CHAPTER 2: Nature and Effects 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. (diligentia pater familias) specific or determinate thing

Specific or Determinate

• identified by its individuality

Ex. (1) the watch I am wearing; (2) the car sold by X; (3) this cavan of rice; etc.

Generic or indeterminate

• identified only by its specie

Ex. (1) a Bulova calendar watch; (2) the sum of P1,000; (3) a cavan of rice, etc.

Duties of Debtor in Obligation to Give a Determinate Thing

• Preserve or take care of the thing

• Deliver the fruits of the thing

• Deliver the accessions and accessories

• Deliver the thing itself

• Answer for damages in case of non-fulfillment or breach

Preserve or take care of the thing

• Diligence of a good father of a family

  • Diligentissime Patris Families

• Another standard of care

• Factors to be considered

• Reason for debtor’s obligation

Standards of Care

• Slight Care

• Ordinary Diligence

• Utmost Diligence

• Extraordinary Diligence

Principal Obligation

the main obligation, usually the deliver of the thing itself

Accessory Obligation

those that come with the performance of the obligation (usually because they are mandated by the law)

Duties of Debtor in Obligation to Deliver a Generic Thing

• To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances

• To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor thereof

Delivery/ Tradition

• Actual Delivery

• Constructive Delivery

Actual Delivery

This kind of delivery includes the physical delivery of the thing, and it is usually performed by the passing of a possession or goods from hand to hand.

Constructive Delivery

the conveyance of the goods in contrast to the actual delivery because parties utilize a symbol or acts as representation of the delivery

Types of Constructive Delivery

• Execution of Public Document

• Symbolic Tradition

• Traditio Longa Manu (delivery with long hand)

• Traditio Brevi Manu (delivery with short hand)

• Constitutum Possessorium (continues possession)

• Quasi-tradition

Execution of Public Document

the execution of the sale is done through public instrument and it is equivalent to the delivery of the thing.

Symbolic Tradition

key; seller hand the buyer something as a symbol of delivery

Traditio Longa Manu (delivery with long hand)

consent (point out); it happens when the seller points out to the buyer the thing in sight that is being sold.

Traditio Brevi Manu (delivery with short hand)

it is an act when a good is transferred to the person who is already in possession of the item, although not as the owner of the item.

Constitutum Possessorium (continues possession)

the original owner remains in control of the goods but transfers possession to the new and legal owner.

Quasi-tradition

delivery of incorporeal property

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

• Natural Fruits

• Industrial Fruits

• Civil Fruits

Natural Fruits

spontaneous products of the soil, and the young and other products of animals

EXAMPLE: Grass; all trees and plants on lands produced without the intervention of human labor

Industrial Fruits

produced by lands of any kind through cultivation or labor

EXAMPLE: Sugar cane; vegetables; rice and all products of lands brought about by reason of human labor

Civil Fruits

derived by virtue of a juridical relation

EXAMPLE: Rents of the buildings, price of leases of lands and other property and the amount of perpetual or life annuities or other similar income

Alluvium

Gradual

Avulsion

Abrupt

When Obligation to Deliver Fruits Arises

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.” Perfection, in this case, refers to the birth of the contract or to the meeting of the minds between the parties.

When Obligation to Deliver Fruits Arises

If the obligation is subject to a suspensive condition or period, it arises upon the fulfillment of the condition or arrival of the term. However, the parties may make a stipulation to the contrary as regards the right of the creditor to the fruits of the thing.

Suspensive Condition

• ART. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.

• a condition the fulfillment of which will give rise to an obligation (or right). The obligation is not effective or in force until the happening of a suspensive condition. The creditor acquires rights when the suspensive condition happens.

• Future; uncertain event; Past events unknown to the parties

Period

• a day certain is understood to be that which must necessarily come, although it may not be known when.

• Future and Certain Event

When Obligation to Deliver Fruits Arises

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.

When Obligation to Deliver Fruits Arises

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.

jus in re

Real Right

jus in personam

Personal Right

Real Right

• There is only a definite active subject without any definite passive subject

• Directed against the whole world

Personal Right

• There is a definite active subject and definite passive subject

• Binding or enforceable only against a particular person

Real Right

power of a person to obtain certain financial or economic advantages over a specific thing, a power enforceable against the whole world

Personal Right

power belonging to a person to demand from another as a definite passive subject debtor, the fulfillment of a prestation to give, to do or not to do

Ownership

• vested upon delivery

• By virtue of delivery, an individual acquires real rights over the thing

Article 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 any fortuitous event until he has effected the delivery.

Specific Real Obligation (deliver a determinate thing)

• demand specific performance or fulfillment, indemnity for damages

• demand rescission or cancellation, right to recover damages

• demand payment of damages only, only feasible remedy

Generic Real Obligation

Can be performed by a third person. 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 with a right to damages in case of breach or violation of the obligation.

Determine Obligation

a. Demand Specific Performance + Indemnity for Damages;

b. Demand Recission/ cancellation (in some cases) + Damages;

c. Damages only if the first two remedies are not feasible.

Indeterminate Obligation

a. Demand Fulfillment + Indemnity for Damages;

b. Ask another person to make delivery at expense of debtor + Damages;

c. Demand Recission/ cancellation (in some cases) + Damages;

Other Provisions

In case of Delay/ promise to Deliver the thing to two or more individuals (with different interests), there arises responsibility for Fortuitous events until delivery is affected. (exception to non-liability in case of fortuitous events)

Fortuitous Events

unforeseeable and unavoidable

Caso Fortuito

include acts of God, or natural occurrences like the forces of nature such as typhoons; or acts of man such as wars and riots, strikes, wars

include acts of God, or natural occurrences like the forces of nature such as typhoons; or acts of man such as wars and riots, strikes, wars.

Requisites of a Fortuitous Event

• Cause is independent of the will of the debtor;

• The event is unforeseeable or unavoidable;

• Occurrence renders it absolutely impossible for the debtor to fulfill his obligation in a normal manner; impossibility must be absolute not partial, otherwise not force majeure; and

• Debtor is free from any participation in the aggravation of the injury to the creditor.

Article 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

are the fruits of a thing or additions to or improvements upon a thing (the principal)

EXAMPLE: House or trees on land; rents of a building; air conditioner in a car

Accessories

are things joined to or included with the principal thing for the latter’s embellishment, better use, or completion

EXAMPLE: Key of a house; frame of a picture; bracelet of a watch; bow of a violin

Article 1167

If a person obliged to do something fails to do it, the same shall be executed at his cost. same rule shall be observed if he does it in contravention of the tenor of the
obligation. Positive Personal Obligation

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; and
3. The debtor performs an obligation to do but in a poor manner.

Performance by a Third Person Art 1167

1. Compelling performance by debtor prohibited - A personal obligation to do, like a real obligation to deliver a generic thing, can be performed by a third person.

2. Indemnification of creditor for damages - While the debtor can be compelled to make the delivery of a specific thing (Art. 1165.), a specific performance cannot be ordered in a personal obligation to do because this may amount to involuntary servitude.

Can you compel performance if the debtor refuses to an act?

No, because doing so would result in involuntary servitude, a situation that is prohibited by the Constitution.

Remedy: Ask performance by another individual (as long as act is not purely personal) at the expense of the debtor.

Article 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

1. Undo the act at the expense of the debtor, plus damages; and

2. When the act cannot be undone, demand damages.

Involuntary- Breach of Obligation

these are due to causes independent of the will of the parties. (fortuitous event and Force Majeur)

Voluntary- Breach of Obligation

arises from the will of the parties (Mora or delay, Dolo or Fraud, Culpas or Negligence, and Contravention of the tenor of the obligation)

Article 1169

Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

The demand of the creditor is not necessary for the delay to exist

• when the obligation or the law expressly so declare

• when the nature and circumstances of the obligation it appears that the destination of the time the thing to be delivered was a controlling motive

  • when demand would be useless,

Mora

Delay

Ordinary Delay

merely the failure to perform an obligation on time

Legal Delay or Default or Mora

failure to perform an obligation on time which failure constitutes a breach of the obligation

How can there be legal delay/mora?

There can be delay if there is no demand. The demand contemplated here is usually a written demand. (General Rule)

Thus, there can only be mora if a demand was made.

Mora Solvendi- Kinds of Delay or Default

delay on the part of the debtor to fulfill his obligation (to give or to do)

Mora Accipiendi- Kinds of Delay or Default

delay on the part of the creditor to accept the performance of the obligation

Compensatio Morae- Kinds of Delay or Default

delay of the obligors in reciprocal obligations (like in sale), i.e., the delay of the obligor cancels the delay of the oblige, and vice-versa.

Mora Solvendi- Effects of Delay

a) The debtor is guilty of breach or violation of the obligation;

b) He is liable to the creditor for interest (in case of obligations to pay money) or damages (in other obligations). In the absence of extrajudicial demand, the interest shall commence from the filing of the complaint; and

c) He is liable even for a fortuitous event when the obligation is to deliver a determinate thing. However, of the debtor can prove that the loss would have resulted just the same even if he had not been in default, the court may be equitable mitigate or reduce the damages.

Mora Accipiendi- Effects of Delay

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

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 or deposit in court of the thing or sum due.

Compensatio Morae- Effects of Delay

the delay of the obligor cancels the delay of the oblige and vice-versa. Legally speaking, there is no default or delay on the part of both parties.

Article 1170

Those who in performance of their obligation are guilty of fraud, negligence, or delay, and those who in manner contravene the tenor thereof, are liable for damages

Grounds for liability

• Fraud (deceit or dolo)- intentional evasion of the fulfillment

• Negligence (fault or culpa) - failure to exercise the degree of care

• Delay (Mora)

• Contravention of the manner- violation without justifiable reason

Two Kinds of Fraud (Dolo)

• Incidental fraud (dolo incidente) is a fraud committed in the performance of an obligation already existing

• Casual fraud (dolo causante) is a fraud employed in the execution of a contract which vitiates consent

Art. 1338

There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to.

Requisites of Fraud

(1) Made in bad Faith;

(2) Use of insidious words and machination;

(3) Due to the foregoing, the other party is induced to enter into the contract;

(4) The party suffered damage or injury;

(5) The damage or injury must be serious;

Incidental Fraud

Refer to deception or misrepresentations which are not serious in character and without which, the party would have still entered into the contract. Dolo incidente gives rise to damages.

Dolo Incidente

• present only during the performance of a pre-existing obligation

• aims to evade the normal fulfillment of the obligation

• non- fulfillment or breach of the obligation

• allows the obligee to recover damages from the obligor

Dolo Causante

• employed at the time of birth of the obligation

• aims to secure the consent of the other party to enter into the contract.

• results in the vitiation of his consent

• gives rise to the right of the innocent party to ask for the annulment of the contract

Fraud

• There is deliberate intention to cause damage or injury.

• Waiver of the liability for future fraud is void. (Art. 1171.)

• Fraud must be clearly proved.

• Liability for fraud cannot be mitigated or reduced by the courts.

Negligence

• Negligence

• There is no such intention.

• Such waiver may, in a certain sense, be allowed in negligence. (Art. 1172.)

• Negligence is presumed from the violation of a contractual obligation.

• 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

Article 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

(1) Discretion of court to fix amount of damages

(2) Damages where both parties mutually negligent

Kinds of Negligence According to Source of Obligation

(1) Contractual negligence (culpa contractual) or negligence in contracts resulting in their breach

(2) Civil negligence (culpa aquiliana) or negligence which by itself is the source of an obligation between the parties not so related before by a preexisting contract.

(3) Criminal negligence (culpa criminal) or negligence resulting in the commission of a crime.

Negligence/Culpa

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 the place.

Test of Negligence ---MEMORIZE---

Did the obligor, in doing the alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence.

Effects of Negligence on the Part of the Injured Party

When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, he may recover damages, but the courts shall mitigate the damages to be awarded.

Article 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 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

Factors to be Considered in Determining Negligence

(1) Nature of obligation

(2) Circumstances of the person

(3) Circumstances of time

(4) Circumstances of the place

Nature of obligation

EXAMPLE: Smoking while carrying inflammable materials

Circumstances of the person

EXAMPLE: A robust and healthy gourd sleeping while on duty

Circumstances of time

EXAMPLE: Driving a car without headlights at night

Circumstances of the place

EXAMPLE: Driving 100 kilometers per hour in Makati is gross recklessness

Damages

signify the money compensation awarded to party for loss or injury resulting from breach of contract or obligation by the other

Diligence

attention and care required of a person in a given situation

Article 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

Fortuitous Event Distinguished from Force Majeure

• Acts of man- war, robbery, murder, arson, etc.

• Acts of God- earthquake, flood, storm, lightning, volcanic eruption, tsunami, etc.

(2) kinds of fortuitous events

• Ordinary fortuitous events or those events which are common and which the contracting parties could reasonably foresee (e.g., rain)

• Extra-ordinary fortuitous events or those events which are uncommon and which the contracting parties could not have reasonably foreseen (e.g., earthquake, fire, war).

GENERAL RULE- Rules as to Liability in Case of Fortuitous Event

No person may be held responsible or liable for loss or damage caused to another resulting from the non-performance of his obligation due to a fortuitous event.