BUSLAW

BY: PROF. STEPHEN C. ESCARTIN J.D, LPT

BREACHES OF
OBLIGATION
Forms of breach of obligations

2. FRAUD (DOLO)

4. Breach through
1. DELAY (MORA) VOLUNTARY (DEBTORS
FAULT)
contravention of the
tenor thereof

3. Negligence
(culpa)
 Forms of breach of obligations

– Debtor is unable to perform

the obligation due to fortuitous
INVOLUNTARY event thus not liable for
damages.

FORTUITOUS
EVENTS
 Delay or Mora

Compensatio Morae –
Mora Accipiendi –
Mora solvendi – Default on the part of
Default on the part
Default on the part of both the debtor and
of the
the debtor/obligor creditor in reciprocal
creditor/oblige; obligations.
CASE ANALYSIS: Pantaleon v. American Express
International, Inc.,

American Express Card (AMEX) failed to approve Pantaleon’s credit card

purchases which urged the latter to commence a complaint for moral and
exemplary damages against AMEX. He said that he and his family experienced
inconvenience and humiliation due to the delays in credit authorization during his
vacation trip in Amsterdam and in the United States. Did AMEX commit a breach
of its obligations to Pantaleon?
RULING:
YES. Generally, the relationship between a credit card provider and its cardholders
is that of creditor-debtor, with the card company as the creditor extending loans
and credit to the cardholder, who as debtor is obliged to repay the creditor. One
hour appears to be patently unreasonable length of time to approve or disapprove a
credit card purchase. The culpable failure of AmEx herein is not the failure to
timely approve petitioner’s purchase, but the more elemental failure to timely act
on the same, whether favorably or unfavorably;
Contributory negligence of the creditor

General Rule:

It reduces or mitigates the damages which he can recover.

Exception to the rule

If the negligent act or omission of the creditor is the proximate cause of the event
which led to the damage or injury complained of, he cannot recover
INVOLUNTARY: FORTUITOUS EVENT

ELEMENTS:
1.Cause of breach 3. Absolutely
is independent of 2. Event is
impossible to
the will of the unforseeable
debtor fulfill

4.Without fault
of the debtor
Act of God vs. Act of Man

ACT OF GOD ACT OF MAN

Fortuitous event Force majeure

Event which is absolutely independent of human Event caused by the legitimate or illegitimate acts
intervention of persons other than the obligor

e.g. Earthquakes, storms, floods, epidemics e.g. Armed invasion, robbery, war (Pineda, 2000).
NOTE

:There is no essential difference between fortuitous event and force

majuere; they both refer to causes independent of the will of the
obligor
Question

MIAA entered into a compromise agreement with ALA. MIAA

failed to pay within the period stipulated. Thus, ALA filed a motion for
execution to enforce its claim. MIAA filed a comment and attributed
the delays to its being a government agency and the Christmas rush. Is
the delay of payment a fortuitous event?
Answer

NO. The act-of-God doctrine requires all human agencies to be

excluded from creating the cause of the mischief. Such doctrine cannot
be invoked to protect a person who has failed to take steps to forestall
the possible adverse consequences of loss or injury. Since the delay in
payment in the present case was partly a result of human participation -
whether from active intervention or neglect - the whole occurrence was
humanized and was therefore outside the ambit of a caso fortuito.
Answer

First, processing claims against the government are certainly not only foreseeable
and expectable, but also dependent upon the human will. Second, the Christmas
season is not a caso fortuito, but a regularly occurring event. Third, the occurrence of
the Christmas season did not at all render impossible the normal fulfillment of the
obligation. Fourth, MIAA cannot argue that it is free from any participation in the
delay. It should have laid out on the compromise table the problems that would be
caused by a deadline falling during the Christmas season. Furthermore, it should
have explained to ALA the process involved for the payment of ALA’s claim (MIAA
v. Ala Industries Corp., G.R. No. 147349, February 13, 2004)
 Effects of fortuitous events

1. On determinate obligation – The obligation is extinguished.

2. On generic obligation – The obligation is not extinguished (genus

nun quam peruit – genus never perishes).
Problem
Kristina brought her diamond ring for cleaning to
a jewelry shop which failed to fulfill its promise
to return such ring in February 1, 2019. Kristina
went back to the shop on February 6, 2019 but
she was informed that the ring was stolen by a
thief the night before. Kristina filed an action for
damages against the jewelry shop which put up
the defense of force majeure. Will the action
prosper or not?
 YES. The action will prosper. Since the defendant
was already in default for not having delivered the
ring when delivery was demanded by plaintiff at due
date, the defendant is liable for the loss of the thing
and even when the loss was due to force majeure. The
defendant who is obliged to deliver incurred delay
from the time the plaintiff extrajudicially demands the
fulfillment of the obligation. The defendant shall be
held liable for the loss of the thing even it was due to
fortuitous event.
REMEDIES
In case of breach of obligation, the following are the
remedies available:

1.Specific performance, or substituted performance by a third

person in case of an obligation to deliver a generic thing, and
in obligations to do, unless it is a purely personal act;

2. Rescission (or resolution in reciprocal

obligations);

3. Damages, in any case;

In case of breach of obligation, the following are
subsidiary remedies available:

Accion subrogatoria

Accion pauliana

Accion directa
 Accion subrogatoria

An indirect action brought in the name of

the debtor by the creditor to enforce the
former’s rights except: a. Personal rights of
the debtor; b. Rights inherent in the person
of the debtor; c. Properties exempt from
execution. e.g. family home
 Accion pauliana (rescissory action)

– An action to impugn or assail the acts done

or contracts entered into by the debtor in
fraud of his creditor.

NOTE: Resort to the remedies must be in the

order stated above (NCC, Art. 1177).
 Accion directa

-Direct action to be filed in court in the

recovery of damages or to compel the
debtor in performance of the
obligation (if available).
 Q: Sacramento Steel Corporation (SSC) executed 5 separate
deeds of chattel mortgage constituted over various equipment
for International Exchange Bank (IEB) which subsequently,
SSC defaulted in the payment of its obligations. IEB’s demand
for payment went unheeded. Meanwhile, Metropolitan Bank
and Trust Company (Metro Bank) filed a motion for
intervention as a creditor of SSC.which it contends that the
mortgage contracts between IEB and SSC were entered into to
defraud the latter’s creditors. Thus, it prayed for the rescission
of the chattel mortgaged executed by SSC in favor of IEB. Will
the action to rescind the mortgage prosper?
 A: NO. Jurisprudence is clear that the following successive measures
must be taken by a creditor before he may bring an action for rescission of an
allegedly fraudulent contract: (1) exhaust the properties of the debtor through
levying by attachment and execution upon all the property of the debtor,
except such as are exempt by law from execution; (2) exercise all the rights
and actions of the debtor, save those personal to him (acción subrogatoria);
and (3) seek rescission of the contracts executed by the debtor in fraud of their
rights (acción pauliana). It is thus apparent that an action to rescind, or an
acción pauliana, must be of last resort, availed of only after the creditor has
exhausted all the properties of the debtor not exempt from execution or after
all other legal remedies have been exhausted and have been proven futile
(Metropolitan Bank and Trust Company v. International Exchange Bank, G.R.
No. 176008, August 10, 2011).
 KINDS OF
CIVIL
OBLIGATION
1.Pure Obligation

2. Conditional Obligation

3.Obligations with a period

4.Alternative, Facultative, Conjunctive

5.Joint and Solidary

6. Obligations with a penal clause

1. Pure Obligation

An obligation whose performance does not depend upon a future or uncertain

event, or upon a past event or upon a past event unknown to the parties,
demandable at once (NCC, Art. 1179).

NOTE: Other obligations which are demandable at once are: 1. Obligations with a
resolutory condition; and 2. Obligations with a resolutory term or period [NCC,
Arts. 1179 (2) and 1193 (2)].
distinctive characteristic of a pure obligation

1. The immediate demandability of the obligation; and

2. Its performance or fulfilment by the obligor or debtor. Although the obligee or

creditor can demand the performance of the obligation immediately, the quality of
immediate demandability is not infringed or violated when a reasonable period is
granted for performance (Jurado, 2009).
2. Conditional Obligation

An obligation subject to a condition and the effectivity of

which is subordinated to the fulfilment or non-fulfillment of a
future and uncertain event, or upon a past event unknown to
the parties (Pineda, 2000).
What is condition?

A condition is an event which is future and uncertain, upon

which the efficacy or extinguishment of an obligation
depends. It has two requisites: first, futurity; and second,
uncertainty.
Uncertain but past event as a condition

An uncertain but past event itself can never constitute a condition because in
order to be classified as a condition, the requisites of futurity and uncertainty are
required. Neither can it constitute a term or period because in order to be classified
as a term or period, the requisites of futurity and certainty are required. But the
proof or ascertainment of the fact or event, as distinguished from the fact or event
itself may either constitute a condition or a term depending upon the circumstances
of each case.
Constructive fulfillment of a condition

The condition shall be deemed fulfilled when the obligor

voluntarily prevents its fulfilment (NCC, Art. 1186).
Problem

Q: Ramon, the judicial administrator of the estate of Juan, found out that
Rodriguez had enlarged the area of the land which he purchased from Juan before
his death. Thus, Ramon demanded Rodriguez to vacate the portion allegedly
encroached by him. Rodriguez refused and contested there was indeed a
conditional sale with the balance of the purchase price payable within five years
from the execution of the deed of sale. Ramon then filed an action for recovery of
possession of the disputed lot. Is the contract of sale a conditional one?
ANSWER:

A: NO. The stipulation that the "payment of the full consideration based on a
survey shall be due and payable in five years from the execution of a formal deed
of sale" is not a which affects the efficacy of the contract of sale. It
merconditionely provides the manner by which the full consideration is to be
computed and the time within which the same is to be paid. But it does not affect
in any manner the effectivity of the contract (Heirs of San Andres v. Rodriguez,
G.R. No. 135634, May 31, 2000)