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  1. 1. CONTRACTSattyjdc
  2. 2. Art. 1170. Those who in the performance of theirobligations are guilty of fraud, negligence, ordelay, and those who in any manner contravenethe tenor thereof, are liable for damages.Article 1170Fraud: (deceit or dolo) the deliberate or intentional act to evade fulfillmentNegligence: (fault or culpa) the omission, without malice, whichprevents fulfillmentDelay:(default or mora) if imputable to the debtorGROUNDS FOR DAMAGES:Violation of the Terms: (violatio) unless properly excused byfortuitous eventattyjdc
  3. 3. Kinds of Damages(A) MORAL - for mental and physical anguish.(B) EXEMPLARY - corrective or to set an example.(C) NOMINAL - to vindicate a right, when no other kind ofdamages may be recovered.(D) TEMPERATE - exact amount cannot be determined(E) ACTUAL - actual losses as well as unrealized profit.(F) LIQUIDATED - predetermined by an agreement.MENTALattyjdc
  4. 4. Dolo & CulpaArt. 1171. Responsibility arising from fraud is demandable in allobligations. Any waiver of an action for future fraud is void.Art. 1172. Responsibility arising from negligence in the performanceof every kind of obligation is also demandable, but such liability maybe regulated by the courts, according to the circumstances.Art. 1173. The fault or negligence of the obligor consists in theomission of that diligence which is required by the nature of theobligation and corresponds with the circumstances of the persons, ofthe time and of the place. When negligence shows bad faith, theprovisions of Articles 1171 and 2201, paragraph 2, shall apply.If the law or contract does not state the diligence which is to beobserved in the performance, that which is expected of a good fatherof a family shall be required. (1104a)attyjdc
  5. 5. DistinctionDolo Deliberate intention tocause damage orprejudiceCulpa No deliberate intent tocause damage Liability cannot bemitigated or reducedby the courts Liability may bemitigated or reducedby the courts Waiver of an actionagainst future fraud isvoid. Waiver of an actionagainst future culpa mayin a certain sense beallowed.attyjdc
  6. 6. Fraud (Dolo)Past fraud may be waived, but not for future fraud.Dolo Causante or Causal FraudDeceit that is not serious in character and withoutwhich the other party would have entered into thecontract anyway.A deception used by one party prior to or simultaneouswith the contract, in order to secure the consent of other.Deceit must be serious.Dolo Incidente or Incidental Fraud(Solidbank vs. Mindanao Ferroalloy, G.R. No. 153535. July 28, 2005)attyjdc
  7. 7. Negligence (Culpa)Gross Negligence:negligence characterized by the want of even slight care, actingor omitting to act in a situation where there is a duty to act, notinadvertently but willfully and intentionally, with aconscious indifference to consequences, insofar as otherpersons may be affected. It is the omission of that care whicheven inattentive and thoughtless men never fail to give to theirown property. (CSC vs. Rabang, G.R. No. 167763. March 14,2008)Simple Negligence:Ordinary negligence which in certain cases may be excused or mitigated.attyjdc
  8. 8. According to Source of ObligationKinds of CulpaCULPACONTRACTUAL(ContractualNegligence)CULPAAQUILIANA (CivilNegligence)CULPA CRIMINAL(CriminalNegligence)Results in a breachof contractTort or Quasi-Delict Results in thecommission of acrimeNegligence ismerely incidental,incident to theperformance of anobligation alreadyexisting because of acontractNegligence is direct,substantive andindependent.Negligence is direct,substantive andindependentattyjdc
  9. 9. CULPACONTRACTUALCULPA AQUILIANA CULPA CRIMINALThere is a pre-existingobligation whetherimplied or express.No pre-existingobligationNo pre-existingobligationProof is preponderanceof evidenceProof is preponderanceof evidenceProof of guilt beyondreasonable doubtDefense of “goodfather of a family” inthe selection andsupervision ofemployee is not aproper completedefense, though it maymitigate damages.Defense of GFF is aproper and completedefense insofar asemployers areguardians areconcernedGFF is not a properdefense. Employee’sguilt is automaticallythe employer’s civilguilt, if the former isinsolvent.Kinds of CulpaAccording to Source of Obligationattyjdc
  10. 10. CULPACONTRACTUALCULPA AQUILIANA CULPA CRIMINALAs long as it is provedthat there was acontract and that it wascarried out, it ispresumed that thedebtor is at fault, and itis his duty to provethat there was nonegligence in carryingout the terms of thecontract.Ordinarily, the victimhas to prove thenegligence of thedefendant. This isbecause his action isbased on allegednegligence on the partof the defendant.Accused is presumedinnocent until thecontrary is proved, soprosecution has theburden of proving thenegligence of theaccused.According to Source of ObligationKinds of Culpaattyjdc
  11. 11. According to Source of ObligationKinds of CulpaScenario:A taxi hit a make-shift store therebyinjuring its driver, passenger and thestore attendant. What kinds of culpaare present?attyjdc
  12. 12.  Kinds under the Civil Code:(a) that agreed upon by parties(b) in the absence of (a), that required by the law.(c) in the absence of (b), bonum pater-familia or thatexpected of a good father of a familyDILIGENCEattyjdc
  13. 13. Art. 1174. Except in cases expressly specified by the law, or when it isotherwise declared by stipulation, or when the nature of the obligationrequires the assumption of risk, no person shall be responsible for thoseevents which could not be foreseen, or which, though foreseen, wereinevitable.Fortuitous EventFortuitous EventAny event which cannot be foreseen, or which, though foreseen isinevitable. It consists of a happening independent of the will of the debtorand which happening, makes the normal fulfillment of the obligationimpossible.Caso fortuito, act of God, force majeureattyjdc
  14. 14.  General Rule: Debtor is not liable for fortuitousevents. Exceptions:(1) When expressly declared by law;(2) When expressly declared by stipulation orcontract;(3) When the nature of the obligation requires theassumption of risk.Fortuitous Eventattyjdc
  15. 15. Essential Characteristics of a Fortuitous Event Independent of the will of the debtor; Impossibility of foreseeing or impossibility ofavoiding it even if foreseen; The occurrence must be such as to render itimpossible for the debtor to fulfill his obligation in anormal manner.Fortuitous Eventattyjdc
  16. 16. InterestsArt. 1175. Usurious transactions shall be governed byspecial laws.USURY:Contracting for or receiving something in excess of the amount allowedby law for the loan or use of money, goods, chattels or credit.Exaction of excessive interest.Under Central Bank Circular No. 905, usury had been abolished sinceJan. 1, 1983. The parties will now mutually agree on the rate of interest.attyjdc
  17. 17.  Kinds of Interest:A. Moratory Interest – interest given for compensation or use ofmoney.Ex. Tommy borrowed P10,000 at 7% interest per annum for 2 yearsfrom the bank.B. Compensatory Interest – interest given by way of damages.Ex. Tommy borrowed P10,000 with no interests for 2 years. If hepays when the debt falls due, he would not pay any interest. However, hewill be liable for interest by way of damages if he incurs default.Interestsattyjdc
  18. 18.  Lawful Interests (Authorized Rates): those allowedas maximum under the former Usury Law Legal Interests: rate presumed by law to have beenagreed upon but no rate was stipulated. Conventional Interests: rate agreed upon by parties. Usurious Interests: rate which exceeds the maximunprovided by law.Interestsattyjdc
  19. 19. Art. 1176. The receipt of the principal by the creditor withoutreservation with respect to the interest, shall give rise to thepresumption that said interest has been paid.The receipt of a later installment of a debt without reservation as toprior installments, shall likewise raise the presumption that suchinstallments have been paid.Presumption: inference of a fact drawn from other evidence that isadmitted and proven to be true.It could be CONCLUSIVE or DISPUTABLE.Presumptionsattyjdc
  20. 20. Art. 1177. The creditors, after having pursued the property inpossession of the debtor to satisfy their claims, may exercise allthe rights and bring all the actions of the latter for the samepurpose, save those which are inherent in his person; they mayalso impugn the acts which the debtor may have done to defraudthem.attyjdc
  21. 21.  Exact payment. Exhaust debtor’s properties generally by attachment Accion subrogatoria (subrogatory action)- exercise all rights and actions except those inherent in the person. Accion pauliana- impugn or rescind acts or contracts done by the debtor to defraud thecreditors.Rights of Creditorsattyjdc
  22. 22. Art. 1178. Subject to the laws, all rights acquired invirtue of an obligation are transmissible, if there hasbeen no stipulation to the contrary.General Rule: Rights are transmissible.Except:(1) If law provides otherwise.(2) If the contract provides otherwise.(3) If the obligation is purely personal.Transmissibility of Rightsattyjdc