Obligations and Contracts Cases

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AND BUSINESS
THE OFFICE OF THE SOLICITOR

GENERAL VS. AYALA LAND, G.R. NO.
177056, SEPTEMBER 18, 2009
FACTS:
OSG files a review for certiorari regarding the
decision of the C.A. affirming the decision of the
R.T.C. which denied the Motion for
Reconsideration of the OSG.
RTC adjudged that Ayala Land, Robinsons, SM
Prime and Shangri La could not be obliged to
provide free parking spaces in their malls for
their patrons or general public.
Senate committee on trade and commerce
found that the collection of parking fees in malls
is contrary to the National Building Code and
Article 2 of R.A. 9734 protecting the interest of
customers.
ISSUE:
1. WON C.A. erred in affirming the
decision of R.T.C. and the respondents
are not obliged to provide free parking
spaces to their customers or the public?
2. WON petition of the O.S.G. for
prohibiting the collection of parking fees
is a valid exercise of police power of
state?
HELD:
1. No, C.A. was correct in affirming the
decision of the R.T.C. and that the
respondents are not obliged to provide
free parking spaces.
OSG argues section 102 of the National
Building Code yet fails to read the
second paragraph that explains how
said policy should be carried out and
since the code nor the IRR X!X do not
mention parking fees then said provision
will not regulate the same.
And because Article 1158 of the Civil
Code states that Obligations arising
from law are not presumed. Only those
expressly determined in this Code or in
special laws are demandable, and shall
be regulated by the precepts of the law
which established them; and as to what
has not been foreseen, by the provisions
of this Book.
2. No, it is not a valid excuse of police of
power court finds that total prohibition in
the collection of such is acting beyond
the bounds of police power.
Police Power= Limited to power to
regulate but does not involve power to
prohibit.
NEW WORLD VS. AMA, G.R. NOS.

187930 & 188250 FEBRUARY 23,2015
FACTS:
New World owns a commercial building leased
by AMA entering a contract of lease for a period
of eight (8) years.
Agreement:
Rent of Php 181,500 per month
15% yearly increase
Php 450,000 Advance Rental and
Security Deposit
If AMA preterminates the contract, at
least six (6) months on intended date,
they will be liable for Liquidated
Damages.
For the first three years, AMA paid on what was
stipulated in the contract. But on March 2002,
AMA requested for a deferment on the Rent for
the reasons of lack of enrolees. New World
approved the reduction of 50% on the rent for
the next 6 months.
In the following year, AMA asked for another
reduction and New World granted a 45%
reduction on monthly rent and 5% reduction on
yearly increase. For this purpose, parties
entered into Addendum to the Contract.
July 2004, AMA evacuated the premise and
sent a letter to New World that they are
preterminating the contract and that they
demand the refund of Php 450,000 for advance
on rental and security deposit.
New World replied with a letter attached with a
statement of account containing unpaid balance
less advance deposit which left a net unpaid
balance of Php 1,049,486.59. Parties failed to
arrive in a settlement.
RTC ruled in favour of the New World, but
because they failed to provide basis for Php
15,580 for damages and Php 100,00 for
Attorneys fees.
CA turned liquidated damages to four (4)
months, deleted Php 15,580 for damages and
Attorneys fees for no basis and removed three
(3) % monthly interest for it was not entered into
contract.
ISSUE:
1. WON AMA is liable to pay six (6)
months worth of liquidated damages?
2. WON AMA remained liable for rental
arrears?
HELD:
1. Yes. (Cite Article 1159)
OBLIGATIONS AND CONTRACTS REVIEWER
AND BUSINESS
2. No. No basis for computation.

PRINCIPLE OF EQUITY- we do not employ
equitable principles when well-established
doctrines and positive provisions of the law
clearly apply. THIS ONLY APPLIES WHEN
THERE IS NO LAW EXPRESSLY PROVIDED.
METROBANK VS. CHUY LU TAN, G.R.

NO. 202176. AUGUST 1, 2016
FACTS:
Chuy and Tanco obtained a loan (5 loans) from
Metrobank with an aggregate amount of Php
19,900,000.00. Evidences were five (5)
promissory notes. Chuy executed mortgage as
the security of loans. Also, Sy and Tan executed
a continuing surety agreement.
Chuy and Tanco failed to settle their debt which
already amounts to Php 24,353,062.03.
Metrobank foreclosed the mortgage and
foreclosed the mortgage and sold it for Php
24,572,268.00 to Metrobank itself. Yet
Metrobank claims that theres still a deficiency
of Php 1,641,815.00 costs of foreclosure,
accrued interest, penalty charges, Attys fees
and other related expenses.
RTC ruled in favor of Metrobank ordering Chuy,
Tanco, Sy and Tan to pay jointly the amount of
Php 1,641,815.00. RTC erred in not applying
interest rates in promissory notes and not
awarding Attorneys fees in favor of metro bank.
CA ruled in favor of Chuy and Tanco, reversing
decision of TC for reasons of Unjust
Enrichment.
ISSUE:
WON petitioner can claim accrued balance?
HELD:
Using the promissory note as an evidence that
said agreement is binding and their petition
(Metrobank) is partly granted.
SC reversed and set aside decision of CA and
reinstated the decision of RTC with an addition
of 10% for Attorneys Fees.
PRINCIPLE OF EQUITY- we do not employ
equitable principles when well-established
doctrines and positive provisions of the law
clearly apply. THIS ONLY APPLIES WHEN
THERE IS NO LAW EXPRESSLY PROVIDED.
LOCSIN ii VS. MEKENI FOOD G.R. NO.

192105 December 09, 2013
FACTS:
February 2004, Mekeni offered the position of
Regional Sales Manager for its NCR
Supermarket or Foodservice and South Luzon

operations to Locsin II. Mekenis offer was
contained in an Offer Sheet which shows that
the car plan will be paid in the following terms:
One-Half of the cost of the vehicle shall
be paid by the company.
One-Half to be deducted from the
petitioners salary.
March 17, 2004, as petitioner began to work as
Regional Sales Manager, he was given the
used Honda Civic Car valued at Php
280,000.00 which was used by the previous
supervisor. Petitioner is deducted Php 5000.00
each month from his salary.
Petitioner resigned on February 25, 2006. By
then, total deduction was Php 112,500.00 in his
resignation letter, petitioner offered to purchase
vehicle and jus pay outstanding balance. Both
parties could not go to an agreement so
petitioner just returned vehicle to Mekeni.
Petitioner made a follow up for his unpaid
salaries, commissions, benefits and offered to
purchase vehicle. Mekeni replied that the car
plan benefit only applied to employees who had
been with them for five (5) years. For this
reason, he needs to pay Php 116,380.00 if he
still wants to purchase vehicle. Petitioner filed at
(NLRC) a complaint for the recovery of the
monetary claims.
NLRC ruled on the side of petitioner including
the other 50% of the equivalent share of the
company. For the reason that it forms part of
the latters benefits under car plan and the five
(5) year employment rule had not been
substantiated by evidence.
CA modified the decision by just granting all
monetary claims but deleting the Php 112,500
of Locsins car payment and Php 112,500 of
Mekenis share of the car payment. CA treated
locsins Php 112,500.00 as rentals for the use of
the service vehicle. Petitioner filed instant
petition while Mekeni took no further actions.
ISSUE:
WON CA erred in treating petitioners payment
as a rental for said car?
HELD:
Yes. The petition is partially granted.
Instalments made on car plans may only be
treated as car plans when there is an express
stipulation in the car plan agreement. It may not
be said that the car plan agreement was a
benefit that only the petitioner enjoyed because
without a service vehicle, Mekenis business
could only prosper at a snail pace and any
AND BUSINESS
benefit enjoyed by petitioner was merely

insignificant or incidental.
It is unfair to deny petitioner a refund of all his
contribution stressing Article 22 of the Civil
Code. IN the absence of specific terms and
conditions, a quasi-contractual agreement or
relation was created between the parties and
under Article 2142: Certain lawful, voluntary
and unilateral acts give rice to the juridical
relation of quasi contract to the end that no one
shall be unjustly enriched or benefited at the
expense of another.
Petition was partially granted, granting the
refund of Php 112,500.00 to petitioner.
VENZON VS. RURAL BANK OF

BUENAVISTA, G.R. NO. 178031 AUGUST
28, 2013
FACTS:
Virginia and George Venzon applied for a loan
for Php 5000.00 with their house at Libertad,
Butuan as the mortgage. In the duration of the
said loan, she was able to pay Php 2,300.00.In
March 1987, she offered to pay in full but the
bank refused and shoved her out of the
premise. The bank foreclosed the mortgage at
the amount of Php 6, 472.76 to itself (the bank).
Petitioner says that foreclose is null and void for
the following reasons:
Lack of Notice and Publication of Sale
Lack of Certification by Sherriff
That she paid Php 6,000.00 on October
9, 1995 with an Official Receipt
Respondent replied:
Denied the allegations of the petitioner
That the petitioners cause of action
already
prescribed
(March
1987
foreclosure to filing of suit on 2005, 18
years gap.)
That petitioner is guilty of Laches
RTC dismissed the case. RTC stated R.A. 720
or the Rural Bank Act that a property not
exceeding Php 10,000.00 is exempted for
requirement of Publication.
CA dismissed the petition for it was belatedly
filed.
ISSUE:
1. CA erred in dismissing petition
preventing the court in finding that there
was no issued certificate by Sherriff.
2. CA erred in disregarding Technicalities.
HELD:
Court denies petition for there was no error in

the CAs ruling. RTCs decision was treated as
final order. The court is also not prepared to be
lenient in petitioners case. The case was filed
on 2005 while foreclosure happened on 1987.
Petitioners long inaction cannot earn sympathy
of the court.
Because respondent did not deny the issuance
of O.R. for the petitioners payment of Php
6,000.00, they are obliged to return it stating
Article 2154 of CC;
If something is received when there is no right
to demand it, and it was unduly delivered
through mistake, the obligation to return arises.
Solutio Indebiti
Wherefore, petition is denied. However, the
bank must return Php 6,000.00 with an interest
of 6% per annum computed from filing of
petition.
DY CS. PEOPLE, G.R. NO. 189081

AUGUST 10, 2016
FACTS:
Gloria Dy is the General Manager of MCCI.
William Mandy Proposed to purchase the
property owned by PANTRANCO. Mandy
loaned Php 20,000,000.00 in ICBC, with an
evidence of a promissory note, and the
warehouse in the Numancia property placed
into chattel mortgage.
MCCI received notice of foreclosure over the
mortgaged property and in order to avoid such,
Mandy instructed petitioner, Gloria Dy, to
facilitate payment. Mandy issued;
13 Allied Bank Checks; and
12 AsiaTrust Bank Checks
Petitioner alleged that she just encashed the
checks and gave the cash to William Mandy.
ICBC foreclosed the property and this is how
Mandy knew that not a single check was
delivered. Mandy filed ESTAFA against Dy.
RTC acquitted petitioner. Mandy and Dy
entered into a Contract of Loan which failed to
establish an important element of Estafa which
is Misappropriation, thus, acquitting Gloria Dy
with Estafa with Cost de Officio.
CA affirmed the RTCs decision.
ISSUE:
WON acquittal on a criminal case will also
extinguish Civil Liability?
HELD:
Yes, because criminal liability was extinguished,
then there should be no Civil Liability and also
AND BUSINESS
taking into consideration that Estafa was not

committed.
PEOPLE VS. BAYOTAS G.R. NO. 102007

SEPTEMBER 2, 1994
FACTS:
Rogelio Bayotas was charged with rape and
eventually convicted thereof on June 19, 1991.
Upon pending appeal of his conviction, Bayotas
died on February 4, 1992 at National Bilibid
Hospital due to cardiac arrest. The SC
dismissed the criminal aspect of the appeal,
however required the OSG to file its comment
with regards to Bayotas Civil Liability arising
from the commission of the offense.
OSG, on his comment, said that the death of
the accused did not extinguish the civil liability.
Counsel of the accused apposed the view of the
OSG arguing that the death of the accused
while judgement of conviction is on pending
appeal extinguishes both civil and criminal
liabilities.
ISSUE:
Does death of the accused on pending appeal
of his conviction extinguish his civil liability?
HELD:
Article 89 (1) of the Revised Penal Code reads
that Criminal liability is totally extinguished:
By fair intendment, the term final judgment

employed in the Revised Penal Code means
judgment beyond recall. Really, as long as a
judgment has not become Executory, it cannot
be truthfully said that defendant is definitely
guilty of the felony charged against him.
People vs. Castillo
From this lengthy disquisition, we summarize

our ruling herein:
1. Death of the accused pending appeal of his

conviction extinguishes his criminal liability as
well as the civil liability based solely thereon.
2. The claim for civil liability survives

notwithstanding the death of accused, if the
same may also be predicated on a source of
obligation other than delict. (Article 1157)
3. Where the civil liability survives, as explained

in Number 2 above, an action for recovery
therefor may be pursued but only by way of
filing a separate civil action.
1. By the death of the convict, as to the

personal penalties; and as to the
pecuniary penalties liability therefor is
extinguished only when the death of the
offender occurs before final judgment;
4. Finally, the private offended party need not

fear a forfeiture of his right to file this separate
civil action by prescription.
The civil liability, however, poses a problem.

Such liability is extinguished only when the
death of the offender occurs before final
judgment. How should "final judgment." be
defined?
Applying this set of rules to the case at bench,

we hold that the death of appellant Bayotas
extinguished his criminal liability and the civil
liability based solely on the act complained
of, i.e., rape. Consequently, the appeal is
hereby dismissed without qualification.
Is
it
final
judgment
contradistinguished
from
interlocutory order? Or,
as
an
WHEREFORE, the appeal of the late Rogelio
Bayotas is DISMISSED with costs de oficio.
is it a judgment which is final and

Executory?
AND BUSINESS
METROBANK VS. ROSALES AND YO

YUK TO G.R. NO. 183204 JANUARY 13,
2014
Respondent Ana Grace Rosales (Rosales) is
the owner of China Golden Bridge Travel
Services, a travel agency. Respondent Yo Yuk
To is the mother of respondent Rosales. In
2000, respondents opened a Joint Peso
Account with petitioners Pritil-Tondo Branch. As
of August 4, 2004, respondents Joint Peso
Account showed a balance of P2,515,693.52.
In May 2002, respondent Rosales accompanied
her client Liu Chiu Fang, a Taiwanese National
applying for a retirees visa from the Philippine
Leisure and Retirement Authority (PLRA), to
petitioners branch in Escolta to open a savings
account, as required by the PLRA. Since Liu
Chiu Fang could speak only in Mandarin,
respondent Rosales acted as an interpreter for
her.
On March 3, 2003, respondents opened with
petitioners Pritil-Tondo Branch a Joint Dollar
Account with an initial deposit of US$14,000.00.
On July 31, 2003, petitioner issued a "Hold Out"
order against respondents accounts.
On September 3, 2003, petitioner, through its
Special Audit Department Head Antonio Ivan
Aguirre, filed before the Office of the Prosecutor
of Manila a criminal case for Estafa through
False Pretences, Misrepresentation, Deceit,
and Use of Falsified Documents against
respondent Rosales.
Petitioner said that:
Rosales and an unidentified woman
were the one responsible for the
unauthorized
withdrawal
of
US$75,000.00 from Liu Chiu Fangs
account at Escolta Branch
On February 5, 2003, in Escolta branch,
they received from PLRA a Withdrawal
Clearance for the dollar account of Liu
Chiu Fang and on that afternoon the
petitioner talked with the Branch Head
(Gutierrez) that Liu Chiu Fang was going
to withdraw her dollar deposit in cash
and that Gutierrez told respondent to
come back the following day because
they ran out of dollar bills
On the following day, respondent
accompanied an impostor of Liu Chiu
Fang and was able to deposit the
US$75,000.00
On March 3, 2003, respondents opened
a dollar account with petitioner and that
the bank later discovered that the serial

numbers of the dollar notes deposited
by respondents in the amount of
US$11,800.00 were the same as those
withdrawn by the impostor.
Respondent (Rosales) said that:
He denies taking part of such fraudulent
act and that he did not go to the bank on
February 5, 2003 and neither did she
inform Gutierrez that Liu Chiu Fang was
going to close her account. Furthermore,
after helping Liu Chiu Fang set up the
account, she lost track or contact of her.
On February 6, 2003, she received a
call from Gutierrez that Liu Chiu Fang
was closing her account and on that
afternoon she went to the bank to make
a transaction. While transacting, she
saw on the desk of Branch Operating
Officer
Melinda
Perez.
Rosales
approached Perez who informed her
that Liu Chiu Fang had closed her
account and had already left and Perez
even gave her a copy of the withdrawal
clearance from PLRA.
On June 16, 2003, Rosales received a
call from Liu Chiu Fang inquiring about
the extension of her PLRA Visa and her
Dollar Account which made Rosales
realize that her account was closed
without
her
(Liu
Chiu
Fangs)
knowledge.
Rosales went to the bank and informed
Gutierrez and Perez about the
unauthorized withdrawal.
On June 23, 2003, Rosales and Liu Chiu
Fang went to PLRA and they were
informed that the Withdrawal Clearance
was issued based on an SPA executed
by Liu Chiu Fang in favor of Richard So
in which Liu Chiu Fang denied in
executing such.
Following day, Liu Chiu Fang, Rosales,
Gutierrez and Perez met at PLRA office
to discuss the matter and during the
conference the bank officers assured Liu
Chiu Fang that the money would be
returned to her.
Office of the City Prosecutor of Manila issued a
Resolution dismissing the criminal case for lack
of probable cause.
Respondents filed to the RTC of Manila a
complaint for Breach of Obligations and
Contract with Damages against petitioner.
Respondents alleged that they were unable to
withdraw their deposit because petitioner
placed their accounts under Hold Out status.
No explanation was given by the petitioner thus
they prayed that the Hold Out order be lifted for
them to be allowed to withdraw their deposits
AND BUSINESS
and also claim for actual, moral and exemplary

damages, as well as attorneys fees.
Petitioner alleged that respondents have no
cause of action because it has a valid reason
for issuing the Hold Out order due to the
fraudulent scheme thus they had to reimburse
Liu Chiu Fang for the amount of US$ 75,000.00
and for the criminal complaint of Estafa against
respondent.
RTC ruled that the petitioner is liable for
damages for breach of contract. RTC said that it
is the duty of the petitioner to release the
deposit of respondent and that fraudulent act
would have not prospered if not of the
negligence of its employees and not against
respondent. Metrobank is therefore ordered to
remove Hold Out order with Actual Damages of
Php 50,000.00, moral damages of Php
50,000.00, exemplary damages of Php
30,000.00 and 10% for the attorneys fees plus
cost of suit.
CA affirmed RTCs decision deleting the award
for actual damages for the basis of such claim
is for the professional fee that they paid to their
legal counsel against criminal complaint of
Estafa and not in connection to this case.
ISSUE:
1. WON CA erred in ruling that Hold-Out
provision does not apply in this case?
NO
2. WON CA erred when it ruled that
petitioners employees were negligent in
releasing Liu Chiu Fangs funds? (Has
no bearing in the resolution of this case.
Thus, we find no need to discuss the
same.)
3. WON CA erred in affirming the award of
Moral and Exemplary Damages and
Attorneys fees? NO
HELD:
1. The Hold Out clause does not apply to
the instant case. The "Hold Out" clause
applies only if there is a valid and
existing obligation arising from any of
the sources of obligation enumerated in
Article 1157 of the Civil Code. In this
case, petitioner failed to show that
respondents have an obligation to it
under any law, contract, quasi-contract,
delict, or quasi-delict. Although a
criminal case was filed by petitioner
against respondent Rosales, this is not
enough reason for petitioner to issue a
"Hold Out" order as the case is still
pending and no final judgment of
conviction has been rendered against
respondent Rosales. Thus, considering
that respondent Rosales is not liable
under any of the five sources of
obligation, there was no legal basis for

petitioner to issue the "Hold Out" order.
2. Has no bearing in the resolution of this
case. Thus, we find no need to discuss
the same.
3. Because petitioner is guilty of breach of
contract when they unjustifiably refused
to
release
respondents
deposit,
petitioner is liable for damages.
Respondents are entitled to moral and
exemplary damages and also attorneys
fees.
In closing, it must be stressed that while we
recognize that petitioner has the right to protect
itself from fraud or suspicions of fraud, the
exercise of his right should be done within the
bounds of the law and in accordance with due
process, and not in bad faith or in a wanton
disregard of its contractual obligation to
respondents.
WHEREFORE, the Petition is hereby DENIED.
The assailed April 2, 2008 Decision and the
May 30, 2008 Resolution of the Court of
Appeals in CA-G.R. CV No. 89086 are hereby
AFFIRMED. SO ORDERED.
DRA. DELA LLANA VS. BIONG, G.R. NO.

182356 DECEMBER 4, 2013
FACTS:
March 30, 2000, Juan dela Llana was driving a
1997 Toyota Corolla along North Ave., Quezon
City. Dra. Llana (Juans Sister) was seated in
the front of the passengers seat and a certain
Calimlim at the back. The car stopped across
the Veterans Memorial Hospital when the traffic
light turned red and suddenly a dump truck
rammed the cars rear end and due to the
impact the cars rear end collapsed and its rear
windshield was chattered which cause glass
splinters to flew and puncturing Dra. Dela Llana
but, apart from the minor wound, Dra. Dela
Llana did not suffer any other visible physical
injuries.
According to the traffic investigation, it was
identified that Joel Primero, the Dump Truck
driver, was recklessly imprudent in driving the
truck. Joel was the employee of Rebecca Biong
who owns Pongkay Trading.
In the first week of May 2000, Dra. Dela Llana
began to feel pain on the left side of her neck
and shoulders. Her injury became more severe
that to the extent that she could no longer move
AND BUSINESS
her left arm. She consulted Dra. Rosalinda Milla

and later on it was discovered that she suffered
a whiplash injury. Dra. Milla advised her to
undergo physical therapy yet Dra. Dela Llanas
condition did not improve despite of three
months of extensive physical therapy.
Dra. Dela Llana consulted other doctors who
advised her to a cervical spine surgery to
release the compression of her nerve. The
operation did not heal injury and it incapacitated
Dra. Dela Llana to practice her profession since
June 2000 until October 2000.
Dra. Dela Llana demanded from Rebecca the
compensation for her injuries, but Rebecca
refused.
Dra. Dela Llana filed before the RTC to recover
damages alleging that she spent Php
150,000.00 for medical expenses, average of
Php30,000.00 loss on her monthly salary since
June 2000 and further prayed for actual, moral
and exemplary damages and also for attorneys
fees.
Rebecca argues that Dra. Dela Llana has no
cause of action against her for there was no
reasonable connection between the vehicular
accident and the injury. Also she pointed out
that said injury manifested one (1) month and
one (1) week from the date of the accident and
that Dra. Dela Llana was still physically fit and
strong when they met days after the vehicular
accident.
Dra. Dela Llana brought Joel Primero as her
hostile witness admitting that his truck hit the
car because the brakes got stuck.
RTC ruled in favor of Dra. Dela Llana The Court
concluded that the three elements necessary to
establish Rebeccas liability were present:
(1) That the employee was chosen by the
employer, personally or through another;
(2) That the services were to be rendered in
accordance with orders which the employer had
the authority to give at all times; and
(3) That the illicit act of the employee was on
the occasion or by reason of the functions
entrusted to him.
The RTC thus awarded Dra. dela Llana the
amounts
of P570,000.00
as
actual
damages, P250,000.00 as moral damages, and
the cost of the suit.
CA reversed the ruling of the RTC saying that
Dra. Dela Llana failed to establish connection
between accident and injury by preponderance
of evidence. Also, the interval between the
collision and beginning of the symptoms was
too lengthy and it also observed that Dra. Dela
Llana did not immediately visit a hospital to

check if she sustained internal injuries after
accident. The medical certificate was given no
value for it did not explain how and why the
vehicular accident caused the injury.
ISSUE:
WON Joels reckless driving is the proximate
cause of Dra. Dela Llanas whiplash injury?
HELD:
SC found the petition unmeritorious. The issue
involves a question of fact and as a general rule
The CAs findings of fact are final and
conclusive and this court will not review them
on appeal. But as an exception, SC can only
review the presented evidences when the
conflict exists in findings of the RTC and CA,
thus, this case is an exemption therefore SC
can accordingly examine relevant evidences
presented.
In this case, Dra. Dela Llana failed to establish
her case by preponderance of evidence.
Under article 2176, the elements of Quasi-Delict
are:
1. Damages to the plaintiff;
2. Negligence, by act or omission, of the
defendant or by some person for whose
acts the defendant must respond, was
guilty; and
3. The connection of cause and effect
between such negligence and the
damages.
Dra.
Lllana
must
first
establish
by
preponderance of evidence that the three (3)
elements of quasi delict are present before we
determine Rebeccas liability ad Joels
employer.
In civil cases, a party who alleges a fact has the
burden of proving it. In the present case, the
burden of proving the proximate causation
between Joels negligence and Dra. dela
Llanas whiplash injury rests on Dra. dela Llana.
Notably, Dra. dela Llana anchors her claim
mainly on three pieces of evidence:
(1) The pictures of her damaged car;

(The picture of the damaged car only
demonstrated the impact of the collision)
(2) The medical certificate dated November 20,
2000, and
AND BUSINESS
(The
medical
certificate
cannot
be
considered because it was not admitted in
evidence)
(3) Her testimonial evidence.
(Dra. Dela Llanas opinion that Joels
negligence caused her whiplash injury has
no probative value)
its case two months after notice of his death.

Court issued an order dismissing the criminal
aspect of the case but reserving the rights to
resolve the civil aspect.
Judge Obien rendered judgement on March 7,
1985 with following decision.
WHEREFORE, and in view of the foregoing
considerations, judgment is hereby rendered
as follows:
The SC cannot take judicial notice that

vehicular accidents cause whiplash injuries, in
sum, Dra. Dela Llana miserably failed to
establish preponderance of evidence.
1. The dismissal of the criminal case

against Antonio J. Vlllegas, on account
of his death on November 16, 1984. is
hereby reiterated.
WHEREFORE, presmises considered, the

assailed Decision dated February 11, 2008 and
Resolution dated March 31, 2008 of the Court
of Appeals are hereby AFFIRMED and the
petition is hereby DENIED for lack of merit.
2. Ordering the estate of Antonio J.

Villegas, represented herein by his legal
heirs to pay plaintiff Antonio V. Raquiza
Two
Hundred
Million
Pesos
(P200,000,000.00), itemized as follows:
VILLEGAS, ET AL. VS. CA, ET AL., G.R.

NOS. 82562 & 82592, APRIL 11, 1997.
a. One Hundred Fifty Million Pesos

(P150.000.000.00) as moral
damages:
FACTS:
This case originated from libel suit filed by
Antonio V. Raquiza against Manila Mayor
Antonio J. Villegas, who allegedly publicly
imputed to him acts constituting violations of the
Anti-Graft and Corrupt Practices Act on several
August 1968 through;
a) A speech before the Lionos Club of
Malasiqui, Pangasinan on August 10;
b) Public Statements in Manila on August
13;
c) In Davao on August 17, which was
coupled with a radio-TV interview; and
d) A public statement shortly prior to his
appearance
ebfore
the
Senate
Committee on Public Works Committee
on August 20.
The Committee observed that all allegations in
the complaint was based on the testimony of
Pedro U. Fernandez. Villegas also failed to
submit the original copies of his documentary
evidence. Thus, after investigation, Raquiza
was cleared of all charged by the Committee.
On July 25, 1969, information for libel was filed
before the Fiscal of Manila against Villegas who
denied the charge. After losing the 1971
election, Villegas left for the United Stated
where he stayed until he died on November 16,
1984. Nevertheless, trial proceeded on
absentia. The prosecution had already rested
b. Two Hundred Thousand Pesos

(P200.000.00)
as
actual
damages:
c. Forty-nine Million Eight Hundred
Thousand
Pesos
(P49,800,000.00) as exemplary
damages; and
d. The cost of suit.
SO ORDERED.
The heirs of Villegas appealed the decision.
On March 15, 1988, the Court of Appeals
rendered a decision affirming the trial court's
judgment modified only with respect to the
award of damages which was reduced to P2
million representing P1.5 million, P300,000.00,
and P200,000.00 in moral exemplary and actual
damages, respectively. Both parties elevated
said decision to this Court for review.
ISSUE:
WON death of the accused before final
judgement extinguishes Civil Liability?
AND BUSINESS
HELD:
NO. Applying the rule on the Bayotas case:
1. Death of the accused pending appeal of his
conviction extinguishes his criminal liability
as well as the civil liability based solely
thereon.
(Definition of Terms: Usufructuary - Usufruct

comes from civil law, it is a subordinate real
right of limited duration, usually for a person's
lifetime. The holder of a usufruct, known as a
usufructuary, has the right to use the property
and enjoy its fruits.)
Juan perez, along with Maria Perez Fructosa
Perez, Victoria Perez, Apolonio Lorenzo and
Vicente Asucion, is the usufructuary of a parcel
of land known as Papaya Fishpond.
The claim for civil liability survives

notwithstanding the death of accused, if the
same may also be predicated on a source of
obligation other than delict. (Article 1157)
On June 5, 1975, the usufructuaries entered

into a contract leasing the fishpond to Luis Keh
for a period of five (5) years and renewable for
another five (5) years with the condition that the
first five (5) years rental would be Php
150,000.00 and Php 175,000 for the next five
(5) years.
3. Where the civil liability survives, as

explained in Number 2 above, an action for
recovery therefor may be pursued but only
by way of filing a separate civil action.
Paragraph 5 of the lease contract says that Luis

Keh cannot sublease the fishponod nor assign
his rights to anyone.
2.
4. Finally, the private offended party need not

fear a forfeiture of his right to file this
separate civil action by prescription.
The source of Villegas' civil liability in the

present case is the felonious act of libel he
allegedly committed. Yet, this act could also be
deemed a quasi-delict within the purview of
Article 33 9 in relation to Article 1157 of the Civil
Code.
WHEREFORE, the petition in G.R. No. 82562 is
GRANTED and the petition in G.R. No. 82592 is
DENIED. The decisions of the Court of Appeals
in CA-G.R. CR No. 82186 dated March 15,
1988, and of the Manila Regional Trial Court,
Branch 44, dated March 7, 1985, as amended,
are
hereby
REVERSED
and
SET
ASIDE, without prejudice to the right of the
private offended party Antonio V. Raquiza, to
file the appropriate civil action for damages
against the executor or administrator of the
estate or the heirs of the late Antonto J. Villegas
in accordance with the foregoing procedure.
JUAN L. PEREZ VS. C.A., G.R. NO.

98695, JANUARY 27, 1993
FACTS:
Luis Crisostomo, who only finished 5th grade, is

a businessman engaged in fishponds. On
September 20, 1977, his close friend Ming
Cosim arrives in his fishpond farm in Bataan
with petitioner Charlie Lee. They persuaded
Luis Crisostomo to take over the operation of
Papaya Fishpond for Charlie Lee and and his
partner Luis Keh were losing money in its
operation.
Sometime in December, Crisostomo, Lee and
Keh executed a written agreement denominated
as PAKIAO BUWIS whereby Crisostomo
would take possession of the Papaya
Fishpond from January 6, 1978 to June 6,
1978 (5 months) in consideration for the amount
of Php 128,000.00.
Breakdown of Php 128,000.00;
Php 75,000.00 for Rental
Php 50,000.00 for value of Milk Fish
Php 3,000.00 for Labor Expenses
Private respondent paid the P75,000.00 to
petitioner Keh at the house of petitioner Lee in
Sta. Cruz, Hagonoy, Bulacan in the presence of
Lee's wife, brother-in-law and other persons. He
paid the balance to petitioner Lee sometime in
February or March 1978 because he was
uncertain as to the right of petitioners Keh and
Lee to transfer possession over the fishpond to
him. Private respondent made that payment
only after he had received a copy of a written
agreement dated January 9, 1978 whereby
petitioner Keh ceded, conveyed and transferred
all his "rights and interests" over the fishpond to
petitioner Lee, "up to June 1985." From private
respondent's point of view, that document
10 | P a g e L A W Y E R S I N T H E M A K I N G
AND BUSINESS
assured him of continuous possession of the

property for as long as he paid the agreed
rentals of P150,000.00 until 1980 and
P.175,000.00 until 1985.
For the operation of the fishpond from June
1978 to May 1979, private respondent,
accompanied by Ming Cosim and Ambrocio
Cruz, paid the amount of P150,000.00 at the
Malabon, Metro Manila office of petitioner Keh.
Receipt
was
issued
to
him.
Handwritten below that receipt but above the
signature of petitioner Charlie Lee, are the
following: "Rec'd from Luis Crisostomo sum of
P154,000.00
for
above
payment.
Private respondent incurred expenses for
repairs in and improvement of the fishpond in
the total amount of P486,562.65. However,
sometime in June 1979, petitioners Tansinsin
and Juan Perez, in the company of men bearing
armalites, went to the fishpond and presented
private respondent with a letter dated June 7,
1979 showing that petitioner Luis Keh had
surrendered possession of the fishpond to the
usufructuaries.
Because of the threat to deprive him of earnings
of around P700,000.00 that the 700,000 milkfish
in the fishpond would yield, and the refusal of
petitioners Keh, Juan Perez and Lee to accept
the rental for June 5, 1979 to June 6, 1980,
private respondent filed on June 14, 1979 with
the then CFI of Bulacan an action for injunction
and damages. He prayed for the issuance of a
restraining order enjoining therein defendants
Keh, Perez and Lee from entering the premises
and taking possession of the fishpond. He also
prayed for actual damages of P50,000.00,
moral damages of P20,000.00, exemplary
damages in an amount that the court might
award, and attorney's fees of P10,000.00.
That same day, June 14, 1979, the lower court
granted the prayer for a restraining order. On
November 13, 1979, Crisostomo paid one of the
usufructuaries, Maria Perez (who died in 1984),
the amount of P21,428.00 as her 1/7 share of
the annual rental of the fishpond for 1979-80.
Maria Perez issued a notarized receipt for that
amount.
On January 11, 1980, the court lifted the
restraining order thereby effectively depriving
private respondent of possession over the
fishpond. On February 14, 1980, the parties
submitted a partial compromise agreement.
ISSUE:
WON private respondent may be considered a
sublessee or a transferee of the lease entitled
to
possess
the
fishpond
under
the
circumstances of the case
HELD:
In this case, the lifting of the restraining order
paved the way for the possession of the
fishpond on the part of petitioners and/or their
representatives pending the resolution of the
main action for injunction. In other words, the
main issue of whether or not private respondent
may be considered a sublessee or a transferee
of the lease entitled to possess the fishpond
under the circumstances of the case had yet to
be resolved when the restraining order was
lifted.
Art. 1168 of the Civil Code provides that when
an obligation "consists in not doing and the
obligor does what has been forbidden him, it
shall also be undone at his expense." The lease
contract prohibited petitioner Luis Keh, as
lessee, from subleasing the fishpond. In
entering into the agreement for pakiao-buwis
with private respondent, not to mention the
apparent artifice that was his written agreement
with petitioner Lee on January 9, 1978,
petitioner Keh did exactly what was prohibited
of him under the contract to sublease the
fishpond to a third party.
That the agreement for pakiao-buwis was
actually a sublease is borne out by the fact that
private respondent paid petitioners Luis Keh
and Juan Perez, through petitioner Tansinsin
the amount of annual rental agreed upon in the
lease contract between the usufructuaries and
petitioner Keh. Petitioner Keh led private
respondent to unwittingly incur expenses to
improve the operation of the fishpond. By
operation of law, therefore, petitioner Keh shall
be liable to private respondent for the value of
the improvements he had made in the fishpond
or for P486,562.65 with interest of six percent
(6%) per annum from the rendition of the
decision of the trial court on September 6, 1989.
35
WHEREFORE, in light of the foregoing
premises, the decision of the CA is
AFFIRMED insofar as it
a) directs the release to private respondent of
the
amounts
of
P128,572.00
and
P123,993.85 deposited with the Paluwagan
ng Bayan Savings Bank in Paombong,
Bulacan and
b) requires private respondent Crisostomo to
pay petitioner Juan Perez the rental for the
period June 1979 to January 1980 at the
rate of P150,000.00 per annum less the
amount of P21,428.00 already paid to
usufructuary Maria Perez.
AND BUSINESS
It should, however, be subject to the

MODIFICATIONS that:
does not preclude the existence of a culpa

aquiliana,
1. Petitioner Luis Keh shall pay private

respondent Luis Crisostomo in the amount
of P486,562.25 with legal interest from the
rendition of the judgment in Civil Case No.
5610-M or on September 6, 1989, and
We find no reason to disregard the respondents

Court finding that there was no negligence.
2. Petitioners be made liable jointly and

severally liable for moral damages of
P50,000.00,
exemplary
damages
of
P20,000 and attorney's fees of P10,000.00.
JUAN J. SYCIP VS. C.A., G.R. NO.,

98695, JANUARY 27, 1993
FACTS:
Juan Syquia, father of the deceased Vicente
Syquia, entered in a contract of Deed of Sale
and Interment Order with Manila Memorial Park
Cemetery Inc (MMPCI). In the contract, there
contained a provision which stated that the
coffin would be placed in a sealed concrete
vault to protect the remains of the deceased
from the elements.
During the preparation for the transfer of
Vicentes remains in the newly bought lot in
Manila Memorial, it was discovered that there
was a hole in the concrete vault which caused
total flooding inside, damaged the coffin as well
as the body of the deceased and covered the
same with filth. Syquia filed a complaint for
recovery of damages arising from breach of
contract and/or quasi-delict against the MMPCI
for failure to deliver a defect-free concrete vault
to protect the remains of the deceased. In its
defense, MMPCI claimed that the boring of the
hole was necessary in order to prevent the vault
from floating when water fills the grave. The trial
court dismissed the complaint holding that there
was no quasi-delict because the defendant is
not guilty of any fault or negligence and
because there was a pre-existing contract
between the parties. The CA affirmed the
decision of the trial court. Hence, the present
petition.
ISSUE:
Whether or not the private respondent is guilty
of tort?
HELD:
Denied. Decision of the CA affirmed. We are
more inclined to answer the foregoing questions
in the negative. There is not enough ground,
both in fact and in law, to justify a reversal of the
decision of the respondent Court and to uphold
the pleas of the petitioners. Although a preexisting contractual relation between the parties
Article 2176. Whoever by act or omission

causes damage to another, there being fault or
negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no
pre-existing contractual relation between the
parties, is called a quasi-delict
x x x.
In this case, it has been established that the
Syquias and the Manila Memorial Park
Cemetery, Inc., entered into a contract entitled
Deed of Sale and Certificate of Perpetual Care
On August 27, 1969. That agreement governed
the relations of the parties and defined their
respective rights and obligations. Hence, had
there been actual negligence on the part of the
Manila Memorial Park Cemetery, Inc., it would
be held liable not for a quasi-delict or culpa
aquiliana, but for culpa contractual as provided
by Article 1170 of the Civil Code, to wit:
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.
LEGASPI OIL CO., INC. VS. C.A., G.R.

NO. 96505, JULY 01, 1993
FACTS:
Bernard Oseraos had several transactions with
Legaspi Oil Co. for the sale of copra to the
latter. The price at which appellant sells the
copra varies from time to time, depending on
the prevailing market price when the contract is
entered into. On February 16, 1976, appellant's
agent Jose Llover signed contract No. 3804 for
the sale of 100 tons of copra at P82.00 per 100
kilos with delivery terms of 20 days effective
March 8, 1976. After the period to deliver had
lapsed, appellant sold only 46,334 kilos of copra
thus leaving a balance of 53,666 kilos.
Accordingly, demands were made upon
appellant to deliver the balance with a final
warning that failure to deliver will mean
cancellation of the contract, the balance to be
purchased at open market and the price
differential to be charged against appellant. On
October 22, 1976, since there was still no
compliance, appellee exercised its option under
the contract and purchased the undelivered
balance from the open market at the prevailing
price of P168.00 per 100 kilos, or a price
AND BUSINESS
differential of P86.00 per 100 kilos, a net loss of

P46,152.76 chargeable against appellant.
ISSUE:
WON private respondent is guilty of breach of
contact.
RULING:
Private respondent is guilty of fraud in the
performance of his obligation under the sales
contract whereunder he bound himself to
deliver to petitioner 100 metric tons of copra.
However within the delivery period, Oseraos
delivered only 46,334 kilograms of copra to
petitioner. Petitioner made repeated demands
upon private respondent to deliver the balance
of 53,666 kilograms but private respondent
ignored the same. Petitioner made a final
demand with a warning that, should private
respondent fail to complete delivery of the
balance of 53,666 kilograms of copra, petitioner
would purchase the balance at the open market
and charge the price differential to private
respondent. Still private respondent failed to
fulfill his contractual obligation to deliver the
remaining 53,666 kilograms of copra and since
there was still no compliance by private
respondent, petitioner exercised its right under
the contract and purchased 53,666 kilograms of
copra, the undelivered balance, at the open
market at the then prevailing price of P168.00
per 100 kilograms, a price differential of
P46,152.76.
The conduct of private respondent clearly
manifests his deliberate fraudulent intent to
evade his contractual obligation for the price of
copra had in the meantime more than doubled
from P82.00 to P168 per 100 kilograms. Under
Article 1170 of the Civil Code of the Philippines,
those who in the performance of their obligation
are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor
thereof, are liable for damages. Pursuant to
said article, private respondent is liable for
damages.
GUTIERREZ VS. GUTIERREZ, 56 PHIL

177
This is an action brought by the plaintiff in the
Court of First Instance of Manila against the five
defendants, to recover damages in the amount
of P10,000, for physical injuries suffered as a
result of an automobile accident. On judgment
being rendered as prayed for by the plaintiff,
both sets of defendants appealed.
On February 2, 1930, a passenger truck and an
automobile of private ownership collided while
attempting to pass each other on the Talon
bridge on the Manila South Road in the

municipality of Las Pias, Province of Rizal.
The truck was driven by the chauffeur Abelardo
Velasco, and was owned by Saturnino Cortez.
The automobile was being operated by
Bonifacio Gutierrez, a lad 18 years of age, and
was owned by Bonifacio's father and mother,
Mr. and Mrs. Manuel Gutierrez. At the time of
the collision, the father was not in the car, but
the mother, together will several other members
of the Gutierrez family, seven in all, were
accommodated therein. A passenger in the
autobus, by the name of Narciso Gutierrez, was
en route from San Pablo, Laguna, to Manila.
The collision between the bus and the
automobile resulted in Narciso Gutierrez
suffering a fracture right leg which required
medical attendance for a considerable period of
time, and which even at the date of the trial
appears not to have healed properly.
It is conceded that the collision was caused by
negligence pure and simple. The difference
between the parties is that, while the plaintiff
blames both sets of defendants, the owner of
the passenger truck blames the automobile,
and the owner of the automobile, in turn,
blames the truck. We have given close attention
to these highly debatable points, and having
done so, a majority of the court are of the
opinion that the findings of the trial judge on all
controversial questions of fact find sufficient
support in the record, and so should be
maintained. With this general statement set
down, we turn to consider the respective legal
obligations of the defendants.
In amplification of so much of the above
pronouncement as concerns the Gutierrez
family, it may be explained that the youth
Bonifacio was in incompetent chauffeur, that he
was driving at an excessive rate of speed, and
that, on approaching the bridge and the truck,
he lost his head and so contributed by his
negligence to the accident. The guaranty given
by the father at the time the son was granted a
license to operate motor vehicles made the
father responsible for the acts of his son. Based
on these facts, pursuant to the provisions of
article 1903 of the Civil Code, the father alone
and not the minor or the mother, would be liable
for the damages caused by the minor.
We are dealing with the civil law liability of
parties for obligations which arise from fault or
negligence. At the same time, we believe that,
as has been done in other cases, we can take
cognizance of the common law rule on the
same subject. In the United States, it is
uniformly held that the head of a house, the
owner of an automobile, who maintains it for the
general use of his family is liable for its
AND BUSINESS
negligent operation by one of his children,

whom he designates or permits to run it, where
the car is occupied and being used at the time
of the injury for the pleasure of other members
of the owner's family than the child driving it.
The theory of the law is that the running of the
machine by a child to carry other members of
the family is within the scope of the owner's
business, so that he is liable for the negligence
of the child because of the relationship of
master and servant. (Huddy On Automobiles,
6th ed., sec. 660; Missell vs. Hayes [1914], 91
Atl., 322.) The liability of Saturnino Cortez, the
owner of the truck, and of his chauffeur
Abelardo Velasco rests on a different basis,
namely, that of contract which, we think, has
been sufficiently demonstrated by the
allegations of the complaint, not controverted,
and the evidence. The reason for this
conclusion reaches to the findings of the trial
court concerning the position of the truck on the
bridge, the speed in operating the machine, and
the lack of care employed by the chauffeur.
While these facts are not as clearly evidenced
as are those which convict the other defendant,
we nevertheless hesitate to disregard the points
emphasized by the trial judge. In its broader
aspects, the case is one of two drivers
approaching a narrow bridge from opposite
directions, with neither being willing to slow up
and give the right of way to the other, with the
inevitable result of a collision and an accident.
The defendants Velasco and Cortez further
contend that there existed contributory
negligence on the part of the plaintiff, consisting
principally of his keeping his foot outside the
truck, which occasioned his injury. In this
connection, it is sufficient to state that, aside
from the fact that the defense of contributory
negligence was not pleaded, the evidence
bearing out this theory of the case is
contradictory in the extreme and leads us far
afield into speculative matters.
The last subject for consideration relates to the
amount of the award. The appellee suggests
that the amount could justly be raised to
P16,517, but naturally is not serious in asking
for this sum, since no appeal was taken by him
from the judgment. The other parties unite in
challenging the award of P10,000, as
excessive. All facts considered, including actual
expenditures and damages for the injury to the
leg of the plaintiff, which may cause him
permanent lameness, in connection with other
adjudications of this court, lead us to conclude
that a total sum for the plaintiff of P5,000 would
be fair and reasonable. The difficulty in
approximating the damages by monetary
compensation is well elucidated by the
divergence of opinion among the members of
the court, three of whom have inclined to the

view that P3,000 would be amply sufficient,
while a fourth member has argued that P7,500
would be none too much.
In consonance with the foregoing rulings, the
judgment appealed from will be modified, and
the plaintiff will have judgment in his favor
against the defendants Manuel Gutierrez,
Abelardo Velasco, and Saturnino Cortez, jointly
and severally, for the sum of P5,000, and the
costs of both instances.
DE GUIA VS. MANILA ELECTRIC, 40

PHIL 796
FACTS:
The plaintiff is a physician residing in Caloocan
City.-Sept 4, 1915, at about 8pm, the defendant
boarded a car at the end of the line with the
intention of coming to Caloocan.-At about 30
meters from the starting point the car entered a
switch, the plaintiff remaining on the back
platform holding the handle of the right-hand
door. Upon coming out of the switch, the small
wheels of the rear truck left the track ran for a
short distance and hit a concrete post.-the post
was shattered: at the time the car struck against
the concrete post, the plaintiff was allegedl y
standing on the rear platform, grasping the
handle of the right-hand door. The shock of the
impact threw him forward, and the left part of
his chest struck against the door causing him to
fall. In the falling, the plaintiff alleged that his
head struck one of the seats and he became
unconscious.-the plaintiff was taken to his home
which was a short distance away from the site
of the incident. A physician of the defendant
company visited the plaintiff and noted that the
plaintiff was walking about and apparently
suffering somewhat from bruises on his chest.
The plaintiff said nothing about his head being
injured and refused to go to a hospital.-The
plaintiff consulted other physicians about his
condition, and all these physicians testified for
the plaintiff in the trial court.-the plaintiff was
awarded with P6,100, with interest and costs,
as damages incurred by him inconsequence of
physical injuries sustained. The plaintiff and the
defendant company appealed.
ISSUES:
1. WON the defendant has disproved the
existence of negligence?
2. What is the nature of the relation between the
parties?
3. WON the defendant is liable for the damages
4. If liable for damages, WON the defendant
could avail of the last paragraph of Art 1903 on
culpa aquiliana (Art 2180)
5. What is the extent of the defendants liability?
AND BUSINESS
5.1 Did the trial judge err in the awarding of the

damages for loss of professional earnings
(P900)?
5.2 Did the trial judge err in the awarding of the
damages for inability to accept a position as a
district health officer?
5.3 Did the trial judge err in not awarding
damages
for
the
plaintiffs
supposed
incapacitation for future professional practice
(P30,000)?
5.4
Is
the
plaintiff
reasonable
in
demandingP10,000 for the cost of medical
treatment and other expenses incident to his
cure?
6. WON the trial judge erred in treating written
statements of the physicians who testified as
primary evidence?
HELD:
1. NO, the existence of negligence in
theoperation of the car must be sustained, as
notbeing clearly contrary to the evidence.
Ratio:
An experienced and attentive motorman should
have discovered that something was wrong and
would have stopped before he had driven the
car over the entire distance from the point
where the wheels left the track to the place
where the post was struck.
Reasoning:
The motorman alleged that he reduced his
speed to the point that the car barely entered
the switch under its own momentum, and this
operation was repeated as he passed out. Upon
getting again on the straight track he put the
control successively at points one, two, three
and lastly at point four. At the moment when the
control was placed at point four he perceived
that the rear wheels were derailed and applied
the brake; but at the same instant the car struck
the post, some 40 meters distant from the exit
of the switch. However, testimonial evidence
alleged that the rate of a car propelled by
electricity with the control at point "four" should
be about five or 6 miles per hour (around 8 kph)
and other evidence showed that the car was
behind schedule time and that it was being
driven, after leaving the switch, at a higher rate
than would ordinarily be indicated by the control
at point four. The car was practically empty (so
its possible that it could run faster???). The
court granted that there is negligence as shown
by the distance which the car was allowed to
run with the front wheels of the rear truck
derailed, aside from the fact that the car was
running in an excessive speed.
2. The relation between the parties was of a
contractual nature.
Ratio:
The company was bound to convey and

deliverthe plaintiff safely and securely with
reference to thedegree of care which, under the
circumstances, isrequired by law and custom
applicable to the case.
Reasoning:
The plaintiff had boarded the car as a
passenger for the city of Manila and the
company undertook to convey him for hire.
3. YES, the defendant is liable for the damages
Ratio/ Reasoning
Upon failure to comply with that obligation
arising from the contract, the company incurred
the liability defined in articles 1103-1107 of the Civil
Code.
4. No, the defendant could not avail of the last
paragraph of Art 1903
Ratio/ Reasoning:
The last paragraph of article 1903of the civil
code refers to liability incurred by negligence in
the absence of contractual relation, that is, to
the culpa aquiliana of the civil law and not to
liability incurred by breach of contract;
therefore, it is irrelevant to prove that the
defendant company had exercised due care in
the selection and instruction of the motorman
who was in charge of its car and that he was in
experienced and reliable servant.
5. The defendant is liable for the damages
ordinary
recoverable
for
the
breach
of contractual obligation, against a person who
has acted in good faith, which could be
reasonably foreseen at the time the obligation is
contracted.
Ratio:
The extent of the liability for the breach of a
contract must be determined in the light of the
situation in existence at the time the contract is
made; and the damages ordinarily recoverable
are in all events limited to such as might be
reasonably foreseen in the light of the facts then
known to the contracting parties.
Reasoning:
The court has the power to moderate liability
according to the circumstances of the case ,i.e.
when the defendant must answer for the
consequences of the negligence of its
employees. Also, an employer who has
displayed due diligence in choosing and
instructing his servants is entitled to be
considered a debtor in good faith (w/n meaning
of article 1107, old CC)
5.1. NO, the trial judge was liberal enough to
the plaintiff.
AND BUSINESS
Reasoning:
As a result of the incident, the plaintiff was
unable to properly attend his professional labors
for 3 months and suspend his practice for that
period. By testimonial evidence, his customary
income, as a physician, was about P300/month.
So the trial judge accordingly allowed P900 as
damages for loss of earnings.
5.2 YES. The trial judge erred in awarding such
damages.
Ratio:
Damage of this character could not, at the time
of the accident, have been foreseen by the
delinquent party as a probable consequence of
the injury inflicted.
Reasoning:
The representative from Negros Occidental has
supposedly asked Dr. Montinola to nominate
the plaintiff as district health officer of Negros
Occidental for two years, with a salary
of P1,600 per annum and a possible outside
practice worth of P350. However, even if true,
the damages were too speculative to be the
basis of recovery in a civil action.
5.3 NO. The trial court was fully justified in
rejecting the exaggerated estimate of damages
allegedly created.
Ratio/ Reasoning
The plaintiff alleged, even showing testimonial
evidences from numerous medical experts, that
he developed infarct of the liver and traumatic
neurosis, accompanied by nervousness,
vertigo, and other disturbing symptoms of a
serious and permanent character, and these
manifestations of disorder rendered him liable
to a host of other dangerous diseases, and that
restoration
to
health
could
only
be
accomplished after long years of complete
repose.-The medical experts introduced by the
defendant testified however that the plaintiffs
injuries, considered in their physical effects,
were trivial and that the attendant nervous
derangement, with its complicated train of
ailments, was merely simulated.
According to the court, the evidence showed
that immediately after the incident the plaintiff,
sensing in the situation a possibility of profit,
devoted himself with great assiduity to the
promotion of this litigation; and with the aid of
his own professional knowledge, supplemented
by suggestions obtained from his professional
friends and associates, he enveloped himself
more or less unconsciously in an atmosphere of
delusion which rendered him incapable of
appreciating at their true value the symptoms of

disorder which he developed.
5.4 No. He is only justified with P200, or the
amount actually paid to Dr. Montes (the doctor
who treated the plaintiff) which is the obligation
supposedly incurred with respect to treatment
for said injuries.
Ratio:
In order to constitute a proper element
of recovery in an action of this character, the
medical service for which reimbursement is
claimed should not only be such as to have
created a legal obligation upon the plaintiff but
such as was reasonably necessary in view of
his actual condition.
Reasoning:
Dr. Montes, in his testimony, speaks in the most
general terms with respect to the times and
extent of the services rendered; and it is not
clear that those services which were rendered
many months, or year, after the incident had in
fact any necessary or legitimate relation to the
injuries received by the plaintiff.-On the
obligation supposedly incurred by the plaintiff to
three other physicians: (1) it does not appear
that said physicians have in fact made charges
for those services with the intention of imposing
obligations on the plaintiff to pay them; (2)in
employing so many physicians the plaintiff must
have had in view the successful promotion of
the issue of this lawsuit rather than the bona
fide purpose of effecting the cure of his injuries.
6. YES, certificates or the written statements of
the physicians which were referred to in the trial
cannot be admitted as primary evidence since it
is fundamentally of a hearsay nature.
Ratio:
The only legitimate use of certificates could be
put, as evidence for plaintiff, was to allow the
physician who issued it to refer thereto, to
refresh his memory upon details which he might
have forgotten.
DEL PRADO VS. MANILA ELECTRIC, 52

PHIL 900
Facts:
The Manila Electric Company, is engaged in
operating street cars in the City of Manila for the
conveyance of passengers; and on the morning
of 18 November 1925, one Teodorico
Florenciano, as Meralcos motorman, was in
charge of Car 74 running from east to west on
R. Hidalgo Street, the scene of the accident
being at a point near the intersection of said
street and Mendoza Street. After the car had
stopped at its appointed place for taking on and
AND BUSINESS
letting off passengers, just east of the

intersection, it resumed its course at a
moderate speed under the guidance of the
motorman. The car had proceeded only a short
distance, however, when Ignacio del Prado ran
across the street to catch the car, his approach
being made from the left. The car was of the
kind having entrance and exit at either end, and
the movement of del Prado was so timed that
he arrived at the front entrance of the car at the
moment when the car was passing. Del Prado,
upon approaching the car, raised his hand as
an indication to the motorman of his desire to
board the car, in response to which the
motorman eased up a little, without stopping.
Upon this, del Prado seized, with his left hand,
the front perpendicular handpost, at the same
time placing his left foot upon the platform.
However, before del Prados position had
become secure, and even before his raised
right foot had reached the platform, the
motorman applied the power, with the result that
the car gave a slight lurch forward. This sudden
impulse to the car caused del Prados foot to
slip, and his hand was jerked loose from the
handpost. He therefore fell to the ground, and
his right foot was caught and crushed by the
moving car. The next day the member had to be
amputated in the hospital.
An action was instituted in the CFI of Manila by
Ignacio del Prado to recover damages in the
amount of P50,000 for personal injuries alleged
to have been caused by the negligence of
Meralco in the operation of one of its street cars
in the City of Manila. Upon hearing the cause
the trial court awarded to del Prado the sum of
P10,000, as damages, with costs of suit.
Meralco appealed.
ISSUE:
WON There is absence or presence of
Contributory Negligence.
SC Ruling:
The Supreme Court affirmed the appealed
judgment with the modification that the sum to
be recovered reduced to P2,500; with costs
against Meralco.
1 No obligation on the part of a street
railway company to stop cars at
points other than appointed for
stoppage. There is no obligation on the
part of a street railway company to stop
its cars to let on intending passengers at
other points than those appointed for
stoppage. It would be impossible to
operate a system of street cars if a
company engaged in this business were
required to stop any and everywhere to
take on people who are too indolent, or
who imagine themselves to be in too
great a hurry, to go to the proper places
for boarding the cars.
Duty of the motorman of the car.

Although the motorman of the car was
not bound to stop to let the passenger
on, it was his duty to do no act that
would have the effect of increasing the
passengers peril while he was
attempting to board the car. The
premature acceleration of the car was a
breach of this duty.
Nature of relation between a carrier
of passengers for hire and its
patrons; Duty of the carrier. The
relation between a carrier of passengers
for hire and its patrons is of a
contractual nature; and a failure on the
part of the carrier to use due care in
carrying its passengers safely is a
breach of duty (culpa contractual) under
articles 1101, 1103, and 1104 of the Civil
Code. Furthermore, the duty that the
carrier of passengers owes to its
patrons extends to persons boarding the
cars as well as to those alighting
therefrom.
Relevance of distinction between
Culpa
Contractual
and
Culpa
Aquiliana as to defenses available.
The distinction between the two sorts of
negligence is important in this
jurisdiction, for the reason that where
liability arises from a mere tort (culpa
aquiliana), not involving a breach of
positive obligation, an employer, or
master, may exculpate himself, under
the last paragraph of article 1903 of the
Civil Code, by proving that he had
exercised due diligence to prevent the
damage; whereas this defense is not
available if the liability of the master
arises from a breach of contractual duty
(culpa contractual).
Training of motorman irrelevant in
breach of obligation under Article
1101 of the Civil Code. Herein, the
company pleaded as a special defense
that it had used all the diligence of a
good father of a family to prevent the
damage suffered by del Prado; and to
establish this contention the company
introduced testimony showing that due
care had been used in training and
instructing the motorman in charge of
this car in his art. This proof is irrelevant
in view of the fact that the liability
involved was derived from a breach of
obligation under article 1101 of the Civil
Code and related provisions.
Relevance of distinction between
negligence arising under Article 1902
and 1101 as to mitigation of liability.
Another practical difference between
liability for negligence arising under
article 1902 of the Civil Code and
AND BUSINESS
liability arising from negligence in the

performance of a positive duty, under
article 1101 and related provisions of
the Civil Code, is that, in dealing with
the latter form of negligence, the court is
given a discretion to mitigate liability
according to the circumstances of the
case (art 1103). No such general
discretion is given by the Code in
dealing with liability arising under article
1902; though possibly the same end is
reached by courts in dealing with the
latter form of liability because of the
latitude of the considerations pertinent
to cases arising under this article.
Contributory negligence a mitigating
circumstance under Article 1103 Civil
Code.
As to the contributory
negligence of del Prado, as in Rakes
vs. Atlantic, Gulf and Pacific Co. (7
Phil., 359), it is treated as a mitigating
circumstance under article 1103 of the
Civil Code. Herein, the negligence of
del Prado was contributory to the
accident and must be considered as a
mitigating circumstance.
Proximate cause.
Del Prados
negligence in attempting to board the
moving car was not the proximate cause
of the injury. The direct and proximate
cause of the injury was the act of
Meralcos motorman in putting on the
power prematurely. A person boarding a
moving car must be taken to assume
the risk of injury from boarding the car
under the conditions open to his view,
but he cannot fairly be held to assume
the risk that the motorman, having the
situation in view, will increase his peril
by accelerating the speed of the car
before he is planted safely on the
platform. Again, the situation is one
where the negligent act of the
companys servant succeeded the
negligent act of the passenger, and the
negligence of the company must be
considered the proximate cause of the
injury.
Rule analogous to the doctrine of
the last clear chance. The rule
applicable seems to be analogous to, if
not identical with that which is
sometimes referred to as the doctrine of
the last clear chance. In accordance
with this doctrine, the contributory
negligence of the party injured will not
defeat the action if it be shown that the
defendant might, by the exercise of
reasonable care and prudence, have
avoided the consequences of the
negligence of the injured party.
SAN PEDRO BUS LINES ET AL VS.

NAVARRO, G.R. NO. L-6291, APRIL 29,
1954
FACTS:
Nicolas Navarro filed a complaint in the court of
First Instance of Rizal against the San Pedro
Bus Line, Paulino de la Cruz and Teodulo
Lacdan, doing business in the name of the San
Pedro Bus Line, alleging that the plaintiff, on
April 21, 1943, rode as a passenger in Manila
bound bus No. TPU-7654 owned and operated
by the defendants; that while on its way the bus
collided with another vehicle, causing serious
physical injuries to the plaintiff, with subsequent
post-traumatic
psychosis
which
might
incapacitate him for life; that as a result thereof
the plaintiff suffered damages, for actual
medical and hospital expenses and loss of
earning power, in the total sum of P4,500 which
the plaintiff sought to recover from the
defendants.
In their answer the defendants admitted the
occurrence of the accident and the injuries
received
the
plaintiff,
but
disclaimed
responsibility for the accident. After trial, the
court dismissed the complaint on the ground
that there was "no proof whatsoever of the
relation of the defendants San Pedro Bus Line
and Paulino de la Cruz with the damages
claimed by the plaintiff." The plaintiff appealed
to the Court of Appeals which, on part of which
reads as follows: "WHEREFORE, it appearing
that the trial court erred as charged, and that
the facts and the lawfully warrant a recovery by
the appellant, the judgment appealed in the
total sum of P9,500, with interests thereon from
the date this action was commenced. Costs are
charged against the appellees." The defendants
have elevated the case by way of a petition for
certiorari.
It is contended for the herein petitioners that
they cannot be held civilly liable to respondents
Nicolas Navarro, for the reason that the Court of
First Instance of Rizal had dismissed the
criminal charge against petitioner Paulino de la
Cruz, driver of the bus involved in the accident,
citing the case of Martinez vs. Barredo,* Off.
Gaz., 4922. In answer to this contention, it is
enough to advert to the conclusion of the Court
of Appeals which is correct that the action
was not based on tort or quasi delict, but was
one for breach of a carrier's contract, there
being a clear distinction between culpa as a
source and creator of obligations (aquiliana)
and culpa in the performance of an already
existing obligation (contractual).
As already held in the case of Castro vs. Acro
Taxicab Co.** 46 Off. Gaz., 2023, "para que
AND BUSINESS
prosperase la accion del demandante pidiendo

indemnizacion de daos y perjuicios bastaba
que probase la existencia del contrato de
pasaje esto es, que causo lesiones y daos en
el pasajero. De acuerdo con la doctrina
enunciada, para el exito de la accion de daos
no era necesario que se probase la culpa,
desuido a negligencia del chofer que guiaba el
taximetro No. 962." The case of Martinez vs.
Barredo is not controlling, since it referred to an
action based on criminal negligence.
The other contention of the petitioners is that it
was erroneous for the Court of Appeals to
award in favor of respondent Navarro damages
in the amount of P9,500, his claim in the
complaint being only for P4,500. It appears,
however, that the complaint prayed for "such
further relief as may be deemed just and
equitable," and this of course warranted the
granting in the complaint. Indeed, under section
9, Rule 35, of the Rules of Court, "the judgment
shall grant the relief to which the party in whose
favor it is rendered is entitled, even if the party
has not demanded such relief in his pleadings."
It is also urged by counsel for the petitioners
that the finding of the Court of Appeals that
respondent Navarro is insane, is not supported
by any evidence, and that on the other hand, in
the motion for new trial filed by the petitioners,
accompanied by the affidavits of Marcelo
Legaspi and Ceferino Terello, respondent
Navarro is shown not to be insane, with the
result that there is no basis for awarding the
additional amount of P5,000. However, apart
from the fact that the finding of the Court of
Appeals is factual and therefore conclusive, the
said sum was granted by the Court of Appeals,
not only for the resulting insanity of respondent
Navarro but for his pain and suffering in
general; and we are not prepared to hold that
the award is excessive as compensation for
moral damages.
Wherefore, the decision complained of is
affirmed, and it is so ordered with costs against
petitioners.
CONSOLIDATED BANK VS. C.A., G.R.

NO. 138569, SEPTEMBER 11, 2003
FACTS:
Petitioner Solidbank is a domestic banking
corporation organized and existing under
Philippine laws. Private respondent L.C. Diaz
and Company, CPAs, is a professional
partnership engaged in the practice of
accounting.
In March 1976, L.C. Diaz opened a savings

account with Solidbank. On 14 August 1991,
L.C. Diaz through its cashier, Mercedes
Macaraya, filled up a savings (cash) deposit slip
for P990 and a savings (checks) deposit slip for
P50. Macaraya instructed the messenger of
L.C. Diaz, Ismael Calapre, to deposit the money
with Solidbank. Macaraya also gave Calapre
the Solidbank passbook.
Calapre went to Solidbank and presented to
Teller No. 6 the two deposit slips and the
passbook. The teller acknowledged the receipt
of the deposit by returning to Calapre the
duplicate copies of the two deposit slips. Teller
No. 6 stamped the deposit slips with the words
DUPLICATE and SAVING TELLER 6
SOLIDBANK HEAD OFFICE. Since the
transaction took time and Calapre had to make
another deposit for L.C. Diaz with Allied Bank,
he left the passbook with Solidbank. Calapre
then went to Allied Bank. When Calapre
returned to Solidbank to retrieve the passbook,
Teller No. 6 informed him that somebody got
the passbook. Calapre went back to L.C. Diaz
and reported the incident to Macaraya.
Macaraya immediately prepared a deposit slip
in duplicate copies with a check of P200,000.
Macaraya and Calapre went to Solidbank and
presented to Teller No. 6 the deposit slip and
check. The teller stamped the words
DUPLICATE and SAVING TELLER 6
SOLIDBANK HEAD OFFICE on the duplicate
copy of the deposit slip. When Macaraya asked
for the passbook, Teller No. 6 told Macaraya
that someone got the passbook but she could
not remember to whom she gave the passbook.
When Macaraya asked Teller No. 6 if Calapre
got the passbook, Teller No. 6 answered that
someone shorter than Calapre got the
passbook. Calapre was then standing beside
Macaraya.
The following day L.C. Diaz learned of the
unauthorized withdrawal the day before (14
August
1991)
of
P300,000
from
its
savings account. The withdrawal slip for the
P300,000 bore the signatures of the authorized
signatories of L.C. Diaz, namely Diaz and
Rustico L. Murillo. The signatories, however,
denied signing the withdrawal slip. A certain
Noel Tamayo received the P300,000.
L.C. Diaz demanded from Solidbank the return
of its money. Solidbank refused. L.C. Diaz filed
a Complaint for Recovery of a Sum of Money
against Solidbank. The trial court absolved
Solidbank. L.C. Diaz appealed to the CA. CA
reversed the ecision of the trial court. CA denied
the motion for reconsideration of Solidbank. But
it modified its decision by deleting the award of
exemplary damages and attorneys fees. Hence
this petition.
AND BUSINESS
ISSUE:
WON petitioner Solidbank is liable.
RULING:
Yes. Solidbank is liable for breach of contract
due to negligence, or culpa contractual.
The contract between the bank and its
depositor is governed by the provisions of the
Civil Code on simple loan. Article 1980 of the
Civil Code expressly provides that x x x
savings x x x deposits of money in banks and
similar institutions shall be governed by the
provisions concerning simple loan. There is a
debtor-creditor relationship between the bank
and its depositor. The bank is the debtor and
the depositor is the creditor. The depositor
lends the bank money and the bank agrees to
pay the depositor on demand. The savings
deposit agreement between the bank and the
depositor is the contract that determines the
rights and obligations of the parties.
The law imposes on banks high standards in
view of the fiduciary nature of banking. The
bank is under obligation to treat the accounts of
its depositors with meticulous care, always
having in mind the fiduciary nature of their
relationship.
This fiduciary relationship means that the
banks obligation to observe high standards of
integrity and performance is deemed written
into every deposit agreement between a bank
and its depositor. The fiduciary nature of
banking requires banks to assume a degree of
diligence higher than that of a good father of a
family. Article 1172 of the Civil Code states that
the degree of diligence required of an obligor is
that prescribed by law or contract, and absent
such stipulation then the diligence of a good
father of a family. Section 2 of RA 8791
prescribes the statutory diligence required from
banks that banks must observe high
standards of integrity and performance in
servicing their depositors.
However, the fiduciary nature of a bankdepositor relationship does not convert the
contract between the bank and its depositors
from a simple loan to a trust agreement,
whether express or implied. Failure by the bank
to pay the depositor is failure to pay a simple
loan, and not a breach of trust. The law simply
imposes on the bank a higher standard of
integrity and performance in complying with its
obligations under the contract of simple loan,
beyond those required of non-bank debtors
under a similar contract of simple loan.
The fiduciary nature of banking does not
convert a simple loan into a trust agreement
because banks do not accept deposits to enrich

depositors but to earn money for themselves.
Solidbanks Breach of its Contractual Obligation
Article 1172 of the Civil Code provides that
responsibility arising from negligence in the
performance of every kind of obligation is
demandable. For breach of the savings deposit
agreement due to negligence, or culpa
contractual, the bank is liable to its depositor.
Calapre left the passbook with Solidbank
because the transaction took time and he had
to go to Allied Bank for another transaction. The
passbook was still in the hands of the
employees of Solidbank for the processing of
the deposit when Calapre left Solidbank. When
the passbook is in the possession of
Solidbanks tellers during withdrawals, the law
imposes on Solidbank and its tellers an even
higher degree of diligence in safeguarding the
passbook.
Solidbanks tellers must exercise a high degree
of diligence in insuring that they return the
passbook only to the depositor or his authorized
representative. For failing to return the
passbook
to
Calapre,
the
authorized
representative of L.C. Diaz, Solidbank and
Teller No. 6 presumptively failed to observe
such high degree of diligence in safeguarding
the passbook, and in insuring its return to the
party authorized to receive the same.
In culpa contractual, once the plaintiff proves a
breach of contract, there is a presumption that
the defendant was at fault or negligent. The
burden is on the defendant to prove that he was
not at fault or negligent. In contrast, in culpa
aquiliana the plaintiff has the burden of proving
that the defendant was negligent. In the present
case, L.C. Diaz has established that Solidbank
breached its contractual obligation to return the
passbook only to the authorized representative
of L.C. Diaz. There is thus a presumption that
Solidbank was at fault and its teller was
negligent in not returning the passbook to
Calapre. The burden was on Solidbank to prove
that there was no negligence on its part or its
employees. But Solidbank failed to discharge its
burden. Solidbank did not present to the trial
court Teller No. 6, the teller with whom Calapre
left the passbook and who was supposed to
return the passbook to him. Solidbank also
failed to adduce in evidence its standard
procedure in verifying the identity of the person
retrieving the passbook, if there is such a
procedure, and that Teller No. 6 implemented
this procedure in the present case.
Solidbank is bound by the negligence of its
employees under the principle of respondeat
superior or command responsibility. The
AND BUSINESS
defense of exercising the required diligence in

the selection and supervision of employees is
not a complete defense in culpa contractual,
unlike in culpa aquiliana. The bank must not
only exercise high standards of integrity and
performance, it must also insure that its
employees do likewise because this is the only
way to insure that the bank will comply with its
fiduciary duty
Proximate Cause
Withdrawal
of
the
Unauthorized
Proximate cause is that cause which, in natural

and continuous sequence, unbroken by any
efficient intervening cause, produces the injury
and without which the result would not have
occurred. Proximate cause is determined by the
facts of each case upon mixed considerations
of logic, common sense, policy and precedent.
L.C. Diaz was not at fault that the passbook
landed in the hands of the impostor. Solidbank
was in possession of the passbook while it was
processing the deposit. After completion of the
transaction, Solidbank had the contractual
obligation to return the passbook only to
Calapre, the authorized representative of L.C.
Diaz. Solidbank failed to fulfill its contractual
obligation because it gave the passbook to
another person.
not exculpate the defendant from his breach of

contract
Mitigated Damages
Under Article 1172, liability (for culpa
contractual) may be regulated by the courts,
according to the circumstances. This means
that if the defendant exercised the proper
diligence in the selection and supervision of its
employee, or if the plaintiff was guilty of
contributory negligence, then the courts may
reduce the award of damages. In this case, L.C.
Diaz was guilty of contributory negligence in
allowing a withdrawal slip signed by its
authorized signatories to fall into the hands of
an impostor. Thus, the liability of Solidbank
should be reduced.
In PBC v. CA where the Court held the
depositor guilty of contributory negligence, we
allocated the damages between the depositor
and the bank on a 40-60 ratio. Applying the
same ruling to this case, we hold that L.C. Diaz
must shoulder 40% of the actual damages
awarded by the appellate court. Solidbank must
pay the other 60% of the actual damages.
WHEREFORE, the decision of the Court of
Appeals is AFFIRMED with MODIFICATION.
Had the passbook not fallen into the hands of

the impostor, the loss of P300,000 would not
have happened. Thus, the proximate cause of
the unauthorized withdrawal was Solidbanks
negligence in not returning the passbook to
Calapre.
BISHOP OF JARO VS. DELA PEA. 26

PHIL 144
Doctrine
of
Last
Clear
Chance
The doctrine of last clear chance states that
where both parties are negligent but the
negligent act of one is appreciably later than
that of the other, or where it is impossible to
determine whose fault or negligence caused the
loss, the one who had the last clear opportunity
to avoid the loss but failed to do so, is
chargeable with the loss. The antecedent
negligence of the plaintiff does not preclude him
from recovering damages caused by the
supervening negligence of the defendant, who
had the last fair chance to prevent the
impending harm by the exercise of due
diligence.
The plaintiff is the trustee of a charitable

bequest made for the construction of a leper
hospital and that father Agustin de la Pea was
the duly authorized representative of the plaintiff
to receive the legacy. The defendant is the
administrator of the estate of Father De la
Pea.
We do not apply the doctrine of last clear

chance to the present case. This is a case of
culpa
contractual,
where
neither
the
contributory negligence of the plaintiff nor his
last clear chance to avoid the loss, would
exonerate the defendant from liability. Such
contributory negligence or last clear chance by
the plaintiff merely serves to reduce the
recovery of damages by the plaintiff but does
FACTS:
In the year 1898 the books Father De la Pea,

as trustee, showed that he had on hand as such
trustee the sum of P6,641, collected by him for
the charitable purposes aforesaid. In the same
year he deposited in his personal account
P19,000 in the Hongkong and Shanghai Bank
at Iloilo. Shortly thereafter and during the war of
the revolution, Father De la Pea was arrested
by the military authorities as a political prisoner,
and while thus detained made an order on said
bank in favor of the United States Army officer
under whose charge he then was for the sum
AND BUSINESS
thus deposited in said bank. The arrest of

Father De la Pea and the confiscation of the
funds in the bank were the result of the claim of
the military authorities that he was an insurgent
and that the funds thus deposited had been
collected by him for revolutionary purposes. The
money was taken from the bank by the military
authorities by virtue of such order, was
confiscated and turned over to the Government.
While there is considerable dispute in the case
over the question whether the P6,641 of trust
funds was included in the P19,000 deposited as
aforesaid, nevertheless, a careful examination
of the case leads us to the conclusion that said
trust funds were a part of the funds deposited
and which were removed and confiscated by
the military authorities of the United States.
ISSUE:
for events which could not be foreseen, or

which having been foreseen were inevitable,
with the exception of the cases expressly
mentioned in the law or those in which the
obligation so declares." (Art. 1105.)
By placing the money in the bank and mixing it

with his personal funds De la Pea did not
thereby assume an obligation different from that
under which he would have lain if such deposit
had not been made, nor did he thereby make
himself liable to repay the money at all hazards.
If they had been forcibly taken from his pocket
or from his house by the military forces of one
of the combatants during a state of war, it is
clear that under the provisions of the Civil Code
he would have been exempt from responsibility.
The fact that he placed the trust fund in the
bank in his personal account does not add to
his responsibility. Such deposit did not make
him a debtor who must respond at all hazards.
Whether or not Father de la Pea is liable for

the loss of the money under his trust?
OBEJERA VS. IGA SY, 76 PHIL 580

RULINGS:
The court, therefore, finds and declares that the
money which is the subject matter of this action
was deposited by Father De la Pea in the
Hongkong and Shanghai Banking Corporation
of Iloilo; that said money was forcibly taken from
the bank by the armed forces of the United
States during the war of the insurrection; and
that said Father De la Pea was not responsible
for its loss.
Father De la Pea's liability is determined by

those portions of the Civil Code which relate to
obligations. (Book 4, Title 1.)
Although the Civil Code states that "a person

obliged to give something is also bound to
preserve it with the diligence pertaining to a
good father of a family" (art. 1094), it also
provides, following the principle of the Roman
law, major casus est, cui humana infirmitas
resistere non potest, that "no one shall be liable
Facts:
On December 13, 1941, plaintiffs and defendant
sought refuge in the house of Leon Villena, on
account of the Japanese invasion of the
Philippines. News having spread that the
Japanese were committing barbarous acts,
plaintiffs and defendant decided to hide their
things and valuables in a dugout belonging to
Villena.
On February 18, 1942, it was discovered that
their money and things had been lost. The
defendant reported the loss of her valuables
causing the arrest and investigation of Villena,
two others and the plaintiff Engracio Obejera,
who were released shortly after, except
Engracio Obejera who was released only on
April 19, 1912 after he, with his wife, had
consented to execute a transfer agreement with
the defendant which was annulled by the Court
of First Instance in Batangas on the ground of
force and intimidation.
Issue:
1. Whether or not the deed of transfer certificate
executed by both parties is valid?
2. Whether or not Obejera is civilly liable to the
assets that were lost by Sy?
Held:
1. NO. Decision AFFIRMED
2. NO. Decision AFFIRMED
AND BUSINESS
Ratio Decidendi:
The Supreme Court ruled that the alleged
deposit cannot be believed and is contrary to
the ordinary course of nature and the ordinary
habits of life. Even if it was considered, any
obligation or liability arising therefrom was
extinguished upon the loss. The evidence of
record shows that the plaintiffs were not in any
way responsible for the loss of the defendant's
money and jewellery. It necessarily follows that
the deed of transfer whereby the plaintiffs
promised to transfer their property cannot be
held liable, is null and void for lack of cause or
consideration and lack of free consent.
BERNARDINO JIMENEZ VS. CITY OF

MANILA, G.R. NO. 71049, MAY 29, 1987
Facts
Petitioner Bernardino Jimenez bought bagoong
in the Sta. Ana Public Market on a rainy day. It
was flooded by ankle-deep and dirty rainwater.
When petitioner turned around, he stepped on
an uncovered drainange opening, causing a 4inch rusty nail to penetrate his leg. Petitioner fell
sick and was unable to supervise his bus
business for a long time. He sued the City of
Manila and Asiatic Integrated Corp. as
administrator of the said public market. The trial
court sentenced the City of Manila and Asiatic
solidarily liable for damages. On appeal, the CA
modified and held that only Asiatic is liable.
Hence this petition. HELDCity of Manila liable
under article 2189 of the Civil Code.
Argument
The City of Manila argues that it cannot be held
liable because under the Management and
Operating Contract with Asiatic, the latter
assumed sole responsibility for damages which
may be suffered by third persons for any cause
attributable to it.
The City of Manila also argues that under the
Revised Charter of Manila, it shall not be liable
or held for damages or injuries to persons or
property arising from the failure of the Mayor,
the Municipal Board, or any other City Officer, to
enforce the provisions of this chapter, or any
other law or ordinance, or from negligence of
said Mayor, Municipal Board, or any other
officers while enforcing or attempting to enforce
said provisions.
Yes.
1. The Revised Charter of Manila establishes a
general rule regulating the liability of the City of
Manila for "damages or injury to persons or
property arising from the failure of city officers"
to enforce the provisions of said Act, "or any
other law or ordinance or from negligence" of
the City "Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce
said provisions."
On the other hand, Art. 2189 of the Civil Code
provides
that
Provinces,
cities
and
municipalities shall be liable for damages for the
death of, or injuries suffered by any person by
reason of defective conditions of roads, streets,
bridges, public buildings and other public works
under their control or supervision.
The said article constitutes a particular
prescription making "provinces, cities and
municipalities ... liable for damages for the
death of, or injury suffered by any person by
reason" specifically "of the defective
condition of roads, streets, bridges, public
buildings, and other public works under their
control or supervision." In other words the
Revised Charter of Manila refers to liability
arising from negligence, in general, regardless
of the object, thereof, while Article 2189 of the
Civil Code governs liability due to "defective
streets, public buildings and other public works"
in particular and is therefore decisive on this
specific case.
Under article 2189, it is not necessary for the
liability therein established to attach, that the
defective public works belong to the province,
city or municipality from which responsibility is
exacted. What said article requires is that the
province, city or municipality has either "control
or supervision" over the public building in
question.
2. The City of Manila, per the contract,
remained in control of Asiatic, hence the former
must be held liable for petitioners injuries.
The fact of supervision and control of the City
over subject public market was admitted by
Mayor Ramon Bagatsing in his letter to
Secretary of Finance Cesar Virata.
Whether the City of Manila is liable for the

injuries suffered by the petitioner despite the
contract and the Revised Charter of Manila.
In fact, the City of Manila employed a market

master for the Sta. Ana Public Market whose
primary duty is to take direct supervision and
control of that particular market, more
specifically, to check the safety of the place for
the public.
Held
3. On defense:
Issue
AND BUSINESS
As a defense against liability on the

basis of a quasi-delict, one must have exercised
the diligence of a
good father of a family.
(Art. 1173 of the Civil Code).
There is no argument that it is the duty
of the City of Manila to exercise reasonable
care to keep the
public market reasonably
safe for people frequenting the place for their
marketing needs.
While it may be conceded that the
fulfillment of such duties is extremely difficult
during storms and
floods, it must however,
be admitted that ordinary precautions could
have been taken during good
weather to
minimize the dangers to life and limb under
those difficult circumstances.
For instance, the drainage hole could
have been placed under the stalls instead of on
the passage ways. Even more important is
the fact, that the City should have seen to it that
the openings were
covered.
Sadly,
the
evidence indicates that long before petitioner
fell into the opening, it was already uncovered,
and five (5) months after the incident happened,
the opening was still uncovered. Moreo
ver,
while there are findings that during floods the
vendors remove the iron grills to hasten the flow
of
water, there is no showing that such
practice has ever been prohibited, much less
penalized by the City of Manila. Neither was it
shown that any sign had been placed
thereabouts to warn passersby of the
impending danger.
To recapitulate, it appears evident that
the City of Manila is likewise liable for damages
under Article 2189 of the Civil Code,
respondent City having retained control and
supervision over the Sta. Ana
Public
Market and as tort-feasor under Article 2176 of
the Civil Code on quasi-delicts
Petitioner had the right to assume that
there were no openings in the middle of the
passageways and
if any, that they were
adequately covered. Had the opening been
covered, petitioner could not have fallen into
it. Thus the negligence of the City of Manila is
the proximate cause of the injury suffered, the
City is therefore liable for the injury suffered by
the petitioner.
Respondent City of Manila and Asiatic
Integrated Corporation being joint tort-feasors
are solidarily liable under Article 2194 of the
Civil Code.
Dispositive
The judgment is modified. The City of Manila

and Asiatic are solidarily liable.
MERCURY DRUG CORP., VS. DE LEON,

G.R. NO. 165622, OCTOBER 17, 2008
FACTS:
Raul T. De Leon noticed that his left eye was
reddish. He also had difficulty reading. On the
same evening, he met a friend who happened
to be a doctor and had just arrived from abroad
for dinner. De Leon consulted Dr. Milla about his
irritated left eye. The latter prescribed the drugs
"Cortisporin Opthalmic" and "Ceftin" to relieve
his eye problems.
Before heading to work the following morning,
De Leon went to the Betterliving, Paraaque,
branch of Mercury Drug Store Corporation to
buy the prescribed medicines. He showed his
prescription to petitioner Aurmela Ganzon, a
pharmacist assistant. Subsequently, he paid for
and took the medicine handed over by
Ganzon.De Leon requested his sheriff to assist
him in using the eye drops. As instructed, the
sheriff applied 2-3 drops on respondent's left
eye. Instead of relieving his irritation,
respondent felt searing pain so immediately, he
rinsed the affected eye with water, but the pain
did not subside. Only then did he discover that
he was given the wrong medicine, "Cortisporin
Otic Solution.
De Leon returned to the same Mercury Drug
branch and confronted Ganzon why he was
given ear drops, instead of the prescribed eye
drops, she did not apologize and instead
brazenly replied that she was unable to fully
read the prescription. In fact, it was her
supervisor who apologized and informed De
Leon that they do not have stock of the needed
Cortisporin Opthalmic. De Leon wrote Mercury
Drug, through its president about the day's
incident. It did not merit any response. Instead,
two sales persons went to his office and
informed him that their supervisor was busy
with other matters. Having been denied his
simple desire for a written apology and
explanation, De Leon filed a complaint for
damages against Mercury Drug.
MERCURY DRUGS CONTENTION- Mercury
Drug and Ganzon pointed out that De Leon's
own negligence was the proximate cause of his
injury. They argued that any injury would have
been averted had De Leon exercised due
diligence before applying the medicine on his
eye. Had he cautiously read the medicine
bottle label, he would have known that he had
the wrong medicine.
AND BUSINESS
RTC- rendered judgment in favor of De Leon.

The proximate cause of the ill fate of
plaintiff was defendant Aurmila (sic)
Ganzon's negligent exercise of said
discretion. She gave a prescription drug
to a customer who did not have the
proper form of prescription, she did not
take a good look at said prescription,
she merely presumed plaintiff was
looking for Cortisporin Otic Solution
because it was the only one available in
the market and she further presumed
that by merely putting the drug by the
counter wherein plaintiff looked at it,
paid and took the drug without any
objection meant he understood what he
was buying.
Although De Leon may have been
negligent by failing to read the
medicine's label or to instruct his sheriff
to do so, Mercury Drug was first to be
negligent. Ganzon dispensed a drug
without the requisite prescription.
Moreover, she did so without fully
reading what medicine was exactly
being bought. In fact, she presumed that
since what was available was the drug
Cortisporin Otic Solution, it was what De
Leon was attempting to buy
CA dismissed the appeal and the motion for
reconsideration on the ground that if statement
of fact is unaccompanied by a page reference
to the record, it may be stricken or disregarded
all together. Hence the petition.
safeguards consistent with the reasonable

conduct of the business, so that human life
may not constantly be exposed to the
danger flowing from the substitution of
deadly poisons for harmless medicines.
one holding himself out as competent to
handle drugs, having rightful access to them,
and relied upon by those dealing with him to
exercise that high degree of caution and
care called for by the peculiarly dangerous
nature of the business, cannot be heard to
say that his mistake by which he furnishes a
customer the most deadly of drugs for those
comparatively harmless, is not in itself gross
negligence.
In cases where an injury is caused by the

negligence of an employee, there instantly
arises a presumption of law that there has been
negligence on the part of the employer, either in
the selection or supervision of one's
employees. This presumption may be rebutted
by a clear showing that the employer has
exercised the care and diligence of a good
father of the family. Mercury Drug failed to
overcome such presumption. Mercury Drug and
Ganzon have similarly failed to live up to high
standard of diligence expected of them as
pharmacy professionals. They were grossly
negligent in dispensing ear drops instead of the
prescribed eye drops to De Leon. Worse, they
have once again attempted to shift the blame to
their victim by underscoring his own failure to
read the label.
As a buyer, De Leon relied on the expertise and

experience of Mercury Drug and its employees
Pharmacist gave the wrong medicine
in dispensing to him the right medicine. This
Culpa-contractual
Court has ruled that in the purchase and sale of
Druggists must exercise the highest practicable degreedrugs,
of prudence
the buyerand
and seller do not stand at arms
vigilance,
and
the
most
exact
and
reliable
safeguards
length. There exists an imperative duty on the
consistent with the reasonable conduct of the business, so that
life druggist
may
sellerhuman
or the
to take precaution to
not constantly be exposed to the danger flowing from the substitution
of
deadly
prevent death or injury to any person who
poisons for harmless medicines.
relies on one's absolute honesty and peculiar
learning. Mercury Drug and Ganzon's defense
ISSUE:
that the latter gave the only available
WON Mercury Drug and Ganzon had exercised
Cortisporin solution in the market deserves
the degree of diligence expected of them?
scant consideration. Ganzon could have easily
verified whether the medicine she gave De
HELD:
Leon was, indeed, the prescribed one or, at the
NO. Mercury Drug and Ganzon failed to
very least, consulted her supervisor. Absent the
exercise the highest degree of diligence
required certainty in the dispensation of the
expected of them. Mercury Drug and Ganzon
medicine, she could have refused De Leon's
can not exculpate themselves from any liability.
purchase of the drug.
As active players in the field of dispensing
medicines to the public, the highest degree of
The award of damages is proper and shall only
care and diligence is expected of them.
be reduced considering the peculiar facts of the
The profession of pharmacy demands care
case. Though
incapable
of
pecuniary
and skill, and druggists must exercise care
computation, moral damages may be recovered
of a specially high degree, the highest
if they are the proximate result of defendant's
degree of care known to practical men. In
wrongful act or omission. However, the award of
other words, druggists must exercise the
damages must be commensurate to the loss or
highest practicable degree of prudence and
injury suffered.
vigilance, and the most exact and reliable
AND BUSINESS
It is generally recognized that the drugstore

business is imbued with public interest. This
cannot be more real for Mercury Drug, the
country's biggest drugstore chain. This Court
cannot tolerate any form of negligence which
can jeopardize the health and safety of its loyal
patrons.
Moreover, this Court will not
countenance the cavalier manner it treated De
Leon. Not only does a pharmacy owe a

customer the duty of reasonable care, but it is
also duty-bound to accord one with respect.
CRUZ VS. GANGAN, G.R. NO. 143403,

JANUARY 22, 2003

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1 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

THE OFFICE OF THE SOLICITOR

NEW WORLD VS. AMA, G.R. NOS.

OBLIGATIONS AND CONTRACTS REVIEWER

2 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

2. No. No basis for computation.

METROBANK VS. CHUY LU TAN, G.R.

LOCSIN ii VS. MEKENI FOOD G.R. NO.

Supermarket or Foodservice and South Luzon

OBLIGATIONS AND CONTRACTS REVIEWER

3 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

benefit enjoyed by petitioner was merely

VENZON VS. RURAL BANK OF

Court denies petition for there was no error in

DY CS. PEOPLE, G.R. NO. 189081

OBLIGATIONS AND CONTRACTS REVIEWER

4 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

taking into consideration that Estafa was not

PEOPLE VS. BAYOTAS G.R. NO. 102007

By fair intendment, the term final judgment

From this lengthy disquisition, we summarize

1. Death of the accused pending appeal of his

2. The claim for civil liability survives

3. Where the civil liability survives, as explained

1. By the death of the convict, as to the

4. Finally, the private offended party need not

The civil liability, however, poses a problem.

Applying this set of rules to the case at bench,

is it a judgment which is final and

OBLIGATIONS AND CONTRACTS REVIEWER

5 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

METROBANK VS. ROSALES AND YO

the bank later discovered that the serial

OBLIGATIONS AND CONTRACTS REVIEWER

6 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

and also claim for actual, moral and exemplary

obligation, there was no legal basis for

DRA. DELA LLANA VS. BIONG, G.R. NO.

OBLIGATIONS AND CONTRACTS REVIEWER

7 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

her left arm. She consulted Dra. Rosalinda Milla

Llana did not immediately visit a hospital to

(1) The pictures of her damaged car;

OBLIGATIONS AND CONTRACTS REVIEWER

8 | Page LAWYERS IN THE MAKING

FROM ST. THOMAS MORE SCHOOL OF LAW

its case two months after notice of his death.

The SC cannot take judicial notice that

1. The dismissal of the criminal case

WHEREFORE, presmises considered, the

2. Ordering the estate of Antonio J.

VILLEGAS, ET AL. VS. CA, ET AL., G.R.

a. One Hundred Fifty Million Pesos

b. Two Hundred Thousand Pesos

OBLIGATIONS AND CONTRACTS REVIEWER

9 | Page LAWYERS IN THE MAKING