19 January 2018

Obligations and Contracts

ATTY. CASINO

In a civil obligation, there are three prestations; to give, to do, or not to do. In an obligation to give,
what does an obligation to give consist in?
It consists in the delivery of the thing or things due.

The thing of obligation to give can be classified into 2; determinate or special, or indeterminate or
generic. When is a thing generic? When is a thing determinate?
A determinate thing is individualized and can be identified or distinguished from other of its kind.

In an obligation to give a generic thing, what are the obligations of the debtor?
1. To deliver a thing which is neither of superior not inferior quality (Art. 1246).
2. To be liable for damages in case of breach through fraud, negligence, delay and contravention to
the tenors of the obligation (Art. 1170).

Art. 1163 applies only to obligations to give determinate things; specific. It has no application
whatsoever in an obligation to give generic things. Why?
Because a generic thing never perishes; genus nunquam perit. If a person bounds himself to give a generic
thing to another and that thing was destroyed because of the his fault or negligence, it does not
extinguish the obligation for he can always give another thing which is with the same class or genus.

Art. 1163 made mention about proper diligence or due diligence. What is meant by proper diligence
of a good father of a family?
A measure of prudence or activity as is properly to be expected from and ordinarily exercised by a
reasonable and prudent man under particular circumstances.

How does the law define a proper diligence of a good father of a family?
It is defined in the negative, found in Art. 1173 which states that it is the observance of that diligence
required by the nature of obligation in corresponds with the circumstances of the person, of the time, and
of the place.

A has 10 race horses in his stable. 1 Jan. 2017, A bound himself to give B one of the race horses from
his stable on or before 31 Dec. 2017. Suppose on 31 Dec. 2017, while was on his was to comply with
his obligation by delivery of a race horse, the race horse that was supposed to be delivered suddenly
died due to A’s fault and negligence. Is A liable for liable on account of negligence in relation to Art.
1163 and 1170?
A is not liable for damages because the object of A’s obligation is a limited generic object. A can still
deliver or fulfil his obligation in favour of B by delivering 1 of the 9 remaining race horses in his stable.
Article 1163 will not apply.

1 Jan 2017, A bound himself to deliver to B 100 sack of Jasmine rice on 31 Dec 2017. 1 Dec 2017 arrived,
B demanded from A the performance of the latter’s obligation. A refused to deliver 100 sacks of
Jasmine rice. Can B go to court and ask the court to compel A to deliver the 100 sacks of Jasmine rice?
No. The remedy of specific performance is not available to the creditor in an obligation to give a generic
thing. Because the law provides therein Article 1165 (2), “If the thing is indeterminate or generic, he may
ask the obligation to be complied with at the expense of the debtor.”

1 Jan 2017, A bound himself to give B a specific car on 1 Dec 2017. The said date arrived, B demanded
from A the delivery of the car or the performance of the obligation. A refused to deliver. Can B go to
court and ask the court to compel A to deliver the car?
Yes. Under article 1165, the law expressly provides that the creditor may compel the debtor to make the
delivery.

On 1 Jan 2017, A bound himself to give B a specific carabao, named Candida on 31 Dec 2017. 1 Mar
2017, Candida gave birth to a calf named Gorge. On 5 Jan 2018, A has not yet delivered Candida to B
but, miraculously, gave birth again to another calf, Perdido. How should A comply with the
obligation to give the carabao Candida upon demand from B?
A is to give the carabao named Candida and Perdido to B as it is expressly provided in Article 1164 that
the creditor’s right to the fruits is only given upon the time the obligation to deliver the thing arises.
Since Perdido was born after 31 Dec 2017 (the time the obligation to deliver Candida came to be), it is
rightly to be delivered to B as the fruit of Candida. On the other hand, A can rightfully take the first calf,
Gorge, for the birth was done on 1 March, when the obligation to deliver Candida has not yet arisen.

On 1 Jan 2017, A bound himself to give B a carabao from A’s farm on 31 Dec 2017. 31 Dec 2017, while
A was on his way to deliver a carabao to B in compliance to his obligation. The carabao that was
supposed to be delivered gave birth to a calf. Immediately after giving birth, A took the carabao and
the offspring and went back to B to deliver another carabao. Can B ask, in addition, for the offspring?
No. Article 1164 provides that “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.” As stated by the Latin maxim, non nudis pactis, sed traditione dominie dominica rerum
transferuntur, it is not by agreement that passes ownership but rather delivery. Since A has not yet
effected the delivery, Article 1166 is not applicable.

What is a personal right?

It is a right that can be imposed against a specific subject as oppose to a real right that is imposable
against the whole world.
On 1 Jan 2017, A bound himself to give B a particular carabao named Candida on 31 Dec 2017.
However, on 1 Nov 2017, X stole the carabao from A and as of this moment, the said carabao is still in
the possession of X. Can B compel X, by way of a court action, to deliver the carabao to him?
No. Since the obligation to give the carabao has not yet arisen, B has not yet obtained legal possession or
ownership of the carabao because it was not yet delivered to him. For this, B has not lost anything. How
can there be something that is not lost but can be recovered. Wala, hindi ba sweetheart. It is absurd.
Nevertheless, A can recover the carabao from X because he is the one who has a real right over the
carabao. The real right can only be transfer to B upon delivery. Pending delivery, A remains to be the
owner of the carabao, that is whether or not he has incur in delay. Si B wala pa sweetheart, wala pa.
Maliwaag?

What is meant by accession?

Accession, under article 440, includes everything which is produced, attached, incorporated to or by a
thing, either naturally or artificially.

What is meant by accessory?

Accessories are those destined for embellishment, use for preservation of another thing or have for the
object the completion of another thing. These are the things necessary or convenient for the perfection of
another.

A owns a parcel of land that adjoins a body of water, a river. On 1 Jan 2017, A offered this land to B
for P5M. Under the contract, B bound himself to pay the P5M immediately, and A deliver the parcel
of land to B on 31 Dec 2017. Due to the currents, rocks and sand were deposited prior to the date of
delivery alongside the bank of the river adjoining the parcel of land. 5 Jan 2018, A, upon demand,
delivered to B the parcel of land but retaining for himself the soil deposits at the bank of the river.
Can B be compelled to accept the delivery of the stipulated land alone?
Yes. Article 1166 states that the obligor in an obligation to give a determinate thing is also bound to
deliver all its accessions and accessories even though they may not have been mentioned. There is a big
difference of fruits and accessions sweetheart. Therefore, in order for A to comply with his obligation, he
must deliver not only the land but also the soil deposit or accession as well. Maliwanag? Yan and sinasabi
ng batas. The reason behind this article is that accessions and accessories follow the principal.

A, for P5M, bound himself to construct a house and deliver it to B on 1 June 2017. The said date
arrived but house was build, not even a single concrete was laid. B thereafter went to court, filed a
complaint against A and asked the court to direct and compel A to construct the house. Will the action
prosper?
No. The law provides under Article 1167 that “if a person is obliged to do something and fails to do it, the
same shall be executed at his cost.” This means that B has not right to go to court and compel A to
construct the house. He may ask another person to construct the house at the expense of A. The reason
behind the law for B’s inability to go to court notwithstanding the presence of a valid contract is that “the
law recognizes the individual’s freedom to choose between doing that which he has promised to do and
not doing it. [It is] a personal act, of which courts may not compel compliance as it is an act of violence to
do so” (Jurado, 51). If B is allowed to compel A for the construction of the house, it would amount to
involuntary servitude. The remedy available to B is that he may either do it himself or ask another
person to construct the house at the expense of A.

What are the modes in breach of obligation?

Delay, fraud, negligence and contravention to the tenors of obligation

What is delay?
The non-fulfilment of the obligation in terms of time.

Requisites of delay under Article 1169.

1. That the obligation has already become demandable.
2. That there is a valid demand.
3. The demand must refer to the object of prestation and not anything else.
4. The demand must be addressed to the debtor himself or anyone authorized by him to fulfil the
obligation.

A bound himself to pay B P5M on 1 July 2017. 1 July 2017 arrived and until now, the obligation has
not been paid yet. Is B in delay?
Yes, but in ordinary sense. He is not liable for damages under Article 1169 in relation to Article 1170
because he is not yet in legal delay. Ang sinasabi ng batas, delay only sets in only from the very moment
when the creditor judicially or extrajudicially demands from the debtor the fulfilment of the obligation
and failed to do so. Dito wala pang demand. ‘Di ba? It would have been different if A bound himself to pay
B P5M on 1 July 2017 and upon arrival of the said date, B demanded from A the fulfilment of the latter’s
obligation and A refused to pay. Yan may delay na jan. Maliwanag?

A bound himself to pay B P5M on 1 July 2017. 1 June 2017 arrived and B demanded the fulfilment of
obligation. A refused to do so. Is he in delay?
No. There is an invalid demand for at the time B demanded from A the payment, the obligation was not
yet due and demandable. Hindi ba?

A bound himself to pay B P5M on 1 July 2017. 1 July 2017 arrived and B demanded the payment of the
P5M in the form of a car. A refused to do so. Is he in delay?
No. What was being demand is not the object of prestation so there is no valid demand.

A bound himself to pay B P5M on 1 July 2017. 1 July 2017 arrived, B went to A’s house to collect the
payment only to find out that B was not in his house but B saw C, A’s father. B demand the fulfilment
of the obligation from C. C refused to do so. Is A in delay?
No. The demand is not addressed to the debtor himself.

1 Jan 2017, A bound himself to pay B P5M on 1 July 2017. On the said date, B called A and reminded
him about his obligation. A wasn’t able to pay. Is he in delay?
No. Mere reminder is not a demand. For delay to incur there must be a categorical statement that the
creditor is now enforcing his rights over the obligation. In the absence of such statement, there is no
delay despite the lapse of the period.

Can the debtor in an obligation not to do incur in delay?

No. The law expressly provides under Article 1169 that delay is only incurred by “those obliged to
deliver or to do something…”

In what instances shall demand be unnecessary?

1. When the obligation or the law expressly so declares.
2. When from the nature and the circumstances of the obligation it appears that the designated time
when the thing is to be delivered or the service is to be rendered was the controlling motive for
the establishment of the contract.
3. When the demand would be useless as to when the obligor has rendered it beyond his power to
perform.

On 1 Jan 2017, A bound himself to pay B the amount of P5M on 31 Dec 2017. A was not able to pay B
on 31 Dec 2017. Is A already in delay?
No. The intent of the parties to constitute the debtor in delay upon maturity of the obligation without
demand, must clearly appear in the agreement (Bayala v Silang Traffic Co.) A was not yet in demand
because no demand was served.

On 1 Jan 2017, A bound himself to pay B the amount of P5M on 31 Dec 2017 and for which A executed
a promissory note stating therein that failure to comply with the obligation, an interest of 15% would
incur. A was not able to pay B on 31 Dec 2017. Is demand necessary?
No. This falls within the first exception under Article 1169 which states that “when the obligation or the
law expressly so declares.” The 15% interest in the case at bar takes the form of damages for non-
fulfilment of the obligation on time under Article 1170 rendering demand unnecessary.

On 1 Jan 2017, A borrowed money from B amounting to P5M to be paid upon the receipt of the
amount executing a promissory note binding himself to pay B the amount of P5M plus an amount
equivalent to 15% per annum on 31 Dec 2017. Is demand necessary?
Yes. The promissory note executed is merely an evidence of credit. It does not mean that in case of delay
at the time of execution. The 15% here is a civil fruit for the borrowed P5M; it is not a result of breach as
contrary to the above situation.
B celebrated his birthday on 25 Dec. 2017. June 1 2017, A promised a cake to B in lieu with B’s birthday
celebration. 25 Dec. 2017 arrived and B was nowhere to be found. Is B in delay?
Yes. The law provides that “when from the nature and the circumstances of the obligation it appears that
the designation of time when the things is to be delivered or services is to be rendered was a controlling
motive for the establishment of the contract” (Art 1169, par. 2). In this case, B’s birthday is the controlling
motive for the establishment of the obligation.

A and B decided to get married on 31 Dec 2017 hence, they contracted C to make a wedding gown. The
date arrived but C was not there to deliver the gown. Is demand necessary?
No. The demand is no longer necessary for the fixing of the date or the period is the primary factor for the
establishment of the obligation. Maliwanag?

Give an example of the 3rd exemption in Article 1169.

A promised to give B a specific female horse (note: Art. 1174 applies only to determinate objects) on 31
Dec. 2017. However, on 1 June 2017, the horse died because A raped her.

Mora accepiendi speaks of delay on the part of the creditor. When is the creditor in delay?
When the creditor refuses to accept the delivery of the obligation without just cause.

A bound himself to deliver 100 sacks of jasmine rice to B on 31 Dec 2017. The date arrived and A
delivered the said 100 sacks of jasmine rice to B. upon reasons unknown to A, B refused to accept the
delivery of the 100 sacks of rice. Is B in delay? What may A do to protect his interest?
Yes, B is in delay for refusal to accept the delivery of the 100 jasmine rice without just cause. A may go to
court to compel B to accept the delivery of the 100 jasmine rice. (note: upon the refusal of to accept
without just cause, it does not result in the extinguishment of the obligation of A)

A bound himself to deliver to B a specific car on 31 Dec 2017. 31 Dec 2017 arrived and B refused to
accept the tender of delivery of the specific car. Is B in delay? The answer is yes. Question: Is A still
bound to observe the proper diligence of a good father of a family in the custody of the car?
Yes. The law provides that those who are obliged to give something are also obliged to take care of it
(Art. 1163). A is still bound to take care of the thing with the proper diligence of a good father of a family
even if B refused to accept the same. However, any expenses incurred by A in the care and custody of the
car from the very moment B incurred in delay shall be subject to reimbursement from B.

On 1 Jan 2017, A bound himself to deliver to B a specific car on 31 Dec 2017. From 1 Jan to 31 Dec 2017,
before the delivery was effected by A, A incurred P2M expenses for the preservation of the car. who
must bear the expenses, A or B?
A should bear the expenses because it is his own obligation to preserve the car under Article 1163 until
delivery has been made or effected.

What is compensasio marae?

Compensasio morae, as define in Article 1169, states that “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 fulfils his obligation, delay by the other
begins.”

1 Jan 2017, A bound himself to pay B the amount of P5M on 1 Mar 2018. 2 Feb 2017, B bound himself
to deliver to A on 5 Nov 2017. 5 Nov arrived, A demanded from B the delivery of the land but refused
to do so contending that A has yet paid the P5M. Is it compensasio morae?
No because, there are 2 independent and separate obligations in this case; they are not reciprocal. When
A demanded from B the delivery of the land and B could not comply, B was already in delay because
there is no reciprocal obligation here for the obligation arouse from separate acts.

1 Jan 2017, A and B entered into a contract of sale and under the contract, A bound himself to deliver
the land to B on 1 Nov 2017 for an exchange of obligation B will pay A P5M on 31 Jan 2017. 1 Nov
2017 arrived, B demanded from A the Land but refused to arguing that B has not paid yet the land. Is
A already in delay?
Yes. Delay has already set in as far as A is concerned. Compensasio morae presupposes that this
obligation has to be done simultaneously.

1 Jan 2017, A and B entered into a contract of sale for a particular parcel of land for P5M. under the
contract, A bound himself to deliver the land on 31 Dec 2017 and payment upon delivery. 21 Dec
arrived, A delivered the land but B has not paid the land. Is B in delay?
Yes. The law provides, “from the moment one of the arties fulfils his obligation, delay by the other
begins” (Art. 1169).

What is negligence?
Negligence is 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 (Art. 1173).

What are the 2 kinds of civil negligence?

1. Culpa contractual – fault or negligence of the obligor by virtue of which he is unable to perform
his obligation arising from a pre-existing contract;
2. Culpa aquiliana/quasi-delict – fault or negligence of a person, whose failure to observe the
required diligence to the obligation causes damage to another.
What are the differences of negligence as an independent source of obligation (quasi-delicts) with
negligence as defined in Art. 1173 (culpa contractual).
1. As to the character, the negligence is merely incidental to the performance of an obligation
already existing because of contract in culpa contractual. Whereas, in culpa aquiliana, negligence
is the direct, substantive, and independent source of obligation.
2. As to the relationship of parties, in culpa contractual, there is always a pre-existing contractual
relationship. Whereas, in culpa aquiliana, there may or may or be a pre-existing contractual
relationship.
3. As to the source of obligation, breach or non-fulfilment of contract for culpa contractual.
Whereas, in culpa aquiliana, it is the defendant’s negligent act or omission.
4. As to the availability of diligence as a defense, it is not a proper defense culpa contractual though
it is mitigating. Whereas, in culpa aquiliana, it is a proper and complete defense.

A bound himself to give B a particular car on 31 Dec 2017. However, on 1 Jun 2017, the car was totally
destroyed through A’s negligence. Is it culpa contractual or culpa aquiliana?
Culpa contractual because the negligence was present in the performance of an obligation; it is an
incident to the obligation. Whereas, on the other hand, culpa aquiliana gives rise to an obligation.

What is the remedy available to B?

Action for specific performance (Art. 1165).

What is meant by fraud?

It is the deliberate or intentional evasion of the normal fulfilment of an obligation.

1 Nov 2017, A offered to B for sale of what purports to be a kilo of 99.99% gold bar where in fact, it is a
plastic coated in gold. Knowing that it is a gold bar, B accepted the offer of A for P1M. What kind of
fraud by A?
Dolo incidente of fraud in the constitution of an obligation.

A bound himself to give B a particular rolex watch on 1 Nov 2017. 1 Nov 2017 arrived, A delivered to B
a fake rolex watch. What kind of fraud was employed by A?
Dolo causante or fraud in the performance of an obligation.

A bound himself to give B a particular rolex watch on 1 Nov 2017 for P1M. 1 Nov 2017 arrived, A
delivered to B a fake rolex watch. Upon knowledge that the watch is fake, B tried to sue A. However,
A apologized and promised to return the P1M to B plus P100,000 for the damages caused. B withdrew
the suit against A. Was the waiver valid?
Yes because, what is proscribe by article 1171 is waiver of an action for future fraud; fraud that is yet to be
employed or committed, yun ang bawal. Dito, what was waived by B was future action for fraud already
committed.
Waiver of an action for future negligence, is it valid?
No, because it is contrary to public policy. Nevertheless, a reduction of the standard of diligence that
should be exercised is valid for no waiver has been made.

What is meant by contravention to the tenor of obligation?

An illicit act which impairs the strict and faithful fulfilment of the obligation and also includes every kind
of defective performance, unless excused in proper cases by fortuitous events.

A and B entered into a contract of sale on 1 Jan 2017 of a specific car which was parked inside the
premises of San Beda for P2M and with A to deliver the car on 31 Dec 2017 and B to pay the price
immediately upon the perfection of A’s obligation. 31 Dec 2017 arrived, A told B that he may now get
the car in Laoag City. In getting the car from Laoag City, B incurred in damages amounting to P500k.
Can B reimburse the money from A?
Yes, for A is in contravention to the tenor of obligation under the provision of article 1251 which states
that the place of delivery of a determinate thing in the absence of a stipulation as to where it is where the
thing might be at the moment the obligation was constituted.

What is a fortuitous event?

Inevitable accident or casualty; an accident produced by any physical cause which is irresistible.

Requisites of fortuitous events?

1. There must an event which could not e foreseen, or which, though foreseen, were inevitable.
2. The event must be independent of the human will.
3. The event must be such a character as it would render the debtor incapable in performing his
obligation in a normal manner.

A and B are both residents of Manila. 1 Jan 2017, A offered for sale a particular car to B located at that
time inside San Beda for P5M. Under the contract, A bound himself to deliver the particular car on 31
Dec 2017, and B to pay the price immediately upon the perfection of the contract. 31 Dec 2017 arrived,
Mindanao was inundate due to super typhoon in the country. A refused to give the car arguing that
there is a fortuitous event. Is A correct?
No because the obligation was not of a character as to render the obligor incapable of performing the
obligation in a normal manner.