THE NATURE AND EFFECT OF OBLIGATIONS (Joshua Kho)

THE NATURE AND EFFECT OF OBLIGATIONS
Obligations of the Debtor

1. Deliver a determinate thing
2. Preserve or take care of the thing with the required degree of diligence, if
the party stipulated upon a certain degree of diligence if not then the law’s
degree.
3. To deliver all accessions and accessories
-Accessions - anything that is produced either naturally or artificially
(apples from a tree)
Accessories - for the embellishment use or preservation of the thing
(earring)
4. Liability for damages in case of breach of obligation due to fraud, delay,
negligence or contravention of the tenor of the obligation.
Rights and Remedies of the creditor

- If thing’s determined, the creditor has the right to compel the debtor to
make delivery or specific performance or damages in case of breach.
- Has the right to hold the debtor liable in case it’s lost or damaged due to a
fortuitous event, in case there’s delay, or in case the debtor has promised to
deliver the thing to 2 or more ppl who don’t have the same interests.
- The creditor acquires a personal (only enforced against a definite passive
subject who is the debtor) right to the fruits of the thing from the time of
the delivery of the thing arises.
- The creditor will only acquire a real right once the thing is delivered to him.
- delivery is the transferring of ownership
Rights of a creditor in case of a personal obligation

- Positive Personal Obligation = if the debtor fails to perform his obligation or
the debtor does it in contravention of the tenor of the obligation then the
creditor may demand it be performed at the expense of the debtor.
- Debtor pays for third party willing to do it due to the Constitutional
Prohibition of Involuntary Servitude
- Negative Personal Obligation = done poorly = creditor pays for reparation or
damages.
BREACH - Failure without legal reason
Damages (pera) is the remedy for breach.

- The purpose of damages is to place the party in the SAME position
had the obligation been performed
- Default, Fraud, Negligence, or Contravention of the tenor
- Default - constitute breach of the obligation
1. There must be an obligation that is demandable or liquidated
2. Failure to perform at prescribed time
3. Demand by the creditor for performance and there’s failure to
perform it
Unilateral Obligations= only 1 party has obligation to perform, if there’s no demand

then no delay except when the law provides, if time is in the essence of obligation
Reciprocal Obligations = 2 party has obligation to perform there’s default when one
party is ready to comply with the obligation and the other’s not.
However there is an exception, what if different dates of performance are
imposed in each party, default when only happens after dates have expired.
Kinds of default
1. Mora solvendi = delay on the debtor’s part n/a on obligations not to do.
-debtor now guilty of breach of obligation, they’ll now be liable for interests
and damages counted from the date of default.
-The debtor’s now liable due to a thing being lost due to a fortuitous event
X determines things only due to genus nunquam perit the debtor can
always get the same thing, of the kind of the same quality to perform said
obligation.
-Demand may not be necessary to constitute the debtor in default due to
1. Law gives the time
2. w/o need on prior demand
3. Time of the essence (ex:wedding dress, bday cake)
4. Demand is useless due to the debtor being unwilling or the thing is
lost bcz u can't demand delivery of the lost thing.
5. Demand’s not necessary in case of reciprocal obligations which
involves simultaneous performance because default will only begin if
one party performs their part and the other has not, the party in the
default is the one who has not done
2. Mora accipiendi = delay on the part of the creditor to accept the

performance
- There must be an offer by the debtor to perform the obligation to perform
the obligation as agreed upon
- The creditor refused performance w/o just cause ( debtor can simply
consign the thing in court)
3. Compensatio morae = both parties caused delay

- The delay of each party is now canceled therefore there’s no actionable
default
- The liability of the first infractor (first one who caused delay) may be
reduced by the courts if it cannot be determined then the contraction be
extinguished and each should bear their own damages.
EFFECT OF DEFAULT CEASES WHEN THE CREDITOR RENOUNCES HIS RIGHT

OR THE OBLIGATION HAS ALREADY BEEN PRESCRIBED
FRAUD
Kinds of Fraud
1)dolo causante - Present at the perfection of the contract, it’s the reason party
enters the contract, it’s a vice of consent which makes contract voidable remedy is
for this is an annulment
Example: X offers Y condo unit u should buy it bcz its close to MRT if Y buys it due
to the MRT then it’s dolo causante and can be annulled.
2) dolo incidente - The conscious and the willful evasion of the normal fulfillment
of the obligation
Example: X offers Y condo unit u should buy it bcz its near public transpo but if X
buys it bcz he likes the way it looks and doesnt care abt transpo if it so happens
that the unit’s not close to it the only remedy of X is an action for damages based
on breach.
An action for future fraud can’t be waived and in case it is it’s void bcz a waiver of
action is void because it’s contrary to public policy as it encourages the
perpetration of fraud in other words one can pretty much fraud all u can as they
know they won’t be liable which is why it's void
Waiver of an action for passt fraud is valid because it is an act of generosity ;like
they care abt the fraud anymore. They are then waiving any right for indemnity for
the fraud.
NEGLIGENCE= Failure to observe the required diligence for the protection of

the interests of another, that degree of care, precaution, or vigilance which
the circumstances justly demands whereby the other suffers injury/damage as
a result.
- Remedy is damages
- Required diligence = stipulation of the parties, law which could prescribe
extraordinary diligence or ordinary diligence and finally in the absence of
both the diligent good father.
3 Kinds of negligence
1)Culpa Criminal - source of the obligation ; Negligence is in Negligence in the
performance of an act that causes a criminal offense the obligation to pay damages
will arise from that negligent act.
2)Culpa Contractual- Negligence is incidental; due to there being a pre-existing

contractual relation, in the performance thereof damages negligence attends said
performance in said case damages may be claimed by the injured party.
3)Culpa Aquilana- same as 1 ; acts of a debtor that cause damage to another given
there’s proximate cause or approximate relation between the act and damage
Nature & Effects of Obligations

Fortuitous Events - cannot be foreseen or even foreseen the inevitable
Act of Man - acts of independent of the will of the data but not independent
of the will of other human beings
Act of God - independent of the will of all humans (e.g. Natural calamities)
Loan Oblique - are used interchangeably; basically the same thing
General Rule for Fortuitous Events

● A party or any person shall not be liable in case if there’s loss or damage
which is brought by a fortuitous event
● There are exemptions under law in case there is delay default or fraud
negligence or contravention of the debtor or then the debtor will be liable
even if the thing is lost due to a fortuitous event
● If the debtor was suppose to deliver by a certain date and wasn’t able to
deliver on the decided date or the item was lost due to a natural calamity,
the debtor is liable for the loss or damage due to the fortuitous event
because he promised to deliver the item
● The law punishes the debtor for his evident bad faith, the debtor is liable
for loss or damage of the item in case of obligation to deliver the item
arises from he a criminal offense
● A debtor enters into an obligation with full knowledge of risk; no person will
be liable for loss or damage caused by a fortuitous event.
This rule to apply these requisites must be present:
1. the event must be independent of the will of the debtor
2. the event could not have been foreseen or a foreseeable must be in available
3. the event must be of such character as to render it impossible for the
debtor to comply with this obligation in a normal manner
The debtor must be free from any participation or aggravation of the injury
caused by the creditor
No concurrent negligence on the part of the debtor likewise the fortuitous

event must be the proximate and sole cause of the injury suffering
Usury - generally contracting for receiving an amount in excess of that allowed by

law for the loan or use of money, goods, shuttles or credit.
-Suspended or non-existent, people will not be punished for imposing
usurious rates of interest or rates of interest which are higher than the
legal rate of interest.
(Despite with this fact, banks and other leaders impose a rate of interest which is
higher than the rate of interest which is higher than the set by law the Supreme
Court)
Presumptions by law
● In case a creditor receives or gives a receipt for the principal pay without
indicating or without reserving the right of interest, this gives rise to a
presumption that the interest has been paid also if the principal gives a
receipt for a later installments receipt of that installment leads to the
presumption that prior installments that has been paid. However, only
disputable presumptions which may overcome by proof to the contrary they
are not conclusive presumption
These followings cases does not apply the Presumptions:

● Oral or written reservation by the creditor because as already reserved
his/her right either to be interest or the prior installment
● If receipt issued by the creditor does not state that it is issued for a
particular installment even if it is intended, they cannot just infer that the
date indicated there refers to the installment concern
● In case the receipt given by the creditor is only for part of principle, for
the presumption to apply it must be a receipt for the whole of the principal
in order for the presumption does not apply
Payment of Taxes - Incase of payment of taxes for the current year does not
lead to the presumption that the taxes for the previous years have been paid
Non-payment has actually been proven with presumptions will not apply because now
of proof to the contrary
Remedies of Creditor
Exhaust all the assets or property of the debtor, can use various legal
remedies available such as attachment
Action Suburgatory - refers to the right of the creditor to be subrogated to all

the rights of the debtors to protect his credit *in case of actions suburgatory, the
creditor does not become the creditor of the third person; the creditor merely
acts in the place of the debtor
For acton suburgatory action to take place in the following requisites:

1. There must be a debt owing from the debtor the creditor
2. The creditor must be prejudiced by the inaction of the debtor to run after
or proceed against the third person who owes the debtor
3. The creditor has exhausted the properties of the debtor
Actio Pauliana
The right of the creditor to impugn pay or challenge the debtors acts which may
have been done to defraud the creditor and this will lead to Rescissory Action
Requisites action for Actio Pauliana
1. Prior credit owing to the creditor from the debtor
2. A subsequent transfer from a debtor to a third party; after the credit is
taken from the creditor, the debtor will now transfer property to a third
party
3. Creditor must have no other legal remedy, must also be fraudulent and third
party act accomplice the fraud because transfers made in good faith are
valid, Generally the third person who has connived in the fraud or in bad
faith that can be compelled to return the object
Rescissory Action
The creditor will file an action for rescission of the fraudulent contracts
which may the debtor may have entered into; this is only subsidiary action - a build
off if the other remedies have already been unveiled off
Principle of rights are transmissible

Exemptions:
transmission are prohibited by law when purely personal in nature (e.g. contracts of
agency)
Stipulated by parties (e.g. gym memberships)

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THE NATURE AND EFFECT OF OBLIGATIONS

Obligations of the Debtor

Rights and Remedies of the creditor

Rights of a creditor in case of a personal obligation

BREACH - Failure without legal reason

Damages (pera) is the remedy for breach.

Unilateral Obligations= only 1 party has obligation to perform, if there’s no demand

2. Mora accipiendi = delay on the part of the creditor to accept the

3. Compensatio morae = both parties caused delay

EFFECT OF DEFAULT CEASES WHEN THE CREDITOR RENOUNCES HIS RIGHT

NEGLIGENCE= Failure to observe the required diligence for the protection of

2)Culpa Contractual- Negligence is incidental; due to there being a pre-existing

Nature & Effects of Obligations

General Rule for Fortuitous Events

No concurrent negligence on the part of the debtor likewise the fortuitous

Usury - generally contracting for receiving an amount in excess of that allowed by

These followings cases does not apply the Presumptions:

Action Suburgatory - refers to the right of the creditor to be subrogated to all

For acton suburgatory action to take place in the following requisites:

Principle of rights are transmissible

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