Juridical Capacity vs Capacity to Act: What Is the Difference?
Juridical capacity is the fitness to hold rights and duties; capacity to act is the power to exercise rights through legally effective acts.
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Prescription of Contract Actions: How Long Do You Have to File?
Quick answer: An action based on a written contract generally must be filed within 10 years from the time the right of action accrues under Article 1144 of the Civil Code. But not every contract-related claim has the same prescriptive period, and the starting date is not necessarily the date the contract was signed. What…
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Acceleration Clauses: Can the Entire Loan Become Due Immediately?
Direct answer: Yes. Under Philippine law, a valid acceleration clause can make the whole unpaid balance of a loan due at once when the borrower defaults, instead of only the missed instalments. The clause is enforced as written because contracts have the force of law between the parties (Civil Code Article 1159). Whether the lender…
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Attorney’s Fees in the Philippines: Article 2208 and Fee Clauses
Recovering attorney’s fees after a breach of contract in the Philippines: how attorney’s-fee clauses work, when courts reduce them, and why a breach alone is not bad faith.
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Duty to Mitigate Damages After a Contract Breach
Quick answer: An injured party must take reasonable steps to reduce avoidable loss after learning of a breach. The mitigation rule in Civil Code Article 2203 does not require extraordinary expense or unreasonable risk, but damages may be reduced when the claimant’s own failure to act aggravated the loss. Governing rule The duty to mitigate…
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Liquidated Damages vs Penalty Clauses
Quick answer: Both clauses fix financial consequences in advance, but their function and wording matter. Liquidated damages estimate compensation for breach, while a penalty clause principally secures performance. Courts examine substance rather than labels and may reduce an iniquitous or unconscionable amount. G.R. No. 249247 also explains how stipulated forfeiture or liquidated damages may operate…
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Temperate Damages When the Exact Loss Cannot Be Proven
Quick answer: Temperate or moderate damages may be awarded when the court is satisfied that a pecuniary loss occurred but the exact amount cannot be proved with certainty. They are more than nominal damages but less than fully proved compensatory damages. Governing rule Temperate damages are one of the six kinds of damages listed in…
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Actual Damages for Breach of Contract: What Must Be Proven?
Quick answer: Actual or compensatory damages require competent proof of a real pecuniary loss caused by the breach. As the Supreme Court reiterates in G.R. No. 200942, courts do not award actual damages based on speculation, unsupported estimates, or the mere fact that a contract was violated. Governing rule Actual damages are one of the…
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Specific Performance vs Resolution vs Damages
Quick answer: When the other party to a reciprocal contract fails to perform, Article 1191 of the Civil Code lets the injured party choose between fulfillment (specific performance) and rescission (often called resolution), “with the payment of damages in either case.” Specific performance keeps the contract alive and asks the court to make the other…
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Resolution Under Article 1191: When Can a Reciprocal Contract Be Cancelled?
Quick answer: Article 1191 of the Civil Code allows the injured party in a reciprocal obligation to choose between fulfillment and resolution, with damages potentially recoverable in either case. Resolution generally requires a substantial breach—not merely a slight, casual, or technical failure. What Article 1191 means Article 1191 of the Civil Code applies to reciprocal…
