1. CONTRACTS
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2. 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.
Article 1170
Fraud: (deceit or dolo) the deliberate or intentional act to evade fulfillment
Negligence: (fault or culpa) the omission, without malice, which
prevents fulfillment
Delay:(default or mora) if imputable to the debtor
GROUNDS FOR DAMAGES:
Violation of the Terms: (violatio) unless properly excused by
fortuitous event
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3. 
Kinds of Damages
(A) MORAL - for mental and physical anguish.
(B) EXEMPLARY - corrective or to set an example.
(C) NOMINAL - to vindicate a right, when no other kind of
damages may be recovered.
(D) TEMPERATE - exact amount cannot be determined
(E) ACTUAL - actual losses as well as unrealized profit.
(F) LIQUIDATED - predetermined by an agreement.
MENTAL
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4. 
Dolo & Culpa
Art. 1171. Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void.
Art. 1172. 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.
Art. 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 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. (1104a)
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5. 
Distinction
Dolo
 Deliberate intention to
cause damage or
prejudice
Culpa
 No deliberate intent to
cause damage
 Liability cannot be
mitigated or reduced
by the courts
 Liability may be
mitigated or reduced
by the courts
 Waiver of an action
against future fraud is
void.
 Waiver of an action
against future culpa may
in a certain sense be
allowed.
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6. 
Fraud (Dolo)
Past fraud may be waived, but not for future fraud.
Dolo Causante or Causal Fraud
Deceit that is not serious in character and without
which the other party would have entered into the
contract anyway.
A deception used by one party prior to or simultaneous
with the contract, in order to secure the consent of other.
Deceit must be serious.
Dolo Incidente or Incidental Fraud
(Solidbank vs. Mindanao Ferroalloy, G.R. No. 153535. July 28, 2005)
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7. 
Negligence (Culpa)
Gross Negligence:
negligence characterized by the want of even slight care, acting
or omitting to act in a situation where there is a duty to act, not
inadvertently but willfully and intentionally, with a
conscious indifference to consequences, insofar as other
persons may be affected. It is the omission of that care which
even inattentive and thoughtless men never fail to give to their
own property. (CSC vs. Rabang, G.R. No. 167763. March 14,
2008)
Simple Negligence:
Ordinary negligence which in certain cases may be excused or mitigated.
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8. 
According to Source of Obligation
Kinds of Culpa
CULPA
CONTRACTUAL
(Contractual
Negligence)
CULPA
AQUILIANA (Civil
Negligence)
CULPA CRIMINAL
(Criminal
Negligence)
Results in a breach
of contract
Tort or Quasi-Delict Results in the
commission of a
crime
Negligence is
merely incidental,
incident to the
performance of an
obligation already
existing because of a
contract
Negligence is direct,
substantive and
independent.
Negligence is direct,
substantive and
independent
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9. CULPA
CONTRACTUAL
CULPA AQUILIANA CULPA CRIMINAL
There is a pre-existing
obligation whether
implied or express.
No pre-existing
obligation
No pre-existing
obligation
Proof is preponderance
of evidence
Proof is preponderance
of evidence
Proof of guilt beyond
reasonable doubt
Defense of “good
father of a family” in
the selection and
supervision of
employee is not a
proper complete
defense, though it may
mitigate damages.
Defense of GFF is a
proper and complete
defense insofar as
employers are
guardians are
concerned
GFF is not a proper
defense. Employee’s
guilt is automatically
the employer’s civil
guilt, if the former is
insolvent.
Kinds of Culpa
According to Source of Obligation
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10. 
CULPA
CONTRACTUAL
CULPA AQUILIANA CULPA CRIMINAL
As long as it is proved
that there was a
contract and that it was
carried out, it is
presumed that the
debtor is at fault, and it
is his duty to prove
that there was no
negligence in carrying
out the terms of the
contract.
Ordinarily, the victim
has to prove the
negligence of the
defendant. This is
because his action is
based on alleged
negligence on the part
of the defendant.
Accused is presumed
innocent until the
contrary is proved, so
prosecution has the
burden of proving the
negligence of the
accused.
According to Source of Obligation
Kinds of Culpa
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11. 
According to Source of Obligation
Kinds of Culpa
Scenario:
A taxi hit a make-shift store thereby
injuring its driver, passenger and the
store attendant. What kinds of culpa
are present?
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12. 
 Kinds under the Civil Code:
(a) that agreed upon by parties
(b) in the absence of (a), that required by the law.
(c) in the absence of (b), bonum pater-familia or that
expected of a good father of a family
DILIGENCE
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13. 
Art. 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
Fortuitous Event
Any event which cannot be foreseen, or which, though foreseen is
inevitable. It consists of a happening independent of the will of the debtor
and which happening, makes the normal fulfillment of the obligation
impossible.
Caso fortuito, act of God, force majeure
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14. 
 General Rule: Debtor is not liable for fortuitous
events.
 Exceptions:
(1) When expressly declared by law;
(2) When expressly declared by stipulation or
contract;
(3) When the nature of the obligation requires the
assumption of risk.
Fortuitous Event
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15. 
Essential Characteristics of a Fortuitous Event
 Independent of the will of the debtor;
 Impossibility of foreseeing or impossibility of
avoiding it even if foreseen;
 The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a
normal manner.
Fortuitous Event
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16. 
Interests
Art. 1175. Usurious transactions shall be governed by
special laws.
USURY:
Contracting for or receiving something in excess of the amount allowed
by law for the loan or use of money, goods, chattels or credit.
Exaction of excessive interest.
Under Central Bank Circular No. 905, usury had been abolished since
Jan. 1, 1983. The parties will now mutually agree on the rate of interest.
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17. 
 Kinds of Interest:
A. Moratory Interest – interest given for compensation or use of
money.
Ex. Tommy borrowed P10,000 at 7% interest per annum for 2 years
from the bank.
B. Compensatory Interest – interest given by way of damages.
Ex. Tommy borrowed P10,000 with no interests for 2 years. If he
pays when the debt falls due, he would not pay any interest. However, he
will be liable for interest by way of damages if he incurs default.
Interests
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18. 
 Lawful Interests (Authorized Rates): those allowed
as maximum under the former Usury Law
 Legal Interests: rate presumed by law to have been
agreed upon but no rate was stipulated.
 Conventional Interests: rate agreed upon by parties.
 Usurious Interests: rate which exceeds the maximun
provided by law.
Interests
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19. 
Art. 1176. 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 without reservation as to
prior installments, shall likewise raise the presumption that such
installments have been paid.
Presumption: inference of a fact drawn from other evidence that is
admitted and proven to be true.
It could be CONCLUSIVE or DISPUTABLE.
Presumptions
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20. 
Art. 1177. 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.
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21. 
 Exact payment.
 Exhaust debtor’s properties generally by attachment
 Accion subrogatoria (subrogatory action)
- exercise all rights and actions except those inherent in the person.
 Accion pauliana
- impugn or rescind acts or contracts done by the debtor to defraud the
creditors.
Rights of Creditors
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22. 
Art. 1178. Subject to the laws, all rights acquired in
virtue of an obligation are transmissible, if there has
been no stipulation to the contrary.
General Rule: Rights are transmissible.
Except:
(1) If law provides otherwise.
(2) If the contract provides otherwise.
(3) If the obligation is purely personal.
Transmissibility of Rights
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