Art. 1194.

In case of loss, deterioration or

improvement
of the thing before the arrival of the day certain,
the rules in
Article 1189 shall be observed.
COMMENT:
Rules in Case of LOSS, Deterioration, or
Improvement
(a) Note the cross-reference to Art. 1189 of the Civil
Code.
(b) Example: If A is supposed to deliver to B a particular
car
on Mar. 1, 2005 but the car is destroyed by a fortuitous
event on Dec. 15, 2004, the obligation is extinguished.

Art. 1189. When the conditions have been imposed

with
the intention of suspending the effi cacy of an
obligation
to give, the following rules shall be observed in
case of the
improvement, loss or deterioration of the thing
during the
pendency of the condition:
(1) If the thing is lost without the fault of the
debtor,
the obligation shall be extinguished;
(2) If the thing is lost through the fault of the
debtor,
he shall be obliged to pay damages; it is
understood that the
thing is lost when it perishes, or goes out of
commerce, or
disappears in such a way that its existence is
unknown or it
cannot be recovered;
(3) When the thing deteriorates without the fault
of the
debtor, the impairment is to be borne by the
creditor;
(4) If it deteriorates through the fault of the
debtor,
the creditor may choose between the rescission of
the obligation
and its fulfi llment, with indemnity for damages in
either
case;
(5) If the thing is improved by its nature, or by
time, the
improvement shall inure to the benefi t of the
creditor;
(6) If it is improved at the expense of the debtor,
he shall
have no other right than that granted to the
usufructuary.

COMMENT:
(1) Loss, Deterioration, and Improvement During
the Pendency
of Condition
(a) The Article applies only if:
1) the suspensive condition is fulfi lled; and
2) the object is specifi c (not generic).
(b) What are the three things that may happen to the
object
of an obligation pending the fulfi llment of a suspensive
condition?
ANS.: The object:
1) may be lost
2) may deteriorate (value is reduced or impaired)
3) may be improved
The object may be lost:
a) without the fault of the debtor
b) with fault of the debtor
c) partly with and partly without the fault of the
debtor
The object may deteriorate:
a) without the fault of the debtor
b) with the fault of the debtor
c) partly with and partly without the fault of the
debtor
The object may improve:
a) by nature or by time
b) through the expense of the debtor
c) partly through nature or time and partly by the
debtor
(NOTE: Because of these varying circumstances,
the Code has deemed it proper to enunciate
several rules thereon, hence, the existence
of Art. 1189.)

(2) “Loss” Defined

It is understood that the thing is lost:
(a) when it perishes (as when a house is burnt to ashes)
(b) when it goes out of commerce (as when the object
heretofore
unprohibited becomes prohibited)
(c) when it disappears in such a way that its existence is
unknown
(as when a particular car has been missing for some
time)
(d) when it disappears in such a way that it cannot be
recovered
(as when a particular diamond ring is dropped in the
middle
of the Pacifi c Ocean). (Art. 1189, par. 2, Civil Code).
(3) Effects of Partial Loss
It may be partial loss:
(a) that would amount to a loss important enough to be
considered
a complete loss (this will be determined by the courts).
(Art. 1263, Civil Code).
(b) that would merely be considered a deterioration of the
thing, in which case the rules on deterioration should
apply.
(4) Illustrative Problems
(a) A promised to give B his car if B passes the bar.
Pending
the results of the bar exams, the car is destroyed by
a fortuitous event, without any fault at all on the part of
the debtor. When B passes the bar, does A have to give B
anything?
ANS.: No, A does not have to give B anything. “If the
thing is lost without the fault of the debtor, the obligation
shall be extinguished.” (1st par., Art. 1189, Civil Code).
The
reason is that as a general rule, no one should be liable
for a fortuitous event unless otherwise provided by law or
contract.
(b) A promised to give B P1,000,000 if B passes the bar.
Pending
the results of the bar, A’s money is destroyed by fire,
not imputable to A. When B passes the bar, does A still
have to give him P1,000,000?
ANS.: Yes, because the money here is generic. “In an
obligation to deliver a generic thing the loss or
destruction
of anything of the same kind does not extinguish the
obligation.” (Art. 1263, Civil Code). The reason is “Genus
nunquam peruit” — “genus never perishes.”
(c) Suppose the loss occurred through the fault of the
debtor,
is the debtor liable?
ANS.: Yes. “If the thing is lost through the fault of
the debtor, he shall be obliged to pay damages.” (Art.
1189,
par. 2, Civil Code).
(d) Suppose pending the fulfi llment of the suspensive
condition,
the object, say a particular car, deteriorates without
the fault of the debtor, is the debtor bound to make up
for
the depreciation, or should the creditor bear the
deterioration
suffered?
ANS.: In such a case, the creditor will have to suffer
the deterioration or impairment. The law says: “When
the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor.” (Art. 1189,
par.
3, Civil Code).
(e) Suppose the thing deteriorates through the fault of
debtor?
ANS.: The creditor here may choose between:
1) Rescission (or cancellation of the agreement or
obligation),
plus damages;
2) Or fulfi llment of the obligation (even if there has been
deterioration) plus damages. (Art. 1189, par. 4, Civil
Code).
(f) Suppose the thing is improved by nature or by time,
who
gets the benefi t of the improvement?
ANS.: The creditor gets the benefi t. “If the thing is
improved by its nature or by time, the improvement shall
inure (go) to the benefi t of the creditor.” (Art. 1189, par.
5,
Civil Code). The reason for this is to compensate the
creditor
who would suffer in case, instead of improvement, there
would be deterioration without the fault of the debtor.
(g) Suppose the thing has improved, not through time or
by
its nature but through the expense of the debtor, what
will
be the rights of said debtor?
ANS.: The debtor will have the rights granted to a
usufructuary for improvements on a thing held in
usufruct.
(Usufruct is the right to the enjoyment of the use and the
fruits of a thing.) These rights granted to the usufructuary
with reference to improvements may be found in Art. 579
of
the Civil Code, which reads as follows: “The usufructuary
may make on the property held in usufruct such useful
improvements
or expenses for mere pleasure as he may deem
proper, provided he does not alter its form or substance;
but he shall not have the right to be indemnifi ed
therefor.
He may, however, remove such improvements, should it
be possible to do so without damage to the property.” In
other words, he is not entitled to reimbursement but he
may remove the improvements provided he does not, by
doing so, damage the property. “He may however set off
the
improvements he may have made on the property
against
any damage to the same.” (Art. 580, Civil Code).
(h) Suppose the improvement is due partly to the
expenses
made by the debtor and partly due to its nature or by
time,
who gets the benefi t?
ANS.: The creditor gets the benefi t of the improvement
of the thing by its nature or by time, but the debtor
is entitled to the rights of a usufructuary over useful
improvements
that may have been caused at his expense.
(NOTE: The subject of usufruct is treated in detail in
the subject “Property.”)
ART. 1480. Any injury to or benefit from the thing
sold, after the contract has been perfected, from
the
moment of the perfection of the contract to the
time
of delivery, shall be governed by articles 1163 to
1165,
and 1262.
Art. 1480 NATURE AND FORM OF THE CONTRACT
104 SALES
This rule shall apply to the sale of fungible things,
made independently and for a single price, or
without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the risk
shall
not be imputed to the vendee until they have been
weighed, counted, or measured, and delivered,
unless
the latter has incurred in delay. (1452a)
Risk of loss or deterioration.
Four rules may be given regarding risk of loss:
(1) If the thing is lost before perfection, the seller and not
the
one who intends to purchase it bears the loss (see Roman
vs.
Grimalt, 6 Phil. 96 [1906].) in accordance with the
principle that
the thing perishes with the owner (res perit domino);
(2) If the thing is lost at the time of perfection, the
contract is
void or inexistent. (Art. 1409[3].) The legal effect is the
same as
when the object is lost before the perfection of the
contract of sale
(see Art. 1493.);
(3) If the thing is lost after perfection but before its
delivery, that
is, even before the ownership is transferred to the buyer,
the risk
of loss is shifted to the buyer as an exception to the rule
of res perit
domino (Arts. 1480, pars. 1 and 2, 1538, 1189, and
1269.); and
(4) If the thing is lost after delivery, the buyer bears the
risk of
loss following the general rule of res perit domino.
Scope of Article 1480.
Article 1480 contemplates two rules:
(1) The first rule — where the thing is lost after perfection
but
before its delivery (see Rule No. 3, supra.) — applies to
non-fungible
things (par. 1.) and fungible things sold independently
and
for a single price or for a price fixed without consideration
of their
weight, number, or measure. (par. 2.)
Under this rule, which follows the Roman Rule, the risk of
the
thing sold passes to the buyer, even though the thing has
not yet
been delivered to him. Therefore, if a house (sold) be
destroyed
Art. 1480
105
wholly or partly by fire the loss falls upon the buyer who
must
pay the price, even though he has not received the thing.
For the
seller is not liable for anything which happens without his
fraud
or negligence. But if after the sale any alluvion has
accrued to the
land, the benefit goes to the buyer for the benefit ought
to belong
to him who has the risk. (Sherman, Inchiridion Romani
Juris, Sec.
296.) In other words, the buyer assumes the risk of loss
caused by
fortuitous event (Art. 1174.) without the fault of the seller
(Art.
1262.), that is, in spite of the exercise of due diligence on
his part
(Art. 1163.) and before he has incurred in delay (Arts.
165, 1170,
1262.) after the perfection of the contract to the time of
delivery.
(Art. 1480, par. 1.) With respect to the fruits, the buyer
has a right
to the same from the time the obligation to deliver the
thing arises.
(Art. 1164.) If the risk ought to belong to the buyer before
delivery,
the benefit ought to belong to him who has the risk. (see
Arts.
1538, 1189[5].)
Article 1480, paragraph 1 is applicable only where the
thing
is determinate. (Art. 1460.) It also applies to fungible
things sold
for a price not fixed in relation to weight, number, or
measure
because in such case the fungible things have been
“particularly
designated or physically segregated.” (Ibid., par. 2.)
Is Article 1480 above in conflict with Article 1504 (infra.)?
(2) The second rule relates to fungible things sold for a
price
fixed in relation to weight, number, or measure. Under
the third
paragraph, “the risk shall not be imputed to the vendee
until they
have been weighed, counted, or measured, and
delivered.” (see U.S.
vs. De Vera, 43 Phil. 1001 [1922].) Paragraph 3 is an
exception to
the rule that the vendee bears the loss after the
perfection of the
contract and before delivery. However, the vendee
assumes the
risk if he has incurred in delay in receiving the goods
sold. (North
Negros Sugar Co., Inc. vs. Compania General Tabacos de
Filipinas,
100 Phil. 1103 [1957].)
ILLUSTRATIVE CASES:
1. The sugar which the seller intended to deliver was
destroyed
by flood.
Facts: B advanced P3,000 to S in payment of 600 piculs
of
sugar. The written contract did not specify that the sugar
was
Art. 1480 NATURE AND FORM OF THE CONTRACT
106 SALES
to come from the crop on S’s land which was destroyed
by a
flood.
Issue: S claimed that the fortuitous cause excused non-
performance
by him of the contract.
Held: S promised to deliver a generic thing. Any sugar of
the quality stipulated, regardless of origin or however
acquired,
(lawfully) would be obligatory on the part of B to receive
and
would discharge the obligation. It seems, therefore, plain
that
the sugar to be sold not having been segregated, the sale
was
not perfected and the loss of the crop even through force
majeure,
did not extinguish S’s obligation to deliver the sugar.
Flood, like other catastrophes, was a contingency, a
collateral
incident, which S should have provided for by proper
stipulations.
Genus nunquam perit (genus never perishes). (Yu Tek &
Co. vs. Gonzales, 29 Phil. 384 [1915]; De Leon vs.
Soriano, 87 Phil.
193 [1950]; Bunge Corp. vs. Camenforte & Co., 91 Phil.
861
[1954].)
———— ———— ————
2. Buyer denies liability for price of tobacco delivered to
its agent
by seller for inspection, grading and weighing, because it
was burned
before it could be inspected, graded, and weighed.
Facts: S (vendor) delivered the tobacco in question to the
redrying plant of A, trading agent of B (vendee). The
tobacco
was burned while awaiting inspection, grading, and
weighing.
It appeared that S directed, supervised, and controlled A
in
receiving shipments of tobacco and in the performance of
its
activities, and that shipments, once received from trading
entities
like S, were under B’s control, and not subject to
withdrawal
without its authority.
Issue: Should B be considered as having accepted the
tobacco
shipments as of the fire and, therefore, should bear the
loss?
Held: Yes. The contract of sale has been perfected at the
time
of the loss (see Art. 1475.) and the shipment was placed
in the
control and possession of B. The technical defect that the
tobacco
in question “were still to be inspected, graded and
weighed” cannot suffice to overturn the decision. Aside
from
raising an issue of fact (for B’s own fieldmen had the
responsibility
of such tobacco being graded, weighed, baled and loaded
on trucks duly sealed for transportation to its redrying
plant
Art. 1480
107
and that responsibility was fulfilled according to the trial
court),
the delay was traceable to the fault of B and A and that A
was
negligent in causing the fire, whereas S had done
everything
that was required of him by B’s regulations in order to
have the
tobacco inspected and paid for.
Furthermore, for sometime after the conflagration, there
was no question raised by B as to its liability. It would,
therefore,
be the height of injustice to deny S’s claim for payment.
(Phil.-Virginia Tobacco Adm. vs. De Los Angeles, 87 SCRA
9 [1978].)
Dissenting opinion by R.C. Aquino, J.: The judgment is
erroneous.
The sale was not consummated because there was no
tradition or delivery to B of the tobacco which was lost
when it
was still owned by S. A was merely an agent of B. Even as
agent,
A had not yet accepted delivery of the tobacco before it
was
lost during the fire. There was no acceptance of delivery
because
the tobacco, at the time it was lost, had not yet been
properly
inspected, graded and weighed. Under the contract
between
B and A, the latter’s responsibility as agent of the former
begins from the moment the tobacco had been delivered,
received
and accepted from the trading entities (like S) and the
same had been properly graded and weighed.
These requirements had not yet been satisfied at the
time
the tobacco was lost in A’s redrying plant. Inasmuch as B
did
not become the owner of the lost tobacco and as S was
still the
owner thereof, the loss should be borne by S, not by B.
Res perit
domino. Hence, B was not obligated to pay for the
tobacco. S’s
cause of action was really against A. S did not appeal
from the
lower court’s judgment absolving A. Under the contract
between
B and A, the latter was supposed to advance to the
trading
entities the payment for the tobacco delivered to A, and B
would then reimburse A for its advances. No such
advances
were made by A, a circumstance which may signify that
the
sale was not consummated.
Author’s Note: The buyer assumes the risk of loss caused
by
fortuitous event after the perfection of the contract even
before
the delivery of the thing sold. (see Rule 3 under “Risk of
loss or
deterioration.”) In the mind of the author, the opinion of
Justice
Aquino is that no contract of sale was perfected between
S
and B; neither was there delivery of the tobacco to B
before it
was lost. The opinion expresses its conformity to the
following
excerpts, among others, from the brief of the Solicitor
General
for PVTA (B):
Art. 1480 NATURE AND FORM OF THE CONTRACT
108 SALES
“Viewed thus, the conclusion is inescapable that the
tobacco shipments brought to the redrying plant to be
inspected,
graded, and weighed are considered not delivered
and sold in legal contemplation, until after grading and
weighing where the ‘meeting of minds’ takes place
because
the price or consideration is determined by the grade and
weight thereof. And without agreement as to price, the
sale
is not perfected. It is worth emphasizing that before the
tobacco
shipments were graded and weighed, they remained
properties of the respondent trading entities (S and
others)
subject to their control and possession, and at their risk;
consequently, respondents shall bear the loss which
occurred
prior to the grading and weighing of the tobaccos.”
———— ———— ————
3. Bales of tobacco were lost while in the control and
possession
of buyers’ agent before they were graded and weighed.
Facts: PVTA, a government corporation, entered into a
contract
of procuring, redrying and servicing with FVTR for the
1963 tobacco trading operation. Petitioners ATC shipped
to
FVTR bales of tobacco. Not all the bales of tobacco were
graded
and weighed because some officers and employees in the
premises of FVTR asked for money to have the remaining
bales
graded and weighed. The remaining ungraded and
unweighed
bales were lost while they were in the possession of
FVTR.
Having learned of such loss, ATC demanded for their
value
and the application of the same to ATC’s merchandising
loan
with PVTA but both the latter and the FVTR refused to
heed
said demands.
Issue: Was the contract of sale between ATC and PVTA
perfected
by ATC’s delivery of all bales of tobacco to FVTR, a
contractee of PVTA, so as to hold PVTA liable for the loss
of
said bales while in the possession of FVTR?
Held: (1) Delivery to buyer’s agent (FVTR) proven. —
“Under
the Santiago Virginia Tobacco Planters Assoc. vs. PVTA
(31 SCRA
528 [1970].) case, shipping documents and checklists
which are
accomplished prior to delivery do not prove actual
delivery. To
prove such delivery, documents such as the weigher’s
tally sheet
and the warehouse receipts which are accomplished
when the
actual delivery is made, are necessary. The factual
circumstances
extant in this case are different from those in the
Santiago case.
Art. 1480
109
In said case, there was a need to prove actual delivery
because
the petitioner therein demanded for the payment of
tobacco
shipments which were allegedly delivered to the FVTR. In
other
words, the actual physical delivery of the shipments was
not
proven. On the other hand, in this case, the lower court
established
from the testimonies of witnesses the fact that petitioner
entrusted to the FVTR a total of 263 bales of tobacco, 89
bales of
which were even actually weighed and graded in the
redrying
plant. However, for reason beyond the control of the
petitioner,
the FVTR refused to weigh and grade the remaining 174
bales.
On top of this, the FVTR also refused to grant petitioner’s
request
to withdraw the unweighed and ungraded shipments.
As it turned out later, said shipments were lost while in
the
custody of FVTR, thereby placing the petitioner in a ‘no
win’
situation.’’
(2) Seller (ATC) lost possession and control over
shipment. —
“The Civil Code provides that ownership of the thing sold
shall
be transferred to the vendee upon the actual or
constructive
delivery thereof. (Art. 1477.) There is delivery when the
thing
sold is placed in the control and possession of the
vendee. (Art.
1497.) Indeed, in tobacco trading, actual delivery plays a
pivotal
role. The peculiar procedure undergone in trading, which
procedure was set out at length in both the Santiago and
the
PVTA vs. De los Angeles (87 SCRA 197 [1978].) cases,
reveals that
delivery seals the contract of sale because the trader
loses not
only possession but also control over the shipment.
Outlined
by the PVTA pursuant to its power ‘to take over and
assume,
and, therefore, exclusively direct, supervise and control,
all functions
and operations with respect to the processing,
warehousing,
and trading of Virginia tobacco, the provisions of any
existing
law to the contrary notwithstanding, the procedure is
observed by everyone involved in the trade.’”
(3) Tobacco traders placed at a disadvantage. — “Verily,
the
tobacco trading procedure conceived and formulated by
the
PVTA is akin to a contract of adhesion wherein only one
party
has a hand in the determination of the terms. But
observance
of the procedure more often than not renders a trader at
a disadvantage.
The moment the shipment is placed in the hands of
the PVTA or its representative and it is lost, the trader is
left
empty-handed. While the flaw may not really be in the
procedure
itself, the same way may be found in the persons charged
with the implementation of the procedure. Some
personnel
Art. 1480 NATURE AND FORM OF THE CONTRACT
110 SALES
mishandle the shipment to the detriment of the trader.
Some
demand grease money to facilitate the trading process.
Sadly,
this is what happened in this case.”
(4) Delivery considered effective delivery to seller (PVTA).
—
“Hence, while under an ideal situation, there would have
been
merit in respondent PVTA’s contention that the contract
of sale
could not have been perfected pursuant to Article 1475
because
to determine the price of the tobacco traded, the
shipment
should first be inspected, graded and weighed, a strict
interpretation
of the provision may result in adverse effects to small
planters who would not be paid for the lost products of
their
toil. Such situation was what the ruling in PVTA vs. De los
Angeles
sought to avoid.
Equity and fair dealing, the anchor of said case, must
once
more prevail. Since PVTA had virtual control over the lost
tobacco bales, delivery thereof to the FVTR should also
be considered effective delivery to the PVTA.” (Alliance
Tobacco,
Inc. vs. Phil. Virginia Tobacco Administration, 179 SCRA
336
[1989].)
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.
COMMENT:
(1) Duty to Exercise Diligence
This Article deals with the fi rst effect of an obligation to
deliver a determinate thing (as distinguished from a
generic thing
— or one of a class) — namely — the duty to exercise
proper
diligence. Unless diligence is exercised, there is a danger
that
the property would be lost or destroyed, thus rendering
illusory
the obligation. (See 8 Manresa 35-36).
(2) Diligence Needed
(a) That which is required by the nature of the obligation
and
corresponds with the circumstances of person, time, and
place. (Art. 1173, Civil Code). This is really diligence of a
good father of a family.
(b) However, if the law or contract provides for a different
standard of care, said law or stipulation must prevail.
(Art.
1163, Civil Code).
[Example of a case where the law requires extraordinary
care
(not merely that of a prudent man):
“A common carrier is bound to carry the passengers
safely
as far as human care and foresight can provide, using the
utmost
diligence of very cautious persons, with a due regard for
all the
circumstances.” (Art. 1755, Civil Code).]
CIVIL CODE OF THE PHILIPPINES
110
(3) Some Cases
Obejera, et al. v. Iga Sy
76 Phil. 580
FACTS: During the Japanese occupation, A and B sought
refuge in the house of a certain Villena in Batangas,
Batangas.
When the Japanese neared the place, A and B hid their
valuables
in Villena’s dugout. Later, the valuables were lost. A
claimed
that he had given his things to B as a deposit, and that
therefore
B should be liable for the loss. B denied the existence of
such
deposit. Decide the question of liability.
HELD: In the fi rst place, it is hard to believe that B
consented
to safeguard the valuables at a time when no one could
be sure of his own life. In the second place, granting that
B had
assumed the obligation to take care of the property, still
considering
the circumstances of the time and place, the obligation to
return the valuables was extinguished by the loss of the
thing
thru something which was not the fault of B.
Bishop of Jaro v. De la Peña
26 Phil. 144
FACTS: A priest, A. de la Peña, was the custodian of
certain
charity funds (P6,641) which he deposited together with
his
personal account of (P19,000) in an Iloilo Bank shortly
before
the American invasion of the Philippines. During the
revolution,
Peña became a political prisoner and his bank deposit
was confi scated
on the ground that they were being used for
revolutionary
purposes. Issue: Is he liable for the loss of the trust
funds?
HELD: No, because negligence did not exist in his
depositing
the money with the bank. It is as if the money was taken
from him by force and clearly, he should not be
responsible.
Bernabe Africa, et al. v. Caltex, et al.
L-12986, Mar. 31, 1966
FACTS: A fi re broke out at a Caltex service station. It
started while gasoline was being hosed from a tank truck
into
the underground storage, right at the opening of the
receiving
Art. 1163
CIVIL CODE OF THE PHILIPPINES
111
tank where the nozzle of the hose had been inserted. The
fi re
destroyed several houses. Caltex and the station
manager were
sued. Issue: Without proof as to the cause and origin of
the fi re,
would the doctrine of res ipsa loquitur apply such that the
defendants
can be presumed negligent?
HELD: Yes, for the gasoline station was under the care of
the defendant, who gave no explanation at all regarding
the fi re.
It is fair to reasonably infer that the incident happened
because
of their want of care.
Ronquillo, et al. v. Singson
CA, L-22612-R, Apr. 22, 1959
FACTS: A man ordered a ten-year-old boy, Jose Ronquillo,
to climb a high and rather slippery santol tree, with a
promise
to give him part of the fruits. The boy was killed in the act
of
climbing. Issue: Is the person who ordered him liable?
HELD: Yes, in view of his negligent act in making the
order. He did not take due care to avoid a reasonably
foreseeable
injury to the 10-year-old boy. The tree was a treacherous
one, a veritable trap. His act was clearly a departure from
the
standard of conduct required of a prudent man. He
should have
desisted from making the order. Since he failed to
appreciate the
predictable danger and aggravated such negligence by
offering
part of the fruits as a reward, it is clear that he should be
made
to respond in damages for the actionable wrong
committed by
him.

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 fortuitous event until he
has
effected the delivery.
COMMENT:
(1) Classifi cation of Obligation from the Viewpoint
of Subject
Matter
From the viewpoint of the subject matter (or object) of
the
obligation, obligations are divided into:
(a) real obligations (to give):
1) to give a specifi c thing (set apart from a class);
2) to give a generic or indeterminate thing (one of a
class).
(b) personal obligations (to do or not to do).
(2) Specifi c or Determinate Things
A thing is said to be specifi c or determinate when it is
capable
of particular designation.
Examples:
(a) this car
(b) the car owned by A on Sept. 12, 2005
(c) the car with plate number 1814 (2005)
Art. 1165
CIVIL CODE OF THE PHILIPPINES
115
(d) this particular picture of Maui in my notebook
(3) Generic or Indeterminate Things
A thing is generic or indeterminate when it refers only to
a class, to a genus, and cannot be pointed out with
particularity.
Examples:
(a) a car
(b) a 2005 BMW automobile
(c) the sum of P5 million
(d) a kilo of sugar
(4) Remedies of the Creditor When the Debtor Fails
to Comply
With His Obligation
(a) demand specifi c performance (or compliance) of the
obligation.
(This is true whether the obligation be generic or
specifi c.)
(b) demand rescission or cancellation (in some cases).
(c) demand damages either with or without either of the
fi rst
two, (a) or (b).
(NOTE: If I am entitled to 10 kilos of sugar from A, I
can demand that A obtain the sugar and give me 10 kilos
thereof. This is true even if the obligation here be
generic.
A cannot insist on just paying me damages or the
monetary
value of the sugar. Upon the other hand, if I desire to, I
can just buy 10 kilos of sugar anywhere and charge the
expense to A.).

Art. 1262. An obligation which consists in the

delivery of
a determinate thing shall be extinguished if it
should be lost
or destroyed without the fault of the debtor, and
before he
has incurred in delay.
When by law or stipulation, the obligor is liable
even for
fortuitous events, the loss of the thing does not
extinguish
the obligation, and he shall be responsible for
damages. The
same rule applies when the nature of the
obligation requires
the assumption of risk.
COMMENT:
(1) Two Kinds of Obligations “To Give”
An obligation to give may consist of an obligation:
(a) to give a generic thing;
(b) or to give a specifi c thing.
[NOTE: The fi rst is NOT extinguished by loss or by
a fortuitous event because “genus never perishes.” (Art.
1263, Civil Code).]
(2) Effect of Loss on an Obligation to Deliver a
Specifi c
Thing
(a) General rule — the obligation is extinguished.
[NOTE: The loss must be after the obligation has been
incurred, because if the loss had been PRIOR, there would
not be any subject matter and therefore there would not
have been any obligation at all.]
Art. 1262
CIVIL CODE OF THE PHILIPPINES
438
[NOTE: If the mortgaged property is lost, the mortgagor
being the owner of it bears the loss (res perit domino).
He is, of course, still liable for the debt, since this
obligation
is monetary, and therefore may be said to be generic
in character. (Warner, Barnes & Co. v. Flores, L-12377,
Mar. 29, 1961 and Lawyers Cooperative Publishing Co. v.
Tabora, L-21263, Apr. 30, 1965).]
(b) Exceptions:
The obligation is not extinguished in the following
cases:
1) if the debtor is at fault (Art. 1262, par. 1, Civil
Code);
2) when the debtor is made liable for a fortuitous event
because:
a) of a provision of law;
b) of a contractual stipulation;
c) the nature of the obligation requires the assumption
of risk on the part of the debtor.
(NOTE: Of course in the above-mentioned cases, the
obligation to deliver the specifi c thing itself is
extinguished
for there is no more thing to be given. BUT said obligation
is converted into a MONETARY OBLIGATION FOR
DAMAGES.
It is in this sense that we say that the “obligation”
remains.)
(3) When Claim of Loss Must Be Made
If under the terms of a contract a claim for loss or
damage
(of goods carried on a vessel) must be made only after
the date
of discharge of the last package from the carrying vessel
— will
a claim before such date of discharge be regarded as
premature
and speculative?
It depends:
(a) The claim is premature and speculative if made
without
basis.
(b) The claim would, however, be proper if the claim was
made
because of prior information or discovery of shortage of
or
Art. 1262
CIVIL CODE OF THE PHILIPPINES
439
damage to the goods. (New Hampshire Fire Insurance Co.
v. Manila Port Service, et al., L-20938, Aug. 9, 1966;
Switzerland
General Insurance Co. v. Manila Railroad Co. &
Manila Port Service, L-22150, Apr. 22, 1968 and
Insurance
Co. of North America v. Manila Port Service, L-24887, Apr.
22, 1968).
(4) Examples of Instances When the Law Requires
Liability
Even in the Case of a Fortuitous Event
(a) when the debtor is in default (mora) (Art. 1165, Civil
Code);
(b) when the debtor has promised to deliver the same
thing
to two or more persons (parties) who do not have the
same
interest (Art. 1165, Civil Code);
(c) when the obligation arises from a crime. (Art. 1268,
Civil
Code);
(d) when a borrower (of an object) has lent the thing to
another
who is not a member of his own household (Art. 1942[4],
Civil Code);
(e) when the thing loaned has been delivered with
appraisal
of the value, unless there is a stipulation exempting the
borrower from responsibility in case of a fortuitous event
(Art. 1942[3], Civil Code);
(f) when the payee in solutio indebiti is in bad faith. (Art.
2159,
Civil Code).