9.2. OBLIGATIONS: NATURE AND EFFECTS

9.2.1. SPECIFIC AND GENERIC THING

"ART. 1163: Every person obliged to give something is also obliged to take care of it with proper diligence of a good father of a family, unless the law or the stipulation of the parties requires anotehr standard of care."

A specific or determinate thing is segregated from others of the same class or style.

A generic of indeterminate thing refers to a class or genus an item is considered to belong and it cannot be pointed out specifically.

9.2.2. DUTIES OF DEBTOR TO GIVE A DETERMINATE THING

1. Preserve the thing - the obligor has the duty to take care of the thing in the contract.
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

9.2.3. DUTIES OF DEBTOR TO DELIVER A GENERIC THING

1. Deliver a thing of equal quality as agreed upon.
2. To be liable of damages in case of fraud, negligence, or delay in the performace of the obligation

9.2.4. DIFFERENT KINDS OF FRUITS

"ART. 1164: The creditor has a right tot he 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."

1. Natural fruits - the spontaneous products of the soil, and the young and other products of animals.
2. Industrial fruits -those produced by lands of any kind through cultivation or labor.
3. Civil fruits - those derived by virtue of a juridical relation. (Example: rents of buildings, leases of land)

9.2.5. RIGHT OF CREDITOR TO THE FRUITS

The creditor has the right to the fruits of the thing in contract from the time the obligation arises.

9.2.6. PERSONAL AND REAL RIGHT

Personal right. The right of the creditor to demand from the debtor as a fulfillment to the latter’s obligation.

 

Real right. Right of a person over a determinate thing without any passive subject against whom the right may be personally enforced.

9.2.7. OWNERSHIP ACQUIRED BY DELIVERY

The creditor does not become the owner until the specific thing has been delivered to him.

9.2.8.  REMEDIES OF CREDITOR IN REAL OBLIGATION

"ART 1165: When what is to be dellivered 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 fortuitous event until he has effected the delivery." 

9.2.9. ACCESSIONS AND ACCESSORIES

"ART. 1166: The obligation to give a determinate thing includes that of delivering all its accessions and accesories, even though they may not have been mentioned."

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

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

All accessions an accessories are considerd included in the obligation to deliver a determinate thing although they may not have been mentioned.

9.2.10. POSITIVE PERSONAL OBLIGATION (Obligation to do)

"ART. 1167: If a person obliged to do someting 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 teh obligation. Furthermore, it may be decreed that what has been poorly done be undone."

The article contemplates three situations:.

1. The debtor fails to perform an obligation to do
2. The debtor performs an obligation to do but contrary to the terms thereof
3. The debtor performs an obligation to do but in a poor manner

9.2.10.1. REMEDIES OF CREDITOR IN POSITIVE PERSONAL OBLIGATION

1. The debtor fails to comply with his obligation, the creditor has the right:
1. To have the obligation done at the debtor's expense
2. To recover damages
2. In case the obligation is poorly done, it may be ordered to be undone if it is still possible to undo what was done.

9.2.10.2. PERFORMANCE BY A THIRD PERSON

A personal obligation to do, like a real obligation to deliver a generic thing, can be performed by a third person.

9.2.11. NEGATIVE PERSONAL OBLIGATION (Obligation not to 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."

The remedy is the undoing of the forbidden thing plus damages.

9.2.12. DELAY

"ART. 1169: Those obliged to deliver or to do something incure in delay from the time the obligee judicially or extrajudicially 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 do declares; or

(2) When from the nature and the circumstances of the obligation, it appears that the designation of the time whent he thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the conract; 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 compy in a proper manner with what is incumbent upon him. From the moment

1. Ordinary delay
2. Legal delay  

9.2.12.1. KINDS OF DELAY OR DEFAULT

1. Mora solvendi
2. Mora accipiendi
3. Compensatio morae

*There is no delay in obligation not to do, non-fulfillment may take place but delay is impossible. 

9.2.12.2. EFFECTS OF DELAY

MORA SOLVENDI

1. The debtor is guilty of breach or violation of obligation
2. He is liable to the creditor for interest or damages.
3. He is liable even for a fortuitous event when the obligation is to deliver a determinate thing. 

MORA ACCIPIENDI

1. The creditor is guilty of breach of obligation
2. He is liable for damages suffered by the debtor
3. He bears the risk of loss of the thing due
4. Where the obligation is to pay money, the debtor is not liable for interest from the time of creditor's delay
5. The debtor may release himself from the obligation by the consignation or deposit in cour of the thing due

COMPENSATIO MORAE

There is no default of delay on the part of both parties.

9.2.13. LIABILITY

"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."

The four grounds of liability are as follows:

1. Fraud (deceit or dolo) - the deliberate or intentional evasion of the normal fulfillment of an obligation.
2. Negligence (fault or culpa) - any voluntary act or omission, there being no bad faith or malice, which prevents the normal fulfillment of an obligation.
3. Delay (mora) 
4. Contravention of the terms of the obligation - violation of the terms and conditions stipulated in the obligation. 

9.2.14. FRAUD

" 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 can be demanded with respect to all kinds of obligation and unlike in the case of responsibility arising from negligence.

WAIVER FOR ACTION FOR FUTURE FRAUD:

A waiver of an action for future fraud is void ( no effect as if there is no waiver).

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 of the victim of the fraud.

9.2.15. NEGLIGENCE

"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."

The debtor is also liable for damages resulting from negligence in the performance of every kind of obligation. The court has the discretion in fixing the measure of damages. 

* An action for future negligence may be renounced.

*Where negligence shows bad faith, it is considered equivalent to fraud.

9.2.15.1. 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 any preexisting contract. It is also called tort or quasi-delict.
3. Criminal negligence (culpa criminal) or negligence resulting in the commission of a crime.

* Suppose the creditor is also guilty of negligence, he cannot recover damages.

* If his negligence was only contributory, the plaintiff may recover damages, but the court shall mitigate the damages to be awarded.

9.2.15.2. MEANING OF NEGLIGENCE

"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 articles 1171 and 2201 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."

 9.2.15.3. FACTORS CONSIDERED

1. Nature of obligation.
2. Circumstances of the person
3. Circumstances of time.
4. Circumstances of place (Example: Driving 100kph on a superhighway is permissible but driving the same rate at a residential road is gross recklessness.)

9.2.15.4. MEASURE OF LIABILITY FOR DAMAGES

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

9.2.16. FORTUITOUS EVENT

" 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."

A fortuitous event is any inevitable event, foreseen or not.

A fortuitous event may either be:

1. Acts of man - an event independent of the will of the obligor but not of other human wills.
2. Acts of God (majeure) - events which are totally independent will of every human being.

9.2.16.1. KINDS OF FORTUITOUS EVENTS

1. Ordinary fortuitous events - those which are common and which the contracting parties could reasonably foresee (Example: rain)
2. Extra-ordinary fortuitous events - those which are uncommon and which the contracting parties could not have reasonably foreseen (Examples: earthquake, fire, war)

9.2.16.2. REQUISITES OF A FORTUITOUS EVENT

1.  The event must be independent of the human will or at least  the debtor's will.
2. The event could not be foreseen, or if foreseen, is inevitable.
3. The event 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.

9.2.16.3. RULES AS TO LIABILITY IN CASE OF FORTUITOUS EVENT

A person is not responsible for loss or damage caused to another resulting from the non-performance of his obligation due to a fortuitous event except the following conditions:

1. When expressly specified by law. 
2. When declared by stipulation.
3. When the nature of the obligation requires the assumption of risk.

9.2.17. USURIOUS TRANSACTIONS

"ART. 1175: Usurious transactions shall be governed by special laws."

  Simple loan or mutuum is a contract obliging one to deliver to the other consumables or money, with the condition that there is same amount or kind paid.

Usury is contracting for or receiving interest in excess of the mount allowed by law for the loan or use of money, goods, chattels or credits.

9.2.17.1. REQUISITES FOR RECOVERY OF INTEREST

1. The payment of interest must be expressly stipulated.
2. The agreement must be in writing.
3. The interest must be lawful.

9.2.18. PRESUMPTION

"ART. 1176: The receipt of the principal by the creditor, without reservation with respect tot he interest, shall give rise to the presemption 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."

 

 

9.2.18.1. KINDS OF PRESUMPTION

1. Conclusive presumption
2. Disputable (or rebuttable) presumption

9.2.18.2. SITUATIONS WHEN PRESUMPTIONS 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

9.2.19. CLAIMS

"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 ave done to defraud them."

In case the debtor does not comply with his obligation, the creditor may avail himself of the following remedies to satisfy his claim:

1. Exact fulfillment (specific performance) with the right to damages
2. Pursue the leviable property of the debtor
3. Exercise all rights and actions to the debtor
1. Right to redeem
2. Right to collect from the debtor of his debtor
4. Through court, rescind or impugn acts or contracts which the debtor may have done to defraud him (when he cannot recover his claim)

9.2.20. TRANSMISSIBILITY OF RIGHTS

"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."

All rights acquired with obligation are transmissible and assignable, except the following situations:

1. Prohibited by law
2. Prohibited by stipulation of the parties