5 – NATURE AND EFFECT OF OBLIGATIONS (3)

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Article 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.
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Meaning of delay:

(1) Ordinary delay is merely the failure to perform and obligation on time.
(2) Legal delay or default or mora is the failure to perform an obligation on time which failure
constitutes a breach of the obligation.

Kinds of delay or default:

(1) Mora solvendi or the delay on the part of the debtor to fulfill his/her obligation (to give or to
do)
(2) Mora accipiendi or the delay on the part of the creditor to accept the performance of the
obligation; and
(3) Compensatio morae or the delay of the obligors in reciprocal obligations (like in sale), i.e.,
the delay of the obligor cancels the delay of the obligee, and vice versa. The net result is that
there is no actionable default on the part of both parties.

Note: There is no delay in negative personal obligation. In an obligation not to do, non-
fulfillment may take place but delay is impossible for the debtor fulfills by not doing what
has been forbidden him.

Requisites of delay or default by the debtor:

There are three conditions that must be present before mora solvendi can exist or its effects may
arise:

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(1) failure of the debtor to perform his (positive) obligation on the date agreed upon
(2) demand (not mere reminder or notice) made by the creditor upon the debtor to comply with
his obligation which demand may be either judicial (when a complaint is filed in court) or
extra-judicial (when made outside of court, orally or in writing)
(3) failure of the debtor to comply with such a demand

Example:

S obliged himself to deliver to B a specific refrigerator on December 10.

a. If S does not deliver the refrigerator on December 10, he is only in ordinary delay in the
absence of any demand from B although a period had been fixed for the fulfillment of the
obligation. The law presumes that B is giving S an extension of time within which to deliver
the refrigerator. Hence, there is no breach of the obligation and S is not liable for the
damages.

b. If a demand is made upon S by B on December 15 and S fails to deliver the refrigerator; S is

considered in default only from the date

c. If an action for specific performance is filed by B on December 20, the payment of damages
for the default must commence on December 15 when he made the extrajudicial demand and
not on December 20. In the absence of evidence; as to such extra-judicial demand, the effects
of default arise from the date of the judicial demand, that is, from the filing of the complaint.

Effects of delay:

(1) In Mora solvendi the effects are:

a. The debtor is guilty of breach or violation of the obligation;

b. He/She is liable to the creditor 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
c. He/She is liable even for a fortuitous event where 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 or reduce
the damages (Art. 2215[4]).

(2) In Mora accipiendi the effects are:

a. The creditor is guilty of breach of obligation

b. He/She is liable for damages suffered, if any, by the debtor
c. He/She bears the risk of loss of the thing due (Art. 1262)
d. Where the obligation is to pay money, the debtor is not liable for interest from the time of
creditor’s delay

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

(3) In Compensatio morae the effect is:

a. The delay of the obligor cancels the delay of the obligee and vice versa.

Situations when demand is not necessary to put debtor in delay:

As a general rule, delay by the debtor begins only from the moment a demand, judicial or extra-
judicial, for the fulfillment of the former’s obligation is made by the creditor. Without such
amount, the effect of default will not arise. The exceptions are mentioned below:

(1) When the obligation so provides

Example:

D promised to pay the sum of Php 20,000 on or before November 30 without the need of any
demand. Therefore, if D fails to pay on November 30, he is automatically in default. In this
case, the parties stipulate to dispense with the demand.

(2) When the law so provides

Example:

Under the law, taxes should be paid on or before a specific date; otherwise penalties and
surcharges are imposed without the need of demand for payment by the government.

(3) When time is of the essence

Example:

The delivery of balloons on a particular date when a children’s party will be held; the
making of a wedding dress where the wedding is scheduled at a certain time

(4) When demand would be useless

Example:

S obliged himself to deliver a specific horse to B on September 5. Through S’s negligence or

deliberate act, or by reason of fortuitous event for which S has expressly bound himself
responsible (see Art. 1174), the horse died on September 2.

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 Under this situation, any demand for the delivery of the horse on September 5 would be
useless as S has made it impossible for him to perform his obligation.

(5) When there is performance by a party in reciprocal obligations

Example:

S agreed to sell his TV set for Php 10,000. The obligation of S is to deliver the TV set while
that of B, to pay Php 10,000 . Since no date is set for performance of their respective
obligations, it is understood that it must be simultaneous. S cannot demand payment if he
himself cannot deliver the TV set. From the moment S delivers the TV set, B is in default if he
does not pay S without the need of any demand.

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Article 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.
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Grounds for liability:

(1) Fraud (deceit or dolo) – It is the deliberate or intentional evasion of the normal fulfillment of
an obligation.

Example:

S obliged himself to deliver to B 20 bottles of wine, of a particular brand. Subsequently, S

delivered 20 bottles knowing that they contain cheaper wine. S is guilty of fraud and is liable
for damages to B.

(2) Negligence (fault or culpa) – It is any voluntary act or omission, there being no bad faith or
malice, which prevents the normal fulfillment of an obligation.

Example:

P is a passenger in a taxi. Here, there is considered a contract of carriage between P and the
owner of the taxi company. In consideration of the fare to be paid by P, the owner of the taxi
company, through the driver, agrees to safely bring P to his destination. If, through the
recklessness of the driver an accident occurs, as a result of which P is injured, there is
negligence which would make the owner liable for damages. If the taxi contained defective
parts, the failure to repair the same constitutes also negligence on the part of the owner.

(3) Delay (mora) – already discussed under Article 1169.

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(4) Contravention of the terms of the obligation – 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).

Example:

E leased the apartment of R for Php 10,000 a month to be paid in advance during the first
week of every month. The obligation of E, as lessee, is to pay the stipulated rent. The
obligation of R, as lessor, is to maintain E in the peaceful possession of the apartment leased.

If E violates his obligation, R is entitled to eject him from the premises and recover damages.
If R does not maintain E in the peaceful possession of the apartment (as when R is not the
owner), and E is ejected, R may be held liable for damages for violation of the terms of his
obligation.

The measure of damages to be awarded to E or to R, as the case may be, is left to the sound
discretion of the court in accordance with the provisions of the civil code on damages.

Fraud and negligence distinguished:

(1) In fraud, there is deliberate intention to cause damage or injury, while in negligence, there is
no such intention.

(2) Waiver of the liability for future fraud is void (Art. 1171), while such waiver may, in a
certain sense, be allowed in negligence (Art. 1172).

(3) Fraud must be clearly proved, while negligence is presumed from the violation of a
contractual obligation.

(4) Lastly, liability for fraud cannot be mitigated or reduced by the courts, while liability for
negligence may be reduced according to the circumstances Art. 1173)

Reference: The Law on Obligations and Contracts 2011

by H. S. De Leon and H. M. De Leon, Jr.

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5 – Nature and Effect of Obligations (3)

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