Buslaw 1

De La Salle University
Comlaw Department
Obligations and Contracts
Book IV, New Civil Code
Title 1, Chapter 2
Nature and Effects of Obligations
ARTICLE 1163. Every person obliged to give something is also obliged to take care of it
with the proper diligence of a good father to a family, unless the law or the stipulation of
the parties require another standard of care.

Kinds of Obligation as to object

GENERIC OR INDETERMINATE when it refers only to a class or genus and cannot be

pointed out particularly

Ex. I promise to give you a cellphone

SPECIFIC OR DETERMINATE when it is particularly designated or physically segregated

from all other of the same class

Ex. I promise to give you this cellphone

Required Diligence in Obligations to Give

In all obligations to give, the obligor is required to take care of the thing to be
delivered with the diligence in the following order:

1) Required by the stipulations of the parties

2) Required by law
3) Diligence of a good father of a family.

Diligence of a good father of a family is often referred to as ordinary diligence.

ARTICLE 1164. The creditor has the right to the fruits of the thing from the
time the obligation to deliver it arises. However, he shall require no real
right over it until the same has been deliver to him.

Fruits are the produce of the thing to be delivered.

There are different kinds of fruits

Natural Fruits – are the spontaneous products of the soil, and the young and
the other products of animals
Industrial Fruits – are those produce by lands of any kind through cultivation
or labor
Civil Fruits – are those derived by virtue of a juridical relation
Rights over the fruit can be personal or real.

Personal rights mean that the obligee is entitled to the fruits but other than
being entitled to it, the oblige cannot exercise any other rights.
Real rights mean that the oblige is not only entitled to the fruits but can enjoy
all the other rights that comes with owning the fruits.

Ex. I may be entitled to a car upon graduation, but until I have gotten
the car I cannot drive it or say I own it.

The time when a personal right over the fruits, or any other property, becomes
real is when the thing/fruit is actually delivered.
ARTICLE 1165. 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 the thing is indeterminate or generic, he may ask that the obligation to be

complied with the expense of the debtor.

If the obligor delays, or has promise to deliver the same thing to two or more
persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected delivery.
ARTICLE 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.

Accession – fruits of a thing or addition to or improvements upon a thing; not

essential for the thing to work
Ex. in cars, the accessions are mags, paint, anti-lock system
In computers, the accessions are hard disk, memory
Accessories – essential for the thing to work
Ex. in cars, the accessories are engine, muffler
in computers, drives, keyboard, monitor
ARTICLE 1167. If a person obliges to do something fails to do it; the same
shall be executed at his cost.

This same rule shall be observed if he does do it in contravention of the tenor

of the obligation.

Furthermore, it may be decreed that what has been poorly done be undone.

ARTICLE 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.
ARTICLE 1169. Those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demand 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 demand would be useless, as when the obligor has rendered it beyond his
power to perform.

In reciprocal obligations, neither parties 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 fulfill his obligation, delay by the other begins.
Delay

Failure to deliver the object on time. Such delay may be classified as

Ordinary – When the obligor has not delivered it at the time of delivery
Legal – When after demand to deliver it, the obligor has failed to deliver

Generally, it is only when there had been a demand to deliver it, either
judicially or extra-judicially, that the obligee may ask the law and the court to
step in and enforce the terms of the obligations.

Sometimes, demand is not necessary for there to be legal delay.

Kinds of Delay
 
Mora Solvendi – failure to comply with your obligation (to give or to do)
Mora Accipiendi – the delay on the part of the creditor to accept the
performance of the obligation 
Compensatio Morae – the delay of the obligors in reciprocal obligation
ARTICLE 1170. Those who are in performance of their obligations are guilty
of fraud, negligence, or delay, and those in any contravene the tenor thereof,
are liable for damages.

Damages – can be construed to be either

The injury sustained by a party
The Compensation to which a party is entitled to.

In this Article, the damages referred to is the latter.

(Discussion on details of Damages are in Art. 1159)

When can damages be asked:

Fraud (Dolo) – dishonest practice or deception in an obligation

 Dolo Causante – fraud existing at the time the obligation was created
 Dolo Incedental – fraud that existed after the obligation was created

 Negligence (Culpa) – voluntary act or omission, there being no malice,

which prevents the normal fulfillment of the obligation
 Culpa Aquiliana – quasi-delicts
 Culpa Contractual - contractual negligence

Delay
Contravention of the terms
ARTICLE 1171. Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void.

Waiver of future frauds are void. Waiver is when one gives up one’s rights

*This is because fraud is so serious and evil that its employment to avoid the
fulfillment of one’s obligation should be discouraged

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.
ARTICLE 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.

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.

negligence is the failure to observe for the protection of the interest of another
person, that degree of care, precaution and vigilance which the circumstance
justly demand, whereby such other person suffers injury.
In determining whether there is negligence present in a situation, one must take
into consideration the following:

(1) Nature of the obligation

(2) Circumstances of the person
(3) Circumstances of time
(4) Circumstance of the place
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 this
events which could not be foreseen, or which, though foreseen, were
inevitable.

Fortuitous Events are any events which cannot be seen, or which though
foreseen, is inevitable.
Ordinary – events which are common and which the contracting parties
could reasonably have forseen.
Extra-ordinary - events which are uncommon and which the contracting
parties could not have reasonably foreseen (earthquake, fire, war, pestilence,
unusual flood, etc.).
Requisites for a Fortuitous event to exempt obligors

1) The event must be independent of the human will or at least the debtors will

2) The event could not be foreseen, or if foreseen, is inevitable

3) The fortuitous event must have affected obligation in such a way that the
obligation can’t be delivered anymore

4) The debtor must be free from any participation in the aggravation of the
injury or loss

*one can be liable even without fortuitous event if he agreed on delivering a specific product to two
person; as stated on article 1165
ARTICLE 1175. Usurious transactions shall be governed by special laws.

ARTICLE 1176. The receipt of the principal by the creditor without

reservation with respect to the interest, shall give rise to the assumption that
said interest has been paid.
The receipt of later installment of a debt without reservation as to prior
installment shall likewise raise the presumption that such installments have
been paid.

Presumption - meant the inference of a fact not actually known arising from it.
- usual connection with another which is known
Kinds of Presumptions

Conclusive Presumption - one which cannot be contradicted.

Ex. It is presumed that everyone knows the law (ignorance excuses no one)

Disputable (or Rebuttable) Presumption – one which can be contradicted or

rebutted by presenting truth to the contrary. This is also referred to in law as
prima facie.

Note that in cases of presumptions, the only evidence needed to prove the presumption
is the acceptability of a presumption. Merely stating that there is a presumption is not
sufficient to establish a fact if such presumption is not widely accepted.
ARTICLE 1178. Subject to the laws, all rights acquired to the virtue of an
obligation are transmissible, if there has been no stipulation to the contrary.

This means that rights acquired by a person by virtue of an obligation is fully

transferrable to another person provided:

1) The law says otherwise

2) The stipulation says otherwise
Buslaw 1
Study Guide
MODIFIED TRUE OR FALSE
1. In a real obligation, a debtor is required to take care of the thing with the
diligence of a good father of a family.
2. Ordinary diligence is the level of diligence generally exercised by a common
person.
3. Money, being an artificial construct, cannot be considered a fruit of an
object.
4. In a contract to deliver a specific object, it also carries with it the obligation
to deliver the fruits of the specific object.
5. A person who is not in possession of a thing can only exercise a personal
right over the same.
6. In an obligation to do something, in case the debtor does not comply, the
creditor can ask the court to compel the debtor to fulfill is obligation.
MODIFIED TRUE OR FALSE
7. An object not agreed upon is considered to be generic.
8. Specific objects are those which have been specifically identified or
physically segregated for the creditor.
9. Something poorly done to the best of the ability of a debtor is not
considered to be a breach of an obligation.
10. When the due date has passed and the obligor has not complied with his
obligation, he shall be considered in delay as provided by law.
11. Parties can agree that in the event either party commits an act of fraud
against each other, the other party will not be able to collect damage.
12. A person who counts his money in public is considered to be negligent.
13. In all obligations to deliver a thing, loss of the thing due excuses the obligor
from making delivery of the thing.
MODIFIED TRUE OR FALSE
14. In an obligation, a creditor cannot be in delay.
15. Fraud that was used to induce a party to enter into a contract is called
incidental fraud.
16. A person who is in delay is conclusively presumed to be liable for fortuitous
events.
17. Negligence and Fraud are the same in that they are both reasons why
creditor can claim for damages.
18. Fraud may or may not be intentional.
19. Rights arising from obligations are transmissible.
20. Usurious contracts are against law and hence are void.
MODIFIED TRUE OR FALSE
21. In an obligation to deliver a specific thing, the diligence required from the
creditor is the diligence of a good father of a family.
22. Rights created by contract are generally personal and cannot be assigned to
third parties.
23. Ordinary fortuitous events are those which can be reasonably foreseen and
as such will not excuse the debtor in case the thing is lost due to the said
event.
24. Delay, whether ordinary or legal, entitles the creditor to damages.
25. A debtor in an obligation to render a service who is in breach of his
obligation cannot be forced to comply with his obligation by the court.
ENUMERATIONS/DEFINITIONS
1. What are the kinds of obligation as to the object?
2. In real obligations, what kind of diligence needs to be exercised by a debtor?
3. What is ordinary diligence?
4. What are the kinds of fruits of an object?
5. What are personal rights and real rights?
6. What breaches of obligations?
7. What are the kinds of fraud in an obligation?
8. What are the kinds of negligence in an obligation?
9. What are the circumstances considered in determining negligence?
10. What are the kinds of delay?
ENUMERATIONS/DEFINITIONS
11. When is demand not necessary to make the debtor in delay?
12. What are fortuitous events?
13. What are the requisites for fortuitous events to extinguish an obligation.
14. What are the kinds of presumptions?
15. When are the rights created in an obligation not transmissible?
16. What are the instances when a person in an obligation is entitled to
damages?
PROBLEM SOLVING
Problem 1. – Jose promised to deliver a cellphone to Mario on or before
Wednesday next week. Later in the day, Mario saw Jose using a cellphone in
vibrate mode to massage his shoulder. Mario complained stating that Jose is
not exercising proper diligence in his obligation to deliver to him the cellphone.
Is Mario correct in citing the negligence of Jose? Justify.
Problem 2. – Peter and Paul, best of friends in DLSU, entered into a partnership
to do business. One of the provisions in the contract was that because of their
close relationship, the parties have full trust and confidence with each other and
hencefother binds themselves not to sue each other relating to the business for
any reason including but not limited to negligence, delay or fraud. 6 months
after, Paul stole the day’s receipt from the business and prompted Peter to sue
Paul for estafa. Paul countered that this is not allowed under the contract. Who
is correct? Justify
PROBLEM SOLVING
Problem 3. – Ayee promised to deliver to James a specific dog on Friday. On
due date, the dog went into labor and when James came over to pick up the
dog, Ayee told James that the dog was giving birth to 4 puppies and she could
not give James the dog until the puppies were viable enough, which would be
about 5 weeks later. James agreed that this might be the best recourse and left
the dog with Ayee. However, James started to sell the puppies to Tito, Vic and
Joey. Unfortunately, despite all the care that Ayee did, the puppies did not
survive. James was so angry that he sued Ayee because James was made to
return the money he received from Tito, Vic and Joey for the puppies. Ayee
claimed that she was not liable to James because James did not have any right
over the puppies in the first place. Is Ayee liable to pay James for the loss of the
puppies? Justify.
PROBLEM SOLVING
Problem 4. – Mario promised to give Pedro a car on Pedro’s graduation. Pedro
was so grateful because he had always wanted to have Mario’s car. However, a
month before Pedro’s graduation, a typhoon hit and the entire city was
inundated with floods. The floods submerged Mario’s car in 6 feet of water for
5 days which totally destroyed the car. Because of this incident, Mario went to
Pedro to tell Pedro that he can no longer give the car to Pedro because it has
been lost already. Pedro protested because he was looking forward to getting
the car and sued Mario for breach of contract. But Mario countered that the
thing has been lost by fortuitous events and as such he cannot be made liable.
a. Can Mario validly claim that his car had been lost by fortuitous events?
Justify.
b. Can Jose sue Mario for breach of contract? Justify.
c. Is Mario liable to Jose for the obligation? Justify
Buslaw 1
End of BIV T1 C2