MODULE 2: Nature and Effects of Obligations

• Specific/determinate


  When a thing is particularly designated or physically segregated from others of the same kind. It cannot be substituted with another, although the latter is of the same kind and quality, without the creditor's consent (Art. 1244 of the Civil Code)
• Generic/indeterminate


  When it refers only to a class or genus to which it pertains and cannot be pointed out with particularity. The debtor can give anything of the same class as long as it is of the same kind
• Duties of a debtor in obligation to give a determinate thing

  • Preserve the thing with the proper diligence of a good father of a family or that diligence required by law or stipulation of parties
  • 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 of the obligation
• Diligence of a good father of a family

  Ordinary care or diligence that an average or reasonably prudent person exercises over his property
• Why is a debtor required to exercise a certain kind of diligence?
• Types of fruits

  • Natural fruits - Spontaneous products of the soil and the young and animal products
  • Industrial fruits - Produced by lands of any kind because of human labor
  • Civil fruits - Derived by a juridical relation
• Only fruits that exist when the obligation to deliver arises must be delivered with the thing
• Accessions


  Fruits of the thing or additions to or improvements upon the thing
• Accessories


  Things joined to or included with the principal thing for the latter's embellishment, better use, or completion
• Why must accessions and accessories be included in the obligation to deliver a determinate thing?
• Duties of a debtor in obligation to deliver a generic thing

  • Deliver a thing of the quality intended by the parties considering the purpose of the obligation and other circumstances (Art. 1246, Civil Code)
  • Liable for damages in case of fraud, negligence, or delay in performing his obligation or contravention of the tenor thereof (Art. 1170, Civil Code)
• Fraud


  The deliberate or intentional evasion of the normal fulfillment of an obligation
• Negligence


  Any voluntary act or omission, there being no bad faith or malice, which prevents fulfilling an obligation
• Differences between Fraud and Negligence

  • Fraud - Deliberate intent to cause damage or injury, Waiver of liability for future fraud is void, Must be clearly proved, Liability cannot be mitigated or reduced by courts
  • Negligence - No intent to cause damage or injury, Waiver of liability for future negligence may be allowed, Presumed, Liability may be reduced according to the circumstances
• Delay/default


  The failure to perform an obligation on time which failure constitutes a breach of the obligation
• Kinds of Delay

  • Mora solvendi - Delay on the part of the debtor to fulfill his obligation
  • Mora accipiendi - Delay on the part of the creditor to accept the performance of the obligation
  • Compensatio morae - Delay of the obligors in reciprocal obligations
• Requisites of Delay

  • Failure of the debtor to perform his obligation on the date agreed upon
  • Judicial or extrajudicial demand made by the creditor upon the debtor to comply with his obligation
  • Failure of the debtor to comply with such demand
• When is demand not necessary to place the debtor in delay?

  • When the obligation so provides
  • When the law so provides
  • When time is of the essence
  • When demand is useless
  • When there is a performance by the other party in reciprocal obligations
• Fortuitous event


  Any event that cannot be foreseen or which, though foreseen, is inevitable. It consists of being a happening independent of the will of the debtor and which happening makes the normal fulfillment of the obligation impossible. It may either be an act of man or an act of God
• Acts of man - fortuitous events


  • War, fire, robbery, murder, and insurrection
• Acts of God - fortuitous events

  • Earthquakes, floods, rain, shipwrecks, lightning, and volcanic eruptions
• Kinds of Fortuitous Events

  • Ordinary - Events which are common and which the contracting parties could reasonably foresee
  • Extraordinary - Events which are uncommon and which the contracting parties could not have reasonably foreseen
• Requisites of a Fortuitous Event

  • Independent of human will or at least the debtor's will
  • Could not be foreseen, or if foreseen, is inevitable
  • Of such character as to render it impossible for the debtor to comply with his obligation in a normal manner
  • The debtor is free from any participation in, or the aggravation of, the injury to the creditor
• General rule: The debtor is not liable for damages caused to another from non-performance of his obligation due to a fortuitous event
• Exceptions when the debtor is liable for damages due to a fortuitous event

  • When expressly specified by law
  • When declared by stipulation
  • When the nature of the obligation requires the assumption of risk
• Presumption


  The inference of a fact not actually known arising from its usual connection with another, which is known or proved
• Kinds of Presumption

  • Conclusive presumption - Cannot be contradicted
  • Disputable presumption - Can be contradicted or rebutted by presenting proof to the contrary
• Article 1176 - The receipt of the principal by the creditor, without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid
• Simple loan or mutuum


  A contract whereby one of the parties delivers money or other consumable things to another 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
• Requisites for Recovery of Interest

  • The payment of interest must be expressly stipulated (Art. 1956 of the Civil Code)
  • The agreement must be in writing
  • The interest must be lawful (Art. 1957 of the Civil Code)
  • The interest must not be usurious
• Usury


  Contracting for or receiving interest over the amount allowed by law for the loan or use of money, goods, chattels, or credits (Art. 1933 of the Civil Code)
• The receipt of a later installment of a debt without reservation to prior installments shall raise the presumption that such installments have been paid
• When are these presumptions inapplicable?

  • With reservation as to the interest
  • Receipt for a part of the principal
• Remedies of the creditor if the debtor does not comply with his obligation

  • Exact fulfillment (specific performance) with the right to damages
  • Pursue the debtor's leviable (not exempt from attachment under the law) property
  • After having pursued the property in possession of the debtor, exercise all the rights and bring all the debtor's actions except those inherent in or personal to the person of the debtor
  • 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
• Exceptions to the general transmissibility or assignability of rights acquired by virtue of an obligation

  • Prohibited by law - Partnership, Agency, Commodatum
  • Prohibited by the stipulation of the parties