Topic Name > Subheading > Memorize > Simple Explanation > Examples

Topic 2: Nature and Effect of Obligations

Rights of Creditor and Duties of Debtor

Obligation to Give

●​ 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
Article 1163
standard of care.
●​ Anyone required to give something must take
good care of it, unless the law or agreement
specifies a different level of care.

1.​ Good Father of a Family – A good father of a

family means a person of ordinary or average
diligence.
Diligence 2.​ Contractual Diligence – Anything
3.​ Extraordinary Diligence – Imposed by law;
Banks; Common Carriers – Anything that
transports people or things.

●​ The creditor has a right to the fruits of the thing

from the time the obligation to deliver it arises.
However, he shall acquire no real right over it
Article 1164 until the same has been delivered to him.
●​ The creditor can benefit from the fruits of an item
once the obligation to deliver it starts, but they
don't own it until it is actually delivered.

1.​ Natural Fruits – are the spontaneous products

of the soil, and the young and other products of
animals. Article 442.
2.​ Civil Fruits – are the rents of buildings, the price
Article 441:
of leases of lands and other property and the
Right of Accession with
amount of perpetual or life annuities or other
Respect to What is
similar income. Product of contractual efforts.
Produced by Property
Article 443.
3.​ Industrial Fruits – are those produced by lands
of any kind through cultivation or labor. Product
of human effort. Article 444.
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●​ When what is to be delivered is a determinate

thing, the creditor, in addition to the right granted
him by article 1170, may compel the debtor to
make the delivery.
●​ If a specific item is to be delivered, the creditor
can demand its delivery; if it's a generic item, they
can request the debtor to fulfill the obligation. If
the debtor delays or promises the same item to
multiple people, they are responsible for any
unexpected events until delivery is made.
➔​ Generic/Indeterminate – Specified
among its kinds. Generic or indeterminate
thing is not particularly designated or
Article 1165
physically segregated from all others of the
same class. Examples: a horse, a
motorcycle, a sack of rice, a car, and USD
100, 000.
➔​ Specific/Determinate – A thing is
determinate when it is particularly
designated or physically segregated from
all others of the same class. Examples:
Romeo's only horse named Alden,
Kawasaki Raider with engine number
12345 and plate number HX1123, and
Romeo's one and only Rolex 3310 made in
China with serial number 265747.

●​ The obligation to give a determinate thing

includes that of delivering all its accessions and
accessories, even though they may not have been
mentioned.
Article 1166
●​ When obligated to deliver a specific item, the
debtor must also deliver everything that comes
with it, including any extras, even if they weren't
mentioned.

Obligation to Do

●​ If a person obliged to do something fails to do it,

the same shall be executed at his cost.
Article 1167 ●​ If someone fails to fulfill their obligation, they
must bear the costs of completing it, and if done
incorrectly, it may need to be undone.
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Obligation Not to Do

●​ When the obligation consists in not doing, and the

Article 1168 obligor does what has been forbidden him, it shall
also be undone at his expense.

Grounds for liability for damages

Article 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.

●​ According to Article 1169, Those obliged to

deliver or to do something incur 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
so declare; or “No Demand, No Delay”
(2)​When from the nature and the
circumstances of the obligation it appears
that the designation of the time when the
1.​ Delay
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 demand would be useless, as when
the obligor has rendered it beyond his
power to perform.
●​ Delay occurs when a debtor fails to meet their
obligation after being asked, except when the law,
contract timing, or circumstances make asking
unnecessary, or if fulfilling it is impossible. In
reciprocal obligations, delay starts when one party
fulfills their duty.

●​ According to Article 1171, Responsibility arising

from fraud is demandable in all obligations. Any
waiver of an action for future fraud is void.
2.​ Fraud ●​ You can always hold someone accountable for
fraud, and any agreement to ignore future fraud is
invalid.
●​ Kinds of Fraud;
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(1)​ Dolo Causante (Causal Fraud) –

Article 1338, There is fraud when,
through insidious words or machinations
of one of the contracting parties, the other
is induced to enter into a contract which,
without them, he would not have agreed to.
●​ Causal fraud occurs when someone
uses deceitful tactics to convince
the other person to enter a contract
they wouldn’t have agreed to
otherwise.
(2)​Dolo Incidente (Incidental Fraud) –
Article 1344, In order that fraud may
make a contract voidable, it should be
serious and should not have been
employed by both contracting parties.
Incidental fraud only obliges the person
employing it to pay damages.
●​ Incidental fraud involves minor
deceit that doesn’t void the contract
but requires the deceiver to pay
damages.

●​ According to Article 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.
●​ You can be held accountable for negligence when
fulfilling any obligation, but the court can adjust
the level of responsibility based on the situation.
●​ According to Article 1173, The fault or
3.​ Negligence 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; 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.
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●​ Negligence happens when someone fails to use the

care required by the type of obligation and the
situation, and if the level of care isn't stated, it
must be what a responsible person would do.

●​ According to Article 1170, Those who in the

performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any
4.​ Contravention of manner contravene the tenor thereof, are liable for
the tenor of the damages.
obligation ●​ If someone violates the terms of their obligation
through fraud, negligence, delay, or any other way,
they are responsible for paying damages. Or
simply, breach of contract.

●​ According to Article 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
5.​ Fortuitous event events which could not be foreseen, or which,
though foreseen, were inevitable.
●​ A person is not liable for unforeseeable or
unavoidable events, unless the law or contract
says otherwise, or the obligation involves taking
on such risks.

Usurious Transactions

●​ Usurious transactions shall be governed by special

laws.
●​ Usury is now legally non-existent. Parties are now
Article 1175 free to stipulate any amount of interest given
that the creditor should not charge the
debtor interest that is iniquitous or
unconscionable

●​ According to Article 1933, By the contract of

loan, one of the parties delivers to another, either
something not consumable so that the latter may
Loan or Mutuum
use the same for a certain time and return it, in
which case the contract is called a commodatum;
or money or other consumable thing, upon the
Topic Name > Subheading > Memorize > Simple Explanation > Examples

condition that the same amount of the same kind

and quality shall be paid, in which case the
contract is simply called a loan or mutuum.
●​ A loan contract involves one party giving
something to another, which can be either a
non-consumable item for temporary use
(commodatum) or money/consumable goods to be
returned in the same amount and quality
(mutuum).

Presumptuous

●​ 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; The receipt of a later installment of a debt
without reservation as to prior installments, shall
likewise raise the presumption that such
Article 1176
installments have been paid
●​ If a creditor accepts the main amount of a loan or
a later payment without mentioning any interest
or previous installments, it's assumed that the
interest and those earlier payments have been
settled.

●​ One which cannot be contradicted, like the

presumption that everyone is conclusively
1.​ Conclusive presumed to know the law.
presumption ●​ A conclusive presumption is an assumption that
cannot be challenged or disproven, like the belief
that everyone knows the law.

●​ One which can be contradicted by presenting

2.​ Disputable (or proof to the contrary.
rebuttable) ●​ A disputable (or rebuttable) presumption is an
presumption assumption that can be challenged by presenting
evidence that contradicts it.

Remedies available to creditors for the satisfaction of their claims

●​ The creditors, after having pursued the property in

Article 1177 possession of the debtor to satisfy their claims,
may exercise all the rights and bring all the actions
Topic Name > Subheading > Memorize > Simple Explanation > Examples

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.
●​ Subrogation. If a debtor sells their property to
avoid paying debts, creditors can challenge that
sale and claim the property to satisfy what they are
owed.

Transmissibility of Rights

●​ Subject to the laws, all rights acquired in virtue of

an obligation are transmissible, if there has been
no stipulation to the contrary.
Article 1178
●​ Rights gained from an obligation can be passed on
to others unless there’s an agreement that says
otherwise.