When loss of thing will not extinguish liability

Art. 1262. An obligation which consists in the delivery - STILL NOT EXEMPTED AND/OR WILL NOT
of a determinate thing shall be extinguished if it should EXTINGUISH LIABILITY despite . . .
be lost or destroyed without the fault of the debtor, and - The thing due is specific/ determinate;
before he has incurred in delay. - Without the fault and delay of the debtor.

When by law or stipulation, the obligor is liable even for 1. When the law so provides;
fortuitous events, the loss of the thing does not
2. When the stipulation so provides (i.e. stipulation of
extinguish the obligation, and he shall be responsible for
damages. The same rule applies when the nature of the the parties);
obligation requires the the assumption of risk. 3. When the nature of the obligation requires the
assumption of risk; and
4. When the obligation to deliver a specific thing
● A thing is lost when it perishes, or goes out of
arises from a crime.
commerce or disappears in such a way that its
existence is unknown or it cannot be recovered.

● Loss of the thing due in Art. 1231 (1) and Art. 1262 Art. 1263. In an obligation to deliver a generic
extends to both obligations to give and obligations thing, the loss or destruction of anything of the
to do. same kind does not extinguish the obligation.

Requisites: When loss of the thing will extinguish an ● Effect of loss of a generic thing.
obligation to give. ○ A generic thing never perishes.
1. The obligation is to deliver a specific or ■ The debtor can still be
determinate thing; compelled to deliver a thing of
2. The loss of the thing occurs without the fault of the the same kind. However, the
debtor; and creditor cannot demand a thing
3. The debtor is not guilty of delay. of superior quality and neither
 can the debtor deliver a thing suffers depreciation or deterioration. Partial
of inferior quality. loss is the equivalent of difficulty of
● Example case (from book) performance in obligations to do.
○ Facts: D obtained loans from C ○ The court will decide whether the partial
secured by a chattel mortgage on the loss is such as to be equivalent to a complete
sanding crops of the land owned by or total loss (substantial yung kulang or
him. These crops were lost or hindi).
destroyed through enemy action
during the war.
○ Issue: Is D’s obligation to pay the Art. 1265. Whenever the thing is lost in the possession
loans extinguished? of the debtor, it shall be presumed that the loss was due
○ Held: No. The obligation of D is not to his fault, unless there is proof to the contrary, and
to deliver a determinate thing, namely without prejudice to the provisions of Article 1165. This
the crops to be harvested from his presumption does not apply in case of earthquake, flood,
land but to pay a generic thing, the store or other natural calamity.
amount of money representing the
total sum of his loans, with interest. ● Presumption of fault in case of loss of thing in
possession of the debtor.
○ This presumption is reasonable because the
debtor who has the custody and care of the
Art. 1264. The courts shall determine whether, under the
circumstances, the partial loss of the object of the thing can easily explain the circumstances of
obligation is so important as to extinguish the the loss.
obligation. ○ It is the debtor who must prove that he was
not at fault.
● Effect of partial loss of a specific thing. ● When presumption not applicable.
○ There is partial loss when only a portion of ○ In case of natural calamities, the
the thing is lost or destroyed or when it presumption of fault does not apply. Lack of
 fault on the part of the debtor is more likely. KINDS OF IMPOSSIBILITY
So it is unjust to presume negligence on his a. Physical impossibility: Example, in cases of purely
part. personal obligations, when the qualifications of the
obligor are involved, physical impossibility takes
place when for example, the obligor dies or
Art. 1266. The debtor in obligations to do shall also be becomes physically incapacitated to perform the
released when the prestations becomes legally or obligation.
physically impossible without the fault of the obligor.
b. Legal impossibility: It is rendered impossible by
● Effect of impossibility of performance. provision of law, although physically it may be
○ It refers to a case when, without the possible of performance.
obligor’s fault, an obligation to do becomes
legally or physically impossible. CASES:
1. Impossibility of performance refers not to the
○ The supervening impossibility of obligation itself but to the intended use of the
performance will result in the extinction of money to be paid;
the debtor’s obligation after restitution of 2. Lack of funds is alleged for failure to fulfill an
what he may have received, if any, in obligation
advance from the other contracting party. NOTE:
The debtor incurs no liability for his - Mere pecuniary inability to fulfill an
inability to perform. engagement does not discharge the
○ The impossibility must take place after the obligation of the contract, nor does it
constitution of the obligation. If the constitute a defense to a decree of specific
obligation is impossible from the very performance. (Gutierrez Repide vs.
beginning, the obligation is void. In such a Alzelius)
case, there is no obligation to be 3. Performance of the obligation is possible but
extinguished. dangerous to life and property.
4. Performance would violate a government order and i. The motive or particular purpose of a
be contrary to public policy. party in entering into a contract does
5. Consignee refused to take delivery of over not affect the validity nor existence of
shipment of goods on the ground that it would the contract; an exception is when the
cause it to violate customs, tariff and Central Bank realization of such motive or
rules and regulations. particular purpose has been made a
6. Performance of obligation by principal is prevented condition upon which the contract is
by the government (obligee). made to depend.
a. Principal obligation extinguished = the
accessory obligation should also be NATURAL IMPOSSIBILITY VS. IMPOSSIBILITY IN
extinguished. FACT.
7. Performance of obligation in favor of obligee is
prevented by the government. 1. Natural impossibility
8. The lessee decided to cancel or discontinue with a. Must consist in the nature of the thing to be
the lease contract due to financial, as well as, done and not in the inability of the party to
technical difficulties. do so;
a. The obligation to pay rentals or deliver the b. It must appear that the thing to be done
thing in a contract of lease falls within the cannot by any means be accomplished.
prestation to give; hence, it is not covered c. Goes to the consideration and renders the
within the scope of Art. 1266. contract void.
b. Principle of rebus sic stantibus 2. Impossibility in fact
i. The parties stipulate in the light of a. In the absence of inherent impossibility in
certain prevailing conditions, and the nature of the thing stipulated to be
once these conditions cease to exist, performed, which is only improbable or out
the contract also ceases to exist. of the power of the obligor.
c. General principle b. Does not render the contract void.
Art. 1267. When the service has become so difficult as Art. 1269. The obligation having been extinguished by
to be manifestly beyond the contemplation of the the loss of the thing, the creditor shall have all the rights
parties, the obligor may also be released therefrom, in of action which the debtor may have against third
whole or in part. person by reason of the loss.

● Right of creditor to proceed against third persons.

Art. 1268. When the debt of a thing certain and ○ The creditor is given the right to proceed
determinate proceeds from a criminal offense, the debtor against the third person responsible for the
shall not be exempted from the payment of its price, loss.
whatever may be the cause for the loss, unless the thing ○ The rights of action of the debtor are
having been offered by him to the person who should transferred to the creditor from the moment
receive it, the latter refused without justification to the obligation is extinguished, by operation
accept it.
of law to protect the interest of the latter by
reason of the loss.
● Effect of fortuitous event where obligation
proceeds from a criminal offense.
○ The obligation subsists except when the
creditor refused to accept the thing, without
justification, after it had been offered to him.
In such case, the creditor is in mora
accipiendi. Consignation is not necessary.
The debtor, however, must still exercise due
diligence. He is liable for damages if the
loss is due to this fault.