OBLIGATIONS AND CONTRACTS (Arts. 1169-1178, Civil Code of the Philippines)

Questions:

1. B and C entered into a contract wherein B would deliver to C 10 cases of softdrinks on March 30, 2022. B failed to deliver the softdrinks on the said date. On March 31, 2022, C called be and reminded him about his obligation. Is B already in delay in performing his obligation? explain briefly.

2. Jose, a known singer and songwriter, was hired by the BLT1 class to sing during their graduation on March 31, 2022. Is there a need to make a demand against Jose in order to put him in delay? explain briefly.

3. P was strolling around the mall and came across a portion of the floor that was wet. Seeing that there were no warning signs that the floor was slippery, he decided to walk through. Unfortunately, he slipped and broke his arm.

a. was there negligence? if so,who was negligent and who should be held liable for P's broken arm? explain briefly.

4. What is the presumption if the creditor accepts the debtor's payment of a later installment without making any reservation as to prior installments?

References: OBLIGATIONS AND CONTRACTS (Arts. 1169-1178, Civil Code of the Philippines)

THE LAW ON OBLIGATIONS AND CONTRACTS Art. 1172 In negligence Art. 1172 62 between a criminal act Penal Code or a civil act Validity of waiver of action arising of the Civil Code. What is from negligence. the Civil Code is to recover (1) An action for future negligence (not fraud) may be renounced except where the nature of the obligy requires the exercise of extraordinary diligence as in obligation the case of common carriers. (see Art. 1733.) Thus, in the EXAMPLES: (1) IfSentere preceding example, the law allows an agreement between's and B, whereby S will not be liable for damages arising from a specific horse on a negligence in the performance of his obligation. But if Sic the negligence of S' a common carrier (e.g., bus, shipping or airline company) to B for having fa such waiver is void. (contract may be (2) Where negligence shows bad faith (i.e., deliber- negligence. This is ately committed), it is considered equivalent to fraud. (Art. (2) Assum 2201, 2nd par.) Any waiver of an action for future negligence in the possession of this kind is, therefore, void. the death of the no pre-existing Kinds of negligence according negligence itself to source of obligation. (3) A CT They are: wants, he can (1) Contractual negligence (culpa contractual) or neg- property throw ligence in contracts resulting in their breach. Article 1172 crime is the s refers to culpa contractual. This kind of negligence is not a (Arts. 1157 4); source of obligation. (Art. 1157.) It merely makes the debtor liable for damages in view of his negligence in the fulfill- But B C ment of a pre-existing obligation (Arts. 1170, 1172.); or omission (2) Civil negligence (culpa aquiliana) or negligence delict is not which by itself is the source of an obligation between the arising from parties not so related before by any preexisting contract: It is also called tort or quasi-delict (Art. 2176.); and Effect of negli (3) Criminal negligence (culpa criminal) or negligence of the in resulting in the commission of a crime. (Arts. 3, 365, Revised Penal Code.) The same negligent act causing damages may Suppose produce civil liability arising from a crime under Article 100 recover dama of the Revised Penal Code (supra.), or create an action for Article quasi-delict under Article 2176, et seq., of the Civil Code. immeTHE LAW ON OBLIGATIONS AND CONTRACTS Art. 1174 Art. 1174 70 from the impossibility to foresee the same. As stated earli the event must be unforeseeable, or even if it could IF S sold and prove foreseen, must be impossible to avoid. EXAMPLE: and Cseparately, S is Due Rules as to liability in case of fortuitous reason is because it would his obligation to both B event. A person is not, as a rule, responsible for loss or damage event taking place. caused to another resulting from the non-performance of his obligation due to a fortuitous events. In other words, his (c) the obligation obligation is extinguished. The exceptions are enumerated from a crime. (Art. 126 below. (1) When expressly specified by law. - In exceptions (a), (b), and (c) below, the special strictness of the law is EXAMPLE: Sstole the caraba justified. the crime, to return th (a) the debtor is guilty of fraud, negligence, or delay, is lost through a fortu or contravention of the tenor of the obligation. (Arts. 1170, unless B is in mora acc 1165, par. 3.) results of whatever ca (see U.S. vs. Mamban EXAMPLE: S is obliged to deliver a specific horse to B on August (d) the thing 10. S did not deliver the horse on said date. If, on August 11, the horse died because it was hit by lightning, S is not liable if no demand was made by B. His obligation is EXAMPLE: extinguished. The loss or des If the horse died after a demand was made by B, S is liable for damages because he is guilty of (legal) delay. sugar, etc. does not In this case, the obligation of S to deliver the horse is also because the debtor extinguished (see, however, Art. 1262.) but it is converted delivering another into monetary obligation to pay damages. (Art. 1165, par. 3.) the principle that perit). If the horse would have died in any event even if no demand had been made by B, S would still be liable. A debtor in default becomes liable even for loss due to a fortuitous event. (see Art. 1165.) However, the court may reduce the (2) When decla exception rests upon amount of damages. (see Art. 2215[4].) Such a stipulation interest of the part of itAND 65 his negligence NATURE AND EFFECT OF OBLIGATIONS nd proximate caus Art. 1173 s lack of due car In other words, to be entitled to damages, it is not but the courts shal required that the negligence of the defendant should be the d." (see Arts. 2214 sole cause of the damage. ART. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature driven bus. Withou of the obligation and corresponds with the result of which, he circumstances of the person, of the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201, mages because the paragraph 2, shall apply. If the law or contract does not state g on the running the diligence which is to be observed in the by the conductor performance, that which is expected of a good ention. Suddenly, father of a family shall be required. (1104a) sion with another n off the bus. At xicated and was Meaning of fault or negligence. ed. Fault or negligence is defined by the above provision. gence of a good (par. 1.) According to our Supreme Court, "negligence self. (Art. 1761.) is the failure to observe for the protection of the interests ar recovery for of another person, that degree of care, precaution and e proximate or vigilance which the circumstances justly demand, whereby ommon carrier. such other person suffers injury." (United States vs. Barrias, itably reduced. 23 Phil. 434.) Factors to be considered. e bus rounded f the platform Negligence is a question of fact, that is, its existence accident was being dependent upon the particular circumstances of each there was no case. In determining the issue of negligence, the following exposed to no factors must be considered: cular mode of (1) Nature of the obligation. been on his EXAMPLE: of losing his bus rounded Smoking while carrying materials known to be inflammable constitutes negligence.Art. 1169 Art. 1169 NATURE AND EFFECT OF 55 OBLIGATIONS des that d would kind, time element is important as performance itself. When such an the time of performance is not fixed or is stated in general or indefinite terms, time is, as a rule, not of the essence of the It upon contract in which case performance must be made within ble for a reasonable time. What is a reasonable time will depend. he time upon the circumstances of the particular case. made It is not necessary for the contract to categorically state that time is of the essence; intent is sufficient. (4) When demand would be useless. EXAMPLE: S obliged himself to deliver a specific horse to B on September 5. Through S's negligence or deliberate act, or efore by reason of fortuitous event for which S has expressly are bound himself responsible (see Art. 1174.), the horse died on the September 2. Under this situation, any demand for the delivery of he the horse on September 5 would be useless as S has made it om impossible for him to perform his obligation. eed Demand is also unnecessary where it is apparent that it would be unavailing, as where there has been a prior absolute refusal by S or S has manifested an intention not to comply with his obligation. (5) When there is performance by a party in reciprocal obli- gations. - In case of reciprocal obligations, the performance of one is conditioned upon the simultaneous fulfillment on the part of the other. So neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. This is compen- satio morac. From the moment, however, a party fulfills or is ready to fulfill his obligation, delay by the other begins.THE LAW ON OBLIGATIONS AND Art. 1127 CONTRACTS Art. 117, right to collect from 76 inherent in or persona the right to vote to hold waives his right to apply the payment first to the interest revoke a donation on the R and then to the principal as permitted by Article 1259 (4) ask the court to n (infra.) It is only when the principal is fully receipted for and there is failure by the creditor to reserve the claim for which the debtor may ha interest, that the presumption that the said interest has not in any other man been paid will arise. (4) Payment of taxes. - Article 1176 does not apply The debtor is liable to payment of taxes. There is no presumption that previous taxes have been paid by the payment of later ones. future, for the fulfillmer exemptions provided by (5) Non-payment proven. - Of course, Article 1176 is not applicable where the non-payment of prior obligations has been proven. A presumption cannot prevail over a EXAMPLE: On the due da proven fact. the amount of P400 ART. 1177. The creditors, after having P280,000 and X is pursued the property in possession of the due date of the obl debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter Y. for the same purpose, save those which are Under the ci inherent in his person; they may also impugn the law are as foll the acts which the debtor may have done to defraud them. (1111) (a) He ma amount of P400, Remedies available to creditors for the (b) If, in satisfaction of their claims. pay the amount In case the debtor does not comply with his obligation, car so that the the creditor may avail himself of the following remedies to proceeds of the satisfy his claim: (c) He (1) exact fulfillment (specific performance) with the that payment right to damages; (d) He (2) pursue the leviable (not exempt from attachment sale made by under the law) property of the debtor; fraudulent in his credit. (3) "after having pursued the property in possession of the debtor," exercise all the rights (like the right to The Lad redeem) and bring all the actions of the debtor (like the collert in fu first eshaxe Art linTHE LAW ON OBLIGATIONS AND Art. 11 CONTRACTS Art. 1176 disputab 74 evidence t 1176, par. 1 EXAMPLES: (1) X was shot dead. Nobody witnessed the shooting (2) Y, however, was seen at the scene of the crime just after ,; rental a m commission holding the fatal gun. The fact not actually February known is the person who fired the gun. The fact knows receipt tha the presence of Y at the scene of the crime holding the fatal The gun. The inference is that Y is the person who killed X unless February accordar contradicted by competent evidence. installme (2) D borrowed P1,000 from C. Later, D shows a to the lat receipt signed by C. The fact not actually known is the disputab payment by D. The fact known is the possession by D of a Smith, 1 receipt signed by C. 2 SCRA The presumption is that the obligation has been paid unless proved otherwise by C as, for example, that D forced C to sign the receipt. When pres do not Two kinds of presumption. (1) W They are: established (1) Conclusive presumption. - one which cannot reservation be contradicted, like the presumption that everyone is or prior in conclusively presumed to know the law (see Art. 3.); and may be ma (2) Disputable (or rebuttable) presumption. - one which examples, can be contradicted or rebutted by presenting proof to the a reservat contrary, like the presumption established in Article 1176. the interes (see Sec. 69[i], Rule 123, Rules of Court.) may be. EXAMPLES: (2) paid. - (1) . D owes C the amount of P10,000 with interest at not appli 15% a year. C issued a receipt for the principal. The interest for a par been paid. was not referred to in the payment whether or not it has dated. T alone th It is presumed that the interest has been previously justify th paid by D because normally, the payment of interest precedes had bee that of the principal. (Art. 1253.) This, however, is only a (3) withorin the peaceful pass Art 1121 not the owner) and damnages for violation of The measure of desk THE LAW ON OBLIGATIONS AND Art. 1170 CONTRACTS R as the case may be is it is dental and it will likewise give rise only to an action for court in accordance with the pre damages. (see Art. 1344, par. 2.) (2) Negligence (fault or culpa). - It is any voluntary Damages. (Title XVIll.) act or omission, there being no bad faith or malice, which prevents the normal fulfillment of an obligation. (see Arts Fraud and negligence distingu Fraud may be distingui 1173, 1174.) EXAMPLE: P is a passenger in a taxi. Here, there is considered a () In fraud, there is d contract of carriage between P and the owner of the taxi follows: company. In consideration of the fare to be paid by P, the damage or injury, while in owner of the taxi company, through the driver, agrees to safely bring P to his destination. (Lasam vs. Smith, 48 Phil 657.) intention' (2) Waiver of the liabili If, through the recklessness of the driver, like for 1171.), while such waiver m example, driving at an unjustified rate of speed or entering a one-way street, an accident occurs, as a result of which P in negligence (Art. 1172.); is injured, there is negligence which would make the owner liable for damages. If the taxi contained defective parts, the (3) Fraud must be failure to repair the same constitutes also negligence on the is presumed from the vio part of the owner. (Ibid.) and (3) Delay (mora). - This has already been discussed (4) Lastly, liability under Article 1169. reduced by the courts, w (4) Contravention of the terms of the obligation. - This reduced according to the is the violation of the terms and conditions stipulated in the obligation. The contravention must not be due to a They are similar in fortuitous event or force majeure. (Art. 1174.) are committed with volit EXAMPLE: is gross or there is fail entire absence of care th E leased the apartment of R for P10,000 a month to be malice or wanton attitu paid in advance during the first week of every month. The obligation of E, as lessee, is to pay the stipulated rent. The rules on fraud shall ap obligation of R, as lessor, is to maintain E in the peaceful exists between the two possession of the apartment leased. If E violates his obligation, R is entitled to eject him from the premises and recover damages. If R does not maintain E ART. 1171 fraud Is dacall waiver of anTHE LAW ON OBLIGATIONS AND 176 CONTRACTS Art. (1) The pa 72 Art. 1175 the intention to make the debtor liable even in case of lated (Art. 1956.); fortuitous event should be clearly expressed. (2) The ag (3) When the nature of the obligation requires the assump (3) The in tion of risk. - Here, risk of loss or damage is an essential A stipulati element in the obligation. void, that is, as EXAMPLE: comments und B insured his house against fire for P100,000 with c, Note: By an insurance company. Later, the house was destroyed by accidental fire. Although the cause of the loss is a fortuitous No. 905 (Dec. event, B may recover the amount of the policy. the Monetary In a contract of insurance, the insurer (C), in consi- the Usury La deration of the premium paid by the insured (B), undertakes loan or forbe to indemnify the latter for the loss of the thing insured by reason of the peril insured against even if the cause of the of maturity loss is a fortuitous event. be charged o prescribed ART. 1175. Usurious transactions shall be non-existent governed by special laws. (n) of interest. I creditor to Meaning of simple loan or mutuum. unconscion Simple loan or mutuum is a contract whereby one of the parties delivers to another, money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. It may be gratuitous or with by th a stipulation to pay interest. (Art. 1933.) respe Meaning of usury. pres Usury is contracting for or receiving interest in excess of the amount allowed by law for the loan or use of money, with 558.) goods, chattels or credits. (Tolentino vs. Gonzales, 50 Phil. shal inst Requisites for recovery of interest. Meaning In order that interest may be recovered, the following requisites must be present: By actually anotherTHE LAW ON OBLIGATIONS AND CONTRACTS Art 1173 In case Art. 1173 66 titude, the ob (2) Circumstances of the person, which may b mance of the EXAMPLE: A guard, a man in the prime of life, robust and healthy sleeping while on duty is guilty of negligence. EXAMPLE: .S agree 1,000 kilos o (3) Circumstances of time. B agreed to P35,000. Thi EXAMPLE: date designa Driving a car without headlights at night is gross sugar from a negligence but it does not by itself constitute negligence The br when driving during the day. of the amou he suffered (4) Circumstances of the place. five (5) days In this EXAMPLE: Bought to Driving at 100 kilometers per hour on the superhighway which B fai is permissible but driving at the same rate of speed in Ayala But, if Avenue, Makati is gross recklessness. the hospita Measure of liability for damages. originated been reaso Damages signify the money compensation awarded to they enter a party for loss or injury resulting from breach of contract or obligation by the other. As a rule, the purpose of awarding damages is to place the innocent party in the same (not Kinds of dilig better) position he would have occupied if the contract or Under Al obligation had been performed according to its terms. required: Article 2201 of the Civil Code states: (1) that "In contracts and quasi-contracts, the damages for writing; which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences (2) in of the breach of the obligation, and which the parties law in the pa have foreseen or could have reasonably foreseen at the required of c time the obligation was constituted. (3) if b diligence ex Art. 1163Art 1170 THE LAW ON OBLIGATIONS AND Art. 1170 CONTRACTS Article 1157. Her 56 in Article 1174 person fails or EXAMPLES: (1) S agreed to sell to B his television set for P10,000 legal justification The obligation of S is to deliver the television set while that 1 Fraua of B, to pay P10,000. Since no date is set for performance of their respective it is the delib obligations, it is understood that it must be simultaneous fulfillment of a cannot demand payment if he himself cannot deliver the television set. From the moment S delivers the television set, for damages, B is in default if he does not pay S without the need of any and it cannot made in good demand. (2) If the agreement is that the delivery and payment involves a de shall be made on December 10, the delivery (payment) by S(B) on December 5 does not give him the right to demand EXAMP payment (delivery) from B(S). Neither party will incur in S delay before December 10 notwithstanding that the other has already complied with his obligation. of a par knowing Here, performance is set on the same date. and is li (3) Suppose in the same example, the delivery is to be made on December 10 and the payment, on December 15. In this case, a demand on December 10 by B is Article necessary to put S in delay following the general rule. (Art. committed 1169, par. 1.) Similarly, the delivery of the television set by S existing be does not put B in delay until a demand is made upon him on December 15, or subsequently. In this case, performance from causa is set on different dates. execution consent. ART. 1170. Those who in the performance In th of their obligations are guilty of fraud, negli- wine on t gence, or delay and those who in any manner contravene the tenor thereof, are liable for as represe damages. (1101) causal fra consent to Grounds for liability. annulled 1391. The above provision gives the four (4) grounds for liability which may entitle the injured party to damages Bu (infra; see Art. 2197.) for all kinds of obligations mentioned in ment of63 Art. 1172 NATURE AND EFFECT OF OBLIGATIONS (not fraud) ma of the obligation In negligence cases, the aggrieved party may choose diligence as between a criminal action under Article 100 of the Revised 33.) Thus, in the Penal Code or a civil action for damages under Article 2176 ment betweens of the Civil Code. What is prohibited under Article 2177 of the Civil Code is to recover twice for the same negligent act.- ges arising from ation, But if Sis EXAMPLES: rline company) (1) If S entered into a contract of sale with B to deliver a specific horse on a certain day and the horse died through h (i.e., deliber- the negligence of S' before delivery, S is liable for damages to fraud. (Art. to B for having failed to fulfill a pre-existing obligation (contract may be either express or implied) because of his ure negligence negligence. This is culpa contractual. (2) Assume now, that the horse belongs to and is in the possession of B. The negligence of S which results in the death of the horse is culpa aquiliana. In this case, there is no pre-existing contractual relation between S and B. The negligence itself is the source of liability. (Art. 115715].) (3) A crime can be committed by negligence. If B wants, he can bring an action for culpa criminal (damage to ual) or neg- property through simple or reckless imprudence). Here, the Article 1172 crime is the source of the obligation of S to pay damages. nce is not a (Arts. 1157[4); 1161.) s the debtor But B cannot recover damages twice for the same act the fulfill- or omission of S. In other words, responsibility for quasi- 72.); delict is not demandable together with the civil liability arising from a criminal offense. (Art. 2177.) negligence etween the Effect of negligence on the part contract: It of the injured party. Suppose the creditor is also guilty of negligence, can he negligence recover damages? 5, Revised ages may Article 2179 of the new Civil Code provides: Article 100 "When the plaintiff's own negligence was the action for Code. immediate and proximate cause of his injury, hee interest Art. 1177 NATURE AND EFFECT OF 77 icle 1253 OBLIGATIONS ipted for claim for right to collect from the debtor of his debtor) except those erest has inherent in or personal to the person of the latter (such as the right to vote, to hold office, to receive legal support, to revoke a donation on the ground of ingratitude, etc.); and ot apply (4) ask the court to rescind or impugn acts or contracts previous which the debtor may have done to defraud him when he- cannot in any other manner recover his claim. (see Arts. 1380-1389.) 1176 is The debtor is liable with all his property, present and gations future, for the fulfillment of his obligations, subject to the over a exemptions provided by law. (see Art. 2236.) EXAMPLE: 1g On the due date, D could not pay C his obligation in the amount of P400,000. However, D owns a car worth about P280,000 and X is indebted to him for P40,000. Before the due date of the obligation, D sold his land worth P200,000 to Y. Under the circumstances, the rights granted to C under the law are as follows: (a) He may bring an action for the collection of the amount of P400,000 with a right to damages. (b) If, in spite of the judgment rendered, D fails to pay the amount due, C can ask for the attachment of D's car so that the car may be sold and payment made from the proceeds of the sale. tion, (c) He may ask the court to order X not to pay D so es to that payment may be made to him (C). (d) He may ask the court to rescind or cancel the the sale made by D to Y on the ground that the transaction is fraudulent in case he (C) cannot recover in any other manner his credit. ent The last remedy can be resorted to only if C could not collect in full his credit. (see Arts. 1381[3], 1387.) He must sion first exhaust the properties of the debtor or subrogatisee Art. 1300.) himself in the latter's transmissible rights. toArt. 1169 53 NATURE AND EFFECT OF Art. 1169 OBLIGATIONS effects: (3) Compensation morae. - The delay of the obligor can- olation of cels the delay of the obligee and vice versa. Legally speaking, there is no default or delay on the part of both parties. st (in case If the delay of one (1) party is followed by that of the damages other, the liability of the first infractor shall be equitably osence of tempered or balanced by the courts. If it cannot be deter- ommence mined which of the parties is guilty of delay, the contract shall be deemed extinguished and each shall bear his own damages. (Art. 1192.) ent when ng. (Arts. When demand is not necessary that the to put debtor in delay. if he had As a general rule, delay by the debtor begins only mitigate from the moment a demand, judicial or extra-judicial, for the fulfillment of the former's obligation is made by the ling, the creditor. Without such amount, the effect of default will not due to a arise. The exceptions are mentioned below. deliver a (1) When the obligation so provides. - iable for EXAMPLE: D promised to pay C the sum of P20,000 on or before VS: November 30 without the need of any demand. Therefore, if D igation; fails to pay on November 30, he is automatically in default. In this case, the parties stipulate to dispense with the any, by demand. lue (see The mere fixing of the period is not enough. The arrival of the period merely makes the obligation demandable. Before its arrival, the creditor cannot demand performance. money, The obligation must expressly so declare that demand time of is not necessary or must use words to that effect, as for instance, "the debtor will be in default" or "I will be liable m the for damages." ourt of69 the nature assumption of Art. 1174 NATURE AND EFFECT OF OBLIGATIONS sible for those een, or which In our law, fortuitous events and force majeure are (1105a) identical in so far as they exempt an obligor from liability. Both are independent of the will of the obligor. Kinds of fortuitous events. nnot be foresen In speaking of the contract of lease, our Civil Code tated otherwise distinguishes between two (2) kinds of fortuitous events, namely: to foresee (1) Ordinary fortuitous events or those events which are common and which the contracting parties could ists of being reasonably foresee (e.g., rain); and tor and which (2) Extra-ordinary fortuitous events or those events he obligation which are uncommon and which the contracting parties could not have reasonably foreseen (e.g., earthquake, fire, war, pestilence, unusual flood). (see Art. 1680, par. 2.) Requisites of a fortuitous event. They are the following: an or an act (1) The event must be independent of the human will or at least of the debtor's will; ous event (2) The event could not be foreseen, or if foreseen, is but not of inevitable; (3) The event must be of such a character as to render it impossible for the debtor to comply with his obligation in a normal manner; and (4) The debtor must be free from any participation in, or the aggravation of, the injury to the creditor, that is, there ajeure is no concurrent negligence on his part. every The absence of any of the above requisites would prevent the obligor from being exempt from liability. Mere pecuniary inability or poverty is not an excuse for the non-fulfillment of an obligation. Neither is mere tion difficulty to foresee the happening of an event; it is differentStated earlier, if it could be Art. 1174 NATURE AND EFFECT OF 71 OBLIGATIONS (b) the debtor has promised to deliver the same (specific) thing to two (2) or more persons who do not have the same interest. (Ibid.) ss or damage EXAMPLE: formance of If S sold and promised to deliver the same car to B r words, his and C separately, S is liable even for a fortuitous event. The reason is because it would be impossible for S to comply with numerated his obligation to both B and C even without any fortuitous event taking place. exceptions (c) the obligation to deliver a specific thing arises the law is from a crime. (Art. 1268.) EXAMPLE: or delay, S stole the carabao of B. Shas the obligation, arising from rts. 1170, the crime, to return the carabao. Even if the carabao dies or is lost through a fortuitous event, S is still liable for damages unless B is in mora accipiendi. A person is responsible for the results of whatever cause which flow from his criminal act. (see U.S. vs. Mambang, 36 Phil. 348.) August (d) the thing to be delivered. is generic. (Art. 1263.) August g, S is EXAMPLE: tion is The loss or destruction of a generic thing like rice, corn, sugar, etc. does not produce the extinction of the obligation B, S because the debtor can still comply with his obligation by lelay. delivering another thing of the same kind in accordance with also the principle that "genus never perishes" (Genus, nunquam rted perit). : 3.) (2) When declared by stipulation. - The basis for this no exception rests upon the freedom of contract. (see Art. 1306.) tor us Such a stipulation is usually intended to better protect the he interest of the creditor and procure greater diligence on the part of the debtor in the fulfillment of his obligation. ButArt. 1170 59 o an action for NATURE AND EFFECT OF Art. 1171 OBLIGATIONS any voluntary in the peaceful possession of the apartment (as when R is malice, which not the owner), and E is ejected, R may be held liable for ion. (see Arts. damages for violation of the terms of his obligation. The measure of damages to be awarded to E or to R, as the case may be, is left to the sound discretion of the court in accordance with the provisions of the Civil Code on Damages. (Title XVIII.) considered a r of the taxi Fraud and negligence distinguished. aid by P, the er, agrees to Fraud may be distinguished from negligence as nith, 48 Phil. follows: (1) In fraud, there is deliberate intention to cause er, like for damage or injury, while in negligence, there is no such or entering intention; of which P (2) Waiver of the liability for future fraud is void (Art. the owner 1171.), while such waiver may, in a certain sense, be allowed parts, the in negligence (Art. 1172.); nce on the (3) Fraud must be clearly proved, while negligence is presumed from the violation of a contractual obligation; and iscussed (4) Lastly, liability for fraud cannot be mitigated or reduced by the courts, while liability for negligence may be - This reduced according to the circumstances. (Art. 1173.) lated in They are similar in that both are voluntary, that is, they le to a are committed with volition. Where, however, the negligence is gross or there is failure to exercise even slight care or entire absence of care that it shows bad faith or amounts to malice or wanton attitude on the part of the defendant, the rules on fraud shall apply. In such case, no more distinction h to be exists between the two, at least as to effects. h. The it. The aceful ART. 1171. Responsibility arising from fraud is demandable in all obligations. Any from waiver of an action for future fraud is void. tain E (1102a)THE LAW ON OBLIGATIONS AND 78 CONTRACTS Art. 1178 ART. 1178. Subject to the laws, all rights acquired in virtue of an obligation are trans. missible, if there has been no stipulation to Define or give Definitions the contrary. (1112) 1. generic or inde Transmissibility of rights. 2. personal right; All rights acquired in virtue of an obligation are generally transmissible or assignable. (see Art. 1311.) The 3. legal delay or exceptions to this rule are the following: fortuitous ever (1) Prohibited by law. - When prohibited by law like the rights in partnership, agency, and commodatum which 5. diligence of a are purely personal in character. (a) By the contract of partnership, two or more 11. Discussions persons bind themselves to contribute money, 1. Give the property or industry to a common fund, with the for loss or damage intention of dividing the profits among themselves. (Art. 1767.) 2. What rig (b) By the contract of agency, a person binds in case the debtor himself to render some service or to do something in deliver a specific th representation or on behalf of another, with the consent or authority of the latter. (Art. 1868.) 3. What are (c) By the contract of commodatum, one of the obligation to give a parties delivers to another something not consumable 4. Suppose (e.g., car) so that the latter may use the same for a certain time and return it. Commodatum is essentially do something and gratuitous. (Art. 1933.) contravention of th (2) Prohibited by stipulation of the parties. - When available to the cre prohibited by stipulation of the parties, like the stipulation that upon the death of the creditor, the obligation shall be 5. Canadel incur liability eve another. extinguished, or that the creditor cannot assign his credit to Explain. Such stipulation, being contrary to the general rule, 6. May an must be clearly proved, or, at the very least, clearly implied Explain. from the wordings or terms of the contract itself. 7. May an - ooo waived? ExplainTHE LAW ON OBLIGATIONS AND Art. 1174 In our law CONTRACTS Art. 1174 identical in so far as ART. 1174. Except in cases expressly Both are independent specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of Kinds of fortultous risk, no person shall be responsible for those In speaking O events which could not be foreseen, or which though foreseen, were inevitable. (1105a) distinguishes betw namely. (1) Ordinary Meaning of fortuitous event. A fortuitous event is any event which cannot be foreseen. are common an or which, though foreseen, is inevitable. Stated otherwise reasonably forese It is an event which is either impossible to foresee or (2) Extra- impossible to avoid. which are unco The essence of a fortuitous event consists of being a happening independent of the will of the debtor and which could not have happening, makes the normal fulfillment of the obligation war, pestilence impossible. Requisites of Fortuitous event distinguished from force majeure. They are A fortuitous event may either be an act of man or an act (1) The of God. or at least of (1) Acts of man. - Strictly speaking, fortuitous event (2) Th is an event independent of the will of the obligor but not of other human wills. inevitable; (3) T EXAMPLES: it impossib War, fire, robbery, murder, insurrection, etc. a normal m (2) Acts of God. - They refer to what is called majeure (4) or those events which are totally independent will of every or the age human being. is no cone EXAMPLES: The prevent of volcano, etc. Earthquake, flood, rain, shipwreck, lightning, eruption for theLLIL 219 61 Art. 1172 NATURE AND EFFECT OF OBLIGATIONS d which rt. 1170.) is EXAMPLE: S promised to deliver 120 cavans of rice of a particular demanded brand and quality to B at the rate of 10 cavans a month. like in the Art. 1172.), S cannot make an agreement with B, whereby B will not file an action in court against S, should S commit fraud reduce the in the performance of his obligation. This waiver of an action s deemed for future fraud is void. Hence, B can still bring an action ulfillment against S for damages arising from the fraud. But once fraud is committed, B, with full knowledge thereof, can waive his right to indemnity as an act of forgiveness on his part. may be ART. 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such effect, liability may be regulated by the courts, public according to the circumstances. (1103) ge the even if Responsibility arising from negligence thus demandable. In the performance of every kind of obligation, the debtor is also liable for damages resulting from his negli- gence. The courts, however, are given wide discretion in fixing raud the measure of damages. The reason is because negligence is a question which must necessarily depend upon the circumstances of each particular case. (see Art. 1173.) use Moreover, negligence is not as serious as fraud because in the and case of the former, there is no deliberate intention to cause injury or damages. According to the circumstances, the court may increase or decrease the damages recoverable. When both parties to a contract are negligent in the performance of their respective obligations, the fault of one may cancel or neutralize the negligence of the other.Art. 1las THE LAW ON OBLIGATIONS AND 54 CONTRACTS Art. 1169 kind time elem the time of pert EXAMPLE: indefinite terms The contract of loan between D and C provides that contract in wh failure of D to pay any installment therein stipulated would a reasonable ti mature the entire obligation. It does not state that in such an upon the circus event, D shall thereafter be in default. It is not n Demand is still necessary to hold D in default upon that time is of failure to pay any such installments. He is not liable for interest for default for the whole debt except from the time (4) Whe that judicial or extra-judicial demand for payment is made upon him. EXAMPL Sob (2) When the law so provides. - Septemb EXAMPLES: by reason bound h (1) Under the law, taxes should be paid on or before a specific date; otherwise, penalties and surcharges are Septemb imposed without the need of demand for payment by the Un government. the horse (2) The partner is liable for the fruits of the thing he impossi may have promised to contribute to the partnership from the time they should have been delivered without the need De of any demand. (Art. 1786; see Art. 1788.) it would absolute (3) When time is of the essence. comply EXAMPLES: (5 ) W The delivery of balloons on a particular date when a gations. - I children's party will be held; the making of a wedding dress of one is co where the wedding is scheduled at a certain time; payment of money at a particular time so that the creditor could pay the part of off certain debts due on the same date; the delivery of a car other does to be used in a trip at a particular time; etc. manner w satio morae In all the foregoing cases, the debtor is fully aware that the performance of the obligation after the designated time From to fulfill would no longer benefit the creditor. In agreements of thiselevision set for Pi television set whi 57 Art. 1170 NATURE AND EFFECT OF OBLIGATIONS ance of their respect Article 1157. Here, the breach of the obligation is voluntary; must be simultane in Article 1174, it is involuntary. There is breach when a elf cannot deliver person fails or refuses to perform his obligation without ers the televisions legal justification. out the need of (1) Fraud (deceit or dolo). - As used in Article 1170, it is the deliberate or intentional evasion of the normal livery and paymen fulfillment of an obligation. (see 8 Manresa 72.) As a ground for damages, it implies some kind of malice or dishonesty very (payment) and it cannot cover cases of mistake and errors of judgment e right to deman made in good faith. It is synonymous to bad faith in that, it arty will incur involves a design to mislead or deceive another. g that the other EXAMPLE: late. S obliged himself to deliver to B 20 bottles of wine, of a particular brand. Subsequently, S delivered 20 bottles e delivery is to knowing that they contain cheaper wine. S is guilty of fraud December 15. and is liable for damages to B. 10 by B is Article 1170 refers to incidental fraud (dolo incidente) ral rule. (Art committed in the performance of an obligation already ision set by S existing because of contract. It is to be differentiated le upon him from causal fraud (dolo causante) or fraud employed in the erformance execution of a contract under Article 1338, which vitiates consent. In the same example, if B bought the 20 bottles of nce wine on the false representation of S that the wine is that gli- as represented by the labels, the fraud committed by S is ner causal fraud. Without the fraud, B would not have given his For consent to the contract. He has the right to have the contract annulled or set aside on the ground of the fraud. (Arts. 1390, 1391.) But in the first example, the remedy of B is not annul- ment of the contract of sale which is not affected by the in- Is for cidental fraud but to claim damages. If the fraud employed ages by S to get B's consent was not the principal inducement d in that led B to enter into the contract, the fraud is also inci-witnessed the shooting NATURE AND EFFECT OF 75 the crime just after Art. 1176 OBLIGATIONS The fact not actually disputable presumption and may be overcome by sufficient in. The fact knownis evidence that such interest had not really been paid. (Art. ime holding the fatal 1176, par. 1.) (2) E is a lessee in the apartment of R, paying P5,000 rental a month. E failed to pay the rent for the months of who killed X unless February and March. In April, E paid P5,000 and R issued a receipt that the payment is for the month of April. Later, D shows a The presumption is that the rents for the months of ally known is the February and March had already been paid. This is also in ssession by D of a accordance with the usual business practice whereby prior installments are first liquidated before payments are applied to the later installments. Again, this presumption is merely on has been paid disputable. (Art. 1176, par. 2; see Rubert and Guamis vs. le, that D forced Smith, 11 Phil. 138; Manila Trading & Supply Co. vs. Medina, 2 SCRA 549.) When presumptions in Article 1176 do not apply. (1) With reservation as the interest. - The presumptions established in Article 1176 do not arise where there is a hich cannot reservation that no payment has been made as to interest everyone is or prior installments, as the case may be. The reservation t. 3.); and may be made in writing or verbally. Thus, in the preceding examples, no presumption of payment arises where there is one which a reservation by C or R that no payment has been made as to proof to the the interest or the rents for February and March, as the case rticle 1176. may be. (2) Receipt without indication of particular installment paid. - The presumption in paragraph 2 of Article 1176 is not applicable if the receipt does not recite that it was issued for a particular installment due as when the receipt is only interest at dated. Thus, in the preceding example (No. 2.), the fact he interest alone that the receipt issued by R is dated April 5 does not not it has justify the inference that the rents for February and March had been paid. Previously precedes (3) Receipt for a part of the principal. - Such a receipt, is only a without mentioning the interest, implies that the creditorTHE LAW ON OBLIGATIONS AND CONTRACTS 60 Art. 1171 Art. 1172 EXAMPLE: Spromised Responsibility arising from fraud brand and qualit demandable. S cannot This provision refers to incidental fraud which is employed in the fulfillment of an obligation. (Art. 1170.) not file an actio Responsibility arising from fraud can be demanded in the performa for future frau with respect to all kinds of obligation and unlike in the against S for d case of responsibility arising from negligence (Art. 1172. the court is not given the power to mitigate or reduce !' But onc damages to be awarded. This is so because fraud is deemed thereof, can serious and evil that its employment to avoid the fulfillment forgiveness of one's obligation should be discouraged. ART. Waiver of action for future fraud void. negligenc According to the time of commission, fraud may be of obliga past or future. liability A waiver of an action for future fraud is void (no effect, according as if there is no waiver) as being against the law and public policy. (Art. 1409[1].) A contrary rule would encourage the perpetration of fraud because the obligor knows that even if Responsibili he should commit fraud, he would not be liable for it, thus demand making the obligation illusory. In the p debtor is als Waiver of action for past fraud valid. gence. What the law prohibits is waiver anterior to the fraud The cou and to the knowledge thereof by the aggrieved party. the measure A past fraud can be the subject of a valid waiver because is a questi the waiver can be considered as an act of generosity and circumstan magnanimity on the part of the party who is the victim of Moreover, the fraud. Here, what is renounced is the effect of the fraud, case of the that is, the right to indemnity of the party entitled thereto. injury or d The waiver must be expressed in clear language which may incre leaves no doubt as to the intention of the obligee to give up his right against the obligor. both part of their re neutralizArt. THE LAW ON OBLIGATIONS AND Art. 1172 CONTRACTS In 64 required that cannot recover damages. But if his negligence was sole cause of the only contributory, the immediate and proximate cause ART. of the injury being the defendant's lack of due care the obligor the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded." (see Arts. 2214 diligence of the obl 2215.) circumsta of the pla EXAMPLES: faith, the (1) Pis a passenger in a carefully driven bus. Without any warning, he jumped off the bus, as a result of which, he paragraph suffered injuries. If th The bus company is not liable for damages because the the dilige cause of P's injuries is his own negligence. performa (2) Now suppose P was standing on the running board of the bus and was repeatedly told by the conductor father of to go inside but he did not pay any attention. Suddenly, the bus swerved to the left to avoid collision with another vehicle, as a result of which, P was thrown off the bus. At Meaning of fa the time of the mishap, the driver was intoxicated and was driving recklessly at a very high rate of speed. Fault or (par. 1.) Acc In this case, P did not observe the diligence of a good father of a family to avoid injury to himself. (Art. 1761.) is the failure But his contributory negligence does not bar recovery for of another damages for his death or injuries since the proximate or vigilance wh direct cause thereof is the negligence of the common carrier. However, the amount of damages shall be equitably reduced. such other p (Art. 1762.) 23 Phil. 434. (3) Suppose in the second example, the bus rounded a curve causing P to lose his balance and fall off the platform, Factors to sustaining injuries. The bus at the time of the accident was travelling at a moderate rate of speed and there was no Neglig infraction of law and regulations, and P was exposed to no being depe travel. greater danger than that inherent in that particular mode of case. In de factors mu Here, P cannot recover. He should have been on his guard against a contingency as natural as that of losing his (1) balance to a greater or lesser extent when the bus rounded the curve. (see Lasam vs. Smith, 45 Phil. 657.) EXAL67 NATURE AND EFFECT OF Art. 1173 OBLIGATIONS ence. robust and health In case of fraud, bad faith, malice or wanton at- titude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-perfor- mance of the obligation." EXAMPLE: S agreed to sell and deliver to B on a certain date 1,000 kilos of sugar of a certain quality for P30,000. Then, t night is gross B agreed to sell the sugar to be received from S to C for tute negligence P35,000. This contract with C was made known to S. On the date designated, S did not deliver the sugar so that C bought sugar from another. The breach of the obligation by S, resulting in the loss of the amount of P5,000 as expected profit, so angered B that he suffered a heart attack for which he was hospitalized for five (5) days. In this case, if S acted in good faith, the damage which perhighway Bought to receive should be the amount of P5,000, the profit eed in Ayala which B failed to realize. (par. 1; Art. 2200.) But, if S acted in bad faith, he is also liable to pay for the hospitalization expenses incurred by B which clearly originated from the breach although they might not have been reasonably contemplated by the parties at the time varded to they entered into the contract. (par. 2.) ontract or warding Kinds of diligence required. me (not Under Article 1173, the following kinds of diligence are tract or required: IS. (1) that agreed upon by the parties, orally or in writing; " (2) in the absence of stipulation, that required by ges for law in the particular case (like the extraordinary diligence e shall required of common carriers); and ences arties (3) if both the contract and law are silent, then the at the diligence expected of a good father of a family. (par. 2; see Art. 1163.)Of Art. 1176 NATURE AND EFFECT OF 73 OBLIGATIONS the assump- (1) The payment of interest must be expressly stipu- an essential lated (Art. 1956.); (2) The agreement must be in writing; and (3) The interest must be lawful. (Art. 1957.) 00 with c, A stipulation for the payment of usurious interest is stroyed by void, that is, as if there is no stipulation as to interest. (see fortuitous comments under Art. 1413.) Note: By virtue, however, of Central Bank Circular in consi- No. 905 (Dec. 10, 1982, effective Jan. 1, 1983.) issued by ndertakes the Monetary Board under the authority granted to it by sured by the Usury Law, the rate of interest and other charges on a se of the loan or forbearance of money, goods, or credit, regardless of maturity and whether secured or unsecured, that may be charged or collected shall not be subject to any ceiling prescribed under the Usury Law, Usury is now legally be non-existent. Parties are now free to stipulate any amount of interest. It does not, however, give absolute right to the creditor to charge the debtor interest that is "iniquitous or unconscionable." (see Art. 1229.) one of mable ART. 1176. The receipt of the principal same by the creditor, without reservation with with respect to the interest, shall give rise to the presumption that said interest has been paid. The receipt of a later installment of a debt without reservation as to prior installments, cess shall likewise raise the presumption that such ney, installments have been paid. (1110a) hil. Meaning of presumption. By presumption is meant the inference of a fact not actually known arising from its usual connection with ng another which is known or proved