Article 1163: Obligation of Due Care

Article 1163: Obligation to Take Care of the Thing Due

• Anyone obliged to give something must take care of it with the diligence of a good father of a family.
• Unless the law or parties stipulate another standard of care.

Meaning of Specific or Determinate Thing

• A specific or determinate thing is particularly designated and physically segregated from others of the same class.

Meaning of Generic or Indeterminate Thing

• A generic or indeterminate thing refers only to a class or genus and cannot be pointed out with particularity.

Specific vs. Generic Things

• A determinate thing is identified by its individuality and cannot be substituted by the debtor with another.
• A generic thing is identified only by its specie, allowing the debtor to give anything of that kind.

Examples of Specific vs. Generic

• Generic: If D owes C a "Bulova calendar watch," D can deliver any Bulova watch with a calendar feature.
• Specific: If D owes C "the watch D is wearing," D must deliver that exact watch, neither party can substitute it without the other's consent.
• Determinate Class: If D owes C "one of his cars," the object is a specific class (D's cars); the exact car to be delivered becomes specific upon delivery without a new contract.

Duties of Debtor in Obligation to Give a Determinate Thing

• Preserve or take care of the thing.
• Deliver the fruits of the thing.
• Deliver its accessions and accessories.
• Deliver the thing itself completely; the debtor cannot compel the creditor to receive a different object.

Delivery of a Thing

• The thing is deemed delivered when it is placed in the control of the vendee.
• Placing titles in the name of the vendee.
• Answer for damages in case of nonfulfillment or breach.

Obligation to Take Care of the Thing Due

• The obligor has the incidental duty to take care of the thing due with the diligence of a good father of a family pending delivery.
• Ordinary care is the diligence an average, reasonably prudent person exercises over their own property.
• Another Standard of Care: if the law or stipulation provides another standard (slight or extraordinary diligence), it must prevail.
  • Common Carrier: bound to carry passengers safely as far as human care and foresight can provide, using utmost diligence.
  • Banks are bound to treat deposit accounts with the highest degree of care.
• Parties may agree upon diligence more or less than that of a good father of a family, but absolute exemption from liability for fault or negligence is contrary to public policy.
• Factors to be considered: diligence depends upon the nature of the obligation, circumstances of the person, time, and place.
• General rule: the debtor is not liable if failure to preserve the thing is due to fortuitous events or force majeure, not fault or negligence.
• Reason for debtor's obligation: to ensure the thing is delivered in the same condition as when the obligation was contracted.

Duties of Debtor in Obligation to Give a Generic Thing

• Deliver a thing of the quality intended, considering the obligation and circumstances.
• Be liable for damages in case of fraud, negligence, or delay.

Article 1164: Right to Fruits of Thing

• The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises.
• The creditor acquires no real right over it until the same has been delivered.

Kinds of Fruits

• Natural Fruits: spontaneous products of the soil, and the young and other products of animals.
• Industrial Fruits: those produced by lands of any kind through cultivation or labor.
• Civil Fruits: derived by virtue of a juridical relation.

Rights of Creditor to Fruits

• The creditor is entitled to the fruits of the thing to be delivered from the time the obligation to make delivery arises.
• The law protects the obligee's interest if the obligor delays fulfilling the obligation.
• In rescission, parties must return the objects of the contract, along with their fruits and the price with its interest.

When Obligation to Deliver Arises

• Generally, the obligation to deliver and the fruits thereof arises from the perfection of the contract.
• Perfection refers to the birth of the contract or meeting of the minds.
• If the obligation is subject to a suspensive condition or period, it arises upon fulfillment of the condition or arrival of the period.
• In a contract of sale, the obligation arises from perfection or a suspensive period where the price is paid.
• In obligations from law, quasi-contracts, delicts, and quasi-delicts, time of performance is determined by specific legal provisions.

Example: Fruits of a Horse Sale

• S sold a horse to B for P15,000, with no delivery date or conditions. While S had the horse, it gave birth to a colt.
• General Rule: B is entitled to the colt because fruits belong to the buyer from the contract's perfection.
• Exception: S gets the colt if it was born before S's obligation to deliver arose and B hasn't paid.
• Upon fulfillment of the condition or period in the exception, S keeps the colt, and B doesn't pay interest on the price.

Meaning of Personal Right and Real Right

• Personal Right: right to demand from another, as a definite passive subject, for the fulfillment of an obligation.
• Real Right: right or interest of a person over a specific thing without a definite passive subject.

Personal Right vs. Real Right

• Personal Right: there is a definite active and passive subject, binding only against a particular person.
• Real Right: there is only a definite active subject, directed against the whole world.

Ownership Example

• X owns land with a Torrens title, giving a real right enforceable against everyone.
• If Y claims and takes possession, X gains a personal right to recover the land specifically from Y.
• If X mortgages the land to Z and it’s registered, the mortgage becomes a real right binding against all third parties.
• Any buyer of the land purchases it with the mortgage already attached.

Ownership Acquired by Delivery

• Ownership and other real rights over property are acquired and transmitted by law, donation, testate and intestate succession, and certain contracts by tradition or delivery.
• Delivery in sale: actual or real, constructive or legal, signifying agreement that possession is transferred.
• The creditor does not become the owner until the specific thing is delivered; before delivery, the creditor's action is for specific performance or rescission.

Article 1165: Remedies for Determinate Delivery

• When a determinate thing is to be delivered, the creditor may compel the debtor to make the delivery, in addition to damages per Article 1170.
• If the thing is indeterminate or generic, the creditor may ask for compliance at the debtor's expense.
• If the obligor delays or promises the same thing to multiple persons with differing interests, they are responsible for any fortuitous event until delivery.
• Breakdown of Rules: If the seller is late in delivering a specific item or promised the same item to different buyers, and it gets destroyed by accident, the seller bears the loss.
• Creditor Remedies, Determinate Thing: demand specific performance, rescission, or payment of damages.
• Creditor Remedies, Generic Thing: not necessary to compel the debtor to make the delivery.
• The court will have to deal with the matter, the law does not mean that the creditor can use force or violence upon the Debtor
• Generic Real Obligation / Obligation to Deliver a Generic Thing: Under the Constitution, no person shall be imprisoned for non-payment of debt, though subsidiary imprisonment may apply in criminal cases.

Debtor's Delay

• Gives two instances when a fortuitous event does not exempt the debtor from responsibility.
• An indeterminate thing cannot be destroyed by a fortuitous event because genus never perishes.

Article 1166: Delivery of Accessions and Accessories

• The obligation to give a determinate thing includes delivering all its accessions and accessories, even if unmentioned.
• Accessions: fruits, additions, or improvements upon a thing; includes building, planting, sowing, alluvion, avulsion.
• Accessories: things joined to or included with the principal thing for embellishment, better use, or completion.
• Accessions are not necessary to the principal thing, and accessories can only exist in relation to the principal.
• General rule: all accessions and accessories are considered included unless stipulated otherwise; obligation to deliver a thing does not include the principal obligation.

Article 1167: Failure to Perform an Obligation to Do

• If someone obliged to do something fails to do it, it will be executed at their cost.
• Furthermore, what has been poorly done may be ordered undone.
• If the debtor fails to comply with their obligation to do, the creditor can have the obligation performed by themselves or another at the debtor's expense or recover damages.
• Three situations: Debtor fails to perform an obligation to do; debtor performs an obligation to do but contrary to the terms thereof; debtor performs an obligation to do but in a poor manner
• With negative personal obligation: non-fulfillment may take place but delay is impossible for the debtor fulfills by not doing - what has been forbidden to him.

Remedies

• In case the obligation is done in contravention of the terms or poorly, it may be ordered undone (by the court) if still possible.
• Specific performance cannot be ordered in a positive personal obligation to do against an unwilling debtor because this may amount to involuntary servitude.
• If personal qualifications are the determining motive, performance by another would be impossible and the only remedy is damages.
• The personal qualifications of the debtor are the determining motive for the obligation contracted
• However, the higher court has ruled that the debtor must also be liable for the cost of the missing parts.

Examples of Liability

• A gave B, a typewriter repairer, a typewriter for servicing. B returned it unrepaired, with missing parts.
• A had it repaired elsewhere for P89.85. The higher court ruled B is liable for the full P89.85 because B violated the terms.

Article 1168: Obligation Consisting of Not Doing

• If the obligation consists in not doing, and the obligor does what has been forbidden, it shall also be undone at his expense.
• In an obligation not to do, the duty of the obligor is to abstain from an act, and the debtor cannot be guilty of delay.
• The remedy of the obligee is the undoing of the forbidden thing plus damages; if undoing is impossible, the remedy is an action for damages.

Article 1169: Delay

• Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands fulfillment.
• Demand by the creditor is unnecessary when the obligation or law declares, when time was a controlling motive, or when demand would be useless.
• In reciprocal obligations, neither party incurs in delay if the other does not comply; delay begins from the moment one party fulfills their obligation.

Kinds of Delay

• Ordinary delay is merely the failure to perform an obligation on time.
• Legal delay or default or mora is the failure to perform on time constituting a breach of the obligation.

Types of Mora

• Mora solvendi is the debtor's delay in fulfilling the obligation by reason of a cause imputable to him.
• Mora accipiendi is the creditor's delay without justifiable reason to accept the performance
• Compensatio morae is the delay of obligors in reciprocal obligations, i.e., the delay of the obligor cancels the delay of the obligee, and vice versa.
• Three conditions for mora solvendi: failure to perform on the agreed date, demand by the creditor, and failure to comply with such demand.
• The creditor bears the burden of proving demand.

Rules for Delay

• There is no delay if the obligation is not yet due or demandable.
• A debt is liquidated when the amount is known or determinable.
• The creditor must prove that a demand has been made
• Three conditions before mora solvendi can exist: failure to perform, there must be demand (not mere reminder or notice), failure of debtor to comply with demand
• For demand to be made by creditor on obligor, there must already be obligation due and demandable

Example: Refrigerator Delivery

• S agreed to deliver a specific refrigerator to B by December 10th.
• "No Demand, No Default": If S doesn't deliver on December 10th, S is in ordinary delay, not default, without a demand from B. B is presumed to have granted an extension.
• "Default Upon Demand": If B demands delivery on December 15th, S is in default from that date onwards.
• "Damages from Demand": If B files a lawsuit on December 20th, damages are calculated from December 15th, the date of B's demand.
• "Judicial Demand as Default": Without proof of an earlier demand, default begins from the date the lawsuit is filed.

Illustrative Cases

• The court ruled R was not in delay and that the seller had to formally demand the taxes or the loan

Court cases rules

• despite the contract's terms, R was not in delay because E did not make a formal demand for payment of taxes or the loan.
• None of the exceptions in Article 1169 (which excuse a demand) applied which was also considered as minor breach and the non-payment taxes was rectified

Filing of Foreclosure Suit - equivalent to demand for payment.

• B agreed to pay S the remaining balance for a subdivision lot within two years of S completing the subdivision roads. S filed a foreclosure suit against B
• It as deemed the filing a suit was suffienct for payment. The court ruled that S as not valid.

Effects of Delay

• In Mora Solvendi, the debtor is guilty of breach: liable for interest on obligations to pay money or damages in other obligations.
• In the absence of extrajudicial demand = interest shall commence from the filing of the complaint.
• Liable for Mora Solvedi if its his delay even if a fortuitous event when the obligation is to deliver a determinate thing.
• In Mora accipiendi, the creditor is guilty of breach: damages suffered by debtor, bears risk of loss, Dbtor then not liable for any interest from the tiome of creditors delay

When Demand is Not Necessary

• When the obligation so provides, the contact itself removes the need to make a demand.
• There must be a clear statement to indicate that it deems 'unneccessary'
• Government payments are auto applied once deadline is met.
• Partnership contributions, a patner must pay for profots and fruits that can be delivered on the date without a payment.
• Is payment is not needed on fixed date- must be based on contractual duties

General terms

• time is not of contractual duties, therefore if there no inteded purpose in such cases deliver must within resonable timeframe
• If there is a contract is breached as result - by one party then is may be waived by the other party to remain valid
• if on a set date that cant be met - it will deem useless
• if with neglicne - this is caused to delivery and can cause harm

Article 1170: Fraud, Negligence, Delay

• It can be related to those with an obligation and also is relevant those the the other can be cause a breach and the non fulfilment as those who with damage

General Rules: Refer Article

• Can be caused by deceit or dolo
• the perfromance of the contracts is when made cause
• fraud will be emplyoed to the eavde of the fulfillemnt- with rights fromthe damages can be recoveres

Senerio - Important points

• B can annull the contract
• D for damages
• S commits