BREACH OF CONTRACT

Legal Provisions:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
Latin maxims: honeste vivere, alterum non laedere, and jus suum quique
tribuere (to live honorably, not to injure others, and to render to every man
his due).
The showing of wanton negligence in effecting the plans, designs,
specifications, and constructions of a building is equivalent to bad faith in
the performance of the assigned tasks. Thus, one who negligently creates a
dangerous condition cannot escape liability for the natural and probable
consequences thereof, although the act of a third person or an act of God for
which he is not responsible, intervenes to precipitate the loss. (Nakpil &
Sons vs. Court of Appeals, L-47851, April 15, 1988)
Doubts in contracts should be settled in favor of the greatest reciprocity of
interests. (Philipine National Construction Corporation vs. Mars
Construction Enterprises, Inc., 325 SCRA 624)
The Court has consistently denied relief to a party who seeks to avoid the
performance of an obligation voluntarily assumed because they turned out to
be disastrous or unwise contracts, even if there was a mistake of law or fact.
(Maestrado vs. Court of Appeals, 327 SCRA 678)
In reciprocal obligations, neither party incurs in delay if the other parrty does
not comply or is not ready to comply in a proper manner with what was
incumbent upon him. (Laforteza vs. Machuca, 333 SCRA 643)
When the service (required by the contract) has become so manifestly
beyond the contemplation of the parties, the obligor may be released
therefrom, in whole or in part. (Magat, Jr. vs. Court of Appeals, 337
SCRA 298)
To recover moral damages in an action for breach of contract, the breach
must be palpably wanton, reckless, malicious, in bad faith, oppressive or
abusive. (Magat, Jr. vs. Court of Appeals, 337 SCRA 298)
Neither the law nor the courts will excuse a party from an unwise or
undesirable contract he or she entered into with all the required formalities
and with full awareness of its consequences. (Mortel vs. Kassco, Inc. 348
SCRA 391)
The breach of obligation because of fraud, negligence or delay or of a
contravention by any means of the tenor of that obligation does open the

defaulting obligor to possible liability for damages. The right to those

damages and the extent of their recovery would depend on the kind and
nature of the damages and the manner in which the injury causing it is
brought about. (Philippine Telegraph &Telephone Corporation, et.al. vs.
Hon. Court of Appeals, et.al., G.R. No. 139268, September 3, 2002,
Vitug, J.)
In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him, as provided in Art. 1169 of the Civil Code. (Laforteza vs.
Machuca (3d), G.R. No. 137552, June 16, 2000, Gonzaga-Reyes, J.)
Delay in the performance of an obligation is looked upon with disfavor
because, when a party to a contract incurs delay, the other party who
performs his part of the contract suffers damages thereby. Dilationes in lege
sunt idiosae. Obviously, respondent suffered damages brought about by the
failure of petitioner to comply with its obligation on time. And, sans
elaboration of the matter at hand, damages take the form of interest.
(Arwood Industries, Inc. vs. D.M. Consunji, Inc, G.R. No. 142277,
December 11, 2002; Corona, J.)
A debtor who incurs in delay or default is liable for damages plus interest
generally from extrajudicial or judicial demand in the form of interest.
(Malayan Insurance Co., Inc. vs. Court of Appeals, G.R. No. 59919,
November 25, 1986)
Those liable under Article 1170 of the Civil Code should pay damages, but
generally only if aside from the breach of contract, prejudice or damage was
caused. (Berg vs. Teus, GR L-6453, October 30, 1964)
DAMAGES:
Moral damages may be awarded in a breach of contract when the defendant
acted in bad faith, or was guilty of gross negligence amounting to bad faith,
or in wanton disregard of his contractual obligation. (BPI Investment
Corporation vs. D.G. Carreon Commercial Corporation, et.al. G.R. No.
126524, November 29, 2001)
Temperate or moderate damages may be recovered when the court finds that
some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty. (BPI Investment Corporation
vs. D.G. Carreon Commercial Corporation, et.al. G.R. No. 126524,
November 29, 2001)