Chapter II

NATURES 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.
The different standards of care which the debtor most
exercise in the preservation of the object prior to delivery
are as follows:

1. As provided for by Law- If the law prescribes a

certain kind of care which debtor must exercise, then such
standard of care must be strictly followed.

2. As stipulated in the Contract- If the contracting

parties have mutually agreed on the standard care which
the debtor must exercise, then such standard must be
followed by the debtor.
3. Proper diligence of a good father of a family- If the
law or the contracting parties do not prescribed any
specific standard of care, then the debtor must exercise
the proper diligence of a good father of a family in the
preservation of the object prior to delivery.

ART.1164- The creditor has a right to fruits of 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 it.
The Creditors acquires: (1) A personal right (in
personam) to demand from the debtor delivery of the
specific thing and the fruits thereof from the time to
deliver; and
3. Proper diligence of a good father of a family- If the
law or the contracting parties do not prescribed any
specific standard of care, then the debtor must exercise the
proper diligence of a good father of a family in the
preservation of the object prior to delivery.

ART.1164- The creditor has a right to fruits of 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 it.
The Creditors acquires: (1) A personal right (in personam)
to demand from the debtor delivery of the specific thing
and the fruits thereof from the time to deliver; and
ART.1164- The creditor has a right to fruits of
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 it.

The Creditors acquires: (1) A personal right (in

personam) to demand from the debtor delivery
of the specific thing and the fruits thereof from
the time to deliver; and
(2) a real right (in rem') or ownship of the object of the
obligation from the time it is actually delivered to him by
the debtor.
EXAMPLE-”On september 1,1990 A obliged himself to
deliver to B a specific parcel of land on September
30,1990.“

If a has not yet delivered the land to B, the editor, acquires

the personal right to demand or compel A to deliver the
land and fruits thereof as September 30,1990,the date the
obligation to deliver arises. B However, acquires real life
right or ownership of the land only from the land only
from the time actual delivery of the land is made to him by
A.
To better understand the above rules, it is necessary that
there is a clear understanding of when a thing or object of
an obligation is considered specific or Determinate and
when it is called Generic or Indeterminate.

a) Specific or Determine- when the object is sufficiently

described so that it can be identified and segregated or
picked out from a mass or group of things of the same
kind, nature and specie.

b) Generic or Indeterminate - when the object is not

sufficiently described as to enable one to identify or
segregate it from a mass or group of things if the same
kind, nature or specie.
ART.1165- When what is to be delivered 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 on generic , he may ask

that the obligation be complied with at the expenses
of the debtor.

if the obligor delays, or has promised to deliver the

same thing to two more persons, who do not have the
same interest, he shall be responsible for any fortuitous
event until event until he has effected the delivery.
Example: A obligated himself to deliver to B a car.

The car is the prestation of the obligation. It is generic or

indeterminate because it cannot be determined what kind of car A
has to deliver to B. In this case A can deliver to B any kind of car
and he fulfills his obligation, subject of course, to certain
qualifications. (Please refer to Art 1246)
Suppose the obligation states that A is to deliver a Buick, 4-door
Sedan. Model 76, to B. The object is considered specific or
determinate ecause the obligation clearly specifies the particular
kind or brand of car A has to deliver. To fulfill the obligation, A has
to deliver a Buick, 4-door Sedan, Model 76. If he delivers a Buick
2-door coupe, his obligation will not be extinguished because it is
not the specific car designated in the obligation.
The creditor has the following remedies in the event the debtor fails
to comply with his prestation:
1. When Objects is Specific or Determinate:
a) Creditor has the right to campel the debtor to comply with his
prestation, and

b) Creditor has the right to ask for damages for fraud, negligence,
delay, etc. committed by the debtor under Art. 1170
2. When object is Generic on Indeterminate:

a) Creditor may demand specific compliance of the obligation plus

damages, or
b) If the debtor does not comply, the creditor can ask a 3rd party to
comply with the prestation at the expense of the debtor, plus
damages.
ART.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.

ACCESSORIES- are those things artificially added, or

attached to the principle object for purposes of adornment
or embellishment of convenience in the use of the principal
object.

ACCESSIONS- are those things attached, added or

incorporated to the principal object, either naturally or
artificially, for a natural accession is alluvium which means
the gradual formation of deposit of soil or sand along the
river banks through the continuous flow of water.
ART.1167- 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

contravention
of the tenor of the obligation. Furthermore , it may be
decreed that what has been poorly done, be undone.

ART.1168- When the obligation consists is not doing,

and the obligor does what has been forbidden him, it
shall also be undone at this expenses.
ART.1169- Those obliged to deliver or to do something
incur in delay from the time to 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 so

declares; or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when
the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the
contract: or
(3) When the 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 comply in a proper manner with what is
incumbent upon him. From the moment one of the parties fulfills his
obligation, delay by the other begins.
There are three classification o Delay(Moral):
1.Moral Solvendi - default or delay on the part of the debtor to fulfill
his obligation.
(a) Ex-re -delay in giving or delivering the object.
(b) Ex persona- delay in obligations to do or perform some service.

2. Mora Accipiendi - delay or default on the part or creditor to

accept or acknowledge receipt of the object due.
3.Compenatio Morae -delay or default of both parties in reciprocal
obligations.
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.
This article provides for the four (4) sources of liability
which will entire the injured party to damages, ie.:
1.Fraud-DOLO- It is the dishonesty, malice or bad faith in
the performance of an existing valid obligation, which
entitles the injured party to damage, i.e:
2.Negligence-CULPA- the fault or negligence here is
known as Culpa Contractual, committed by the debtor in the
performance of an existing valid obligation.
3. Delay or Default- MORA- This has been discussed
lengthily under the preceding Article.
4. Contravention of the Tenor of the Obligation- Refers to all
forms of defective performance or fulfillment of the obligation, or
to any unlawful acts which impair the valid and faithful
performance of the obligation, such as failure to follow the agreed
specifications of the contracts.
This Article, Art,1170, must be distinguished from the Art 1157.Art.
1157gives the five(5) sources of an Obligation, while Art. 1170
enumerates the four(4) kinds of liability. Summarizing the four
kinds of liability under Art. 1170, we have the following:
(1) Delay or Mora- composed of:
(a) Mora Solvendi - Delay of default on the part of the Debtor.
(b) Mora Accipiendi - delay on the part of the creditor to accept
or receive delivery of the presentation.
(c) Compensatio Morea- delay or default both debtor and
creditor in the fulfillment of an obligation.
(2) Negligence or Culpa- (a) Culpa Contractual- Negligence on the
part of the debtor in the performance of a valid existing contract.
(3) Fraud mora) Dolo Contractual- Dolo -(Fraud or dolo committed by the
debtor in the performance of an existing valid contract. This Fraud in Factum.

(b) Dolo by Inducement- This is the Fraud of Dolo committed under Art.
1138 whereby the debtor fraudulently induces a 3rd party to enter into a contact
with him. Such contract becomes viodable because the consent of the 3rd party to
the contract is obtained though fraudulent means.

(4) Contravention of the Tenor of the Obligation- Involves any act which
would impair the validity of a contact by not following strictly the specifications
agreed upon by the contacting parties.

ART.1171- Responsibility arising from fraud is demandable to all obligations.

Any waiver of an action for future fraud is void.
Any waiver, express or implied, is void as contrary to law and public policy
because such a waiver may serve as an inducement for the commission of fraud
in the fulfillment of the obligation.
In
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.

Culpa contractual- This is the Negligence or Culpa that is

committed in the performance of an existing valid contact. The
debtor, for example, committed negligence in the performance of his
contract, thus causing lesion or damage to the creditor. The creditor,
therefore, can sue the debtor for damages in the negligent
performance of his contract.

Culpa Aquiliana- This kind of negligence is also known as Tort. In

this case, a person is performing a voluntary legal act by himself,
without any contractual relationship with another. However, he
performed his act negligently, thereby causing lesion or damage to
another person without the intent to cause such damage. He is called
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 persons, of the time and of the place. When negligence
shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall
apply.
Three(3) Degrees of Diligence Required to be exercised by the debtor:
1.As required by the law- if a law provides a certain degree of diligence which
debtor must exercise in the performance of his obligation, then such diligence
must be strictly adhered to.

2.As stipulated in the obligation- in the absence of any legal provision, the
diligence stipulated or expressed in the obligation shall govern.

3. In the absence of No. 1 and 2 above, the proper diligence of a good father of a
family must be exercised in the fulfillment of the obligation.

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.
We are now consolidating under this Article all the exceptions to the above general
rule, and these are:
1) When the object is generic or indeterminate.
When the object or prestation is generic and is lost through fortuitous even
before delivery date, the obligation is not deemed extinguished because the
debtor can always deliver another object of the same kind or specie.

2) When the debtor has incurred in delayor is in default.

However, the debtor shall not be held liable for judicial delay until the
creditor has made a demand, judicial or extrajudicial, under Art.1169.

3) When the debtor promises to deliver the same prestation to two or more
persons who do not have the same interest.
It is not possible for the debtor to deliver the same thing to 2 or more persons who
do not have the same interest and therefore should be held liable because of his
bad faith.

4) When the nature of the obligation requires the assumption of risk.

The exception is premised on equity and social justice because there are certain
obligations, the fulfillment or performance of which involves the assumption of
risks.
 5) When the law provides that the obligation is not extinguished even
if the object is lost through fortuitous event.
a) Art.552 of NCC- Professor in bad faith shall be liable for loss or
deterioration in every case, even if through fortuitous event.
b) Art.1942.NCC- Bailee is liable for loss of the thing for another
purpose.
6) When the obligation itself expressly stipulates that the obligor shall
still be liable even if he fails to perform his obligation due to
fortuitous event.
ART.1175 - Usurious transactions shall be governed by special laws.
Usury is the overcharging of interest for the use of money or goods
in excess of the rates prescribed by law. The special law governing
Usury is Act. No.2655, as amended by Acts 3291, 3998, 4070, and CA
399.

ART.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.
Presumption Defined- “Presumption is the inference as to the
existence of certain facts which, if not contradicted, is considered
true”. In the above examples, the presumption is what we call the
creditor ”disputable or rebuttable presumption,” which means that
it is up to the creditor to prove that the interest in the first example
and the previous installments in the second example have not been
actually paid previously by debtor A.

ART.1177- The creditors, after having pursed the property in

possession of the debtor to satisfy their claims, may exercise all
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 have done to defraud them.
The remedies of a Creditor against his debtor are the following:
Sue debtor for collection
Attachment of debtor’s property, real or personal except those
which are exempt by law from execution.
Exercise all the rights and actions which debtor may have
against third persons, except those which are inherently
personal to debtor.
Impugn or contest acts of debtor which were intended to
defraud his creditors.

Debtor’s Property- which is answerable for his debt may be

his present and some of which are future property, real or
personal, 12 of Rule 39 of the Rules of Court. Some of these
properties exempt.

ART.1178- Subject to the laws, all rights acquired in virtue

of an obligation are transmissible, if there has been no
stipulation to the country.
THANKYOU!!