I. BREACH OF OBLIGATIONS person what they deserve.

It could be about
fulfilling obligations, recognizing someone's
A breach of obligation, or breach of contract,
contributions, or simply treating them with the
occurs when a party fails to fulfill their contractual
respect they're entitled to as a human being.You
duties or obligations as agreed upon, whether
make sure your friend gets their agreed-upon share
partially or wholly.
of the pizza, even if you could eat more.
EXAMPLE:
Observing honesty and good faith: This speaks to the
A buyer refusing to pay for goods or services as
importance of sincerity, truthfulness, and acting
outlined in the contract.
with genuine intentions. It means being upfront and
A seller failing to deliver goods as promised.
not trying to deceive or take advantage of others.
"Good faith" implies a commitment to fair dealing
Types of Breach:
and acting without any hidden motives or malice.
Minor breach: A less serious failure that may
You don't lie and say you ate fewer slices than you
not allow termination, but still entitles the non-
actually did to get more later. You're upfront and
breaching party to seek damages. A minor breach
trustworthy.
happens when you don’t receive an item or service by
the due date.
MANNER OF BREACH
EXAMPLE: you bring a suit to your tailor to be custom
fit. The tailor promises (an oral contract) that they
will deliver the adjusted garment in time for your Grounds for liability
important presentation but, in fact, they deliver it a
day later.
Article 1170. Those who in the performance of their
Material breach: A significant failure that obligations are guilty of fraud, negligence, or delay,
goes to the heart of the contract, potentially
and those who in any manner contravene the tenor
allowing the non-breaching party to terminate the
agreement. A material breach is when you receive thereof, are liable for damages.
something different from what was stated in the
This provision applies to any contractual
agreement.
relationship where one party fails to fulfill their
EXAMPLE: that your firm contracts with a vendor to
obligation as agreed.
deliver 200 copies of a bound manual for an auto
industry conference. But when the boxes arrive at
the conference site, they contain gardening
A. FRAUD
brochures instead.
Fraud (Dolo) Fraud, or "dolo," occurs when one party
deliberately deceives another or intentionally does
Further, a breach of contract generally falls under
not comply with the terms of the agreement. This
one of two categories:
deception can be in the form of false promises,
 Actual breach: When one party refuses to fully
misrepresentations, or deliberate actions to avoid
perform the terms of the contract.
fulfilling the obligation. In cases of fraud, the
 Anticipatory breach: When a party states in
aggrieved party is entitled to seek damages as
advance that they will not be delivering on the
compensation for the harm suffered.
terms of the contract.
Responsibility arising from fraud demandable.
https://www.investopedia.com/terms/b/breach-of-
contract.asp#:~:text=Minor%20breach:%20A%20mino Article 1171. Responsibility arising from fraud is
r%20breach,deliver%20it%20a%20day%20later.
demandable in all obligations. Any waiver of an
Article 19. Every person must, in the exercise of his action for future fraud is void. (1102a)
rights and in the performance of his duties, act with Demandable in all obligations: This means that if
someone commits fraud in the context of any
justice, give everyone his due, and observe honesty
obligation (whether it's a contract, a tort, or any
and good faith. other legal duty), they can be held liable for the
damages caused by that fraud.
(When you use your rights or do what you're
Any waiver of an action for future fraud is void:
supposed to do, you gotta be fair, give people what
This means that if someone tries to agree in advance
they deserve, and be honest. "Play fair, be respectful,
to not sue for fraud that they might commit in the
and be honest in everything you do.")
future, that agreement is not enforceable.
EXAMPLE:
Example: If a seller intentionally hides a
Act with justice: This isn't just about what's legal;
defect in a product they are selling, the buyer can
it's about what's fair and morally right. It means
sue for damages even if the contract included a
considering the impact of your actions on others and
clause stating that the buyer would not sue for
striving for equitable outcomes. You don't try to
defects.
sneak extra slices just because you're hungrier. You
make sure the slices are divided fairly.
Meaning of causal fraud
Giving everyone his due: : This part emphasizes the
idea of respecting individual rights and giving each
Article 1338. There is fraud when, through insidious Article 1172. Responsibility arising from negligence
words or machinations of one of the contracting in the performance of every kind of obligation is also
parties, the other is induced to enter into a contract demandable, but such liability may be regulated by
which, without them, he would not have agreed to. the courts, according to the circumstances.
Insidious Words or Machinations: This refers to This means that if someone breaches their
deceptive or manipulative language or actions used contractual obligations through fraud, negligence,
to trick or deceive someone. or delay, or otherwise violates the terms of the
Induced to Enter into a Contract: The fraud must be contract, they are responsible for compensating the
the reason why the other party agreed to the other party for the resulting damages.
contract. Example: Scenario: A construction company
Would Not Have Agreed To: The contract would not (Company A) contracts with a homeowner (Client B) to
have been entered into if the fraud had not occurred. build a house, with a specified completion date.
Example: Imagine a scenario where "A" claims Company A fails to complete the house on time due
to have a valuable antique necklace that is worth a to negligence in managing resources and materials,
lot of money, and "B" is interested in buying it. "A" causing Client B to incur additional expenses for
then convinces "B" to buy the necklace for a high temporary housing and other costs.
price by claiming that it is a rare and valuable piece,
when in reality, it is a common imitation. If "B" buys Application of Article 1172: Company A is liable for
the necklace based on "A"s false statements, and damages to Client B because their delay (due to
would not have bought it if they knew it was a fake, negligence) constitutes a breach of their contractual
then "A"s actions would be considered fraud under obligation. Client B can sue for compensation for the
Article 1338. costs incurred due to the delay.

Two kinds of fraud in the making of a contract Meaning of fault or negligence

Article 1344. In order that fraud may make a Article 1173. The fault or negligence of the obligor
contract voidable, it should be serious and should consists in the omission of that diligence which is
not have been employed by both contracting parties. required by the nature of the obligation and
Explanation: corresponds with the circumstances of the persons,
Voidable Contract: A contract that is not inherently
of the time and of the place. When negligence shows
invalid but can be annulled or set aside by a party
who has been defrauded. bad faith, the provisions of articles 1171 and 2201,
Serious Fraud: The fraud must be substantial enough
paragraph 2, shall apply.
to induce a reasonable person to enter into the
contract.
Not Mutual Fraud: If both parties are guilty of fraud,
Article 1173 of the Philippine Civil Code defines fault
the contract cannot be annulled.
Example: Scenario: A seller (A) sells a car to a or negligence as the obligor's (debtor) omission of
buyer (B) representing that the car has a clean title the diligence required by the obligation, considering
and no hidden damages. However, A knows that the the circumstances of the persons, time, and place.
car has a lien and hidden damages, which A Explanation:
concealed from B. B, relying on A's representation, Obligor: The person who has a duty or obligation to
buys the car. do something or provide something.
Diligence: The level of care and attention that is
Application of Article 1344: A's fraud is serious expected in fulfilling an obligation.
because it induced B to enter into the contract with Omission: The failure to act or do something that is
false information. Because the fraud was not required.
employed by both parties, B can seek to have the Nature of the obligation: The specific type or kind of
contract annulled. obligation, which influences the level of diligence
required.
B. NEGLIGENCE Circumstances of the persons: The individual
Negligence (Culpa) Negligence, referred to as characteristics and capabilities of the obligor, which
"culpa," is the failure to exercise the care that a can affect the level of diligence expected.
reasonably prudent person would exercise in similar Time and place:.The context in which the obligation
circumstances. Unlike fraud, negligence does not must be performed, which can influence the level of
involve intent to cause harm, but it still results in a diligence required.
breach of obligation due to carelessness or lack of
attention. When negligence leads to the non-
fulfillment of an obligation, the negligent party is C. DELAY
liable for damages. Delay (Mora) Delay, or "mora," arises when a party
fails to perform their obligation on time. The delay
Responsibility arising from negligence demandable. can be either excusable or inexcusable, with the
latter making the party liable for damages. The law circumstances of the obligation clearly show that
distinguishes between "mora solvendi," the delay of the time of performance was crucial to the contract,
the obligor (the party obligated to perform), and a demand is not required.
"mora accipiendi," the delay of the obligee (the party Consequences of Delay:
entitled to the performance). Once a debtor is in mora, they are liable for damages,
including interest on the amount owed, and may also
Meaning of delay. be subject to other remedies available to the
Article 1169. Those obliged to deliver or to do creditor.
Example:
something incur in delay from the time the obligee Scenario:
judicially or extrajudicially demands from them the A construction company (debtor) agrees to deliver a
building (obligation) to a client (creditor) on April 15,
fulfillment of their obligation.
2025. The contract does not specify any
consequences for late delivery, and the client does
not demand delivery by the deadline.
However, the demand by the creditor shall not be
Ordinary Delay:
necessary in order that delay may exist: The company fails to deliver the building on April
15th. This is considered an ordinary delay, as the
client has not yet made a demand for fulfillment.
1. When the obligation or the law expressly so Legal Delay:
declare; or On April 20th, the client formally demands delivery.
If the company still fails to deliver by a reasonable
2. When from the nature and the circumstances of time after the demand, it incurs legal delay (mora).
the obligation it appears that the designation of the Consequences:
The client can then pursue legal remedies, such as
time when the thing is to be delivered or the service
suing for damages or specific performance (requiring
is to be rendered was a controlling motive for the the company to deliver the building).
establishment of the contract; or
D. ANY OTHER MANNER OF CONTRAVENTION
3. When demand would be useless, as when the
obligor has rendered it beyond his power to perform.
EXCUSE FOR NON-PERFORMANCE

In reciprocal obligations, neither party incurs in A. FORTUITOUS EVENTS

delay if the other does not comply or is not ready to
Meaning of fortuitous event
comply in a proper manner with what is incumbent
Article 1174. Except in cases expressly specified by
upon him. From the moment one of the parties
the law, or when it is otherwise declared by
fulfills his obligation, delay by the other begins.
stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be
Article 1169 of the Philippine Civil Code states that a
debtor incurs delay (mora) only when the creditor responsible for those events which could not
demands fulfillment of the obligation, either be foreseen, or which, though foreseen, were
judicially or extrajudicially, unless the obligation or
law expressly states otherwise, or the nature and inevitable.
circumstances of the obligation indicate that time is
of the essence.
Explanation: Article 1165. When what is to be delivered is a
Mora: determinate thing, the creditor, in addition to the
This refers to the failure to perform an obligation on
time, which constitutes a breach of the obligation. right granted him by article 1170, may compel the
Demand for Fulfillment: debtor to make the delivery.
The creditor (the person to whom the obligation is
owed) must formally demand that the debtor (the
person obligated) fulfill their duty, either through a If the thing is indeterminate or generic, he may ask
court proceeding or by a simple request. that the obligation be complied with at the expense
Exceptions to the Demand Requirement:
Express Stipulation: If the obligation or law of the debtor.
explicitly states that the debtor is in delay from the
time the obligation is due, a demand is not necessary.
Time as a Controlling Motive: If the nature and If the obligor delays, or has promised to deliver the
same thing to two or more persons who do not have The injured party may choose between the
the same interest, he shall be responsible for any fulfillment and the rescission of the obligation, with
fortuitous event until he has effected the delivery. the payment of damages in either case. He may also
seek rescission, even after he has
A. ACT OF CREDITOR chosen fulfillment, if the latter should become
impossible.
II.REMEDIES FOR BREACH OF OBLIGATIONS

The court shall decree the rescission claimed, unless

Obligations to give
there be just cause authorizing the fixing of a period.
Article 1165. When what is to be delivered is a
determinate thing, the creditor, in addition to the This is understood to be without prejudice to the
right granted him by article 1170, may compel the rights of third persons who have acquired the thing,
debtor to make the delivery. in accordance with articles 1385 and 1388 and the
Mortgage Law.
If the thing is indeterminate or generic, he may ask
that the obligation be complied with at the expense OTHER PROVISIONS:
of the debtor. Article 1166. The obligation to give a determinate
thing includes that of delivering all its accessions
If the obligor delays, or has promised to deliver the and accessories, even though they may not have been
same thing to two or more persons who do not have mentioned.
the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery. Article 1177. The creditors, after having pursued the
(1096) property in possession of the debtor to satisfy their
claims, may exercise all the rights and bring all the
Obligations to do: actions of the latter for the same purpose, save
Article 1167. If a person obliged to do something those which are inherent in his person; they may also
fails to do it, the same shall be executed at his cost. impugn the acts which the debtor may have done to
defraud them.
This same rule shall be observed if he does it in
contravention of the tenor of the obligation. Article 1178. Subject to the laws, all rights acquired
Furthermore, it may be decreed that what has been in virtue of an obligation are transmissible, if there
poorly done be undone. has been no stipulation to the contrary.

Obligations not to do: Article 1192. In case both parties have committed a
Article 1168. When the obligation consists in not breach of the obligation, the liability of the first
doing, and the obligor does what has been forbidden infractor shall be equitably tempered by the courts.
him, it shall also be undone at his expense. If it cannot be determined which of the parties first
violated the contract, the same shall be deemed
RESCISSION AS A REMEDY: extinguished, and each shall bear his own damages.
Article 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.