obligation 4

Question 1

— It is any voluntary act or omission, there being no malice, which prevents the normal fulfi llment of
an obligation.7

Answer 1

Negligence (fault or culpa)

Question 2

s, where the omission of
the buyer to sign a check, one of 24 post dated checks which were
delivered to the seller who did not bother to call the buyer to ask him
to sign the check, was mere “inadvertence’’ on the part of the buyer,
the latter was held not liable for damages resulting from the delay in
the payment of the value of the unsigned check.

Answer 2

Delay (mora).

Question 3

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.) The unilateral act of terminating a contract without legal

Answer 3

Contravention of the terms of the obligation. —

Question 4

which is his interest in having the
benefi t of his bargain by being put in as good a position as he
would have been had the contract been performed;

Answer 4

Expectation interest

Question 4

the failure without justifi able excuse to comply
with the terms of a contract. The breach may be willful or done
unintentionally. It has been defi ned as the failure, without legal excuse,
to perform any promise which forms the whole or part of the contract.

Answer 4

Breach of contract

Question 4

A breach upon the contract confers upon the injured party
a valid cause for recovering that which may have been lost or suffered.
The remedy serves to preserve the interests of the promisee that

Answer 4

Contractual interests of obligee or promisee, remedy serves to
preserve. —

Question 5

The provisions under Title
XVIII on “Damages’’ of the Civil Code govern in determining the measure of recoverable damages.8 Fundamental in the law on damages is
that one injured by a breach of a contract, or by a wrongful or negligent
act or omission shall have a fair and just compensation commensurate
to the loss sustained as a consequence of the defendant’s act.

Answer 5

Measure of recoverable damages

Question 5

— An obligee is duty
bound to minimize the damages for which he intends to hold any
obligor responsible. (see Art. 2203.) He cannot recover damages for any
loss which he might have avoided with ordinary care. If his negligence
was contributory to the loss, the court may equitably mitigate the
damages. (

Answer 5

Duty of obligee to minimize his damages

Question 5

which is his interest in being reimbursed
for loss caused by reliance on the contract by being put in as good
a position as he would have been had the contract not been made;

Answer 5

Reliance interest

Question 5

which is his interest in having restored
to him any benefi t that he has conferred on the other party

Answer 5

Restitution interest

Question 6

The effect of every infraction
is to create a new duty, that is, to make recompense to the one who
has been injured by the failure of another to observe his contractual
obligation. The mere proof of the existence of the contract and the
failure of its compliance justify a corresponding right of relief to the
obligee unless the obligor can show extenuating circumstance, like
proof of his exercise of due diligence (normally that of the diligence of
a good father of a family or, exceptionally by stipulation or by law such
as in the case of common carriers, that of extraordinary diligence) or
of the attendance of fortuitous event, to excuse him from his ensuing
liability.

Answer 6

Excuse from ensuing liability.

Question 7

Damages may be
recovered under Article 1170 when the obligation is to do something
other than the payment of money but when the obligation which the
debtor failed to perform consists only in the payment of money

Answer 7

Penalty interest for delay or non-performance. —

Question 8

The rate of the penalty interest
payable shall be that agreed upon. In the absence of stipulation of a
particular rate of penalty interest, then the additional interest shall
be at a rate equal to the regular monetary interest; and if no regular
interest had been agreed upon, then the legal interest shall be paid. The
payment of the regular interest constitutes the price or cost of the use
of money and thus, until the principal due is returned to the creditor,
such interest continues to accrue since the debtor continues to use such
principal amount

Answer 8

Rate of the penalty interest

Question 9

negligence characterized by want or absence of
or failure to exercise even slight care or diligence, or the entire absence
of care, acting or omitting to act on a situation where there is a duty to
act, not inadvertently but willfully and intentionally.

Answer 9

Gross negligence

Question 10

Responsibility arising from fraud is demandable
in all obligations. Any waiver of an action for future fraud is
void. (

Answer 10

ART. 1171

Question 11

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. (

Answer 11

ART. 1172.

Question 12

negligence which by itself
is the source of an obligation between the parties not formally bound
before by any pre-existing contract. It is also called “tort” or “quasidelict.”

Answer 12

Civil negligence (culpa aquiliana)

Question 13

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

Answer 13

ART. 1173

Question 14

he test for determining whether a person is negligent in doing
an act whereby injury or damage results to the person or property of
another is this: Would a prudent man, in the position of the person to
whom negligence is attributed, foresee harm to the person injured as a

Answer 14

Reasonable care and caution expected of an ordinary prudent person

Question 15

smoking while carrying materials
known to be infl ammable constitutes negligence;

Answer 15

Nature of the obligation

Question 16

.g., a guard, a man in the prime
of life, robust and healthy, sleeping while on duty is guilty of negligence

Answer 16

Circumstances of the person. —

Question 17

driving a car without headlights at night is gross negligence but it does not by itself constitute negligence when driving during the day; and

Answer 17

Circumstances of time

Question 18

driving at 60 kilometers per
hour on the highway is permissible but driving at the same rate of
speed in Quezon Boulevard, Manila, when traffi c is always heavy is
gross recklessness.

Answer 18

Circumstances of the place

Question 19

what article Willful injury to property may be a legal ground for
awarding moral damages if the court should fi nd that, under the
circumstances, such damages are justly due. The same rule applies
to breaches of contract where the defendant acted fraudulently or
in bad faith.’’16

Answer 19

“Art. 2220.

Question 20

what artice In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.’’

Answer 20

“Art. 2232

Question 21

The law distinguishes a contractual breach effected in good faith from one attended by bad faith. Where in breaching the contract, the defendant is not shown to have acted fraudulently or in bad faith

Answer 21

Contractual breach committed in good faith/bad faith.

Question 22

They are not punitive in nature. Although incapable of pecuniary estimation, such damages must somehow be proportional to and in approximation of the suffering infl icted, the factual basis for which must be satisfactorily established by the aggrieved party

Answer 22

With respect to moral damages.

Question 23

what article The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage

Answer 23

“Art. 587

Question 23

The principle of limited liability in maritime law is enunciated in the following provisions of the Code of Commerce:

Answer 23

) Code of Commerce provisions

Question 24

what article The co-owners of a vessel shall be civilly liable in the proportion of their interests in the common fund for the results of the acts of the captain referred to in Art. 587.’’

Answer 24

Art. 590.

Question 25

what article The civil liability incurred by shipowners in the case prescribed in this section, shall be understood as limited to the value with all the appurtenances and the freightage served during the voyage.’’

Answer 25

“Art. 837.

Question 26

what article applies the principle of limited liability in cases of collision, hence, Articles 587 and 590 embody the universal principle of limited liability in all cases. “No vessel, no liability,’’ expresses in a nutshell the limited liability rule. The liability of the owner or agent arising from the operation of the ship is confi ned to the vessel, equipment, and freight, or insurance

Answer 26

Article 837

Question 27

“the attention and care required of a person in a given situation and is the opposite of negligence.’’

Answer 27

Diligence

Question 28

what article Except in cases expressly specifi ed 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.

Answer 28

ART. 1174

Question 29

s any extraordinary event which cannot be foreseen, or which, though foreseen, is inevitable. In other words, it is an event which is either impossible to foresee or impossible to avoid.

Answer 29

fortuitous event

Question 30

Strictly speaking, fortuitous event is an event independent of the will of the obligor but not of other human wills, e.g., war, fi re, robbery, murder, insurrection, etc.

Answer 30

Acts of man

Question 31

They are those events which are totally independent of the will of every human being, e.g., earthquake, fl ood, rain, shipwreck, lightning, eruption of volcano, etc. They are also called force majeure. The term generally applies to a natural accident

Answer 31

Acts of God

Question 32

r those events which are common and which the contracting parties could reasonably foresee

Answer 32

Ordinary fortuitous events

Question 33

r those events which are uncommon and which the contracting parties could not have reasonably foreseen (e.g., earthquake, fi re, war,19 pestilence, unusual fl ood).

Answer 33

) Extraordinary fortuitous events

Question 33

In order that fortuitous event may release a debtor from his obligation, it is necessary that he be free from previous negligence or misconduct by which the loss or damage may have been occasioned. When the negligence of a person concurs with a fortuitous event in producing a loss, he is not exempted from liability by showing that the immediate cause of the damage was the fortuitous event

Answer 33

Negligence contributed to the loss or damage

Question 34

But where both fortuitous event and lack of due diligence are present under conditions that the loss would have happened with or without the negligence of the obligor — hence, the consequences are all a derivation of the fortuitous event — it cannot be said that responsibility arises therefrom. (Ibid.; see 8 Manresa 94-95.) In such a case, however, the courts are not bound to discharge the obligor from all liability. Under the law (Art. 2215[4].), where “the loss would have resulted in any event,” they “may equitably mitigate the damages” which in view of the circumstances the obligor should pay.

Answer 34

Negligence not contributory to the loss or damage.

Question 35

what article Usurious transactions shall be governed by special laws.

Answer 35

ART. 1175.

Question 36

s a contract whereby one of the parties delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. It may be gratuitous or with a stipulation to pay interest.

Answer 36

Simple loan or mutuum

Question 37

contracting for or receiving interest in excess of the amount allowed by law for the loan or use of money, goods, chattels, or credits.

Answer 37

Usury

Question 38

when the rate of interest is stipulated by the parties

Answer 38

Simple interest

Question 38

— when the interest earned is upon interest due

Answer 38

Compound interest

Question 38

when the rate of interest is within the maximum allowed by (usury) law (Secs. 2, 3, Usury Law, Act No. 2655, as amended.)

Answer 38

Lawful interest

Question 39

when the rate of interest intended by the parties is presumed by law, as when the loan mentions interest but does not specify the rate thereof. (Art. 2209.) The same rate is allowed in judgments where there is no express contract between the parties in anticipation of the same. Its use is not justifi ed where there is a stipulated rate of interest in the loan contract;

Answer 39

Legal interest.

Question 40

when the rate of interest is beyond the maximum fixed by law.

Answer 40

Unlawful interest

Question 40

12% per annum. (see Sec. 1, Ibid.) The legal rate is 12% (from default until fully paid) if the transaction is a loan or forbearance of money, goods, or credits or the judgment involves a loan or forbearance of money, goods or credits, as prescribed in Central Bank Circular

Answer 40

Legal rate

Question 41

if the loan is secured in whole or in part by a mortgage upon real estate with a Torrens Title or by any agreement conveying such real estate (also registered) or an interest therein. For purposes of the ceiling, loans secured by government securities such as treasury bills, CB certifi cates of indebtedness, etc., qualify as secured loans; and

Answer 41

Maximum rate

Question 41

— if the loan is not secured as provided above

Answer 41

14% per annum

Question 41

Interest fi xed by the parties to a contract for the ease or forbearance of money is referred to

Answer 41

s monetary interest.

Question 42

if it is imposed by law or by courts as penalty or indemnity for damages.

Answer 42

compensatory interest

Question 43

When the obligation consists in the payment of money (i.e., loan or forbearance of money, goods or credits), the interest due should be that which may have been stipulated in writing. Legal interest in the nature of (actual and compensatory) damages for non-compliance with an obligation to pay a sum of money is recoverable even if not expressly stipulated in writing

Answer 43

Loan or forbearance of money.

Question 43

what article 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 w

Answer 43

ART. 1176

Question 44

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

Answer 44

presumption

Question 45

one which cannot be contradicted like the presumption that everyone is conclusively presumed to know the law

Answer 45

Conclusive presumption

Question 46

Article 1176 does not apply to the payment of taxes. Taxes payable by the year are not installments of the same obligation.

Answer 46

Payment of taxes

Question 46

one which can be contradicted or rebutted by presenting proof to the contrary like the presumption established in Article 1176

Answer 46

Disputable (or rebuttable) presumption.

Question 47

— Of course, Article 1176 is not applicable where the non-payment of the prior obligations has been proven. Between a proven fact and a presumption pro tanto, the former stands, and the latter falls.

Answer 47

Non-payment proven.

Question 47

what article 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. (

Answer 47

ART. 1177

Question 48

what artcle Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary. (

Answer 48

ART. 1178

Question 49

When prohibited by law, like the rights in partnership, agency, and commodatum which are purely personal in character.

Answer 49

Prohibited by law

Question 50

two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profi ts among themselves.

Answer 50

contract of partnership

Question 50

a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.

Answer 50

contract of agency

Question 51

one of the parties delivers to another something not consumable so that the latter may use the same for a certain time and return it. Commodatum is essentially gratuitous. (

Answer 51

contract of commodatum

Question 52

When prohibited by stipulation of the parties, like the stipulation that upon the death of the creditor, the obligation shall be extinguished or that the creditor cannot assign his credit to another. The stipulation against transmission must not be contrary to public policy

Answer 52

Prohibited by stipulation of parties