LOSS OF THE THING DUE

GROUP One
 Definition
Loss here is not contemplated in its strict and
legal meaning and is not limited to
obligations to give, but extends to those
which are personal, embracing therefore all
causes which may render impossible the
performance of the prestation. In some
Codes, this is designated as impossibility of
performance.
 KINDS OF LOSS

1. Physical Loss
When a thing perishes as when a house is burned and reduced to ashes.

2. Legal Loss
When a thing goes out of commerce or when a thing heretofore legal
becomes illegal

3. Civil Loss
When a thing disappears in such a way that its existence is unknown or
even if known it cannot be recovered whether as a matter of fact or of
law.
When a thing is considered lost (DOPE)

1. It Disappears in such a way that its existence is

unknown;
2. It goes Out of commerce;
3. It Perishes; or
4. Its Existence is unknown or if known, it cannot be
recovered
 EFFECT OF LOSS OF THE
THING/OBJECT

If the obligation is a:
1. Determinate obligation to give
2. Generic obligation to give
3. An obligation to do
 EFFECT OF LOSS OF THE THING/OBJECT
1. Determinate obligation to give

Requisites
a. The thing lost must be determinate;
b. The thing lost is without fault of the debtor;
c. The thing is lost before the debtor has incurred delay
(NCC, Art. 1262).

GR:The obligation is extinguished when the object of the

obligation is lost or destroyed (NCC, Art. 1262).
 EFFECT OF LOSS OF THE THING/OBJECT
1. Determinate obligation to give

EXCEPTIONS
a. Law provides otherwise (NCC, Art. 1262);
b. Nature of the obligation requires the Assumption of risk;
c. Stipulation to the contrary;
d. Debtor Contributed to the loss;
e. Loss the of the thing occurs after the debtor incurred in Delay;
f. When debtor Promised to deliver the same thing to two or more persons who do not
have the same interest (NCC, Art. 1165);
g. When the debt of a certain and determinate thing proceeds from a Criminal offense
(NCC, Art. 1268);
h. When the obligation is Generic (NCC, Art. 1263).
 EFFECT OF LOSS OF THE THING/OBJECT
2. Generic obligation to give

GR: The obligation is not extinguished because a

generic thing never perishes (genus nun guam perit
(NCC, Art. 1263).
 EFFECT OF LOSS OF THE THING/OBJECT
2. Generic obligation to give:

XPNs:
a. In case of generic obligations whose object is a
particular class or group with specific or
determinate qualities (delimited generic
obligation);
b. In case the generic thing has already been
segregated or set
 EFFECT OF LOSS OF THE THING/OBJECT
3. An obligation to do

the obligation is extinguished when the

prestation becomes legally or physically
impossible without the fault of the obligor
(NCC, Art. 1266).
 Types of impossibility to perform an
obligation to do

1. Legal impossibility – act stipulated to be performed is

subsequently prohibited by law.

2. Physical impossibility – act stipulated could not be

physically performed by the obligor due to reasons
subsequent to the execution of the contract (Pineda, 2000).
 Effect of partial loss

1. Due to the fault or negligence of the debtor :

Creditor has the right to demand the rescission of the
obligation or to demand specific performance, plus
damages, in either case.

2. Due to fortuitous event:

a. Substantial loss – obligation is extinguished.
b. Unsubstantial loss – the debtor shall deliver the thing
promised in its impaired condition (NCC, Art. 1264).
 Effect when the thing is lost in the
possession of the debtor

GR: It is presumed that loss is due to debtor’s

fault. The obligation is not extinguished.

XPN: Presumption shall not apply in case loss

is due to earthquake, flood, storm or other
natural calamity (NCC, Art. 1262).
 Effect when the thing is lost in the
possession of the debtor
XPN to the XPN: Debtor still liable even if loss is due to
fortuitous event when:

1. Debtor incurred in delay; or

2. Debtor promised to deliver the thing to two or more

persons with different interests [NCC, Art. 1165(3)].
 Effect of unforeseen difficulty of
fulfilment
When the service has become so difficult as to be
manifestly beyond the contemplation of the parties,
the obligor may also be released therefrom, in
whole or in part (NCC, Art. 1267). The impossibility
of performance of an obligation to do shall release
the obligor.
 Rebus sic stantibus

A principle in international law which means that an

agreement is valid only if the same conditions
prevailing at the time of contracting continues to
exist at the time of performance. It is the basis of
the principle of unforeseen difficulty of service
(NCC, Art. 1267).
 Requisites in order to relieve the debtor
from his obligation, in whole or in part,
based on unforeseen difficulty of fulfilment

1. Event or change in circumstance could not have been

foreseen at the time of the execution of the contract;
2. Such event makes the performance extremely difficult but
not impossible;
3. The event must not be due to the act of any of the
parties;
4. The contract is for a future prestation (Tolentino, 2002).
 Debt which proceeds from a criminal
offense
GR: Debtor shall not be exempted from the
payment of his obligation regardless of the cause of
the loss.

XPN: The thing having been offered by debtor to

the person who should receive it, the latter refused
without justification to accept it (NCC, Art. 1268).
 Creditor’s right of action

The obligation, having been extinguished by the loss

of the thing, the creditor shall have all the rights of
action which the debtor may have against third
persons by reason of the loss (NCC, Art. 1269).

This refers not only the rights and actions which the
debtor may have against third persons, but also to
any indemnity which the debtor may have already
received.