MODULE 2 (NATURE AND EFFECTS OF OBLIGATIONS)
ARTICLE 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 stipulate of the parties
requires another standard of care.
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(to preserve and take good care of the thing)
(to give, to do, not to do)
(if a person is obliged to give something, he must take good care of it as if he is the real
owner)
ARTICLE 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.
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(The creditor has the right to the fruits of the thing from the time of obligation to deliver
it arises.)
KINDS OF FRUITS:
- Natural Fruits
(Spontaneous product of the soil without the intervention of human labor)
- Industrial Fruits
(Product of the soil through human labor)
- Civil Fruits
(fruits as a result of civilization through cultivation)
ARTICLE 1165:
CONCEPTS:
CASES:
Velarde vs. Court of Appeals 361 SCRA 56
DETAILS:
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David Raymund executed a Deed of Sale with assumption of mortgage in favor if Avelina Valerde
The mortgage with BPI was not approved
“This is to advise you, therefore, that our client is willing to pay the balance in cash not later
than January 21, 1987 provided:
ISSUES:
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Whether there was a breach of contract
Whether the defendant has the right to rescind the contract
RULING:
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Private respondents had already performed their obligation through the execution of the
Deed of Sale, while the Petitioners, on the other hand, did not perform their correlative
obligation of paying the contract price in the manner agreed upon.
Yes. Private respondents validly exercised their right to rescind the contract, because of
the failure of petitioners to comply with their obligation to pay the balance of the
purchase price.
Song Fo vs. Hawaiian Philippines 47 Phil.
821
DETAILS:
 Hawaiian-Philippine Co (HPC) entered into a contract with Song Fo and Co (SFC) where it would
deliver molasses to the latter
 Song Fo agreed to the delivery of 30,000 gallons of molasses with a additional 100,000 molasses
 However HPC was only able to deliver 55,006 gallons.
 SFC thereafter files a complaint which is the breach of contract ang asked for P70,369.50
 HPC answered that, SFC was delayed in their payment, that is why HPC has the right to rescind
the contracts
ISSUES:
 Does HPC have a right to rescind the contract?
RULING:
 HPC has no right to rescind the contract, since the general rule is that rescission will not be
permitted for a slight breach of contract.
Vermen Realty vs. Court of Appeals 224
SCRA 549
DETAILS:
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Woodhouse vs. Halili 93 Phil. 526
A. Modes of Breach
(FRAUD)
DETAILS:
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The plaintiff and the defendant entered into a written agreement, that they shall organize
a partnership for the bottling and distribution of Mission soft drinks
For the franchise that it would be transferred to the partnership or the plaintiff after they
go to Mission’s main base of operations in California.
Unfortunately, upon arrival, the defendant has come to know that the exclusive rights for
the plaintiff had not yet been secured and was only about to be secured.
ISSUES:
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Is the agreement null and void
May execution of a contract of partnership be enforced
RULING:
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No. The Court concluded that the contract cannot be null and void since the plaintiff’s
consent in entering the contract is not breached.
No. The contract itself indicated that they shall enter into a partnership – in the future –
and not that the partnership was to be in force after the conditions are fulfilled.
(NEGLIGENCE)
Gutierrez vs. Gutierrez 56 Phil. 177
(1932)
DETAILS:
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On February 2, 1930, a passenger truck and an automobile of private ownership collided
while attempting to pass each other on a bridge.
At the time of the collision, the father was not in the car, but the mother, together with
several other members of the Gutierrez family were accommodated therein.
The collision between the bus and the automobile resulted in Narciso Gutierrez
suffering a fractured right leg which required medical attendance for a considerable
period of time.
ISSUE:
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Whether or not both the driver of the truck and automobile are liable for damages and
indemnification due to their negligence.
RULING:
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Bonifacio Gutierrez’s obligation arises from culpa aquiliana. On the other hand,
Saturnino Cortez’s and his chauffeur Abelardo Velasco’s obligation rise from culpa
contractual.
Vasquez vs. Borja 74 Phil. 560
DETAILS:
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Francisco De Borja entered into a contract of sale with the NVSD (Natividad-Vasquez
Sabani Development Co., Inc)
The sale was 4,000 cavans of rice valued at Php 2.10 per cavan
Om behalf of the company, Vasquez which is the president of NVSD executed the contract
NVSD only delivered 2,488 cavans and failed and refused despite demand to deliver the
rest hence Borja incurred damages
ISSUES:
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Whether or not Vasquez is liable for damages
RULING:
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No. Vasquez is not party to the contract as it was NVSD which De Borja contracted with.
De Guia vs. Manila Electric 40 Phil. 706
DETAILS:
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De Guia was a passenger of a street-car owned by Defendant (Manila electric)
The car was driven by employee of defendant which had been derailed and thereby
caused injuries upon De Guia
ISSUE:
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If De Guia was entitled to the damages awarded
RULING:
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There was negligence on the part of the employee of manila electric, since the company
have a contractual relation of a carrier and a passenger.
Sarmiento vs. Sps. Cabrido 401 SCRA 122
DETAILS:
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Tomasa’s friend Virginia Lao requested to find someone to reset a pair of diamong
earrings into two gold rings.
Sarmiento sent the earrings to Dingding’s jewelry shop owned and managed by Cabrido
which accepted the job for P400
The diamond was broken while dismounting it, then the petitioner required the
respondent to replace the diamond with the same size and quality. Then Cabrido denied
ISSUES:
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Whether or not the Respondent are liable for damages
RULING:
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YES. Since the scope of the obligation assumed by the jewelry shop to reset the pair of
earrings.