MODULE 3: Sources of Damages

• Sources of Damages

  Grounds where the creditor may claim damages against the debtor
• Sources of Damages

  • Fraud
  • Negligence
  • Delay
  • Contravention of the tenor of the obligation
• Fraud


  The deliberate and intentional evasion of the normal fulfillment of the obligation
• Types of Fraud

  • Dolo Incidente (Incidental Fraud)
  • Dolo Causante (Causal Fraud)
• Dolo Incidente (Incidental Fraud)


  Fraud that is not serious and without which the other party would still have entered into the contract
• Dolo Causante (Causal Fraud)


  Fraud is serious enough to render a contract voidable, referring to fraud without which the other party's consent would not have been given
• Waiver of Fraud


  A renunciation, repudiation, abandonment, or surrendering of some claim, right or privilege
• Only those frauds committed in the past may be waived, as the creditor has the right to forgive any fraud committed in the past by the debtor
• An agreement to waive an action for future fraud is void
• Negligence (Culpa)


  The failure to use the care and diligence demanded by the special relationship between the plaintiff and defendant under particular circumstances that arise from inattention, careless conduct, or want of care
• Negligence is different from fraud, as fraud consists of deliberate acts, while negligence is an unintentional act that causes injury to the other
• Kinds of Negligence

  • Culpa Contractual (Contractual Negligence)
  • Culpa Aquiliana (Quasi-delict)
• Culpa Contractual


  The contract is the foundation of the defendant's liability, and the obligation to answer arises from a breach of contract because of the defendant's failure to exercise due care in its performance
• Culpa Aquiliana


  A separate source of obligation independent of the contract, where the pre-existing obligation is derived from the general obligation or duty to observe the standards of care set by society in dealing with other persons
• Delay (Mora)


  The non-fulfillment of the obligation with respect to time
• Kinds of Delay (Mora)

  • Mora solvendi (Delay on the part of the debtor)
  • Mora accipiendi (Delay on the part of the creditor)
  • Compensatio morae (Delay of the obligors in reciprocal obligations)
• Requisites of Delay or Default by the Debtor

  • Failure of the debtor to perform his obligation on the date agreed upon
  • Demand made by the creditor upon the debtor to fulfill, perform, or comply with his obligation
  • Failure of the debtor to comply with such demand
• The general rule is "No Demand, No Delay"
• Exceptions to the rule "No Demand, No Delay"

  • When the law so provides
  • When the obligation so provides
  • When time is of the essence
  • When demand would be useless
• Effects of Mora Solvendi (Delay of the Debtor)


  • The debtor is guilty of breach of the obligation
  • He is liable for interest or damages
  • He is liable even for a fortuitous event when the obligation is to deliver a determinate thing
  • In an obligation to deliver a generic thing, the debtor is not relieved from liability for loss due to a fortuitous event
• Effects of Mora Accipiendi (Delay of the Creditor)


  • The creditor is guilty of breach of obligation
  • He is liable for damages suffered by the debtor
  • He bears the risk of loss of the thing due
  • The debtor is not liable for interest from the time of the creditor's delay
  • The debtor may release himself from the obligation by consigning the thing or sum due
• Compensation morae


  The delay of the obligor cancels out the effects of the delay of the obligee and vice versa
• Reciprocal Obligations


  Obligations where each party is a debtor and a creditor of the other, and the performance of one is conditioned upon the simultaneous fulfillment of the other
• In reciprocal obligations, neither party incurs delay if the other does not comply or is not ready to comply properly with what is incumbent upon him
• Reciprocal obligations


  Obligations that arise from the same cause, where each party is a debtor and a creditor of the other, and the obligation of one is dependent upon the obligation of the other
• Performance of reciprocal obligations

  1. Obligations are to be performed simultaneously

  2. Performance of one is conditioned upon the simultaneous fulfillment of the other
• In reciprocal obligations, neither party incurs delay if the other does not comply or is not ready to comply properly with what is incumbent upon them
• From the moment one of the parties fulfills their obligation, delay by the other begins
• Ways to demand the fulfillment of an obligation

  • Judicial demand
  • Extrajudicial demand
• Contravention of the tenor of the obligation


  Breaking or non-fulfillment of the obligation, which is a source of liability
• Fortuitous event

  An event that cannot be foreseen or which, although foreseeable, cannot be avoided
• A fortuitous event is unforeseeable and unavoidable, and is independent of the will of the obligor/debtor
• Exceptions to the rule that no person shall be liable for fortuitous events

  • Cases expressly specified by law
  • When it is otherwise declared by stipulation
  • When the nature of the obligation requires the assumption of risk
• Requisites for a fortuitous event to exempt one from liability

  • Cause of non-performance must be independent of the debtor's will
  • Event must be unforeseeable or unavoidable
  • Event must render it impossible for the debtor to comply in a normal manner
  • Debtor must be free from any participation in the creditor's injury
• Kinds of fortuitous events

  • Acts of God (Force majeure)
  • Acts of Man (Caso Fortuito)
• Usurious transaction

  Receiving something over the amount allowed by law for the loan or forbearance of money, goods, or chattels
• Special laws shall govern usurious transactions
• Requisites for recovery of interest

  • Payment of interest must be expressly stipulated
  • Agreement must be in writing
  • Interest must be lawful
• A stipulation for paying usurious interest is void as if there is no stipulation as to interest
• The creditor may add interest in the principal obligation in a loan contract, but the interest must be within the limits prescribed by the Usury Law