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NON-FULFILLMENT/BREACH OF OBLIGATION

Manner of non-fulfillment (Caguiao)


1. Total non-fulfillment
- No performance whatsoever
2. Partial non-fulfillment
- When there is partial performance (or
irregular non-fulfillment when there is
irregular non-performance).
- Non-fulfillment occurs either at the very
moment of the demand (ordinary breach) or
before the maturity of the obligation
(anticipatory breach)
2 kinds of Breach of Obligations (Jurado)
1. Voluntary
- Arises from modes of breach
Voluntary breach through default or mora
(Art.1169)
Voluntary breach through fraud or dolo
(Art. 1171)
Voluntary breach through negligence or
culpa (Art. 1172)
Voluntary breach through contravention
of tenor of the agreement (Art. 1170)
Note: The debtor is liable for damages.
2. Involuntary
- Arises from fortuitous events
- if the non-fulfillment is brought about by
circumstances foreign to the will of the debtor;
otherwise put, if the debtor is unable to comply
with his obligation because of some fortuitous
event
Note: The debtor is NOT liable for damages

The responsibility for damages arising from nonfulfillment of a contractual obligation cannot be
divided nor can it be extended to persons who
have nothing to do with the obligation (Tolentino)

1. Contravention of the tenor of obligation


- Kind of voluntary breach of obligation or
partial non-fulfillment of obligation
Any illicit act which impairs the strict and
faithful fulfillment of the obligation or every kind
of defective performance.
i.e. An architect who made plans that contain
defects and inadequacies which led to the collapse
of the building.
2. Fraud (Dolo)
Voluntary execution of a wrongful act, or a
willful omission, knowing and intending the
effects which naturally and necessarily arise
from such act or omission. (Tolentino)
Consists in the conscious and intentional
proposition to evade the normal fulfillment of the
obligation. (Jurado)
Kinds of Fraud
1. Fraud in the performance
2. Fraud in the execution/creation/birth of the
contract
a. Dolo causante (Causal fraud) fraud in
the execution of the contract
b. Dolo incidente (Incidental fraud) fraud in
performance of obligation already existing
because of a contract

Modes of Breach
Article 1170. Those who in the performance of their
obligations are guilty of FRAUD, NEGLIGENCE, or
DELAY and those who in any manner CONTRAVENE
THE TENOR thereof, are liable for damages.
General rule: in cases where there is voluntary
breach of obligation, one of the rights of the creditor is to
ask for indemnification of damages under this article.
Notes:
Damages as used in the above provision
include any and all damages that a human being
may suffer in any and all manifestations of his
life: physical or material, moral or psychological,
mental or spiritual, financial, economic, social,
political and religious. (Tolentino)
Breach of contractual obligation entitles the
other party damages even if no penalty for such
breach is provided in the contract.

NOTE: Future fraud cannot be waived. However, the law


does not prohibit renunciation of the action for damages
on the ground of fraud already committed.
3. Negligence (Culpa)
Consists in the omission of that diligence which is
required by the nature of the obligation and
corresponds with the circumstances of the persons,
of the time and of the place (Art. 1173)
Omission of that diligence required in social
relations which if observed would have prevented
the contrary and undesired result (Caguioa)
Simply the absence of due care required by the
nature of the obligation (Jurado)

2.

3.

Kinds of Negligence
1. According to form (Caguiao)
a. Culpa in faciendo (positive act)
b. Culpa in non faciendo (omission)
According to degree of culpa/diligence
a. Culpa lata (grave which is the omission of the
most minimum diligence)
b. Culpa leve (omission of the diligence of an
ordinary layman or bonus pater familias)
c. Culpa levissima (omission of the maximum
diligence of a very careful man)
Most Important Classifiaction
a. Culpa contractual /Contractual Negligence
Fault or negligence in the performance of a preexisting contractual obligation resulting in a breach
of obligation (Caguioa & Tolentino)
Fault or negligence of the obligor by virtue of
which he is unable to perform his obligation arising
from a pre-existing contract because of the
omission of the diligence which is required by the
nature of the obligation and corresponds with the
circumstances of the persons, of the time and of
the place (Jurado)
b. Culpa extra-contractual or aquiliana/QuasiDelict
Failure to observe the care required by law with
respect to other persons not connected by
contract or of any juridical relation whatsoever
save the generic one which is common to all men
of not damaging another (Caguioa)
Fault or negligence of a person, who, because
of the omission of the diligence which is required
by the nature of the obligation and which must
correspond with the circumstances of the persons,
of the time and of the place, causes damage to
another. (Jurado)
Fault or negligence which constitutes an
independent source of obligation between parties
not previously bound. (Tolentino)
CULPA CONTRACTUAL
There
is
pre-existing
contractual relation
The negligence of the

CULPA AQUILIANA
None.
The negligence involved

defendant is merely an
incident
in
the
performance
of
an
obligation
Source
of
liability
breach or non-fulfillment
of the contract
There is presumption of
negligence
from
the
breach of the contract
The
master
cannot
exempt
himself
by
proving due diligence in
the
selection
and
supervision of employee
Damages may be claimed
only by the parties, their
heirs and privies
Negligence referred to in
Art.1173

is
substantive
independent.

and

Source
of
liability
negligent act or omission
itself
Plaintiff must prove the
existence of negligence
The master is free from
liability upon proof of
such diligence
A stranger may claim
damages such as the
relatives and dependents
Negligence referred to in
Art. 2176

NOTE: Negligence can be waived except in cases


where the nature of the obligation or public policy
requires another standard of care.
Negligence distinguished from Fraud
Distinguishing element of fraud from negligence:
INTENTION
Dolo presence of intent to cause damage or injury
Culpa mere abandonment, inattention, carelessness,
lack of diligence
Dolo
The guilty party is
aware that his conduct
will violate another
right or duty
There
is
no
presumption
of
its
existence but it must
be proved
The guilty party is
responsible for all the
consequences
attributable to his act
whether intended or
not or foreseen or not
Waiver in advance is
not allowed

Culpa
The guilty party is not
aware but should have
been aware
There is presumption
because of breach of
contract
The guilty party only
answers
for
the
damages which are
foreseen or could
have been foreseen at
the time the obligation
was constituted
Allowable
unless
contrary
to
public
policy

4. Delay (Mora)
- Kind of voluntarily breaching obligation, a
defect and partial non-fulfillment of obligation
Covers all non-fulfillment in point of time in its
broadest sense; juridically, however, it pertains
only to culpable delay where fulfillment or

compliance with the obligation, although late, is


still possible (Caguioa)
signifies the idea of delay in the fulfillment of
an obligation with respect to time (Jurado)
delay in the fulfillment of obligations; it is nonfulfillment with respect to time (Tolentino)
NOTE: There can be delay ONLY in positive
obligations (to do and to give); but there can be NO
delay in negative obligations
Classifications of Mora
1 Mora solvendi delay on the part of the debtor
a mora solvendi ex re
- when demand by the creditor is not necessary
to make the debtor in mora (Caguioa)
- refers to obligations to give
b mora solvendi ex persona
- if demand by the creditor is necessary in order
to make the debtor in mora (Caguioa)
- refers to obligations to do
2 Mora accipiendi delay on the part of the
creditor to accept the delivery of the thing which
is the object of the obligation (Jurado); generally,
delay on the part of the creditor
3 Compensatio morae delay of the parties or
obligors in reciprocal obligations; where mora of
the creditor neutralizes the mora of the debtor
(Caguioa)
Mora solvendi
the delay, contrary to law, in the fulfillment of
the prestation by reason of a cause imputable to
the former (Tolentino)
presupposes a prestation that is due and
demandable
requisites: (Caguioa)
o Obligation consists of a positive prestation (to do
or to give)
o Obligation should be demandable1, due2,
determined or liquidated3
o Debtor delays in the performance due to causes
imputable to him
o Creditor should demand performance of the
debtor

When does the obligor incur in delay?


The obligor or debtor incurs in delay from the time
the obligee or creditor demands from him the
fulfillment of the obligation; the demand may be
judicial or extrajudicial
o judicial: if the creditor files a complaint against
the debtor for the fulfillment of the obligation

1 There is NO mora in natural obligations


2 Either because the obligation is pure or because the term has

extrajudicial: if the creditor demands from the


debtor the fulfillment of the obligation either
orally or in writing (Jurado); sending of a bill or
demand letter (Caguioa)

NOTES:
A mere reminder or any act which cannot be
qualified as a demand for payment will not be
considered a demand since the code requires
that the tolerance and benevolence of the
creditor has terminated (Castan as cited in
Caguioa)
The proof of the demand will be incumbent
upon the creditor (Tolentino)
Demand is generally necessary even if a
periof has been fixed in the obligation
(Tolentino)
Where there has been an extrajudicial
demand before action for performance was
filed, the effects of default arise from the date
of such extrajudicial demand. But where the
evidence does not disclose any particular date
on which the creditor made extrajudicial
demand upon the debtor, the payment of
interest or damages for the default must
commence from the filing of the complaint.
(Tolentino)
The demand must refer to the prestation that
is due and not to another (Tolentino)
When demand is NOT necessary
1 When the obligation or the law expressly so
declares
the obligation or the law itself must expressly
declare that the demand is not necessary in
order that the debtor shall incur in delay
example: in the obligation it is stipulated that,
D shall incur in delay if he does not pay the
obligation upon the arrival of the designated
date for payment.
NOTES:
In case of doubt, the doubt should be resolved in
favor of the debtor, because dispensing with
demand is an exception to a general rule; unless
the exception is clearly proved, the general rule
must apply. (Tolentino)
According to Art.1788 of the Civil Code, where
one of the partners who has undertaken to
contribute a sum of money to the common fund
at a specified date fails to do so, he becomes a
debtor of the partnership not only for the amount
which he has promised to contribute but also for
the interest and damages from the time he
should have complied with his obligation
(Jurado)

lapsed or the condition has been fulfilled

3 Amount is ascertained
3

When from the nature and the circumstances of


the obligation it appears that the designation of
the time when the thing is to be delivered or the
service is to be rendered was a controlling
motive for the establishment of the contract
Basis: the time element for the fulfillment of the
obligation is of the essence of the contract
Examples: (1) where a building was to be
completed on a certain date because it was to be
opened as a school on a fixed date; (2) where goods
were to be delivered on a specified date because
they were to be loaded on a boat leaving on such
date

NOTE: It is essential that the debtor has knowledge


of the fixing of the date of performance as a
controlling motive on the part of the creditor in order
that it can be said that the debtor has tacitly
consented to incur in delay without the necessity of a
demand. (Tolentino)
3

When demand would be useless, as when the


obligor has rendered it beyond his power to
perform
Where performance has become impossible
either through (1) some act or fault of the debtor or
(2) as that caused by fortuitous event but the debtor
has bound himself to be liable in cases of such
events.
NOTE: 4th instance when demand is not necessary
according to some authors (acknowledged by
Tolentino) when the debtor expressly recognizes
or acknowledges that he has incurred in delay.
There must, however, be an express recognition of
the default and not merely requests for extension to
time to perform.
Effects of mora solvendi:
1 to indemnify the creditor for damages which his
delay has occasioned in obligations to give and
to do (Caguioa)
2 to answer for the loss or deterioration of the
thing due even if caused by fortuitous event
(Caguioa)
3 When it has for its object a determinate thing,
the delay places the risks of the thing on the
debtor (Tolentino)
Mora accipiendi
Constitutes non-acceptance without reason
(Caguioa)
Delay in the performance based on the omission
by the creditor of the necessary cooperation,
especially acceptance on his part (Tolentino)
Requisites:

o
o

That there exists an obligation which has


already matured and for whose fulfillment an act
of cooperation on the part of the creditor is
required
That the debtor has performed al that is
incumbent upon him under the obligation and
made tender of payment to the creditor
That the creditor refused to accept payment or
to cooperate in the fulfillment of the obligation
without any justifiable reason

When does the creditor incur in delay?


The creditor incurs in delay when the debtor
tenders payment or performance, but the creditor
refuses to accept it without just cause.
Effects of mora accipiendi:
1 it excludes the mora of the debtor and destroys
the effects of the latter (Caguioa)
2 it transfers the risk to the creditor for fortuitous
events which formerly belonged to the debtor
(Caguioa & Tolentino)
3 debtor can obtain his freedom from the
obligation by the consignation of the thing due,
and consequently, after consignation, his
obligation to pay interest is extinguished
(Caguioa & Tolentino)
4 the responsibility of the debtor for the thing is
reduced and limited to fraud and gross
negligence (Tolentino)
5 all expenses incurred by the debtor for the
preservation of the thing after the mora shall be
chargeable to the creditor (Tolentino)
6 creditor becomes liable for damages (Tolentino)

Compensatio morae

Reciprocal obligations those which are created or


established at the same time, out of the same cause,
and which result in mutual relationships of the creditor
and debtor between the parties.
- are conditional in the sense that fulfillment of an
obligation by one party depends upon the fulfillment of
the obligation by the other
General rule in reciprocal obligations: the
fulfillment by the parties should be simultaneous. Where
both are in default, their respective liability for damages
shall be offset equitably.
When does delay or mora begin?
Delay or mora begins from the moment the other
party fulfills or tenders fulfillment of his obligation in a
proper manner (Caguioa)); otherwise put, delinquency
commences when one of the contracting parties fulfills
his obligation and becomes invested with power to
determine the contract because of failure on the part of
the other to carry out the agreement. (Tolentino)

How is demand made in reciprocal


obligations?
Demand is made in only one way and that is by
actual performance or tender of performance of the

obligation of the party claiming delay or default by


the other. (Caguioa)