Chapter 2

NATURE AND
EFFECT OF
OBLIGATIONS
Art. 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.
-A thing is specific or determinate
particularly designated or physically
segregated others of the same class.
Ex. The watch I am wearing
- A thing is generic or
indeterminate when it refers only to
a class or genus to which it pertains
and cannot be pointed out with
particularity.
Ex. A bulova calendar watch
Specific thing and generic thing distinguished

(1) A determinate thing is identified

by its individuality.
(2) A generic thing is identified only
by its specie.
Duties of debtor in obligation to
give a determinate thing
(1) Preserve the thing
(a) Diligence of a good father of
a family
(b) Another standard of care
 (c) Factors to be considered
(d) Reason for debtor’s
obligation
(2) Deliver the fruits of the thing
(3) Deliver the accessions and
accessories
(4) Deliver the thing itself
(5) Answer for damages in case of
non-fulfillment or breach
Duties of debtor in obligation to
deliver a generic thing.
(1) To deliver a thing which is of the
quality intended by the parties taking
into consideration the purpose of the
obligation and other circumstances
and
(2) To be liable for damages in case
of fraud, negligence, or delay, in the
performance of his obligation, or in
contravention of the tenor thereof.
Art. 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.
Different kinds of fruits
(1) Natural fruits
(2) Industrial fruits
(3) Civil fruits
Rights of creditor to the
fruits- creditor is entitled to the
fruits of the thing to be
delivered from the time the obli-
gation to make delivery arises.

When obligation to deliver

fruits arises:
(1) Generally, the obligation to
deliver the thing due and,
consequently, the fruits thereof, if
any, arises from the time of the
“perfection of the contract.”
(2) If the obligation is subject to a
suspensive condition or period, it
arises upon the fulfillment of the
condition or arrival of the term.
(3) In a contract of sale, the
obligation arises from the
perfection of the contract even
if the obligation is subject to a
suspensive condition or a suspensive
period where the price has been paid.
(4) In obligations to give arising from
law, quasi-contracts, delicts and
quasi-delicts, the time of performance
is determined by the specific
provisions of the law applicable.
Meaning of personal right and
real right and distinction

1. Personal right
2. Real right
Ownership acquired by
delivery- ownership and other
real rights over property are
acquired and transmitted in
consequence of certain contracts
by tradition or delivery. In sale,
mere agreement on the terms
does not affect transfer of
ownership of the thing sold in the
absence of delivery, actual or
constructive of the thing.
Remedy: No delivery; specific
performance or rescission of the
obligation
Art. 1165. When what is to be
delivered is a determinate thing,
the creditor, in addition to the
right granted him by Article
1170, may compel the debtor to
make the delivery.
If the thing is indeterminate
or generic, he may ask that the
obligation be complied with at
the expense of the debtor.
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 fortuitous event
until he has effected the
delivery.

Remedies of creditor in real

obligation.
(1) Specific real obligation
(a) demand specific
performance or fulfillment (if
it is still possible) of the
obligation with a right to
indemnity for damages; or
(b) demand rescission or
cancellation (in certain cases)
of the obligation also with a
right to recover damages; or
 (c) demand payment of
damages only, where it is
the only feasible remedy.
(2) Generic real obligation
Where debtor delays or has
promised delivery to separate
creditors
-Para. 3 gives two instances
when fortuitous event does not
exempt the debtor from
responsibility. It refers to
determinate thing. An
indeterminate thing cannot be
the object of destruction by a
fortuitous event because genus
nunquam perit (genus never
perishes).
Art. 1166. The obligation to give
a determinate thing includes
that of delivering all its
accessions and accessories,
even though they may not have
been mentioned.
Meaning of accessions and
accessories
(1) Accessions- are the fruits of a
thing or additions to or
improvements upon a thing
(the principal)
(2) Accessories- are things joined
to or included with the principal
thing for the latter’s
embellishment, better use, or
completion.

-Rights of creditor to accessions

and accessories
Art. 1167. If a person obliged
to do something fails to do it,
the same shall be executed at
his cost.
This same rule shall be
observed if he does it in
contravention of the tenor of
the obligation. Furthermore, it
may be decreed that what has
been poorly done be undone.

Situations contemplated in
Article 1167
(1) The debtor fails to perform an
obligation to do;
(2) The debtor performs an
obligation to do but contrary to
the terms thereof; or
(3) The debtor performs an
obligation to do but in poor
manner.
Remedies of creditor in
positive personal obligation
(1) If the debtor fails to comply
with his obligation to do, the
creditor has the right:
(a) to have the obligation
performed by himself, or by
another, unless personal
 considerations are involved,
at the debtor’s expense; and
(2) In case the obligation is done
in contravention of the terms of
the same or is poorly done, it
may be (by the court upon
complaint) that it be undone if it
is still possible to undo what was
done.
Performance by a third person
A personal obligation to do, lie a
real obligation to deliver a generic
thing, can be performed by a third
person. While the debtor can be
compelled to make the delivery of
a specific thing, a specific
performance cannot be ordered in
a personal
obligation to do because this
may amount to involuntary
servitude which, as a rule, is
prohibited under our Constitution.
Art. 1168. When the obligation
consists in not doing, and the
obligor does what has been
forbidden him, it shall also be
undone at his expense.
Remedies of creditor in
negative personal obligation.
-In an obligation not to do, the
duty of the obligor is to abstain
from an act. There is no specific
performance. The very obligation
is fulfilled in not doing what is
forbidden.
Art. 1169. Those obliged to
deliver or to do something
incur in delay from the time
the obligee judicially or extra-
judicially 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 declares;
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 will be
useless; as when the obligor
has rendered it beyond his
power to perform.
In reciprocal obligation,
neither party incurs in delay if
the other does not comply or is
not ready to comply in a proper
manner with what is incumbent
upon him. From the moment one
of the parties fulfills his
obligation, delay by the other
begins.

Meaning of delay- as used in the

law is not to be understood
according to its meaning in common
parlance.
(1) Ordinary delay is merely the
failure to perform an obligation on
time.
(2) Legal delay or default or mora
is the failure to perform an
obligation on time which failure
constitutes a breach of obligation.
Kinds of delay or default
(1) Mora solvendi
(2) Mora accipiendi
(3) Compensation morae

-No delay on negative personal

obligation
Requisites of delay or default
by the debtor
(1) Failure of the debtor to
perform his (positive) obligation on
the date agreed upon;
(2) Demand (not mere reminder
or notice) made by the creditor
upon the debtor to 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); and
(3) failure of the debtor to comply
with such demand.
Effects of delay
(1) Mora solvendi
(2) Mora accipiendi
(3) Compensation morae
When demand is not necessary
to put debtor in delay
(1) When the obligation so
provides
(2) When the law so provides
(3) When time is of the essence
(4) When demand would be
useless
(5) When there is performance by
a party in reciprocal obligations
Art. 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.
Grounds for liability
(1) Fraud (deceit or dolo)
(2) Negligence (fault or culpa)
(3) Delay
(4) Contravention of the terms of
the obligation
Fraud and negligence
distinguished
(1) In fraud, there is deliberate
intention to cause damage or
injury, while in negligence,
there is no intention;
(2) Waiver of the liability for future
fraud is void, while such
waiver may, in a certain sense, be
allowed in negligence
(3) Fraud must be clearly proved,
while negligence is presumed from
the violation of a contractual
obligation; and
(4) Lastly, liability for fraud cannot
be mitigated or reduced by the
courts, while liability for negligence
may be reduced according to the
circumstances.
Art. 1171. Responsibility arising
from fraud is demandable in all
obligations. Any waiver of an
action for future fraud is void.

-Responsibility arising from fraud

demandable
-Waiver of action for future fraud void
-Waiver of action for past fraud valid

Art. 1172. Responsibility arising

from negligence in the
performance of every kind of
obligation is also demandable,
but such liability may be
regulated by the courts,
according to the circumstances.

-Responsibility arising from

negligence demandable
-Validity of waiver of action arising
from negligence
Kinds of negligence according to
source of obligation:
(1) Contractual negligence (culpa
contractual)
(2) Civil negligence (culpa aquiliana)
(3) Criminal negligence (culpa
criminal)
-Effect of negligence on the part of
the injured party

Art. 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 person,
of the time and of the place.
When negligence shows bad faith,
the provisions of article 1171 and
2201, paragraph 2 shall apply.
If the law or contract does
not state the diligence which is to
be observed in the performance,
that which is expected of a good
father of a family shall be
required.

-Meaning of fault or negligence

accdg to Supreme Court,
“negligence is the failure to observe
for the protection of the interests of
another person, that degree of care,
precaution and vigilance which the
circumstances justly demand,
whereby such other person suffers
injury.”
Factors to be considered
(1) Nature of the obligation
(2) Circumstances of the person
(3) Circumstances of time
(4) Circumstances of place
-Measure of liability for damages

Kinds of diligence required

(1) That agreed upon by the parties,
orally or in writing
(2) In the absence of stipulation, that
required by law in the particular
case (like extraordinary
diligence required of common
carriers); and
(3) If both the contract and law are
silent, then the diligence expected
of a good father of a family.
Art. 1174. Except in cases
expressly specified by the law,
or when it is otherwise declared
by stipulation, or when the
nature of the obligation requires
the assumption of risk, no
person shall be responsible for
those events which could not be
foreseen, or which though
foreseen, were inevitable.

-Fortuitous event is any event

which cannot be foreseen, or
which, though foreseen, is
inevitable.
Fortuitous event distinguished
from force majeure.
(1) Acts of man
(2) Acts of God
Kinds of fortuitous events
(1) Ordinary fortuitous events
(2) Extra-ordinary fortuitous events
Requisites of a fortuitous event
(1) The event must be
independent of the human will
or at least of the debtor’s will;
(2) The event could not be
foreseen, or if foreseen, is
inevitable;
(3) The event must be of such a
a character as to render it impossible
for the debtor to comply with his
obligation in a normal manner; and
(4) The debtor must be free from any
participation in, or the aggravation of,
the injury to the creditor, that is,
there is no concurrent negligence on
his part.
Rules as to liability in case of
fortuitous event
(1) When expressly specified by
law
(a) The debtor is guilty of fraud,
negligence, or delay, or
contravention of the tenor of
 the obligation.
(b) The debtor has promised to
deliver the same (specific)
thing to two or more persons
who do not have the same
interest.
c) The obligation to deliver a
specific thing arises from crime.
 (d) The thing to be delivered is
generic
(2) When declared by stipulation
(3) When the nature of the
obligation requires the assumption
of risk
Art. 1175. Usurious transactions
shall be governed by special laws.

-Simple loan or mutuum is a

contract whereby one of the parties
delivers to another, money or other
consumable thing, upon the
condition that the same amount of
the same kind and quality shall be
paid.
-Usury is contracting for or
receiving interest in excess of the
amount allowed by law for the loan
or use of money, goods, chattels or
credits.
Requisites for recovery of
interest
(1) The payment of interest must
be expressly stipulated
(2) The agreement must be in
writing; and
(3) The interest must be lawful.
Art. 1176. The receipt of the
principal by the creditor, without
reservation with respect to the
interest, shall give rise to the
presumption that said interest
has been paid.
The receipt of a later
installment of a debt without
reservation as to prior
installments, shall likewise
raise the presumption that
such installments have been
paid.

-Presumption is meant the

inference of a fact not actually
known arising from its usual
connection with another which
is known or proved.
Two kinds of presumption
(1) Conclusive presumption
(2) Disputable (or rebuttable)
presumption
When presumption in Article
1176 do not apply
(1) With reservation as the
interest
(2) Receipt without indication of
particular installment paid
(3) Receipt for a part of the
principal
(4) Payment of taxes
(5) Non-payment proven

Art.1177. The creditors, after

having pursued the property in
possession of the debtor to
satisfy their claims, may
exercise all the rights and bring
all the actions of the latter for
the same purpose, save those
which are inherent in his
person; they may also impugn
the acts which the debtor may
have done to defraud them.
Remedies available to creditors
for the satisfaction of their
claims.
(1) Exact fulfillment (specific
performance) with the right to
damages;
(2) Pursue the leviable (not
exempt from attachment under
 the law) property of the debtor;
(3) “after having pursued the
property in possession of the
debtor,” exercise all the rights (like
the right to redeem) and bring all
the actions of the debtor (like the
right to collect from the debtor of
his debtor) except those inherent
in or personal to the person of
the latter (such as the right to
vote, to hold office, to receive
legal support, to revoke a
donation on the ground of
ingratitude, etc.); and
(4) Ask the court to rescind or
impugn acts or contracts, which
the debtor may have done to
defraud him when he cannot in
any other manner recover his
claim.
Art. 1178. Subject to the laws, all
rights acquired in virtue of an
obligation are transmissible, if
there has been no stipulation to
the contrary.
Transmissibility of rights
(1) Prohibited by law
(a) by the contract of
partnership
(b) by the contract of agency
(c) by the contract of
commodatum
(2) Prohibited by stipulation of the
parties