Ramon Magsaysay Memorial Colleges, General Santos City LAW ON OBLIGATION & CONTRACTS

CHAPTER 2. NATURE AND EFFECT OF OBLIGATIONS

1. PRESTATION

2. BREACH OF OBLIGATION

2.1. TYPES OF BREACH

2.1.1. SUBSTANTIAL BREACH Total breach which amounts to Non-Performance; Basis for
rescission under Art. 1191 and payment of damages

2.1.2.SLIGHT OR CASUAL BREACH Partial breach; Obligation is partially performed; Gives

rise to liability for damages only

2.2. KINDS OF BREACH OF OBLIGATION

2.2.1. VOLUNTARY BREACH OF OBLIGATION (Art. 1170)

2.2.1.1. FRAUD (Deceit or Dolo) Deliberate or intentional evasion of the normal

fulfillment of an obligation

2.2.1.1.1. VALIDITY OF WAIVER OF FRAUD

2.2.1.1.1.1. FUTURE FRAUD: Any waiver of action for future fraud is
void
2.2.1.1.1.2. PAST FRAUD: can be subject of a valid waiver by the
aggrieved party

2.2.1.2. NEGLIGENCE (Fault or Culpa) omission of that diligence which is required by

the nature of the obligation and corresponds with the circumstances of the
person, of the time and of the place

2.2.1.2.1. VALIDITY OF WAIVER OF ACTION ARISING FROM NEGLIGENCE

2.2.1.2.1.1. FUTURE NEGLIGENCE (not fraud): may be renounced
except where the nature of the obligation requires the
exercise of extraordinary diligence as in the
2.2.1.2.1.2. Any waiver of action arising from negligence which is gross
or shows bad faith is void.

2.2.1.2.2. KINDS OF NEGLIGENCE

2.2.1.2.2.1. CONTRACTUAL NEGLIGENCE (culpa contractual) or
negligence in contracts resulting in their breach Article
1172 refers to culpa contractual. This kind of negligence
is not a source of obligation;
2.2.1.2.2.2. CIVIL NEGLIGENCE (culpa aquiliana) or negligence which
by itself is the source of an obligation between the parties
not formally bound before by any pre-existing contract. It
is also called tort or quasi-delict; and

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2.2.1.2.2.3. CRIMINAL NEGLIGENCE (culpa criminal) or negligence

resulting in the commission of a crime.

2.2.1.2.3. TEST FOR DETERMINING WHETHER A PERSON IS NEGLIGENT

Reasonable care and caution expected of an ordinary prudent person.
2.2.1.2.3.1. FACTORS
2.2.1.2.3.1.1. Nature of the obligation.
2.2.1.2.3.1.2. Circumstances of the person.
2.2.1.2.3.1.3. Circumstances of time.
2.2.1.2.3.1.4. Circumstances of the place.

2.2.1.3. DELAY (Mora) The failure to perform an obligation on time which failure,
constitutes a breach of the obligation

2.2.1.3.1. KINDS
2.2.1.3.1.1. MORA SOLVENDI or the delay on the part of the debtor
to fulll his obligation (to give or to do) by reason of a
cause imputable to him;
2.2.1.3.1.2. MORA ACCIPIENDI or the delay on the part of the creditor
without justiable reason to accept the performance of
the obligation; and
2.2.1.3.1.3. COMPENSATIO MORAE or the delay of the obligors in
reciprocal obligations (like in sale)

2.2.1.3.2. REQUISITES
2.2.1.3.2.1. MORA SOLVENDI
2.2.1.3.2.1.1. Failure of the debtor to perform his
(positive) obligation on the date agreed
upon;
2.2.1.3.2.1.2. Demand (not mere reminder or notice)
made by the creditor upon the debtor to
fulll, perform, or comply with his obligation
which demand, may be either judicial (when
a complaint is led in court) or extra-judicial
(when made outside of court, orally or in
writing); and
2.2.1.3.2.1.3. Failure of the debtor to comply with such
demand.
2.2.1.3.2.2. MORA ACCIPIENDI
2.2.1.3.2.2.1. Debtor offers of performance
2.2.1.3.2.2.2. Offer must be in compliance with the
prestation
2.2.1.3.2.2.3. Creditor refuses the performance without
just cause
2.2.1.3.3. EFFECTS
2.2.1.3.3.1. MORA SOLVENDI
2.2.1.3.3.1.1. The debtor is guilty of breach of the
obligation;

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2.2.1.3.3.1.2. He is liable for interest in case of obligations

to pay money (Art. 2209.) or damages in
other obligations. (Art. 1170.)
2.2.1.3.3.1.3. He is liable even for a fortuitous event when
the obligation is to deliver a determinate
thing.
2.2.1.3.3.2. MORA ACCIPIENDI
2.2.1.3.3.2.1. The creditor is guilty of breach of obligation;
2.2.1.3.3.2.2. He is liable for damages suffered, if any, by
the debtor;
2.2.1.3.3.2.3. He bears the risk of loss of the thing due
2.2.1.3.3.2.4. Where the obligation is to pay money, the
debtor is not liable for interest from the time
of the creditors delay; and
2.2.1.3.3.2.5. The debtor may release himself from the
obligation by the consignation of the thing
or sum due.
2.2.1.3.3.3. COMPENSATIO MORAE
2.2.1.3.3.3.1. The delay of the obligor cancels out the
effects of the delay of the obligee and vice
versa. The net result is that there is no
actionable default on the part of both
parties, such that as if neither one is guilty of
delay.
2.2.1.3.4. RULES
2.2.1.3.4.1. GENERAL RULE: No demand no delay.
2.2.1.3.4.2. EXCEPTIONS: When demand not necessary to put debtor
in delay
2.2.1.3.4.2.1. When the obligation so provides
2.2.1.3.4.2.2. When the law so provides
2.2.1.3.4.2.3. When time is of the essence.
2.2.1.3.4.2.4. When demand would be useless.

2.2.1.4. CONTRAVENTION OF TENOR Violation of the terms and conditions

stipulated in the obligation, which must not be due to a fortuitous event or force
majeure.
2.2.1.4.1. In any manner contravenes the tenor means any illicit act, which
impairs the strict and faithful fulfillment of the obligation, or every
kind of defective performance.

2.2.2. INVOLUNTARY BREACH OF OBLIGATION

2.2.2.1. FORTUITOUS EVENT (ACTS OF MAN) any extraordinary event which cannot
be foreseen, or which, though foreseen, is inevitable; independent of the will of
the obligor but not of other human wills, e.g., war, re, robbery, murder,
insurrection, etc.

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2.2.2.1.1. REQUISITES
2.2.2.1.1.1. The event must be independent of the human will or at
least of the obligors will;
2.2.2.1.1.2. The event could not be foreseen (unforeseeable), or if it
could be foreseen, must have been impossible to avoid
(unavoidable);
2.2.2.1.1.3. The event must be of such a character as to render it
impossible for the obligor to comply with his obligation
in a normal manner; and
2.2.2.1.1.4. The obligor must be free from any participation in, or the
aggravation of the injury to the obligee.

2.2.2.1.2. GENERAL RULE: no person shall be responsible for those events

which could not be foreseen, or which, though foreseen, were
inevitable.

2.2.2.1.3. EXCEPTIONS
2.2.2.1.3.1. When expressly specied by law.
2.2.2.1.3.2. When declared by stipulation.
2.2.2.1.3.3. When the nature of the obligation requires the assumption
of risk.

2.2.2.2. FORCE MAJEURE (ACTS OF GOD) They are those events which are totally
independent of the will of every human being, e.g., earthquake, ood, rain,
shipwreck, lightning, eruption of volcano, etc.

3. REMEDIES OF CREDITORS
4. USURY LAW

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