Short answer. No. Under Article 1263, the loss or destruction of a specific batch of a generic thing does not extinguish the obligation to deliver that kind of thing. You still owe the buyer the agreed quantity and quality of goods — you must source them elsewhere. The obligation survives the loss of the particular stock.
What the law says
In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.
Civil Code, Article 1263 — Loss of a Generic Thing (Genus Nunquam Perit). Read the full provision →
The principle: genus does not perish
The Latin maxim behind Article 1263 is genus nunquam perit — the genus never perishes. A generic thing is one identified only by its kind, quality, and quantity, not by its individual identity. Fifty kilograms of rice grade AA is a generic thing: any fifty kilograms of the same grade satisfies the obligation. When the debtor's own stock of that rice burns down, the obligation survives because rice of that grade still exists in the world. The loss is the debtor's personal loss, not a legal extinction of the duty to deliver.
How this differs from specific things
The rule is the opposite for specific, determinate things. If the obligation is to deliver a particular, individually identified object — a specific painting, a named horse, a uniquely described vehicle — and that exact object is lost through no fault of the debtor, the obligation may be extinguished because that very object no longer exists and cannot be replaced by another. Generic obligations do not share this vulnerability: the loss of the debtor's supply does not extinguish the obligation, because the genre of goods that must be delivered continues to exist.
The debtor must source substitute goods
The practical implication of Article 1263 is that you remain contractually obligated to deliver even after your stock is destroyed. You must obtain substitute goods of the same kind, quality, and quantity from another source and fulfill the contract. If you fail to deliver, the creditor may pursue you for the contractual obligation and for damages arising from the non-performance. The fact that your particular inventory was destroyed does not constitute a fortuitous event that excuses the obligation, because the type of goods you owe still exists and can be procured.
When the rule may not apply
Article 1263 applies to generic obligations broadly, but courts look carefully at whether the obligation was truly generic or whether it was particularized to such a degree that it effectively became specific. If the contract specified a unique source — a particular harvest, a particular shipment, a goods identified by their origin in a way that makes them irreplaceable — a court might treat the obligation as more specific than generic. Ordinary commercial sales of fungible commodities, however, are clearly generic, and Article 1263 applies to them without ambiguity.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Gaisano Cagayan, Inc. vs. Insurance Co. of North America, G.R. No. 147839, June 8, 2006 — read the decision on LawPhil →