THE LAW ON

OBLIGATIONS AND
CONTRACTS
CHAPTER 2
NATURE AND EFFECT OF OBLIGATIONS

Art. 1163. Every person obliged to give

something is also obliged to take care of it
with the proper diligence of a good father of
a family, unless the law or the stipulation of
the parties requires another standard of
care. (1094a)
Art. 1163
> this article refers to an obligation
specific or determinate thing .

A THING IS SPECIFIC or DETERMINATE

> when it is particularly designated or
physically segregated others of the same
class
Art. 1163

Example:
1. The watch I am wearing
2. The Toyota car with plate NO.XYZ123
3. The dog name “brownie”
4. This cavan of rice
5. The money I gave you
Art. 1163

A THING IS GENERIC OR INDETERMINATE

> when it refers only to a class or genus
to which it pertains and cannot be pointed
out with particularity

Example:
1. A 2012 Toyota car
2. A cavan of rice
3. A police dog
SPECIFIC THING (ST)and GENERIC
THING(GT) DISTINGUISHED

1. ST is identified by its individuality. The

debtor cannot substitute it with another
although the latter is of the same kind
and quality without the consent of the
creditor

2. GT is identified only by its specie. The

debtor can give anything of the same
class as long as it is of the same kind
SPECIFIC THING and GENERIC THING

Example:

1. If S obligation is to deliver to B one his

cars, the object refers to a class which in
itself is determinable
> Here the particular thing to be delivered
is determinate without the need of a new
contract.

2. If S obligation is to deliver to B a swiss

watch
> S can deliver any watch as long as it a
swiss watch
OBLIGATION OF DEBTOR IN OBLIGATION TO
GIVE A DETERMINATE THING

1. PRESERVE THE THING

2. DELIVER THE FRUITS
3. DELIVER THE ACCESSION AND
ACCESSORIES
4. DELIVER THE THING ITSELF
5. ANSWER FOR DAMAGES IN CASE OF NON-
FULFILMENT OR BREACH
OBLIGATION OF DEBTOR IN OBLIGATION TO
GIVE A DETERMINATE THING

1. PRESERVE THE THING

> in obligation to give (real obligation),
the obligor has the incidental duty to take
care of the thing due with the diligence of a
good father of a family

a. DILIGENCE OF A GOOD FATHER OF A

FAMILY
> or that diligence which an average
(reasonably prudent) person exercise over
his own property
Example:

S binds himself to deliver a specific horse

to B on certain date.
> pending delivery, S has the additional
or accessory duty to take of the horse
regularly, keeping it in safe place, etc.,
> in other words, S must exercise that
diligence which he would exercise over
another horse belonging to him.
> the accessory obligation of S to take
care of the horse is demandable even if no
mention thereof is made in the contract
DUTY OF DEBTOR IN OBLIGATION TO
DELIVER A GENERIC THING

1. To deliver a thing which is of the quality

intended by the parties taking into
consideration the purpose of the
obligation and other circumstances

2. To be liable for damages in case of fraud,

negligence or delay, in the performance of
his obligation or contravention of the
tenor thereof.
b. ANOTHER STANDARD OF CARE
> however, if the law or the stipulation of
the parties provides for another standard of
care (slight or extra-ordinary diligence) said
law or stipulation must prevail.

c. FACTORS TO BE CONSIDERED
> the diligence required necessarily
depends upon the nature of the obligation
and corresponds with the circumstances of
the person, of the time and place
Art. 1164. The creditor has a right to the
fruits of the thing from the time the
obligation to deliver it arises. However, he
shall acquire no real right over it until the
same has been delivered to him. (1095)
DIFFERENT KINDS OF FRUITS

1. NATURAL FRUITS – are the spontaneous

products of the soil and the young and
other products of animals
ex. grass, all trees and plants on lands
produced without the intervention of human
labor

2. INDUSTRIAL FRUITS – are those produced

by lands of any kind through cultivation or
labor
ex. Sugar cane, vegetable, rice
DIFFERENT KINDS OF FRUITS

3. CIVIL FRUITS – are those derived by

virtue of a juridical relation

ex. Rents of buildings, price of leases of

lands
RIGHT OF CREDITOR TO THE FRUITS

> the creditor is entitled to the fruits of

the thing to be delivered from the time the
obligation to make delivery arises
WHEN OBLIGATION TO DELIVER FRUITS
ARISES?

1. > generally, the obligation to deliver the

thing due and consequently the fruits, if any,
arises from the time of the perfection of the
contract. Perfection refers to the birth of the
contract or to the meeting of the minds
between the parties.
WHEN OBLIGATION TO DELIVER FRUITS
ARISES?

2. > if the obligation is subject to a

suspensive condition or period, it arises
upon the fulfillment of the condition or
arrival of the term. However, the parties
may make a stipulation to the contrary as
regards the right of the creditor to the fruits
of the thing
WHEN OBLIGATION TO DELIVER FRUITS
ARISES?

3. > in a contract of sale, the obligation

arises from the perfection of the contract
even if the obligation is subject to
suspensive condition or period where the
price has been paid
WHEN OBLIGATION TO DELIVER FRUITS
ARISES?

4. > in obligation to give arising from law,

quasi-contracts, delicts and quasi-delicts,
the time of performance is determined by
the specific provisions of the law applicable
Example:

S sold his horse to B for P20,000. No date

or condition was stipulated for the delivery
of the horse. While still in the possession of
S, the horse gave birth to a colt.

WHO HAS THE RIGHT TO THE COLT?

Example:

B is entitled to the colt. This hold true

even if the delivery is subject to suspensive
condition or period, if B has paid the price

But S has the right to the colt if it was

born before the obligation to deliver the
horse has arisen and B has not yet paid the
price
PERSONAL RIGHT
> is the right or power of a person
(creditor) to demand to another (debtor), as
a definite passive subject, the fulfillment of
the latter’s obligation to give, to do or not to
do.

REAL RIGHT
> is the right or interest of a person over
a specific thing (like ownership, possession,
mortgage) without a definite passive subject
against whom the right may be personally
enforced
PERSONAL RIGHT (PR) vs. REAL RIGHT (RR)

1. In PR there is a definite active subject

and a definite passive subject;
while RR, there is only a definite active
subject without any definite passive subject

2. In PR, binding and enforceable only

against a particular person,
while a RR is directed against the whole
world
Example :

X is the owner of a parcel of land under

the torrens title registered in his name in the
Registry of Property.
> his ownership is a real right directed
against anybody. There is no definite passive
subject.
> if the land is claimed by Y who takes
possession, X has a personal right to recover
from Y, as a definite passive subject, the
property
> if the same land is mortgaged by X to Z,
the mortgage if duly registered , is binding
against third persons, a real right
OWNERSHIP ACQUIRED BY DELIVERY:

> ownership and other real rights over

property are acquired and transmitted in
consequence of certain contracts by
tradition or delivery

Ex. In sale, mere agreement on the terms

thereof does not effect transfer of ownership
of the thing sold in the absence of delivery,
actual or constructive of the thing.
HE SHALL ACQUIRE NO REAL RIGHT OVER IT
UNTIL THE SAME HAS BEEN DELIVERED TO
HIM
> is that the creditor does not become the
owner until the specific thing has been
delivered to him
> hence, when there has been no delivery
yet, the proper action of the creditor is not
one of recovery of possession and ownership
but one of specific performance or rescission
of the obligation
Example :

S is obliged to give to B on Dec.2, 2014 a

particular horse. Before Dec. 2, B has no
right over the horse. B will acquire a
personal right against S to fulfill his
obligation only from Dec. 2

if the horse is delivered on Dec.30, B

acquires ownership or real right only from
that date

but if on Dec.1, S sold and delivered the

same horse to C, a third person in good
faith. C acquires ownership and S shall be
liable to B for damages
Art. 1165. When what is to be delivered is a
determinate thing, the creditor, in addition
to the right granted him by Article 1170,
may compel the debtor to make the delivery.

If the thing is indeterminate or generic, he

may ask that the obligation be complied with
at the expense of the debtor.

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 any fortuitous
event until he has effected the delivery.
(1096)
REMEDIES OF CREDITOR IN REAL
OBLIGATION

A. In a specific real obligation (obligation to

deliver a determinate thing)
B. A generic real obligation (obligation to
deliver a generic thing)
REMEDIES OF CREDITOR IN REAL
OBLIGATION

A. In a specific real obligation (obligation to

deliver a determinate thing), the creditor
may exercise the following remedies or
rights in case the debtor fails to comply
with his obligation
1. Demand specific performance or fulfillment
of the obligation with a right to indemnity
for damages; or
2. Demand rescission or cancellation of the
obligation also with right to recover
damages
3. Demand payment of damages only, where
it is the only feasible remedy
Example

S sells his piano to B for 20,000. If S refuses

to comply with his obligation to deliver the
piano, what is the remedy of B?
> B can bring an action for fulfillment or
rescission of the obligation with the payment
of damages in either case. In case of
rescission, the parties must return to each
other what they have received
> the right to demand fulfillment and
rescission with damages are alternative not
cumulative
2. A GENERIC REAL OBLIGATION (obligation
to deliver a generic thing) on the other hand
can be performed by a third person since the
object is expressed only according to its
family or genus.
> it is thus not necessary for the creditor to
compel the debtor to make the delivery,
although he may ask for performance of the
obligation.
> in any case, the creditor has the right to
recover damages in case of breach or
violation of the obligation
Example

S obliges himself to deliver to B 100 sacks of

rice on December 4, 2014 for P50,000. If S
does not comply with his obligation, what is
the remedy of B?
> B may buy rice from C, a third person.
If B paid C P55,000, he may recover P5,000
from S. Furthermore, B can also hold S
liable for damages
WHEN DEBTOR DELAYS OR HAS PROMISED
DELIVERY TO SEPARATE CREDITORS
> this is an exception to a fortuitous event.
> it likewise refers to a determinate thing.
> an indeterminate thing cannot be the
object of destruction by a fortuitous event
because GENUS NUNQUAM PERIT (genus
never perishes)
Art. 1166. The obligation to give a
determinate thing includes that of delivering
all its accessions and accessories, even
though they may not have been mentioned.
(1097a)
ACCESSION vs. ACCESSORIES

ACCESSION – are the fruits of a thing or

addition to or improvements upon a thing
(the principal)
ex. Trees on a land; air-conditioner in a
car; rent of a building

ACCESSORIES – are things joined to or

included with the principal thing for the
latter embellishment
ex. Key of a house, frame of a picture;
bracelet of a watch
RIGHT OF CREDITOR TO ACCESSIONS AND
ACCESSORIES
> the general rule is that all accessions and
accessories are considered included in the
obligation to deliver a determinate thing
although they may not have been mentioned
> this rule is based on the principle of law
that the “accessory follows the principal”
> unless otherwise stipulated, an
obligation to deliver the accessions or
accessories of a thing does not include the
latter.
Example: the sale on improvement (house) is
not sufficient to convey title or any right to the
land.
Art. 1167. If a person obliged to do
something fails to do it, the same shall be
executed at his cost.

This same rule shall be observed if he does it

in contravention of the tenor of the
obligation. Furthermore, it may be decreed
that what has been poorly done be undone.
(1098)
Situations contemplated in Art. 1167

1. The debtor fails to perform an obligation

to do
2. The debtor performs an obligation to do
but contrary to the terms thereof
3. The debtor performs an obligation to do
but in poor manner
REMEDIES OF CREDITOR IN POSITIVE
PERSONAL OBLIGATION

1. If the debtor fails to comply with his

obligation to do, the creditor has the right
a. to have the obligation performed by
himself, or by another, unless personal
considerations involved at the debtor expense
b. to recover damages

2. In case the obligation is done in

contravention of the terms of the same or is
poorly done, it may be ordered that it be
undone if it is still possible to undo what was
done
PERFORMANCE BY A THIRD PERSON

> a personal obligation to do, like a real

obligation to deliver a generic thing, can be
performed by a third person.
> while the debtor can be compelled to
make the delivery of a specific thing, a specific
performance cannot be ordered in personal
obligation to do because this may amount to
involuntary servitude
> where however, the personal qualification
of the debtor are the determining motive for
the obligation contracted (ex.to sing in a night
club), the performance of the same by another
would be impossible, hence, the only remedy is
indemnification for damages
Example:

1. X binds himself to construct a house for B.

Among other things, it was stipulated that
the house shall have 3 bedrooms, each of
which to have an area of 5 meters by 4
meters and that the kitchen shall be painted
all white.
if X does not construct the house, B may ask
C to contract the house at the expense of X
Example:

2. Suppose X constructed the house but the

size of the bedroom is not 5 meters by 4
meters or the kitchen is not painted all white
> In this case, B can ask to have it done
according to the specifications. If X refuses,
the obligation may be performed by C at the
expense of X
Example:

3. Now, if the kitchen was painted white but

the painting was poorly done, B may ask X that
it be undone or in case of X’s refusal, he may
ask C to paint the kitchen at the expense of X
> in no case however, can X be compelled
against his will to comply with his obligation
should he refuse to do so.
Example:

4. If the obligation contracted by X is to sing in

the night club of B and he fails to comply
with his obligation, the performance by the
same by another would be impossible or
would result to be so different that the
obligation could not be considered
performed.
> here the personal qualification of X is the
determining motive for the contract. In this
case, the only practical remedy of B is
indemnification for damages
Art. 1168. When the obligation consists in
not doing, and the obligor does what has
been forbidden him, it shall also be undone
at his expense. (1099a)
REMEDIES OF CREDITOR IN NEGATIVE
PERSONAL OBLIGATION

> in an obligation not to do, the duty of

the obligor is to abstain from an act
> as a rule, the remedy of the obligee is
the undoing of the forbidden thing plus
damages. However, if it is not possible to
undo what was done, his remedy is an action
for damages caused by the debtor’s violation
of his obligation
Example

B bought a land from S. It was stipulated

that S would not construct a fence on a
certain portion of his land adjoining that
sold to B
> should S construct a fence in violation
of the agreement, B can bring an action to
have the fence removed at the expense of S.
Art. 1169. Those obliged to deliver or to do
something incur in delay from the time the
obligee judicially or extra-judicially demands
from them the fulfillment of their obligation.
However, the demand by the creditor
shall not be necessary in order that delay
may exist:
(1) When the obligation or the law expressly
so declare; or
(2) 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; or
(3) When demand would be useless, as
when the obligor has rendered it beyond his
power to perform.

In reciprocal obligations, neither party

incurs in delay if the other does not comply
or is not ready to comply in a proper manner
with what is incumbent upon him. From the
moment one of the parties fulfills his
obligation, delay by the other begins.
(1100a)
DELAY

1. ORDINARY DELAY
> is merely the failure to perform an
obligation on time

2. LEGAL DELAY or DEFAULT or MORA

> is the failure to perform an obligation
on time which failure constitutes a breach of
the obligation
KIND OF DELAY or DEFAULT

1. MORA SOLVENDI – or the delay on the

part of the debtor to fulfill his obligation
2. MORA ACCIPIENDI – or the delay on the
part of the creditor to accept the
performance of the obligation
3. COMPENSATIO MORAE – or the delay of
the obligors in reciprocal obligations. The
delay of the obligor cancels the delay of
the obligee and vice versa. There is no
actionable default on the part of both
parties
NO DELAY IN NEGATIVE PERSONAL
OBLIGATION
> in an obligation not to do, non-
fulfillment may take place, but delay is
impossible for the debtor fulfills by not doing
what has been forbiden him
NO DELAY IN NEGATIVE PERSONAL
OBLIGATION
> in an obligation not to do, non-
fulfillment may take place, but delay is
impossible for the debtor fulfill by not doing
what has been forbidden him
REQUISITES OF DELAY OR DEFAULT BY THE
DEBTOR

1. Failure of the debtor to perform his

(positive) obligation on the date agreed
upon
2. Demand (not mere reminder or notice)
made by the creditor upon the debtor with
his obligation, either judicial or extra-
judicial
3. Failure of the debtor to comply with such
demand

Note:
Art. 1170. Those who in the performance of
their obligations are guilty of fraud,
negligence, or delay, and those who in any
manner contravene the tenor thereof, are
liable for damages. (1101)
GROUNDS FOR LIABILITY
> which may entitle the injured party to
damages
1. Fraud (deceit or dolo) – deliberate or
intentional evasion of the normal
fulfillment of an obligation
2. Negligence (fault or culpa) – any
voluntary act or omission, there being no
bad faith or malice, which prevents the
normal fulfillment of an obligation
3. Delay (mora)
4. Contravention of the terms of the
obligation – violation of the terms and
condition stipulated in the obligation
Example
1. Fraud (deceit or dolo) –

S obliged himself to deliver to B 20 bottles

of wine, of a particular brand, Subsequently,
S delivered 20 bottles knowing that they
contain cheaper price wine. Hence, S is
guilty of fraud and is liable for damages to B
Example

2. Negligence (fault or culpa)

P is a passenger in a taxi. Hence, there is

considered a contract of carriage between P
and the owner of the taxi company. If
through recklessness of the driver, an
accident occurs, as a result P was injured.
> hence there is negligence which would
make the owner of taxi liable for damages
Example

4. Contravention of the terms of the

obligation

E leased the apartment of R for P10,000

monthly. If E violates his obligation as
lessee, R is entitled to eject him from the
premises and recover damages
FRAUD vs. NEGLIGENCE

1. In fraud, there is deliberate intention to

cause damage or injury, while in
negligence, there is no such intention
2. Waiver of the liability for future fraud is
void, while such waiver may be allowed in
negligence
3. Fraud must be clearly proved, while
negligence is presumed from violation of
a contractual obligation
4. Liability for fraud cannot mitigated or
reduced by courts, while liability of
negligence may be reduced by the court
Art. 1171. Responsibility arising from fraud
is demandable in all obligations. Any waiver
of an action for future fraud is void. (1102a)
RESPONSIBILITY ARISING FROM FRAUD
DEMANDABLE

> this provision refers to incidental fraud

which is employed in the fulfillment of an
obligation. This is because fraud is deemed
serious and evil that its employment to avoid
the fulfillment of one’s obligation should be
discouraged
WAIVER OF ACTION FOR FUTURE FRAUD IS
VOID

> according to the time of commission,

fraud may be past or future. A waiver of an
action for future fraud as being against the
law and public
> a contrary rule would encourage the
perpetration of fraud
WAIVER OF ACTION FOR PAST FRAUD IS
VALID

> because the waiver can be considered

as an act of generosity and magnanimity on
the part of the party who is the victim of the
fraud
Example

S promised to deliver 120 cavans of rice

of a particular brand and quality to B at the
rate of 10 cavans a month

S cannot make an agreement with B,

whereby B will not file an action in court
against S should S commit fraud in the
performance of obligation
Art. 1172. Responsibility arising from
negligence in the performance of every kind
of obligation is also demandable, but such
liability may be regulated by the courts,
according to the circumstances. (1103)
RESPONSIBILITY ARISING FROM
NEGLIGENCE DEMANDABLE

> in the performance of every kind of

obligation, the debtor is also liable for
damages resulting from his negligence.

> the courts however are given wide

discretion in fixing the measure of damages
VALIDITY OF WAIVER OF ACTION ARISING
FROM NEGLIGENCE

1. An action for future negligence may be

renounced except where the nature of
obligation requires the exercise of extra-
ordinary diligence as in the case of
common carrier

2. Where the negligence shows bad faith, it

is considered equivalent to fraud
VALIDITY OF WAIVER OF ACTION ARISING
FROM NEGLIGENCE

1. An action for future negligence may be

renounced except where the nature of
obligation requires the exercise of extra-
ordinary diligence as in the case of
common carrier

2. Where the negligence shows bad faith, it

is considered equivalent to fraud
KINDS OF NEGLIGENCE ACCORDING TO
SOURCE OF OBLIGATION

1. Contractual negligence (culpa contractual)

– negligence in contracts resulting in their
breach
2. Civil negligence (culpa aquilina)
- which by itself is the source of an
obligation between the parties not so related
before by any pre-existing contract
3. Criminal negligence (culpa criminal)
- or negligence resulting in the commission
of a crime
EFFECT OF NEGLIGENCE ON THE PART OF THE
INJURED PARTY

> when the plaintiff’s own negligence was

the immediate and proximate cause of his
injury, he cannot recover damages .
> but if his negligence was only
contributory, the immediate and proximate
cause of the injury being the defendant’s lack
of due care, the plaintiff may recover
damages, but the court shall mitigate the
damages to be awarded
Example

P is a passenger in a carefully driven bus.

Without any warning, he jumped off the bus,
as a result of which, he suffered injuries

> the bus company is not liable for damage

because the cause of P’s injuries is his own
negligence
Art. 1173. The fault or negligence of the
obligor consists in the omission of that
diligence which is required by the nature of
the obligation and corresponds with the
circumstances of the persons, of the time
and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and
2201, paragraph 2, shall apply.

If the law or contract does not state the

diligence which is to be observed in the
performance, that which is expected of a
good father of a family shall be required.
(1104a)
NEGLIGENCE
> is the failure to observe for the
protection of the interest of another person,
that degree of care, precaution and vigilance
which the circumstances justly demand,
whereby such other person suffers injury
FACTORS TO BE CONSIDRED IN NEGLIGENCE

1. Nature of obligation
- smoking while carrying inflammable
materials constitute negligence
2. Circumstances of the person
- a guard sleeping while on duty is
negligence
3. Circumstances of time
- driving a car without headlights at night
is gross negligence but not during the day
4. Circumstances of the place
- driving at 100 km per hour on the super
highway is permissible but not in Makati
KINDS OF DILIGENCE REQUIRED

1. That agreed upon by the parties, oral or

written
2. In the absence of stipulation, that
required by the law in the particular case
3. If both contract and law are silent, then
the diligence of a good father a family
Art. 1174. Except in cases expressly
specified by the law, or when it is otherwise
declared by stipulation, or when the nature
of the obligation requires the assumption of
risk, no person shall be responsible for those
events which could not be foreseen, or
which, though foreseen, were inevitable.
(1105a)
FORTUITOUS EVENT (FE)

> is any event which cannot be foreseen,

or which though foreseen, is inevitable.
> is an event which either impossible to
foresee or impossible to avoid
KINDS OF FORTUITOUS EVENT

1. ORDINARY FE – or those events which are

common and which the contracting
parties could reasonable foresee
2. EXTRA-ORDINARY FE – those event which
are uncommon and which the contracting
parties could not have reasonably
foreseen
REQUISITES OF A FORTUITOUS EVENT

1. The event must be independent of the

human will or at least of the debtor’s will
2. The event could not be foreseen, or if
foreseen is inevitable
3. The event must be of such a character as
to render it impossible for the debtor to
comply with his obligation
4. The debtor must be free from any
participation
RULES AS TO LIABILITY IN CASE OF A
FORTUITOUS EVENT

> general rule : a person is not as a rule,

responsible for loss or damages caused to
another resulting from the non-performance
of his obligation due to fortuitous event,
except the following
1. The debtor is guilty of fraud, negligence
or delay or contravention of the tenor of
obligation
2. The debtor has promised to deliver the
same (specific ) to two or more person
who do not have the same interest
RULES AS TO LIABILITY IN CASE OF A
FORTUITOUS EVENT

3. The obligation to deliver a specific thing

arises from a crime
4. The thing to be delivered is generic
Art. 1175. Usurious transactions shall be
governed by special laws. (n)
SIMPLE LOAN or MUTUUM

> is a contract whereby one of the parties

delivers to another, money or other
consumable thing, upon condition that the
same amount or the same kind and quality
shall be paid.

> it may be gratuitous or with stipulation

to pay interest
USURY

> is contracting for or receiving interest

in excess of the amount allowed by law for
the loan or use of money, goods, chattels or
credits
REQUISITES FOR THE RECOVERY OF
INTEREST

1. The payment of interest must be

expressly stipulated
2. The agreement must be in writing
3. Interest must be lawful
BEFORE: stipulation for the payment of
usurious interest is void, as if there is no
stipulation as to interest

NOW: under Central Bank Circular No.905

> the rate of interest and other charges
on a loan or forbearance of money, goods or
credit, SHALL NOT BE SUBJECT to any ceiling
prescribed under the usury law.
Art. 1176. The receipt of the principal by the
creditor without reservation 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,
shall likewise raise the presumption that
such installments have been paid. (1110a)
PRESUMPTION

> the inference of a fact not actually

known arising from its usual connection with
another which is known or proved
Example

D borrowed P1,000 from C. Later, D shows a

receipt signed by C. The fact not actually
known is the payment by D. The fact known
is the possession by D of a receipt signed by
C.

> the presumption is that the obligation

has been paid unless proved otherwise
TWO KINDS OF PRESUMPTION:

1. CONCLUSIVE PRESUMPTION
> one which cannot be contradicted
ex. Everyone presumed to know the law

2. DISPUTABLE PRESUMPTION
> one which can be contradicted or
rebutted by presenting proof to the contrary
DISPUTABLE PRESUMPTION

Example:

D owes C the amount of P10,000.00 with

interest at 15% a year. C issued a receipt for
the principal. The interest was not referred
to in the payment whether or not it has been
paid

> it is presumed that the interest has

been previously paid by D because, the
payment of interest precedes the payment of
principal. However, it may be overcome by
sufficient evidence that such interest had
not really been paid
WHEN PRESUMPTION IN ART.1176 DO NOT
APPLY?

1. With reservation as the interest

2. Receipt without indication of particular
installment
3. Receipt for a part of the principal
4. Payment of taxes
5. Non-payment proven
Art. 1177. The creditors, after having
pursued the property in possession of the
debtor to satisfy their claims, may exercise
all the rights and bring all the actions of the
latter for the same purpose, save those
which are inherent in his person; they may
also impugn the acts which the debtor may
have done to defraud them. (1111)
REMEDIES AVAILABLE TO THE CREDITOR

1. Exact fulfillment (specific performance)

with right to damages
2. Pursue the leviable (not exempt from
attachment under the law)
3. After having pursued the property in
possession of the debtor, exercise all the
rights (like right to redeem) and bring all
actions of the debtor (like the right to
collect), except those inherent in or
personal to the debtor (right to vote)
4. Ask the court to rescind or impugn acts or
contracts which the debtor may have
done to defraud the creditor
Example

On due date, D could not pay C his obligation

in the amount of P400,000. However, D
owns a car worth 280,000 and X is indebted
to him for 40,000. Before the due date, D
sold his land worth 200,000
under the circumstances, C can
1. May bring for the collection of 400,000
with right to damages
2. If after judgement D fails to pay, C can
ask the court for attachment of D’s car so
that the car may be sold and payment
made from the proceeds
3. C may ask the court to order X not to pay
D but to him

4. C may ask the court to rescind or cancel

the sale made by D to Y on the ground that
the transaction is fraudulent
Art. 1178. Subject to the laws, all rights
acquired in virtue of an obligation are
transmissible, if there has been no
stipulation to the contrary. (1112)
TRANSMISSIBILITY OF RIGHTS

> all rights acquired in virtue of an

obligation are generally transmissible

EXCEPTIONS:
1. Prohibited by law – ex. Contract of
partnership, contract of agency, contract of
commodatum

2. Prohibited by stipulation of the parties