Section 2: Loss of the Thing Due

When is a thing considered lost?

Loss of the thing pertains to objects that do not exist anymore. A thing is considered lost
when it perishes, goes out of commerce of man, or disappears in such a way that its existence
is unknown or cannot be recovered.
Risk of loss
The risk of loss may take place at different times hence, it is important to determine who
bears the risk.
1.) Before the perfection creditor bears all of the risk;
2.) At the perfection contract is without effect; and
3.) After perfection, but before delivery Article 1480: Any injury to or benefit from
the thing sold, after the contract has been perfected, from the moment of the
perfection of the contract to the time of delivery, shall be governed by Articles 1163
to 1165, and 1262.
Obligations extinguished and not

Obligations to give

In obligations to give, the extinguishment of the obligation depends upon whether the
thing to be delivered is generic or specific.
In obligations to deliver a generic or indeterminate thing, the loss of the thing due
does not extinguish the obligation. This is based upon the principle genus never perishes. The
debtor can still be compelled to deliver a thing of the same kind.
In obligations to deliver a specific or determinate thing, there are different
circumstances we should take into account.
As a general rule, Article 1262, An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be lost or destroyed without the fault of
the debtor, and before it has incurred delay.
Illustration:
G binds himself to deliver to H a watch. The watch which G intended to deliver was
lost through heavy flooding. Should the obligation be extinguished?
Here, G is still liable because the thing to be delivered which is a watch is a generic
thing and the obligation can still be performed by delivering another watch.

Suppose that the obligation of G was to deliver the watch he was wearing, is the
obligation extinguished?
The obligation is extinguished. The watch stipulated to be delivered by G is confined
to a particular class and thus, is a determinate thing
o Cases when loss of the specific thing even in the absence of fault and delay will not exempt
debtor from liability
However, there are also cases in which loss of specific thing, even in the absence of
fault or delay, will not exempt the debtor from liability, namely:
1.)
2.)
3.)
4.)

When the law so provides;

When the stipulation so provides;
When the nature of the obligation requires the assumption of risk; and
When the debt arises from criminal offense.

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. Article 1268
Illustration:
F stole the cellphone of G. Therefore F has the obligation to return the said cellphone
to G. If the cellphone was caught on fire, what is its effect to the obligation?
F is still liable although the cellphone was destroyed without his fault because his
obligation arises from a crime.
o Partial loss of a specific thing (Art. 1264)
There is partial loss when only a portion of the thing is lost or destroyed or when it
suffers depreciation or deterioration.
In case of partial loss, the court is given the discretion in case of agreement between
the parties, to determine whether the partial loss is substantial as to extinguish the whole
obligation.
Illustration:
o Loss occurs without the fault of the debtor
It is said that in order that the obligation be extinguished given that the thing to be
delivered is specific, there should be no fault by the debtor. However, whenever the thing is
lost in possession of the debtor, there is a disputable presumption that the debtor is at fault of
the loss. (Art. 1265) This presumption is not applicable if there is proof the contrary and in the

case of a natural calamity. The creditor does not have the duty to show that the debtor is at
fault.
Illustration:
o Debtor not guilty of delay
It is also stated in Article 1262 that the loss must take place before the debtor has
incurred in delay. Therefore a debtor may be free of fault, but still liable if he incurs in delay
or if he has promised to deliver the same thing to two or more persons who do not have the
same interest. (Art. 1165 par. 3)
Illustration:

In obligations to do

o Impossibility of performance (Art. 1266)

In obligations to do, the loss of a specific thing is equivalent to the impossibility of
performance. The following are the requisites that the impossibility of performance render the
extinguishment of obligation:
1.) The obligation becomes legally or physically impossible;
2.) The impossibility takes place without the fault of the debtor; and
3.) The impossibility takes place after the constitution of the obligation.
Notice that there are two kinds of impossibility stated. Legal impossibility occurs
when the obligation cannot be performed because it is rendered impossible by the provision
and law. Meanwhile physical impossibility takes place when the obligor dies or becomes
physically incapacitated to perform the obligation. Also, the impossibility must take place
after the constitution of the obligation. This is because the obligation was impossible before
its constitution, therefore it should be void and no obligation should be extinguished in the
first place.
Illustration:

o Service difficulty (Art. 1267)

As to loss is equivalent to impossibility, therefore partial loss is equivalent to service
difficulty. This means that the court is authorized to release the obligor, same as to partial loss,
when the performance has become so difficult as to be manifestly beyond the contemplation
of the parties.
Illustration:

 Right of creditor to proceed against third persons

Under Article 1269, after the obligation has been extinguished by reason of loss, the
creditor is given the right to proceed against the third person responsible for the said loss
without the need of assignment by the debtor.
Illustration: