called force to Danica before the cat died, Danica is
majeure. Example, earthquake, flood, liable for damages because he is guilty of
rain, shipwreck, lightning, eruption of (legal) delay.
volcano
Kinds of fortuitous events: Article 1175. Usurious transactions shall be
 Ordinary fortuitous events- those governed by special laws. (n)
events which are common and which
the contracting parties could Simple loan or mutuum- contract whereby
reasonably foresee one of the parties delivers to another money
 Extraordinary fortuitous events- or other consumable thing, upon the
those events which are uncommon condition that the same amount of the same
and which the contracting parties kind and quality shall be paid
could not have reasonably foreseen Usury- contracting for or receiving interest in
Requisites of a fortuitous event: excess of the amount allowed by law for the
 Event must be independent of the loan
human will
 Event could not be foreseen or if it Kinds of interest:
could be foreseen, must have been 1. Simple interest
impossible to avoid event must be of 2. Compound interest
such a character as to render it 3. Legal interest
impossible for the obligor to comply 4. Lawful interest
with his obligation in a normal 5. Unlawful interest
manner
 Obligor must be free from any
participation in, or the aggravation of
the injury to the oblige
Interest rules: contradicted or rebutted by presenting
1. Legal rate. — 12% per annum. proof
2. Maximum rate: When presumptions in Article 1176 do not
a. 12% per annum- the loan is apply:
secured in whole or in part by a. With reservation as to interest
a mortgage b. Receipt for a part of principal
b. 14% per annum- the loan is c. Receipt without indication of
not secured as provided above particular installment paid
c. The rate prescribed by the d. Payment of taxes
Monetary Board of the e. Non-payment proven
Central Bank Illustration:
Requisites for recovery of monetary Mr. Dan borrowed the amount of Php
interest: 5000.00 from Ms. Niky with the interest
1. Payment of interest must be expressly rate of 5% per month. After three months,
stipulated Dan paid 5000 to Niky as payment for the
2. Agreement must be in writing principal amount borrowed. Niky
3. Interest must be lawful received the amount without making any
Liability for legal interest: reservation as to the collection of
1. Loan or forbearance of money interest.
2. Other than loan or forbearance of
money Presumption: As if Dan paid the
3. Final and executory judgment interest before the principal.
awarding a sum of money

Article1176. The receipt of the principal by Article 1177. The creditors, after having
the creditor, without reservation with pursued the property in possession of the
respect to the interest, shall give rise to the debtor to satisfy their claims, may exercise
presumption that said interest has been all the rights and bring all the actions of
paid. the latter for the same purpose, save those
which are inherent in his person; they may
The receipt of a later installment of also impugn the acts which the debtor may
a debt without reservation as to prior have done to defraud them. (1111)
installments, shall likewise raise the
presumption that such installments have
been paid. (1110a) Remedies available to creditors for the
satisfaction of their claims:
Presumption- the inference of a fact not  Exact fulfillment (specific
actually known arising from its usual performance) with the right to
connection with another which is known or damages
proved  Pursue the leviable or not exempt
Kinds of presumption: from attachment under the law
1. Conclusive presumption- one which property of the debtor
cannot be contradicted  Exercise all the rights (like the right
2. Disputable (or rebuttable) to redeem) and bring all the actions of
presumption- one which can be the debtor
  Ask the court to rescind or impugn reason that the option was only given to
acts or contracts which the debtor Yeol and not to Kai. He (Chan) also
may have done to defraud him reasoned that Yeol can’t assign anyone
without his consent. When Yeol was the
Article 1178. Subject to the laws, all rights one who communicated to Chan, he
acquired in virtue of an obligation are (Chan) withheld his approval.
transmissible, if there has been no
stipulation to the contrary. (1112) In this case, Chan was wrong from not
approving the request sent by Kai,
Transmissibility- that character whereby an because it was not stated in their contract
act, a deed or a title whereby it passes on to that Yeol is prohibitted to assign someone
one’s heirs or assigns or even Yeol needs to get Chan’s
Intransmissible Rights- rights that do not approval to assign someone.
pass on to one’s heirs or assigns Note: All rights acquired in virtue of an
obligation are generally transmissible
Exceptions to this rule:
1. Prohibited by law
a. By the contract of
partnership- two or more
Submitted by:
persons bind themselves to
contribute money, property or Ayeza Marie C. Alacapa
industry to a common fund,
with the intention of dividing Sheerah Galupo
the profits among themselves
Nizreen Macalawi
b. By the contract of agency- a
person binds himself to render Giah Doreen B. Mesiona
some service or to do
something in representation Nicole S. Pableo
c. By the contract of
commodatum- one of the
parties delivers to another
something not consumable
2. Prohibited by stipulation of parties-
like the stipulation that upon the death
of the creditor, the obligation shall be
extinguished or that the creditor
cannot assign his credit to another
Illustration:
Chan leased his vending machine to
Yeol for 6 months, giving the latter an
option to buy said machine within the
same period.
Yeol assigned his rights to Kai who
communicated in writing his desire to buy
the machine to Chan who, however,
refused to create a deed of sale for a