LAW REVIEWER – MIDTERMS
Chapter 2 – Nature and Effect of Obligations
Specific or Determinate Thing – particularly
designated or physical segregated from others of the
same class; individuality
Generic or Indeterminate Thing – refers to only a
class or genus to which it pertains and cannot be
pointed out with particularity; specie
Duties of a Debtor in Obligation to Give a
Determinate Thing (Art. 1163)
1. Preserve the thing
a. Diligence of a Good Father of a Family –
average diligence a person exercises over his
own property.
b. Another Standard of Care – slight or
extraordinary diligence
c. Factors to be Considered – nature of the
obligation, circumstances of the person, time,
and place.
d. Reason for Debtor’s Obligation – debtor
must exercise diligence to insure that the thing
to be delivered would subsist in the same
condition as it was when the obligation was
contracted.
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 a Debtor in Obligation to Deliver a
Generic Thing
1. Deliver a thing of the quality intended by the
parties, in consideration of the purpose and other
circumstances.
2. To be liable for damages in case of fraud,
negligence, or delay.
Right of Creditor to the Fruits (Art. 1164)
- the creditor is entitled to the fruits of the thing to
be delivered, from the time the obligation to make
delivery arises.
Different Kinds of Fruits
1. Natural Fruits – spontaneous products of the
soil, the young and other products of animals.
2. Industrial Fruits – produced by lands of any kind
through cultivation or labor.
3. Civil Fruits – derived by virtue of a juridical
relation.
When Obligation to Deliver Fruits Arises
1. Arises from the time of the “perfection of the
contract.”
2. If subject to suspensive condition or period, it
arises upon the fulfillment of the condition or the
arrival of the term.
3. In the contract of sale, obligation arises from the
perfection of the contract even if it is subject to
suspensive condition or period.
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.
Personal Right and Real Right
Personal – right or power to demand from another the
fulfillment of the latter’s obligation to give, to do, or not
to do.
Real – right or interest of a person over a specific thing
without a definite passive subject against whom the
right may be personally enforced.
Modes of Acquiring Ownership
Occupation Tradition (Delivery)
Law Intellectual Creation
Donation Prescription (Lapse of Time)
Succession
Ownership Acquired by Delivery
- “He shall acquire no real right over it until the
same has been delivered to him.”
- when there has been no delivery yet, the proper
court of action of the creditor is one for specific
performance or rescission of the obligation.
Remedies of Creditor in Real Obligation (Art.
1165)
1. In a specific real obligation:
a. Demand specific fulfillment with damages
b. Demand rescission with damages
c. Demand payment of damages only, where it is
the only feasible remedy
* Creditor must bring the matter to court and the
court will be the one to order the delivery.
2. In a generic real obligation:
- can be performed by a third person.
 - not necessary for the creditor to compel the debtor
to make the delivery, although he may ask for
performance of the obligation.
Right of Creditor to Accessions and
Accessories (Art. 1166)
- general rule is that all accessions and
accessories are considered included in the obligation
to deliver a determinate thing although they may not
have been mentioned.
- accessory follows the principal.
Accessions – fruits of a thing or additions to or
improvements upon a thing.
Accessory – things joined or included with the
principal thing for the latter’s embellishment or
completion.
Situations Contemplated in Article 1167
1. Debtor fails to perform an obligation to do.
2. Debtor performs an obligation to do but contrary
to the terms thereof.
3. Debtor performs an obligation to do but in a poor
manner.
Remedies of Creditor in Positive Personal
Obligation
Creditor has the right to:
a. have the obligation performed by himself or by
another at the debtor’s expense
b. recover damages
c. order (by the court upon complaint) the undoing
of the act if still possible
Performance by a Third Person
- a personal obligation to do can be performed by
a third person.
- where the personal qualifications of the debtor
are the determining motive for the obligation
contracted, the performance of the same by another
would be impossible or would result to be so different
that the obligation could not be considered performed.
Remedies of Creditor in Negative Personal
Obligation (Art. 1168)
- undoing of the forbidden act plus damages.
- if it is not possible to undo what was done, either
physically or legally, the remedy is action for damages
caused by the debtor’s violation of his obligation.
Meaning of Delay (Art. 1169)
Ordinary Delay – failure to perform an obligation on
time.
Legal Delay/Default/Mora – failure to perform an
obligation on time which constitutes a breach of the
obligation.
Kinds of Delay:
1. Mora Solvendi – part of the debtor
2. Mora Accipiendi – part of the creditor
3. Compensatio Morae – in reciprocal obligations
* There is no delay in Negative Personal
Obligations
Requisites of Mora Solvendi:
1. Failure of the debtor to perform his obligation on
the date agreed upon.
2. Demand made by the creditor which may be
either judicial or extrajudicial.
3. Failure of the debtor to comply with such demand.
* Creditor has the burden of proving that demand
has been made.
* In absence of evidence for extra-judicial demand,
effects of default arise from the date of the judicial
demand.
Effects of Delay
1. Mora Solvendi:
- debtor is guilty of breach
- he is liable to creditor for interest or damages
- he is liable even for a fortuitous event; if the debtor
can prove that the loss would have resulted just the
same even if he had not been in default, the court
may equitably mitigate the damages
- in obligation to deliver a generic thing, debtor can
still be compelled to deliver a thing of the same kind
or held liable for damages.
2. Mora Accipiendi:
- creditor is guilty of breach
- he is liable for damages suffered by debtor
- he bears the risk of loss of the thing due
- debtor is not liable to pay interest from the time of
creditor’s delay (if obligation to pay money)
- debtor may release himself from the obligation by
consignation in court of the thing or sum due.
3. Compensatio Morae:
 - delay of the obligor cancels the delay of the oblige - can be demandable with respect to all kinds of
and vice versa. obligation

- liability of first infractor shall be equitably tempered - fraud is deemed serious and evil that its
by the courts. employment should be discouraged.

- if first infractor is unknown, contract is - waiver of an action for future fraud is void because
extinguished and each shall bear his own damages. it is against the law and public policy.

When Demand is Not Necessary to Put Debtor in
Delay (P.U.T.O.L.)
1. When there is Performance by a party in
reciprocal obligations
2. When demand would be Useless
3. When Time is of the essence
4. When the Obligation so provides
5. When the Law so provides (ex. Taxes)
Grounds for Liability/Breach (Art. 1170)
1. Delay – see Art. 1169
2. Fraud (Deceit or Dolo) – deliberate or intentional
evasion of the normal fulfillment of the obligation.
a. Incidental – committed in performance of an
existing obligation
b. Causal – employed in the execution of a
contract
3. Contravention of Terms – violation of terms
stipulated in the obligation; not due to fortuitous
event or force majeure.
4. Negligence (Fault or Culpa) – voluntary act or
omission without bad faith that prevents normal
fulfillment of an obligation.
- waiver of action for past fraud is valid and is
considered as an act of generosity and
magnanimity on the part of the party who is the
victim of the fraud.
- what is renounced is the right to indemnity of the
part entitled thereto.
Responsibility Arising from Negligence
Demandable (Art. 1172)
- courts are given wide discretion in fixing the
measure of damages.
- negligence is a question which must necessarily
depend upon the circumstances of each particular
case.
- no deliberate intention to cause injury or damages.
- when both parties are negligent, the fault of one
may cancel the negligence of the other.
Validity of Waiver of Acton Arising from Negligence
- an action for future negligence may be renounced
except if the nature of the obligation requires the
exercise of extraordinary diligence.
- where negligence shows bad faith, it is equivalent
to fraud.
Kinds of Negligence:

Fraud and Negligence Distinguished 1. Culpa Contractual – negligence in contracts

resulting to breach. Makes the debtor liable for
Fraud Negligence damages.

- there is deliberate - there is no such 2. Culpa Aquiliana – negligence which by itself is

intention to cause
damage
- waiver for future
fraud is void
- must be clearly
proved
- liability cannot be
mitigated by the
courts
intention
- waiver is allowed
- presumed from
violation of a
contractual obligation
Effect of Negligence on the Part of the Injured Party
- liability may be
reduced according to
circumstances
the source of an obligation. (Quasi-delict)
3. Culpa Criminal – negligence resulting in the
commission of a crime. 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.
- plaintiff’s own negligence was the immediate
cause of his injury: cannot recover damages.

- plaintiff’s negligence was only contributory: may

recover damages mitigated by the courts.

Responsibility Arising from Fraud * To be entitled to damages, it is not required that

the negligence of the defendant should be the sole
Demandable (Art. 1171)
cause.
- refers to incidental fraud.
Meaning of Fault or Negligence (Art. 1173)
 - 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 place
4. Circumstances of time
Damages – money compensation awarded to a party
for loss or injury resulting from breach of contract or
obligation by the other.
Kinds of Damages:
1. Moral – alleviate the moral suffering
2. Exemplary – not to compensate but to penalize
3. Nominal – recognize injured party’s right to a
property violated
4. Temperate – judge is empowered to calculate
moderate damages
5. Actual – simply make good or replace the loss
caused by the wrong.
6. Liquidated – agreed upon by the parties to
avoid controversy on the amount of damages
Kinds of Diligence Required
1. Agreed upon by the parties.
2. In absence of stipulation that required by law in the
particular case.
3. If both contract and law are silent: Diligence of a
good father of a family.
Meaning of Fortuitous Event (Art. 1174)
- by chance
- an event which cannot be foreseen or if foreseen,
is inevitable.
1. Acts of Man – independent of debtor’s will but not
of other human wills.
2. Acts of God – force majeure; totally independent of
the will of every human being.
Kinds of Fortuitous Events:
1. Ordinary – common and could be reasonably
foreseen.
2. Extra-Ordinary – uncommon and could not be
reasonably foreseen.
Requisites of a Fortuitous Event:
1. Independent of human WILL or at least of the
debtor’s will.
2. Unforeseen, or if foreseen is inevitable.
3. Impossible for debtor to render or comply with
obligation.
4. Debtor is free from any PARTicipation
Rules as to Liability in Case of Fortuitous Event
- obligation is extinguished; except:
1. When expressly specified by law
a. Debtor is guilty of DeFConNe
b. Debtor has promised to deliver the specific thing
to two or more persons
c. Obligation to deliver a specific thing arises from a
crime
d. The thing to be delivered is generic. (Genus
nunquam perit = Genus never perishes)
2. When declared by stipulation
3. When nature of obligation requires the assumption
of risk.
Usurious Transactions (Art. 1175)
Simple Loan or Mutuum – 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 – contracting interest in excess of the amount
allowed by law.
* 6% Legal Interest
Requisites for Recovery of Interest:
1. Payment of interest must be expressly stipulated
2. Agreement must be in writing
3. Interest must be lawful
Presumption (Art. 1176)
- inference of a fact not actually known arising
from its usual connection with another which is known
or proved.
2 Kinds:
1. Conclusive – cannot be contradicted
2. Disputable – can be contradicted by presenting
proof to the contrary
When Presumptions in Art. 1176 Do Not Apply
1. With reservation as the interest
 2. Receipt without indication of particular installment SECONDARY
paid
- Unilateral and Bilateral
3. Receipt for a part of the principal
- Real and Personal
4. Payment of taxes
- Determinate and Generic
5. Non-payment proven
- Civil and Natural
Remedies Available to Creditors for the
- Legal, Conventional, and Penal
Satisfaction of their Claims (Art. 1177)
1. Exact fulfillment with right to damages

2. Pursue the leviable property of the debtor

3. Exercise all the rights and bring all the actions of

the debtor, except those inherent in or personal to
the person of the latter

4. Ask the court to rescind or impugn acts or

contracts which the debtor may have done to
defraud him.

Transmissibility of Rights (Art. 1178)

- all rights are generally transmissible or
assignable except those:

1. Prohibited by Law

a. Contract of Partnership – two or more persons

bind themselves to contribute money, property, or
industry to a common fund, with the intention of
dividing the profits among themselves.

b. Contract of Agency – a person binds himself to

render service in behalf of another.

c. Contract of Commodatum – one of the parties

delivers to another something not consumable so
that the latter may use it for some time and return it.

2. Prohibited by Stipulation of the Parties

Classification of Obligations
PRIMARY

- Pure and Conditional

- Obligations with a Period

- Alternative and Facultative

- Joint and Solidary

- Divisible and Indivisible

- Obligations with a Penal Clause