SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER, petitioner, vs.

COURT OF APPEALS and PIONEER

INSURANCE and SURETY CORPORATION, respondents.

the “independent” character of these civil actions does not do away with the reservation requirement.
Prior reservation is a condition sine qua non before any of these independent civil actions can be
instituted

Rafael Reyes Trucking

civil liability ex delicto (arising from a crime)

-art100
-subsidiarily civilly liable in case of insolvency of accused
-rtc ruled on this. Ca affirmed

civil liability quasi delicto (pinush nila)

-2176
- solidarily
- employer’s liab: direct and primary

Article 2177 of the Civil Code that the offended party can not recover damages under both types of liability

reservation to file or the filing of a separate

civil action results in a waiver of other available civil actions arising from the same act or omission

LRT v navidad
The foundation of LRTA's liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required of
the common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier
may choose to hire its own employees or avail itself of the services of an outsider or an independent
firm to undertake the task. In either case, the common carrier is not relieved of its responsibilities under
the contract of carriage

the employer can then be made liable on the basis of the presumption juris
tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision
of its employees.

In fine, a liability for tort may arise even under a contract, where tort is that which breaches the
contract.
Stated differently, when an act which constitutes a breach of contract would have itself
constituted the source of a quasi-delictual liability had no contract existed between the parties, the
contract can be said to have been breached by tort

Liga v Allegro
Obligations arising
from contracts have the force of law between the contracting parties and should be complied with in
good faith.

28] It is a general principle of law

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that no one may be permitted to change his mind or disavow and go back upon his own acts, or to
proceed contrary thereto, to the prejudice of the other party.

MMTC v CA

1. driver abd mmtc negligent in duties

2. 2176 on quasi delict applicable
3. whenever employee’s negli causes damage, presumed that employer also negli.
4. Show proof that he has slected and supervised staff with diligence of good father
5. Failed to rebut or discharge the presumption

MKSE v Campos
A complaint states a cause of action where it contains three essential elements of a cause of action, namely: (1) the legal
right of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in
violation of said legal right.

IPOs are shares of corporations offered for sale to the public, prior to the listing in the trading floor of the country's two
stock exchanges

passed a resolution to stop giving petitioner the IPOs he is entitled to, based on the ground that these shares were allegedly
benefiting Gerardo O. Lanuza, Jr., who they wanted to get even with, for having filed cases before the Securities and
Exchange (SEC) for their disqualification as member of the Board of Directors of respondent corporation.

Right and
obligation are legal terms with specific legal meaning. A right is a claim or title to an interest in anything whatsoever that
is enforceable by law.[7] An obligation is defined in the Civil Code as a juridical
necessity to give, to do or not to do.[8] For every right enjoyed by any person, there is a corresponding
obligation on the part of another person to respect such right.

Normally, Twenty-Five Percent (25%) of these shares are divided

equally between the two stock exchanges which in turn divide these equally among their members, who
pay therefor at the offering price.[11] (Emphasis supplied)
A practice or custom is, as a general rule, not a source of a legally demandable or enforceable right.[12]

There is no such law in this case that converts the practice of allocating IPO shares to MKSE members,
for subscription at their offering prices, into an enforceable or demandable right

Bank

Pet liable for breach of contract, Hold out clause applies only if there is a valid and existing obligation arising from 5 in
1157. Although there is criminal charge, not enough reason to issue holdout order. In fact, impt to note that at time of
issuance of holdout, not crim case filed yet. Therefore, NO LEGAL BASIS FOR HOLDOUT.

Regino v. Pangasinan Colleges

The acts of respondents supposedly caused her extreme humiliation, mental

agony and "demoralization of unimaginable proportions" in violation of Articles 19, 21 and 26 of the Civil
Code. These provisions of the law state thus:
"Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith."
"Article 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage."

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"Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute a criminal
offense, shall produce a cause of action for damages, prevention and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his beliefs, lowly station in life, place of birth, physical
defect, or other personal condition."
A perusal of Article 2176 [of the Civil Code] shows that obligations arising from quasi-delicts or
tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether
express or implied. However, this impression has not prevented this Court from determining the existence of a tort even
when there obtains a contract.

Jimmy Co. vs CA
Facts: On July 18, 1990, petitioner entrusted his Nissan pick-up car 1988 model [1] to private respondent - which
is engaged in the sale, distribution and repair of motor vehicles - for the following job repair services and supply
of parts:
Private respondent undertook to return the vehicle on July 21, 1990 fully serviced and supplied in
accordance with the job contract. After petitioner paid in full the repair bill in the amount ofP1,397.00,[3] private
respondent issued to him a gate pass for the release of the vehicle on said date. But came July 21, 1990, the
latter could not release the vehicle as its battery was weak and was not yet replaced. Left with no option,
petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the
same day. However, the battery was not installed and the delivery of the car was rescheduled to July 24, 1990 or
three (3) days later. When petitioner sought to reclaim his car in the afternoon of July 24, 1990, he was told that
it was carnapped earlier that morning while being road-tested by private respondent’s employee along Pedro Gil
and Perez Streets in Paco, Manila. Private respondent said that the incident was reported to the police.
Having failed to recover his car and its accessories or the value thereof, petitioner filed a suit for damages
against private respondent anchoring his claim on the latter’s alleged negligence. For its part, private respondent
contended that it has no liability because the car was lost as a result of a fortuitous event - the carnapping.
Issue: They likewise agreed that the sole issue for trial was who between the parties shall bear the loss of the
vehicle which necessitates the resolution of whether private respondent was indeed negligent.
Decision:
On the merits. It is a not a defense for a repair shop of motor vehicles to escape liability simply because the
damage or loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se cannot be
considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from another’s
rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be
considered as such, carnapping entails more than the mere forceful taking of another’s property. It must be
proved and established that the event was an act of God or was done solely by third parties and that neither the
claimant nor the person alleged to be negligent has any participation. [9] In accordance with the Rules of
evidence, the burden of proving that the loss was due to a fortuitous event rests on him who invokes it [10]- which
in this case is the private respondent. However, other than the police report of the alleged carnapping incident,
no other evidence was presented by private respondent to the effect that the incident was not due to its fault. A
police report of an alleged crime, to which only private respondent is privy, does not suffice to established the
carnapping. Neither does it prove that there was no fault on the part of private respondent notwithstanding the
parties’ agreement at the pre-trial that the car was carnapped. Carnapping does not foreclose the possibility of
fault or negligence on the part of private respondent.

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 Even assuming arguendo that carnapping was duly established as a fortuitous event, still private respondent
cannot escape liability. Article 1165[11] of the New Civil Code makes an obligor who is guilty of delay
responsible even for a fortuitous event until he has effected the delivery. In this case, private respondent was
already in delay as it was supposed to deliver petitioner’s car three (3) days before it was lost. Petitioner’s
agreement to the rescheduled delivery does not defeat his claim as private respondent had already breached its
obligation. Moreover, such accession cannot be construed as waiver of petitioner’s right to hold private
respondent liable because the car was unusable and thus, petitioner had no option but to leave it.
Assuming further that there was no delay, still working against private respondent is the legal presumption
under Article 1265 that its possession of the thing at the time it was lost was due to its fault. [12] This presumption
is reasonable since he who has the custody and care of the thing can easily explain the circumstances of the loss.
The vehicle owner has no duty to show that the repair shop was at fault. All that petitioner needs to prove, as
claimant, is the simple fact that private respondent was in possession of the vehicle at the time it was lost. In
this case, private respondent’s possession at the time of the loss is undisputed. Consequently, the burden shifts
to the possessor who needs to present controverting evidence sufficient enough to overcome that presumption.
Moreover, the exempting circumstances - earthquake, flood, storm or other natural calamity - when the
presumption of fault is not applicable[13] do not concur in this case. Accordingly, having failed to rebut the
presumption and since the case does not fall under the exceptions, private respondent is answerable for the loss.

G.R. No. 171660 October 17, 2011

CONTINENTAL CEMENT CORPORATION Petitioner,

vs.
ASEA BROWN BOVERI, INC., BBC BROWN BOVERI, CORP., AND TORD B. ERIKSON, ** Respondents.

FACTS:

Sometime in July 1990, petitioner Continental Cement Corporation (CCC), a corporation engaged in the business of
producing cement, obtained the services of respondents Asea Brown Boveri, Inc. (ABB) and BBC Brown Boveri, Corp. to
repair its 160 KW Kiln DC Drive Motor (Kiln Drive Motor).

On October 23, 1991, due to the repeated failure of respondents to repair the Kiln Drive Motor, petitioner filed with Branch
101 of the Regional Trial Court (RTC) of Quezon City a Complaint for sum of money and damages, docketed as Civil
Case No. Q-91-10419, against respondent corporations and respondent Tord B. Eriksson (Eriksson), Vice-President of the
Service Division of the respondent ABB. Petitioner alleged that:

On July 11, 1990, the plaintiff delivered the 160 KW Kiln DC Drive Motor to the defendants to be repaired under
PO No. 17136-17137,

The defendant, Tord B. Eriksson, was personally directing the repair of the said Kiln Drive Motor. He has direction
and control of the business of the defendant corporations. Apparently, the defendant Asea Brown Boveri, Inc. has
no separate personality because of the 4,000 shares of stock, 3996 shares were subscribed by Honorio Poblador,
Jr. The four other stockholders subscribed for one share of stock each only.

After the first repair by the defendants, the 160 KW Kiln Drive Motor was installed for testing on October 3, 1990.
On October 4, 1990 the test failed. The plaintiff removed the DC Drive Motor and replaced it with its old motor. It
was only on October 9, 1990 that the plaintiff resumed operation. The plaintiff lost 1,040 MTD per day from
October 5 to October 9, 1990.

On November 14, 1990, after the defendants had undertaken the second repair of the motor in question, it was
installed in the kiln. The test failed again. The plaintiff resumed operation with its old motor on November 19,
1990. The plaintiff suffered production losses for five days at the rate of 1,040 MTD daily.

The defendants were given a third chance to repair the 160 KW Kiln DC Drive Motor.1avvphi1 On March 13,
1991, the motor was installed and tested. Again, the test failed. The plaintiff resumed operation on March 15,
1991. The plaintiff sustained production losses at the rate of 1,040 MTD for two days.

4 of 21
 As a consequence of the failure of the defendants to comply with their contractual obligation to repair the 160 KW
Kiln DC Drive Motor, the plaintiff sustained the following losses:

(a) Production and opportunity losses - P10,600,000.00

This amount represents only about 25% of the production losses at the rate of P72.00 per bag of
cement.

(b) Labor Cost and Rental of Crane - 26,965.78

(c) Penalties (at P987.25 a day) for failure to deliver the motor from
Aug. 29, 1990 to July 31, 1991. - 331,716.00

(d) Cost of money interest of the P987.25 a day from July 18, 1990 to
April 5, 1991 at 34% for 261 days - 24,335.59

Total Damages 10,983,017.42

The plaintiff has made several demands on the defendants for the payment of the above-enumerated damages,
but the latter refused to do so without valid justification.

10. The plaintiff was constrained to file this action and has undertaken to pay its counsel Twenty Percentum (20%)
of the amount sought to be recovered as attorney’s fees.

ISSUES:

Hence, the present recourse where petitioner interposes the following issues:

1. Whether the [CA] gravely erred in applying the terms of the "General Conditions" of Purchase Orders Nos.
17136 and 17137 to exculpate the respondents from liability in this case.

2. Whether the [CA] seriously erred in applying the concepts of ‘implied warranty’ and ‘warranty against hidden
defects’ of the New Civil Code in order to exculpate the respondents from its contractual obligation.

Ruling of the Regional Trial Court

On August 30, 1995, the RTC rendered a Decision in favor of petitioner. The RTC rejected the defense of limited liability
interposed by respondents since they failed to prove that petitioner received a copy of the General
Conditions.16 Consequently, the RTC granted petitioner’s claims for production loss, labor cost and rental of crane, and
attorney’s fees.17 Thus:

WHEREFORE, premises above considered, finding the complaint substantiated by plaintiff, judgment is hereby rendered
in favor of plaintiff and against defendants, hereby ordering the latter to pay jointly and severally the former, the following
sums:

P10,600,00.00 for loss of production;

P 26,965.78 labor cost and rental of crane;
P 100,000.00 attorney’s fees and cost.

SO ORDERED.

Ruling of the Court of Appeals

On appeal, the CA reversed the ruling of the RTC. The CA applied the exculpatory clause in the General Conditions and
ruled that there is no implied warranty on repair work; thus, the repairman cannot be made to pay for loss of production as
a result of the unsuccessful repair. The fallo of the CA Decision reads:

WHEREFORE, premises considered, the assailed August 30, 1995 Decision of the Regional Trial Court of Quezon City,
Branch 101 is hereby REVERSED and SET ASIDE. The October 23, 1991 Complaint is hereby DISMISSED.

5 of 21
SO ORDERED.

Our Ruling (Supreme Court)

The petition has merit.

Petitioner and respondent ABB entered into a contract for the repair of petitioner’s Kiln Drive Motor, evidenced by
Purchase Order Nos. 17136-37,33 with the following terms and conditions:
a) Total Price: P197,450.00
b) Delivery Date: August 29, 1990 or six (6) weeks from receipt of order and down payment 34
c) Penalty: One half of one percent of the total cost or Nine Hundred Eighty Seven Pesos and Twenty five
centavos (P987.25) per day of delay.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated August 25, 2005 and the Resolution dated
February 16, 2006 of the Court of Appeals in CA-G.R. CV No. 58551 are hereby REVERSED and SET ASIDE.
Respondent ABB is ORDERED to pay petitioner the amount of P129,329.75, with interest at 6% per annum to be
computed from the date of the filing of the complaint until finality of this Decision and 12% per annum thereafter until full
payment.

SO ORDERED.

G.R. No. 171660

October 17, 2011
CONTINENTAL CEMENT
CORPORATION Petitioner,
vs.
ASEA BROWN BOVERI, INC.,
BBC BROWN BOVERI, CORP.,
AND TORD B.
ERIKSON,
**

6 of 21
 Respondents.
DECISION
DEL CASTILLO, J.:
FACTS:
Sometime in July 1990,
petitioner Continental
Cement Corporation (CCC), a
corporation
engaged in the business
of producing cement,
obtained the services of
respondents Asea Brown
Boveri, Inc. (ABB) and BBC
Brown Boveri, Corp. to repair
its

7 of 21
160 KW Kiln DC Drive Motor
(Kiln Drive Motor).
On October 23, 1991, due to
the repeated failure of
respondents to repair the Kiln
Drive
Motor, petitioner filed with
Branch 101 of the Regional
Trial Court (RTC) of Quezon
City
a Complaint for sum of
money and damages,
docketed as Civil Case No. Q-
91-10419,
against respondent
corporations and respondent
8 of 21
Tord B. Eriksson
(Eriksson), Vice-
President of the Service
Division of the respondent
ABB. Petitioner alleged that:
On July 11, 1990, the plaintif
delivered the 160 KW Kiln DC
Drive Motor to the
defendants to be repaired
under PO No. 17136-17137,
The defendant, Tord B.
Eriksson, was personally
directing the repair of the
said

9 of 21
Kiln Drive Motor. He has
direction and control of the
business of the defendant
corporations. Apparently, the
defendant Asea Brown
Boveri, Inc. has no separate
personality because of the
4,000 shares of stock, 3996
shares were subscribed
by Honorio Poblador, Jr. The
four other stockholders
subscribed for one share of
stock each only.
After the first repair by the
defendants, the 160 KW Kiln
Drive Motor was installed
10 of 21
for testing on October 3,
1990. On October 4, 1990
the test failed. The plaintif
removed the DC Drive Motor
and replaced it with its old
motor. It was only on
October 9, 1990 that the
plaintif resumed operation.
The plaintif lost 1,040 MTD
per day from October 5 to
October 9, 1990.
On November 14, 1990, after
the defendants had
undertaken the second repair

11 of 21
of the motor in question, it
was installed in the kiln. The
test failed again. The
plaintif resumed operation
with its old motor on
November 19, 1990. The
plaintif
sufered production losses for
five days at the rate of 1,040
MTD daily.
The defendants were given a
third chance to repair the
160 KW Kiln DC Drive
Motor.1avvphi1 On March 13,
1991, the motor was installed
and tested. Again,
12 of 21
the test failed. The plaintif
resumed operation on March
15, 1991. The plaintif
sustained production losses
at the rate of 1,040 MTD for
two days.
As a consequence of the
failure of the defendants
to comply with their
contractual obligation to
repair the 160 KW Kiln DC
Drive Motor, the plaintif
sustained the following
losses:
G.R. No. 171660
October 17, 2011
13 of 21
CONTINENTAL CEMENT
CORPORATION Petitioner,
vs.
ASEA BROWN BOVERI, INC.,
BBC BROWN BOVERI, CORP.,
AND TORD B.
ERIKSON,
**
Respondents.
DECISION
DEL CASTILLO, J.:
FACTS:
Sometime in July 1990,
petitioner Continental
Cement Corporation (CCC), a
corporation

14 of 21
engaged in the business
of producing cement,
obtained the services of
respondents Asea Brown
Boveri, Inc. (ABB) and BBC
Brown Boveri, Corp. to repair
its
160 KW Kiln DC Drive Motor
(Kiln Drive Motor).
On October 23, 1991, due to
the repeated failure of
respondents to repair the Kiln
Drive
Motor, petitioner filed with
Branch 101 of the Regional

15 of 21
Trial Court (RTC) of Quezon
City
a Complaint for sum of
money and damages,
docketed as Civil Case No. Q-
91-10419,
against respondent
corporations and respondent
Tord B. Eriksson
(Eriksson), Vice-
President of the Service
Division of the respondent
ABB. Petitioner alleged that:
On July 11, 1990, the plaintif
delivered the 160 KW Kiln DC
Drive Motor to the
16 of 21
defendants to be repaired
under PO No. 17136-17137,
The defendant, Tord B.
Eriksson, was personally
directing the repair of the
said
Kiln Drive Motor. He has
direction and control of the
business of the defendant
corporations. Apparently, the
defendant Asea Brown
Boveri, Inc. has no separate
personality because of the
4,000 shares of stock, 3996
shares were subscribed

17 of 21
by Honorio Poblador, Jr. The
four other stockholders
subscribed for one share of
stock each only.
After the first repair by the
defendants, the 160 KW Kiln
Drive Motor was installed
for testing on October 3,
1990. On October 4, 1990
the test failed. The plaintif
removed the DC Drive Motor
and replaced it with its old
motor. It was only on
October 9, 1990 that the
plaintif resumed operation.
The plaintif lost 1,040 MTD
18 of 21
per day from October 5 to
October 9, 1990.
On November 14, 1990, after
the defendants had
undertaken the second repair
of the motor in question, it
was installed in the kiln. The
test failed again. The
plaintif resumed operation
with its old motor on
November 19, 1990. The
plaintif
sufered production losses for
five days at the rate of 1,040
MTD daily.

19 of 21
The defendants were given a
third chance to repair the
160 KW Kiln DC Drive
Motor.1avvphi1 On March 13,
1991, the motor was installed
and tested. Again,
the test failed. The plaintif
resumed operation on March
15, 1991. The plaintif
sustained production losses
at the rate of 1,040 MTD for
two days.
As a consequence of the
failure of the defendants
to comply with their

20 of 21
contractual obligation to
repair the 160 KW Kiln DC
Drive Motor, the plaintif
sustained the following
losses:
Eliseo Fajardo Jr., vs Freedom to Build Inc.
G. R. No. 134692 August 1, 2000
Facts: Freedom to Build Inc., an owner-developer and seller of low-cost housing sold to
petitioner-spouses a house and lot in the De La Costa Homes, in Barangka, Marikina,
Metro Manila. The Contract to sell executed between the parties, contained a Restrictive
Covenant providing certain prohibitions, to wit:
“Easements. For the good of the entire community, the homeowner must observe a two-
meter easement in front. No structure of any kind (store, garage, bodega, etc.) may be built
on the front easement.

“Upward expansion. A second storey is not prohibited. But the second storey expansion
must be placed above the back portion of the house and should not extend forward beyond
the apex of the original building.

“Front expansion: 2nd Storey: No unit may be extended in the front beyond the line as
designed and implemented by the developer in the 60 sq. m. unit. In other words, the 2nd
floor expansion, in front, is 6 meters back from the front property line and 4 meters back
from the front wall of the house, just as provided in the 60 sq. m. units.”

The above restrictions were also contained in Transfer Certificate of Title No. N-115384
covering the lot issued in the name of petitioner-spouses.

The controversy arose when the petitioners despite repeated demand from the respondent,
extended the roof of their house to the property line and expanded the second floor of their
house to a point directly above the original front wall. Respondent filed before the RTC an
action to demolish the unauthorized structures.

The RTC rendered a judgment against the petitioner ordering them to immediately
demolish and remove the extension of their expanded housing unit that exceeds the

21 of 21
limitations imposed by the Restrictive Covenant, otherwise the Branch Sheriff of this
Court will execute the this decision at the expense of the defendants.

On appeal, the CA affirmed the decision of the RTC. Hence, this petition for review.

Issue: Whether or not the for the lack of a specific provision, prescribing the penalty of
the demolition in the “Restrictive Covenant” in the event of the breach thereof, the prayer
of the respondent to demolish the structure should fail.

Ruling:
The Court held that the argument of the petitioner-spouses has no merit; Article 1168 of
the New Civil Code states that: “When the obligation consists in not doing and the obligor
does what has been forbidden him, it shall be undone at his expense.”

This Court is not unaware of its ruling in Ayala Corporation vs. Ray Burton Development
Corporation, which has merely adjudged the payment of damages in lieu of demolition. In
the aforementioned case, however, the elaborate mathematical formula for the
determination of compensatory damages which takes into account the current
construction cost index during the immediately preceding 5 years based on the weighted
average of wholesale price and wage indices of the National Census and Statistics Office
and the Bureau of Labor Statistics is explicitly provided for in the Deed of Restrictions
entered into by the parties. This unique and peculiar circumstance, among other strong
justifications therein mentioned, is not extant in the case at bar.

In sum, the Court holds that since the extension constructed exceeds the floor area limits
of the Restrictive Covenant, petitioner spouses can be required to demolish the structure
to the extent that it exceeds the prescribed floor area limits.
Wherefore, the assailed decision of the Court of Appeals is AFFIRMED. No costs. SO
ORDERED.

SPOUSES LUIGI M. GUANIO AND ANNA HERNANDEZ-GUANIO VS. MAKATI SHANGRI-LA

HOTEL & RESORT, INC., also doing business under the name of SHANGRI-LA HOTEL MANILA
G.R. No. 190601, 7 February 2011, SECOND DIVISION, (Carpio-Morales, J.)
FACTS:
Spouses Luigi and Anna Guanio (petitioner) entered into contract with Makati Shangri-La Hotel
and Resort, Inc. (respondent) for the latter to render its catering services to the former’s wedding
reception.
Reportedly during the reception, respondent’s representatives, Catering Director Bea Marquez
and Sales Manager Tessa Alvarez did not show up; there was a delay in the service of the dinner;
certain items in the published menu were unavailable; respondent’s waiters were rude and
unapologetic when confronted by the guest about the delay; wine and liquor brought by the
petitioners in accordance with their open bar agreement were not served to the guests and thus the
latter were forced to pay for their drinks; and despite Sales Manager Alvarez’s promise that would be
no charge for the extension of the reception beyond 12:00 midnight, petitioners were billed PHP
8,000.00 per hour for the three-hour extension of the event which they paid for.

22 of 21
 In view of the foregoing, petitioner’s sent a letter-complaint to respondent and received an
apologetic reply from respondent’s Hotel Executive Assistant Krister Svenson. Nevertheless, the
former filed a complaint for breach of contract and damages before the Regional Trial Court of Makati
City.
In its Answer, respondent claimed that Marquez and Alvarez were present during the event,
albeit they were not permanently stationed thereat as they were also attending to three other
functions; that the said delay in the service dinner was occasioned by the sudden increase of guests
to 470 from the guaranteed expected minimum number of 350–380. In bears mentioning in this
regard, that said increase of guests was not relayed by petitioners to respondents beforehand which
is remiss on the part of the former as they are required to do so at least 48 hours before the
scheduled date and time of the function which is stipulated in the Banquet and Meeting Services
Contract between both parties.
Notwithstanding respondent’s contentions, the Makati RTC rendered judgement in favor of the
petitioners and ordered respondent to pay the petitioners actual, moral and exemplary damages; and
attorney’s fees.
However, on appeal, the Court of Appeals reversed the trial court’s decision, it holding that the
proximate cause of petitioners’ injury was the increase in their guests which respondent did not
expect.
ISSUE:
Whether or not the doctrine of proximate cause is applicable to actions involving breach of
contract.
HELD:
The Supreme Court held that proximate cause is applicable only in actions for quasi-delicts,
not in action involving breach of contract. What applies in the instant case is rather Art. 1170 of the
Civil Code which reads:
Art. 1170. 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 of damages.
The mere proof of the existence of the contract and the failure of its compliance justify a
corresponding right of relief by the injured contracting party.
However, it must be stressed that petitioner’s failure to inform respondent of the change in the
number of the guests is a clear failure on the part of the former to discharge such obligation which is
stipulated in the Banquet and Meeting Services Contract between them.
The failure of petitioner to inform respondent about the change in the number of guests
notwithstanding, the Court notes that respondent could have managed the situation better in view of
its vast experience in the business which warrants the safe presumption that this is not the first time
they have encountered booked events exceeding the guaranteed cover. It is therefore reasonable to
expect that certain measures are placed in case predicaments such as the instant case crops up.
That regardless of these measures, respondent still received complaints from the petitioner. As such,
the Court deems it just to award petitioners only nominal damages.
The Decision of the Court of Appeals is PARTIALLY REVERSED.

RODOLFO G. CRUZ and ESPERANZA IBIAS,

vs. ATTY. DELFIN GRUSPE
G.R. No. 191431, March 13, 2013

Facts:
The claim arose from an accident when the mini bus owned and operated by Cruz and
driven by one Arturo Davin collided with the Toyota Corolla car of Gruspe; Gruspe’s car
was a total wreck. The next day,Cruz, along with Leon ardo Q. Ibias went to Gruspe’s office,
apologized for the incident, and executed a Joint Affidavit of Undertaking promising jointly
and severally to replace the Gruspe’s damaged car in 20 days, or until November 15, 1999,
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 of the same model and of at least the same quality; or, alternatively, they would pay the
cost of Gruspe’s car amounting to P350,000.00, with interest at 12% per month for any
delayed payment after November 15, 1999, until fully paid. When Cruz and Leonardo failed
to comply with their undertaking, Gruspe filed a complaint for collection of sum of money
against them.
Cruz and Leonardo denied Gruspe’s allegation, claiming that Gruspe, a lawyer,
prepared the Joint Affidavit of Undertaking and forced them to affix their signatures
thereon, without explaining and informing them of its contents.

Issue: Whether or not the Joint Affidavit of Undertaking is a contract that can be the basis
of an obligation to pay a sum of money.

Held:
A simple reading of the terms of the Joint Affidavit of Undertaking readily discloses
that it contains stipulations characteristic of a contract. Contracts are obligatory no matter
what their forms may be, whenever the essential requisites for their validity are present. In
determining whether a document is an affidavit or a contract, the Court looks beyond the
title of the document, since the denomination or title given by the parties in their document
is not conclusive of the nature of its contents. In the construction or interpretation of an
instrument, the intention of the parties is primordial and is to be pursued. If the terms of
the document are clear and leave no doubt on the intention of the contracting parties, the
literal meaning of its stipulations shall control. If the words appear to be contrary to the
parties’ evident intention, the latter shall prevail over the former.
The Joint Affidavit of Undertaking contained a stipulation where Cruz and Leonardo
promised to replace the damaged car of Gruspe, 20 days from October 25, 1999 or up to
November 15, 1999, of the same model and of at least the same quality. In the event that
they cannot replace the car within the same period, they would pay the cost of Gruspe’s car
in the total amount of P350,000.00, with interest at 12% per month for any delayed
payment after November 15, 1999, until fully paid. These, are very simple terms that both
Cruz and Leonardo could easily understand. An allegation of vitiated consent must be
proven by preponderance of evidence; Cruz and Leonardo failed to support their allegation.

Solar Harvest, Inc. v. Davao Corrugated

Carton Corporation G.R. No. 176868
(July 26, 2010)
Facts:

1. The petitioner (Solar Harvest, Inc., Solar for brevity) entered into an agreement with
respondent, Davao Corrugated Carton Corporation (DCCC for brevity), for the purchase of corrugated
carton boxes, specifically designed for petitioners business of exporting fresh bananas.

2. The agreement was not reduced into writing.

3. To start the production, Solar deposited in DCCC’s US Dollar Savings Account with Westmont
bank, as full payment for the ordered boxes.
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4. Despite such payment, Solar did not receive any boxes from DCCC.

5. Solar wrote a demand letter for reimbursement of the amount paid.

6. DCCC replied that the boxes had been completed as early as April 3, 1998 and that Solar failed
to pick them up from the formers warehouse 30 days from completion, as agreed upon. It was also
mentioned that Solar placed an additional order, out of which, half had been manufactured without
any advanced payment from Solar. (Solar alleges that the agreement was for DCCC to deliver within
30 days from payment the said cartons to Tagum Agricultural Development Corporation (TADECO)
which the latter failed to manufacture and deliver within such time.)

7. DCCC then demanded Solar to remove the boxes from the factory and to pay the balance for
the additional boxes.

Issue/s:

Whether or not the respondent (Davao Corrugated Carton Corporation) is in default.

Ruling:

No. It was unthinkable that, over a period of more than two years, Solar did not even demand for the
delivery of the boxes. Even assuming that the agreement was for DCCC to deliver the boxes, the latter
would not be liable for breach of contract as Solar had not yet demanded from it the delivery of the
boxes.

In reciprocal obligations, as in contract of sale, the general rule is that the fulfillment of the parties
respective obligation should be simultaneous. Hence, no demand is generally necessary because, once
a party fulfills his obligation and the other party does not fulfill his, the latter automatically incurs
delay. But when different dates for performance of the obligation are fixed, the default for each
obligation must be determined, that is, the other party would incur in delay only from the moment the
other party demands fulfillment of the formers obligation. Thus, even in reciprocal obligations, if the
period for the fulfillment of the formers obligation is fixed, demand upon the obliged is still necessary
before the obligor can be considered in default and before a cause of action for rescission will accrue.

Solar alleges that they made a follow-up upon respondent, which, however, would not qualify as a
demand for the fulfillment obligation. The former also testified that they made a follow-up of the
boxes, but not a demand.

Even assuming that a demand had been previously made before filling the present case Solar’s claim
for reimbursement would still fail, as the circumstances would show that DCCC was not guilty of
breach of contract.

Aside from the pictures of the finished boxes and the production report thereof, there is ample
showing that the boxes had already been manufactured by DCCC. There is the testimony of Estanislao
who accompanied Que to the factory, attesting that, during the first visit to the company, they saw the
pile of boxes and Que took a samples thereof. Que, himself confirmed this incident. He testified that

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 Tan pointed the boxes to him and got a sample and saw that it was blank. Ques absolute assertion that
the boxes were not manufactured is, therefore, implausible and suspicious.

DCCC was willing to shoulder expenses for a representative of the court to visit the plant and see the
boxes. It also prays that Solar be ordered to remove the boxes from its factory site, which would only
mean that the boxes are, up to the present, still in DCCC’s premises.

Assuming that DCCC was obliged to deliver the boxes, it could not have complied with such
obligation. Que, admitted that he did not given DCCC the authority to deliver the boxes to TADECO.
Surely, without such authority, TADECO would not have allowed to deposite the boxes within its
premises.

Santos Ventura Hocorma Foundation,

Inc. v. Santos G.R. No. 153004
(November 4, 2004)
Facts:

1. There are several civil cases between herein respondent (then petitioner, Ernesto Santos) and
petitioner (then respondent, Santos Ventura Hocorma Foundation, Inc., SVHFI for brevity).

2. On October 26, 1990, Santos and SVHFI executed a Compromise Agreementwhich amicable
ended all their pending litigations.

3. Pertinent portions of the agreement read as follows:

 SVHFI shall pay Santos P14.5 million in the following manner:

 P 1.5 million immediately upon the execution of this agreement;

 The balance of P13 million shall be paid, whether in one lump rum or in installments, at
the discretion of the Foundation, within a period of not more than two (2) years from the execution
of this agreement.

 … Santos shall cause the dismissal with prejudice of Civil Cases…. and for immediate
lifting of the aforesaid various notices of lis pendens on the real properties aforementioned; … in
the event that SVHFI shall sell or dispose of any of the lands previously subject of lis pendens, the
proceeds of any such sale, or any part thereof as may be required, shall be partially devoted to the
payment of the Foundations obligations under this agreement as may still be subsisting and
payable at the time of any such sale or sales.

 Failure of compliance of any of the foregoing terms and conditions by either or both parties to
this agreement shall ipso facto and ipso jure automatically entitle the aggrieved party to a write of
execution for the enforcement of this agreement.

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4. Santos move for the dismissal of the aforesaid cases and caused the lifting of the notices of lis
pendens on the real properties involved. SVHFI, paid P1.5 million to Santos, leaving a balance of P13
million.

5. On September 30, 1991, the RTC of Makati approved the compromise agreement.

6. SVHFI sold two real properties, which were previously subjects of lis pendens. Santos then sent
a letter to the SVHFI demanding the payment of the remaining P13 million, which the latter ignored.

7. On October 28, 1992, Santos send another letter to SVHFI inquiring when it would pay the
balance. There was no response from SVHFI.

8. Santos applied for the issuance of the writ of execution of its compromise agreement. Granted
by the RTC.

9. Sheriff levied on the real properties petitioner, which were formerly subjects of the lis pendens.

10. On November 22, 1994, the real properties were auctioned. Riverland, Inc. was the highest
bidder and issued a Certificate of Sale covering the real properties subject of the auction sale,
provided for the right of redemption within one year from the date of registration of properties.

11. Santos and Riverland, Inc. filed a Complaint for Declaratory Relief and Damages alleging that
there was delay on the part of the petitioner in paying the balance of P13 million. They prayed that
petitioner be ordered to pay legal interest and for the sales be declared final and not subject to legal
redemption.

12. SVHFI was able to fully settle its outstanding balance on February 8, 1995.

Issue/s:

1. Whether or not the respondent are entitled to legal interest considering that the compromise
agreement does not provide for the payment of interest.

2. Whether or not the petitioner is in default (mora).

Ruling:

1. Yes. In the absence of agreement, the legal rate of interest shall prevail. The legal interest for
loan as forbearance of money is 12% per annum to be computed from default.

2. Yes. A compromise has upon the parties the effect and authority of res judicata, with respect to
the matter definitely stated therein, or which by implication from its terms should be deemed to have
been included therein. This holds true even if the agreement has not been judically approved.

In the present case, Compromise Agreement was entered into by the parties on October 26, 1990. it
was judicially approved on September 30, 1991. The compromise agreement as a consensual contract
became binding between the parties upon its execution and not upon its court approval. From the
time a compromise is validly entered into, it becomes the source of the rights and obligation of the
parties thereto.

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 The two-year period must be counted from October 26, 1990, the date of execution of the compromise
agreement, and not on the judicial approval of the compromise agreement on September 30, 1991.
When the respondents wrote a demand letter to petitioner on October 28, 1992, the obligation was
already due and demandable. When the petitioner failed to pay its due obligation after the demand
was made, it incurred delay.

The two-year period ended on October 26, 1992. The respondent gave a demand letter on October 29,
1992, to the petitioner. The obligation is liquidated because the debtor knows precisely how much he
is to pay and when he is to py it. The petitioner delayed in the performance, it was able to fully settle
its outstanding balance only on February 8, 1995.

Notes/Doctrine:

Art. 1169. Those obliged to deliver or to something incur in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment of their obligation.

Requisites for a debtor to be in default (mora):

1. The obligation be demandable and already liquidated;

2. the debtor delays performance; and

3. the creditor requires the performance judicially and extrajudicially.

The Compromise Agreement as a consensual contract became binding between the parties UPON ITS
EXECUTION and not upon its court approval.

BRICKTOWN DEVELOPMENT CORP. and MARIANO Z. VERALDE VS. AMOR TIERRA DEVELOPMENT
CORPORATION and the HON. COURT OF APPEALS
G.R. No. 112182
December 12, 1994
239 SCRA 127

FACTS: Bricktown Development Corporation, represented by its President and co-petitioner Mariano Z. Velarde,
executed two Contracts to Sell in favor of Amor Tierra Development Corporation, represented in these acts by its
Vice-President, Moises G. Petilla, covering a total of 96 residential lots at the Multinational Village Subdivision, La
Huerta, Parañaque, Metro Manila.

The total price of P21,639,875.00 was stipulated to be paid by private respondent in such amounts and maturity
dates, as follows: P2,200,000.00 on 31 March 1981; P3,209,968.75 on 30 June 1981; P4,729,906.25 on 31
December 1981; and the balance of P11,500,000.00 to be paid by means of an assumption by private respondent of
petitioner corporation's mortgage liability to the Philippine Savings Bank or, alternately, to be made payable in cash.
On date, March 31, 1981, the parties executed a Supplemental Agreement, providing that private respondent would
additionally pay to petitioner corporation the amounts of P55,364.68, or 21% interest on the balance of down
payment for the period from 31 March to 30 June 1981, and of P390,369.37 representing interest paid by petitioner
28 of 21
corporation to the Philippine Savings Bank in updating the bank loan for the period from 01 February to 31 March
1981.

Private respondent was only able to pay petitioner corporation the sum of P1,334,443.21. However, the parties
continued to negotiate for a possible modification of their agreement, but nothing conclusive happened. And on
October 12, 1981, petitioner’s counsel sent private respondent a “Notice of Cancellation of Contract” because of the
latter’s failure to pay the agreed amount.

Several months later, private respondent’s counsel, demanded the refund of private respondent's various payments
to petitioner corporation, allegedly "amounting to P2,455,497.71," with interest within fifteen days from receipt of
said letter, or, in lieu of a cash payment, to assign to private respondent an equivalent number of unencumbered lots
at the same price fixed in the contracts. When the demand was not heeded, Amor Tierra filed an action with the
court a quo which rendered a decion in its favor. The decision of the lower court was affirmed in toto by the Court of
Appeals. Hence, this petition.

ISSUE:
1. Whether or not the contract was properly rescinded.
2. Whether or not Bricktown properly forfeited the payments of Amor Tierra.
RULING: The contract between Bricktown and Amor Tierra was validly rescinded because of the failure of the latter
to pay the agreed amounts stipulated in the contract on the proper date even after the sixty-days grace period.
Furthermore, the records showed that private respondent corporation paid less than the amount agreed upon. The
Supreme Court also added that such cancellation must be respected. It may also be noteworthy to add that in a
contract to sell, the non-payment of the purchase price can prevent the obligation to convey title from acquiring any
obligatory force.

On the second issue, the Supreme Court ruled that since the private respondent did not actually possessed the
property under the contract, the petitioner is then ordered to return to private respondent the amount remitted.
However, to adjudge any interest payment by petitioners on the amount to be thus refunded, private respondent
should not be allowed to totally free itself from its own breach.

Cathay Pacific v. Sps. Vasquez

FACTS

Private respondents were passengers of petitioner booked on its Flight CX-905 with the route of Manila to
Hongkong and back. They, along with their maid and two friends, went to HK for pleasure and business.
While the maidaâ €™s boarding pass was for the Economy Class, the spousesaâ €™ and their two friendsaâ €™
indicated that they were on the Business Class. However, while in Kai Tak Airport, after checking in their
luggage and presenting their boarding passes to the ground stewardess, they were informed by Ms. Chiu,
a ground attendant, that there was a seat change from Business to First Class for the spouses. It is to be
noted that the Vasquezes are frequent flyers of the airline and are Gold Card members of its Marco Polo
Club. The Marco Polo Club is part of the marketing strategy of Cathay through which it accords its
frequent flyers several privileges, including priority for upgrading of booking without any extra charge
whenever an opportunity arises. Upon being informed of this change, Dr. Vasquez refused the same,
saying that it would not look nice for them as hosts to travel in First Class and their guests, in Business
Class, not to mention that they also had to discuss business matters during the flight. He asked Ms. Chiu to
have other passengers transferred instead. Shocked by this unusual reaction to a seat upgrade, Ms. Chiu,
after consulting with her supervisor, informed them that if they would not avail of the privilege, they
would not be allowed to take the flight. Eventually, after talking with his friends, Dr. Vasquez agreed. He
and his wife took the First Class Cabin. Back in Manila, after apparent inaction on the part of Cathay, the
Vasquezes filed a damage suit, asking for temperate, moral and exemplary damages, as well as

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attorneyaâ €™s fees. They attributed discourteous and humiliating behavior to Ms. Chiu. Cathay answered
that seat upgrading is a common practice among airlines.

The TC ruled for the spouses, awarding them nominal (P100,000 each), moral (P2M each), exemplary
(P5M each) and attorneyaâ €™s fees (P1M each). The CA affirmed, but deleted the award of exemplary
damages and reduced the awards of moral and nominal damages and attorneyaâ €™s fees.

ISSUE/s

1. WON Cathay breached its contract of carriage with the Vs when it upgraded their seat
accommodation.

2. WON the upgrading was made in bad faith or with fraud.

3. WON the Vasquezes are entitled to damages.

RULING

1. YES. The Vazquezes never denied that they were members of Cathayaâ €™s Marco Polo Club. They
knew that as members of the Club, they had priority for upgrading of their seat accommodation at no
extra cost when an opportunity arises. But, just like other privileges, such priority could be waived. The
Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege or
would consent to a change of seat accommodation before their seat assignments were given to other
passengers. Normally, one would appreciate and accept an upgrading, for it would mean a better
accommodation. But, whatever their reason was and however odd it might be, the Vazquezes had every
right to decline the upgrade and insist on the Business Class accommodation they had booked for and
which was designated in their boarding passes. They clearly waived their priority or preference when
they asked that other passengers be given the upgrade. It should not have been imposed on them over
their vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage with the
Vazquezes.

2. NO. The Vazquezes were not induced to agree to the upgrading through insidious words or deceitful
machination or through willful concealment of material facts. Upon boarding, Ms. Chiu told the Vazquezes
that their accommodations were upgraded to First Class in view of their being Gold Card members of
Cathayaâ €™s Marco Polo Club. She was honest in telling them that their seats were already given to other
passengers and the Business Class Section was fully booked. Ms. Chiu might have failed to consider the
remedy of offering the First Class seats to other passengers. But, we find no bad faith in her failure to do
so, even if that amounted to an exercise of poor judgment. Neither was the transfer of the Vazquezes
effected for some evil or devious purpose. As testified to by Mr. Robson, the First Class Section is better
than the Business Class Section in terms of comfort, quality of food, and service from the cabin crew.

3. YES. Case law establishes the following requisites for the award of moral damages: (1) there must be
an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be a
culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant; and (4) the award for damages is predicated on
any of the cases stated in Article 2219 of the Civil Code.

Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances
where the carrier is guilty of fraud or bad faith or where the mishap resulted in the death of a passenger.
Where in breaching the contract of carriage the airline is not shown to have acted fraudulently or in bad
30 of 21
faith, liability for damages is limited to the natural and probable consequences of the breach of the
obligation which the parties had foreseen or could have reasonably foreseen. In such a case the liability
does not include moral and exemplary damages. The breach of contract of carriage, which consisted in the
involuntary upgrading of the Vazquezesaâ €™ seat accommodation, was not attended by fraud or bad faith.
The Court of Appealsaâ €™ award of moral damages has, therefore, no leg to stand on.

The deletion of the award for exemplary damages by the Court of Appeals is correct. It is a requisite in the
grant of exemplary damages that the act of the offender must be accompanied by bad faith or done in
wanton, fraudulent or malevolent manner. Such requisite is absent in this case. Moreover, to be entitled
thereto the claimant must first establish his right to moral, temperate, or compensatory damages. Since
the Vazquezes are not entitled to any of these damages, the award for exemplary damages has no legal
basis. And where the awards for moral and exemplary damages are eliminated, so must the award for
attorneyaâ €™s fees.

The most that can be adjudged in favor of the Vazquezes for Cathayaâ €™s breach of contract is an award
for nominal damages under Article 2221 of the Civil Code, which reads as follows:

Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.

YAMBAO VS ZUNIGA

No. 146173. December 11, 2003|

FACTS
Cecilia Yambao is the registered owner of “Lady Cecil and Rome Trans” passenger bus with
Plate No. CVK 606, with a public transport franchise to ply the Novaliches-via Quirino-Alabang
route. The bus owned by Yambao was being driven by her driver, one Ceferino G. Venturina
along the northbound lane of Epifanio delos Santos Avenue (EDSA), within the vicinity of
Bagong Barrio, Kalookan City. With Venturina was the bus conductor, Fernando Dumaliang.
Suddenly, the bus bumped Herminigildo Zuñiga, a pedestrian. Such was the force of the impact
that the left side of the front windshield of the bus was cracked. Zuñiga was rushed to the
Quezon City General
Hospital where he was given medical attention, but due to the massive injuries sustained, he
succumbed shortly thereafter.

Private respondents, as heirs of the victim, filed a Complaint against petitioner and her driver,
Venturina, for damages.The complaint essentially alleged that Venturina drove the bus in a
reckless, careless and imprudent manner, in violation of traffic rules and regulations, without
due regard to public safety, thus resulting in the victim’s premature death.

The petitioner vehemently denied the material allegations of the complaint. She tried to shift
the blame for the accident upon the victim, theorizing that Herminigildo bumped into her bus,
while avoiding an unidentified woman who was chasing him. She further alleged that she was
not liable for any damages because as an employer, she exercised the proper diligence of a good
father of a family, both in the selection and supervision of her bus driver.

ISSUES & ARGUMENTS

W/N Cecilia Yambao exercised the proper diligence of a good father of a

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family both in the selection and supervision of her bus driver

HOLDING & RATIO DECIDENDI

Cecilia did not exercise the proper diligence of a good father of a family both in the
selection and supervision of her bus driver
Petitioner’s claim that she exercised due diligence in the selection and supervision of her driver,
Venturina, deserves but scant consideration. Her allegation that before she hired Venturina she
required him to submit his driver’s license and clearances is worthless, in view of her failure to
offer in evidence certified true copies of said license and clearances. Bare allegations,
unsubstantiated by evidence, are not equivalent to proof under the rules of evidence. Moreover,
as the court a quo aptly observed, petitioner contradicts herself. She declared that Venturina
applied with her sometime in January 1992 and she then required him to submit his license and
clearances.

However, the record likewise shows that she did admit that Venturina submitted the said
requirements only on May 6, 1992, or on the very day of the fatal accident itself. In other words,
petitioner’s own admissions clearly and categorically show that she did not exercise due
diligence in the selection of her bus driver. Case law teaches that for an employer to have
exercised the diligence of a good father of a family, he should not be satisfied with the
applicant’s mere possession of a professional driver’s license; he must also carefully examine
the applicant for employment as to his qualifications, his experience and record of service.
Petitioner failed to present convincing proof that she went to this extent of verifying Venturina’s
qualifications, safety record, and driving history. The presumption juris tantum that there was
negligence in the selection of her bus driver, thus, remains unrebutted. Nor did petitioner show
that she exercised due supervision over Venturina after his selection. For as pointed out by the
Court of Appeals, petitioner did not present any proof that she drafted and implemented
training programs and guidelines on road safety for her employees. In fact, the record is bare of
any showing that petitioner required Venturina to attend periodic seminars on road safety and
traffic efficiency. Hence, petitioner cannot claim exemption from any liability arising from the
recklessness or negligence of Venturina.

In sum, petitioner’s liability to private respondents for the negligent and imprudent acts of her
driver, Venturina, under Article 2180 of the Civil Code is both manifest and clear. Petitioner,
having failed to rebut the legal presumption of negligence in the selection and supervision of
her driver, is responsible for damages, the basis of the liability being the relationship of pater
familias or on the employer’s own negligence. Thus, this Court has no option but to uphold the
ruling of the appellate court.

NPC v. CA
Facts:

At the height of the typhoon “Kading”, a flash flood covered the towns near the Angat Dam, causing deaths
and destructions to residents and their properties. Respondents blamed the tragedy to the reckless and
imprudent opening of the 3 floodgates by petitioner, without prior warning to the residents within the
vicinity of the dam. Petitioners denied the allegations and contended that they have kept the water at a
safe level, that the opening of floodgates was done gradually, that it exercises diligence in the selection of
its employees, and that written warnings were sent to the residents. It further contended that there was
no direct causal relationship between the damage and the alleged negligence on their part, that the
residents assumed the risk by living near the dam, and that what happened was a fortuitous event and are
of the nature of damnum absque injuria.
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Issues:

(1) Whether the petitioner can be held liable even though the coming of the typhoon is a fortuitous event

(2) Whether a notice was sent to the residents

(3) Whether the damage suffered by respondents is one of damnum absque injuria

Held:

(1) The obligor cannot escape liability, if upon the happening of a fortuitous event or an act of God, a
corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the
obligation as provided in Article 1170 of the Civil Code which results in loss or damage. Even if there was
no contractual relation between themselves and private respondents, they are still liable under the law
on quasi-delict. Article 2176 of the Civil Code explicitly provides "whoever by act or omission causes
damage to another there being fault or negligence is obliged to pay for the damage done." Act of God
or force majeure, by definition, are extraordinary events not foreseeable or avoidable, events that could
not be foreseen, or which, though foreseen, are inevitable. It is therefore not enough that the event should
not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee
or to avoid. The principle embodied in the act of God doctrine strictly requires that the act must be
occasioned solely by the violence of nature. Human intervention is to be excluded from creating or
entering into the cause of the mischief. When the effect is found to be in part the result of the
participation of man, whether due to his active intervention or neglect or failure to act, the whole
occurrence is then humanized and removed from the rules applicable to the acts of God. In the case at bar,
although the typhoon "Kading" was an act of God, petitioners can not escape liability because their
negligence was the proximate cause of the loss and damage.

(2) The letter itself, addressed merely "TO ALL CONCERNED", would not strike one to be of serious
importance, sufficient enough to set alarm and cause people to take precautions for their safety's sake.
The notices were not delivered, or even addressed to responsible officials of the municipalities concerned
who could have disseminated the warning properly. They were delivered to ordinary employees and
policemen. As it happened, the said notices do not appear to have reached the people concerned, which
are the residents beside the Angat River. The plaintiffs in this case definitely did not receive any such
warning. Indeed, the methods by which the defendants allegedly sent the notice or warning was so
ineffectual that they cannot claim, as they do in their second assignment of error, that the sending of said
notice has absolved them from liability.

(3) We cannot give credence to petitioners' third assignment of error that the damage caused by the
opening of the dam was in the nature of damnum absque injuria, which presupposes that although there
was physical damage, there was no legal injury in view of the fortuitous events. There is no question that
petitioners have the right, duty and obligation to operate, maintain and preserve the facilities of Angat
Dam, but their negligence cannot be countenanced, however noble their intention may be. The end does
not justify the means, particularly because they could have done otherwise than simultaneously opening
the spillways to such extent. Needless to say, petitioners are not entitled to counterclaim.

Philcomsat v. Globe Telecom

429 SCRA 153, G.R. No. 147324 (May 25, 2004)

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 Facts:

1. Globe Telecom, Inc. (Globe) is engaged in the coordination of the provision of various
communication facilities for the military bases of the United States of America (US) in the Clark Air
Base and Subic Naval Base.

2. Saud communication facilities were installed and configured for the exclusive use of the US
Defense Communications Agency (USDCA).

3. Globe contracted Philippine Communications Satellite Corporation (Philcomsat) for the

provision of the communication facilities.

4. Philcomsat and Globe entered into an agreement whereby Philcomsat obliged itself to
establish, operate and provide an IBS Standard B earth station (earth station) for the exclusive use of
the USDCA. Globe promised to pay Philcomsat monthly rentals for each leased circuit involved.

5. Philcomsat installed and established the earth station and the USDCA made use of the same.

6. Senate passed and adopted its resolution, expressing its decision not to concur in the
ratification of the Treaty of Friendship, Cooperation and Security and its Supplementary Agreements
that was supposed to extend the term of the use by the US of Subic Naval Base, among others.

7. PH government sent a Note Verbale to the US government through the US Embassy, notifying
it of the Philippine termination of the RP-US Military Base Agreement. The withdrawal of all US
military forces from Subic Naval Base should be completed by December 31. 1992.

8. Globe notified Philcomsat of its intention to discontinue the use of the earth station.

9. Philcomsat demand payment of rentals for the balance of lease term, despite the non-use of
earth station.

Issue/s:

1. Whether the termination of the RP-US Military Base Agreement, the non-ratification of the
Treaty of Friendship, Cooperation and Security, and the consequent withdrawal of US military forces
and personnel from Cubi Point constitute force majeure which would exempt Globe from complying
with its obligation to pay rentals under its Agreement with Philcomsat.

2. Whether Globe is liable to pay rentals under the Agreement for the month of December 1992.

3. Whether Philcomsat is entitled to attorney’s fees and exemplary damages.

Ruling:

1. Yes. Philcomsat and Globe had no control over the non-renewal of the term of the RP-US
Military Base Agreement when the same expired in 1991, because the prerogative to ratify the treaty
extending the life thereof belonged to the Senate. Neither did the parties have control over the
subsequent withdrawal of the US military forces and personnel from Cubi Point in December 1992.

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 As a consequence of the termination of the RP-US Military Base Agreement the continued stay of all
US Military forces and personnel from Subic Naval Base would no longer be allowed, hence, plaintiff
would no longer be in any position to render service it was obligated under the Agreement.

Events made impossible the continuation of the Agreement until the end of its five-year term without
fault on the part of either party. Such fortuitous events rendered Globe exempt from payment of
rentals for the remainder of the term of the Agreement.

Philcomsat would like to charge globe rentals for the balance of the lease term without being any
corresponding telecommunications service subject of the lease. It will be grossly unfair and iniquitous
to hold globe liable for lease charges for a service that was not and could not have been rendered due
to an act of the government which was clearly beyond globes control.

2. Yes. The US military forces and personnel completely withdrew from Cubi Point only on
December 31, 1992. Thus, until that date, USDCA had control over the earth station and had the
option of using the same. Furthermore, Philcomsat could not have removed or rendered ineffective
said communication facility until after December 31, 1992 because Cubi Point was accessible only to
US naval personnel up to that time.

3. No. The award of attorney’s fees is the exemption rather than the rule. In cases where both
parties have legitimate claims against each other and no party actually prevailed, such as in the
present case where the claims of both parties were sustained in part, an award of attorney’s fees would
not be warranted.

Exemplary damages may be awarded in cases involving contracts, if the erring party acted in wanton,
fraudulent, reckless, oppressive or malevolent manner. It was not shown that Globe acted wantonly or
oppressively in not heeding Philcomsats demands for payment of rentals. Globe had valid grounds for
refusing to comply with its contractual obligations after 1992.

PET: FGU Insurance Corporation

RES: CA; San Miguel Corporation (SMC); Estate of Ang Gui represented by Lucio, Julian, Jaime, all surnamed Ang; Co To

These are two separate Petitions for review assailing the decision of the Court of Appeals which affirmed the decision of
RTC of Cebu City.

1. Evidence shows that Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was
engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were
operated as common carriers.

2. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for
it to move from one place to another.

3. On September 23, 1979, SMC shipped from Mandaue City, on board the D/B Lucio for towage by M/T ANCO:
a. Bill of Lading #1: 25,000 cases of Pale Pilsen + 350 cases of Cerveza Negra to Estancia, Iloilo
b. Bill of Lading #2: 15,000 cases of Pale Pilsen + 200 cases of Cerveza Negra to San Jose, Antique

4. When the barge and tugboat arrived at Antique in the afternoon, the clouds over the area were dark and the
waves were already big. SMCs Supervisor, Fernando Macabuag, requested ANCOs representative to transfer the
barge to a safer place because the vessel might not be able to withstand the big waves. ANCO did not heed the
request because he was confident.

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 5. On October 01, 1979, 10pm, the crew of D/B Lucio abandoned the vessel because the barges rope attached to
the wharf was cut off by the big waves.

6. Thus, ANCO failed to deliver to SMCs consignee 29,210 cases of Pale Pilsen and 550 cases of Cerveza
Negra. The value amounted to P1,346,197. SMC filed a complaint for Breach of Contract of Carriage and
Damages against ANCO for the amount aforesaid plus interest & damages

7. Upon Ang Gui’s death, ANCO, as a partnership, was dissolved. Hence, SMC filed a second amended complaint
impleading the surviving partner, Co To and the Estate of Ang Gui represented by Lucio, Julian and Jaime, all
surnamed Ang.

8. ANCO admitted that the cases of beer were indeed loaded on the vessel belonging to them. It claimed however
that it had an agreement with SMC that ANCO would not be liable for any losses or damages resulting to the
cargoes by reason of fortuitous event. Since the cases of beer Pale Pilsen and Cerveza Negra were lost by
reason of a storm, a fortuitous event which battered and sunk the vessel in which they were loaded, they should
not be held liable.

9. ANCO filed a Third-Party Complaint against FGU alleging that before the vessel of ANCO left for San Jose, the
cargoes were insured with FGU. ANCO alleged that the third-party defendant corporation should be held liable to
indemnify or reimburse ANCO whatever amounts, or damages, it may be required to pay to SMC.

10. The trial court found that while the cargoes were indeed lost due to fortuitous event, there was failure on ANCOs
part to observe the degree of diligence required. The trial court thus held the Estate of Ang Gui and Co To liable to
SMC for the amount of the lost shipment. FGU liable to bear 53% of the amount of the lost cargoes.CA affirmed in
toto.

I.
WON ANCO exercised due diligence?

II.
WON respondent Court of Appeals committed grave abuse of discretion in holding FGU liable under the insurance
contract considering the circumstances surrounding the loss of the cargoes?

I. NO.
ANCO claims that their crewmembers exercised due diligence to prevent or minimize the loss of the cargoes but their
efforts proved no match to the forces unleashed by the typhoon. The argument does not persuade.

Caso fortuito or force majeure by definition, are extraordinary events not foreseeable or avoidable, events that could not
be foreseen, or which though foreseen, were inevitable. It is therefore not enough that the event should not have been
foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. In this case, the
calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the
port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMCs District Sales
Supervisor to request that the D/B Lucio be likewise transferred.

To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. There
must have been no contributory negligence on the part of the common carrier.

II. FGU not liable.

It is a basic rule in insurance that the carelessness and negligence of the insured or his agents constitute no defense on
the part of the insurer. This rule however presupposes that the loss has occurred due to causes which could not have
been prevented by the insured, despite the exercise of due diligence.

The question now is whether there is a certain degree of negligence on the part of the insured or his agents that will
deprive him the right to recover under the insurance contract. According to the Court, while mistake and negligence of the
master or crew are incident to navigation and constitute a part of the perils that the insurer is obliged to incur, such
negligence or recklessness must not be of such gross character as to amount to misconduct or wrongful acts; otherwise,
such negligence shall release the insurer from liability under the insurance contract.

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In the case at bar, both the trial court and the appellate court had concluded from the evidence that the crewmembers of
both the D/B Lucio and the M/T ANCO were blatantly negligent.

Taking into account the circumstances present in the instant case, concludes that the blatant negligence of ANCOs
employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from liability under the
insurance contract.

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