Breaches of Obligations

Breaches of Obligations | Nature and Effects of Obligations | Obligations | OBLIGATIONS AND CONTRACTS

Under Philippine Civil Law, the concept of obligations is fundamental, and within this framework, breaches of obligations (i.e., the failure to comply with the requirements of a duty under a contract or by law) are critical for understanding how rights and liabilities are determined. The relevant provisions under the Civil Code of the Philippines outline the nature and effects of obligations, specifically addressing the types of breaches, their implications, and the remedies available.

I. Nature and Definition of Obligations

Obligations, under Article 1156 of the Civil Code, are defined as a juridical necessity to give, to do, or not to do. The essence of an obligation involves a binding relationship where one party, the obligor, is bound to perform an act or provide something to another party, the obligee. Failure to fulfill this obligation constitutes a breach.

II. Types of Breaches of Obligations

Breaches of obligations generally occur when the obligor fails to meet the requirements set forth by law, contract, or the general principles of equity and fairness. In the Civil Code, breaches are categorized primarily into real and personal breaches and moral versus material breaches.

  1. Real Breach: Occurs when the obligor fails to deliver a thing (object of the obligation).
  2. Personal Breach: Involves failure to perform a service or refrain from doing an act.
  3. Moral Breach: Breaches that, though violating a sense of moral obligation, may not necessarily result in material harm.
  4. Material Breach: Refers to breaches that result in substantial harm or damage to the obligee, giving rise to claims for damages.

In addition, the law further categorizes breaches as delays, fraud, negligence, and contravention of the tenor of the obligation.

III. Types of Breaches as to Time (Delay)

Under Article 1169, delay (or "mora") occurs when the obligor fails to perform the obligation on time. Delay has three specific classifications:

  1. Mora Solvendi: The delay of the obligor in the fulfillment of the obligation.
    • Requisites for Mora Solvendi:
      • Obligation is demandable and liquidated.
      • Obligor does not fulfill the obligation on time.
      • There is judicial or extrajudicial demand made by the obligee, except when demand is unnecessary under the law (e.g., in obligations to pay money).
  2. Mora Accipiendi: The delay of the obligee in accepting performance by the obligor.
  3. Compensatio Morae: When both the obligor and obligee are in mutual delay, nullifying the delay-related effects of each.

Delay entitles the obligee to specific remedies, such as the right to demand performance or rescission, plus damages, under certain conditions.

IV. Fraud in Obligations (Dolo)

Fraud, or "dolo," can vitiate consent and affect the enforcement of obligations. Fraud is defined as the deliberate intent to deceive another party. The Civil Code differentiates between fraud in the performance of obligations and fraud in the inception:

  1. Incidental Fraud (Dolo Incidente): Committed in the performance of an obligation, entitling the aggrieved party to damages.
  2. Causal Fraud (Dolo Causante): Used to induce another party to enter into a contract. If proven, it can render the contract voidable.

The party committing fraud is liable for damages, and the injured party may seek rescission or damages based on the seriousness of the fraud.

V. Negligence in Obligations (Culpa)

Negligence, or "culpa," refers to the failure to observe due care or diligence, which leads to a breach. The Civil Code identifies two forms of negligence:

  1. Culpa Contractual: Negligence within a contractual obligation. This does not negate the existence of the contract but entitles the aggrieved party to claim damages due to non-performance.
  2. Culpa Aquiliana: Negligence that gives rise to liability outside of contractual obligations, leading to quasi-delicts.

Negligence also varies based on the standard of care required, which could be ordinary diligence or a heightened duty of care in specific relationships or activities.

VI. Contravention of the Tenor of the Obligation

Contravention involves violating the specific terms of the obligation. A breach occurs if the obligor performs an act contrary to the tenor of the obligation, which may be in defiance of any specific or general stipulations, provided that such terms do not contradict the law, morals, public order, or public policy.

VII. Remedies and Consequences of Breach of Obligation

The Civil Code outlines various remedies available to the aggrieved party in cases of breach:

  1. Demand for Performance: The obligee may require specific performance of the obligation as it was agreed upon.
  2. Rescission: The obligee may rescind the contract in cases where specific performance is impossible or undesirable, often in conjunction with claims for damages.
  3. Damages:
    • Actual Damages: Compensation for real loss.
    • Moral Damages: Awarded for physical suffering, mental anguish, or serious anxiety.
    • Exemplary Damages: Imposed to set a public example or correct social wrongs.
    • Nominal Damages: Awarded when there is a breach without substantial injury.
    • Liquidated Damages: Amount pre-stipulated in the contract as compensation for breach.

Under Article 1170, every breach of an obligation – by reason of fraud, negligence, delay, or contravention – entitles the injured party to damages, except in cases where delay is justified or when performance is rendered impossible due to a fortuitous event (force majeure).

VIII. Fortuitous Events and Breach of Obligation

Fortuitous events relieve the obligor from liability for non-performance, provided that:

  • The event was unforeseeable or unavoidable.
  • The event directly caused the failure to fulfill the obligation.
  • There is no contributory negligence by the obligor.
  • The obligation is not to deliver a determinate thing.

IX. Prescription of Actions for Breach of Obligations

Lastly, actions arising from breaches of obligations are subject to prescriptive periods as outlined in the Civil Code. The typical period to bring an action depends on the nature of the obligation or contract, ranging from 4 years for quasi-delicts to 10 years for obligations with a fixed period.

Conclusion

The Civil Code’s provisions on breaches of obligations aim to maintain fairness by enforcing obligations and compensating for damages due to breach, provided all legal standards and requirements are met.