Nature and Effect of Obligations
Nature and Effect of Obligations
Nature and Effect of Obligations
Effect of
Obligations
C H A P T E R 2 : A RT S . 11 6 3 -
1178 NCC
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.
SPECIFIC/ DETERMINATIVE THING
• 1. Natural Fruits are the spontaneous products of the soil, and the young and other
products of animals.
– Grass, trees, plants on land produced without human intervention.
• 2. Industrial fruits are those produced by lands of any kind through cultivation or
labor.
– Sugar cane, veggies, and all products brought about by reason of human labor.
• 3. Civil fruits are those derived by virtue of a juridical relation.
– Rents of buildings, price of leases of lands other property and the amount of perpetual or life
annuities or other similar income.
Right of Creditor to the fruits.
A suspensive condition: one that makes the effectiveness of a contract and the
enforceability of the obligations arising from it depending on a future and uncertain
event as to the day, so that its full legal effects do not occur until the same is
fulfilled.
If there is a suspensive condition agreed upon, the obligation to deliver the thing as
well as the fruits shall arise only from the moment of the fulfillment of the
condition, and if it is subject to a suspensive term or period the obligation to deliver
arises only upon the expiration of the designated term or period.
Contracts of sale
• Personal right ( jus in personam or jus ad rem) is the right or power of a person
( the creditor) to demand from another (the debtor), as a definite passive subject,
the fulfillment of the latter’s obligation to give, to do, or not to do.
• Real right ( just in re) is the right or interest of a person over a specific thing (like
ownership, possession, mortgage) without a definite passive subject against
whom the right may be personally enforced. Binding on the whole world.
Kinds of Delivery – Actual or Constructive
(a) Actual delivery (or tradition) — where physically, the property changes hands. Example: If A sells B a fountain pen, the giving
by A to B of the fountain pen is actual tradition.
(b) Constructive delivery — that where the physical transfer is implied. This may be done by:
1) traditio simbolica (symbolical tradition) — (as when the keys of a bodega are given)
2) traditio longa manu (delivery by mere consent or the pointing out of the object) (Etymologically, “the extending of the hand.”)
Example: pointing out the car, which is the object of the sale.
3) traditio brevi manu — (delivery by the short hand; that kind of delivery whereby a possessor of a thing not as an owner,
becomes the possessor as owner) (Example: when a tenant already in possession buys the house he is renting).
4) traditio constitutum possessorium — the opposite of brevi manu; thus, the delivery whereby a possessor of a thing as an
owner, retains possession no longer as an owner, but in some other capacity (like a house owner, who sells a house, but remains
in possession as tenant of the same house).
5) tradition by the execution of legal forms and solemnities (like the execution of a public instrument selling land).
Ownership acquired by delivery
• Ownership and other real rights over property are acquired and transmitted by law, by donation, by
testate and intestate succession, and in consequence of certain contracts by tradition (Art. 712.) or
delivery. Delivery in sale may be actual or real, constructive or legal, or in any other manner signifying
an agreement that the possession of the thing sold is transferred from the vendor to the vendee. 3 (see
Arts. 1496-1501.)
• The meaning of the phrase “he shall acquire no real right over it until the same has been delivered to
him,” is that the creditor does not become the owner until the specific thing has been delivered to him.
Hence, when there has been no delivery yet, the proper action of the creditor is not one for recovery of
possession and ownership but one for specific performance or rescission of the obligation. (see Art.
1165.)
Art. 1165 When what is to be delivered is a determinate thing, the
creditor, in addition, to the right granted him by Art. 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 any fortuitous event until
he has effected the delivery.
Remedies of creditor in real obligation.
• (1) In a specific real obligation (obligation to deliver a determinate thing), the creditor may exercise the
following remedies or rights in case the debtor fails to comply with his 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 (Art. 1170.); or
• (c) demand the payment of damages only (see Art. 1170.) where it is the only feasible remedy.
Rationale for 1165 (1)
• In an obligation to deliver a determinate thing, the very thing itself must be delivered. (Art. 1244.)
Consequently, only the debtor can comply with the obligation. This is the reason why the creditor is
granted the right to compel the debtor to make the delivery. (Art. 1165, par. 1.) It should be made clear,
however, that the law does not mean that the creditor can use force or violence upon the debtor. The
creditor must bring the matter to court and the court will be the one to order the delivery.
Generic Real Obligation
• (2) A generic real obligation (obligation to deliver a generic thing), on the other hand, can be performed
by a third person since the object is expressed only according to its family or genus. It is thus not
necessary for the creditor to compel the debtor to make the delivery although he may ask for
performance of the obligation. In any case, the creditor has a right to recover damages under Article
1170 in case of breach of the obligation.
• The manner of compliance with an obligation to deliver a generic thing is governed by Article 1246.
Under the Constitution, no person shall be imprisoned for non-payment of debt. (Art. III, Sec. 20
thereof.) However, a person may be subject to subsidiary imprisonment for non-payment of civil
liability adjudged in a criminal case. (see Art. 1161.) The constitutional prohibition refers to purely civil
debt or one arising from contractual obligations only.
Where debtor delays or has promised delivery to
separate creditors.
• Paragraph 3 gives two instances when a fortuitous event does
not exempt the debtor from responsibility. It likewise refers to a
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.
ACCESSIONS
• The term “accessions’’ signifies all of those things which are produced by the thing which is the
object of the obligation as well as all of those which are naturally or artificially attached thereto.
• Consequently, it comprehends all of the different kinds of accessions which are defined and regulated
by the provisions of Art. 441 to Art. 475 of the Civil Code, such as accesión discreta (natural, industrial
and civil fruits) as well as accesión industrial (building, planting and sowing), accesión natural
(alluvion, avulsion, abandoned river beds, and islands formed in non-navigable or non-floatable rivers)
and accession with respect to movable property (adjunction or conjunction, confusion or commixtion,
and specification).
Examples
• House or trees on a land;
• Rents of a building
• Airconditioner in a car;
• Profits or dividends accruing from shares of stock
ACCESSORIES
• “Accessories,’’ on the other hand, must be understood in its current and popular sense. It signifies all of
those things which have for their object the embellishment, use or preservation of another thing which
is more important and to which they are not incorporated or attached.
• In other words, it includes all of those things which are necessary or convenient for the perfection of
another thing, such as the equipment of a factory, the spare parts and tools of a machine, the key of a
house, and others of a similar nature.
Examples
• Key of a house
• Frame of a picture
• Bracelet of a watch
• Machinery in a factory
• Bow of a Violin
Note that while accessions are not necessary to the principal thing, the accessory and the principal thing
must go together. Both can exist only in relation to the principal. Accession is also used in the sense of a
right, i.e., right to the fruits and/or accessories of a thing.
What the Obligation to Give a Determinate thing
Includes
• If I am obliged to deliver a particular car, I must also give the accessories (like the
“jack”). If I am obliged to deliver a piece of land, I must give also the accessions (like
a building constructed thereon). (This is true even if no mention of them was made in
the contract.)
• Of course, if there is a stipulation to said effect, accessions and accessories do not have
to be included
Article Art. 1167. If a person obliged to do something
1167 fails to do it, the same shall be executed at his
cost.
• “O,’’ lot owner, contracted with “B,” builder, to build a multi-storey building
designed by “A,’’ architect. “A” was paid a fee to supervise the construction
and execution of his design. When completed, “O” accepted the work and
occupied the building, but within one year, it collapsed in an earthquake that
destroyed only the building and not the surrounding buildings. Construction
was faulty. The building cost P3,000,000.00, but reconstruction cost would
reach P10,000,000.00.
• Could “O’’ demand reconstruction of the building? On what ground?
ANSWER
• “O’’ can demand reconstruction of the building. The obligation of both “A” and “B” is an
obligation to do. Consequently, Art. 1167 of the Civil Code is applicable. According to
this article, if a person obliged to do something does it in contravention of the tenor of
the obligation, the same shall be executed at his cost.
• It is obvious that the builder “B” and the architect “A’’ performed their jobs in
contravention of the tenor of the obligation. As a matter of fact, had the building not
collapsed, under the same article, it may even be decreed that what has been poorly done
be undone. Consequently, “C’’ can now demand for the reconstruction of the building by
“A’’ and “B’’ or by another at their cost.
PROBLEM 2
• X delivered a playstation 5 to Y for repair, Y did not finish the job. Finally,
despite repeated reminders of X for Y to finish the job, Y returned the play
station with his job undone and where some parts were missing. Z then
repaired the playstation. Z charged X the amount of P5000.00 for the
repair and the amount of P3000.00 for the missing parts.
• Is Y liable also for the cost of the repair or the amount of P8000.00?
ANSWER
• Yes. Since Y failed to repair the play station, with some missing
parts, Y contravened the tenor of his obligation. Y is liable for such
contravention under Art. 1167 of the Civil Code, considering that
the obligation of Y was to repair the play station. He is likewise
liable under Art. 1170 of the Code for the missing parts
considering that Y failed to return the play station in the same
condition as when it was received.
ART.
• Art.1168. When the obligation
1168
consists in not doing, and the
obligor does what has been
forbidden him, it shall also be
undone at his expense.
Obligations Not To Do; Effects of Breach.
1169 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 would be useless, as when the obligor has rendered it beyond his power
to perform.
In reciprocal obligations, 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.
BREACH OF OBLIGATIONS
• The word delay, as used in the law, is not to be understood according to its
meaning in common parlance. A distinction, therefore, should be made
between ordinary delay and legal delay (default or mora) in the
performance of an obligation.
• (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 the obligation.
KINDS OF DELAY
• (1) Mora solvendi or the delay on the part of the debtor to fulfill his obligation (to
give or to do) by reason of a cause imputable to him; This delay is called mora
solvendi ex re when the obligation is an obligation to give or mora solvendi ex persona
when the obligation is an obligation to do.
• (2) Mora accipiendi or the delay on the part of the creditor without justifiable reason
to accept the performance of the obligation; and
• (3) Compensatio morae or the delay of the obligors in reciprocal obligations (like in
sale), i.e., the delay of the obligor cancels the delay of the obligee, and vice versa.
REQUISITES FOR DEBTOR TO BE IN DEFAULT
• (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 fulfill, perform, or 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.
DEFAULT IN POSITIVE OBLIGATIONS
• 1. When the obligation or the law expressly so declares - Attention must be called to
the fact that what the law means is that the obligation or the law itself must expressly
declare that the demand is not necessary in order that the debtor shall incur in delay.
• 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.
• (3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform.
DEFAULT IN NEGATIVE OBLIGATIONS
• Reciprocal obligations are those which are created or established at the same time, out of the
same cause, and which result in mutual relationships of creditor and debtor between the
parties.
• These obligations are conditional in the sense that fulfillment of an obligation by one party
depends upon the fulfillment of the obligation by the other.
• in reciprocal obligations, the general rule is that fulfillment by both parties should be
simultaneous or at the same time. There are, however, cases in which different dates for
performance or fulfillment of the reciprocal obligations may be fixed by the parties, in which
case, the rule stated in the first paragraph in Art. 1169 shall apply
DEFAULT IN RECIPROCAL OBLIGATIONS
MORA ACCIPIENDI - delay on the part of the creditor without justifiable reason to accept the
performance of the obligation
• (a) The creditor is guilty of breach of obligation;
• (b) He is liable for damages suffered, if any, by the debtor;
• (c) He bears the risk of loss of the thing due (see Art. 1162.);
• (d) Where the obligation is to pay money, the debtor is not liable for interest from the time of the
creditor’s delay; and
• (e) The debtor may release himself from the obligation by the consignation of the thing or sum due.
(see Art. 1256.)
EFFECTS OF DELAY - COMPENSATIO MORAE
INCIDENTAL CAUSAL
Present only during the performance of a pre-existing Present only at the time of the birth of the obligation.
obligation
Employed for the purpose of evading the normal Employed for the purpose of securing the consent of the
fulfillment of an obligation other party to enter into the contract.
Results in the nonfulfillment or breach of the obligation If it is the reason for the other party upon whom it is
employed for entering into the contract, results in the
vitiation of his consent.
Gives rise to a right of the creditor or oblige to recover Gives rise to a right of the innocent party to ask for the
damages from the debtor or obligor annulment of the contract if the fraud is causal or to
recover damages if it is incidental.
NEGLIGENCE
• It
is any voluntary act or omission, there being
no malice, which prevents the normal
fulfillment of an obligation
CONTRAVENTION OF THE TERMS OF THE
OBLIGATION
FRAUD NEGLIGENCE
There is a deliberate intention to cause There is no such intention
damage or injury,
Waiver of the liability for future fraud is Waiver of negligence may be allowed in
void certain causes
Fraud must be clearly proved Negligence is presumed
Liability for fraud cannot be mitigated or Liability for negligence may be reduced
reduced by the courts according to the circumstances
Art. 1171 • Art.1171. Responsibility arising
from fraud is demandable in all
obligations. Any waiver of an
action for future fraud is void..
Waiver of Fraud; Not allowed (ART. 1171)
• It must be noted, however, that what is prohibited is the waiver or renunciation which is
made in advance or in anticipation of the fraud, and not that which is made after the
fraud has already been committed. In other words, under Art. 1171, what is prohibited
is the renunciation of the action for a fraud which has not yet been committed.
• Thus, waiver for future fraud is contrary to law and public policy. As such, said waiver
is void. But waiver for a past fraud is valid since such waiver can be deemed an act of
generosity. Further, what is renounced is the effect of fraud, more particularly the right
of the party to indemnity.
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.
Kinds of negligence according to source of
obligation
• (1) Contractual negligence (culpa contractual) or negligence in contracts resulting in their breach Article
1172 refers to “culpa contractual.” This kind of negligence is not a source of obligation. (Art. 1157.) It
merely makes the debtor liable for damages in view of his negligence in the fulfillment of a pre-existing
obligation resulting in its breach or non-fulfillment. (Arts. 1170-1174, 2201.) It is a kind of civil
negligence if it does not amount to a crime;
• (2) Civil negligence (culpa aquiliana) or negligence which by itself is the source of an obligation
between the parties not formally bound before by any pre-existing contract. It is also called “tort” or
“quasidelict.” (Art. 2176. 10)
• (3) Criminal negligence (culpa criminal) or negligence resulting in the commission of a crime. (Arts.
3, 365, Revised Penal Code.) The same negligent act causing damages may produce civil liability
arising from a crime under Article 100 of the Revised Penal Code (supra.), or create an action for quasi-
delict under Article 2176, et seq., of the Civil Code.
• In negligence cases, the aggrieved party may choose between a criminal action under Article 100 of the
Revised Penal Code or a civil action for damages under Article 2176 of the Civil Code. What is
prohibited under Article 2177 of the Civil Code is to recover twice for the same negligent act.
CULPA CONTRACTUAL CULPA AQUILIANA CULPA CRIMINAL
(a) Negligence is merely incidental, (a) Negligence here is direct, substantive, (a) Negligence here is direct, substantive,
incident to the performance of an and independent. and independent of a contract
obligation already existing because of a
contract.
(b) There is a preexisting obligation (a b) No pre-existing obligation (except of (b) No pre-existing obligation (except the
contract, either express or implied). course the duty to be careful in all human duty never to harm others).
actuations).
(c) Proof needed preponderance of c) Proof needed — preponderance of c) Proof needed in a crime — proof of
evidence. evidence. ( guilt beyond reasonable doubt.
Defense of “good father of a family” in the (d) Defense of “good father, etc,” is a (d) This is not a proper defense in culpa
selection and supervision of employees is proper and complete defense (insofar as criminal. Here the employee’s guilt is
not a proper complete defense in culpa employers or guardians are concerned) in automatically the employer’s civil guilt, if
contractual (though this may MITIGATE culpa acquiliana. the former is insolvent.
damages).
(e) As long as it is proved that there was a (e) Ordinarily, the victim has to prove the (e) Accused is presumed innocent until the
contract, and that it was not carried out, it negligence of the defendant. This is contrary is proved, so prosecution has the
is presumed that the debtor is at fault, and because his action is based on alleged burden of proving the negligence of the
it is his duty to prove that there was no negligence on the part of the defendant. accused.
negligence in carrying out the terms of the
contract.
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 persons, of the time and of the
place. When negligence shows bad faith, the provisions
of Articles 1171 and 2201, paragraph 2, shall apply.
• (a) MORAL - awarded to enable the injured party to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he has undergone
• 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. It may be gratuitous or with a stipulation to pay
interest.
Usury
• 1. With reservation as the interest – The reservation may be made in writing or verbally.
• 2. Receipt without indication of particular installment paid – If the receipt does not recite that it
was issued for a particular installment due as when the receipt is only dated.
• 3. Receipt for a part of the principal – such a receipt without mentioning the interest, implies that
the creditor waives his right to apply the payment first to the interest and then to the principal as
permitted by Art. 1253. Art 1176 presumption applies to a receipt of the whole of the principal.
• 4. Payment of taxes – no application to taxes at all.
• 5. Non-payment proven – a presumption cannot prevail over a proven fact.
Art. 1177 • 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
• 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 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. As a last resort ( All other options are exhausted ), 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.
• The debtor is liable with all his property, present and future, for the fulfillment of his obligations, subject to
exceptions provided by law.
Art. 1178 • 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
• Exceptions:
• 1. Prohibited by law – like the rights in partnership, agency, and commodatum which are purely
personal in character.
• 2. Prohibited by the stipulations of the parties.