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CHAPTER 2: Nature and Effects of Obligations

Art. 1163. Every person obliged to give something isalso obliged to take care of it with the properdiligence of a good father of a family, unless the lawor the stipulation of the parties requires anotherstandard of care. (1094a)

3 kinds of prestations in obligations:

To give real (there is some physicalthing which may be the subject of possession,the delivery of which completely discharges theobligation)

To do

Not to do personal (non-fulfillment isresolved in the end by the payment of anindemnification of damages)

Obligation to do or not to do

Perfection of the obligation devolves upon theperson himself who is bound

Obligation to give Intimately connected with the thing that is the

subject matter of relation

Definition: That which has for its object thedelivery of a thing which the obligor must deliverto the obligee because of whatever right thelatter may have acquired over the same(Caguioa)

Classification:(distinction lies purely andexclusively on the will of parties or under thenorms of law)1. Specific obligation- an obligation to give a specific or determinate

thing*specific/determinate thing- a thing determined individually in such amanner that it cannot be substituted withanother- object is particularly designated or physicallysegregated from all others of the same class;object is a concrete, particularized thing,indicated by its own individuality (Jurado)- one that is individualized and can be identifiedor distinguished from others of its kind(Tolentino)- examples: white horse which won the Senior

Grand Derby in 1979, Samsung G600 G-660#1-1G-6608>PC because

the creditor cannot in his own name file the action but inthe name of the debtorRequisites/Conditions:

The creditor has a right of credit against thedebtor although at the moment it is notliquidated

The credit must be due and demandable

Failure of the debtor to collect, or inaction of thedebtor, whether the same be willful or negligent

Insufficiency of the assets in the hands of thedebtor although the creditor need not bring aseparate action to show this exhaustion orinsolvency of the debtor but he can prove the

same in the very action to exercise thesubrogatory action

The right and actions are not purely personal oinherent in the person of the debtorrights that are purely personal or inherent

of the debtor:o right to existence (support)o rights or relations of a public charactero rights of an honorary charactero rights consisting of powers which have not

been used, including: (a) power toadminister; (b) power to carry out anagency or deposit; (c) power to accept an

offer for a contracto non-patrimonial rights

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o patrimonial rights not subject toexecution

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o patrimonial rights inherent in the person ofthe debtor

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24E.g. action to establish the debtors status as a legitimate/illegitimate

child, action for legal separation or annulment of marriage25

E.g. right to a government gratuity or pension

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Other actions that cannot be subject of asubrogatory action:

Mere options and powers of the debtor such asthe power to exercise legal redemption or torevoke a stipulation pour autri

Properties exempt from execution such as thosementioned in section 12, Rule 39 of the NewRules of Court, the family home, etc.

Effects of subrogatory action

The creditor may exercise the subrogatoryaction in behalf of the debtor not only up to theamount of his credit but in its totality. However,the excess over and above the credit or thedamage must be returned to the debtor

The bringing of the action does not entitle thecreditor to preference; hence, any other creditormay avail of himself of the credit collectedexcept when the suing creditor attaches thedebtors credit or the judgment that is obtained.

The debtor of the debtor, may avail himself of alldefenses available against the creditor.

Note: The law in certain cases gives to the creditor adirect action, an action by the creditor in his own namebut directed against the name of his debtor. (Caguioa)Examples:- action of the lessor directly against the sublessee- action of the laborers of the independent contractoragainst the owner- action of the vendor a retroagainst the transferees ofthe property made by the vendee- action of the creditor to utilize the defense ofprescription although waived by the debtor either tacitlyor expressly.

(3) to ask for the rescission of the contracts madeby the debtor in fraud of their rights

to impugn all of the acts which the debtor mayhave done to defraud the creditor accion pauliana or action to declare absolutesimulation of transfer

Note: Accion subrogatoria and accion pauliana areknown as acts of preserving the patrimony of thedebtor since the guaranty of the obligation with thepatrimony of the debtor may be rendered uselesssimply by omission or inaction on the part of the

debtor by failing to collect his credits or by positiveacts, such as by fraudulently transferring hisproperty to other persons. (Caguioa)

26E.g. right to revoke a donation by reason of ingratitude, right to

demand the exclusion of an unworthy heir

Rescissory action (action pauliana) a remedy granted by law to creditors who cannot inany other way recover their credit to impugn (rescind)the acts which the debtor may have done to defraudthem (Caguioa) refers to the right available to the creditor by virtue owhich he can secure the rescission of any act of thedebtor which is in fraud and to the prejudice of his rightsas a creditor. (Jurado)character: subsidiaryprinciple from which its based: the property of thedebtor, whether present or future, stands as a guarantyfor the payment of the obligation or credit can only be availed of in the absence of any otherlegal remedy to obtain reparation for the injury.requisites:

There exists a credit in favor of the plaintiff The debtor has performed an act or contrac

subsequently which is beneficial to a thirdperson giving him an economic advantage

The creditor is prejudiced by the disposition infavor of the third person and that the rescissionof the same would benefit the creditor

The creditor has no other legal remedy to obtainpayment of his credit

The act impugned is fraudulent although saidfraudulent intent may be presumed in certaincases

The one who acquired the property was incomplicity with the fraudulent intent or bad faithof the debtor.

effects:

The fraudulent transaction is rescinded andconsequently it obliges him who has acquired thething to return the same

If the third person who acquired acted in bad faith

that is, the knowledge of the fraud, and he cannotreturn for any reason the things alienated, as foexample, when the same are in the hands legallyof third persons who did not act in bad faith, he isobliged to indemnify the creditors for the damagewhich the alienation may have caused them.

The action can only lie as far as the credit of theplaintiff-creditor and consequently only thosealienations necessary to satisfy his credit.

Distinctions between subrogatory and rescissoryactions

Rescissory Subrogatory

The credit must existbefore the fraudulentact.

The credit need not exisbefore the action.

In onerous contracts,fraudulent intent isnecessary although thesame may bepresumed.

Malice or fraudulent intent onthe part of the debtor is nonecessary.

Must be brought within4 yrs from discovery

Has no prescriptive period

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Action to declare absolute simulation of transfer a remedy available on the part of the creditoragainst the debtor who, knowing that he cannot payhis debt, or not wishing to pay his debt and notwishing his property to answer for the debt, willsimulate a fictitious transfer to a third person in orderto have the property beyond the reach of thecreditors.

Distinctions between rescissory action andaction to declare absolute simulation of transfer

Rescissory Action Action to declareinexistent a fictitioustransfer of property(absolute simulation)

The alienation by thedebtor is real and notfictitious

The alienation isfictitious and apparent

Fraud actual orpresumed must exist.

Not necessary

Action is subsidiary Action is principal

Only lies as far as isnecessary to cover thecredit of creditor

Covers the entirealienation

Prescribes within 4 yrs Does not prescribe

Art. 1178. Subject to the laws, all rights acquired invirtue of an obligation are transmissible, if there hasbeen no stipulation to the contrary. (1112)

General rule: Rights of obligations or those rightswhich are acquired by virtue of an obligation are as a

general rule transmissible in character they may bealienated or assigned to third persons.Exceptions:

(1) where they are not transmissible by their verynature (personal right)

(2) where there is a stipulation of the parties that theyare not transmissible

(3) where they are not transmissible by operation oflaw

Note: Intransmissibility by stipulation of the parties,being exceptional and contrary to the general rule,should not be easily implied, but must be clearly

established, or at the very least, clearly inferable fromthe provisions of the contract itself. (Jurado)