BUSINESS LAW - OBLIGATIONS AND CONTRACTS

NATURE AND EFFECT OF OBLIGATIONS What is an indeterminate thing?

A thing is generic or indeterminate when
Art. 1163. Every person obliged to give it refers only to a class, to a genus, and
something is also obliged to take care cannot be pointed out with particularity.
of it with the proper diligence of a good
father of a family, unless the law or the Kinds of Delivery
stipulation of the parties requires a.​ Actual Delivery (tradition) - where
another standard of care. physically, the property changes
hands.
EFFECTS OF AN OBLIGATION Example: If A sells B a fountain
a.​ This Article deals with the first pen, the giving by A to B of the
effect of an obligation to deliver a fountain pen is actual tradition.
determinate thing (as
distinguished from a generic b.​ Constructive Delivery - that
thing — or one of a class) — where the physical transfer is
namely — the duty to exercise implied. This may be done by:
proper diligence. Unless diligence i.​ Traditio Simbolica or
is exercised, there is a danger Symbolical Tradition - as
that the property would be lost or when the keys of a bodega
destroyed, thus rendering illusory are given
the obligation. (See 8 Manresa ii.​ Traditio Longa Manu -
35-36). Delivery by mere consent
i.​ Diligence Needed - That or the pointing out of the
which is required by the object
nature of the obligation iii.​ Traditio Brevi Manu -
and corresponds with the Delivery by the short hand -
circumstances of person, whereby a possessor of a
time, and place. (Art. 1173, thing is NOT as an owner,
Civil Code). This is really becomes the possessor as
diligence of a good father AN OWNER
of a family. EX. When a tenant already
in possession buys the
What is a determinate thing? house he is renting
A thing is said to be specific or iv.​ Traditio Constitutum
determinate when it is capable of Possessorium - opposite
particular designation. of brevi manu. A
possessor of a thing as an
OWNER, retains

Prepared By: Liberale Fulvia G. Mascarin, CHRA​

​ ​ ​ The Lewis College
Instructor, College of Business Education​ ​ ​ ​ A.Y. 2024-2025
BUSINESS LAW - OBLIGATIONS AND CONTRACTS

possession but NO condition as it was when

LONGER AS AN OWNER the obligation was made
v.​ Traditio by the Execution of ii.​ So that the debtor may not
Legal Forms and be negligent of his
Solemnities - execution of accessory duty to take
a public instrument selling care of the thing.
land.
Duties of Debtor in an Obligation to
When Does the Obligation to Deliver Deliver a GENERIC thing
Arise?
ANS.: It depends: I.​ Deliver a thing which is of the
a.​ If there is no term or condition, quality intended by the parties
then from the perfection of the taking into consideration the
contract. purpose of the obligation
b.​ If there is a term or a condition, II.​ Be liable for damages in case of
then from the moment the term fraud, negligence or delay in the
arrives or the condition happens. performance of the obligation or
contravention (violation) of the
Duties of a Debtor in an Obligation to tenor thereof
Give a DETERMINATE thing:
Things Required to be delivered:
I.​ Preserve the thing: 1.​ Deliver the fruits of the thing
a.​ Degree of Care Needed 2.​ Deliver the accessions and
i.​ By stipulation of the accessories
parties 3.​ Deliver the thing itself
ii.​ What the law provides 4.​ Answer for damages in case of
iii.​ Diligence of a good father non-fulfillment/breach
of a family (ordinary care)
Art. 1164. The creditor has a right to
Factors to be considered: the fruits of the thing from the
1.​ Nature of the obligation obligation to deliver it arises. However,
2.​ General Rule: if the thing is he shall acquire no real right over it
lost due to force majeure until the same has been delivered to
the debtor is not liable him.

b.​ Reason for Debtor’s Obligation Different Kinds of Fruits

i.​ Thing to be delivered 1.​ Natural Fruits - the spontaneous
should be the same products of the soil, and the

Prepared By: Liberale Fulvia G. Mascarin, CHRA​

​ ​ ​ The Lewis College
Instructor, College of Business Education​ ​ ​ ​ A.Y. 2024-2025
BUSINESS LAW - OBLIGATIONS AND CONTRACTS

young and other products of creditor. Debtor will be

animals. liable for damages to the
2.​ Industrial Fruits - those produce first creditor.
by lands of any kind through
cultivation and labor Art. 1165. When what is to be delivered
3.​ Civil Fruits - by virtue of juridical is a determinate thing, the creditor in
relation e.g. rent, leases, any form addition to the right granted him by
of income Article 1170, may compel the debtor to
make the delivery
Right of the Creditor to the Fruits
1.​ Protects the creditor in case the If the thing is indeterminate or generic,
debtor commits delay/fraud he may ask that the obligation be
a.​ Personal Right - right of complied with at the expense of the
the creditor to demand debtor
from the debtor the
fulfillment of an obligation If the obligor delays, or has promised to
b.​ Real Right - right of a deliver the same thing to two or more
person over a specific persons who do not have the same
thing (ownership, interest, he shall be responsible for any
possession, mortgage) fortuitous event until he has effected
against who the right may the delivery.
be personally enforced --------------------------------------x
2.​ Ownership
a.​ Acquired through actual ALTERNATIVE Remedies of Creditor in
DELIVERY/tradition Real Obligation in case Debtor Fails to
b.​ Creditor does not become Fulfill His Obligation
the owner until specific
thing has been delivered to If Specific Real Obligation
him 1.​ Specific performance/fulfillment
c.​ Personal right is acquired of obligation (if still possible) +
once the thing has been damages
delivered a.​ Rescission - returning
d.​ If the thing delivered to a what each parties receive
3rd person who acted in 2.​ Rescission/cancellation of
good faith before the obligation + damages
obligation has become 3.​ Payment of damages only (if it’s
demandable, the 3rd the only feasible remedy)
person is ENTITLED to the
thing against the 1st

Prepared By: Liberale Fulvia G. Mascarin, CHRA​

​ ​ ​ The Lewis College
Instructor, College of Business Education​ ​ ​ ​ A.Y. 2024-2025
BUSINESS LAW - OBLIGATIONS AND CONTRACTS

If Generic Real Obligation decreed that what has been poorly done
1.​ Can be performed by a third be undone.
person - at the expense of the
debtor Remedies of Creditor in Positive
Personal Obligation (OBLGN TO DO)
Effect of Fortuitous Events (Act of God) (1st Sentence of Art. 1167)
-​ Sometimes called force majeure
(an unforeseeable or if foreseen it 1.​ Failure to Comply
will be inevitable) a.​ Perform the obligation
himself or by another
Difference Between a Generic Thing unless personal
and a Specific Obligation During A considerations are
fortuitous Event involved at the debtors
expenses
1.​ General Rule - an obligation to b.​ Recover Damages
deliver a SPECIFIC thing is 2.​ Contravention/Violation of terms
EXTINGUISHED by a fortuitous or obligations poorly done
event. a.​ Order by the court to undo
EXCEPTION: what has been done if it is
a.​ If the obligor delays or still possible
defaults b.​ Specific performance can
b.​ If the obligor is guilty of not be ordered in a
BAD FAITH (as when he personal obligation TO DO
promised delivery to - involuntary servitude.
separate creditors) NOTE:
2.​ If it is a GENERIC thing, ​ Performance by 3rd person is
obligations are NEVER allowed (if to deliver generic thing) but
EXTINGUISHED by a fortuitous he can not be compelled to.
event. ​ If the personal qualifications of
Because GENUS NEVER the debtor are the determining motive
PERISHES (genus nuquamperit) for the obligation, remedy is
indemnification for damages (if oblgn is
Art. 1167. If a person obliged to do not performed) – only when the oblgn
something fails to do it, the same shall can not anymore be performed at the
be executed at his cost. expense of the debtor

This same rule shall be observed if he

does it in contravention of the tenor of
the obligation. Furthermore, it may be

Prepared By: Liberale Fulvia G. Mascarin, CHRA​

​ ​ ​ The Lewis College
Instructor, College of Business Education​ ​ ​ ​ A.Y. 2024-2025
BUSINESS LAW - OBLIGATIONS AND CONTRACTS

Art. 1168. When the obligation consists (3) When demand would be useless, as
in not doing, and the obligor does what when the obligor has rendered it beyond
has been forbidden him, it shall also be his power to perform.
undone at his expense. In reciprocal obligations, neither party
incurs in delay if the other does not
Remedies of Creditor in Negative comply or is not ready to comply in a
Personal Obligation (OBLGN NOT TO proper manner with what is incumbent
DO) upon him. From the moment one of the
parties fulfills his obligation, delay by
1.​ Undoing the forbidden thing + the other begins.
damages
2.​ If first remedy is impossible - Classification of Delay
damages only is allowed 1.​ Ordinary Delay - failure to
perform an obligation on time,
NOTE: Debtor can not be guilty of delay BEFORE DEMAND is made
since duty is abstaining from an act 2.​ Legal Delay/Default/ Mora -
failure to perform an obligation
BREACH OF OBLIGATIONS on time which constitutes a
breach of obligation. AFTER
Art. 1169. Those obliged to deliver or to DEMAND has been made. This is
do something incur in delay from the the delay referred to in the Civil
time the obligee judicially or extra- Code.
judicially demands from them the
fulfillment of their obligation. Kind of Delay
1.​ Mora Solvendi - delay of debtor to
However, the demand by the creditor fulfill the obligation
shall not be necessary in order that 2.​ Mora Accipiendi - delay of
delay may exist: creditor to accept
3.​ Compensation Morae - delay of
(1) When the obligation or the law debtors in reciprocal obligations;
expressly so declares;or delay of the debtor cancels the
(2) When from the nature and the delay of the creditor, and vice
circumstances of the obligation it versa
appears that the designation of the time
when the thing is to be delivered or the Requisites if Delay by the Debtor (Mora
service is to be rendered was a Solvendi)
controlling motive for the 1.​ Failure of debtor to perform his
establishment of the contract; or obligation on the date agreed
upon

Prepared By: Liberale Fulvia G. Mascarin, CHRA​

​ ​ ​ The Lewis College
Instructor, College of Business Education​ ​ ​ ​ A.Y. 2024-2025
BUSINESS LAW - OBLIGATIONS AND CONTRACTS

2.​ Demand made by the creditor When Demand is NOT NECESSARY to

(judicial/extrajudicial) Put the Debtor in Delay
3.​ Failure of debtor to comply with
such demand 1.​ When the obligation provides
2.​ When the law provides
Effects of Delay 3.​ When time is of the essence
1.​ Mora Solvendi (DEBTOR) 4.​ When demand would be useless
a.​ Guilty of breach of 5.​ Where there is performance by a
obligation party in a reciprocal obligation
b.​ Liable to creditor for a.​ Reciprocal Obligation -
interest (in obligations to performance of one is
pay money) or damages conditioned upon the
c.​ Liable for fortuitous event simultaneous fulfillment of
when obligation is to the part of the other
deliver a determinate thing b.​ Neither party is in delay if
d.​ In obligation to deliver a the other does not comply
generic thing - delivery of with what is incumbent
the thing of the same kind upon him (compensation
+ damages morae)
2.​ Mora Accipiendi (CREDITOR) c.​ When no date is specified.
a.​ Guilty of breach of Obligation is understood
obligation simultaneous.
b.​ Liable for damages
suffered by debtor, if any HELPFUL YOUTUBE VIDEOS:
c.​ Bears the risk of the loss
of the thing due -​ https://www.youtube.com/watch?
d.​ Debtor not liable for v=gXVhe_QS7YU
interest from the time of -​ https://www.youtube.com/watch?
the creditor’s delay v=eyOHI_Q3xos
e.​ Debtor may release -​ https://www.youtube.com/watch?
himself from the v=w_7amtLb42g
obligation by the -​ Note: 3rd vid discusses
consignation or deposit of until Art. 1178, this lesson
the thing or sum due is ONLY UNTIL Art. 1169
3.​ Compensation Morae
a.​ Delay of debtor cancel
delay of the creditor & vice
versa
b.​ No delay in both parties

Prepared By: Liberale Fulvia G. Mascarin, CHRA​

​ ​ ​ The Lewis College
Instructor, College of Business Education​ ​ ​ ​ A.Y. 2024-2025