ART. 1167.

If a person obliged to do something fails to do it the same shall be

executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be
undone. (1098)

Article 1167 refers to an obligation to do, i.e., to perform an act or render a service. It
contemplates three situations whereas the ​debtor fails to perform an obligation to do,
perform obligation to do but contrary to the terms thereof​, and ​performs an obligation to
do but in a poor manner.

Here are the ​remedies​ ​of creditor in positive personal obligation:

If the debtor fails to comply with his obligation to do, the creditor has the right to have
the obligation performed by himself, or by another unless personal considerations are
involved, at the debtor’s expense; and to recover damages. In case the obligation is
done in contravention of the terms of the same or is poorly done, the court may order
(upon complain) that it be undone if it is still possible to undo what was done. If the
debtor fails to perform the obligation to do, note that the creditor could ask someone
else (a third person) to perform the obligation to do at the expense of the debtor.

ART. 1168. When the obligation consists in NOT DOING, and the obligor does
what has been forbidden him, it shall also be undone at his expense. (1099a)

It pertains to negative personal obligation, or the obligation not to do. Also, to the
obligation of the obligor to undo the forbidden act of thing, he may also be made liable
for damages caused by doing that which was forbidden.
ART. 1169. Those obliged to deliver or to do something incur in DELAY from the
time the obligee judicially or extra-judicially 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 obligation it appears that
the designation of the time when the thing is to be delivered or the service is to
be rendered was a controlling 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.

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. From the moment one of the parties fulfills his obligation, delay by the
other begins. (1100a)

Article 1169 covers the delay--- its meaning, kinds, and its effect. The first sentence of
the article states the general rule where the obligor is in delay if the obligee demands
already the fulfillment of their obligation but it is also indicated on the latter part that
there are situations where we could consider automatic delays even without the
demand of the creditor.

Meaning of delay

For distinction, the ​ordinary delay is the failure to perform an obligation on time while in
law (Art.1169), ​legal delay or default or mora it is define as the failure to perform an
obligation on time which failure, constitutes a breach of the obligation.

Kinds of delay

1. Mora solvendi​ or the delay on the part of the debtor

2. Mora accipiendi​ ​or the delay on the part of the creditor
 3. Compensatio morae​ or the delay of both creditor and debtor (no delay)

Requisites of delay or default by the debtor.

1. Ordinary delay
2. Legal delay or mora or default
3. Failure of the debtor to comply with such demand.

Effects of delay.

In the case of Mora Solvendi, the following are the effects:

(a) The debtor is guilty of breach of the obligation;

(b) He is liable 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 filing 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 the damages. (Art. 2215[4].)

In the case of Mora Accipiendi, the following are the effects:

(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 (see Art. 1162.);

(d) Where the obligation is to pay money, the debtor is not liable for interest from the
time of the creditor’s delay; and

(e) The debtor may release himself from the obligation by the consignation of the thing
or sum due. (see Art. 1256.)

In the case of Compensatio morae, the following are the effects:

(a) There is no delay in both parties.

(b) If it cannot be determined which of the following parties is guilty of delay, the
contract shall be deemed extinguished and each shall bear his own damages.

Demand is not necessary to put debtor in delay when ​the obligation so provides, the
law so provides, the time is of the essence, the demand would be useless​, and ​when
there is performance by a party in reciprocal obligations​. In case of reciprocal
obligations (see Art. 1191.), the performance of one is conditioned upon the
simultaneous fulfillment on the part of the other.

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)
Obligee could claim damages when the debtor is guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor
Grounds for liability.

1. Fraud (Deceit or dolo)- deliberate or ​intentional evasion of the normal fulfillment

of an obligation
(a) ​Casual fraud​ (dolo causante)- fraud in obtaining consent
(b) ​Incidental fraud (dolo incidente)- committed in the performance of the
obligation already existing
2. Negligence (fault or culpa)​- Not intentional: It is any voluntary act or omission,
there being ​no malice​, which prevents the normal fulfillment of an obligation.
3. Delay (mora)- ​the failure to perform an obligation on time which failure,
constitutes a breach of the obligation.
4. Contravention of the terms of the obligation​- violation of the terms and
conditions stipulated in the obligation. The contravention must not be due to a
fortuitous event or force majeure.

Note that FRAUD is intentional and must be clearly proved. Waiver for future fraud id
void. The liability for this is cannot be mitigated. On the other hand, NEGLIGENCE is
 not intentional and it is presumed from a violation of a contractual obligation. Liability
for this may be reduced according to circumtances.

Article 1171. Responsibility arising from fraud is demandable in all obligations.

Any waiver of an action for future fraud is void.

● Article 1171 refers to incidental fraud.

● The court has no power to mitigate or reduce the damages to be awarded.
Waiver of action for future fraud is VOID
It is void when one of the provisions of the contract contained an agreement that:
in case he committed a fraud in the future, he would not be liable for it or you cannot
charge him for the fraud that he committed.
Waiver of action for past fraud is VALID
A past fraud can be the subject of a valid waiver because the waiver can be
considered as an act of generosity on the part of the victim. The waiver must be
expressed in clear language which leaves no doubt as to the intention of the oblige to
give up his right against the obligor.

Article 1172. Responsibility arising from negligence in the performance of every

kind of obligations is also demandable, but such liability may be regulated by the
courts, according to the circumstances.

● The court has a wide discretion in fixing the measure of damages

● Negligence is not as serious as fraud because it is not deliberate
● When both parties are negligent, the fault of one may cancel or neutralize the
negligence of the other.

Validity of waiver arising of action from negligence

● Waiver of action for future negligence is VALID except where the nature of obligation
requires extraordinary diligence (e.g., common carriers)
● Negligence showing bad faith is considered equivalent to fraud (waiver for future
negligence of this kind is VOID)

Kinds of Negligence
1. Contractual Negligence (culpa contractual) - Negligence in contracts resulting in
their breach (Article 1172)
2. Civil Negligence (culpa aquiliana)​ - quasi-delict or tort (Article 2176)
3. Criminal Negligence (culpa criminal) – negligence resulting in the commission of a
crime (Articles 3, 365, Revised Penal Code)

Article 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 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 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.

Meaning of fault or negligence:

Fault or negligence is defined by the above provision. According to the
Supreme Court, “negligence is the failure to observe 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.”

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:

● Nature of the obligation

 e.g., Smoking while carrying materials known to be inflammable constitutes negligence.
● Circumstances of the person
e.g., A guard, a man in the prime of life, robust and healthy, sleeping while on duty is
guilty of negligence.

● Circumstances of the time

e.g., Driving a car without headlights at night is gross negligence but it does not by itself
constitute negligence when driving during the day.
● Circumstances of the place
e.g., Driving at 100 kph on the superhighway is permissible but driving at the same rate
of speed in Ayala Ave. Makati is gross recklessness.

Diligence Required
1. that agreed upon by the parties
2. in the absence of stipulation, that required by law in the particular case (e.g.,
extraordinary diligence required for common carriers)
3. in the absence of any provision in the contract or law, the diligence required of a good
father of a family (ordinary diligence)

Article 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.

Fortuitous Event
● An event which cannot be foreseen, or which, though foreseen, is inevitable
● An event impossible to foresee or impossible to avoid.
Fortuitous event distinguished from Force Majeure
1. ​Acts of man – Strictly speaking, fortuitous event is an event independent of the will
of the obligor but not of other human wills.
e.g., War, fire, robbery, murder, insurrection, etc.
 2. ​Acts of God (Majeure) – They refer to what is called majeure or those events which
are totally independent from the will of every human being.
e.g., Earthquake, flood, rain, shipwreck, lightning, eruption of volcano, etc.

Kinds of fortuitous events

● Ordinary fortuitous events - common and which the contracting parties could
reasonably foresee (e.g., rain)
● Extra-ordinary fortuitous events - uncommon and which the contracting parties could
not have reasonably foreseen (e.g., earthquake, fire, war, pestilence, unusual flood).

Requisites of a fortuitous event

1. the event must be independent of the human will or at least of the debtor’s will
2. the event could not be foreseen, or if foreseen, is inevitable
3. the event must of such character as t render it impossible for the debtor to comply
with his obligation in normal manner
4. the debtor must be free from any participation in, pr the aggravation of, the injury to
the creditor, that it, there is NO concurrent negligence on his part.

Rules as to liability in case of fortuitous event

General rule:
A person is not responsible for loss or damaged caused to another resulting from
the non-performance of his obligation due to a fortuitous event (obligation is
extinguished)

Exceptions:
1. When expressly specified by law
● The debtor is guilty of fraud, negligence or delay, or contravention of the tenor of the
obligation (Arts. 1170,1165, par 3)
● The debtor has promised to deliver the same (specific) thing to two (2) or more persons
who do not have the same interest (Art.1165, par 3)
● The obligation to deliver a specific thing arises from a crime (Art.1268)
 ● The thing to be delivered generic (Art. 1263)
2. When declared by stipulation
3. When the nature of the obligation requires the assumption of risk.

1175-1176
Usurious Transactions and Rules on
Interest

USURY: stipulation of interest rates higher than

the ceiling provided by law.

Note: Usury Law (Act No. 2655, as amended)

was repealed​ by Central Bank Circular No. 905,
Dec. 10, 1982.

INTEREST
Art. 1176, Civil Code. Receipt of the principal without
reservation as to the interest shall give rise to a
disputable presumption that the interest has been
paid. Receipt of the latter installment without
reservation as to prior installments shall likewise give
rise to a disputable presumption that such prior
installments have been paid.

What is Presumption?

Meaning the inference of a fact not actually known arising from its usual connection with another
which known or proved.

Inference-Act or process of conducting from evidence or premises.

Two kinds of presumption

1) Conclusive presumption- one which cannot be contradicted, like the presumption that every is
conclusively presumed to know the law. (see art 3)

2) Disputable (or rebuttable) presumption– One which can be contradicted by presenting proof
to the contrary.

EXEMPTIONS

A. WITH RESERVATION AS THE INTEREST

 B. RECEIPT WITHOUT INDICATION THAT A PARTICULAR INSTALLMENT IS PAID
C. RECEIPT FOR A PART OF PRINCIPAL
D. PAYMENT OF TAXES
E. NON PAYMENT PROVEN

EXAMPLE​:

Mr X borrowed P15000 from Mr. Y payable by installment within three months in the amount of
P5,000 per month.

Ist month- Not paid

2nd month- Mr.Y received the amount of 5000 for the 2nd month without making any
reservation as to the collection of the first installment.

1177-1178
Art. 1170, Civil Code. 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.

Transmissibility of Rights
Art. 1178: Rights acquired by virtue of an
obligation are transmissible in character,
UNLESS prohibited:
1. by their very nature (i.e. personal
obligations)
2. by stipulation of the parties
3. by operation of law

Primary Remedies of Creditors

1. Specific Performance – performance

by the debtor of the prestation itself
2. Substituted Performance – someone
else performs or something else is
performed at the debtor’s expense
3. Equivalent Performance – right to
claim damages (in either performance or
rescission)
4. Rescission – right to rescind or cancel
the contract
5. Pursue the Leviable – to attach the
properties of the debtor, except those
exempt by law from execution