BREACH OF

OBLIGATIONS
(CONTINUATION)
Atty. Abrahm A. Apepe, CPA
Course Outline

Lesson 1. Lesson 2. Lesson 3.

Remedies in Case of Breach of Damages in Case of Breach of
Fortuitous Event (continuation)
Obligation Obligation

Lesson 4.
Subsidiary Remedies
Effect of
Fortuitous Event
• On determinate obligations
• The obligation is extinguished.

• On generic obligations
• The obligation is not extinguished
Liability for Loss due to a Fortuitous Event

As a rule, there is no liability for loss in case of a fortuitous event.

The exceptions are:

• When the law so declares

• The nature of the obligation requires the assumption of risk
• The parties so stipulate
• The debtor promised the same thing to two or more persons who does not have the same interest
• The debtor contributed to the loss
• The possessor is in bad faith
• The obligor is guilty of fraud, negligence or delay or if he contrived the tenor of the obligation
Course Progress

Lesson 1 Lesson 2 Lesson 3 Lesson 4

Fortuitous Event Remedies in Case of Damages in Case of Subsidiary Remedies
Breach of Obligation Breach of Obligation
Remedies in Case of Breach

Specific Performance
or Substituted Rescission Damages, in any case Subsidiary Remedies
Performance

Accion subrogatoria Accion pauliana Accion directa

Remedies; Specific Performance
Exhaustion of the properties of the debtor

Accion Subrogatoria (Subrogatory Action) – an indirect action brought in

the name of the debtor by the creditor to enforce the former’s right, except:
• Personal right of the debtor
• Rights inherent in the person of the debtor
• Properties exempt from execution

Accion Pauliana (Rescissory Action) – an action to impugn or assail the acts

done or contracts entered into by the debtor in fraud of his creditor

Note: Resorting to the remedies above must be in the order stated

above.
Remedies;
Substitute
Performance
• This is a remedy of the
creditor in case of non-
performance by the debtor
where another party performs
the obligation or the same is
performed at the expense of
the debtor.
Remedies; Substitute Performance;
Applicability
Positive Personal Obligations

• If not purely personal – substitute performance is applicable; the obligations shall be executed at the debtor’s
cost if he fails to do it.

• If Purely Personal – substitute performance is not applicable because of the personal qualifications taken into
consideration. The only remedy is damages

Real Obligations

• Generic thing – substitute performance is applicable. Delivery may be made by a person other than the debtor
since the object is merely designated by its class or genus. The creditor may ask that the obligation be complied
with at the expense of the debtor

• Specific thing – specific performance may be demanded, that is, the creditor may compel the debtor to make the
delivery.
Remedies; Rescission
(Resolution)
• This remedy refers to the cancellation of
the contract or reciprocal obligation in case
of breach on the part of one, which breach
is violative of the reciprocity between the
parties.
• This is properly called “Resolution”.
• This is different from “Rescission” under
Art. 1380 which is based on lesion or fraud
upon creditors.
• This remedy is applicable in reciprocal
obligations since it is implied therein.
Remedies; Rescission; Characteristics
Can be demanded only if plaintiff is ready, willing and able to comply with his own obligation and
defendant is not
Not absolute

Needs judicial approval in the absence of a stipulation allowing for extra-judicial rescission, in case of
non-reciprocal obligations
Subject to judicial review if availed of extra-judicially

May be waived expressly or impliedly

Implied to exist in reciprocal obligations – thus, it need not be expressly stipulated

Remedies; Rescission; Applicability
◦ Positive Personal Obligations
◦ If not purely personal – substitute performance is applicable; the obligations shall be executed at the debtor’s cost if he
fails to do it.
◦ If Purely Personal – substitute performance is not applicable because of the personal qualifications taken into
consideration. The only remedy is damages

◦ Real Obligations
◦ Generic thing – substitute performance is applicable. Delivery may be made by a person other than the debtor since the
object is merely designated by its class or genus. The creditor may ask that the obligation be complied with at the
expense of the debtor
◦ Specific thing – specific performance may be demanded, that is, the creditor may compel the debtor to make the
delivery.
Fulfillment of
Rescission of
Obligation
• As a general rule, the injured party can only
choose either fulfillment or rescission of the
obligation, and not both.
• As an exception, if fulfillment was chosen
but it becomes impossible, Art. 1191 allows
the injured party to seek rescission even after
he has chosen fulfillment.
Course Progress

Lesson 1 Lesson 2 Lesson 3 Lesson 4

Fortuitous Event Remedies in Case of Damages in Case of Subsidiary Remedies
Breach of Obligation Breach of Obligation
Liability for
Damages
• Those liable under Art. 1170
shall pay damages only if aside
from the breach of contract,
prejudice or damage was
caused.
• Kinds of Damages include
• Moral
• Exemplary
• Nominal
• Temperate
• Actual
• Liquidated
Course Progress

Lesson 1 Lesson 2 Lesson 3 Lesson 4

Fortuitous Event Remedies in Case of Damages in Case of Subsidiary Remedies
Breach of Obligation Breach of Obligation
Subsidiary Remedies;
Accion Subrogatoria
• This remedy is an action where the creditor,
whose claim has not been fully satisfied,
may go after the debtor’s debtor.
• The requisites are:
• The debtor’s assets must be insufficient to satisfy claims
against him
• The creditor must have pursued all properties of the
debtor subject to execution
• The right of action must not be purely personal
• The debtor whose right of action is exercised must be
indebted to the creditor
Effect of
Subrogatory Action
• The creditor may exercise the subrogatory
action in behalf of the debtor not only up
to the amount of his credit but in its totality
• The bringing of action does not entitle the
creditor to preference
• The defendant (the debtor of the debtor)
may avail himself of all defenses available
against the creditor
Subsidiary
Remedies; Accion
Pauliana
• An action where the creditor files in court
for the rescission of acts or contracts
entered into by the debtor designed to
defraud the former (Art. 1177)
Subsidiary
Remedies; Accion
Pauliana; Requisites
• Defendant must be indebted to the plaintiff
• The fraudulent act performed by the debtor
subsequent to the contract gives advantage
to another
• The creditor is prejudiced by such act
• The creditor must have pursued all
properties of the debtor subject to execution
• The creditor has no other legal remedy
Subsidiary
Remedies;
Accion Directa
• The remedy is a right of a
person to go directly against
another who is not a privy to
the contract.
Next Topic

Kinds of
Civil
Obligations
THANK YOU!
Regards, Atty. Abrahm A. Apepe, CPA