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KINDS OF OBLIGATIONS AS

TO PLURALITY/MULTIPLE
PRESTATIONS:

QUESTION:
In multiple prestations where one
of the prestation is impossible to perform even
if the other prestation still are possible to
perform, may the obligation be considered to
have been extinguished?
ANSWER:
It depends on the kind of obligation
involved. It may be a conjunctive obligation,
alternative obligation, facultative obligation.

In conjunctive obligations, the
impossibility of performance of one will not
result in the extinguishment of the obligation
because there is another or two or more other
obligations to be performed.
In facultative obligations, it
depends on whether there is already
substitution at the time of the impossibility of
the performance of one of the prestation.
If before substitution
the impossibility of one of the
obligation becomes impossible to
perform due to a fortuitous event,
the obligation is extinguished.
But if one of the
obligation become impossible to
perform due to the fault of the
debtor, the obligation is not
extinguished (debatable on the
second scenario).
If in facultative obligation what was lost or
became impossible to perform was the
substitute prestation and there was no
substitution yet at the time of the loss, the
obligation is not extinguished because the
due prestation was the principal prestation.

In alternative obligations, if there
was already a communication of a choice, by
then the obligation is converted into a simple
obligation and the one chosen was the one
impossible to perform especially if it is due to
a fortuitous event, as such, the obligation is
extinguished.
If there was already a
communication of a choice but
what become impossible was the
other prestation which was not
chosen, the obligation is not
extinguished.

*Conjunctive- and;
*Alternative-or;
*Facultative-debtor has the right to make a
substitution or to perform instead a substitute
prestation.


Q: Bs car was lost due to the fault of the
debtor, what are the remedies of the creditor?
A: It depends on who has the right to choose.
If it shows that the choice is not expressly
granted to the creditor, the right of choice
pertains to the debtor.
Under the law it was provided that the
choice is with the debtor, unless otherwise
expressly granted to the creditor.
If the choice is with the debtor, even if it
was due to his fault, he has other prestations to
choose from without being held liable for
damages. Anyway, there is yet no due
prestation because the debtor has not yet able
to make a choice.

Q: If however in alternative obligations, the
first two prestations become impossible to
perform due to the fault of the debtor, and the
remaining prestation becomes impossible to
perform due to a fortuitous event. Can the
debtor be held liable for damages?
A: The debtor can be held liable if this is the
choice of the creditor.
However, if the choice is with the
debtor, he (debtor) cannot be held liable for
damages even if the loss of the last remaining
prestation was due to a fortuitous event. This
is because the debtor diminished the
possibility of the performance of the
obligation and secondly he was at fault
therefore he can be held liable for damages
under Art. 1170.
However, the provisions in Art. 1170
presupposes a simple obligation, and thus not
applicable in the present case to make the
debtor liable.
Secondly, even if the obligation has
diminished the performance of the obligation
imputable to the debtor, he cannot be held
liable because it can be considered as his
choosing to make the first two prestations
impossible to perform, and the last prestation
be considered as his choice. The last though
lost due to fortuitous event, cannot make
the debtor liable.
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. (1101)

Q: The horse died due to the fault of the
debtor, this time the creditor has the right to
choose. What are the rights of the creditor?
A: He can choose from one of the remaining
prestations or choose the prestatation which
was lost due to the fault of the debtor.
If the creditor choose to
demand for the value of the
obligation which was lost due to
the fault of the debtor, the debtor
can be heldliable for damages.
If the creditor chose to
compel performance through the
remaining prestations, the debtor
cannot be held liable for
damages.

Q: The horse was lost due to the fault of the
debtor, then after the second prestation was
also lost due to the fault of the debtor, and
thirdly a book was lost due to the fault of the
debtor. What is the extent of the liability of the
debtor under the foregoing circumstances?
Can the creditor choose for the value for any
of the three prestations?
A: It depends on who has the right to choose.
If the creditor has the
right of choice, he can choose on
the value of any of the three
prestations.
But if the choice is
with the debtor, the liability will
be based on the value of the
prestation which was lost last due
to his fault.

QUALIFICATION IN ALTERNATIVE
OBLIGATION:
If one of the prestations become impossible
to perform due to the fault of the debtor, and
the choice is with the creditor:
The creditor can either
demand for the value of the
prestation with damages or he can
demand for the performance of one
of the remaining prestations
without damages.
Second view: If the
creditor can demand for the per
formance of one of the remaining
prestations, the creditor may opt to
demand for
the value of the thing
which was lost due to the fault of
the debtor. In this instance under
alternative obligations, it is
possible that the debtor is not the
owner of the horse.
In alternative obligations the debtor is not
sure whether he can deliver the horse or not. if
the horse was owned by the creditor, as such
he can seek damages. If the thing lost was
owned by the debtor as a valid premise, the
debtor cannot be held liable for damages.
In alternative obligations it must be
remembered that the prestation may either be
owned by the debtor or not.

FACULTATIVE OBLIGATIONS
In facultative obligations, it is improper to
say that there is only one prestation. For how
could it be considered to fall in obligations
with multiple prestations if there is only one
prestation involved. Rather it is better to say
that there is only one prestation due in a
facultative obligation. At any given point in
time there can only be one prestation due
unlike the other prestations.

Q: When will the obligation in facultative
obligation become due?
A: If there is already a communication of the
substitution.

Q: If the principal prestation before
substitution became impossible to perform due
to the fault of the debtor, can the creditor
demand to perform the substitute prestation?
A: No.
This is because in facultative obligation,
the choice is always with the debtor.
The remedy of the creditor is to demand for
damages.

Q: If before substitution became impossible to
perform due to the fault of the debtor, can the
debtor be held liable for damages by the
creditor?
A: The debtor cannot be held liable for
damages because that was not the due
prestation. The debtor will bear the lost, but he
cannot be held liable for damages.

Q: When can the debtor make the
substitution?
A: The debtor can make the substitution at
any time.

Q: Can the debtor make the substitution if the
debtor is already in delay?
A: No.
Why should the law allow the debtor to
make substitution is he is already in delay. If
he is already in delay he can already be liable
for damages.
There is no sense to give him a right if he is
already liable for damages.

Q: If the obligation is already impossible, can
the debtor make a substitution?
A: No.
For how can the debtor make a substitution
if the obligation is already impossible, unless
it was really the agreement or the intention of
the parties.
Otherwise, it is considered simply as an
obligation with a penal clause. Upon non
compliance with the obligation, the debtor can
be compelled to perform the other prestation
or the accessory undertaking.

Q: Is the substitute prestation had already
been agreed upon by the parties?
A: Yes.
There can never be a valid facultative
obligation when the substitute prestation has
not been agreed upon. Otherwise if the debtor
has the right to make a substitution without the
substitute prestation having been agreed upon,
it may be prejudicial to the creditor because
such will give the right to the debtor to deliver
an inferior prestation.

JOINT &
SOLIDARY
OBLIGATIONS
Q: A filed an action against B for the recovery
of a sum of money. Would it matter if it is a
joint or solidary obligation?
A: Yes.
There will be an issue because A may file
an action against A as a joint debtor or a
solidary debtor. There is a difference on an
action filed against one defendant or an action
filed against a debtor. A defendant may either
be a joint debtor or a solidary debtor. The
creditor need not sue everyone.

Q: Assuming there is an issue whether the
obligation is a joint or a solidary obligation,
who would claim that it is a joint obligation?
A: It would be B who would claim that the
obligation is joint. The plaintiff A on the other
hand who demanded payment from only one
of the debtors would definitely claim that the
obligation is a solidary obligation.

Q: What would be an indication in a case
which will warn the examinee on whether the
obligation is joint or solidary?
A: The extent of the liability is the
determining factor that the obligation is joint
or solidary. The question is whether one of the
debtors can be compelled the entire amount.

Q: A and B sold 1000 sacks of rice to X and
Y. X demanded delivery of 1000 sacks of rice
from A and B. A and B delivered the 1000
sacks of rice to X. Y did not receive anything
out of the 1000 sacks of rice. Can Y still
compel A and B to deliver a portion of the
1000 sacks of rice? If he can, how many can Y
demand?
A: It is a joint obligation unless from the
stipulation of the parties or in the nature, or
the law it shows solidarity. Under the facts,
when A and B delivered the 1000 sacks to X it
did not actually extinguished the obligation to
Y because he did not receive anything from
the 1000 sacks of rice, therefore it did not
extinguish the obligation.

Q: What obligations are considered solidary?
(Solidary Obligations-PROVISIONS)
A:
Art. 927. If two or more heirs take
possession of the estate, they shall be
solidarily liable for the loss or destruction of a
thing devised or bequeathed, even though only
one of them should have been negligent. (n)

Art. 1824. All partners are liable
solidarily with the partnership for everything
chargeable to the partnership under Articles
1822 and 1823. (n)
Art. 1822. Where, by
any wrongful act or omission of
any partner acting in the ordinary
course of the business of the
partnership or with the authority of
co-partners, loss or injury is caused
to any person, not being a partner
in the partnership, or any penalty is
incurred, the partnership is liable
therefor to the same extent as the
partner so acting or omitting to act.
(n)
Art. 1823. The partnership is bound
to make good the loss:
1) Where one partner acting
within the scope of his apparent
authority receives money or
property of a third person and
misapplies it; and
(2) Where the partnership in the
course of its business, money or
property of a third person and the
money or property so received is
misapplied by any partner while it
is in the custody of the partnership.
(n)

Art. 1911. Even when the agent
has exceeded his authority, the principal is
solidarily liable with the agent if the former
(principal) allowed the latter (agent) to act as
though he had full powers. (n)

Art. 1915. If two or more persons
have appointed an agent for a common
transaction or undertaking, they shall be
solidarily liable to the agent for all the
consequences of the agency. (1731)

Art. 1945. When there are two or
more bailees to whom a thing is loaned in the
same contract, they are liable solidarily.
(1748a)

Art. 2157. The responsibility of
two or more payees, when there has been
payment of what is not due, is solidary. (n)

Art. 2194. The responsibility of
two or more persons who are liable for quasi-
delict is solidary.
(n)

Art. 2146. If the officious manager
delegates to another person all or some of his
duties, he shall be liable for the acts of the
delegate, without prejudice to the direct
obligation of the latter toward the owner of the
business.
The responsibility of two or more officious
managers shal l be sol idary, unless the
management was assumed to save the thing or
business from imminent danger. (1890a)

Art. 94. (FC) The absolute
community of property (APC) shall be liable
for:
(1) The support of the
spouses, their common children,
and legitimate children of either
spouse; however, the support of
illegitimate children shall be governed
by the provisions of this Code on
Support;
(2) All debts and
obligations contracted during the
marriage by the designated
administratorspouse for the benefit
of the community, or by both
spouses, or by one spouse with the
consent of the other;
(3) Debts and
obligations contracted by either
spouse without the consent of the
other to the extent that the family
may have been benefited;
(4) All taxes, liens,
charges and expenses, including
major or minor repairs, upon the
community property;
(5) All taxes and
expenses for mere preservation
made during marriage upon the
separate property of either spouse
used by the family;
(6) Expenses to enable
either spouse to commence or
complete a professional or
vocational course, or other activity
for self improvement;
(7) Ante-nuptial debts
of either spouse insofar as they
have redounded to the benefit of
the family;
(8) The value of what is
donated or promised by both
spouses in favor of their common
legitimate children for the
exclusive purpose of commencing
or completing a professional or
vocational course or other activity
for selfimprovement;
(9) Ante-nuptial debts
of either spouse other than those
falling under paragraph (7) of this
Article, the support of illegitimate
children of either spouse, and
liabilities incurred by either spouse
by reason of a crime or a quasi-
delict, in case of absence or
insufficiency of the exclusive
property of the debtor-spouse, the
payment of which shall be
considered as advances to be
deducted from the share of the
debtor -spouse upon l iquidat ion of
the community; and
(10)Expenses of
litigation between the spouses
unless the suit is found to be
groundless. If the community
property is insufficient to cover the
foregoing liabilities, except those
falling under paragraph (9), the
spouses shall be solidarily liable
for the unpaid balance with their
separate properties.

Art. 121. (FC) The conjugal partnership
(CPG) shall be liable for:
(1) The support of the
spouse, their common children, and
the legitimate children of either
spouse; however, the support of
illegitimate children shall be
governed by the provisions of this
Code on Support;
(2) All debts and
obligations contracted during the
marriage by the designated
administrator-spouse for the benefit
of the conjugal partnership of
gains, or by both spouses or by one
of them with the consent of the
other;
(3) Debts and
obligations contracted by either
spouse without the consent of the
other to the extent that the family
may have benefited;
(4) All taxes, liens,
charges, and expenses, including
major or minor repairs upon the
conjugal partnership property;
(5) All taxes and
expenses for mere preservation
made during the marriage upon the
separate property of either spouse;
(6) Expenses to enable
ei ther spouse to commence or
complete a professional, vocat
ional , or other act ivi ty for sel f -
improvement;
(7) Ante-nuptial debts
of either spouse insofar as they
have redounded to the benefit of
thefamily;
(8) The value of what is
donated or promised by both
spouses in favor of their common
legitimate children for the
exclusive purpose of commencing
or completing a professional or
vocational course or other activity
for selfimprovement; and
(9) Expenses of
litigation between the spouses
unless the suit is found to
groundless. If the conjugal
partnership is insufficient to cover
the foregoing liabilities, the
spouses shall be solidarily liable
for the unpaid balance with their
separate properties.

Q: Give an example of an obligation which is
solidary by nature?
A: The liability of those who figured in
vehicular mishaps where a person is a
passenger of one at the time of the mishap,
such passenger hold the owner of the vehicle
under breach of contract together with the
driver under the contract. The owner of the
vehicle as well as the driver may b eheld liable
under quasi delict.
There is no basis under the law which
would make them solidarily liable the case
being based on different causes of action.
There is no law which provides for solidarity,
but by the nature of the obligation they are
held solidarily liable.

Q: For contractual obligations, may the
partners be held solidarily liable?
A: No. because as a rule joint without
prejudice that the partners binding themselves
solidarily.

Q: May an insurance company of a vehicle be
held solidarily liable with the owner of the
vehicle , the driver, and the employer of the
driver?
A: No.
It is only the owner of the vehicle (Sio
Choy) and the the employer of the driver
(San Leon Rice Mill) should be held solidarily
liable and not the insurance company.
The basis of the liability of the owner of
the vehicle is Art. 2184 which provides that in
motor vehicle mishaps, the owner is solidarily
liable with his driver, if the former, who was
in the vehicle, could have, by the use of due
diligence, prevented the misfortune it is
disputably presumed that a driver was
negligent, if he had been found guilty of
reckless driving or violating traffic
regulations at least twice within the next
preceding two months. Since the owner was
not in the vehicle Art. 2184 is not applicable.
If the owner was not in the motor vehicle, the
provisions of article 2180 may be applicable.
Secondly the basis of the liability of the
employer is in Art. 2180 which provides: The
obligation imposed by article 2176 is
demandable not only for one's own acts or
omissions, but also for those of persons for
whom one is responsible.

xxx xxx xxx

Employers shall be liable for the damages
caused by their employees and household
helpers acting within the scope of their
assigned tasks, even though the former are not
engaged in any business or industry. But the
owner of the vehicle is not the employer so
Art. 2180 is likewise not applicable.

xxx xxx xxx

The responsibility treated in this article
shall cease when the persons herein mentioned
proved that they observed all the diligence of a
good father of a family to prevent damage.
Under the foregoing, the employer and
the owner of the vehicle are solidarily liable
as joint tortfeasors. Under the law: The
responsibility of two or more persons who
are liable for a quasi-delict is solidarily
liable.
The basis of the liability of the insurer is
the insurance contract while the employer and
the owner is torts which could not make the
insurer be solidarily liable (Malayan
Insurance vs. CA).

Q: For contractual obligations, may the
partners in a partnership be held solidarily
liable?
A: No.
As a rule joint unless of course if the
partners bind themselves solidarily and under
certain specific scenarios or exceptional
circumstances under the civil code which
make them solidarily liable. (See provisions
above)
Note: In these scenarios the examinee must
be able to determine under what specific
circumstances that the debtor may be held
solidarily liable.

Q: Other word or phrase for solidary?
A:
Joint and collective,
Joint and several,
Jointly and individually.

Ronquillo vs. CA
Clearly then, by the express term of
the compromise agreement and the decision
based upon it, the defendants obligated
themselves to pay their obligation
"individually and jointly".
The term "individually" has the
same meaning as "col lect ively" , "separately"
, "dist inct ively" , respectively or "severally".
An agreement to be "individually liable"
undoubtedly creates a several obligation, and a
"several obligation is one by which one
individual binds himself to perform the
whole obligation.
In the case of Parot vs. Gemora
We therein ruled that "the phrase juntos or
separadamente or in the promissory note is an
express statement making each of the persons
who signed it individually liable for the
payment of the full amount of the obligation
contained therein." Likewise in Un Pak Leung
vs. Negorra We held that "in the absence of a
finding of facts that the defendants made
themselves individually liable for the debt
incurred they are each liable only for one-half
of said amount.
The obligation in the case at bar
being described as "individually and jointly",
the same is therefore enforceable against one
of the numerous obligors.

Q: A and B, debtors X and Y creditors. X
filed an action against A, the action was
dismissed, thereafter X filed an action against
B, may the action be dismissed?
A: It would depend on what kind of obligation
is involved, whether it is joint or solidary.
If the obligation is solidary, there is more
reason that the action against B should
likewise be dismissed since its obligation is
solidary.
However, even if A and B are solidarily
liable and the action against A is dismissed, a
subsequent action against B may prosper if
the defenses is purely personal to A, like
when A is a minor.
Therefore it would depend on the defense
raised which is the basis of the dismissal.
If the obligation is joint, the dismissal of
the first case shall not affect the action against
the other debtor, because their obligations are
separate and distinct from each other.

Q: What kind of defense is minority? Is it a
defense? If it is a defense, Is it partial or total
defense?
A: It depends, if it is a joint or solidary
obligation.
If the obligation is joint, it is a defense as
to the minor but not as to B. Their obligation
is separate and distinct from each other.
The same is likewise a defense in
solidary obligation. It is a total if it is the
minor is raising the defense; If the one
claiming the defense is a co-debtor, it is only
partial as to the share of the minor.

Q: Is there a total defense in any kind of
obligation whether joint or solidary and can be
invoked by any of the debtors?
A: If the obligation is void it it a total defense.

Q: A and B are solidary debtors, A paid the
creditors 1 million last year, today A
demanded money from B, how much can A
recover from B? Can A recover interest?
A: A may recover 50% of the debt paid. A
may recover interest from the date the
obligation became due and not on the date
when he paid the obligation before it was due.

Q: A obliged himself to pay X or Y, X
demanded payment from A, thereafter Y
demanded payment from A, A paid Y. May X
able to hold A liable?
A: It depends on the intention of the parties
who has the right to choose.
X may still able to hold A liable despite the
fact that X has already paid Y if it is under an
agreement between X and Y that X had the
right to choose.
Then the payment by A to Y is a payment
to a wrong party.
If in their agreement A had the right to
choose, then it does not matter who made the
demand because A clearly can choose to pay
the obligation.
Then in this case payment to Y
extinguishes the obligation.

Q: If the intention of the parties is not clear as
to who has the right to choose, May X still
hold A liable?
A: X may still hold A liable under the rules on
solidary obligation because if one of the
solidary creditors was the first one to make a
demand he shall be the one who has the right
to choose. Since under the facts, X was the
first to make the demand, X may still hold A
liable. This rule is applied because this would
be conducive to the fulfillment of the
obligation (Tolentino)

Uribe: If the rules on solidary obligations is to
be applied then there is no reason to make
provisions on other kinds of obligations. The
law should have made all obligations solidary
because the same shall be conducive to the
fulfillment of the obligation. Therefore, the
view of Tolentino is incorrect.
The rules on alternative obligations should be
applied, and under this rule, the right to
choose is with the debtor. If the intention is
not clear, it is the debtor who should be given
the right to choose.


Q: An obligation to pay 1 million pesos is a
divisible obligation?
A: Not necessarily, because it would depend
on the intention or agreement of the parties.

Q: Without any express agreement on how the
obligation is to be performed, is it a divisible
or an indivisible obligation?
A: If there is no agreement it would be an
indivisible obligation. Under the law, no
creditor can be compelled to accept partial
performance, unless there is a stipulation to
the contrary.

Q: Is there an obligation which is considered
divisible by nature even if there is no
stipulation?
A: If the obligation is to be performed for a
number of days like the construction of a
building.

Q: Is there an obligation which is considered
by law an indivisible obligation?
A: If the obligation consists in delivering a
finite thing.


Q: A, B and C obliged to deliver a handy-
dandy amazing thing-a-ma-jig, not your
everyday complicated multi use tool worth
30,000 pesos to X. When the obligation to
deliver the thing to X is due the handy dandy
amazing thing-a-majig exploded due to the
fault of A. X filed an action against B, may the
action proper?
A: Since this is a joint and indivisible
obligation because a finite thing is involved,
an action to deliver cannot prosper since it is a
finite thing. But the action for money claims
will prosper as to the share of B which is
10,000 with respect to his share, since the
stipulation is silent as to the debtors share,
they shall share equally. B cannot be liable
for damages, it is only A who can be liable .
When the obligation is a joint and
indivisible obligation, and the obligation has
become impossible of performance, the
obligation is converted into a monetary
obligation, and each of the debtor shall each
be responsible for his share in the absence of
designation of his share and the one at fault
shall be liable for damages. With respect to A,
he shall be liable for his share plus damages.

Robes- Francisco vs. CFI
In this case there was a stipulation
that in case the developer fail to issue a
certificate of title after the amount is paid by
the buyers, the developer be liable to the
amount of 4% interest. May the developer be
held liable for damages? Or should the 4%
interest compensate to the damages as a form
of a penal clause?
Art. 1226. In
obligations with a penal clause, the
penalty shall substitute the
indemnity for damages and the
payment of interests in case of
noncompliance, if there is no
stipulation to the contrary.
Nevertheless, damages shall be
paid if the obligor refuses to pay
the penalty or is guilty of fraud in
the fulfillment of the obligation.
The penalty may be enforced only
when it is demandable in
accordance with the provisions of
this Code.
NO it is not a penal clause because even
without such stipulation of interests the
developer may still be held for interests at the
legal rate of 6% per annum. It is therefore
inconceivable that the subject clause in the
certificate of title be considered as a penal
clause which would relieve the developer of
liability. Besides the legal interest is 6%, the
interest is only charged at 4% which means it
is lower. How can a lower interest be a penal
clause. Penalty should charge a bigger
amount, which is the purpose of a penalty.

Q: Assuming that a penal clause is contained
in a contract, in case of violation, may the
debtor be still liable for damages in addition to
the penal clause?
A: As a general rule, the penal clause is
considered as a substitute to the damages that
may be suffered, however, when the debtor
failed to comply with the provisions of the
penal clause he may still be liable aside
from the penalty.
Another ground is if there was fraud and if
there is stipulation.

Q: If the penal clause agreed upon is 100,000
but the damage sustained is 200.000, even
assuming there was fraud, how much shall the
creditor be entitled?
A: The creditor shall be entitled to 100,000
plus actual damage of 200,000 as decided by
the Supreme Court.

Q: May the court reduce the amount of the
penalty agreed upon in the penal clause?
A: The court may reduce the penalty if there
was already a compliance of the obligation.

Q: In an obligation with a penal clause, can
the debtor compel the creditor to accept the
penalty instead the debtor performing the
obligation?
A: As a rule the debtor cannot compel the
creditor to accept the penalty instead of
performing the obligation, the creditor can
compel the debtor to perform the obligation.
As an exception, the debtor can compel the
creditor where this right has been expressly
reserved for him as provided in art. 1227 of
the civil code.

Q: Can the creditor both demand for the
performance of the obligation and the payment
of the penalty agreed upon?
A: Generally the creditor cannot demand both
the performance and at the same time compel
to demand for the penalty, except: if such
right is clearly granted to him. This may not
be expressly granted or stipulated because it
may be inferred by the acts of the parties.

Q: If the obligation is void and there is a penal
clause, may a party be held liable under the
penal clause?
A: Ordinarily no, because a penal clause is
an accessory undertaking. If the obligation is
void any accessory undertaking is likewise
void. As an exception if the nullity of the
obligation would give rise to the enforcement
of the penal clause, then party thereto can be
held liable under the penal clause.
For instance, if one of the parties is a
filipino, if that contract will be governed by
Philippine law, the alien has every right to rely
on the Philippine law as to the validity of the
contract. Therefore if this contract is declared
null and void, the Filipino shall be liable for
indemnity. Such will be a valid penal clause.

BREACH OF OBLIGATIONS: Specific
circumstances affecting obligations
If there is an obligation, one of the
parties may be held liable or even a third
person may be held liable for damages
incurred by one of the parties or a third
person.
Under 1170 those who in the
performance of the obligation are guilty of
fraud, negligence or delay can be held liable
for damages.
Note that even if there is no
negligence, fraud or delay those who in any
manner contravene the tenor of the obligation
shall also be liable for damages.
Generally, non performance or
contravention of the tenor can be the basis of
liability.
If both parties have faithfully
complied with their respective obligations, no
one may be held liable.
The law says those who in the
performance because it is not only the debtor
who may be held liable for damages.
Creditors likewise may be held
liable like if they commit fraud or in delay
may be held liable for damages.


FRAUD
Fraud here means fraud in the
performance of the obligation.
Under Art. 1170 and Art. 1171,
there is an existing obligation 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. (1101)
Art. 1171. Responsibility arising
from fraud is demandable in all obligations.
Any waiver of an action for future fraud is
void. (1102a)
Unlike the other kind of fraud
which are in the law on contracts, there is
fraud in obtaining consent. A person may
enter into a contract because of the fraud
employed upon him. Without such fraud he
would not have entered into such contract.
This is called causal fraud or dolo causante.
However there is another kind of fraud in
obtaining consent which are not causal in
character. It is merely incidental, and this
would be under Art. 1344. However, this will
not affect the validity of a contract, unlike
causal fraud which will make the contract
voidable. In incidental fraud will only make a
person liable for damages in employing such
fraud.
Art. 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.
However, in Art. 1170,
the performance of an obligation
can be the basis of liability for
damages.
Art. 1170 should be
called malice or bad faith. The
term Dolo cannot be used under
Art. 1170 because dolo really is
deceit as used in Art. 1388 known
as dolo causante, and while fraud
in Art 1344 above is known as
dolo incidente.
Art. 1388. Whoever acquires in
bad faith the things alienated in fraud of
creditors, shall indemnify the latter for
damages suffered by them on account of the
alienation, whenever, due to any cause, it
should be impossible for him to return them. If
there are two or more alienations, the first a c
q u i r e r s h a l l b e l i a b l e fi r s t , a n d s o
o n successively.
If fraud was committed
which can be the basis of liability,
the other party can actually waive
his right to go after the party
committing the fraud. This can be
done through a waiver. However if
the waiver is executed before the
fraudulent act was committed
(waiver of future fraud) the waiver
is void. As such, the other party can
hold the person employing fraud
liable for damages. Therefore, one
thing that should be considered in
problems involving waivers is,
when was the waiver executed in
relation to the fraudulent act.

NEGLIGENCE
Negligence, otherwise known as
quasi delict is fault under Art. 2176 which
provides:
Art. 2176. Whoever by act or
omission causes damage to another, there
being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if
there is no pre-existing contractual relation
between the parties, is called a quasi-delict
and is governed by the provisions of this
Chapter.

Q: Is negligence synonymous to fault?
A: No. Negligence is just an omission of the
diligence required whereas fault may actually
be intentional in character.
One word which would cover both fault
and negligence is Culpa.

Q: How do u know that an act is negligent or
not?
A: Under Art. 1173, this is the best definition
of negligence which could be the basis on
determining whether an act is a negligent act
or not.
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.
If the law or contract
does not state the d i l i g e n c e wh
i c h i s t o b e o b s e r v e d i n t h
e performance, that which is
expected of a good father of a
family shall be required.
Here the the law defines negligence which
is the omission of the diligence required by the
nature of the obligation.
example: Say if a person slept only for two
seconds, it would depend on his job on
whether to make him negligent or not. If he
was a driver, if he slept for two seconds, then
is negligence, his omission would cause the
death of so many people.
The most important thing to determine
whether a person is negligent or not is to
consider the nature of the obligation. After
considering the nature of the obligation, other
things which must be considered is the time,
the person and the place.
In the case of Gangco vs. MRR, the
Supreme court ruled that the act of alighting
from the train was not a negligent act because
of the circumstances surrounding the event.
Primarily it was because of the circumstances
surrounding the person of Cangco because the
Supreme Court discussed the circumstance
that he was at his prime. he would ride the
train everyday, and the train was about to stop
when he was about to alight from the train. It
is an important factor in determining
negligence,
because it is about to alight when the train was
still running at 180 km/hr and he alighted from
such train, obviously that would be considered
a negligent act.
However, in the case of Telefast vs. Castro,
the respondent Sophia Castro asked telefast to
send a fax message in the United States to tell
her relatives that her mother already died,
telefast was not able to send the message,
allegedly because of atmospheric pressure.
When the relatives knew of what happened,
the deceased was already buried so they filed
an action against Telefast. Telefast was willing
to return the money that was paid by Sophia
but moral damages was awarded by the court.
Telefast questioned the validity of the award
for moral damages because they said that in
contracts, the award for moral damages can
only be awarded if there was bad faith or there
was wanton disregard of the obligation of a
party in the contract. But when they failed to
send the message due to atmospheric pressure,
apparently there was no bad faith. However,
the Supreme Court nonetheless held
Telefast liable for damages because they
failed to inform Sophia on the fact that they
failed to send the message.
As such, the Supreme Court considered
the act of Telefast as a grossly negl igent act
, and jurisprudence will tell you that Gross
negligence amounts to fraud. Therefore it
appears to be bad faith, which can be the
basis of liability for moral damages.
Therefore, there is a need to determine
whether the act is simple negligence or a
gross negligence.
Note: Negligence under this topic is a
negligence in the performance of an
obligation and not the negligence as a
separate source of obligation. If the negligent
act is an act punished by law, such as those
under the Revised Penal Code, that would be
criminal negligence which can be the basis of
liability under delict. However, the same
negligent act under delict can be the basis of
liability under quasi delict.

DELAY
Delay is almost synonymous this
time to default, or mora.
Mora Accipiendi which is default
on the part of the creditor.
Mora Solvendi or default on the
part of the debtor.

Q: If a party to an obligation was able to
comply with his obligation, nonetheless may
he be considered in delay?
A: Yes. This is default or delay with respect to
time.

Q: Can there be a delay in obligations not to
do?
A: No, because as long as one is not doing
what he is not supposed to do, he is actually
fulfilling his obligation.
For delay to set in the law requires demand,
and for demand to be a valid one the
obligation must already be due. Demand here
is not necessary for the obligation to be due,
rather demand here is necessary in order to
hold the other party liable because he is
already in delay.
The demand here need not be in writing, it
need not be in any particular form. A demand
letter need not be notarized, a private
document would suffice.
Note however, that in order for delay to set
in the law requires demand, such is only a
general rule. A person may still be held liable
even if there is no demand, like: (exceptions)
a. By Stipulation
b. By law such as in the
law on partnership, where it
provide that when a partner fails to
make his contribution on the date
agreed upon, even without need of
demand from the non defaulting
partners, he is deemed by law to be
in delay. He will be held liable for
interests but also for damages.
Under the below quoted provision
particularly the last paragraph of 1169 is one
good provision on an obligation with
reciprocal obligation such as that of sale. If a
party to that contract had already complied
with his obligation and the other has not,
under the law he shall already be considered in
delay, even if no demand was made. However,
Art. 1169 as interpreted by the Supreme Court
should be read or interpreted to mean that
there was no agreement as to the when the
other party is to perform his obligation. In
other words, this provision is subject to the
stipulation of the parties. When there is a
stipulation to the effect that the other party
must comply with the obligation, 30 days from
delivery, then the other party cannot be
considered in delay even if one of the parties
has performed his obligation.

Art. 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
(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
theestablishment 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. (1100a)

Art. 1786. Every partner is a
debtor of the partnership for
whatever he may have promised to
contribute thereto.
He shall also be bound
for warranty in case of eviction
with regard to specific and
determinate things which he may
have contributed to the partnership,
in the same cases and in the same
manner as the vendor is bound with
respect to the vendee. He shall also
be liable for the fruits thereof from
the time they should have been
delivered, without the need of any
demand. (1681a)

Art. 1788. A partner who has
undertaken to contribute a sum of
money and fails to do so becomes a
debtor for the interest and damages
from the time he should have
complied with his obligation.
The same rule applies to
any amount he may have taken
from the partnership coffers, and
his liability shall begin from the
time he converted the amount to
his own use.

Art. 1896. The agent owes interest
on the sums he has applied to his
own use from the day on which he
did so, and on those which he still
owes after the extinguishment of
the agency. (1724a)

Art. 1942. The bailee is liable for
the loss of the thing, even if it
should be through a fortuitous
event:
(1) If he devotes the
thing to any purpose different from
that for which it has been loaned;
(2) If he keeps it longer
than the period stipulated, or after
the accomplishment of the use for
which the commodatum has been
constituted;
(3) If the thing loaned
has been delivered with appraisal
of its value, unless there is a
stipulation exemption the bailee
from responsibility in case of a
fortuitous event;
(4) If he lends or leases
the thing to a third person, who is
not a member of his household;
(5) If, being able to save
either the thing borrowed or his
own thing, he chose to save the
latter. (1744a and 1745)
c. When period is the controlling motive. Here
the time is of the essence in this contract.
d. When demand becomes useless. This
presupposed that demand becomes useless
because of the fault of the debtor. If the
demand becomes useless due to the fault of
the creditor, then of course the creditor cannot
hold the debtor liable for damages.
When the demand becomes useless
due to fortuitous event, obviously the
obligation shall be extinguished.

Agcaoili vs. GSIS
Q: If both parties are in delay,
what will be its effect?
A: Under the law, when both are in
delay, no one is considered to be in delay,
hence, no one can be held liable for damages,
or no one can have a cause of action by and
between the parties.

Q: In this case, Agcaoili suspended the
payment of the monthly amortizations. GSIS
cancelled the contract. Was GSIS correct in
cancelling the contract?
A: No.Because both are in delay. Agcaolili
failed to pay his month amortization while
GSIS is also in delay in not delivering a
habitable house. The GSIS only delivered a
structure with a roof.

Q: Kristine went to a jewelry shop to have her
jewelry cleaned and it should be returned to
her after a week, when she returned after a
week the jewelry shop told her that the jewelry
had not yet been cleaned, so she has to return
again after another week. When she returned
back after another week. She was informed
that the ring was lost because of an alleged
robbery that took place. Claiming that robbery
is fortuitous event, then the jewelry shop
cannot be held liable. Is such contention
tenable?
A: No. Under the facts Art. 1165 would apply.
In an obligation to deliver a determinate thing,
and the thing was lost even if due to a
fortuitous event, the obligor would be held
liable for damages if he was already in delay.
Clearly, the jewelry shop was already in
delay. Even for the fact, that the jewelry was
lost due to a fortuitous event, the shop shall be
liable because there was already a delay when
the creditor failed to deliver the same after as
week time as promised.

Q: A leased a machine of B because he
opened his own car repair shop. They agreed
that the lease would only be for 1 month, and
the lease was entered only in February 15 of
1985, in March 15 the next month, the lessor
demanded for the return of the machine.
However, the lessee was not able to return the
machine because As truck had a mechanical
problem. On MArch 16 which was still in the
lessee A was destroyed in a fire that started in
a neighboring house, which apparently is a
fortuitous event. Can the lessee be held liable
for the lost of the machine?
A: A cannot be held liable because even if
there was a demand made and the loss
happened after the demand was made, the
lessee was not yet in delay because at the time
of the demand, the obligation was not yet due.
This is because February was only 28 days.
From February 15 to March 15, that was only
28 days. The delivery must be made only after
a month, and a month under the law is 30
days. Then B should have made the demand
only on March 17, because 1985 is not a leap
year. If a leap year, of course March 16 should
be the demand date, because if a leap year a
month is 29 days.

Q: If a party to an obligation was not able to
comply or it was not completely fulfilled or
irregularly complied, does it mean that he will
be liable for damages?
A: Not necessarily. There are excuses to non
performance, incomplete performance or
irregular performance. E.g. Fault of the
creditor or fortuitous
event.
Note: Not every time that there was a
fortuitous event or force majeure can be an
excused to non performance. Under Art. 1174
a party thereto can be held liable even if there
was a fortuitous event if there was an express
stipulation, if the law so provides, or because
the nature of the obligation requires the
assumption of risk.
....by stipulation
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. (1105a)

.....law so provides
If the debtor promises to deliver the same
thing to two persons who do not have the same
interest, thereafter the thing was lost due to a
fortuitous event, he will still be responsible for
the loss of the thing.
Note however, there should be no
concurring negligence on the part of the
person invoking the defense that liability
attaches even if non compliance was due to a
fortuitous event if the law so provides.

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
complied 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 any
fortuitous event until he has
effected the delivery. (1096)
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.

NPC vs. CA
NAPOCOR was liable because it
released the water when the dam was full. It
should have released the water when the dam
was not yet full so that the pressure would that
be not much as would result to so much
damage.
Hence, to invoke fortuitous event
which transpired in the case due to heavy
rainfall, there should be no concurring
negligence on the part of the defendant
NAPOCOR.
In another case, in the event that
NAPOCOR would release the water of a dam,
in order not to be held liable a proper
notification to the proper authorities is
required.
Notice to persons not authorized
such as a P01 officer is not a proper
notification which would relieve NAPOCOR
of liability.

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