Law on Obligations and

Contracts
ARTICLE:
1169-1173
ARTICLE 1169

Those obliged to deliver or to do

something incur in delay from the
time the obligee judicially or
extrajudicially demands from them
the fulfillment of their obligation.
However the demand by the creditor shall not
be necessary in order that delay may exist:
1. When the obligation or the law expressly
so declares; or
2. When from the nature and the
circumstances of the obligations it appears
that the designation of the time when the
thing is to be delivered or the service is to
be rendered was a controling motive for the
establishment of the contract; or
3. When demand would be useless, as when
the obligor has rendered it beyond his
power to perform.
Meaning of Delay.
The word delay, as used in the law, is not to be
understood according to it's meaning in
common parlance. A distinction,
therefore,should be made between ordinary
delay and legal ( default or mora) in the
performance of an obligation.
1. Ordinary delay is merely the failure to
perform an obligation on time.
2. Legal delay or default or mora is the failure
to perform an obligation on time which failure
constitutes a breach of the obligation.
Kinds of Delay or default
They are:
1. Mora Solvendi or the delay on the part of
the debtor to fulfill his obligation (to give or to
do);
2. Mora accipiendi or the delay on the part of
the creditor to accept the performance of the
obligation; and
3. Compensatio morae or the delay of the
obligors in reciprocal obligations (like in sale),
i.e. the delay of the obligor cancels the delay
of the obligee, andvice versa.the net result is
that there is no actionable default on the part of
Requisites of delay or default by the deptor.
There are three(3) conditions that must be
presented before more solvendi can exists or its
effect may arise:
1. Failure of the debtor to perform his (positive)
obligation on the date agreed upon;
2. demand (not mere reminder or notice) made by
the creditor upon the debtor to comply with his
obligation which demand may be either judicial (
when a complaint is filed in court) or extrajudicial
(when made outside of the court, orally or in
writing); and
3. Failure of the debtor to comply with such
demand.
 Effects of delay
(1) Mora Solvendi - The following are the
effects
(a) The debtor is guilty of breach or
violation of the obligation;
(b) He is liable to rhe creditor for
interest (in case of obligations to pay
money) (Art. 2209) or damages (in other
obligations). (Art. 1170). In the absence of
extrajudicial demand, the interest shall
commence from the filling of the
complaint; and
 (c) He is liable even for a fortuitous event
when the obligation is to deliver a
determinate thing. (Arts. 1165, 1170.)
However, if the debtor can prove that the loss
would have resulted just the same even if he
had not been in default, the court may
equitably mitigate or reduce the damages.
(Art. 2215 [4]).
In an obligation to deliver a generic
thing, the debtor is not relieved from liablity
for loss due to a fortuitous event. He can still
be compelled to deliver a thing of the same
kind (see Art. 1263.) or held liable for
damages. (Art. 1170).
(2) Mora accipiendi - The effects are as follows
(a) The creditor is guilty of breach of
obligation;
(b) He is liable for damages suffered, if any,
by the debtor;
(c) He bears the risk of loss of the thing due
(Art. 1262.);
(d) Where the obligation is to pay money,
the debtor is not liable for interest from the time
from the time of creditor's delay; and
(e) The debtor may release himself from the
obligation by the consignation or deposit in
court of the thing or sum due. (Art. 1256).
(3) Compensatio morae - The delay of the
obligator cancels the delay of the obligee and
vice versa. Legally speaking, there is no
deafult or delay on the part of the both parties.

If the delay of one (1) party is

followed by that of the other, the liability of
the first infractor shall be equitably tempered
or balance by the courts. If it cannot be
determined which of the parties is guity of
delay, the contract shall be deemed
extinguished and each shall bear his own
damages. (Art. 1192).
When demand is not necessary
to put debtor in delay

As a general rule , delay by the

debtor begins only from the moment
a demand, judicial or extra-judicial,
for the fulfillment of the former's
obligation is made by the creditor .
Without such amount, the effect of
default will not arise. The
execeptions are mentioned below.
(1) When the obligation so provides. -
EXAMPLE:
D promised to pay C the sum of
P20,000 on or before November 30
without the need of any demand.
Therefore, if D fails to pay on
November 30, he is automatically in
default.
In this case, the parties stipulate
to dispense with the demand.
The mere fixing of the period is not enough. The
arrival of the period merely makes the
obligation demandable. Before its arrival, the
creditor cannot demand performance. The
obligation must expressly so declare that
demand is not necessary or must use words to
that effect, as for instance, "the debtor will be in
default" or "I will be liable for damages".
EXAMPLES:
The contract of loan between D and C
provides that failure of D to pay any
installments therein stipulated would mature the
entire obligation. It does not state that in such an
event, D shall thereafter be in default.
 Demand is still necessary to
hold D in default upon failure to pay
any such installments. He is not
liable for interest for default for the
whole debt except from the time that
judicial or extra-judicial demand for
payment is made upon him.
(2) When the law so provides-
EXAMPLES:
(1) Under the law, taxes should be paid
on or before a specific date ; otherwise,
penalties and surcharges are imposed
without the need of demand for payment by
the government.
(2) The partner is liable for the fruits of
the thing he may have promised to
contribute to the partnership from the time
they should have been delivered without the
need of any demand. (Art. 1786; see Art.
1788.)
(3) When time is of the essence. -

EXAMPLES:
The delivery of balloons on a
particular date when a children's party will
be held; the making of a wedding dress
where the wedding is scheduled at a certain
time; payment of money at a particular time
so that the creditor could pay off certain
debts due on the same date; the delivery of a
car to be used in a trip at a particular time;
etc.
 In all the foregoing cases, the debtor is fully
aware that the performance of the obligation
after the designate time would no longer benefit
the creditor. In agreements of this kind, time
element is important as performance itself.
When the time of performance is not fixed or is
stated in general or indifinite terms, time is, as a
rule, not of the essence of the contract in which
case performance must be made within a
reasonable time. What is reasonable time will
depend upon the circumstances of the particular
case.
It is not necessary for the contract to
categorically state that time is of the essence;
intent is sufficient.
(4) When demand would be useless. -
EXAMPLE:
S obliged himself to deliver a specific horse to
B on September 5. Through S's negligence or
deliberate act, or by reason of fortuitous event for
which S has expressly bound himself responsible
(see Art. 1174), the horse died on September 2.
Under this situation any demand for the
delivery of the horse on September 5 would be
useless as S has made it impossible for him to
perform his obligation.
Demand is also unnecessary where it is
apparent that it would be unavailing, as where there
has been a prior absolute refusal by S or S has
manifested an intention not to comply with his
(5) When there is performance by a party in
reciprocal obligations. -

In case of reciprocal obligations, the

performance of one is conditioned upon the
simultaneous fulfillment on the part of the
other. So 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. This is compensatio
morae.
From the moment,however, a party
fulfills or is ready to fulfill his obligation,
delay by the other begins.
EXAMPLES:
(1) S agreed to sell to B his television set
for
P10,000. The obligation of S is to deliver the
television set while that of B, to pay P10,000.

Since no date is set for performance of their

respective obligations, it is understood that it
must be simultaneous. S cannot demand
payment if he himself cannot deliver the
televisiom set. From the moment S delivers the
television set B is in default if he does not pay
(2) If the agreement is that the delivery and
payment shall be made on December 10, the
delivery (payment) by S(B) on December 5
does not give him the right to demand
payment (delivery) from B(S). Neither party
will incur in delay before December 10
notwithstanding that the other has already
complied with his obligation.

Here, performance is set on the same

date
(3) Suppose in the same example, the delivery
is to be made on December 10 and the
payment, on December 15.

In this case, a demand on December 10 by

B is necessary to put S in delay following the
general rule. (Art. 1169, par. 1.) Similarity, the
delivery of the television set by S does not put
B in delay until a demand is made upon him on
December 15, or subsequently. In this case,
performance is set on different dates.
ART. 1170.
Those who in the performance
of their obligation 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

(1) Fraud (deceit or dolo). - As used in

Article 1170, it is the deliberate or
intentional evasion of the normal fulfillment
of an obligation. (see 8 Manresa 72.) As a
ground for damages, it is implies some kind
of malice or dishonesty and it cannot cover
cases of mistake and errors of judgement
made in good faith. It is synonymous to bad
faith in that, it involves a design to mislead
or deceive another.
EXAMPLE:
S obliged himself to deliver to B 20 bottles
of wine, of a prarticular brand. Subsequently, S
delivered 20 bottles knowing that they contain
cheaper wine. S is guilty of fraud amd is liable
for damages to B.

Article 1170 refers to incidental fraud (dolo

incidente) committed in the performance of an
obligation already existing because of contract .
It is to be differentiated from casual fraud (dolo
causante) or fraud employed in the execution of
a contract under Article 1338, which vitiates
consent.
 In the same example, if B bought the 20
bottles of wine on the false representation of
S that the wine is that as represented by the
labels, the fraud committed by S is causal
fraud. Without the fraud, B would not have
given his consent to the contract. He has the
right to have the contract annulled or set
aside on the ground of the fraud. (Arts. 1390,
1391)
But in the first example, the remedy of
B is not annulment of the contract of
sale which is not affected by the
incidental fraud but to claim damages. If
the fraud employed by S to get B's
consent was not the principal
inducement that led B to enter into the
contract, the fraud is also incidental and
it will likewise give rise only to an
action for damages. (see Art. 1344,
par.2.)
(2) Negligence (fault or culpa) -
It is any voluntary act or
omission, there being no bad faith
or malice, which prevents the
normal fulfillment of an
obligation. (see Arts. 1173, 1174.)
Example:
P is a passenger in a taxi. Here,
there is a considered a contract of
carriage between P and the owner of
the taxi company. In consideration
of the fare to be paid by P, the owner
of the taxi company, through the
driver, agrees to safely bring P to
his destination. (Lasam vs. Smith,
48 Phil. 657.)
If, through the recklessness of the
driver, like for example, driving at an
unjustified rate of speed or entering a
one-way street, an accident occurs , as
a result of which P is injured, there is
negligence which would make the
owner liable for damages. If the taxi
contained defective parts, the failure
to repair the same constitutes also
negligence on the part of the owner.
(Ibid.)
(3) Delay (mora) - This has already been
discussed under Article 1169.

(4) Contravention of the terms of the

obligation -
This is the violation of the terms and
conditions stipulated in the obligation.
The contravention must not be due to a
fortuitous event or force majeure.
(Art.1174.)
Example:
E leased the apartment of R for
10,000 a month to be paid in advance
during the first week of every month.
The obligation of E, as lessee, is to
pay the stipulated rent. The obligation
of R, as lessor, is to maintain E in the
peaceful possession of the apartment
leased.
 If E violates his obligation, R is entitled
to eject him from the premises and recover
damages. If R does not maintain E in the
peaceful possession of the apartment (as
when R is not the owner), and E is ejected,
R may be held liable for damages for
violation of the terms of his obligation.
The measure of damages to be awarded
to E or to R, as the case may be, is left to
the sound discretion of the court in
accordance with the provisions of the Civil
Code on damages. (Title XVIII.)
Fraud and negligence distinguished
Fraud may be distinguished from
negligence as follows:
(1) In fraud,there is deliberate intention to
cause damage or injury, while in
negligence, there is no such intention;
(2) Waiver of the liability for future fraud is
void (Art. 1171.), while such waiver may, in
a certain sense, be allowed in negligence
(Art.1172.);
(3) Fraud must be clearly proved, while
negligence is presumed from the viation of
a contractual obligation; and
(4) Lastly, liability for fraud cannot
be mitigated or reduced by the
courts, while liability for negligence
may be reduced according to the
circumstances.(Art. 1173.)
ART. 1171.
Responsibility arising from
fraud is demandable in all
obligations. Any waiver of an
action for future fraud is void.
(1102a)
Responsibility arising from fraud
demandable.
This provision refers to incidental fraud
which is employed in the fulfillment of an
obligation. (Art.1170)
Responsibility arising from fraud can be
demanded with respect to all kinds of
obligation and unlike in the case of
responsibility arising from the negligence (Art.
1172.), the court is not given the power to
mitigate or reduce the damages to be awarded.
This is so because fraud is deemed serious and
evil that its employment to avoid the
fulfillment of one's obligation should be
Waiver action for future fraud void.
According to the time of
commission, fraud maybe past or future.
A waiver of an action for future
fraud is void (no effect, as if there is no
waiver) as being against the law and
public policy. (Art. 1409[1].) A contrary
rule would encourage the perpetration of
fraud because the obligor knows that
even if he should commit fraud, he
would not be liable for it, thus making
the obligation illusory.
Waiver of action for past fraud valid.
What the law prohibits is waiver anterior to
the fraud and to the knowledge thereof by the
aggrieved party.
A past fraud can be the subject of a valid
waiver because the waiver can be considered as
an act of generosity and magnanimity on the
part of the party who is the victim of the fraud.
Here, what is renounced is the effect of the
fraud, that is, the right to indemnity of the party
entitled thereto. The waiver must be expressed
in clear language which leaves no doubt as to
the intention of the obligee to give up his right
against the obligor.
Example:
S promised to deliver 120 cavans of rice
of a particular brand and quality to B at the
rate of 10 cavans a month.
S cannot make an agreement with B,
whereby B will not file an action in court
against S, should S commit fraud in the
performance of his obligation. This waiver of
an action for future fraud is void. Hence, B,
can still bring an action against S for
damages arising from the fraud.
But once fraud is commited, B, with full
knowledge thereof, can waive his right to
Art.1172.
Responsible the 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)
Responsible arising from negligence
demandable.
In the performance of every kind of
obligation, the debtor is also liable for
damages resulting from his negligence.
The courts,however, are given wide
discretion in fixing the measure of damages.
The reason is because negligence is a question
which must necessarily depend upon the
circumstances of each particular case.
(see Art. 1173.) Moreover, negligence is not as
serious as fraud because in the case of the
former, there is no deliberate intention to cause
injury or damages.
According to the circumstances the court
may increase or decrease the damages
recoverable. When both parties to a
contract are negligent in the performance
of their respective obligations, the fault of
one may cancel or neutralize the
negligence of the other.
Validity of waiver of action arising from
negligence.
(1) An action for future negligence (not
fraud) may be renounced except where the
nature of the obligation requires the exercise of
extraordinary deligence as in the case of
common carriers. (see Art. 1733.) Thus, in the
preceding example, the law allows an
agreement between S and B, whereby S will
not be liable for damages arising from
negligence in the performance of his
obligation. But if S is a common carrier (e.g.,
bus, shipping or airline company) such waiver
is void.
(2) Where negligence shows bad
faith (i.e., deliberately committed), it
is considered equivalent to fraud.
(Art. 2201, 2nd par.) Any waiver of
an action for future negligence of this
kind is, therefore, void.
Kinds of negligence according to source
of obligation.
They are:
(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.
(Art. 1157.) It merely makes the debtor
liable for damages in view of his
negligence in the fulfillment of a pre-
existing obligation (Arts. 1170, 1172.);
(2) Civil negligence (culpa aquiliana) or
negligence which by itself is the source of an
obligation between the parties not so related
before by any preexisting contract. It is also
called tort or quasi-delict (Art. 2176.); and
(3) Criminal negligence (culpa criminal) or
negligence resulting in the commission of a
crime. (Arts. 3,365,Revised Penal Code.) The
same negligent act causing damages may
produce civil liability arising from a crime
under Article 100 of the Revised Penal Code
(supra.), or create an action for quasi-delict
under Article 2176. et seq., of the Civil Code.
In the negligence cases, the aggrieved party may
choose between a criminal action under Article 100 of
the Revised Penal Code or a civil action for damages
under Article 2176 of the Civil Code . What is
prohibited under Article 2177 of the Civil Code is to
recover twice for the same negligent act.
Examples:
(1) If S entered to a contract of sale with B to
deliver a specific horse on a certain day and the horse
died through the negligence of S before delivery, S is
liable for damages to B for having failed to fulfill a
pre-existing obligation (contract may be either
express or implied) because of his negligence. This is
culpa contractual
(2) Assume now, that the horse belongs to and
is in the possession of B. The negligence of S
which results in the death of the horse is culpa
aquiliana. In this case, there is no pre-existing
contractual relation between S and B. The
negligence itself is the source of liablity. (Art.
1157[5].)
(3) A crime can be committed by negligence. If
B wants, he can bring an action for culpa
criminal (damage to property through simple
or reckless imprudence). Here, the crime is the
source of the obligation of S to pay damages.
(Arts.1157[4];1161.)
 But B cannot recover damages
twice for the same act or omission of
S. In the other words, responsibility
for quasi-delict is not demadable
together with the civil liablity arsing
from a criminal offense. (Art. 2177.)
Effect of negligence on the part of the injured
party.
Suppose the creditor is also guilty of
negligence, can he recover damages?
Article 2179 of the new Civil Code
provides:
"When the plaintiff's own negligence was the
immediate and proximate cause of his injury, he
cannot recover damages, But if his negligence was
only contributory, the immediate and proximate cause
of the injury being the defendant's lack of due care,
the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded." (see
Arts.2214, 2215.)
Examples:
(1) P is a passenger in a carefully
driven bus. Without any warning, he
jumped off the bus, as a result of which,
he suffered injuries.
The bus company is not liable for
damges because the cause of P's injuries
is his own negligence.
(2) Now suppose P was standing on
the running board of the bus and was
repeatedly told by the conductor to
go inside but he did not pay any
attention. Suddenly, the bus swerved
to the left to avoid collision with
another vehicle, as a result of which,
P was thrown off the bus. At the time
of the mishap, the driver was
intoxicated and was driving
recklessly at a very high rate of
speed.
In this case, P did not observe the
deligence of a good father of a family
to avoid injury to himself. (Art.
1761.) But his contributory
negligence does not bar recovery for
damages for his death or injuries
since the proximate or direct cause
thereof is the negligence of the
common carrier. However, the
amount of damages shall be equitably
reduced. (Art. 1762,)
(3) Suppose in the second example, the bus rounded a
curve causing P to lose his balance and fall off the
platform, sustaining injuries. The bus at the time of
the accident was travelling at a moderate rate of speed
and there was no infraction of law and regulations,
and P was exposed to no greater damage than that
inherent in that particular mode of travel.
Here, P cannot recover. He should have been on
his guard against a contingency as natural as that of
losing his balance to a greater or lesser extent when
the bus rounded the curve. (see Lasam vs. Smith, 45
Phil. 657.)
In the other words , to be entitled to damages, it
is not required that the negligence of the defendant
should be the sole cause of the damage.
 Art. 1173.
The fault or negligence of the obligor
consists in the omission of that deligence
which is required by the nature of the
obligation and corresponds with the
circumstances of the person, 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 contact does not state the
deligence which is to be observed in the
performance, that which is expected of a
good father of a family shall be required.
(1104a)
Meaning of fault or negligence.
Fault or negligence is defined by
the above provision. (par. 1.) According
to our Supreme Court," negligence is the
failure to obeserve for the protection of
the interests of another person, that
degree of care, precaution and vigilance
which the circumstances justly demand,
whereby such other person suffers
injury." (United States vs. Barrias, 23
Phil. 434.)
Factors to be considered.
Negligence is a question of fact, that is,
its existence being dependent upon the
particular circumstances of each case. In
determining the issue of negligence, the
following factors must be considered:
(1) Nature of the obligation.
Example:
Smoking while carrying materials
known to be inflammable constitutes
negligence.
(2) Circumstances of the person.
Example:
A guard, a man in the prime of life,
robust and healthy, sleeping while on
duty is guilty of negligence.
(3) Circumstances of time.
Example:
Driving a car without headlights at
night is gross negligence but it does not
by itself constitute negligence when
driving during the day.
(4) Circumstances of the place.

Example:
Driving at 100 kilometers per hour
on the superhighway is permissible but
driving at the same rate of speed in Ayala
Avenue, Makati is gross recklessness.
Measure of liabilty for damages.
Damages signify the money
compensation awarded to a party for loss
or injury resulting from breach of cntract
or obligation by the other. As a rule, the
purpose of awarding damages is to place
the innocent party in the same (not better)
position he would have occupied if the
contract or obligation had been
performed according to its terms.
Article 2201 of the Civil Code states:
" In contracts and quasi-contracts, the
damages for which the obligor who acted in
good faith is liable shall be those that are the
natural and probable consequences of the
breach of the obligation, and which the parties
have forseen or could have reasonably forseen
at the time the obligation was constituted.
In case of fraud, bad faith, malice or
wanton attitude, the obligor shall be
responsible for all damages which may be
reasonably attributed to the non-performance
of the obligation."
Example:
S agreed to sell and deliver to B on a
certain date 1,000 kilos of sugar of a certain
quality for P30,000. Then, B agreed to sell the
sugar to be received from S to C for P 35,000.
This contract with C was made known to S. On
the date designated, S did not deliver the
sugar so that C bought sugar from another.
The breach of the obligation by S,
resulting in the loss of the amount of P5,000
as expected profit, so angered B that he
suffered a heart attack for which he was
hospitalized for five (5) days.
 In this case, if S acted in good faith,
the damage which B ought to receive
should be the amount of P5,000, the
profit which B failed to realize. (par.1;
Art. 2200.)
But, if S acted in bad faith , he is also
liable to pay for the hospitalization
expenses incurred by B which clearly
originated from the breach although they
might not have been reasonably
contemplated by the parties at the time
they entered into the contract. (par. 2.)
Kinds of diligence required
Under Article 1173, the following kinds of
diligence are required:
(1) that agreed upon by the parties, orally
or in writing;
(2) in the absence of stipulation, that
required by law in the particular case ( like the
extraordinary diligence required of common
carriers); and
(3) if both the contract and law are silent,
then the diligence expected of a good father
of a family. (par. 2; see Art. 1163.)