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OBLIGATIONS

Nature and Effect of


Obligations

ART. 1156 AN OBLIGATION IS A


JURIDICAL
NECESSITY TO
GIVE, TO DO OR NOT TO DO.

an obligation is a legal bond whereby


constraint is laid upon a person or group of
persons to act or forbear on behalf of
another person or group of persons.
obligation arises from the concurrence of:
a) the vinculum juris or juridical tie;
b) the object which is the prestation;
c) subject-persons (Ang Yu Asuncion
v. CA)

ART. 1157 - OBLIGATIONS ARISE FROM:


1)LAW;
2)CONTRACTS;
3)QUASI-CONTRACTS;
4)ACTS OR OMISSIONS PUNISHED BY LAW;
5)QUASI-DELICTS.
obligations are civil or natural. Civil obligations give
a right of action to compel performance. Natural
obligations, not being based on positive law but on
equity and natural law, do not grant a right of action
to enforce performance, but after their voluntary
fulfillment by the obligor, they authorize the retention
of what has been delivered or rendered by reason
thereof.

ART. 1158 - OBLIGATIONS DERIVED FROM


LAW ARE NOT PRESUMED. ONLY THOSE
EXPRESSLY DETERMINED IN THIS CODE
OR IN SPECIAL LAWS ARE DEMANDABLE,
AND SHALL BE REGULATED BY THE
PRECEPTS
OF
THE
LAW
WHICH
ESTABLISHES THEM; AND AS TO WHAT
HAS NOT BEEN FORSEEN, BY THE
PROVISIONS OF THIS BOOK.
among sources of obligation, the law is the most
important one. It does not depend upon the will of
the parties.
It is imposed by the state and is
generally
imbued
with
some
public
policy
considerations.

It cannot be presumed.
Hence, the payment of taxes must be
specifically directed by our tax statutes. Also,
parents and children are obliged to support
each other as mandated by the provisions of
the Family Code.

ART. 1159 - OBLIGATIONS ARISING


FROM CONTRACTS HAVE THE FORCE
OF LAW BETWEEN THE CONTRACTING
PARTIES AND SHOULD BE COMPLIED
WITH IN GOOD FAITH.
a contract is a meeting of minds between 2 or more
persons whereby a person (or a group of persons)
binds himself, with respect to the other (or others)
to give something or to render some service.
a contract may likewise involve mutual and
reciprocal obligations and duties between and
among the parties.

Whatever stipulations, clauses, terms and


conditions are included in a contract, as long as
they are not contrary to law, morals, good
customs, public policy or public order, such
contract is the law between the parties (Gaw v.
IAC)
Contracts which are the private laws of the
contracting parties should be fulfilled according
to the literal sense of their stipulations, if their
terms are clear and leave no room for doubt as
to their intention of the contracting parties, for
contracts are obligatory, no matter what form
they may be, whenever essential requirements
for their validity are present (PAGICO v. Mutuc)

ART. 1160 - OBLIGATIONS DERIVED


FROM QUASI-CONTRACTS SHALL BE
SUBJECT TO THE PROVISIONS OF
CHAPTER 1 TITLE XVII OF THIS BOOK.
certain lawful, voluntary and unilateral acts give
rise to the juridical relation of quasi-contract to
the end that no one shall be unjustly enriched or
benefited at the expense of the other.
A good example of an obligation arising from a
quasi-contract is the obligation to return what
has been obtained by mistake (solutio indebiti)

ART. 1161 CIVIL OBLIGATIONS


ARISING FROM CRIMINAL OFFENSES
SHALL BE GOVERNED BY THE PENAL
LAWS, SUBJECT TO THE PROVISIONS
OF
ART
2177,
AND
OF
THE
PERTINENT PROVISIONS OF CHAPTER
2, PRELIMINARY TITLE, ON HUMAN
RELATIONS, AND OF TITLE XVIII OF
THIS BOOK, REGULATING DAMAGES.
Scope of Civil Liability:
1) Restitution;
2) Reparation for the damage caused; and

3) Indemnification for consequential damages.

ART. 1162 - OBLIGATIONS DERIVED


FROM QUASI-DELICTS SHALL BE
GOVERNED BY THE PROVISIONS OF
CHAPTER 2, TITLE XVII OF THIS
BOOK AND BY SPECIAL LAWS.
quasi-delict: whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the damage done.
Such fault, if there is no pre-existing contractual
relation between the parties, is called quasi-delict.

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.
this article involves the prestation to give. The
word something connotes a determinate object
which is definite, known, and has already been
distinctly decided and particularly specified as the
matter to be given from among the same things
belonging to the same kind.

diligence of a good father of a family because it is a


commonly-accepted notion that a father will always do
everything to take care of his concerns.
If the law does not state the diligence which is supposed
to be observed in the performance of an obligation, that
which is expected of a good father of a family is
required.
In case of a contrary stipulation of the parties, such
stipulation is should not be one contemplating a
relinquishment or waiver of the most ordinary diligence.
An example where the law requires another standard of
care is that which involves common carriers (persons or
firms engaged in the business of carrying, transporting
passengers or goods of both, by land, water, air for

compensation, offering their service to the public)they are bound to observe extraordinary diligence

ART. 1164 - THE CREDITOR HAS THE


RIGHTS TO THE FRUITS OF THE
THING
FROM
THE
TIME
THE
OBLIGATION TO DELIVER IT ARISES.
HOWEVER, HE SHALL ACQUIRE NO
REAL RIGHT OIVER IT UNTIL THE
SAME HAS BEEN DELIVERED TO HIM.

after the right to deliver the object of the prestation


has arisen in favor of the creditor but prior to the
delivery of the same, there is no real right
enforceable or binding against the whole over the
object and its fruits in favor of the person to whom
the same should be given.
The acquisition of a real right means that such right
can be enforceable against the whole world and will
prejudice anybody claiming the same object of the
prestation.
The real right only accrues when the thing or object
of the prestation is delivered to the creditor.
He only has a personal right over the same if it is
enforceable only against the debtor who is under an

obligation to give.
This means that the
personal right of the creditor can be defeated
by a third party in good faith who has
innocently acquired the property prior to the
scheduled delivery regardless of whether or
not such third party acquired the property
after the right to the delivery of the thing has
accrued in favor of the creditor. In this case,
however, the aggrieved creditor can go
against the debtor for damages as the debtor
should have known that the fruits should
have been delivered to the creditor alone.

ART. 1165 - WHEN WHAT IS TO BE


DELIVERED IS A DETERMINATE THING,
THE CREDITOR, IN ADDITION TO THE
RIGHT GRANTED HIM BY ART 1170,
MAY COMPEL THE DEBTOR TO MAKE
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 REPSONSIBLE FOR FORTUITOUS
EVENT UNTIL HE HAS EFFECTED
DELIVERY.
In the event that there is non-delivery of a generic
thing, the creditor may have it accomplished or
delivered in any reasonable and legal way charging
all expenses in connection with such fulfillment to
the debtor. The same creditor can ask a third party
to deliver the same thing of the same kind with all
the expense charged to the debtor.

In case of non-delivery of a determinable thing, the


remedy is to file an action to compel the debtor to
make the delivery. This action is called specific
performance.
If the debtor is guilty of fraud, negligence, delay or
contravention in the performance of the obligation,
the creditor can likewise seek damages against the
debtor.
A fortuitous event is an event which could not be
foreseen, or which though foreseen, were inevitable.
The last paragraph of art 1165 however provides that
a fortuitous event will not excuse the obligor from his
obligation in 2 cases namely: 1) if the obligor delays;
and 2) if he has promised to deliver the same thing to
2 or

more persons who do not have the same interest. In


both cases, the obligor will be liable for damages or
will be bound to replace the lost object of the
prestation in cases when the obligee agrees to the
replacement.

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.
Accessions are the fruits of a thing or additions to or

improvements upon a thing the principal


(ex. House or trees on a land; rents of a
building; air-conditioner in a car; profits or
dividends accruing from shares of stocks)
Accessories are things joined to or included
with the principal thing for the latters
embellishment, better use, or completion.
(ex. Key of a house; frame of a picture;
bracelet of a watch machinery; bow of a
violin)
Accessions are not necessary to the principal
thing, but the accessory and the principal
thing must go together.

ART. 1167 - IF THE 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.

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.
the debtor can ask any third person to perform
the obligation due from the debtor should the
latter fail to do the same.
The debtor will be liable for all the expenses in
connection with the performance or fulfillment
of the obligation undertaken by the third person.

The words at his cost imply both the right to


have somebody else perform the obligation and
the right to charge the expenses thereof to the
debtor.
With respect to the situation wherein the debtor
poorly undertook the obligation, the creditor has
the right to have everything be undone at the
expense of the debtor. The reason for this rule is
to prevent the debtor from taking his obligation
lightly.
In case the prestation is for the debtor not to do
a particular act or service and he nevertheless
performs it, it shall likewise be undone at his own
expense.

In Chaves v. Gonzales, the Supreme Court ruled that


the original repairer can be held liable not only for the
missing parts but also for the cost of the execution of the
obligation for repairing the typewriter by another
company.

ART. 1169 - THOSE OBLIGED TO


DELIVER OR TO DO SOMETHING INCUR
IN DELAY FROM THE TIME THE
OBLIGEE
JUDICIALLY
OR
EXTRAJUDICIALLY
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 DECLARES; OR
2) WHEN FROM THE NATURE AND
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.
Delay or default can be committed by the debtor in
which case it is known as mora solvendi.
If it is committed by the creditor, it is known as mora
accipiendi.

Delay in the performance of the obligation,


however, must be either malicious or negligent.
Hence, if the delay was only due to inadvertence
without any malice or negligence, the obligor will
no be held liable under Art 1170.
Default generally begins from the moment the
creditor demands the performance of the
obligation. Without such demand, judicial or
extra-judicial, the effects of default will not arise.
Commencement of suit is a sufficient demand.
Art 1169 is only applicable when the obligation is
to do something other than the payment of
money (Picson v. Picson).

If the contract involving a sum of money does


not stipulate any interest and/or the time when
it will be counted, interest will run only from
the time of judicial or extra-judicial demand.
However, damages or interest shall start to run
only after judicial or extra-judicial demand.
Hence, if the obligation were due on March 1,
2011, the aggrieved party can file suit for
specific performance immediately after March
1, 2011. If extra-judicial demand however was
made on March 5, 2011, damages shall be
counted not from March 1, 1998 but from
March 5, 2011.

The 2 cases where an extra-judicial


demand should first be made prior to
the filing of a civil suit are: ejectment
cases and consignment cases. If there is
no extra-judicial demand made prior to the
filing of the civil suit, the ejectment case will
be dismissed.
In consignment cases, the
debtor must first make an extra-judicial
demand for the creditor to accept payment of
the obligation. If the creditor unjustifiably
refuses to accept payment, the debtor can
now consign the amount in court for purposes
of extinguishing the obligation.

Demand not necessary in 3 cases: 1) when the


obligation or the law expressly so declares (ex.
Promissory note providing for payment on a
particular date without necessity of demand; Also the
law expressly declares that taxes should be paid on a
particular date); 2) when time is of the essence in a
particular contract (ex. Stock market transactions;
delivery for a one-day car exhibit); 3) when it would
be useless, as when the obligor has rendered it
beyond his power to perform (ex. A debtor promised
to constitute his house as a collateral for a particular
loan which is payable at a particular date but before
he can make the mortgage, he donates the house to
his friend, demand from the creditor to constitute the
house as a collateral is useless. In this case, his
obligation
becomes
immediately
demandable
considering that he loses his right to the period
within which to pay the loan).

Reciprocal obligations are those created and


established at the same time, out of the same
cause and which results in a mutual
relationship of creditor and debtor between
parties.
In reciprocal obligations, the
performance of one is conditioned upon the
simultaneous fulfillment of the other.

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.
The law specifically provides that damages can be
awarded to any person who may have been
prejudiced in the performance of the obligation as a
result
of
fraud,
negligence,
delay
or
contravention of the tenor of the obligation.

Significantly, if any of these 4 bases of liability coexist with a fortuitous event or aggravates the loss
caused by a fortuitous event, the obligor cannot be
excused from being liable on his obligation.

ART. 1171 - RESPONSIBILITY ARISING


FROM FRAUD IS DEMANDABLE IN ALL
OBLIGATIONS. ANY WAIVER OF AN
ACTION FOR FUTURE FRAUD IS VOID.
When a party complies with or performs his
obligation fraudulently, he is liable for damages.

If, in the contract of sale, A and B stipulated


that any fraudulent act by another in the
performance of his obligation shall not be a
ground for the aggrieved party to file a suit
against the other for fraud is a void stipulation.
By express provision of law, such waiver is void.
The dolo or fraud which is committed to induce
a party to enter into a contract, thereby making
the agreement annullable is not the one
contemplated by Art 1171.
The dolo or fraud under Art 1171 necessarily
involves a valid agreement but, in the
performance of the same, fraud is committed.

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.
Kinds of Negligence according to source of
obligation:
1) Contractual Negligence (culpa contractual),
negligence in contracts resulting in their breach.
This kind of negligence is not a source of obligation,
it

merely makes the debtor liable for damages in


view of his negligence in the fulfillment of a preexisting obligation.
2)
Civil
Negligence
(culpa
Aquiliana),
negligence which by itself is the source of an
obligation between the parties not so related
before any pre-existing contract. It is also called
tort or quasi-delict.
3) Criminal Negligence (culpa criminal),
negligence resulting in the commission of a
crime, the same negligent act causing damages
may produce civil liability arising from a crime
under Art. 100 of the RPC, or create an action for
quasi-delict under Art. 2176 of the Civil Code.

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 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.
In essence, negligence is that want of care
required by the circumstances.
As a general rule, negligence must be
proven.
In Syquia v. CA, the law defines negligence as 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. In the absence of stipulation or


legal provision providing the contrary, the
diligence to be observed in the performance of the
obligation is that which is expected of a good
father of a family.
In PNB v. CA,
where the bank negligently
dishonored the check of its depositor, the SC said,
This court has ruled that a bank is under the
obligation to treat the accounts of its depositors
with meticulous care whether such account
consists only of a few hundred pesos or of millions
of pesos. Responsibility arising

from negligence in the performance of every kind


of obligation is demandable. While petitioners
negligence in this case may not have been
attended with malice and bad faith, nevertheless,
it caused serious anxiety, embarrassment and
humiliation to private respondent for which she is
entitled to recover reasonable moral damages.
The law likewise provides that when negligence
shows bad faith, the provisions of Articles 1171
and 2201, par 2 shall apply.
In Samson v. CA, the SC discussing bad faith said:
Bad faith is essentially a state of mind
affirmatively

operating with furtive design or with some


motive of ill-will. It does not simply connote
bad judgment or negligence.
It imports a
dishonest purpose or some moral obliquity and
conscious doing of wrong. Bad faith is thus
synonymous with fraud and involves a design
to mislead or deceive another, not prompted by
an honest mistake as to ones rights or duties,
but by some interested or sinister motive.
Pursuant to Art 2201, par 2, the obligor shall be
responsible for all damages which may be
reasonably attributed to the non-performance
of the obligation.

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.
The general rule is that no one should be held to
account for fortuitous cases which are those situations
that could not be foreseen, or which though foreseen,

were inevitable. An act of God has been


defined as an accident, due directly and
exclusively to natural causes without human
intervention, which by no amount of foresight,
pains or care, reasonably to have expected,
could have been prevented.
In Nakpil v. CA, the SC said, To exempt the
obligor from liability under Art 1174 of the
Civil Code, for a breach of an obligation due
to an act of God, the ff. must concur: a) the
cause of the breach of the obligation must be
independent of the will of the debtor;

b) the event must either be unforeseeable or


unavoidable; c) the event must be such as to
render it impossible for the debtor to fulfill his
obligation in a normal manner; and d) the debtor
must be free from any participation in, or
aggravation of the injury. Thus, it has been held
that when the negligence of a person concurs
with an act of God in producing a loss, such
person is not exempt from liability by showing
that the immediate cause of the damage was the
act of God. To be exempt from liability for loss
because of an act of God, he must be free from
any previous negligence or misconduct by which
that loss or damage may have been occasioned.

In Sia v. CA, where the bank failed to notify its


client of the flooding of its safety deposit box
containing the said clients valuable stamp
collection resulting in the destruction of the said
collection, and where the said bank already had
two previous experiences of the flooding of the
said safety deposit box located inside the bank
that was guarded 24 hrs a day, the SC reversed
the ruling of the CA in not holding the bank for
damages on the basis of fortuitous event and
held that the bank was negligent.
In Dioquino v. Laureano, the SC considered the
sudden and unexpected throwing of stone
directed at the

car of the plaintiff causing damage to the said


car a fortuitous event.
When the object of the prestation is generic, like
the payment of a sum of money as a
consequence of a loan contract, the debtor
cannot avail of the benefit of a fortuitous event
even if the object for which the loaned money is
used, such as the construction of a factory, is
wiped out by a typhoon. Also, even if there is a
fortuitous event, a person can still be held
responsible for the performance of his obligation
if the law, or the stipulation of the parties, or
when the nature of the obligation so requires.

The law can provide that, even if there is a


fortuitous event, the obligor can still liable. An
example of this is par. 3 of Art 1165 which provides
that 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 delivery.
Also Art 1268 provides that when the debt of a thing
certain and determinate proceeds from a criminal
offense, the debtor shall not be exempted from the
payment of its price, whatever may be the cause for
the loss, unless the thing having been offered by
him to the person who should receive it, the latter
refused without justification to accept it.

When the parties declare that they shall


be liable even for loss due to a
fortuitous event, they shall be so liable.
When the nature of the obligation requires
the assumption of risk, the person obliged to
perform the obligation shall likewise not be
excused should a fortuitous event occur.

ART. 1175 - USURIOUS TRANSACTIONS


SHALL BE GOVERNED BY SPECIAL
LAWS.
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 credit (Tolentino vs.
Gonzales)
Requisites for recovery of Interest:
1) The payment of interest must be expressly
stipulated;
2) The agreement must be in writing; and
3) The interest must be lawful.
A stipulation for the payment of usurious interest is
void, that is, as if there is no stipulation as to interest.

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.

Presumption is the inference of a fact not


actually known arising from its usual
connection with another which is known.
Two kinds of Presumption:
1) Conclusive Presumption one which
cannot be contradicted, like the presumption
that everyone is conclusively presumed to
know the law; and
2) Disputable (or rebuttable) Presumption
one which can be contradicted or rebutted by
presenting proof to the contrary, like the
presumption established in Art. 1176.

ART. 1177 - THE CREDITORS, AFTER


HAVING PURSUED THE PROPERTY IN
THE 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.

The law protects the creditors. The creditor is


given by law all possible remedies to enforce
such obligations.
The ff. successive measures must be taken by a
creditor before he may bring an action for
rescission of an allegedly fraudulent sale: 1)
exhaust the properties of the debtor through
levying by attachment and execution upon all
the property of the debtor, except such as are
exempt by law from execution; 2) exercise all the
rights and actions of the debtor, save those
personal to him (accion subrogata); and 3) seek
rescission of the contracts executed by the
debtor in fraud of their rights (accion pauliana).

In Adorable v. CA, it was held that unless a


debtor acted in fraud of his creditor, the
creditor has no right to rescind a sale made
by the debtor to someone on the mere
ground that such sale will prejudice the
creditors rights in collecting later on from the
debtor.
The creditors right against the
debtor is only a personal right to receive
payment for the loan; it is not a real right
over the lot subject of the deed of sale
transferring the debtors property.

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.
However, the person who transmits the right
cannot transfer greater rights than he himself has
by virtue of the obligation. Conversely, the person
to whom the rights are transmitted can have no
greater interest than that possessed by the
transmitter at the time of transmission of the
rights.

The transmissibility of rights may be limited, or


altogether prohibited by stipulation of the parties.
Thus, it can be stipulated in a contract that the
assignment of any or all the rights provided by
such contract is prohibited.
Likewise, no transmission can be made of a
particular right if the personal qualifications or
circumstances of the transferor is a material
ingredient attendant in the obligation. Hence, an
author who specializes in horror stories written in a
very distinct and peculiar style and who has been
engaged by a publisher to write his (the authors)
kind of horror stories for his magazine cannot
transmit his rights arising from such obligation to

anybody else.
Transmission must likewise be subject to pertinent
laws.

SOURCES:
1)OBLIGATIONS and CONTRACTS (Text and
Cases) of STA. MARIA (2006 Edition)
2)The LAW on OBLIGATIONS and CONTRACTS of
Hector S. De Leon (2003 Edition)
BY: Benchie B. Gonzales