Case of JACINTO TANGUILIG doing business under the HELD:

name and style J.M.T. ENGINEERING AND GENERAL

MERCHANDISING vs COURT OF APPEALS and VICENTE WHEREFORE, the appealed decision is MODIFIED.
HERCE JR. Respondent VICENTE HERCE JR. is directed to pay
petitioner JACINTO M. TANGUILIG the balance of
FACTS OF THE CASE: P15,000.00 with interest at the legal rate from the date
of the filing of the complaint. In return, petitioner is
Herce contracted Tanguilig to construct a windmill ordered to "reconstruct subject defective windmill
system for him, for consideration of 60,000.00. system, in accordance with the one-year guaranty" and
Pursuant to the agreement Herce paid the to complete the same within three (3) months from the
downpayment of 30,000.00 and installment of finality of this decision.
15,000.00 leaving a 15,000.00 balance.
Obligations and Contracts Terms:
Herce refused to pay the balance because he had
already paid this amount to SPGMI which constructed
a deep well to which the windmill system was to be
connected since the deepwell, and assuming that he
owed the 15,000.00 this should be offset by the
defects in the windmill system which caused the
structure to collapse after strong winds hit their place.
According to Tanguilig, the 60,000.00 consideration is
only for the construction of the windmill and the
construction of the deepwell was not part of it. The
collapse of the windmill cannot be attributed to him as
well, since he delivered it in good and working
condition and Herce accepted it without protest. Herce
contested that the collapse is attributable to a
typhoon, a force majeure that relieved him of liability.

The RTC ruled in favor of Tanguilig, but this decision

was overturned by the Court of Appeals which ruled in
favor of Herce

ISSUES OF THE CASE:

Can the collapse of the windmill be attributed to force

majeure? Thus, extinguishing the liability of
Tanguilig?
- Yes, in order for a party to claim exemption from
liability by reason of fortuitous event under Art 1174 of
the Civil Code the event should be the sole and
proximate cause of the loss or destruction of the object
of the contract.
- In Nakpil vs. Court of Appeals, the S.C. held that 4
requisites must concur that there must be a (a) the
cause of the breach of the obligation must be
independent of the will of debtor (b) the event must be
either unforeseeable or unavoidable; (c) the event be
such to render it impossible for the debtor to fulfill his
obligation in a normal manner; and (d) the debtor must
be free from any participation in or aggravation of the
injury to the creditor.
- Tanguilig merely stated that there was a strong wind,
and a strong wind in this case is not fortuitous, it was
not unforeseeable nor unavoidable, places with strong
winds are the perfect locations to put up a windmill,
since it needs strong winds for it to work.
Fortuitous Events- Refers to an occurrence or happening
which could not be foreseen, or even if foreseen, is
inevitable. It is necessary that the obligor is free from
negligence. Fortuitous events may be produced by two
(2) general causes: (1) by Nature, such as but not
limited to, earthquakes, storms, floods, epidemics, fires,
and (2) by the act of man, such as but not limited to,
armed invasion, attack by bandits, governmental
prohibitions, robbery, provided that they have the force
of an imposition which the contractor or supplier could
not have resisted.
CANGCO VS. MANILA RAILROAD CO.
On January 20, 1915, Cangco was riding the train of
Manila Railroad Co (MRC). He was an employee of the
latter and he was given a pass so that he could ride the
train for free. When he was nearing his destination at
about 7pm, he arose from his seat even though the train
was not at full stop. When he was about to alight from
the train (which was still slightly moving) he accidentally
stepped on a sack of watermelons which he failed to
notice due to the fact that it was dim. This caused him
to lose his balance at the door and he fell and his arm
was crushed by the train and he suffered other serious
injuries. He was dragged a few meters more as the train
slowed down.
It was established that the employees of MRC were
negligent in piling the sacks of watermelons. MRC raised
as a defense the fact that Cangco was also negligent as
he failed to exercise diligence in alighting from the train
as he did not wait for it to stop.
ISSUE: Whether or not Manila Railroad Co is liable for
damages.
HELD: Yes. Alighting from a moving train while it is
slowing down is a common practice and a lot of people
are doing so every day without suffering injury. Cangco
has the vigor and agility of young manhood, and it was
by no means so risky for him to get off while the train
was yet moving as the same act would have been in an
aged or feeble person. He was also ignorant of the fact
that sacks of watermelons were there as there were no
appropriate warnings and the place was dimly lit.
The Court also elucidated on the distinction between the
liability of employers under Article 2180 and their
liability for breach of contract [of carriage]:
NOTES: But, if the master has not been guilty of any
negligence whatever in the selection and direction of the
servant, he is not liable for the acts of the latter,
whatever done within the scope of his employment or
not, if the damage done by the servant does not amount
to a breach of the contract between the master and the
person injured.
The liability arising from extra-contractual culpa is
always based upon a voluntary act or omission which,
without willful intent, but by mere negligence or
inattention, has caused damage to another.
These two fields, figuratively speaking, concentric; that
is to say, the mere fact that a person is bound to another
by contract does not relieve him from extra-contractual
liability to such person. When such a contractual relation
exists the obligor may break the contract under such
conditions that the same act which constitutes the
source of an extra-contractual obligation had no
contract existed between the parties.
Manresa: Whether negligence occurs an incident in the
course of the performance of a contractual undertaking
or in itself the source of an extra-contractual
undertaking obligation, its essential characteristics are
identical.
Vinculum Juris: (def) It means an obligation of law,
or the right of the obligee to enforce a civil matter in a
court of law.
SOUTHEASTERN COLLEGE, INC., VS. CA
FACTS:
Private respondents are owners of a house at 326
College Road, Pasay while petitioner owns a four-storey
school building along the same College Road. That on
October 11, 1989, a powerful typhoon hit Metro Manila.
Buffeted by very strong winds, the roof of the
petitioners building was partly ripped off and blown
away, landing on and destroying portions of the roofing
of private respondents house. When the typhoon had
passed, an ocular inspection of the destroyed building
was conducted by a team of engineers headed by the
city building official. In their report, they imputed
negligence to the petitioner for the structural defect of
the building and improper anchorage of trusses to the
roof beams to cause for the roof be ripped off the
building, thereby causing damage to the property of
respondent. Respondents filed an action before the RTC
for recovery of damages based on culpa aquiliana.
Petitioner interposed denial of negligence and claimed
that the typhoon as an Act of God is the sole cause of
the damage. RTC ruled in their favor relying on the
testimony of the City Engineer and the report made after
the ocular inspection. Petitioners appeal before the CA
which affirmed the decision of the RTC. Hence this
present appeal.
ISSUES:
(1) Whether the damage on the roof of the building of
private respondents resulting from the impact of the
falling portions of the school buildings roof ripped off by
the strong winds of typhoon Saling, was, within legal
contemplation, due to fortuitous event? (2) Whether or
not an ocular inspection is sufficient evidence to prove
negligence?
HELD:
1.Yes, petitioner should be exonerated from liability
arising from the damage caused by the typhoon. Under
Article 1174 of the Civil Code, Except in cases expressly
specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires
the assumption of risk, no person shall be responsible
for those events which could not be foreseen, or which,
though foreseen, were inevitable. In order that a
fortuitous event may exempt a person from liability, it
is necessary that he be free from any previous
negligence or misconduct by reason of which the loss
may have been occasioned.
2
An act of God cannot be invoked for the protection of a
person who has been guilty of gross negligence in not
trying to forestall its possible adverse
consequences. When a persons negligence concurs with
an act of God in producing damage or injury to another,
such person is not exempt from liability by showing that
the immediate or proximate cause of the damages or
injury was a fortuitous event. When the effect is found
to be partly the result of the participation of man
whether it be from active intervention, or neglect, or
failure to act the whole occurrence is hereby humanized,
and removed from the rules applicable to acts of God.
In the case at bar, the lower court accorded full
credence to the finding of the investigating team that
subject school buildings roofing had no sufficient
anchorage to hold it in position especially when battered
by strong winds. Based on such finding, the trial court
imputed negligence to petitioner and adjudged it liable
for damages to private respondents. There is no
question that a typhoon or storm is a fortuitous event,
a natural occurrence which may be foreseen but is
unavoidable despite any amount of foresight, diligence
or care. In order to be exempt from liability arising from
any adverse consequence engendered thereby, there
should have been no human participation amounting to
a negligent act. In other words; the person seeking
exoneration from liability must not be guilty of
negligence. Negligence, as commonly understood, is
conduct which naturally or reasonably creates undue
risk or harm to others. It may be the failure to observe
that degree of care, precaution, and vigilance which the
circumstances justify demand, or the omission to do
something which a prudent and reasonable man, guided
by considerations which ordinarily regulate the conduct
of human affairs, would do. 2. It bears emphasizing that
a person claiming damages for the negligence of
another has the burden of proving the existence of fault
or negligence causative of his injury or loss. The facts
constitutive of negligence must be affirmatively
established by competent evidence, not merely by
presumptions and conclusions without basis in fact.
Private respondents, in establishing the culpability of
petitioner, merely relied on the aforementioned report
submitted by a team which made an ocular inspection
of petitioners school building after the typhoon.
Necessito vs. Paras
Facts: On January\y 28, 1954, Severina Garces and her
one year old son, Precillano Necesito boarded passenger
auto truck bus of the Philippine Rabbit Bus Lines at
Agno, Pangasinan.
After the bus entered a wooden bridge, the front wheels
swerved to the right. The driver lost control, and after
the wrecking the bridge wooden rails, the truck fell on
its right side into a creek where water was breast deep.
The mother, Severina was drowned and the son
Precillano was injured.
Issue: Whether or nor the carrier is liable for
manufacturing defect of the steering knuckle?
Held: It is clear that the carrier is not an insurer of the
passengers safety. His liability rest upon negligence,
that his failure to exercise utmost degree of diligence
that the law requires.
The passenger has neither choice nor control over the
carrier in the selection and use of the equipment and
the appliances in use by the carrier. Having no privity
whatever with the manufacturer or vendor of the
defective equipment, the passenger has no remedy
against him, while carrier usually has. It is but logical,
therefore, that the carrier, while not an insurer of the
safety of his passengers, should nevertheless be held to
answer for flaws of his equipment if such cause were at
all discoverable.
La Mallorca v. CA
Facts:
Mariano Beltran and his family rode a bus owned by
petitioner. Upon reaching their desired destination, they
alighted from the bus. But Mariano returned to get their
baggage. His youngest daughter followed him without
his knowledge. When he stepped into the bus again, it
suddenly accelerated. Marianos daughter was found
dead. The bus ran over her.
Issue:
Whether the liability of a common carrier extends even
after the passenger had alighted
Held:
The relation of carrier and passenger does not cease at
the moment the passenger alights from the carriers
vehicle at a place selected by the carrier at the point of
destination, but continues until the passenger has had a
reasonable time or reasonable opportunity to leave the
current premises.
Juntilla vs Fontanar
Facts: Herein plaintiff was a passenger of the public
utility jeepney on course from Danao City to Cebu City.
The jeepney was driven by driven by defendant Berfol
Camoro and registered under the franchise of Clemente
Fontanar. When the jeepney reached Mandaue City, the
right rear tire exploded causing the vehicle to turn
turtle. In the process, the plaintiff who was sitting at the
front seat was thrown out of the vehicle. Plaintiff
suffered a lacerated wound on his right palm aside from
the injuries he suffered on his left arm, right thigh, and
on his back.
Plaintiff filed a case for breach of contract with damages
before the City Court of Cebu City. Defendants, in their
answer, alleged that the tire blow out was beyond their
control, taking into account that the tire that exploded
was newly bought and was only slightly used at the time
it blew up.
Issue: Whether or not the tire blow-out is a fortuitous
event?
Held: No. In the case at bar, the cause of the
unforeseen and unexpected occurrence was not
independent of the human will. The accident was caused
either through the negligence of the driver or because
of mechanical defects in the tire. Common carriers
should teach drivers not to overload their vehicles, not
to exceed safe and legal speed limits, and to know the
correct measures to take when a tire blows up thus
insuring the safety of passengers at all times.
AUSTRIA VS. COURT OF APPEALS
39 SCRA 527
FACTS:
Maria G. Abad received from Guillermo Austria a
pendant with diamonds to be sold on a commission basis
or to be returned on demand. While walking home, the
purse containing the jewelry and cash was snatched by
two men. A complaint of the incident was filed in the
Court of First Instance against certain persons. Abad
failed to return the jewelry or pay for its value despite
demands made by Austria. Austria brought an action
against the Abad spouses for the recovery of the
pendant or of its value and damages. Abad spouses set
up the defense that the alleged robbery had
extinguished their obligation.
ISSUE:
Should the Abad spouse be held liable for the loss of the
pendant?
RULING:
No. The Court ruled that the exempting provision of
Article 1174 of the Civil Code is applicable in the case.
It is a recognized jurisdiction that to constitute a caso
fortuito that would exempt a person from responsibility,
it is necessary that the event must be independent of
the human will or of the obligors will; the occurrence
must
render it impossible for the debtor to fulfill the obligation
in a normal manner; and that the obligor must be free
of participation in, or aggravation of, the injury to the
creditor. To avail of the exemption granted, it is not
necessary that the persons responsible for the event
should be found or punished. It is sufficient that to
unforeseeable event which is the robbery took place
without concurrent
fault or negligence on the part of the obligor which can
be proven by preponderant evidence. It was held that
the act of Maria Abad in walking home alone carrying
the jewelry was not negligent for at that time the
incidence of crimes was not high.
VASQUEZ VS. CA
Facts:
A lot of the Himalayan Cadastre was registered
under the name of spouses Olea.
October 1959: the lot was leased by
respondent-spouses Olea to spouses Vasquezz.
September 21, 1964: the spouses Olea sold the
lot to spouses Vasquez under a Deed of Sale for
the amount of P9,000.00. The Deed of Sale was
duly ratified and notarized.
On the same day and along with the execution
of the Deed of Sale, a separate instrument,
denominated as Right to Repurchase, was
executed by the parties granting spouses Olea
the right to repurchase the lot for P12,000.00,
likewise duly ratified and notarized.
January 2, 1969: spouses Olea sold the same
lot to Benito Derrama, Jr., after securing
spouses Vasquez' title, for the sum of
P12,000.00. Upon the protestations of spouses
Vasquez, assisted by counsel, the said second
sale was cancelled after the payment.
January 15, 1975: Respondents Spouses Olea
filed an action against the Spouses Vasquez and
Gayanelo seeking to redeem the subject
property which was previously sold by Spouses
Olea to Spouses Vasquez on September 21,
1964.
Spouses Vasquez resisted this action for
redemption on the premise that the Right to
Repurchase is just an option to buy since it is
not embodied in the same document of sale but
in a separate document, and since such option
is not supported by a consideration distinct from
the price, said deed for right to repurchase is
not binding upon them.
RTC ruled against spouses Vasquez ordering
them to resell the lots to spouses Olea for the
repurchase price of P24,000.00, which amount
combines the price paid for the first sale and the
price paid by defendants to Benito Derrama, Jr.
Spouses Vasquez insist that they cannot be
compelled to resell the lot contending that the
nature of the sale over the said lot between
them and spouses Olea was that of an absolute
deed of sale and that the Right to Repurchase
can only be either an option to buy or a mere
promise on their part to resell the property.
They argued that since the "RIGHT TO
REPURCHASE" was not supported by any
consideration distinct from the purchase price it
is not valid and binding on the petitioners
pursuant to Article 1479 of the Civil Code.
Issue: WON the right of repurchase was supported by
a consideration distinct from the price. NO
Held:
It is clear that the right to repurchase was not supported
by a consideration distinct from the price
The rule is that the promisee has the burden of proving
such consideration. Unfortunately, the spouses Olea,
promisees in the right to repurchase failed to prove such
consideration. They did not even allege the existence
thereof in their complaint.
The Sanchez ruling is not applicable
Therefore, in order that the Sanchez case can be
applied, the evidence must show that the spouses Olea
accepted the right to repurchase.
The record, however, does not show that spouses Olea
accepted the "Right to Repurchase" the land in question.
The SC disagrees with the lower court's finding that
spouses Olea accepted the "right to repurchase" under
the following circumstances:
... as evidenced by the annotation and registration of
the same on the back of the transfer of certificate of title
in the name of appellants. As vividly appearing therein,
it was signed by appellant himself and witnessed by his
wife so that for all intents and purposes the Vasquez
spouses are estopped from disregarding its obvious
purpose and intention."
The annotation and registration of the right to
repurchase at the back of the certificate of title of the
petitioners cannot be considered as acceptance of the
right to repurchase Annotation at the back of the
certificate of title of registered land is for the purpose of
binding purchasers of such registered land.
Purchasers of a registered land are bound by the
annotations found at the back of the certificate of title
covering the subject parcel of land. In effect, the
annotation of the right to repurchase found at the back
of the certificate of title over the subject parcel of land
of the private respondents only served as notice of the
existence of such unilateral promise of the petitioners to
resell the same to the private respondents. This,
however, cannot be equated with acceptance of such
right to repurchase by the private respondent.
Neither can the signature of the spouses Vasquez
in the document called "right to repurchase"
signify acceptance of the right to repurchase
The spouses Olea did not sign the offer. Acceptance
should be made by the promisee, in this case, the
private respondents and not the promisors, the
petitioners herein. It would be absurd to require the
promisor of an option to buy to accept his own offer
instead of the promisee to whom the option to buy is
given.
Furthermore, the actions of the private respondents
(a) filing a complaint to compel re-sale and their
demands for resale prior to filing of the complaint cannot
be considered acceptance.
The right of repurchase is not a right granted to the
seller to the buyer
The right of repurchase is not a right granted the vendor
by the vendee in a subsequent instrument, but is a right
reserved by the vendor in the same instrument of sale
as one of the stipulations of the contract. Once the
instrument of absolute sale is executed, the vendor can
no longer reserve the right to repurchase, and any right
thereafter granted the vendor by the vendee in a
separate instrument cannot be a right of repurchase but
some other right like the option to buy in the instant
case.
While it is true that this Court in the Zulueta case found
Zulueta guilty of laches, this, however, was not the
primary reason why this Court disallowed the
redemption of the property by Zulueta. It is clear from
the decision that the ruling in the Zulueta case was
based mainly on the finding that the transaction
between Zulueta and Octaviano was not a sale with right
to repurchase and that the "option to repurchase was
but an option to buy or a mere promise on the part of
Octaviano to resell the property to Zulueta.
In the instant case, since the transaction between the
spouses Vasquez and private respondents Olea was not
a sale with right to repurchase, the private respondents
cannot avail of Article 1601 of the Civil Code which
provides for conventional redemption.
Javier vs CA
Victoria Javier, wife of the private respondent received
from Prudential bank and Trust Company the amount of
USD 999,973.70 remitted by her sister, Mrs. Dolores
Vertosa, through some banks in the US, among which is
Mellon Bank,NA.
Mellon Bank filed a complaint against private
respondent, his wife and other defendants, claiming that
its remittance of US$1M was a clerical error and should
have been US$1,000. On the ground that the
defendants are trustees of an implied trust for the
benefit of Mellon Bank with the clear, immediate and
continuing duty to return the said amount from the
moment it was received.
Private respondent filed his income tax return for the
taxable year 1977 showing a gross income of PhP
53,053.38 and a net income of PhP 48.053.88 and
stating in the footnote of the return that Taxpayer was
a recipient of some money received from abroad which
he presumed to be a gift but turned out to be an error
and is now subject to litigation.
Private respondent wrote the BIR that he was paying the
deficiency income assessment for the year 1976 but
denying that he had any undeclared income for the year
1977 and requested that the assessment for 1977 be
made to wait final court decision on the case filed
against him for filing an allegedly fraudulent return.
CIR reply stating that the amount of Mellon Bank
erroneous remittance which were depose is definitely
taxable. The Commission also imposed a 50% fraud
penalty against Javier.
ISSUE: WON private respondent is liable for the 50%
fraud?
HELD:
Under Sec 72 of the Tax Code, a taxpayer who files a
false return is liable to pay a fraud penalty of 50% of
the tax due from him of the deficiency tax in case
payment has been made on the basis of the return filed
before the discovery of the falsity or fraud. The fraud
contemplated by law is actual and not constructive.
In the case at bar, there was no actual and intentional
fraud through willful and deliberate misleading of the
government agency concerned, the BIR. The
government was not induced to give up some legal right
and place itself at a disadvantage so as to prevent its
lawful agents from proper assessment of tax liabilities
because Javier did not conceal anything. Error or
mistake of law is not fraud.
The imposition of the fraud penalty in this case is not
justifies by the extant facts because he did not conceal
the facts that he received an amount of money although
it was a subject of litigation.
As ruled by respondent CTA, the 50% surcharge
imposed as fraud penalty by the petitioner against the
private respondent in the deficiency assessment should
be deleted.
PLDT VS. JUTERIAN
PLDT adopted in 1923 a Plan for Employees Pension.
Condition of pension: If they reach the age of 60 and
served for 20years. In 1945 the BOD adopted a
resolution discontinuing the pension plan some retirees
did not get the pension because they did not satisfythe
conditions. PLDT argued that employees cannot compel
them to continueprogram when it was based on
expectancy.
Issue:WON the pre-war employees are entitled to the
pension.
Held: Yes. But with the exception of those who died or
left before the outbreak of the war. The pension plan
was not a gratuity but an inducement foremployees to
continue indefinitely in service. The plan ripened into
abinding contract upon its implied acceptance of the
employees.Acceptance is inferred from their entering
the employ of the company andstaying after the plan
was made known. PLDT argues that it can only beheld
liable under the conditions expressly set in the pension
plan. But theCourt held that the Company that violated
the contract with its employees,by discontinuing the
plan without their consent, is not in the position toinsist
upon the terms of the very contract they have breached.
BALURAN V. NAVARRO
The manner of terminating the right of usufruct may be
stipulated by the parties such as in this case, the
happening of a resolutory condition.
FACTS:
Baluran and Paraiso (ancestor of Obedencio) entered
into a contract which they called barter, but in fact
stipulated that they would only transfer the material
possession of their respective properties to each other.
Thus, Baluran will be allowed to construct a residential
house on the land of Paraiso while Paraiso is entitled to
reap the fruits of the riceland of Baluran. The contract
prohibited them from alienating the properties of the
other and contained a stipulation that should the heirs
of Paraiso desire to re-possess the residential lot,
Baluran is obliged to return the lot. Indeed, years after,
Obedencio (grandchild of Paraiso) acquired the
ownership of the residential lot from his mother and
demanded that Baluran, who was in possession, vacate.
Baluran now counters that the barter already
transferred ownership.
ISSUE:
Whether or not the contract was a barter or usufruct
RULING:
IT IS USUFRUCT. First, the contract is what the law
defines it to be and not what the parties call it. It is very
clear that what the parties exchanged was not
ownership, but merely material possession or the right
to enjoy the thing.
Now, because it is usufruct, the law allows the parties
to stipulate the conditions including the manner of its
extinguishment. In this case, it was subject to a
resolutory condition which is in case the heir of Paraiso
(a third party) desires to repossess the property. Upon
the happening of the condition, the contract is
extinguished.
Therefore, Baluran must return the land to Obedencia.
But since Art. 579 allows the usufructuary to remove
improvements he made, Baluran may remove the house
he constructed.
One last point. At the time of this case, the Obedencias
were also in possession of the riceland of Baluran.
Although it was not proper to decide the issue of
possession in this case, the Court nevertheless decided
on the matter and order the Obedencias to vacate the
property inasmuch as there was an extinguishment of a
reciprocal obligations and rights.
Hermosa vs Longara
Facts: There are three kinds of claims occured after the
death of the intestate in December, 1944. The claimant
presented evidence and the CA found that the intestate
has asked for the said credit advances for himself and
for the members of his family "on condition that their
payment should be made by Fernando Hermosa, Sr. as
soon as he received funds derived from the sale of his
property in Spain." CA held that payment of the
advances did not become due until the administratrix
recieved the sum of P20,000 from the buyer of the
property. Upon authorization of the probate court in
October, 1997. and the same was paid for subsequently.
Thus constitute this appeal.
Issue: Whether the obligation contracted by the
intestate was subject to a condition exclusively
dependent upon the will of the debtor and therefore null
and void.
Held: The obligation contracted is a suspensive
condition, upon the happening of which the obligation to
pay is made dependent. And upon the happening of the
condition, the debt became immediately due and
demandable.
Ocejo, Perez, & Co. v. The International Banking
Corporation
As security for a loan, Chua Teng Chong pledged his
stocks of sugar in a warehouse A in favor of
International Bank. Meanwhile, Chong bought sugar
from Ocejo, Perez, & Co. and the same was delivered to
warehouse B. Chua did not pay the company. When
International Bank learned that the sugar mortgaged
were insufficient, Chua informed them that the rest was
in warehouse B. Hence, the bank secured both
warehouses. Subsequently, Chua was declared
insolvent and an assignee was appointed. Meanwhile,
Chong died. The company wants to recover the sugar
from the bank on the ground that the same was not yet
paid. Intervening in the case, the assignee claimed that
the said sugar properly belonged to the estate of Chong.
HELD: The assignee was entitled to the proceeds of the
sugar in warehouse B as delivery had already been
made; hence, the sugar became the property of the
estate of Chua. Tradition is a true mode of acquiring
ownership which effects the passage of tile and the birth
of the right in rem Ownership of things is not
transferred by contract merely but by delivery.
Contracts only constitute title or rights to the transfer or
acquisition of ownership, while delivery or tradition is
the method of accomplishing the same.
The seller is obligated to transfer the ownership of and
deliver the object of the sale, as well as answer for its
warranty.
The buyer acquires ownership of the thing sold from the
moment it is delivered to him: (a) through the various
modes of delivery, or (b) in any other manner signifying
an agreement that the possession is transferred from
the vendor to the vendee. Not mere agreements but
tradition or delivery transfers the ownership of things
(Non nudis pactis sed traditione dominia rerum
transferentur).
SINGSON vs. COURT OF APPEALS and CATHAY PACIFIC
AIRWAYS
FACTS:
Petitioner CARLOS SINGSON and his cousin Crescentino
Tiongson bought from respondent Cathay Pacific
Airways two (2) open-dated, identically routed, round
trip plane tickets (Manila to LA and vice versa). Each
ticket consisted of six (6) flight coupons, each would be
detached at the start of each leg of the trip.
Singson failed to obtain a booking in LA for their to
Manila; apparently, the coupon corresponding to the 5th
leg of the trip was missing and instead the 3rd was still
attached. It was not until few days later that the
defendant finally was able to arrange for his return to
Manila.
Singson commenced an action for damages based on
breach of contract of carriage against CATHAY before
the Regional Trial Court.
CATHAY alleged that there was no contract of carriage
yet existing such that CATHAYs refusal to immediately
book him could not be construed as breach of contract
of carriage.
The trial court rendered a decision in favor of petitioner
herein holding that CATHAY was guilty of gross
negligence amounting to malice and bad faith for which
it was adjudged to pay petitioner P20,000.00 for actual
damages with interest at the legal rate of twelve percent
(12%) per annum from 26 August 1988 when the
complaint was filed until fully paid, P500,000.00 for
moral damages, P400,000.00 for exemplary damages,
P100,000.00 for attorneys fees, and, to pay the costs.
On appeal by CATHAY, the Court of Appeals reversed
the trial courts finding that there was gross negligence
amounting to bad faith or fraud and, accordingly,
modified its judgment by deleting the awards for moral
and exemplary damages, and the attorneys fees as
well.
ISSUES:
1.) whether a breach of contract was committed by
CATHAY when it failed to confirm the booking of
petitioner.
2.) whether the carrier was liable not only for actual
damages but also for moral and exemplary damages,
and attorneys fees.
HELD:
1.) Yes. x x x the round trip ticket issued by the carrier
to the passenger was in itself a complete written
contract by and between the carrier and the passenger.
It had all the elements of a complete written contract,
to wit: (a) the consent of the contracting parties
manifested by the fact that the passenger agreed to be
transported by the carrier to and from Los Angeles via
San Francisco and Hong Kong back to the Philippines,
and the carriers acceptance to bring him to his
destination and then back home; (b) cause or
consideration, which was the fare paid by the passenger
as stated in his ticket; and, (c) object, which was the
transportation of the passenger from the place of
departure to the place of destination and back, which
are also stated in his ticket. In fact, the contract of
carriage in the instant case was already partially
executed as the carrier complied with its obligation to
transport the passenger to his destination, i.e., Los
Angeles. , x x x the loss of the coupon was attributable
to the negligence of CATHAYs agents and was the
proximate cause of the non-confirmation of petitioner's
return flight.
2.) Yes. x x x Although the rule is that moral damages
predicated upon a breach of contract of carriage may
only be recoverable in instances where the mishap
results in the death of a passenger, or where the carrier
is guilty of fraud or bad faith, there are situations where
the negligence of the carrier is so gross and reckless as
to virtually amount to bad faith, in which case, the
passenger likewise becomes entitled to recover moral
damages.
x x x these circumstances reflect the carriers utter lack
of care and sensitivity to the needs of its passengers,
clearly constitutive of gross negligence, recklessness
and wanton disregard of the rights of the latter, acts
evidently indistinguishable or no different from fraud,
malice and bad faith. As the rule now stands, where in
breaching the contract of carriage the defendant airline
is shown to have acted fraudulently, with malice or in
bad faith, the award of moral and exemplary damages,
in addition to actual damages, is proper.
However, the P500,000.00 moral damages and
P400,000.00 exemplary damages awarded by the trial
court have to be reduced. The well-entrenched principle
is that the grant of moral damages depends upon the
discretion of the court based on the circumstances of
each case. This discretion is limited by the principle that
the "amount awarded should not be palpably and
scandalously excessive" as to indicate that it was the
result of prejudice or corruption on the part of the trial
court. Damages are not intended to enrich the
complainant at the expense of the defendant. They are
awarded only to alleviate the moral suffering that the
injured party had undergone by reason of the
defendant's culpable action. There is no hard-and-fast
rule in the determination of what would be a fair amount
of moral damages since each case must be governed by
its own peculiar facts.
In the instant case, the injury suffered by petitioner is
not so serious or extensive as to warrant an award
amounting to P900,000.00. The assessment of
P200,000.00 as moral damages and P50,000.00 as
exemplary damages in his favor is, in our view,
reasonable and realistic.
On the issue of actual damages, we agree with the Court
of Appeals that the amount of P20,000.00 granted by
the trial court to petitioner should not be disturbed.
As regards attorney's fees, they may be awarded when
the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur
expenses to protect his interest. It was therefore
erroneous for the Court of Appeals to delete the award
made by the trial court; consequently, petitioner should
be awarded attorney's fees and the amount of
P25,000.00, instead of P100,000.00 earlier awarded,
may be considered rational, fair and reasonable.
Song Fo and Co., vs. Hawaiian-Philippine Co
Facts: Hawaiian-Philippine Co. got into a contract with
Song Fo & Co. where it would deliver molasses to the
latter.
Hawaiian-Philippine Co. was able to deliver 55,006
gallons of molasses before the breach of contract.
SFC filed a complaint for breach of contract against
Hawaiian-Philippine Co. and asked P70,369.50.
Hawaiian-Philippine Co. answered that there was a
delay in the payment from Song Fo & Co. and that
Hawaiian-Philippine Co. has the right to rescind the
contract due to that and claims it as a special defense.
The judgment of the trial court condemned Hawaiian-
Philippine Co. to pay Song Fo & Co. a total of
P35,317.93, with legal interest from the date of the
presentation of the complaint, and with costs.
Issue:
(1) Did Hawaiian-Philippine Co. agree to sell 400,000
gallons of molasses or 300,000 gallons of molasses?
(2) Had Hawaiian-Philippine Co. the right to rescind the
contract of sale made with Song Fo & Co.?
(3) On the basis first, of a contract for 300,000 gallons
of molasses, and second, of a contract imprudently
breached by Hawaiian-Philippine Co., what is the
measure of damages?
Held:
(1) Only 300,000 gallons of molasses was agreed to by
Hawaiian-Philippine Co. as seen in the documents
presented in court. The language used with reference to
the additional 100,000 gallons was not a definite
promise.
(2) With reference to the second question, doubt has
risen as to when Song Fo & Co. was supposed to make
the payments for the delivery of molasses as shown in
the documents presented by the parties.
The Supreme Court said that Hawaiian-Philippine Co.
does not have the right to rescind the contract. It should
be noted that the time of payment stipulated for in the
contract should be treated as of the presence of the
contract. There was only a slight breach of contract
when the payment was delayed for 20 days after which
Hawaiian-Philippine Co. accepted the payment of the
overdue accounts and continued with the contract,
waiving its right to rescind the contract. The delay in the
payment of Song Fo & Co. was not such a violation for
the contract.
(3) With regard to the third question, the first cause of
action of Song Fo & Co. is based on the greater expense
to which it was put in being compelled to secure
molasses from other sources to which Supreme Court
ruled that P3,000 should be paid by Hawaiian-Philippine
Co. with legal interest from October 2, 1923 until
payment.
The second cause of action was based on the lost profits
on account of the breach of contract. Supreme Court
said that Song Fo & Co. is not entitled to recover
anything under the second cause of action because the
testimony of Mr. Song Heng will follow the same line of
thought as that of the trial court which in unsustainable
and there was no means for the court to find out what
items make up the P14,000 of alleged lost profits.
RUSTAN ANG y PASCUA, Petitioner, vs. THE
HONORABLE COURT OF APPEALS
Facts:
After receiving from the accused Rustan via multimedia
message service (MMS) a picture of a naked woman with
her face superimposed on the figure, Complainant filed
an action against said accused for violation of the Anti-
Violence Against Women and Their Children Act or
Republic Act (R.A.) 9262.
The senders cellphone number, stated in the message,
was 0921-8084768, one of the numbers that Rustan
used. Irish surmised that he copied the picture of her
face from a shot he took when they were in Baguio in
2003. The accused said to have boasted that it would be
easy for him to create similarly scandalous pictures of
her and threatened to spread the picture he sent
through the internet.
The trial court later found Rustan guilty of the violation
of Section 5(h) of R.A. 9262. On Rustans appeal to the
Court of Appeals (CA), the latter rendered a decision
affirming the RTC decision. The CA denied Rustans
motion for reconsideration in a resolution dated April 25,
2008. Thus, Rustan filed the present for review on
certiorari.
Issue:
Whether or not the RTC properly admitted in evidence
the obscene picture presented in the case?
Held:
Yes. The Supreme Court affirms the decision of the CA.
Rustan claims that the obscene picture sent to Irish
through a text message constitutes an electronic
document. Thus, it should be authenticated by means of
an electronic signature, as provided under Section 1,
Rule 5 of the Rules on Electronic Evidence (A.M. 01-7-
01-SC).
However, Rustan is raising this objection to the
admissibility of the obscene picture for the first time
before the Supreme Court. The objection is too late
since he should have objected to the admission of the
picture on such ground at the time it was offered in
evidence. He should be deemed to have already waived
such ground for objection.
Moreover, the rules he cites do not apply to the present
criminal action. The Rules on Electronic Evidence applies
only to civil actions, quasi-judicial proceedings, and
administrative proceedings.
In conclusion, the Court finds that the prosecution has
proved each and every element of the crime charged
beyond reasonable doubt.
RIOS VS. JACINTO
FACTS
It appears that by contract dated September 1, 1920,
the plaintiffs, as owners of a parcel of land on
Gagalangin Street, Tondo District, Manila, let the same,
with the improvements thereon, to the firm of Jacinto,
Palma y Hermanos, S. C., for the term of fifteen years
at a monthly rental of P400 payable in advance during
the first ten days of each month. Among the provisions
contained in this contract we note clause 9, which is to
the effect that the terms and conditions of the contract
shall be obligatory upon and redound to the benefit of
the persons composing the lessee firm, their heirs
executors, administrators, successors and assigns, as
well as the successors and assigns of the lessors. The
lessee entered upon the possession of the leased
premises upon the date above stated; and the payment
of the agreed rental was continued until November and
December of the year 1923, for which months the rent
fell into arrears.
Meanwhile several successive reorganizations of the
lessee firm had been effected as follows: The first
lessee, Jacinto, Palma y Hermanos, S. C., was
succeeded by the firm of P. & F. Jacinto, and the latter
in turn by the firm of Palma Brothers & Co., Ltd., to be
itself again succeeded by Palma & Co,. a corporation.
The plaintiffs were informed of these changes in the
personality of the lessee and, as the trial court found,
acquiesced therein.
In view of the default in the payment of the monthly
rental for the months of November and December,
1923, Mr. Gregorio Araneta, as attorney for Manuel
Rios, addressed a letter, on December 27, 1923, to
Rafael Palma, as partner in the original firm and its
former manager. In the course of this letter the writer
asked Mr. Palma, in case the lessee could not continue
to pay the rent, to return the property at once to Rios,
without prejudice to ulterior responsibility for damages
for breach of contract. The writer added that Rios
desired prompt action in the matter and that he must
have possession of the property on or before the 29th
of the month, otherwise he would be compelled to begin
a detainer suit.
In response to this demand the occupant, Palma Bros.
& Co., Ltd., or Palma & Co., or whoever had actual
possession, vacated the premises on December 29,
giving notification to the plaintiff Manuel Rios, who at
once assumed possession. We gather from the record
that the rent for November and December, 1923, has
subsequently been paid; but the premises appear to
have been entirely vacant during the months of January
and February, 1924, and for this period no
compensation has been paid to the plaintiffs by any one.
Beginning with March, 1924, the property was let by the
plaintiffs for a term of three years, renewable for
another three, to the firm of Walter A. Smith Co., Inc.,
upon the best terms then procurable in the market,
which was at a monthly rental of P250.
In this court the plaintiffs, as appellants, have assigned
error among other things, to the failure of the trial court
to give judgment for the sum of P800, the stipulated
rent for January and February, 1924, and for the further
sum of P22,500, being the difference between the
amount which the lessee had agreed to pay during the
twelve years that the lease was to run from the time
when the plaintiffs resumed possession and the amount
which, during the same period, the plaintiffs would
obtain from the new-lessee, or others, at the rate of
P150 a month.
The firm of Jacinto, Palma y Hermanos, S. C., allowed a
default judgment to be entered in this case for its failure
to answer, but the individual defendants interposed an
answer relying upon two special defenses which will be
examined in turn. It is first claimed that the original
lessee and the partners in that concern were discharged
by a novation of the original contract whereby the lessee
was changed and new debtor substituted for the original
debtor. We are of the opinion that there is no merit in
this defense and that the facts found by the trial court
are not sufficient in law to show a discharge of the
parties liable upon the original lease. What appears to
have occurred, and what the court found, was that the
plaintiff Rios said that it was all right when told of the
successive changes in the personality of the lessee, and
he seems to have been content to receive the monthly
rent from anybody who wanted to pay it.
But by preference to clause 9 of the contract, it will be
seen that the lessors really had no choice in their
attitude to these changes. It was there stipulated that
the provisions of the lease should be obligatory upon
and redound to the benefit not only of the persons
composing the lessee firm but their assigns. The
transfer of the lease was therefore anticipated in the
lease and stipulated for, and the lessors had no right to
complain as the leased premises passed from one entity
to another. The contract, however, does not stipulate
that the original lessee should be discharged by any
such assignment, and an agreement to this effect
cannot be implied from the mere forced acquiescence of
the lessors in the transfer of the lease.
The second ground of defense to the action is, in the
opinion of the majority of the members of the court, of
a more meritorious character. This defense is planted
upon the fact that after the default occurred in the
payment of rent for the months of November and
December, 1923, the lessors voluntarily, and upon their
own demand, resumed possession of the premises. It is
insisted for the defense that this relieved the original
lessee and all other persons liable upon the lease from
any liability for future rent and therefore from any
liability for damages that may have accrued, or might
accrue, to the lessors during the remainder of the term
of the lease. The situation is one that must be
considered in the light of certain provisions of the Civil
Code, to which attention will be directed.
In the case before us the lessors clearly elected to
resolve or rescind the contract. Now it is an inseparable
incident of resolution or rescission that the parties are
bound to restore to each other the thing which has been
the subject matter of the contract, precisely as in the
situation where a decree of nullity is granted. In the
common case of the resolution of a contract of sale for
failure of the purchaser to pay the stipulated price, the
seller is entitled to be restored to the possession of the
thing sold, if it has already been delivered. But he
cannot have both the thing sold and the price which was
agreed to be paid, for the resolution of the contract has
the effect of destroying the obligation to pay the price.
Similarly, in the case of the resolution, or rescission, of
a contract of lease, the lessor is entitled to be restored
to the possession of the leased premises, but he cannot
have both the possession of the leased premises for the
remainder of the term and the rent which the other
party had contracted to pay. The termination of the
lease has the effect of destroying the obligation to pay
rent for the future.
The damages or indemnity conceded in case of
resolution by article 1124 and the damages conceded by
article 1556 in the case of the rescission of a lease have
reference to the damages for the default which gave rise
to the right to terminate the lease. In a case of the kind
now before us it would cover rent in arrears and damage
done by the lessee to the leased premises or other
special damages in particular cases resulting from
nonperformance of the lessees obligation. By no
reasonable interpretation of these provisions can the
indemnity or damages be understood as extending the
rent for the future, inasmuch as the termination of the
lease abrogated liability for future rent.
At first blush it might appear that the case would
perhaps be affected by the reservation contained in the
demand of plaintiffs attorney for the surrender of the
premises, in which he stated that the demand was
without prejudice to ulterior responsibility for damages.
But a moments reflection ought to show that the right
of action here reserved must be understood as having
reference to such damages as might be recoverable in
law, consistently with the election of the plaintiffs to
rescind the contract.
HELD:
From what has been said it follows that the judgment
absolving the defendants from the complaint must be
affirmed; and it is ordered, with costs against the
appellants.
The plaintiffs were unable to find a new tenant until
March 1, 1924, when the property was leased to Walter
A. Smith, Inc., for the period of three years at a rental
of P250 per month, P150 less than that which the
plaintiffs would have received under the former lease.
On April 4, 1924, the plaintiffs brought the present
action for damages alleged to have been suffered by
reason of the defendants breach of contract.
The theory that damages for the loss of profits suffered
subsequent to the rescission of a lease, but before the
expiration of its original term, are incompatible with the
idea of rescission, is entirely new and in direct conflict
with the views expressed by this court It is also out of
harmony with all other cases upon the subject of
damages for breach of contract in this jurisdiction and
cannot be good law.
ALBERT VS UNIVERSITY PUBLISHING CO
Facts: In Albert vs. University Publishing Co., Inc., L-
9300, April 18, 1958, we found plaintiff entitled to
damages (for breach of contract) but reduced the
amount from P23, 000.00 to P15, 000.00.
Then in Albert vs. University Publishing Co., Inc., L-
15275, October 24, 1960, we held that the judgment for
P15,000.00 which had become final and executory,
should be executed to its full amount, since in fixing it,
payment already made had been considered.
15 years ago, Mariano Albert entered into a contract
with University Publishing Co., Inc. through Jose M.
Aruego, its President, whereby University would pay
plaintiff for the exclusive right to publish his revised
Commentaries on the Revised Penal Code. The contract
stipulated that failure to pay one installment would
render the rest of the payments due. When University
failed to pay the second installment, Albert sued for
collection and won.
However, upon execution, it was found that the records
of this Commission do not show the registration of
UNIVERSITY PUBLISHING CO., INC., either as a
corporation or partnership. Albert petitioned for a writ
of execution against Jose M. Aruego as the real
defendant. University opposed, on the ground that
Aruego was not a party to the case.
Issue: WON the non-registration of University
Publishing Co., Inc. in the SEC is an existing corporation
with an independent juridical personality.
Held: No.
Ratio: On account of the non-registration it cannot be
considered a corporation, not even a corporation de
facto (Hall vs. Piccio, 86 Phil. 603). It has therefore no
personality separate from Jose M. Aruego; it cannot be
sued independently.
In the case at bar, Aruego represented a non-existent
entity and induced not only Albert but the court to
believe in such representation. He signed the contract
as President of University Publishing Co., Inc.,
stating that this was a corporation duly organized and
existing under the laws of the Philippines.
A person acting or purporting to act on behalf of a
corporation which has no valid existence assumes such
privileges and obligations and becomes personally liable
for contracts entered into or for other acts performed as
such agent.
Aruego, acting as representative of such non-existent
principal, was the real party to the contract sued upon,
and thus assumed such privileges and obligations and
became personally liable for the contract entered into or
for other acts performed as such agent.
The Supreme Court likewise held that the doctrine of
corporation by estoppel cannot be set up against Albert
since it was Aruego who had induced him to act upon
his (Aruegos) willful representation that University had
been duly organized and was existing under the law.
MAGDALENA ESTATE VS. MYRICK
FACTS:
Magdalena Estate, Inc. sold to Louis Myrick lots
No. 28 and 29 of Block 1, Parcel 9 of the San Juan
Subdivision, San Juan, Rizal. Their contract of sale
provides that the Price of P7,953 shall be payable in 120
equal monthly installments of P96.39 each on the
second day of every month beginning the date of
execution of the agreement. In pursuance of said
agreement, the vendee made several payments
amounting to P2,596.08, the last being due and unpaid
was that of May 2, 1930. By reason of this, the vendor,
through its president, notified the vendee that, in view
of his inability to comply with the terms of their
contract, said agreement had been cancelled, relieving
him of any further obligation thereunder, and that all
amounts paid by him had been forfeited in favor of the
vendor. To
this communication, the vendee did not reply, and it
appears likewise that the vendor thereafter did not
require him to make any further disbursements on
account of the
purchase price.
ISSUE:
Was the petitioner authorized to forfeit the
purchase price paid?
RULING:
No. The contract of sale contains no provision
authorizing the vendor, in the event of failure of the
vendee to continue in the payment of the stipulated
monthly installments, to retain the amounts paid to him
on account of the purchase price. The claim therefore,
of the petitioner that it has the right to forfeit said sums
in its favor is untenable. Under Article 1124 of the Civil
Code, however, he may choose between demanding the
fulfillment of the contract or its resolution. These
remedies are alternative and not cumulative, and the
petitioner in this case, having elected to cancel the
contract cannot avail himself of the other remedy of
exacting performance. As a consequence of the
resolution, the parties should be restored, as far as
practicable, to their original situation which can be
approximated only be ordering the return of the things
which were the object of the contract, with their fruits
and of the price, with its interest, computed from the
date of institution of the action.