Art. 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. (1101)
Grounds For Liability For Damages In the
Performance Of Obligations
A debtor, may in the process of fulfilling his
obligations be guilty of any of the following faults:
a. Fraud
b. Negligence
c. Delay
d. Violation of the terms of the contract
Explanation Of The Grounds
a. Fraud- intentional evasion of the faithful
performance of the obligation; also called
dolo
b. Negligence or fault- omission of that
diligence required by the nature of the
obligation and commensurate with the
demands of the subsisting circumstances of
time, place, condition of the persons
involved; also called culpa contractual
c. Delay- default or tardiness in the
performance of the obligation after it has
become due and demandable; also called
mora
Requisites:
a. Obligation be demandable and
liquidated
b. Debtor delays performance
c. The creditor requires the performance
because it must appear that the
tolerance or benevolence of the creditor
must have ended
- To justify award for damages, the delay
must either be malicious or negligent
d. Violation of terms of the contract- act of
contravening the tenor or terms or
conditions of the contract; also called
violatio
Kinds Of Damages Under The Code
1. Actual/ Compensatory- adequate
compensation for the pecuniary loss suffered
by the aggrieved party
2. Moral- includes physical suffering, mental
anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, etc.
3. Nominal- stress the vindication of plaintiff’s
right which was violated
4. Temperate or moderate- more nominal but
less than compensatory damages, imposed
when plaintiff is found to have suffered
pecuniary loss but its amount cannot by the
nature of the case, be proved with certainty
5. Liquidated- damages agreed upon by the
contracting parties to be paid by them in
case of breach thereof
6. Exemplary- corrective damages imposed in
addition to compensatory, moral, temperate
or liquidated damages for the purpose of
setting an example or correction for the
public good
Damages For Monetary Obligations
-damages in monetary obligations shall consist in
stipulated damages like when there is a penalty
clause, or when liquidated damages have been agreed
upon; if there is no stipulation or agreement, the legal
interest is 6% per annum
Fortuitous Events Excuse Non-Performance Of
Obligation; Exception
-debtor failed to fulfill his obligations due to FE, he
will be exempted from liability except:
1. law expressly provides liability
2. there is stipulation between the parties
3. nature of the obligation requires the assumption of
risk
Art. 1171. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an
action for future fraud is void. (1102a)
Fraud Referred To In The Article
-fraud in the performance of an obligation;
intentional evasion of the normal fulfillment of the
obligation
Responsibility Arising From This Kind Of Fraud Is
Demandable In All Obligations
-any deliberate deviation from the normal way of
fulfilling the obligation may be a proper basis for
claim for damages; but the contract itself will remain
intact and valid
-law does not allow any waiver of future fraud-void
-the law does not prohibit waiver of an action for
damages based on fraud already committed
Art. 1172. Responsibility arising from negligence
in the performance of every kind of obligation is
also demandable, but such liability may be
regulated by the courts, according to the
circumstances. (1103)
Responsibility Arising From Negligence; Liability
May Be Regulated
-in determining the liability of a party for damages
resulting from his negligence in the fulfillment of a
contractual obligation, courts have the discretionary
power to moderate the liability accdg to the
circumstances of the case
-liability may increase or decrease
-when both parties are negligent, the fault of one
cancels the fault of the other
Good Faith Or Bad Faith Of Obligor, Effect
Good faith- responsible for the natural and probable
consequences of the breach of contract and which the
parties have foreseen or could have reasonably
foreseen at the time of the constitution of the
obligation
Bad faith- responsible for all damages which may be
reasonably attributed to the non-performance of the
obligation
Mitigation Of Damages In Contracts, Quasi-
Contracts And Quasi-Delicts
Following circumstances must be present to mitigate
liability:
1. Plaintiff himself has contravened the terms
of the contract
2. Plaintiff has derived some benefit as a result
of the contract
3. In cases where exemplary damages are to be
awarded, that the defendant acted upon the
advice of the counsel
4. Loss would have resulted in any event
5. Since the filing of the action, the defendant
has done his best to lessen the plaintiff’s loss
or injury
Effect Of Contributory Negligence On The Liability
Of The Obligor
-obligee’s contributory negligence- reduction or
mitigation of liability of obligor
-if obligee’s negligent act is the proximate cause- no
recovery for damages
Negligence Distinguished From Fraud
-negligence- no deliberate intention to cause damage;
liability may be mitigated or reduced; waiver to
enforce liability from future negligence is allowed
-fraud- there is deliberate intent to cause damage;
liability cannot be mitigated or reduced; waiver for
damages of future fraud is not allowed
Art. 1173. The fault or negligence of the obligor
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. When
negligence shows bad faith, the provisions of
Articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family shall
be required. (1104a)
Diligence- attention and care required of a person in a
given situation and is the opposite of negligence
Due Diligence- measure of prudence, activity, or
assiduity, as is properly to be expected from, and
ordinarily exercised by, a reasonable and prudent
man under particular circumstances; not measured by
absolute standard
Necessary Diligence- degree of diligence which a
person placed in a particular situation must exercise
in order to entitle him to the protection of the law in
respect to rights or claims growing out of that
situation, or to avoid being left without redress on
account of his own culpable carelessness
Negligence- omission of that diligence which is
required by the nature of the particular obligation and
corresponds with the circumstances of the persons, of
the time and of the place
Negligence Is Not Determined By Absolute
Standards; It Is A Question Of Fact
-determined upon its own particular facts and
circumstances and the degree of diligence required
for the performance of an obligation must depend
upon circumstances of the particular obligation
Kinds Of Diligence Under Art. 1173
1. Diligence stipulated by the parties
2. No stipulation, diligence required by the law
governing the particular obligation
3. Absence of the 2, diligence of a good father
of a family
Meaning Of Good Father Of A Family
-bonos pater-familia
-any one who acts below this standard is considered
negligent
Art. 1174. Except in cases expressly specified by
the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be
responsible for those events which could not be
foreseen, or which, though foreseen, were
inevitable. (1105a)
Fortuitous Event- occurrence or happening which 7.
could not be foreseen, or even if foreseen, is
inevitable
8.
-in order for FE to event one from liability, it is
necessary that one has committed no negligence or
misconduct that may have occasioned the loss
Obligor is guilty of fraud, negligence or
delay or if he contravened to the tenor of the
obligation
An act of God cannot be invoked to protect
a person who has failed to take steps to
forestall the possible adverse consequences
of such a loss

Classes Of Fortuitous Event

a. As to origin or cause
1. Fortuitous Event- event which is
absolutely independent of human
intervention; acts of God
2. Force Majeure- event caused by the
legitimate or illegitimate acts of persons
other that the obligor; there is human
intervention
b. As to foreseeability
1. Ordinary FE- events which ordinarily
happen or which could be reasonably
foreseen but inevitable
2. Extraordinary FE- do not usually
happen and could not be reasonably
foreseen
Art. 1175. Usurious transactions shall be governed
by special laws. (n)
-Usury law had been legally ineffective
Art. 1176. The receipt of the principal by the
creditor without reservation with respect to the
interest, shall give rise to the presumption that
said interest has been paid.
The receipt of a later installment of a debt without
reservation as to prior installments, shall likewise
raise the presumption that such installments have
been paid. (1110a)

No Liability In Case Of Failure To Perform An
Obligation Due To FE
GR: exempted from liab because obligation has been
extinguished
Requisites To Exempt Obligor From Liability By
Reason Of FE
1. Cause of breach must be independent of
debtor’s will
2. Event must be unforeseeable or unavoidable
3. Event must be such as to render it
impossible for the debtor to fulfill his
obligation in a normal manner
4. Debtor must be free from any participation
in, or aggravation of, the injury to the
creditor
Exceptions Which Make An Obligor Liable For FE
1. Expressly stipulated that he shall be liable
even if the non-performance is due to FE
2. Nature of obligation requires the assumption
of risk
3. Obligor is in delay
4. Obligor has promised the same thing to 2 or
more persons who do not have the same
interest
5. Possessor is in bad faith and the thing is loss
or deteriorated due to FE
6. Obligor contributed to the loss of the thing
Presumption That Interest Had Been Paid
-creditor issued a receipt covering the principal
obligation, without reservation to the interest due,
there is a rebuttable presumption that the interest had
already been paid by the debtor
Presumption That Prior Installment Had Already
Been Paid
-creditor issued a receipt acknowledging payment of
a latter installment, without reservation to prior
installments, there is a rebuttable presumption that
prior installments had already been paid
Art. 1177. The creditors, after having pursued the
property in possession of the debtor to satisfy
their claims, may exercise all the rights and bring
all the actions of the latter for the same purpose,
save those which are inherent in his person; they
may also impugn the acts which the debtor may
have done to defraud them. (1111)
Actions Or Remedies Available To Creditors To
Protect Their Interests
1. Exhaustion of debtor’s properties still in his
possession; effected by writ of attachment,
before judgement or writ of execution, after
judgement
2. Accion subrogatoria- creditor whose claims
had not been fully satisfied, may go after the
debtors of the defendant-debtor; limitation-
 not allowed to pursue actions which are
personal to the defendant-debtor
3. Accion Pauliana- action where the creditor
files an action in court for the rescission of
acts or contracts entered into by the debtor
designed to defraud the former; counterpart
of RPC’s fraudulent insolvency
Art. 1178. Subject to the laws, all rights acquired
in virtue of an obligation are transmissible, if
there has been no stipulation to the contrary.
(1112)
GR: Rights are transmissible
XPN:
1. Those not transmissible by their nature like
purely personal rights
2. Those not transmissible by provision of law
3. Those not transmissible by stipulation of the
parties
Art. 1179. Every obligation whose performance
does not depend upon a future or uncertain event,
or upon a past event unknown to the parties, is
demandable at once.
Every obligation which contains a resolutory
condition shall also be demandable, without
prejudice to the effects of the happening of the
event. (1113)
Meaning Of Condition
Condition- event which is both future and uncertain
upon which the existence or extinguishment of an
obligation is made to depend; elements of futurity
and uncertainty must concur
Term/ Period- an event or happening certain to
happen at some future time
Pure Obligation, Concept
Pure Obligation- one which does not contain any
condition or term upon which its fulfillment is made
to depend; immediately demandable
Conditional Obligation, Concept
Conditional Obligation- kind of obligation which is
subject to a condition
Suspensive- fulfillment gives rise to the obligation
Resolutory- happening extinguishes the obligation
which is already existing
Past Events Unknown To The Parties
-kind of condition
-upon knowledge of the parties that the past event
happened, obligation immediately becomes pure and
simple
-needs proof
Traditional Classifications Of Conditions
1. Suspensive- performance or fulfillment of
the condition gives birth to the obligation
2. Resolutory- fulfillment of the condition
results in the extinguishment of the
obligation
3. Potestative- fulfillment of the condition
depends upon the will of the debtor
4. Casual- fulfillment of the condition depends
upon third persons or by chance
5. Mixed- fulfillment of the condition depends
partly on the will of a party to the obligation
and partly by chance or the will of a third
person
6. Possible- condition is capable of fulfillment
according to nature, law, public policy or
good customs
7. Impossible- condition is not capable of
fulfillment
8. Positive- condition involves the doing of an
act
9. Negative- condition involves the omission
of an act
10. Divisible- condition is susceptible of partial
performance
11. Indivisible- condition is not susceptible of
partial performance
12. Conjunctive- there are several conditions
and all of which must be performed
13. Alternative- there are several conditions but
only one must be performed
14. Express- condition is expressly stated
15. Implied- condition not expressly stated but
inferred in the conduct of the parties
Art. 1180. When the debtor binds himself to pay
when his means permit him to do so, the
obligation shall be deemed to be one with a period,
subject to the provisions of Article 1197. (n)
Action For Fixing Of Period As To When Payment
Shall Be Made
-when his means permit him to do so, as soon as
possible, as soon as I have money- obligation with a
period
-go to court to fix the period as to when the debtor
shall pay; otherwise, action for collection would be
dismissible
Exception:
-when the prior action of fixing the term or period
will only be a formality and will serve no purpose but
delay, an immediate action may be allowed