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Chapter 2 Nature and Effect of Obligations 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. Specific (determinate) particularly designated of physically segregated others of the same class. Generic (indeterminate) refers to only a class of genus to which it pertains and cannot be pointed out with particularity

or delay, in the performance of his obligation, or contravention of the tenor thereof Art. 1164 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 until the same has been delivered to him. Different kinds of fruits Natural fruits o Spontaneous products of the soil, and the young and other products of animals

Specific vs. Generic Industrial fruits o Produced by lands of any kind through cultivation or labor Determinate identified by its individuality and cannot be substituted w/o consent of creditor Generic identified only by its specie and can be replaced with anything of the same class as long as it is of the same kind

Civil fruits o Derived by virtue of a juridical relation

Duties of a debtor in obligation to give a determinate thing

Right of creditor to the fruits The creditor is entitled to the fruits of the thing to be delivered from the time the obligation to make delivery arises. The intention of the law is to protect the interest of the obligee should the obligor commit delay, purposely or otherwise, in the fulfillment of his obligation.

Preserve the thing obligor has incidental duty to take care of the thing due with the diligence of a good father of a family pending delivery

o o

Diligence of a good father of a family ordinary care or diligence which an average person exercises over his own property Another standard of care if stipulation of the parties provides for another standard of care, it must prevail. Obligor is also not exempted from liability for any fault or negligence on his part Factors to be considered nature of the obligation and circumstances of the person, time, and of the place; force majeure debtor is not liable for his failure to preserve the thing due to fortuitous events Reason for debtors obligation debtor must insure that the thing to be delivered would subsist in the same condition as it was when the obligation was contracted

When obligation to deliver fruits arises (General) Perfection of the contract birth of the contract of the the meeting of minds between parties (Suspensive condition) arises upon fulfillment of the condition or arrival of the term. However, parties may make a stipulation to the contrary as regards the right of the creditor to the fruits of the thing (Contract of sale) from perfection of contract even if obligation is subject to a suspensive condition where the price has been paid (obligations arising from law, quasi-contracts, delicts, and quasi-delicts) the time of perfrmance is determined by the specific provisions of the law applicable

Meaning of personal right and real right Deliver the fruits of the thing Article 1164 Deliver the accessions and accessories Article 1166 Deliver the thing itself Articles 1163, 1233, 1244, 1497-1501 Answer for damages in case of non-fulfillment or breach Article 1170 Personal right right or power of a person (creditor) to demand from another (debtor), as a definite passive subject, fulfillment of obligation Real right right or interest of a person over a specific thing (like ownership, possession, mortgage), without a definite passive subject against whom the right may be personally enforced

Personal right vs. Real right Personal right there is a definite and passive subject; binding or enforceable only against a particular person Real right there is only an active subject without any definite passive subject; directed against the whole world

Duties of a debtor in obligation to deliver a generic thing To deliver a thing which is of the quality intended by the parties taking into consideration the purpose the obligation and other circumstances To be liable for damages in case of fraud, negligence,

Ownership acquired by delivery

Ownership and other real rights over property are acquired and transmitted in consequence of certain contracts by tradition or delivery. He shall acquire no real right over it until the same has been delivered to him. No delivery yet = proper court action of the creditor is not for recovery of possession and ownership but one for specific performance or rescission of the obligation.

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 in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done to be undone. Situations contemplated in Article 1167 The debtor fails to perform an obligation to do The debtor performs an obligation to do but contrary to the terms thereof The debtor performs an obligation to do but in poor manner

Art. 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 be compiled with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for fortuitous event until he has effected the delivery. Remedies of creditor in real obligation Specific real obligation the creditor may exercise the following remedies or rights in case the debtor fails to comply with his obligation: o Demand specific performance of the obligation with a right to indemnity for damages; or Demand payment of damages only, where it is the only feasible remedy The very thing itself must be delivered. Creditor cant use force or violence upon debtor.

Remedies of creditor in positive personal obligation If the debtor fails to comply with this obligation to do, the creditor has the right: o To have the obligation performed by himself or by another, unless personal considerations are involved, at the debtors expense To recover damages

In case the obligation is done in contravention of the terms of the same or is poorly done, it may be ordered that it be undone

o o

Performance by a third person Personal obligation to do = real obligation to deliver a generic thing; both can be performed by a third person. Where the personal qualifications of the debtor are the determining motive for the obligation contracted, the performance of the same by another would be impossible or would result to be so different that the obligation could not be considered performed. The only possible remedy of the creditor = indemnification for damages.

Generic real obligation can be performed by a third person since the object is expressed only according to its family or genus. It is not necessary for creditor to compel the debtor to make the delivery, although he may ask performance of the obligation. Creditor has the right to recover damages in case of breach or violation of the obligation.

Where debtor delays or has promised delivery to separate creditors

An indeterminate thing cannot be the object of destruction by a fortuitous event because genus nunquam perit (genus never perishes).

Art. 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 Remedies of creditor in negative personal obligation Remedy of obligee undoing of the forbidden thing 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. Meaning of accessions and accessories Accessions fruits of a thing or additions to or improvements upon a thing Accessories things joined to or included with the principal thing for the latters embellishment, better use, or completion Accessions are not necessary to the principal thing, the accessory and the principal thing must go together

Right of creditor to accessions and accessories

Art.1169 those obliged to deliver of to do something incur delay from the time the obligee judicially or extra-judicially 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 declared; 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 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.

Meaning of delay Ordinary delay merely the failure to perform the obligation on time Legal delay or default or mora failure to perform an obligation on time which failure constitutes a breach of the obligation

He is liable for damages suffered, if any, by the debtor. He bears the risk of loss of the thing due. Where the obligation is to pay money, the debtor is not liable for interest from the time of creditors delay. The debtor may release himself from the obligation by the consignation or deposit in court of the thing or sum due.

o o

Kinds of delay or default

Mora solvendi delay on the part of the debtor to fulfill his obligation (to give or to do) 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 (like in sale) i.e., the delay of the obligor cancels the delay of the obligee, and vice versa. The net result is that there is no actionable default on the part of both parties.

Compensatio morae o The delay of the obligor cancels the delay of the obligee and vice versa. Legally speaking, there is not default or delay on the part of both parties. If the delay of one party is followed by that of the other, the liability of the first infractor shall be equitably tempered or balanced by the courts. If it cannot be determined which of the parties is guilty of delay, the contract shall be extinguished and each shall bear his own damages.

No delay in negative personal obligation Delay is impossible for the debtor fulfills not doing what has been forbidden him.

When demand is not necessary to put debtor in delay When the obligation so provides. o The obligation must expressly so declare that demand is not necessary.

Requisites of delay or default by the debtor Failure of the debtor to perform his (positive) obligation on the date agreed upon Demand made the creditor upon the debtor to comply with his obligationwhich may either be judicial or extra-judicial Failure of the debtor to comply with such demand In the absence of evidence as to such extrajudicial demand, the effects of default arise from the date of the judicial demand, that is, from the filing of the complaint Effects of delay

When the law so provides. o Example: Government taxes

When time is of the essence. o Examples: making of a wedding dress, delivery of balloons to a childrens party, etc.

When demand would be useless. o Examples: Death of animal prior to delivery, unavailing situations (refusal or intention not to comply)

Mora solvendi o The debtor is guilty of breach or violation of the obligation. He is liable to the creditor of interest or damages. In the absence of judicial demand, the interest shall commence from the filing of the complaint. He is liable even for a fortuitous event when the obligation is to deliver a determinate thing. If the debtor can prove that the loss would have resulted just the same even if he had not been in default, the court may equitably mitigate or reduce the damage. In an obligation to deliver a generic thing, the debtor is not relieved from liability for loss due to a fortuitous event. He can still be compelled to deliver a thing of the same kind or held liable for damages.

When there is performance by a party in reciprocal obligations. o Performance of one is conditioned upon the simultaneous fulfillment on the part of the other. So 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 a party fulfills or is ready to fulfill his obligation, delay by the other begins.

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. Grounds for liability

Mora accipiendi o The creditor is guilty of breach of obligation.

Fraud (deceit or dolo)

Deliberate or intentional evasion of the normal fulfillment of an obligation. As ground for damages, it implies some kind of malice or dishonesty and it cannot cover cases of mistake and errors of judgment made in good faith. Synonymous to bad faith in that, it involves a design to mislead or deceive another. Incidental fraud (dolo incidente) vs. causal fraud (dolo causante)

Negligence (fault or culpa) o Any voluntary act or omission, there being no bad faith or malice, which prevents the normal fulfillment of an obligation.

Delay (mora) o Article 1169

Contravention of the terms of the obligation

Violation of the terms and conditions stipulated in the obligation. Must not be due to force majeure.

Fraud vs. Negligence Fraud there is deliberate intention to cause damage or injury; waiver of the liability for future fraud is void; must be clearly proved; liability for fraud cannot be mitigated or reduced by the courts Negligence there is no intention; waiver liability for future liability may be allowed; presumed from the violation of contractual obligation; liability may be reduced according to the circumstances Both voluntary Where negligence is gross or there is failure to exercise even slight care or entire absence of care that it shows bad faith or amounts to malice or wanton attitude on the part of the defendant, the rules on fraud shall apply.