CHAPTER 2NATURE AND EFFECTS OF OBLIGATION
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.
I. REAL OBLIGATION (OBLIGATION TO GIVE)
Specific or Determinate Thing - one which can be
particularly designated or physically segregated from all
others of the same class.
EXAMPLES: (1) The watch I am wearing. (
2) The car sold by X.
(3) My dog named “Terror.”
(4) The house at the corner of Rizal and Del Pilar
Streets.
(5) The Toyota car with Plate No. AAV 344.
Generic or Indeterminate Thing - one which refers only
to a class or genus to which it pertains and cannot be
pointed out with particularity. EXAMPLES : (1) a Bulova
calendar watch. (2) a 2006 model Japanese car. (3) a
police dog. (4) a cavan of rice (5) the sum of P10,000.
Duties of the obligor or debtor with respect to
determinate or specific thing:
1. To deliver the thing itself
GR: The debtor of a thing cannot compel the creditor to
receive a different one, although the latter may be of
the same value as, or more valuable than which is due.
(Civil Code, Art. 1244, par)
XPNs:
a. By agreement or consent, the debtor may deliver a
different thing or perform a different prestation in lieu
of that stipulated (either a Dation in Payment or
Objective Novation)
b. Waiver of defect, the creditor with knowledge of
defect accepts the thing without protest or disposes it.
2. Preserve the Thing with Due Care
GR: 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. (Civil Code, Art. 1163)
XPNs:
a. The law or stipulations of the parties require another
standard of care.
b. Common Carriers - In case of common carriers,
which from the nature of their business and for reasons
of public policy, is bound to observe extraordinary
diligence in the vigilance over the goods and for the
safety of the passengers transported by them,
according to all the circumstances of each case.
c. Banks - In case of banks, wherein the degree of
diligence required is more than that of a good of a
family, where the fiduciary nature of their depositors is
concerned.
Diligence - the attention and care required of a person
in a given situation and is the opposite of negligence.
Kinds of Diligence
1. Simple Diligence
2. Extraordinary Diligence
3. Diligence of a Good Father of a Family (Bonos Pater
Familia) - measure of prudence or activity as is properly
expected from, and ordinarily exercised by a reasonable
and prudent man under particular circumstances.
3. Deliver the Accessions and Accessories
GR: Obligation to give a determinate thing includes that
of delivering all its accession and accessories, even
though they may not have been mentioned. (Civil Code,
Art. 1166)
XPNs: By contrary intention of the parties.
Accession - is the right by virtue of which the owner of a
thing becomes the owner of everything which is
produced thereby, or which is incorporated or attached
thereto, either naturally or artificially.
- the fruits of, or additions to, or improvements upon, a
thing (the principal)
Accessories - are things joined to or included with the
principal thing for the latter’s embellishment, better
use, or completion.
Right of Accession - right corollary to ownership of
property which gives the owner the right to everything
produced by the property or which is incorporated or
attached thereto, either naturally or artificially.
4. To Deliver the Fruits
GR: The creditor has a right to the fruits of the thing
from the time the obligation to deliver it arises.
However, there is no real right until the same has been
delivered to him. Civil Code, Art. 1164, par)
XPN: Obligations arising from contracts, a stipulation as
regards the fruits shall govern. (CC, Art. 1306)
When an obligation to deliver arises:
a. obligation is based on law, quasi-delict, quasi-
contract or crime, the specific provisions of applicable
law shall determine when the delivery shall be effected;
or
b. obligation is based on contracts.
GR: All fruits shall pertain to the vendee from the
constitution or perfection of the obligation. (CC, Art.
1187)
XPNs: i. Subject to a suspensive condition, it arises from
the happening of the condition; ii. If there is a contrary
stipulation of the parties with respect to the time when
the thing or fruits shall be delivered.
KINDS OF FRUITS:
a. Natural Fruits - the spontaneous products of the soil,
the young and other products of animals produced
without intervention of human labor
b. Industrial Fruits - those produced by lands of any
kind through cultivation brought by an intervention of
human labor
c. Civil Fruits - those derived by virtue of juridical
relation.
Correlative Rights of the Obligee:
1. Right to Specific Performance
2. Right to Rescission or Resolution
3. Right to damages due to the ff:
i. Fraud
ii. Negligence in the performance of an obligation
iii. Delay or Default
iv. Any manner in contravention of the tenor of the
obligation.
GR: If due to fortuitous event, the obligor is not liable
for failure to deliver.
XPNs:
a. Law
b. Stipulation to the contrary
i. Nature if the obligation requires assumption of risk
ii. Fraud or malice (bad faith)
iii. Debtor was already in delay when the fortuitous
event took place.
4.Right to the fruits and interests from the time the
obligation to deliver arises.
Duties of the obligor or debtor with respect to generic
or indeterminate thing:
1. To deliver the thing of the same quality intended by
the parties, taking into account the purpose of the
obligation, intent of the parties and other
circumstances; and
2. To be liable for damages in case of breach due to
delay, fraud, negligence or contravention of the tenor
thereof.
GR: To deliver a thing which is neither of superior nor
inferior quality.
XPN: When the purpose of the obligation and other
circumstances shall have to be taken into consideration.
Correlative Rights of the Obligee:
1. Right to ask for the performance of the obligation.
2. Right to ask that the obligation be complied with by a
third person at the expense of the debtor. CC, Art.
1165)
3. Right to ask for rescission.
4. Right to damages due to:
i. Failure to deliver
ii. Fraud
iii. Negligence
iv. Delay
v. Any matter in contravention of the tenor of the
obligation
II. PERSONAL OBLIGATION (OBLIGATION TO DO) -
Positive Personal Obligation
GR: In obligations to do or not to do, an act or
forbearance cannot be substituted by another act or
forbearance against the obligee’s will. (CC, Art. 1244,
par)
XPN: In facultative obligations, where the debtor
reserves the right to substitute another prestation.
Duties of the obligor in an obligation to do:
1.To do it
2.To shoulder the cost if someone does it
3.To undo what has been poorly done
4. To pay damages
III. OBLIGATION NOT TO DO - NegativePersonal
Obligation
Duties of the obligor in an obligation not to do
1. Not to do what should not be done
2. To shoulder the cost to undo what should nothave
been done
3. To pay damage
 - it implies some kind of malice and dishonesty
Rights of a creditor in personal obligations: “To Do or and cannot cover cases of mistake and errors in
Not To Do” judgement made in good faith.

Positive Negative Effect of Fraud: Liability for damages.

Personal Obligation Personal Obligation
(CC, Art.1167 (CC, Art.1168) Waiver of Fraud: Responsibility arising from fraud is
The creditors can: If the debtor does demandable in all obligations. Any waiver for
what has been future action for fraud is void. ART. 1171
1. Have the obligation forbidden him, the
performed or executed creditor shall have the Kinds of Fraud:
at the expense of ff remedies: a. Fraud in the performance of the obligation. (CC,Art.
the obligor (except 1171)
when the prestation 1. Have it undone at the b. Fraud in the execution / creation / birth of
consists of an act expense of the debtor; a contract:
where the personal or a. Dolo Causante (Causal Fraud)
special qualification of 2. To ask for b. Dolo Incidente (Incidental Fraud)
the obligor is the damages, where it
principal motive for would be physically or Dolo Causante
the establishment of legally impossible to  the fraud employed by one party prior to or
the obligation. In such undo what has been simultaneous with the creation of the contract to
case, the remedy is an undone, because of: a. secure the consent of the other. It is the fraud used
action for damages; the very nature of the by a party to induce the other to enter into a
act itself. Rights contract without which the latter would not
2. Ask that what has acquired by third have agreed to, taking into account the
been poorly done be persons which acted in circumstances of the case.
undone; and good faiths. When the Incidental Fraud
effects of the acts  fraud employed to secure the consent of the
3. Recover damages prohibited are definite other party but which only renders the party who
because of a breach of in character and will not employs it liable for damages.
obligation cease even if the thing
prohibited be undone. 2. NEGLIGENCE (CULPA)
 The fault or negligence of the obligor consists in
Forms of breach of Obligation the omission of the diligence which is
1. Voluntary - arises either by fraud, negligence, required by the nature of the obligation and
delay and in any manner contravene to the tenor of the corresponds with the circumstances of the
obligation. persons, of the time and place (CC, Art. 1173,par.
2. Involuntary - arises due to fortuitous events 1); any voluntary act or omission, there being no
3. Substantial - amount to non-performance which malice, which prevents the normal fulfillment of
isthe basis for rescission and payment of damages, and an obligation.
4. Casual - a part of the obligation has been
performed and gives rise to liability for damages.  In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all
Different Modes of Breach damages which may be reasonably attributed to
Those who in the performance of their obligation are the non-performance of the obligation (CC,Art.
guilty of fraud, negligence or delay and those who in 2201, par. 2
any manner contravene the tenor thereof, are liable for
damages. (CC, Art.1170) Effects of Negligence:
1. FRAUD (Dolo) - the voluntary execution of a
wrongful act, or a willful omission which a. Damages are demandable which the court may
prevents the normal presentation of prestation, regulate according to circumstances; and
knowing and intending the effects which naturally b. Invalidates defense of fortuitous event.
and necessarily arise from such act or omission.
 Kinds of Negligence: Presumed from the breach of Must be clearly proved
a. Civil Negligence the contractual obligation
i. Culpa Contractual - fault or negligence of obligor by
virtue of which he is unable to perform his obligation 3. DELAY (MORA)
arising from a pre- existing contract; and  It refers to the non-fulfillment of obligation with
ii. Culpa Aquilana/quasi-delict - fault or negligence of a respect to time.
person whose failure to observe the required diligence
to the obligation causes damage to another. Civil Code, Art. 1169.
 Those obliged to deliver or to do something incur
b. Culpa Criminal - fault or negligence which results in delay from the time the obligee judicially or extra-
the commission of a crime. judicially demands from them the fulfillment of
Culpa Contractual Culpa Aquilana Culpa Crimina their obligation.
Negligence is merely Negligence Negligence indirect,
incidental to the indirect, substantive and GR: Without demand, judicial or extra-judicial, the
performance of an substantive and independent effect of default will not arise.
obligation already independent
existing because of
XPNs:
a contract
a. When the obligation or law expressly so declares;
There is always a There may or No pre-existing
pre-existing may not be a contractual relation b. When from the nature and circumstances of the
contractual relation pre-existing obligation it appears that the designation of the time
contractual when the thing to be delivered or the services to be
relation rendered was a controlling motive for the
Breach or non- Defendant’s Defendant’s criminal establishment of the contract.
fulfillment of negligent act act c. When demand would be useless:
contract or omission i. Caused by some act or fault of the debtor
Requires proof by Requires proof Requires proof ii. Impossibility caused by fortuitous event.
preponderance of by beyond reasonable
evidence preponderance doubt
Delay in Reciprocal Obligations
of evidence
 In reciprocal obligations, neither party incurs delay
Defense of a good Defense of a Defense of a good
father of a family good father of father of a family if the other does not comply or is nt ready to
in the selection and a family in the in the selection and comply in a proper manner with what is incumbent
supervision of selection and supervision of upon him. From the moment one of the parties,
employees is not a supervision of employees is not a delay by the other begins.
proper or complete employees is a proper defense. The
defense, though it proper or employees guilt Requisites in order to consider the Obligor in Default
may mitigate complete automatically the a. Obligation is demandable and already liquidated;
damages defense employer’s guilt if the b. The obligor/debtor delays performance
former is insolvent
c. The creditor requires performance judicially or extra-
Proof of existence Plaintiff has to Accused is presumed
judicially
of a contract and prove innocent until the
breach thereof gives negligence of the contrary is proved
rise to a defendant Grace Period - it s a period immediately after the due
presumption of fault date for an obligation during which payment may be
Fraud (Dolo) vs Negligence (Culpa made without penalty. - it is not an obligation of the
Fraud (Dolo) Negligence (Culpa) debtor but a right.
Willfulness or deliberate intent Mere want of care or
to cause damage or injury to diligence and not the Kinds of Delay:
another voluntariness of act or a. Mora Solvendi
mission b. Mora Accipiendi
Liability cannot be mitigated by Liability may be mitigated by c. Compensation Morae
courts courts
Waiver for future fraud is void Waiver for future
Mora Solvendi - delay on the part of the debtor by not
negligence is valid if simple
performing his obligation after a demand or specified
negligence but void if it is
gross negligence time and may either be:
i. Ex Re - obligations to give
ii. Ex Persona - obligations to do
Requisites:
a. Prestation is demandable and is already liquidated
b. The debtor is in delay of the performance due to
causes imputable to him and not by acts such as
fortuitous events; and
c. The creditor requires or demands the performance
judicially or extra-judicially.
Reckoning time of delay:
Judicially - date of filing of complaint
Extra-judicially - date of demand
Effects of Mora Solvendi:
1. Debtor is liable for interest in obligation to pay
money, or damages.
2. Debtor is liable even for fortuitous event when the
obligation is to deliver a specific thing. For generic
things, debtor may still be compelled to deliver a
thing of the same kind or be held liable for
damages.
Mora Accipiendi - delay in the performance based on
the omission by the creditor of the necessary
cooperation, especially acceptance on his part.
Requisites:
i. Offer of performance by the debtor who has the
required capacity;
ii. Offer must be to comply with the prestation as it
should be performed; and
iii. Creditor refuses the performance without just cause.
Effects of Mora Accipiendi
a. Responsibility of the debtor for the thing is reduced
and limited to fraud and gross negligence;
b. Debtor is exempted from the risks of loss of the thing,
which automatically passes to the creditor;
c. All expenses incurred by the debtor for the
preservation of the thing after the delay shall be
chargeable to the creditor;
d. The creditor shall become liable for damages;
e. The debtor may relieve himself of the obligation by
consignation of the thing; and
f. If the obligation bears interest, the debtor does not
have to pay from the moment of the mora.
Remedy:
i. Consign it in court; and
ii. Keep it to himself (he is not liable for damages)
Compensation Morae - delay of the parties in a
reciprocal obligation.
GR: P arties in a bilateral contract can regulate the
order in which they shall comply with reciprocal
prestations. Otherwise, the fulfillment must be
simultaneous and reciprocal.
XPN: Contrary stipulation. ( ex. Installment basis)
Effects of Compensation Morae:
i. Delay of the obligor cancels delay of the obligee and
vice versa;
ii. No actionable default on the part of the obligees;
iii. If delay of one party is followed by that of the other,
the liability of the first infractor shall be equitably
balanced by the court. If it cannot be determined which
of the parties is guilty of delay, the contract shall be
deemed extinguished and each shall bear his own
damages.
Cessation of the Effects of Delay (mora)
 The benefits arising from default or delay may cease
upon (1) renunciation by the creditor, express or
implied and (2) prescription.
4 CONTRAVENTTION OF TENOR
 Under Art. 1170 of the Civil Code, the phrase “in
any manner contravene the tenor” of the obligation
includes not only any illicit act which impairs the
strict and faithful fulfillment of the obligation, but
also every kind of defective performance, unless
excused in proper cases by fortuitous event.
Note: the following do not excuse fulfillment:
a. Increase in cost of performance
b. Poverty
c. War between the subjects of a neutral country.
Remedies of creditor in case of Breach:
I. Primary Remedies
1). Action for Performance (Specific Performance or
Substituted Performance)
2). Action for Damages (exclusively or in addition to
action for performance); and
3). Action for Rescission
II. Subsidiary Remedies
1) Accion Subrogatoria
2) Accion Pauliana
3) Other Specific Remedies
**I. Primary Remedies
Action for Performance** a. Action for Specific
Performance (in obligation to give a determinate
thing)
 when what is to be delivered is a
determinate thing, the creditor, in addition to his
right for indemnification of damages, may
compel the debtor to make the delivery.
b. Action for Substituted Performance (in
obligation to given indeterminate thing)
 if the thing is indeterminate or generic, he may ask
the obligation be complied with at the expense of
the debtors.
c. Action for Substituted Performance or Undoing
of Poor Work (in obligation to do)
 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 on
contravention of the tenor of the obligation.
Furthermore, it may be decreed that what has
been poorly done be undone.
d. Action for Undoing (in obligation not to do)
GR: When the obligation consists in not doing,
and the obligor does what has been forbidden
him, it shall be undone at his expense.
XPN: When the only feasible remedy is
indemnification for the damages cause by resonating.
i. It has become impossible to undo the thing physically
or legally
ii. If the acts are definite and will not cease even if
undone.
2. Action for Damages
 Recoverable damages include any and
alldamages that a human being may
suffer.Responsibility for damages is indivisible.
3. Action for Rescission
 The power to rescind obligation is implied in
reciprocal obligations, in case one of the obligors
should not comply with what is incumbent upon
him.
 Note: The action for rescission is subsidiary; it
cannot be instituted except when the party
suffering damage has no other legal means
to obtain reparation for the same.
Breach by Both Parties:
a. If first infract or can be determined, his liability shall
be equitably tempered by the courts.
b. If the first infract or cannot be determined, the
obligation shall be extinguishing and each shall bear his
own damages.
Note: The remedy of rescission is alternative. Party
seeking rescission can only elect one between
fulfillment and rescission. There can be no partial
performance and partial rescission. The remedy only
applies to reciprocal obligations as when there is
reciprocity between the parties.
Rescission requires judicial approval to produce
legal effect.
Effects of Rescission:
1. Extinguishes obligatory relation as if it had never
been created; extinction has a retroactive effect.
2. Mutual restitution - rescission creates the
obligation to return the thing which were the object of
the contract, together with their fruits, and the price
with its interest, consequently.
II. Subsidiary Remedies
Subsidiary remedy - the exhaustion of all remedies by
the prejudiced creditor to collect claims due to him
before rescission is resorted to.
1. To exhaust the property in possession of thedebtor
generally by attachment, subject to exemptions
provided by law.
2. Accion Subrogaatoria (Subrogatory Action)- action
which the creditor may exercise in place of the
negligent debtor in order to preserve or recover for
patrimony of the debtorthe product of such action,
and then obtain therefrom the satisfaction of his own
credit.
Note: The creditor is entitled only to as much as is
needed to satisfy his credit and any balance shall
pertain to the debtor.
Right of the Creditor:
a. Levy by attachment and execution upon all the
property of the debtor, except such as exempt by
law from execution;
b. Exercise all the rights and action of the
debtor, except such as inherently personal to him;
c. To ask for rescission of the contracts made by the
debtor in fraud of their rights.
Requisites:
a. Debtor to whom the right of the property
pertains must be indebted tot he creditor;
 b. Creditor must be prejudiced by the inaction or failure
of the debtor to proceed against the third
person;
c. Creditor must have first pursued or exhaustedall the
properties of the debtor which are notexempted for
execution
Note: In order to exercise the accion subrogatoria, a
previous approval of the court is not necessary.
Exceptions to Accion Subrogatoria:
a. Inherent rights of the debtor
i. Right to existence
ii. Rights or relations of a public character
iii. Rights of an honorary character
iv. Rights consisting of powers which have not been
used ( i., the power to carry out an agency or deposit)
v. Non-patrimonial rights ( i., the action for legal
separation or annulment of marriage)
vi. Patrimonial rights not subject to execution ( i., right
to a government gratuity or pension); and
vii. Patrimonial rights inherent in the person of the
debtor (i., right to revoke a donation by reason of
ingratitude)
b. Only those who at the time of the donor’s death have
a right to the legitime and their successor’s in interest
may ask for the reduction or inofficious donations.
3. Accion Pauliana - Creditors have the right to impugn
the acts which the debtor may have done to defraud
them.
Requisites:
a. Creditor has a credit prior to the alienation by the
debtor, although demandable later.
b. Debtor has made a subsequent contract, giving
advantage to a 3rd person;
c. Third person who received the property is an
accomplice in the fraud; and
d. Act being impugned is fraudulent.
Note: The following are presumptions of fraud provided
under Civil Code, Art. 1387 as follows:
i. Alienation of property by gratuitous title without
reserving sufficient property to pay debts prior to
donation;
ii. Alienation by onerous title when there is judgment or
attachment.
Distinctions between Accion Subrogatoria and Accion
Pauliana
Accion Subrogatoria Accion Pauliana
Not essential that credit is prior Credit must have existed before
to the acquisition of debtor’s debtor’s fraudulent act
right
Intent to defraud creditor is Intent to defraud creditor is
not required required
No period of prescription Action prescribes within 4 years
from the discovery of the fraud
4. ACCION DIRECTA a person may directly sue another
even if there is no privity of contract between them.
Transmissibility of Rights acquired by virtue of
obligation:
GR: Right acquired by virtue of an obligation are
transmissible in character.
XPNs:
a. When prohibited by law which are purely personal in
character;
b. When prohibited by personal qualification or
circumstances of the transferor which is material
ingredient attendant in the obligation; and
c. When prohibited by stipulation of the parties.
Fortuitous Event
Extinguishment of Liability in case of Breach due to
Fortuitous Event
 Except in cases expressly specified by 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.
Forms of Fortuitous Events:
1. By Acts of God or Force Majeure - absolutely
independent of human will. Ex. Earthquakes, storms,
flood, etc.
2. By Acts of Man - an event which arises fro legitimate
or illegitimate acts of persons other than the obligor.
Ex. Robbery, war, attacks by bandits
Requisites of Fortuitous Events:
1. Must be independent of the human will;
2. It must either unforeseeable or inevitable;
3. Must be of such a character as to render it
impossible for the obligor to fulfill his obligation in a
normal manner;
4. Obligor must be free from any participation in the
aggravation of the injury resulting to the obligee.
Liability in case of Fortuitous Event:
GR: No liability in case of fortuitous event.

XPNs:
a. When expressly declared by law ;
b. When expressly declared by stipulation or contract;
c. When the nature of the obligation requires the
assumption of risk;
d. When the object of the prestation is generic.

Effects of Fortuitous Event:

a. On determinate obligation - the obligation is
extinguished; and
b. On generic obligation - the obligation is not
extinguished (genus nun quam peruit - genus never
perishes)

Principle of Assumed or Created Risk

 Based on the document of volenti non fit injuria - no
wrong is done to one who consents. As applied to
obligations, it refers to situations in which the
obligor, with full knowledge of the risk enters into
some relation with the obligee.

Extinguishment of Interest and Prior Installments:

 Receipt of the principal (or later installment)
without reservation as to the interest (or prior
installment) shall give rise to a disputable
presumption that the interest or prior installment
has been paid. (Art. 1176, Civil Code)

Instances when presumptions in Art. 1176 of the Civil

Code do not apply: a. When there is a reservation made
orally or in writing; b. If the receipt does not recite that
it was issued for a particular installment due as when
the receipt is only dated; c. To payment of taxes; and d.
Where non-payment of the prior obligations has been
proven.

- HAPPY READING!!! -
- Atty. Kristalyn P. Vega-Alves -