CHAPTER 2: Nature and Effects of Obligations Art. 1163. E er!

"erson obliged to gi e so#et$ing is also obliged to ta%e care of it &it$ t$e "ro"er diligence of a good fat$er of a fa#il!' unless t$e la& or t$e sti"ulation of t$e "arties re(uires anot$er standard of care. )1*+,a3 %inds of "restations in obligations: To give real (there is some physical thing which may be the subject of possession, the delivery of which completely discharges the obligation) To do Not to do "ersonal (non-fulfillment is resolved in the end by the payment of an indemnification of damages) Obligation to do or not to do Perfection of the obligation devolves upon the person himself who is bound Obligation to gi e Intimately connected with the thing that is the subject matter of relation Definition: That which has for its object the delivery of a thing which the obligor must deliver to the obligee because of whatever right the latter may have ac uired over the same (!aguioa) Classification:(distinction lies purely and e"clusively on the &ill of "arties or under the nor#s of la&) 1. ."ecific obligation - an obligation to give a specific or determinate thing #specific/determinate thing / a thing determined individually in such a manner that it cannot be substituted with another / object is particularly designated or physically segregated from all others of the same class$ object is a concrete, particulari%ed thing, indicated by its own individuality (&urado) / one that is individuali%ed and can be identified or distinguished from others of its 'ind (Tolentino) / e"amples( white horse which won the )enior *rand +erby in ,-.-, )amsung */00 *-//01,,*-//023P!4 / the very same thing promised must be delivered by the debtor and he cannot substitute said thing with another although the substitute is more valuable than that agreed upon unless the creditor agrees to the substitution (5rt6 ,70/ par6,) / 3 accessor! obligations (Note( only in specific obligations)( (,) obligation to ta'e care

of it with the proper diligence of a good father of a family (5rt6,,/8)$ (7) to deliver the accessions and accessories although the same may not have been mentioned (5rt6,,//)$ (8) to deliver the fruits from the moment the obligation to deliver arises (5rt6,,/9) 2. 0eneric obligation - has for its object a genus an object that is determined only by the class to which it pertains (incertum corpus) - delivery of a thing belonging to a specie stipulated, usually those which are fungible and those which are determined by amount, number or measure - an obligation to give a generic thing *generic/indeterminate thing - the object is one whose determination is confined to that of its nature : to the genus to which it pertains (&urado) - one that is indicated only by its 'inds, without being designated and distinguished from others of the same 'ind (Tolentino) - e"amples( ten white horses, )amsung */00, 5cer laptop 2 Pur"oses of obligations to gi e: (!aguioa) ,6 To transfer title (e6g6 contract of sale or barter) 76 To transfer merely possessions (commodatum;5rt6 ,-88, by the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum ) <ther form of classifying obligations in general( (!aguioa) a6 Positi e- obligations which have for their object to give or to do b6 Negati e - restrains the obligor from delivering or doing something which he could do where it not for the obligation 0ood fat$er of a fa#il! (bonus pater familias) general legal standard of care or degree of diligence the law re uires in obligation to deliver a thing Circu#stances t$at s$ould be ta%en into consideration in deter#ining t$e degree of diligence: (!aguioa) nature of the obligation depending on the circumstances of the debtor nature of the obligation depending on the time of the performance of obligation

 nature of the obligation depending on the place of the performance of the obligation Reason be$ind Art.1163: the obligation to deliver a thing would be illusory if the debtor were not also obliged to preserve it6 (Tolentino) Effect of breac$: +ebtor who fails to e"ercise the diligence of a good father of a family in preserving the thing can be held liable for damages6 (Tolentino)
# Note( 5rt6 ,,/8 can be read in conjunction with 5rt6 ,,.86

Reason56ustification of t$e article: found in the corresponding liability of the creditor for any loss that is occasioned to the property, since he bears the same from the moment of the perfection of the contract6

Art. 116,. T$e creditor $as a rig$t to t$e fruits of t$e t$ing fro# t$e ti#e t$e obligation to deli er it arises. Ho&e er' $e s$all ac(uire no real rig$t o er it until t$e sa#e $as been deli ered to $i#. )1*+1 0eneral rule: The creditor or obligee, in an obligation to deliver a determinate thing, is entitled to the fruits from the time the obligation to deliver arises6 2When does the obligation to deliver the thing and the fruits arise? Obligations arising from Obligations arising from law, quasi-contracts, contracts criminal offenses, quasidelicts =rom the time / 0eneral rule: from the designated by the moment of the perfection contract )basis: provisions of the !ivil of 1 !ode or of special laws Art.1133 creating or regulating them E4ce"tions to t$e general rule: 1. In case there is a contrary stipulation of the parties with respect to the time when the thing or fruits shall be delivered6 2. If the obligation is subject to a suspensive condition obligation to deliver the thing as well as the fruits shall arise only from the moment of the fulfillment of the obligation$ otherwise stated, from the moment the condition happens (5rt6,,2.) suspensive condition the happening or fulfillment of the condition results in the birth of the obligation 3. If the obligation is subject to a suspensive term or period obligation to deliver arises only upon the e"piration of the designated term or period

7istinctions bet&een "ersonal and real rig$ts Personal Rig$t Real Rig$t power belonging to one - power belonging to a person to demand of person over a specific another, as a definite thing, without a passive individually passive subject, the subject fulfillment of a determined, against whom right may be prestation to give, to do, such personally e"ercised or not to do (Tolentino) 6us ad re# right - 6us in re right enforceable only enforceable against the against a definite whole world (e6g6 right of possession, person or group of ownership, usufruct, or easement) persons Note: 8efore deli er!, the creditor, in obligations to give, has merely a "ersonal rig$t against the debtor : a right to as' for delivery of the thing and the fruits thereof$ ownership does not pass to the creditor Once t$e t$ings and fruits deli ered' the creditor ac(uires real rig$t over such which is enforceable against the whole world the creditor only ac uires the right of ownership over the thing and the fruits once they are delivered to him6 Art. 1161. 9$en &$at is to be deli ered is a deter#inate t$ing' t$e creditor' in addition to t$e rig$t granted $i# b! Article 113*' #a! co#"el t$e debtor to #a%e t$e deli er!. :f t$e t$ing is indeter#inate or generic' $e #a! as% t$at t$e obligation be co#"lied &it$ at t$e e4"ense of t$e debtor. :f t$e obligor dela!s' or $as "ro#ised to deli er t$e sa#e t$ing to t&o or #ore "ersons &$o do not $a e t$e sa#e interest' $e s$all be res"onsible for an! fortuitous e ent until $e $as effected t$e deli er!. Rig$ts of t$e creditor in deter#inate obligations: 1. To compel specific performance )uch action when the debtor does not comply with what he has promised and the creditor demands that he fulfill the same The debtor may be compelled to ma'e the delivery of the very thing agreed upon !omplemented by Art. 12,, "ar.1 which states that the debtor of a thing cannot co#"el t$e creditor to recei e a different one, although the latter may be of the same value as, or more valuable than that which is due6

Art.1133: The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract6 5ll the fruits shall pertain to the vendee from the day on which the contract was perfected6

Implies that its basis is a contractual relation between plaintiff and defendant (Tolentino) 2. To recover damages for breach of the obligation

Rig$ts of t$e creditor in generic obligations: 1. To as' for performance of the obligation the delivery of a thing belonging to the species stipulated will be sufficient and hence, it is not absolutely necessary for the debtor to ma'e the delivery himself, since the delivery of anything of the same species will fulfill the obligation6 It may be performed by another, but at the e"pense of the debtor6 (substitute performance) !reditor can only as' for the delivery of a thing or object belonging to the class or genus stipulated which must be neither of superior nor inferior uality (5rt6,79/) 2. To as' that the obligation to be complied with at the e"pense of the debtor The creditor may as' a third person to perform the obligation and all e"penses incurred shall be charged against him 3. To recover damages for breach of the obligation Re#edies a ailable to creditor in s"ecific obligation ,6 to compel specific performance 76 to recover damages for breach of the obligation Re#edies a ailable to creditor in deter#inate obligation ,6 to as' for the performance of the obligation 76 to as' that the obligation to be complied with at the e"pense of the debtor 86 to recover damages for breach of the obligation

Note: #>efore the thing to be delivered is separated from others of the same 'ind (and therefore the obligation becomes specific), no accessory obligations arise since the thing has not yet been made determinate$ but once the determination occurs the rules applicable to specific obligations will immediately follow6 (!aguioa) a6 ;iabilit! for fortuitous e ent The classification of obligations into specific and generic is of importance in the determination of the liability of the debtor for fortuitous event6 i6 )pecific;the creditors bear the loss and deterioration of the thing through fortuitous event so long as the debtor is not in mora ii6 *eneric;the creditor does not bear the loss until the object of the prestation has been individuali%ed or made specific in accordance with the principle genus perire non censetur and conse uently, impossibility of performance by fortuitous event is not a possible defense for the debtor6

iii6

?ven if the thing is determinate, and the loss occurs by fortuitous event and as a general rule the creditor should bear the loss, still, in those cases where the debtor is in mora, or whose he has promised to deliver the same thing to two or more persons who do not have the same interest, which is e uivalent to fraud since there is present the deliberate intent not to deliver to one of the two, the law, by way of punishment, shifts the burden of loss to the debtor6 (!aguioa)

86 To deliver all accessions and accessories of the thing even though they may not have been mentioned6 96 To be liable for damages in case of breach of the obligation by reason of delay, fraud, negligence or contravention of the tenor thereof6 Obligations of debtor in generic obligations: ,6 To deliver a thing which is neither of superior nor inferior uality6 )Art. 12,676 To be liable for damages in case of breach of the obligation by reason of delay, fraud, negligence or contravention of the tenor thereof6 +educible from Art. 1263 which states that in an obligation to deliver a generic thing, the loss or destruction of anything of the same class or genus as that which constitutes the object thereof shall not e"tinguish the obligation ( the genus of a thing can never perish) 7ation in "a!#ent < property is alienated to the creditor in satisfaction of a debt in money can be considered as that e"ception where an obligor gives something in e"change of the AspecificB thing to be given, with the consent of the obligee

Art. 1166. T$e obligation to gi e a deter#inate t$ing includes t$at of deli ering all its accessions and accessories' e en t$oug$ t$e! #a! not $a e been #entioned. )1*+3a Accessions;those things incorporated or attached to the principal either naturally or artificially (e6g6, alluvion, buildings, constructions, etc6) Accessories;those things which although not incorporated to the principal are added to the same for its completeness, use, perfection or embellishment (e6g6, 'eys to a house, tools of a car, etc) ?verything that is attached, naturally or artificially, to the principal thing, as well as that which serves to complete it, even if not attached to it, must be delivered together with it6 E4ce"tion: @hen the parties agree to e"clude any accession or accessory of the thing6

Art. 1163. :f a "erson obliged to do so#et$ing fails to do it' t$e sa#e s$all be e4ecuted at $is cost. T$is sa#e rule s$all be obser ed if $e does it in contra ention of t$e tenor of t$e obligation. =urt$er#ore' it #a! be decreed t$at &$at $as been "oorl! done be undone. )1*+> Obligations to do / those obligations which have for their object a prestation consisting of performing a certain activity, physical or intellectual, distinct from that of the delivery of a thing (!aguioa) - difference fro# an obligation to gi e: obligee or creditor does not possess the power to compel the obligor to comply with his obligations o reason: the law recogni%es the individualCs freedom or liberty to choose between doing that which he has promised to do and not doing it6 0eneral rule in obligations to do )or not to do-: The debtor must perform the act as promised and cannot substitute the same with another act of forbearance, unless of course with the consent of the creditor or in case the obligation is facultative6 )Art.12,,' "ar.2Note: (from !aguioa) The act to be performed is either not6 er! "ersonal or

Rig$t b! accession < right corollary to ownership of property which gives the owner the right to everything produced by the property or which is incorporated or attached thereto, either naturally or artificially6 )Art.,,*Natural fruits < spontaneous products of the soil and the young and other products of animals )Art.,,2:ndustrial fruits < produced by lands of any 'ind through cultivation or labor )Art. ,,2Ci il fruits < rents of buildings, price of leases of lands and other property and the amount of perpetual or life annuities or other similar income )Art.,,2)ummary( Obligations of debtor in deter#inate obligations: ,6 To perform the obligation specifically6 76 To ta'e care of the thing with the proper diligence of a good father of a family6

2if er! "ersonal / when the ualifications of the debtor are involved$ the debtor is the only one that must perform it 2if not "ersonal < performance by an agent is permitted (substitute performance)

Effects of breac$ ,6 In positive personal obligations to do, if the obligor fails to do that which he has obligated himself to do, the obligee can have the obligation performed or e"ecuted at the e"pense of the former6 )Art. 1163' "ar.276 In case the debtor should have performed the act agreed upon in contravention of the agreement, or in a manner that is improper or inappropriate, the same thing shall be ordered undone and performed by another at the e"pense of the debtor should he refuse to do it all over again6 86 <bligee can also demand for damages by reason of the breach6 )Art. 113*n case of non-performance b! the debtor, the right of the creditor to e"act fulfillment encounters two difficulties: #Caguioa) i$ %hat violence cannot be e"ercised against the person of the debtor for the purpose of compelling him to perform the prestation$ ii$ f the prestation is purel! personal to the debtor and consequentl!, cannot be performed b! an! person other than him, e"ecution b! another is not possible and will not lie$ ***&ence, the onl! remed! is one of damage$

Art. 116>. 9$en t$e obligation consists in not doing' and t$e obligor does &$at $as been forbidden $i#' it s$all also be undone at $is e4"ense. )1*++a Obligation not to do Negative personal obligations : the object of the obligation is reali%ed or fulfilled so long as that which is forbidden is not done by the obligor (&urado) - those obligations whose object is the abstention of the debtor from whatever act which otherwise he could perform (!aguioa) - This type of obligation carries with it no accessor! obligation and by its nature is "urel! "ersonal to t$e debtor and conse uently, he himself must abstain or refrain from performing the conditions prohibited and cannot delegate the same to an agent, e"cept when there is consent from the creditor6 - 7ela! or #ora is NOT "ossible unli'e in positive obligations? obligation is either fulfilled or not (&urado) -

0eneral rule: The debtor must perform the act as promised and cannot substitute the same with another act of forbearance6 )Art. 12,,' "ar.2-

Effects of breac$: ,6 In case the debtor breaches the obligation, the same shall be ordered undone at his e"pense6 )Art.116>76 In those cases where it is not possible to undo the act done either physically or legally, or because the rights of third persons are involved, or for some other reason, the only feasible remedy on the part of the creditor is an indemnification for the damage caused6 )Art.113*Art. 116+. T$ose obliged to deli er or to do so#et$ing incur in dela! fro# t$e ti#e t$e obligee 6udiciall! or e4tra/6udiciall! de#ands fro# t$e# t$e fulfill#ent of t$eir obligation. Ho&e er' t$e de#and b! t$e creditor s$all not be necessar! in order t$at dela! #a! e4ist: )1- 9$en t$e obligation or t$e la& e4"ressl! so declare? or )2- 9$en fro# t$e nature and t$e circu#stances of t$e obligation it a""ears t$at t$e designation of t$e ti#e &$en t$e t$ing is to be deli ered or t$e ser ice is to be rendered &as a controlling #oti e for t$e establis$#ent of t$e contract? or )3- 9$en de#and &ould be useless' as &$en t$e obligor $as rendered it be!ond $is "o&er to "erfor#. :n reci"rocal obligations' neit$er "art! incurs in dela! if t$e ot$er does not co#"l! or is not read! to co#"l! in a "ro"er #anner &it$ &$at is incu#bent u"on $i#. =ro# t$e #o#ent one of t$e "arties fulfills $is obligation' dela! b! t$e ot$er begins. )11**a=ulfill#ent of t$e obligation Performance of the obligation or payment, juridically spea'ing, presupposes the e4act and co#"lete e4ecution of t$e "restation on t$e "art of t$e debtor. (!aguioa) Traditionally, performance or fulfillment of the obligation has been e"pressed in the term ApaymentB or Asolutio,B which e"pression has also the concept of e"tinction of the juridical relation6 The !ivil !ode regulates fulfillment or payment among the models of e"tinguishing obligations Non/fulfill#ent58reac$ of obligation: @anner of non/fulfill#ent (!aguioa) 1. non/fulfill#ent "ro"erl! s"ea%ing

- causes of non-fulfillment affect the very essence of the obligation thereby rendering it impossible of performance 2. defects in non/fulfill#ent - those which, without fundamentally affecting the tie of law nor rendering the performance thereof impossible presupposes a defective or an ine"act performance of what was agreed upon - e"ample( mora or delay : non-fulfillment in point of time <D (other classification of non-fulfillment according to !aguioa) ,. total non/fulfill#ent : no performance whatsoever 76 "artial non/fulfill#ent : when there is partial performance or irregular non-fulfillment when there is irregular non-performance6 - non-fulfillment occurs either at the very moment of the demand #ordinar! breach) or before the maturity of the obligation #anticipator! breach)$ 2 %inds of 8reac$ of Obligations: (&urado) ,6 Aoluntar! : if the debtor or obligor in the performance of his obligation is guilty of default, fraud, negligence, or in any manner contravenes the tenor thereof$ debtor is liable for damages Eoluntary breach through default or mora )Art.116+ Eoluntary breach through fraud or dolo )Art. 1131 Eoluntary breach through negligence or culpa )Art. 1132 Eoluntary breach through contravention of tenor of the agreement )Art. 113*76 :n oluntar! < if the non-fulfillment is brought about by circumstances foreign to the will of the debtor (!aguioa)$ otherwise put, if the debtor is unable to comply with his obligation because of some fortuitous event$ debtor is N<T liable for damages )Art. 113,7efault or @ora (,st 'ind of voluntarily breaching obligation, a defect and partial non-fulfillment of obligation) covers all non-fulfillment in point of time in its broadest sense$ juridically, however, it pertains only to culpable dela! where fulfillment or compliance with the obligation, although late, is still possible7 (!aguioa) signifies the idea of delay in the fulfillment of an obligation with respect to time (&urado) delay in the fulfillment of obligations$ it is nonfulfillment with respect to time (Tolentino)
2

Rationale: since if as a consequence of the delay the possibility of the performance disappears, there is no more mora or delay but total non-fulfillment properly speaking !aguioa"

Note( There can be delay <NFG in positive obligations (to do and to give)$ but there can be N< delay in negative obligations

Classification of @ora: ,6 @ora sol endi < delay on the part of the debtor a$mora solvendi e" re - when demand by the creditor is not necessary to ma'e the debtor in mora (!aguioa) - refers to obligations to give b$mora solvendi e" persona - if demand by the creditor is necessary in order to ma'e the debtor in mora (!aguioa) - refers to obligations to do 76 @ora acci"iendi < delay on the part of the creditor to accept the delivery of the thing which is the object of the obligation (&urado)$ generally, delay on the part of the creditor 86 Co#"ensatio #orae < delay of the parties or obligors in reciprocal obligations$ where mora of the creditor neutrali%es the mora of the debtor (!aguioa) 3 re(uisites &$ic$ s$ould be "resent in order t$at t$e obligor or debtor #a! be considered in default (&urado)8 o <bligation is demandable and already li uidated o <bligor or debtor delays performance o !reditor re uires the performance judicially or e"tra-judicially Mora solvendi the delay, contrary to law, in the fulfillment of the prestation by reason of a cause imputable to the former (Tolentino) presupposes a prestation that is due and demandable re uisites( (!aguioa)9 o <bligation consists of a positive prestation (to do or to give) o <bligation should be demandableH, due/, determined or li uidated. o +ebtor delays in the performance due to causes imputable to him o !reditor should demand performance of the debtor When does the obligor incur in delay? The obligor or debtor incurs in delay from the time the obligee or creditor demands from him the fulfillment of the obligation$ the demand may be judicial or e"trajudicial
3

!aguioa and Tolentino specified the re uisites according to the 'ind of mora 4 %olentino version( 8 re uisites in order that the debtor may be in default( ,6 that the obligation be demandable and already li uidated 76 that the debtor delays performance 86 that the creditor re uires the performance judicially or e"trajudicially 5 There is N< mora in natural obligations # ?ither because the obligation is pure or because the term has lapsed or the condition has been fulfilled $ 5mount is ascertained

6udicial: if the creditor files a complaint against the debtor for the fulfillment of the obligation o e4tra6udicial: if the creditor demands from the debtor the fulfillment of the obligation either orally or in writing (&urado)$ sending of a bill or demand letter (!aguioa) Notes( 5 mere reminder or any act which cannot be ualified as a demand for payment will not be considered a demand since the code re uires that the tolerance and benevolence of the creditor has terminated (!astan as cited in !aguioa) The proof of the demand will be incumbent upon the creditor (Tolentino) +emand is generally necessary even if a periof has been fi"ed in the obligation (Tolentino) @here there has been an e"trajudicial demand before action for performance was filed, the effects of default arise from the date of such e"trajudicial demand6 >ut where the evidence does not disclose any particular date on which the creditor made e"trajudicial demand upon the debtor, the payment of interest or damages for the default must commence from the filing of the complaint6 (Tolentino) The demand must refer to the prestation that is due and not to another (Tolentino) o When demand is NOT necessary ,6 when the obligation or the law e"pressly so declares the obligation or the law itself must e"pressly declare that the demand is not necessary in order that the debtor shall incur in delay e"ample( in the obligation it is stipulated that, 'D shall incur in dela! if he does not pa! the obligation upon the arrival of the designated date for pa!ment($ #Notes: In case of doubt, the doubt should be resolved in favor of the debtor, because dispensing with demand is an e"ception to a general rule$ unless the e"ception is clearly proved, the general rule must apply6 (Tolentino) 5ccording to Art.13>> of the !ivil !ode, where one of the partners who has underta'en to contribute a sum of money to the common fund at a specified date fails to do so, he becomes a debtor of the partnership not only for the amount which he has promised to contribute but also for the interest and damages from the time he should have complied with his obligation (&urado)

76 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 basis: the time element for the fulfillment of the obligation is of the essence of the contract e"amples( (,) where a building was to be completed on a certain date because it was to be opened as a school on a fi"ed date$ (7) where goods were to be delivered on a specified date because they were to be loaded on a boat leaving on such date Note( It is essential that the debtor has 'nowledge of the fi"ing of the date of performance as a controlling motive on the part of the creditor in order that it can be said that the debtor has tacitly consented to incur in delay without the necessity of a demand6 (Tolentino) 86 when demand would be useless, as when the obligor has rendered it beyond his power to perform where performance has become impossible either through (,) some act or fault of the debtor or (7) as that caused by fortuitous event but the debtor has bound himself to be liable in cases of such events6 #Note( 9th instance when demand is not necessary according to some authors (ac'nowledged by Tolentino) when the debtor e"pressly recogni%es or ac'nowledges that he has incurred in delay6 There must, however, be an e"press recognition of the default and not merely re uests for e"tension to time to perform6 Effects of mora solvendi: ,6 to indemnify the creditor for damages which his delay has occasioned in obligations to give and to do (!aguioa) 76 to answer for the loss or deterioration of the thing due even if caused by fortuitous event (!aguioa) 86 @hen it has for its object a determinate thing, the delay places the ris's of the thing on the debtor (Tolentino) Mora accipiendi constitutes non-acceptance without reason (!aguioa) delay in the performance based on the omission by the creditor of the necessary cooperation, especially acceptance on his part (Tolentino) re uisites( (!aguioa)2
%

Tolentino version( 8 re uisites in order that there be delay on the part of the creditor(

o o

That there e"ists an obligation which has already matured and for whose fulfillment an act of cooperation on the part of the creditor is re uired That the debtor has performed al that is incumbent upon him under the obligation and made tender of payment to the creditor That the creditor refused to accept payment or to cooperate in the fulfillment of the obligation without any justifiable reason

delin uency commences when one of the contracting parties fulfills his obligation and becomes invested with power to determine the contract because of failure on the part of the other to carry out the agreement6 (Tolentino) !ow is demand made in reciprocal obligations? +emand is made in only one way and that is by actual performance or tender of performance of the obligation of the party claiming delay or default by the other6 (!aguioa) Cessation of Effects of @ora occurs in the following cases( (!aguioa version) (,) through the will of the creditor as in the cases of waiver of the payment of the due indemnification, remission, e"tension of time, and novation$ (7) by concession by the law of a time to fulfill to the debtor (moratorium) (8) when the creditor is also guilty of mora, in which case, there occurs the neutrali%ation of the mora (compensation morae) benefits arising from default or delay may cease upon( (Tolentino version) (,) renunciation by the creditor a6 e"press b6 implied : when after the delay has been incurred, the creditor grants an e"tension of time to the debtor or agrees to a novation of the obligation (7) prescription

When does the creditor incur in delay? The creditor incurs in delay when the debtor tenders payment or performance, but the creditor refuses to accept it without just cause6 Effects of mora accipiendi: ,6 it e"cludes the mora of the debtor and destroys the effects of the latter (!aguioa) 76 it transfers the ris' to the creditor for fortuitous events which formerly belonged to the debtor (!aguioa I Tolentino) 86 debtor can obtain his freedom from the obligation by the consignation of the thing due, and conse uently, after consignation, his obligation to pay interest is e"tinguished (!aguioa I Tolentino) 96 the responsibility of the debtor for the thing is reduced and limited to fraud and gross negligence (Tolentino) H6 all e"penses incurred by the debtor for the preservation of the thing after the mora shall be chargeable to the creditor (Tolentino) /6 creditor becomes liable for damages (Tolentino) ompensatio morae

Reci"rocal obligations < those which are created or established at the same time, out of the same cause, and which result in mutual relationships of the creditor and debtor between the parties6 - are conditional in the sense that fulfillment of an obligation by one party depends upon the fulfillment of the obligation by the other 0eneral rule in reci"rocal obligations: the fulfillment by the parties should be simultaneous6 @here both are in default, their respective liability for damages shall be offset e uitably6 When does delay or mora begin? +elay or mora begins from the moment the other party fulfills or tenders fulfillment of his obligation in a proper manner (!aguioa))$ otherwise put,
,6 76 86 an offer of performance by the debtor who has the re uired capacity the offer must be to comply with the prestation as it should be performed the creditor refuses the performance without just cause

Art. 113*. T$ose &$o in t$e "erfor#ance of t$eir obligations are guilt! of fraud' negligence' or dela!' and t$ose &$o in an! #anner contra ene t$e tenor t$ereof' are liable for da#ages. )11*1 enumerated herein are those 'inds of voluntary breaches of obligation( (,) through fraud$ (7) negligence$ (8) delay$ (9) contravention of the tenor of the obligation6 0eneral rule: in cases where there is voluntary breach of obligation, one of the rights of the creditor is to as' for indemnification of damages under this article6 Notes: A+amagesB as used in the above provision include any and all damages that a human being may suffer in any and all manifestations of his life( physical or material, moral or psychological, mental or spiritual, financial, economic, social, political and religious6 (Tolentino)
&

This right is usually resorted to when other rights are not already available to the creditor, for instance when a debtor acting in contravention of the tenor of the obligation cannot physically undo what he has done6

&

>reach of contractual obligation entitles the other party damages even if no penalty for such breach is provided in the contract6 The responsibility for damages arising from nonfulfillment of a contractual obligation cannot be divided nor can it be e"tended to persons who have nothing to do with the obligation (Tolentino)

7istinctions bet&een t$e deceit and #alice: 7eceit

*s to time ?"ists ahead of the contractual obligation, or at the birth of the obligation )ecuring the consent of the other party to enter into the contract Eitiation of consent of the party upon whom it is employed for entering into the contract *ives rise to a right of the innocent party to as' for the annulment of the contract if the fraud is causal or to recover damages if it is incidental

@alice
Present only during the performance of a pre-e"isting obligation ?vading the normal fulfillment of an obligation Non-fulfillment breach of obligation or the

ontravention of the tenor of obligation (also another 'ind of voluntary breach of obligation or partial nonfulfillment of obligation) 5ny illicit act which impairs the strict and faithful fulfillment of the obligation or every 'ind of defective performance6 e"ample( an architect who made plans that contain defects and inade uacies which led to the collapse of the building Art. 1131. Res"onsibilit! arising fro# fraud is de#andable in all obligations. An! &ai er of an action for future fraud is oid. )11*2a"raud or #olo voluntar! e"ecution of a wrongful act, or a willful omission, )nowing and intending the effects which naturally and necessarily arise from such act or omission6 (Tolentino) consists in the conscious and intentional proposition to evade the normal fulfillment of the obligation (&urado) 2 %inds: a. 7eceit1* - ?"ists in the celebration of contracts - !an only e"ist in contracts and precedes or is simultaneous with the celebration of the contract - Desults in a vitiation of consent and a possible annulment of the same b. @alice or bad fait$ - ?"ists in the fulfillment of obligations - De uires that there be a pre-e"isting obligation the fulfillment of which is tainted with bad faith or malice - )ince there e"ists already in obligation, there is no uestion of annulment and the remedy granted by law is indemnification for damages

*s to purpose

*s to result

*s to rights that arise

*ives rise to a right of the creditor or obligee to recover damages from the debtor or obligor

What type of fraud is contemplated under $rt%&&'&? The fraud referred to in this article is #alice or bad fait$. @alice or bad fait$ any voluntary and willful act or omission which prevents the normal reali%ation of the prestation, 'nowing and intending the effects which naturally and necessarily arise from such act6 (Tolentino) Janresa( deliberate and intentional purpose to evade the normal compliance of an obligation (as cited in !aguioa) !astan( an act or omission which with awareness and will to produce an anti-judicial result, prevents the normal compliance of an obligation (as cited in !aguioa) 2 essential ele#ents: (!aguioa) i6 Intellectual awareness (conciencia) ii6 @ill (desire to violate a right of credit, AvoluntadB) ( s the intention of the violator determined b! the motive which impelled him to commit the act essential for malice or bad faith+ Jodern doctrine says that the motive or intention is irrelevant in civil law6 5s +ia% Pairo says, there is a distinction between a debtor in good faith and a debtor because of dolo which conse uently ma'es the latter a debtor in bad faith6 =or malice or bad faith to e"ist, it is sufficient to infringe voluntarily the obligation which falls over the debtor consciously, or with his awareness6 (!aguioa),,
11

1'

This type of fraud is that which is contemplated in Art.133> which stipulates( AThere is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to6B (Janresa as cited in Tolentino) +eceit is referred to by &urado as causal or incidental fraud (dolo causante or dolo incidente

In other words, the intention or motive of a debtor in malice is always irrelevant6 It always implies some 'ind of malice or dishonesty6 5s

1'

Res"onsibilit! for #alice or bad fait$: =or the conse uences of his malicious act, the debtor is liable not only for the results intended but also for their natural and probable conse uences even though they havenCt been foreseen by the debtor or they e"ceeded its intention This responsibility for malice or bad faith is demandable in all 'inds of obligations but it is necessary that it must be proved and not simply presumed and results in an aggravation of the damages that are recoverable 9ai er of action for #alice or bad fait$( o if in advance, i6e6 a waiver for a fraud which has not yet been committed void$ prohibited because it is against law and public policy o if past, i6e6 a waiver for a fraud already committed valid$ is deemed an act of generosity on the part of the creditor Art. 1132. Res"onsibilit! arising fro# negligence in t$e "erfor#ance of e er! %ind of obligation is also de#andable' but suc$ liabilit! #a! be regulated b! t$e courts' according to t$e circu#stances. )11*3Cul"a or fault or negligence consists in the omission of that diligence which is re uired by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place )Art. 1133 omission of that diligence re uired in social relations which if observed would have prevented the contrary and undesired result (!aguioa) simply the absence of due care re uired by the nature of the obligation (&urado) Binds5classes:12 a$ *ccording to form i6 Culpa in faciendo (positive act) ii6 Culpa in non faciendo (omission) b$ *ccording to degree of culpa / diligence,i6 Culpa lata (grave which is the omission of the most minimum diligence) ii6 Culpa leve (omission of the diligence of an ordinary layman or bonus pater familias)
such, it cannot cover cases of mista'e and errors of judgment made in good faith6 (Tolentino I &urado) The element of intent, and not the degree of actual harm done is the test6 (Tolentino) 12 This classification is patterned after !aguioaCs6
13

Culpa levissima (omission of the ma"imum diligence of a very careful man) c$ .ost important classification,/ i$ ulpa contractual fault or negligence in the performance of a pree"isting contractual obligation resulting in a breach of obligation (!aguioa I Tolentino) fault or negligence of the obligor by virtue of which he is unable to perform his obligation arising from a pre-e"isting contract because of the omission of the diligence which is re uired by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place (&urado) ii$ ulpa e)tra*contractual or a+uiliana failure to observe the care re uired by law with respect to other persons not connected by contract or of any juridical relation whatsoever save the generic one which is common to all men of not damaging another (!aguioa) fault or negligence of a person, who, because of the omission of the diligence which is re uired by the nature of the obligation and which must correspond with the circumstances of the persons, of the time and of the place, causes damage to another6 (&urado) fault or negligence which constitutes an independent source of obligation between parties not previously bound6 (Tolentino) 7istinctions bet&een cul"a contractual and cul"a a(uiliana: ,-.$ ONT/$ T,$There is pre-e"isting contractual relation The negligence of the defendant is merely an incident in the performance of an obligation )ource of liability;breach or non-fulfillment of the contract There is presumption of negligence from the breach of the contract The master cannot e"empt himself by proving due diligence in the selection and supervision of employee +amages may be claimed only by the parties, their heirs and privies Negligence referred to in
14

iii6

,-.$ $0,1-1$N$ None6 The negligence involved is substantive and independent6 )ource of liability; negligent act or omission itself Plaintiff must prove the e"istence of negligence The master is free from liability upon proof of such diligence 5 stranger may claim damages such as the relatives and dependents Negligence referred to in

The !ivil !ode follows the modern tendency admitting of no degrees of culpa but sets up a standard of diligence in that of a good father of a family, saving agreement to the contrary, and leaving it to the courts either to moderate or aggravate the responsibility of a person guilty of culpa depending on the circumstances

5ccording to &urado, negligence may either be criminal or civil6 !ulpa a uiliana and culpa contractual are the two 'inds of civil negligence6

11

Art.1133

Art. 213611

Negligence distinguis$ed fro# fraud There is #alice or dolo when there is non-fulfillment due to a cause of which the debtor is aware$ there is actual 'nowledge There is cul"a when there is nonfulfillment due to a cause which the debtor could or ought to have foreseen$ there is possibility of 'nowledge There is fortuitous e ent when there is non-fulfillment for causes which the debtor could not foresee and could not have avoided$ there is total absence or possibility of 'nowledge 7istinguis$ing ele#ent of fraud fro# negligence: INT?NTI<N presence of intent to cause damage or in0ur! dolo mere abandonment, inattention, carelessness, lac) of diligence culpa #olo 2malice3 The guilty party is aware that his conduct will violate another right or duty There is no presumption of its e"istence but it must be proved The guilty party is responsible for all the conse uences attributable to his act whether intended or not or foreseen or not @aiver in advance is not allowed ulpa2"ault or negligence3 The guilty party is not aware but should have been aware There is presumption because of breach of contract The guilty party only answers for the damages which are foreseen or could have been foreseen at the time the obligation was constituted 5llowable unless contrary to public policy

or decrease the liability of the party at fault depending upon the circumstances of each case6 E4e#"tions fro# liabilit!: (,) in which a party to a contract is relieved from the effects of his fault or negligence by a third person (7) in which one party to a contract renounces in advance the right to enforce liability arising from the fault or negligence of the other6 Notes: Test of negligence: If the defendant in doing the alleged negligent act +I+ N<T use the reasonable care and caution which an ordinaril! prudent person would have used in the same situation, he is guilty of negligence6 9ai er of action for negligence: o 1uture negligence can be waived, unless the nature of the obligation and public policy should re uire e"traordinary diligence$ or if the negligence is so gross that it amounts to malice or bad faith o 2ast negligence all the more valid Effect of good5bad fait$ o If the obligor has acted in good faith, he shall be liable only for natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted6 o If the negligence of the obligor shows bad faith, provisions of 5rts6 ,,., and 770,, par67,/ shall apply6 It is in this case that the boundary line, at least with regard to effects, between negligence and fraud disappears altogether$ otherwise put, when negligence shows bad faith the rules on fraud or dolo shall govern6 Effect of contributor! negligence: If there was contributory negligence of the obligee or creditor, the effect is to reduce or mitigate the damages which he can recover from the obligor or debtor as a result of the breach of the obligation6 >KT, if the negligent act or omission of the obligee or creditor was a pro"imate cause of the event which led to the damage or injury complained of, he cannot recover$ (&urado)

Res"onsibilit! for fault or negligence: If the debtor or obligor is unable to comply with his obligation because of his fault or negligence, the creditor or obligee can hold him liable for da#ages. The liability arising from negligence in the performance of every 'ind of obligation may be regulated by the courts6 The court may increase
15

Art. 1133. T$e fault or negligence of t$e obligor consists in t$e o#ission of t$at diligence &$ic$ is re(uired b! t$e nature of t$e obligation and
1#

Art. 2136: @hoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done6 )uch fault or negligence, is there is no pre-e"isting contractual relation between the parties, is called a uasi-delict and is governed by the provisions of this !hapter6

Art. 22*1' "ar.2: In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation6

12

corres"onds &it$ t$e circu#stances of t$e "ersons' of t$e ti#e and of t$e "lace. 9$en negligence s$o&s bad fait$' t$e "ro isions of Articles 1131 and 22*1' "aragra"$ 2' s$all a""l!. :f t$e la& or contract does not state t$e diligence &$ic$ is to be obser ed in t$e "erfor#ance' t$at &$ic$ is e4"ected of a good fat$er of a fa#il! s$all be re(uired. )11*,a0eneral degree of diligence re(uired: @hen neither the law nor the obligation itself states the degree of diligence re uired of the obligor or debtor in the performance or fulfillment of the obligation, the standard diligence re uired is Athat which would be observed by a good fat$er of a fa#il!C. E4ce"tions: 1. when the parties stipulated another degree of diligence re uired 2. when the law re uires a higher degree of diligence - e"ample( common carriers )Art.1333' "ar.1-,. Dgood fat$er of a fa#il!C #bonos paterfamilias) a person of ordinary or average diligence Notes fro# class: 3 (uantu# of diligence: ,6 e"traordinary diligence 76 diligence of a good father of a family (+<5*=<5=) general degree of diligence e"pected of an owner of a property 86 simple diligence

In other cases, the creditor may demand that the obligation be performed at the e"pense of the debtor, which means to say that the thing will be ac uired at the e"pense of the debtor if that is possible and later on delivered to the creditor (substitute performance)

Re(uisites for substitute "erfor#ance: There be non-fulfillment of the obligation either totally or partially whether non-performance or mere delay, and the same is imputable to the debtor )pecific performance is not possible There e"ists a compensable damage or injury There is a casual relation as of cause and effect between the non-fulfillment of the obligation and the damage done6 The indemnification for damages covers both the injury suffered (damnum emergens or da3o emergente) and the loss of profits (lucrum cesans or lucro cesante) b6 Re#edies to obligation to do( @hen it treats of obligations that are not of obligations that are not personal and therefore can be performed by anybody, performance in the specific manner can be demanded not by the debtor himself, but by other persons at the e"pense of the debtor (substitute performance)6 This same rule will apply where the debtor has performed the act in contravention of the obligation in which case what has been done will be ordered undone and done according to the obligation, all at the e"pense of the debtor6 @hen it treats of very personal obligations which only the debtor can perform with utility to the creditor as for e"ample a wor' of art, it is not possible to demand specific performance and is substituted by performance by e uivalent or indemnification for damages6 @here the obligation re uires the declaration or performance of a voluntary act by the debtor, modern doctrine admits of specific performance in such cases, substituting the will of the debtor with that of the judge6 c.Re#edies in obligations not to do: The creditor may as' that the same be undone at the e"pense of the debtor @here above is not possible legally or physically, the only alternative is performance by e uivalent or damages6 Art. 113,. E4ce"t in cases e4"ressl! s"ecified b! t$e la&' or &$en it is ot$er&ise declared b! sti"ulation' or &$en t$e nature of t$e obligation re(uires t$e

.u##ar! of re#edies a ailable to t$e creditor in cases of non/fulfill#ent: Re#edies of creditor for non/fulfill#ent The creditor may either demand specific performance and where it is not possible, e uivalent or substitute performance( a6 Re#edies in obligations to gi e( The creditor could obtain the same through the e"ercise of the action 'nown as specific performance6 If the obligation is to deliver a generic or indeterminate thing and the same is within the patrimony of the debtor, again the creditor may demand for specific performance6

1$

Art.1333' "ar.1: !ommon carriers, from the nature of their business and for reasons of public policy, are bound to observe e"traordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all circumstances of each case6

13

assu#"tion of ris%' no "erson s$all be res"onsible for t$ose e ents &$ic$ could not be foreseen' or &$ic$' t$oug$ foreseen' &ere ine itable. )11*1a-

"ortuitous Event an event which could not be foreseen, or which, though foreseen, was inevitable6 includes unavoidable accidents, even if there has been an intervention of human element, provided fault or negligence cannot be imputed to the debtor6 (Tolentino) Negative +ef( that incident not imputable to the debtor which impedes the e"act fulfillment of the obligation6 (!aguioa) Positive +ef( event not imputable to the debtor which is unforeseen or although foreseen is inevitable and which renders impossible to e"act fulfillment of the obligation (!aguioa) may be( *s to cause a6 fortuitous event proper : or that which is caused by an Aact of *odB : e"amples( earth ua'es, floods, storms, epidemics, fires, etc6 b$ force ma0eure : where there is human intervention -- e"amples( armed invasion, attac' by robbers, attac' by bandits #Note( ?ssentially, there is N< substantial difference between the two, they both refer to an event or cause which is independent of the will of the obligor6 *s to foreseeabilit!,4 a$ ordinar! fortuitous event - refers to an event which usually happens or which could have been reasonably foreseen - e"ample( tropical storms, floods b$ e"traordinar! fortuitous event - refers to an event which does not usually happen and which could not have been reasonably foreseen - e"amples( fire, war, pestilence, unusual flood (<ndoy), locust, earth ua'e c$aracteristics5re(uisites: (,) the cause of the unforeseen and une"pected occurrence, or the failure of the debtor to comply with his obligations, must be independent of the human will (7) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen, it must be impossible to avoid o possibilit! of foreseeing the event 5 should be appreciated rationally according to the circumstances
1%

inevitableness of the event 5 varies according to the case and circumstances and must have a relation with the means of the debtor and therefore with the degree of diligence he should have e"ercised6 (8) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner (9) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor o Effects of fortuitous e ent on liabilit!: 0eneral rule: The effect of fortuitous event is to e4e#"t the debtor from liability for the nonfulfillment of the obligation and to the payment of damages to the creditor6 Lis obligation is e"tinguished6 E4ce"tions: b6The law e"pressly so provides as in the case of aleatory contracts e"ample( 5rts6 HH7, par67,c6 The parties e"pressly so stipulated d6The nature of the obligation re uires the assumption of ris' as in the case of insurance contracts $ssumption of ris4 5 refers to a situation in which the obligor or debtor, with full 'nowledge of the ris' voluntarily enters into some relation with the obligee or creditor - ordinarily re uires 'nowledge and the appreciation of the ris' and the voluntary choice to encounter it6 - doctrinal basis( no wrong is done to one who consents #volenti non fit in0uria) - based on social justice$ it is based on an ethicoeconomic sensibility of modern society, which has noted the injustices which industrial civili%ation has created

e( The debtor is guilty of dolo, malice or bad faith

as when he promises to deliver the same thing to two or more persons who do not have the same interest )Art. 1161' "ar.3-2* f6 The debtor is already in mora at the time the fortuitous event happens g6The liability arises from a criminal act unless the loss occurs after the debtor tendered the thing to
1&

5ccording to !aguioa, this classification must be based on the fre uency of the occurrence6

Art.112' "ar.2: A5 possessor in bad faith shall be liable for deterioration or loss in every case, even if caused by a fortuitous event6B 2' Art. 1161' "ar.3: A 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 delivery6

14

the creditor and the creditor refused to accept the same without justifiable cause6 )Art. 126>-21 Notes: In order that a fortuitous event may e"empt a person from liability, it is necessary that he be free from any previous negligence or misconduct by reason of which the loss may have been occasioned6 ()outheastern !ollege Inc6 vs6 !5)? otherwise put, the fortuitous event must not onl! be the pro"imate cause of the loss or destruction, but that it must be the 6O78 cause$

Par. 1 If the debtor is issued a receipt by the creditor and on the face of the receipt it is shown that the principal has been paid without any reservation with respect to the interest, there arises a disputable presumption that the interest has also been paid6 9asis: If a debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered6 )Art. 1213Par. 2 If the debtor is issued a receipt by the creditor ac'nowledging payment of a latter installment of a specified debt without any reservation with respect to prior installments, there also arises a disputable presumption that such prior installments have already been paid6 (This rule is in conformity with the rule stated in Dule ,8,, )ec6H, subsec6 (i) of the New Dules of !ourt6)77 Esto""el (Art. 1,31, !ivil !ode) : a condition or state by virtue of which an admission or representation is rendered conclusive upon the person ma'ing it and cannot be denied or disproved as against the person relying thereon678

Art. 1131. Esurious transactions s$all be go erned b! s"ecial la&s. )nEsur! contracting for or receiving something e"cess of the amount allowed by law for the loan forbearance of money, goods or chattels$ the ta'ing more interest for the use of money, goods or chattels credit than the law allows6 in or of or

The special laws referred to are the Ksury Faw (5ct6 No6 7/HH) and the different laws amending it6 Ksury Faw provided for a legal rate interest of /M per annum and a contractual rate not e"ceeding ,7M per annum if the loan is secured by a duly registered real estate, and ,9M if not so secured6 Ksury Faw was repealed during the martial law period, leaving parties free to stipulate higher rates6 There is now no longer any ceiling in interest rates on loans pursuant to !entral >an' !ircular No6 779 issued last +ec6,, ,-276

Art. 1133. T$e creditors' after $a ing "ursued t$e "ro"ert! in "ossession of t$e debtor to satisf! t$eir clai#s' #a! e4ercise all t$e rig$ts and bring all t$e actions of t$e latter for t$e sa#e "ur"ose' sa e t$ose &$ic$ are in$erent in $is "erson? t$e! #a! also i#"ugn t$e acts &$ic$ t$e debtor #a! $a e done to defraud t$e#. )11112 distinct as"ects5ele#ents of an obligation: (!aguioa) +ebtor *uarantyNresponsibility duty of the debtor to answer for his obligation with his entire patrimony Rig$ts of creditors in satisf!ing t$eir clai#s against t$e debtor: #,) to lev! b! attachment and e"ecution upon all the propert! of the debtor, e"cept such as are e"empt b! law from e"ecution e"hausting the property in possession of the debtor =or the fulfillment of the obligation of the debtor responds with all his property present and future6 5ll the property of the debtor is answerable for the obligation not only those properties e"isting at the time of birth of the obligation but also all those which
22 23

Art. 1136. T$e recei"t of t$e "rinci"al b! t$e creditor &it$out reser ation &it$ res"ect to t$e interest' s$all gi e rise to t$e "resu#"tion t$at said interest $as been "aid. T$e recei"t of a later install#ent of a debt &it$out reser ation as to "rior install#ents' s$all li%e&ise raise t$e "resu#"tion t$at suc$ install#ents $a e been "aid. )111*aThe presumptions enunciated in the above provision are rebuttable and not conclusive 2 "resu#"tions sti"ulated b! Art.1136:
21

Art. 126>: A@hen the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be e"empted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it6B

)abi ni &urado Dationale( ?stoppel applies perhaps because when one already benefited from a certain act, he is already precluded to uestion the same6 (Not so sure of this)

15

later on become or form part of the patrimony of the debtor6 in conformity with Art. 2236 of the !ivil !ode which states that the debtor is liable with all his property, present and future for the fulfillment of his obligations subject to the e"emptions provided by law6 #:) to e"ercise all the rights and actions of the debtor, e"cept such as are inherentl! personal to him creditor being subrogated to all of the rights and actions of the debtor save those which are inherent in his person subrogatory action 5ubrogatory action the remedy granted by law to creditors who cannot in any other way recover their credit to e"ercise the rights and actions not used by the debtor and which are not inherent in his person6 (!aguioa) the action which the creditor may e"ercise in the place of his negligent debtor in order to preserve or recover the patrimony of the debtor the product of such action, and then obtain therefrom the satisfaction of his own credit (Tolentino) C$aracteristic: indirect ; independent O3 because the creditor cannot in his own name file the action but in the name of the debtor Re(uisites5Conditions: The creditor has a right of credit against the debtor although at the moment it is not li uidated The credit must be due and demandable =ailure of the debtor to collect, or inaction of the debtor, whether the same be willful or negligent Insufficiency of the assets in the hands of the debtor although the creditor need not bring a separate action to show this e"haustion or insolvency of the debtor but he can prove the same in the very action to e"ercise the subrogatory action The right and actions are not purely personal or inherent in the person of the debtor rig$ts t$at are "urel! "ersonal or in$erent of t$e debtor: o right to e"istence (support) o rights or relations of a public character o rights of an honorary character o rights consisting of powers which have not been used, including( (a) power to administer$ (b) power to carry out an agency or deposit$ (c) power to accept an offer for a contract

o
rights79

non-patrimonial patrimonial rights not subject to e"ecution7H patrimonial rights inherent in the person of the debtor7/

o
o

Ot$er actions t$at cannot be sub6ect of a subrogator! action: Jere options and powers of the debtor such as the power to e"ercise legal redemption or to revo'e a stipulation pour autri Properties e"empt from e"ecution such as those mentioned in section ,7, Dule 8- of the New Dules of !ourt, the family home, etc6 Effects of subrogator! action The creditor may e"ercise the subrogatory action in behalf of the debtor not only up to the amount of his credit but in its totality6 Lowever, the e"cess over and above the credit or the damage must be returned to the debtor The bringing of the action does not entitle the creditor to preference$ hence, any other creditor may avail of himself of the credit collected e"cept when the suing creditor attaches the debtorCs credit or the judgment that is obtained6 The debtor of the debtor, may avail himself of all defenses available against the creditor6 Note: The law in certain cases gives to the creditor a direct action, an action by the creditor in his own name but directed against the name of his debtor6 (!aguioa) ?"amples( - action of the lessor directly against the sublessee - action of the laborers of the independent contractor against the owner - action of the vendor a retro against the transferees of the property made by the vendee - action of the creditor to utili%e the defense of prescription although waived by the debtor either tacitly or e"pressly6 #-) to as) for the rescission of the contracts made b! the debtor in fraud of their rights to impugn all of the acts which the debtor may have done to defraud the creditor accion pauliana or action to declare absolute simulation of transfer

24

?6g6 action to establish the debtorCs status as a legitimateNillegitimate child, action for legal separation or annulment of marriage 25 ?6g6 right to a government gratuity or pension 2# ?6g6 right to revo'e a donation by reason of ingratitude, right to demand the e"clusion of an unworthy heir

1#

Note: 5ccion subrogatoria and accion pauliana are 'nown as acts of preserving the patrimony of the debtor since the guaranty of the obligation with the patrimony of the debtor may be rendered useless simply by omission or inaction on the part of the debtor by failing to collect his credits or by positive acts, such as by fraudulently transferring his property to other persons6 (!aguioa)

Rescissor! action )action "auliana a remedy granted by law to creditors who cannot in any other way recover their credit to impugn (rescind) the acts which the debtor may have done to defraud them (!aguioa) refers to the right available to the creditor by virtue of which he can secure the rescission of any act of the debtor which is in fraud and to the prejudice of his rights as a creditor6 (&urado) c$aracter: subsidiar! "rinci"le fro# &$ic$ itFs based: the property of the debtor, whether present or future, stands as a guaranty for the payment of the obligation or credit can only be availed of in the absence of any other legal remedy to obtain reparation for the injury6 re(uisites: There e"ists a credit in favor of the plaintiff The debtor has performed an act or contract subse uently which is beneficial to a third person giving him an economic advantage The creditor is prejudiced by the disposition in favor of the third person and that the rescission of the same would benefit the creditor The creditor has no other legal remedy to obtain payment of his credit The act impugned is fraudulent although said fraudulent intent may be presumed in certain cases The one who ac uired the property was in complicity with the fraudulent intent or bad faith of the debtor6 effects: The fraudulent transaction is rescinded and conse uently it obliges him who has ac uired the thing to return the same If the third person who ac uired acted in bad faith$ that is, the 'nowledge of the fraud, and he cannot return for any reason the things alienated, as for e"ample, when the same are in the hands legally of third persons who did not act in bad faith, he is obliged to indemnify the creditors for the damage which the alienation may have caused them6 The action can only lie as far as the credit of the plaintiff-creditor and conse uently only those alienations necessary to satisfy his credit6 7istinctions bet&een subrogator! and rescissor! actions Rescissor! .ubrogator! The credit must e"ist The credit need not e"ist before the fraudulent before the action6 act6 In onerous contracts, Jalice or fraudulent intent on fraudulent intent is the part of the debtor is not necessary although the necessary6 same may be presumed6 Just be brought within Las no prescriptive period

1$

9 yrs from discovery $ction to declare absolute simulation of transfer a remedy available on the part of the creditor against the debtor who, 'nowing that he cannot pay his debt, or not wishing to pay his debt and not wishing his property to answer for the debt, will simulate a fictitious transfer to a third person in order to have the property beyond the reach of the creditors6 7istinctions bet&een rescissor! action and action to declare absolute si#ulation of transfer Rescissor! Action Action to declare ine4istent a fictitious transfer of "ro"ert! )absolute si#ulationThe alienation is fictitious and apparent Not necessary 5ction is principal !overs the entire alienation +oes not prescribe

The alienation by the debtor is real and not fictitious =raud actual or presumed must e"ist6 5ction is subsidiary <nly lies as far as is necessary to cover the credit of creditor Prescribes within 9 yrs

Art. 113>. .ub6ect to t$e la&s' all rig$ts ac(uired in irtue of an obligation are trans#issible' if t$ere $as been no sti"ulation to t$e contrar!. )1112 0eneral rule: <ights of obligations or those rights which are ac uired by virtue of an obligation are as a general rule transmissible in character : they may be alienated or assigned to third persons6 E4ce"tions: )1- where they are not transmissible by their very nature (personal right) )2- where there is a stipulation of the parties that they are not transmissible )3- where they are not transmissible by operation of law Note: Intransmissibility by stipulation of the parties, being e"ceptional and contrary to the general rule, should not be easily implied, but must be clearly established, or at the very least, clearly inferable from the provisions of the contract itself6 (&urado)

1%