Nature and Effect of Obligations CASO FORTUITO, DOLO, CULPA, MORA (Simplified for Business Law Students) Atty. Glenn Mar P. Acas, CPA September 2020 FORTUITOUS EVENTS (Caso Fortuito] Fortuitous events (caso fortuito) - events which could not be foreseen, or which though foreseen, were inevitable. Ordinary Fortuitous Events vs. Extraordinary Fortuitous Events (Caso Fortuito) 1. Ordinary Fortuitous Events - common events, which the parties could reasonably foresee. 2. Extraordinary Fortuitous Events — uncommon events, which the parties could not have reasonably foresee. This is what is covered by Art. 1174 Kinds of Extraordinary Fortuitous Event covered under Art. 1174: 1. Acts of man - independent of the will of the obligor, like war, fire, robbery, murder, insurrection 2. Acts of God ~ also called force majeure, totally independent of the will of every man, like earthquake, flood, rain, shipwreck, lightning, eruption of volcano, storm. Art. 1174 General Rule: No person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable (Fortuitous Events). EXCEPTIONS. 1. Incases expressly specified by law. a. When the debtor is guilty of fraud, negligence, delay, or in contravention of the tenor of the obligation. b. When the debtor has promised to deliver the same specific thing to two persons who do not have the same interest. c. When the obligation to deliver a specific thing arises from a crime. d. When the thing to be delivered is generic. 2. When it is otherwise declared by stipulation of the parties. 3. When the obligation requires the assumption of risk«Art. 1170 - Those who in the performance of their obligations are guilty of the following are liable for damages: 4, FRAUD. 2. NEGLIGENCE 3. DELAY 4. Contravention the tenor of the obligation + FRAUD (Deceit or Dolo’ Fraud, Deceit or Dolo — is the deliberate or intentional evasion of the normal fulfillment of an obligation. Any waiver of an action for future fraud is void for being against the law and public policy, but waiver for past fraud is valid Kinds of Fraud: 1. Dolo incidente (incidental fraud) - committed in the performance of an obligation already existing because of contract. This is the fraud referred to in Art. 1170 2. Dolo causante (causal fraud) — fraud employed in entering into a contract, which vitiates consent. + NEGLIGENCE (Fault or Culpa) Negligence, Fault or Culpa — any voluntary act or omission, there being bad faith or malice, which prevents the normal fulfilment of an obligation Any waiver for an action for future negligence is valid, except when the law requires otherwise, or when the negligence shows bad faith Kinds of Negligence: 1. Culpa Contractual (contractual negligence) - negligence in the performance of contractual obligations will give rise to damages. This is the negligence referred to in Art. 1170. 2. Culpa Criminal (criminal negligence) - negligence giving rise to criminal obligation: 3. Culpa Aquiliana (civil negligence) - negligence as a source of an obligation+ LEGAL DELAY (Default or Mora Ordinary Delay vs. Legal Delay (default or mora) 3. Ordinary Delay - is merely the failure to perform an obligation on time. 4. Legal Delay / Default / Mora — is the failure to perform an obligation on time which failure constitutes a breach of the obligation. This is the delay referred to in Art. 1170 Kinds of Legal Delay: 1. Mora Solvendi — delay on the part of the debtor 2. Mora Accipiende — delay on the part of the creditor 3. Compensatio Morae - both parties incurred delay General Rule: No demand, no delay. To put the other party in legal delay or default, demand MUST made by the creditor upon the debtor to comply with his obligation which demand may be either judicially or extrajudicially However, the demand by the creditor shall not be necessary in order that delay may exist (Art. 1169). 1, When the obligation or the law expressly so declare; 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 There is no delay in obligation not to do (negative personal obligation) Mora Solvendi Effects of mora solvendi 1. The debtor is guilty of breach or violation of the obligation. 2. The debtor is liable to the creditor for interest or damages. 3. He is liable even for fortuitous event.Mora Accipiende Effects of mora accipiendi: 1. The creditor is guilty of breach or violation of the obligation. 2. The creditor is liable to the debtor for damages. 3. The creditor bears the loss of the thing due. 4. Where the obligation is to pay money, the debtor is not liable for interest from the time of creditor's delay. 5. The debtor may release himself from the obligation by the consignation or deposit in court of the thing or sum due. Compensatio Morae In reciprocal obligations, the delay of the obligor cancels the delay of the obligee. The result is that there is no actionable default on the part of both parties. From the moment one of the parties fulfills his obligation, delay by the other begins. CONTRAVENTION OF THE TENOR 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, USURY - is contracting for or receiving interest in excess of the amount allowed by law for the loan (mutuum) or use of money, goods, chattels or credits. Usurious transactions shall be governed by special laws (Art. 1175), The Usury Law is now legally non-existent. Requisites for Recovery of Interest 4, The payment of interest must be expressly stipulated by the parties. 2. The agreement must be in writing, 3. The interest must be lawful PRESUMPTION - the inference of a fact not actually known arising from its usual connection with another which is known or proved Two Kinds of Presumption: 1. Conclusive Presumption - on which cannot be contradicted, like the presumption that everyone is conclusively presumed to know the law. 2. Disputable or Rebuttable Presumption - one which can be contradicted or rebutted by presenting proof to the contraryDisputable Presumptions in Art, 1176 1. 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 2. 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. Remedies available to the creditor for the satisfaction of their claims: 1. Specific Performance with the right to damages 2, Pursue the leviable property of the debtor. 3. After pursuing the property in the possession of the debtor, exercise all the rights and bring all actions of the debtor (except those inherent in his person), 4. Ask the court to rescind or impugn acts or contracts which the debtor may have done to defraud him. TRANSMISSIBILITY OF RIGHTS General Rule: All rights acquired by virtue of an obligation are TRANSMISSIBLE. Exceptions: 1. Those prohibited by law (like rights in the contracts of partnership, agency and commodatum). 2. Those prohibited by stipulation of the parties.