NATURE AND EFFECT OF OBLIGATIONS

The ownership acquire by delivery, the creditor is

not owner of a specific things until the delivery has
been delivered to him.

Article 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.
Based in this article refers to an obligation whether
specific or generic things.

Specific things or determined things- is the exact

things that both parties have agreed. Debtor cannot
substitute to another without the consent of the
creditor. The duties of debtor is to take care of the
thing with ordinary care to preserve the things. As
a general rule, the debtor is not liable if his failure
to preserve things is due to his negligence but to
fortuitous events/ Accidental event.
Generic things is identified by its specie. The
debtor can give anything to creditor as long as the
same kind. The duties of debtor is to deliver a
things which the quality by the parties taking into
consideration the purpose of the obligation and
either circumstances. Creditor cannot compel to
debtor a high quality to deliver and vice versa.

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.
Remedies of creditor in real obligation
1. Specific real obligation - the creditor may exercise
the following rights in case the debtor fails to
comply his obligation. The creditor have right to
demand specific performance or to fulfillment of
the obligation w/ a rights to indemnity for
damages. Demand cancellation of the obligations
also with a rights to recover damages. And demand
payment of damages only, where it is the only
feasible remedy.
2. Generic real obligation- can be performed by a
third person if the debtor can't comply his
obligations.
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
Accessions - are the fruits of a things or additions
to or improvements upon a things. (Ex. Rents of
building, air conditioner in car).
Accessories- are things joined ti or included with
the principal things for the latter's embellishment,
better use. (Ex. Key of a car, frame of a picture).

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 ( Product)

Natural fruits -are the product of the soil and other
product of animal. (Ex. Grass, Trees w/o the
intervention of the human labor).
Industrial fruits- are the produced by land through the
human labor (Ex. Sugarcane, Corn, Vegetables and
rice),
Civil fruits- are those by virtue of a juridical
relation. (Ex. Rents of buildings, Price of leases of
lands).
There are two rights of a person:
1. Personal right- is the right/power of a creditor to
demand from debtor, as a definite passive subject,
the fulfillment of the latter's obligation to give, to
do, or not to do.
2. Real rights- is the right or the interest of a person
over a specific things w/o definite passive subject
against whom the rights may be personally
enforced. (Ex. Land).

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.
Remedies of creditor in positive personal obligations.
If the debtor fails to comply with his obligations
performed by himself, or by another, unless
personal considerations are involved at the debtor's
expense.
If the obligation is done in violation or poorly done, it
may be ordered that it be undone if it is still possible to
undo what was done.
Performance by a third person.

If the debtor fails to comply with his obligations the

creditor ask to the third person to do what the debtor
cannot do.
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
obligations.
the remedy of the obligee is the undoing of forbidden
things plus damages.
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.
Delay
- is the situation in which something happen later
that it should.
Ordinary delay is merely the failure to perform an
obligation on time. 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/ default

1

Mora solvendi

-the delay on the part of the debtor to fulfill his

obligation.
The effect of mora solvendi are if the debtor is guilty
of breach of the obligation. He is liable to the creditor
for damages. He is liable even fortuitous event when the
obligation is to deliver a determined things. Debtor is
not relieved in liability for loss due to a fortuitous event
he still compelled to deliver a things of the same kinds.
Mora accipiendi
-the delay on the part of the creditor to accept the
performance of the obligation
The effect of mora accipiendi are the creditor is guilty
of violation of the obligation. He liable for damages
suffered by debtor. Where the obligation is to pay
money, the debtor is not liable for the damages from the
times of creditors delay
Compensatio morae

-the delay of the obligors in reciprocal

obligations. The delay of the obligor cancels the delay
of the obligee and vice versa.
There is no delay or default by both parties. If the delay
of one party is followed by one another.
Requisites of delay by the debtor
1. Failure of the debtor to perform his obligation on the
date agreed
2. Demand made by the creditor upon the debtor to
comply with his obligation which demand be either
judicial or extra judicial.
3. Failure of the debtor to comply with such demand.
When demand is not necessary to put
debtor in delay.
4. Delay by the debtor begins only from the moment a
demand, judicial or extra judicial for the fulfillment of
the formers obligation is made by the creditor.
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 of liability
1. Fraud (Deceit or dolo)
-implies some kind of malice or dishonesty and it
cannot cover cases of mistakr and errors of judgment
made by good faith

Incidental fraud (dolo incidente) - committed in

the performances of an obligation already existing
because of contracts.
Causal fraud (dolo causante) - committed by one
party before or at time of the celebration of the
contract to secure the consent of the others.
2. Negligence (Fault or culpa)
- it is voluntary act or omission, there being no bad
faith or malice , w/c prevent the normal fulfillment of
an obligation.
3. Delay/default
4. Contravention of the terms of the obligation.
- this is the violation of the terms and conditions
stipulated in the obligation.
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
-With respect to all kinds of obligations the court is not
given the power to mitigate or reduce the damages

to be awarded. This is because fraud is deemed

serious and evil that is employed to avoid the
fulfillment of ones obligation should discouraged
Waiver of action for future fraud void.
-A waiver of an action for future fraud void as being
against the law and public policy.
Waiver of action for past fraud valid
-A past fraud can be the subject of a valid waiver
because the waiver can be considered as an act of
generosity and magnanimity on the party who is
the victim of the fraud. The waiver must be
expressed in clear language which leaves no doubt
as to the intention of the obligee to give up his
rights against obligor.
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
-The court may increase or decrease the damages
recoverable. When both parties to a contract are
negligent in the performance of their respective
obligations, the fault of one may cancel the
negligence of others.
Validity of waiver of action arising from negligence
-an action for future negligence may be renounced
except where the nature of the obligation requires
the exercise of extraordinary diligence as in the
case of common carriers.
-Where negligence shows bad faith it is considered
equivalent to fraud.
Kinds of negligence according to source of
obligation.
1 Contractual negligence is merely makes the debtor
liable for damages in view of his negligence in the
fulfillment of a preexisting obligation.
Civil negligence is the source of an obligation
between the parties not related before by any
preexisting contract and also called a quasi delict.
Criminal negligence is a resulting in the
commission of a crimes.
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.
Fault or negligence
-is the failure to observe for the protection of the
interest of another person.
Factors to be considered.
1. Nature of the obligation
2. Circumstances of the person
3. Circumstances of time
4. Circumstances of the place
Measure of liability for damages
the damages for w/c the obligor who acted in good
faith is liable shall be those that are the natural and
probable consequences of the breach of the obligation
and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was
constitutes.
Kinds of diligence.
1. That agreed upon by the parties (verbal/ written).
2. In the absence of stipulation, that required by law in
the particular cases.
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 obligation requires the
assumption of risk, no person shall be responsible
for those events which could not be foresee or which
though foreseen, were inevitable.
Fortuitous event - an events which could not be foresee
or which though foreseen, were inevitable.
Fortuitous events distinguished from force majeure.
1. Acts of man - is an event independent of the will of
the obligor but not of other human wills.
2. Acts of God - those events which are totally
independent will of every human being. Also called
majeure.
Kinds of fortuitous events.

1. Ordinary fortuitous event - those events which are

common
2. Extra ordinary fortuitous events - those events are
uncommon and which contracting parties could not
have reasonably foreseen.
Requisites of a fortuitous event.
1. The events must be independent of the human will
and at least of the debtor's will.
2. The event could not be foreseen or if it foreseen it
inevitable.
3. The events must be of such a character as to render it
impossible for the debtor to comply with his obligation
in a normal manner.
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 events.
1. When expressly specified by law
the debtor is guilty of fraud, negligence or delay or
contravention of the tenor of the obligation.
the debtor has promised to deliver the same things
to two or more persons who do not have the same
interest.
The obligation to deliver a specific things arises
from crime.
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 (Mutuum) - is a contract whereby one of
the parties delivers to another, money, or other
consumable things, upon condition that the same
amount of the same kind and quality shall be paid.
Usury (Exessive) -is contracting for of receiving
interest in excess of the amount allowed by law for the
loan or use of money or credits.
Requisites for recovery of interest
1. The payment of interest must be expressly stipulate

2. The agreements must be in writings.

3. The interest must be lawful.
Art. 1176. The receipt of the principal by creditor,
w/o 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 w/o
reservation as to prior installments, shall likewise
raise the presumption that such installments have
been paid.
Presumption - meant the inference of a fact not actually
known arising from its usual connection with another
which is proved.
Two kinds of presumption
1. Conclusive presumption - one which cannot be
contradicted
2. Disputable presumption - one which can be
contradicted or rebutted by presenting proof to the
contrary
Art. 1177. The creditors, after having pursued the
property in possession of the debtor to satisfy their
claims may exercise all the rights and brings all the
actions of the latter for the same purpose.....
Remedies available to creditors for the satisfaction of
their claims.
1. Exact fulfillment with the right to damages.
2. Pursue the leviable property of the debtor.
3. Exercise all the rights and brings all the actions of the
debtor.
4. Ask the court to rescind or impugn acts or contracts
w/c 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.
All rights acquired in virtue of an obligation are
generally transmissible.

1. Prohibited by law - by laws the rights in partnership,

agency and commodatum.
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. When
prohibited by stipulation of the parties. like the
stipulation that upon death of the creditor .