1. SSS vs. Moonwalk Devt. and Housing Corp., G.R. No.

73345, April 7, 1993

Obligations; Requisites in order that debtor may be in default; Necessity of demand.—To be in default “x
x x is different from mere delay in the grammatical sense, because it involves the beginning of a special
condition or status which has its own peculiar effects or results.” In order that the debtor may be in
default it is necessary that the following requisites be present: (1) that the obligation be demandable
and already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the
performance judicially and extrajudicially. Default generally begins from the moment the creditor
demands the performance of the obligation. Nowhere in this case did it appear that SSS demanded from
Moonwalk the payment of its monthly amortizations. Neither did it show that petitioner demanded the
payment of the stipulated penalty upon the failure of Moonwalk to meet its monthly amortization.
What the complaint itself showed was that SSS tried to enforce the obligation sometime in September,
1977 by foreclosing the real estate mortgages executed by Moonwalk in favor of SSS. But this
foreclosure did not push through upon Moonwalk’s requests and promises to pay in full. The next
demand for payment happened on October 1, 1979 when SSS issued a Statement of Account to
Moonwalk And in accordance with said statement, Moonwalk paid its loan in full. What is clear,
therefore, is that Moonwalk was never in default because SSS never compelled performance. Social
Security System vs. Moonwalk Development and Housing Corporation, 221 SCRA 119, G.R. No. 73345
April 7, 1993

2. RCBC vs. CA, G.R. No. 133107, March 25, 1999

Civil Law; Action; Damages; Article 1170 of the Civil Code states that those who in the performance of
their obligations are guilty of delay are liable for damages. The delay in the performance of the
obligation, however, must be either malicious or negligent.—Article 1170 of the Civil Code states that
those who in the performance of their obligations are guilty of delay are liable for damages. The delay in
the performance of the obligation, however, must be either malicious or negligent. Thus, assuming that
private respondent was guilty of delay in the payment of the value of the unsigned check, private
respondent cannot be held liable for damages. There is no imputation, much less evidence, that private
respondent acted with malice or negligence in failing to sign the check. Indeed, we agree with the Court
of Appeals’ finding that such omission was mere “inadvertence” on the part of private respondent.
Toyota salesperson Jorge Geronimo testified that he even verified whether private respondent had
signed all the checks and in fact returned three or four unsigned checks to him for signing: x x x Even
when the checks were delivered to petitioner, it did not object to the unsigned check. In view of the lack
of malice or negligence on the part of Rizal Commercial Banking Corporation vs. Court of Appeals, 305
SCRA 449, G.R. No. 133107 March 25, 1999

3. Barzaga vs. CA, February 12, 1997

Civil Law; Obligations; Damages; Respondent Angelito Alviar was negligent and incurred delay in the
performance of his contractual obligation.—An assiduous scrutiny of the record convinces us that
respondent Angelito Alviar was negligent and incurred in delay in the performance of his contractual
obligation. This sufficiently entitles petitioner Ignacio Barzaga to be indemnified for the damage he
suffered as a consequence of delay or a contractual breach. The law expressly provides that those who
in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any
manner contravene the tenor thereof, are liable for damages.

Same; Same; Same; Case is clearly one of non-performance of a reciprocal obligation.—This case is
clearly one of non-performance of a reciprocal obligation. In their contract of purchase and sale,
petitioner had already complied fully with what was required of him as purchaser, i.e., the payment of
the purchase price of P2,110.00. It was incumbent upon respondent to immediately fulfill his obligation
to deliver the goods otherwise delay would attach.

Same; Same; Same; Award of moral damages sustained.—We therefore sustain the award of moral
damages. It cannot be denied that petitioner and his family suffered wounded feelings, mental anguish
and serious anxiety while keeping watch on Christmas day over the remains of their loved one who
could not be laid to rest on the date she herself had chosen. There is no gainsaying the inexpressible
pain and sorrow Ignacio Barzaga and his family bore at that moment caused no less by the ineptitude,
cavalier behavior and bad faith of respondent and his employees in the performance of an obligation
voluntarily entered into. Barzaga vs. Court of Appeals, 268 SCRA 105, G.R. No. 115129 February 12, 1997

Civil Law; Obligations; Damages; Respondent Angelito Alviar was negligent and incurred delay in the
performance of his contractual obligation.—An assiduous scrutiny of the record convinces us that
respondent Angelito Alviar was negligent and incurred in delay in the performance of his contractual
obligation. This sufficiently entitles petitioner Ignacio Barzaga to be indemnified for the damage he
suffered as a consequence of delay or a contractual breach. The law expressly provides that those who
in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any
manner contravene the tenor thereof, are liable for damages.

Same; Same; Same; Case is clearly one of non-performance of a reciprocal obligation.—This case is
clearly one of non-performance of a reciprocal obligation. In their contract of purchase and sale,
petitioner had already complied fully with what was required of him as purchaser, i.e., the payment of
the purchase price of P2,110.00. It was incumbent upon respondent to immediately fulfill his obligation
to deliver the goods otherwise delay would attach.

Same; Same; Same; Award of moral damages sustained.—We therefore sustain the award of moral
damages. It cannot be denied that petitioner and his family suffered wounded feelings, mental anguish
and serious anxiety while keeping watch on Christmas day over the remains of their loved one who
could not be laid to rest on the date she herself had chosen. There is no gainsaying the inexpressible
pain and sorrow Ignacio Barzaga and his family bore at that moment caused no less by the ineptitude,
cavalier behavior and bad faith of respondent and his employees in the performance of an obligation
voluntarily entered into. Barzaga vs. Court of Appeals, 268 SCRA 105, G.R. No. 115129 February 12, 1997

4. Pantaleon vs. American Express, May 8, 2009

Credit Cards; Obligations and Contracts; Delay; Mora Solvendi and Mora Accipiendi; Requisites.—
Petitioner correctly cites that under mora solvendi, the three requisites for a finding of default are that
the obligation is demandable and liquidated; the debtor delays performance; and the creditor judicially
or extrajudicially requires the debtor’s performance. Petitioner asserts that the Court of Appeals had
wrongly applied the principle of mora accipiendi, which relates to delay on the part of the obligee in
accepting the performance of the obligation by the obligor. The requisites of mora accipiendi are: an
offer of performance by the debtor who has the required capacity; the offer must be to comply with the
prestation as it should be performed; and the creditor refuses the performance without just cause. The
error of the appellate court, argues petitioner, is in relying on the invocation by respondent of “just
cause” for the delay, since while just cause is determinative of mora accipiendi, it is not so with the case
of mora solvendi.
Same; Same; Same; Generally, the relationship between a credit card provider and its card holders is
that of creditor-debtor, with the card company as the creditor extending loans and credit to the card
holder, who as debtor is obliged to repay the creditor, a relationship which takes exception to the
general rule that as between a bank and its depositors, the bank is deemed as the debtor while the
depositor is considered as the creditor.—We can see the possible source of confusion as to which type
of mora to appreciate. Generally, the relationship between a credit card provider and its card holders is
that of creditor-debtor, with the card company as the creditor extending loans and credit to the card
holder, who as debtor is obliged to repay the creditor. This relationship already takes exception to the
general rule that as between a bank and its depositors, the bank is deemed as the debtor while the
depositor is considered as the creditor. Petitioner is asking us, not baselessly, to again shift perspectives
and again see the credit card company as the debtor/obligor, insofar as it has the obligation to the
customer as creditor/obligee to act promptly on its purchases on credit.

Same; Same; Same; Notwithstanding the popular notion that credit card purchases are approved “within
seconds,” there really is no strict, legally determinative point of demarcation on how long must it take
for a credit card company to approve or disapprove a customer’s purchase, much less one specifically
contracted upon by the parties, but one hour appears to be an awfully long, patently unreasonable
length of time to approve or disapprove a credit card purchase.—Notwithstanding the popular notion
that credit card purchases are approved “within seconds,” there really is no strict, legally determinative
point of demarcation on how long must it take for a credit card company to approve or disapprove a
customer’s purchase, much less one specifically contracted upon by the parties. Yet this is one of those
instances when “you’d know it when you’d see it,” and one hour appears to be an awfully long, patently
unreasonable length of time to approve or disapprove a credit card purchase. It is long enough time for
the customer to walk to a bank a kilometer away, withdraw money over the counter, and return to the
store.

Same; Same; Same; The culpable failure of the credit card company herein is not the failure to timely
approve the cardholder’s purchase, but the more elemental failure to timely act on the same, whether
favorably or unfavorably.—We do not wish do dispute that respondent has the right, if not the
obligation, to verify whether the credit it is extending upon on a particular purchase was indeed
contracted by the cardholder, and that the cardholder is within his means to make such transaction. The
culpable failure of respondent herein is not the failure to timely approve petitioner’s purchase, but the
more elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming that
respondent’s credit authorizers did not have sufficient basis on hand to make a judgment, we see no
reason why respondent could not have promptly informed petitioner the reason for the delay, and duly
advised him that resolving the same could take some time. In that way, petitioner would have had
informed basis on whether or not to pursue the transaction at Coster, given the attending
circumstances. Instead, petitioner was left uncomfortably dangling in the chilly autumn winds in a
foreign land and soon forced to confront the wrath of foreign folk.

Same; Same; Same; Damages; Moral Damages; Moral damages avail in cases of breach of contract
where the defendant acted fraudulently or in bad faith, and the court should find that under the
circumstances, such damages are due.—Moral damages avail in cases of breach of contract where the
defendant acted fraudulently or in bad faith, and the court should find that under the circumstances,
such damages are due. The findings of the trial court are ample in establishing the bad faith and
unjustified neglect of respondent, attributable in particular to the “dilly-dallying” of respondent’s Manila
credit authorizer, Edgardo Jaurique.
Same; Same; Same; Same; Moral damages do not avail to soothe the plaints of the simply impatient, so
this decision should not be cause for relief for those who time the length of their credit card
transactions with a stopwatch.—It should be emphasized that the reason why petitioner is entitled to
damages is not simply because respondent incurred delay, but because the delay, for which culpability
lies under Article 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral
damages are remunerative. Moral damages do not avail to soothe the plaints of the simply impatient, so
this decision should not be cause for relief for those who time the length of their credit card
transactions with a stopwatch. The somewhat unusual attending circumstances to the purchase at
Coster—that there was a deadline for the completion of that purchase by petitioner before any delay
would redound to the injury of his several traveling companions—gave rise to the moral shock, mental
anguish, serious anxiety, wounded feelings and social humiliation sustained by the petitioner, as
concluded by the RTC. Those circumstances are fairly unusual, and should not give rise to a general
entitlement for damages under a more mundane set of facts. Pantaleon vs. American Express
International, Inc., 587 SCRA 551, G.R. No. 174269 May 8, 2009

5. Lorenzo Shipping Corp. vs. BJ Mathel International Nov. 19, 2004

Contracts; Interpretation of Contracts; In determining whether time is of the essence in a contract, the
ultimate criterion is the actual or apparent intention of the parties and before time may be so regarded
by a court, there must be a sufficient manifestation, either in the contract itself or the surrounding
circumstances of that intention; It is a cardinal rule in interpretation of contracts that if the terms
thereof are clear and leave no doubt as to the intention of the contracting parties, the literal meaning
shall control.—In determining whether time is of the essence in a contract, the ultimate criterion is the
actual or apparent intention of the parties and before time may be so regarded by a court, there must
be a sufficient manifestation, either in the contract itself or the surrounding circumstances of that
intention. Petitioner insists that although its purchase orders did not specify the dates when the cylinder
liners were supposed to be delivered, nevertheless, respondent should abide by the term of delivery
appearing on the quotation it submitted to petitioner. Petitioner theorizes that the quotation embodied
the offer from respondent while the purchase order represented its (petitioner’s) acceptance of the
proposed terms of the contract of sale. Thus, petitioner is of the view that these two documents
“cannot be taken separately as if there were two distinct contracts.” We do not agree. It is a cardinal
rule in interpretation of contracts that if the terms thereof are clear and leave no doubt as to the
intention of the contracting parties, the literal meaning shall control. However, in order to ascertain the
intention of the parties, their contemporaneous and subsequent acts should be considered. While this
Court recognizes the principle that contracts are respected as the law between the contracting parties,
this principle is tempered by the rule that the intention of the parties is primordial and “once the
intention of the parties has been ascertained, that element is deemed as an integral part of the contract
as though it has been originally expressed in unequivocal terms.”

Same; A contract undergoes three distinct stages—preparation or negotiation, its perfection, and finally,
its consummation.—In the case of Bugatti v. Court of Appeals, we reiterated the principle that “[a]
contract undergoes three distinct stages—preparation or negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective contracting parties manifest their
interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of
the contract takes place when the parties agree upon the essential elements of the contract. The last
stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon
in the contract, culminating in the extinguishment thereof.”
Same; When the time of delivery is not fixed or is stated in general and indefinite terms, time is not of
the essence of the contract.— We find the case of Smith, Bell & Co., Ltd. v. Matti, instructive. There, we
held that—When the time of delivery is not fixed or is stated in general and indefinite terms, time is not
of the essence of the contract. . . . In such cases, the delivery must be made within a reasonable time.
The law implies, however, that if no time is fixed, delivery shall be made within a reasonable time, in the
absence of anything to show that an immediate delivery intended. . . .

Same; Even where time is of the essence, a breach of the contract in that respect by one of the parties
may be waived by the other party’s subsequently treating the contract as still in force.—As an aside, let
it be underscored that “[e]ven where time is of the essence, a breach of the contract in that respect by
one of the parties may be waived by the other party’s subsequently treating the contract as still in
force.” Petitioner’s receipt of the cylinder liners when they were delivered to its warehouse on 20 April
1990 clearly indicates that it considered the contract of sale to be still subsisting up to that time. Indeed,
had the contract of sale been cancelled already as claimed by petitioner, it no longer had any business
receiving the cylinder liners even if said receipt was “subject to verification.” By accepting the cylinder
liners when these were delivered to its warehouse, petitioner indisputably waived the claimed delay in
the delivery of said items.

Same; Rescission; It must be understood that the act of a party in treating a contract as cancelled or
resolved on account of infractions by the other contracting party must be made known to the other and
is always provisional, being ever subject to scrutiny and review by the proper court—the party who
deems the contract violated may consider it resolved or rescinded, and act accordingly, without
previous court action, but it proceeds at its own risk.—There having been no failure on the part of the
respondent to perform its obligation, the power to rescind the contract is unavailing to the petitioner.
Article 1191 of the New Civil Code runs as follows: The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The
law explicitly gives either party the right to rescind the contract only upon the failure of the other to
perform the obligation assumed thereunder. The right, however, is not an unbridled one. This Court in
the case of University of the Philippines v. De los Angeles, speaking through the eminent civilist Justice
J.B.L. Reyes, exhorts: Of course, it must be understood that the act of a party in treating a contract as
cancelled or resolved on account of infractions by the other contracting party must be made known to
the other and is always provisional, being ever subject to scrutiny and review by the proper court. If the
other party denied that rescission is justified, it is free to resort to judicial action in its own behalf, and
bring the matter to court. Then, should the court, after due hearing, decide that the resolution of the
contract was not warranted, the responsible party will be sentenced to damages; in the contrary case,
the resolution will be affirmed, and the consequent indemnity awarded to the party prejudiced.
(Emphasis supplied) In other words, the party who deems the contract violated may consider it resolved
or rescinded, and act accordingly, without previous court action, but it proceeds at its own risk. For it is
only the final judgment of the corresponding court that will conclusively and finally settle whether the
action taken was or was not correct in law. But the law definitely does not require that the contracting
party who believes itself injured must first file suit and wait for a judgment before taking extrajudicial
steps to protect its interest. Otherwise, the party injured by the other’s breach will have to passively sit
and watch its damages accumulate during the pendency of the suit until the final judgment of rescission
is rendered when the law itself requires that he should exercise due diligence to minimize its own
damages.
6. Solar Harvest vs. Davao Corrugated Carlon Corp. July 26, 2010

Civil Law; Contracts; Rescission; The right to rescind a contract arises once the other party defaults in the
performance of his obligation.—The right to rescind a contract arises once the other party defaults in
the performance of his obligation. In determining when default occurs, Art. 1191 should be taken in
conjunction with Art. 1169 of the same law.

Same; Same; Same; In reciprocal obligation, as in a contract of sale, the general rule is that the
fulfillment of the parties’ respective obligations, if the period for the fulfillment of the obligation is fixed,
demand upon the obligee is still necessary before the obligor can be considered in default and before a
cause of action will accrue.—In reciprocal obligations, as in a contract of sale, the general rule is that the
fulfillment of the parties’ respective obligations 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 in delay. But when different dates for performance of the obligations are fixed, the
default for each obligation must be determined by the rules given in the first paragraph of the present
article, that is, the other party would incur in delay only from the moment the other party demands
fulfillment of the former’s obligation. Thus, even in reciprocal obligations, if the period for the fulfillment
of the obligation is fixed, demand upon the obligee is still necessary before the obligor can be
considered in default and before a cause of action for rescission will accrue.

Civil Law; Contracts; Rescission; The right to rescind a contract arises once the other party defaults in the
performance of his obligation.—The right to rescind a contract arises once the other party defaults in
the performance of his obligation. In determining when default occurs, Art. 1191 should be taken in
conjunction with Art. 1169 of the same law.

Same; Same; Same; In reciprocal obligation, as in a contract of sale, the general rule is that the
fulfillment of the parties’ respective obligations, if the period for the fulfillment of the obligation is fixed,
demand upon the obligee is still necessary before the obligor can be considered in default and before a
cause of action will accrue.—In reciprocal obligations, as in a contract of sale, the general rule is that the
fulfillment of the parties’ respective obligations 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 in delay. But when different dates for performance of the obligations are fixed, the
default for each obligation must be determined by the rules given in the first paragraph of the present
article, that is, the other party would incur in delay only from the moment the other party demands
fulfillment of the former’s obligation. Thus, even in reciprocal obligations, if the period for the fulfillment
of the obligation is fixed, demand upon the obligee is still necessary before the obligor can be
considered in default and before a cause of action for rescission will accrue.

7. Cathay Pacific Airways vs. Vazquez March 2003

Common Carriers; Air Transportation; Contracts; Requisites; Words and Phrases; A contract is a meeting
of minds between two persons whereby one agrees to give something or render some service to
another for a consideration.—A contract is a meeting of minds between two persons whereby one
agrees to give something or render some service to another for a consideration. There is no contract
unless the following requisites concur: (1) consent of the contracting parties; (2) an object certain which
is the subject of the contract; and (3) the cause of the obligation which is established. Undoubtedly, a
contract of carriage existed between Cathay and the Vazquezes. They voluntarily and freely gave their
consent to an agreement whose object was the transportation of the Vazquezes from Manila to
HongKong and back to Manila, with seat: in the Business Class Section of the aircraft, and whose cause
or consideration was the fare paid by the Vazquezes to Cathay.
Same; Same; Same; Words and Phrases; “Breach of Contract” is defined as the “failure without legal
reason to comply with the terms of a contract,” or the failure, without legal excuse, to perform any
promise which forms the whole or part of the contract.”—The only problem is the legal effect of the
upgrading of the seat accommodation of the Vazquezes. Did it constitute a breach of contract? Breach
of contract is defined as the “failure without legal reason to comply with the terms of a contract.” It is
also defined as the “[f]ailure, without legal excuse, to perform any promise which forms the whole or
part of the contract.” In previous cases, the breach of contract of carriage consisted in either the
bumping off of a passenger with confirmed reservation or the downgrading of a passenger’s seat
accommodation from one class to a lower class. In this case, what happened was the reverse. The
contract between the parties was for Cathay to transport the Vazquezes to Manila on a Business Class
accommodation in Flight CX-905. After checking-in their luggage at the Kai Tak Airport in Hong Kong, the
Vazquezes were given boarding cards indicating their seat assignments in the Business Class Section.
However, during the boarding time, when the Vazquezes presented their boarding passes, they were
informed that they had a seat change from Business Class to First Class. It turned out that the Business
Class was overbooked in that there were more passengers than the number of seats. Thus, the seat
assignments of the Vazquezes were given to waitlisted passengers, and the Vazquezes, being members
of the Marco Polo Club, were upgraded from Business Class to First Class.

Same; Same; Same; Upgrading; Airline passengers have every right to decline an upgrade and insist on
the accommodation they had booked, and if an airline insists on the upgrade, it breaches its contract of
carriage with the passengers.—We note that in all their pleadings, the Vazquezes never denied that they
were members of Cathay’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.

Same; Same; Same; Same; Words and Phrases; “Bad Faith” and “Fraud,” Explained; Bad faith and fraud
are allegations of fact that demand clear and convincing proof.—We are not, however, convinced that
the upgrading or the breach of contract was attended by fraud or bad faith. Thus, we resolve the second
issue in the negative. Bad faith and fraud are allegations of fact that demand clear and convincing proof.
They are serious accusations that can be so conveniently and casually invoked, and that is why they are
never presumed. They amount to mere slogans or mudslinging unless convincingly substantiated by
whoever is alleging them. Fraud has been defined to include an inducement through insidious
machination. Insidious machination refers to a deceitful scheme or plot with an evil or devious purpose.
Deceit exists where the party, with intent to deceive, conceals or omits to state material facts and, by
reason of such omission or concealment, the other party was induced to give consent that would not
otherwise have been given. Bad faith does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty
through some motive or interest or ill will that partakes of the nature of fraud.
Same; Same; Same; Same; An upgrading is for the better condition and, definitely for the benefit of the
passenger.—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; thus, the difference in fare between the First
Class and Business Class at that time was $250. Needless to state, an upgrading is for the better
condition and, definitely, for the benefit of the passenger.

Same; Same; Same; Overbooking; It is clear from Sec. 3 of Economic Regulation No. 7 of the Civil
Aeronautics Board, as amended, that an overbooking that does not exceed ten percent is not considered
deliberate and therefore does not amount to bad faith.—We are not persuaded by the Vazquezes’
argument that the overbooking of the Business Class Section constituted bad faith on the part of Cathay.
Section 3 of the Economic Regulation No. 7 of the Civil Aeronautics Board, as amended, provides: Sec. 3.
Scope.—This regulation shall apply to every Philippine and foreign air carrier with respect to its
operation of flights or portions of flights originating from or terminating at, or serving a point within the
territory of the Republic of the Philippines insofar as it denies boarding to a passenger on a flight, or
portion of a flight inside or outside the Philippines, for which he holds confirmed reserved space.
Furthermore, this Regulation is designed to cover only honest mistakes on the part of the carriers and
excludes deliberate and willful acts of non-accommodation. Provided, however, that overbooking not
exceeding 10% of the seating capacity of the aircraft shall not be considered as a deliberate and willful
act of non-accommodation. It is clear from this section that an overbooking that does not exceed ten
percent is not considered deliberate and therefore does not amount to bad faith. Here, while there was
admittedly an overbooking of the Business Class, there was no evidence of overbooking of the plane
beyond ten percent, and no passenger was ever bumped off or was refused to board the aircraft.

Same; Same; Same; Damages; Requisites for Award of Moral Damages.—Moral damages include
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury. Although incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission.
Thus, 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.

Same; Same; Same; Same; 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

Same; Same; Same; Same; The amount of damages 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;
Passengers must not prey on international airlines for damages awards, like “trophies in a safari,” after
all neither the social standing nor prestige of the passenger should determine the extent to which he
would suffer because of a wrong done, since the dignity affronted in the individual is a quality inherent
in him and not conferred by these social indicators

8. Meralco vs. Ramoy, March 4, 2008

Civil Law; Negligence; As a public utility, MERALCO has the obligation to discharge its functions with
utmost care and diligence.—Article 1173 also provides that the fault or negligence of the obligor
consists in the omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the place. The Court emphasized
in Ridjo Tape & Chemical Corporation v. Court of Appeals, 286 SCRA 544 (1998), that “as a public utility,
MERALCO has the obligation to discharge its functions with utmost care and diligence.”

Same; Same; Actions of MERALCO cannot be considered wanton, fraudulent, reckless, oppressive or
malevolent; Exemplary damages should not be awarded.—The Court finds that MERALCO fell short of
exercising the due diligence required, but its actions cannot be considered wanton, fraudulent, reckless,
oppressive or malevolent. Records show that MERALCO did take some measures, i.e., coordinating with
NPC officials and conducting a joint survey of the subject area, to verify which electric meters should be
disconnected although these measures are not sufficient, considering the degree of diligence required
of it. Thus, in this case, exemplary damages should not be awarded.

Same; Same; Moral Damages; No other person could have proven such damages except the respondent
himself as they were extremely personal to him.—Leoncio Ramoy, the lone witness for respondents,
was the only one who testified regarding the effects on him of MERALCO’s electric service
disconnection. His co-respondents Matilde Ramoy, Rosemarie Ramoy, Ofelia Durian and Cyrene Panado
did not present any evidence of damages they suffered. It is a hornbook principle that damages may be
awarded only if proven.

Court held thus: In order that moral damages may be awarded, there must be pleading and proof of
moral suffering, mental anguish, fright and the like. While respondent alleged in his complaint that he
suffered mental anguish, serious anxiety, wounded feelings and moral shock, he failed to prove them
during the trial. Indeed, respondent should have taken the witness stand and should have testified on
the mental anguish, serious anxiety, wounded feelings and other emotional and mental suffering he
purportedly suffered to sustain his claim for moral damages. Mere allegations do not suffice; they must
be substantiated by clear and convincing proof. No other person could have proven such damages
except the respondent himself as they were extremely personal to him.

9. Areola vs. CA & Prudential Guarantee Insurance

Civil Law; Agency; Obligations of the Principal; A corporation such as respondent insurance company,
acts solely thru its employees. The latters’ acts are considered as its own for which it can be held to
account.—We uphold petitioner-insured’s submission. Malapit’s fraudulent act of misappropriating the
premiums paid by petitioner-insured is beyond doubt directly imputable to respondent insurance
company. A corporation, such as respondent insurance company, acts solely thru its employees. The
latters’ acts are considered as its own for which it can be held to account. The facts are clear as to the
relationship between private respondent insurance company and Malapit. As admitted by private
respondent insurance company in its answer, Malapit was the manager of its Baguio branch. It is beyond
doubt that he represented its interests and acted in its behalf.
Same; Same; Same; Malapit’s receipt of said premiums is receipt by private respondent insurance
company who, by provision of law, under Article 1910 of the Civil Code, is bound by the acts of its
agent.—His act of receiving the premiums collected is well within the province of his authority. Thus, his
receipt of said premiums is receipt by private respondent insurance company who, by provision of law,
particularly under Article 1910 of the Civil Code, is bound by the acts of its agent. x x x Malapit’s failure
to remit the premiums he received cannot constitute a defense for private respondent insurance
company; no exoneration from liability could result therefrom. The fact that private respondent
insurance company was itself defrauded due to the anomalies that took place in its Baguio branch office,
such as the non-accrual of said premiums to its account, does not free the same from its obligation to
petitioner Areola. As held in Prudential Bank v. Court of Appeals citing the ruling in McIntosh v. Dakota
Trust Co.: “A bank is liable for wrongful acts of its officers done in the interests of the bank or in the
course of dealings of the officers in their representative capacity but not for acts outside the scope of
their authority. A bank holding out its officers and agent as worthy of confidence will not be permitted
to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their
employment; nor will it be permitted to shirk its responsibility for such frauds, even though no benefit
may accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent third persons
where the representation is made in the course of its business by an agent acting within the general
scope of his authority even though, in the particular case, the agent is secretly abusing his authority and
attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate benefit.”

Same; Contracts; Reciprocal Obligations; Reciprocal obligations are those which arise from the same
cause and in which each party is both a debtor and creditor of the other, such that the obligation of one
is dependent upon the obligation of the other.—Consequently, respondent insurance company is liable
by way of damages for the fraudulent acts committed by Malapit that gave occasion to the erroneous
cancellation of subject insurance policy. Its earlier act of reinstating the insurance policy can not
obliterate the injury inflicted on petitioner-insured. Respondent company should be reminded that a
contract of insurance creates reciprocal obligations for both insurer and insured. Reciprocal obligations
are those which arise from the same cause and in which each party is both a debtor and a creditor of the
other, such that the obligation of one is dependent upon the obligation of the other.

Same; Agency; Obligations of the Principal; Under the second paragraph of Article 1191, the injured
party is given a choice between fulfillment or rescission of the obligation in case one of the obligors fails
to comply with what is incumbent upon him. However, said article entitles the injured party to payment
of damages, regardless of whether he demands fulfillment or rescission of the obligation.—Under the
circumstances of the instant case, the relationship as creditor and debtor between the parties arose
from a common cause: i.e., by reason of their agreement to enter into a contract of insurance under
whose terms, respondent insurance company promised to extend protection to petitioner-insured
against the risk insured for a consideration in the form of premiums to be paid by the latter. Under the
law governing reciprocal obligations, particularly the second paragraph of Article 1191, the injured
party, petitioner-insured in this case, is given a choice between fulfillment or rescission of the obligation
in case one of the obligors, such as respondent insurance company, fails to comply with what is
incumbent upon him. However, said article entitles the injured party to payment of damages, regardless
of whether he demands fulfillment or rescission of the obligation. Untenable then is respondent
insurance company’s argument, namely, that reinstatement being equivalent to fulfillment of its
obligation, divests petitioner-insured of a rightful claim for payment of damages. Such a claim finds no
support in our laws on obligations and contracts.

Same; Damages; The nature of damages to be awarded would be in the form of nominal damages where
a legal right is technically violated and must be vindicated. No actual or substantial damage or injury was
inflicted on petitioner Areola at the time the insurance policy was cancelled. Nominal damages are
“recoverable where a legal right is technically violated and must be vindicated against an invasion that
has produced no actual present loss of any kind, or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can be shown.”

10. Tanguiling vs. CA, January 2, 1997

Civil Law; Contracts; Interpretation; Where the terms of the instruments are clear and leave no doubt as
to their meaning, they should not be disturbed.—Notably, nowhere in either proposal is the installation
of a deep well mentioned, even remotely. Neither is there an itemization or description of the materials
to be used in constructing the deep well. There is absolutely no mention in the two (2) documents that a
deep well pump is a component of the proposed windmill system. The contract prices fixed in both
proposals cover only the features specifically described therein and no other. While the words “deep
well” and “deep well pump” are mentioned in both, these do not indicate that a deep well is part of the
windmill system. They merely describe the type of deep well pump for which the proposed windmill
would be suitable. As correctly pointed out by petitioner, the words “deep well” preceded by the
prepositions “for” and “suitable for” were meant only to convey the idea that the proposed windmill
would be appropriate for a deep well pump with a diameter of 2 to 3 inches. For if the real intent of
petitioner was to include a deep well in the agreement to construct a windmill, he would have used
instead the conjunctions “and” or “with.” Since the terms of the instruments are clear and leave no
doubt as to their meaning they should not be disturbed.

Same; Same; Same; The intention of the parties shall be accorded primordial consideration and, in case
of doubt, their contemporaneous and subsequent acts shall be principally considered

Same; Payments by a Third Person; Civil Code provisions on “payments made by a third person” do not
apply in the instant case as no creditor-debtor relationship has been established between the parties.—
Respondent cannot claim the benefit of the law concerning “payments made by a third person.” The
Civil Code provisions do not apply in the instant case because no creditor-debtor relationship between
petitioner and Guillermo Pili and/or SPGMI has been established regarding the construction of the deep
well. Specifically, witness Pili did not testify that he entered into a contract with petitioner for the
construction of respondent’s deep well. If SPGMI was really commissioned by petitioner to construct the
deep well, an agreement particularly to this effect should have been entered into.

Same; Civil Code; Obligations; Art. 1174; In order for a party to claim exemption from liability by reason
of fortuitous event should be the sole and proximate cause of the loss or destruction of the object of the
contract.—The second issue is not a novel one. In a long line of cases this Court has consistently held
that 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, four (4) requisites must concur: (a) the cause of the
breach of the obligation must be independent of the will of the debtor; (b) the event must be either
unforseeable or unavoidable; (c) the event must be such as 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.

Same; Same; Same; Art. 1167; If a person obliged to do something fails to do it, the same shall be
executed at his cost.—Petitioner’s argument that private respondent was already in default in the
payment of his outstanding balance of P15,000.00 and hence should bear his own loss, is untenable. In
reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. When the windmill failed to function
properly it became incumbent upon petitioner to institute the proper repairs in accordance with the
guaranty stated in the contract. Thus, respondent cannot be said to have incurred in delay; instead, it is
petitioner who should bear the expenses for the reconstruction of the windmill. Article 1167 of the Civil
Code is explicit on this point that if a person obliged to do something fails to do it, the same shall be
executed at his cost.

11. Nakpil & Sons vs. CA, October 3, 1986

Obligations and Contracts; Damages; Requisites for exemption from liability due to an “act of God.”—To
exempt the obligor from liability under Article 1174 of the Civil Code, for a breach of an obligation due
to an “act of God,’ the following must concur: (a) the cause of the breach of the obligation must be
independent of the will of the debtor; (b) the event must be either unforseeable or unavoidable; (c) the
event must be such as 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.

Same; Same; Having made substantial deviations from plans and specifications, having failed to observe
requisite workmanship in construction, and the architect made plans that contain defects and
inadequacies, both contractor and architect cannot escape liability for damages sustained by the
building that collapsed in the wake of an earthquake on Aug. 2, 1968.—The negligence of the defendant
and the third-party defendants petitioners was established beyond dispute both in the lower court and
in the Intermediate Appellate Court. Defendant United Construction Co., Inc. was found to have made
substantial deviations from the plans and specifications, and to have failed to observe the requisite
workmanship in the construction as well as to exercise the requisite degree of supervision; while the
third-party defendants were found to have inadequacies or defects in the plans and specifications
prepared by them. As correctly assessed by both courts, the defects in the construction and in the plans
and specifications were the proximate causes that rendered the PBA building unable to withstand the
earthquake of August 2, 1968. For this reason the defendant and third-party defendants cannot claim
exemption from liability.

Same; Same; The lower courts found, among others, that spirals in column A5, ground floor were cut.—
The cutting of the spirals in column A5, ground floor is the subject of great contention between the
parties and deserves special consideration. The proper placing of the main reinforcements and spirals in
column A5, ground floor, is the responsibility of the general contractor which is the UCCI.

Same; Same; One who creates a dangerous condition cannot escape liability although an act of God may
have intervened.—Relative thereto, the ruling of the Supreme Court in Tucker v. Milan (49 O.G. 4379,
4380) which may be in point in this case, reads: “One who negligently creates a dangerous condition
cannot escape liability for the natural and probable consequences thereof, although the act of a third
person, or an act of God for which he is not responsible, intervenes to precipitate the loss.” As already
discussed, the destruction was not purely an act of God. Truth to tell hundreds of ancient buildings in
the vicinity were hardly affected by the earthquake. Only one thing spells out the fatal difference; gross
negligence and evident bad faith, without which the damage would not have occurred.

Same: Same; Liability of architect and contractor for collapse of building is solidary.
12. Republic vs. Luzon Stevedoring 21 SCRA 279

Civil law; Damages; Presumption of negligence; Case at bar—Considering that the Nagtahan bridge was
an immovable and stationary object and uncontrovertedly provided with adequate openings for the
passage of water craft, including barges like those of appellant's, it is undeniable that the unusual event
that the barge, exclusively controlled by appellant, rammed the bridge supports raises a presumption of
negligence on the part of appellant or its employees manning the barge or the tugs that towed it. In the
ordinary course of events, such a thing does not happen if proper care is used. In Anglo American
Jurisprudence, the inference arises by what is known as the “res ipsa loquitur” rule.

Same; Meaning of “caso fortuito” or “force majeure”. —Caso fortuito or force majeure (which in law are
identical in so far as they exempt an obligor from liability) by definition are extra-ordinary events not
foreseeable or avoidable, “events that could not be foreseen, or which, though foreseen, were
inevitable” (Art. 1174, Civil Code). It is, therefore, not enough that the event could not have been
foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid.
The mere difficulty to foresee the happening is not impossibility to foresee the same: “un hecho no
constituye caso fortuito por la sola circunstancia de que su existencia haga mas dificil o mas onerosa la
accion diligente del presento ofensor.”

13. Far East Bank & Trust Co. vs. CA

Civil Law; Damages; In culpa contractual, moral damages may be recovered where the defendant is
shown to have acted in bad faith or with malice in the breach of the contract.—In culpa contractual,
moral damages may be recovered where the defendant is shown to have acted in bad faith or with
malice in the breach of the contract. Bad faith, in this context, includes gross, but not simple, negligence.
Exceptionally, in a contract of carriage, moral damages are also allowed in case of death of a passenger
attributable to the fault (which is presumed) of the common carrier.

Same; Same; Malice or bad faith implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity.—Malice or bad faith implies a conscious and intentional design to
do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of
negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive
design or ill will.

Same; Same; Application of Article 21 of the Code can be warranted only when the defendant's
disregard of his contractual obligation is so deliberate as to appropriate a degree of misconduct certainly
no less worse than fraud or bad faith.—Article 21 of the Code, it should be observed, contemplates a
conscious act to cause harm. Thus, even if we are to assume that the provision could properly relate to a
breach of contract, its application can be warranted only when the defendant's disregard of his
contractual obligation is so deliberate as to approximate a degree of misconduct certainly no less worse
than fraud or bad faith. Most importantly, Article 21 is a mere declaration of a general principle in
human relations that clearly must, in any case, give way to the specific provision of Article 2220 of the
Civil Code authorizing the grant of moral damages in culpa contractual solely when the breach is due to
fraud or bad faith.
Same; Same; A quasi-delict can be the cause for breaching a contract that might thereby permit the
application of applicable principles on tort even where there is a pre-existing contract between the
plaintiff and the defendant.—The Court has not in the process overlooked another rule that a quasi-
delict can be the cause for breaching a contract that might thereby permit the application of applicable
principles on tort even where there is a pre-existing contract between the plaintiff and the defendant
(Phil. Airlines vs. Court of Appeals, 106 SCRA 143; Singson vs. Bank of Phil Islands, 23 SCRA 1117; and Air
France vs. Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents'
case for it can aptly govern only where the act or omission complained of would constitute an
actionable tort independently of the contract. The test (whether a quasi-delict can be deemed to
underlie the breach of a contract) can be stated thusly: Where, without a pre-existing contract between
two parties, an act or omission can nonetheless amount to an actionable tort by itself, the fact that the
parties are contractually bound is no bar to the application of quasi-delict provisions to the case. Here,
private respondents' damage claim is predicated solely on their contractual relationship; without such
agreement, the act or omission complained of cannot by itself be held to stand as a separate cause of
action or as an independent actionable tort.

Same; Same; Court finds the award of moral damages to be inordinate and substantially devoid of legal
basis.—The Court finds, therefore, the award of moral damages made by the court a quo, affirmed by
the appellate court, to be inordinate and substantially devoid of legal basis.

14. Salugada vs. FEU April 30, 2008

Colleges and Universities; Obligations and Contracts; Where a student is enrolled in an educational
institution, there is created a contractual obligation between the two parties—the student is obliged to
comply with the rules and regulations of the school while the latter, as a learning institution, is
mandated to impart knowledge and equip its students with the necessary skills to pursue higher
education or a profession, as well as to ensure and take adequate steps to maintain peace and order
within the campus.—It is undisputed that petitioner was enrolled as a sophomore law student in
respondent FEU. As such, there was created a contractual obligation between the two parties. On
petitioner’s part, he was obliged to comply with the rules and regulations of the school. On the other
hand, respondent FEU, as a learning institution is mandated to impart knowledge and equip its students
with the necessary skills to pursue higher education or a profession. At the same time, it is obliged to
ensure and take adequate steps to maintain peace and order within the campus. It is settled that in
culpa contractual, the mere proof of the existence of the contract and the failure of its compliance
justify, prima facie, a corresponding right of relief. In the instant case, we find that, when petitioner was
shot inside the campus by no less the security guard who was hired to maintain peace and secure the
premises, there is a prima facie showing that respondents failed to comply with its obligation to provide
a safe and secure environment to its students.

Same; Same; Security Guards; A learning institution should not be allowed to completely relinquish or
abdicate security matters in its premises to the security agency it hired—to do so would result to
contracting away its inherent obligation to ensure a safe learning environment for its students.—
Respondents also failed to show that they undertook steps to ascertain and confirm that the security
guards assigned to them actually possess the qualifications required in the Security Service Agreement.
It was not proven that they examined the clearances, psychiatric test results, 201 files, and other vital
documents enumerated in its contract with Galaxy. Total reliance on the security agency about these
matters or failure to check the papers stating the qualifications of the guards is negligence on the part of
respondents. A learning institution should not be allowed to completely relinquish or abdicate security
matters in its premises to the security agency it hired. To do so would result to contracting away its
inherent obligation to ensure a safe learning environment for its students.

Same; Same; Force Majeure; An act of God cannot be invoked to protect a person who has failed to take
steps to forestall the possible adverse consequences of such a loss.—Respondents’ defense of force
majeure must fail. In order for force majeure to be considered, respondents must show that no
negligence or misconduct was committed that may have occasioned the loss. An act of God cannot be
invoked to protect a person who has failed to take steps to forestall the possible adverse consequences
of such a loss. One’s negligence may have concurred with an act of God in producing damage and injury
to another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a
fortuitous event would not exempt one from liability. When the effect is found to be partly the result of
a person’s participation—whether by active intervention, neglect or failure to act—the whole
occurrence is humanized and removed from the rules applicable to acts of God.

Same; Same; Negligence; For breach of contract due to negligence in providing a safe learning
environment, an educational institution is liable to petitioner for damages.—Article 1170 of the Civil
Code provides that those who are negligent in the performance of their obligations are liable for
damages. Accordingly, for breach of contract due to negligence in providing a safe learning
environment, respondent FEU is liable to petitioner for damages. It is essential in the award of damages
that the claimant must have satisfactorily proven during the trial the existence of the factual basis of the
damages and its causal connection to defendant’s acts. In the instant case, it was established that
petitioner spent P35,298.25 for his hospitalization and other medical expenses. While the trial court
correctly imposed interest on said amount, however, the case at bar involves an obligation arising from
a contract and not a loan or forbearance of money. As such, the proper rate of legal interest is six
percent (6%) per annum of the amount demanded. Such interest shall continue to run from the filing of
the complaint until the finality of this Decision. After this Decision becomes final and executory, the
applicable rate shall be twelve percent (12%) per annum until its satisfaction.

Same; Same; Same; Damages; Trial courts must guard against the award of exorbitant damages; they
should exercise balanced, restrained and measured objectivity to avoid suspicion that it was due to
passion, prejudice, or corruption on the part of the trial court. We deem it just and reasonable under the
circumstances to award petitioner moral damages in the amount of P100,000.00.

Same; Same; Same; Security Guards; For acts of negligence and for having supplied an educational
institution with an unqualified security guard, which resulted in the latter’s breach of obligation to its
student, it is proper to hold the security agency liable to the client for such damages equivalent to the
amounts awarded to the student.

15. Fil Estate Properties Inc. vs. Sps. Ronquillo G.R. No. 185798, January 13, 2014

Civil Law; Obligations; Rescission; The non-performance of petitioners’ obligation entitles respondents
to rescission under Article 1191 of the New Civil Code.—Indeed, the non-performance of petitioners’
obligation entitles respondents to rescission under Article 1191 of the New Civil Code which states:
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him. The injured party may choose between the
fulfillment and the rescission of the obligation, with payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should become impossible. More in
point is Section 23 of Presidential Decree No. 957, the rule governing the sale of condominiums, which
provides: Section 23. Non-Forfeiture of Payments.—No installment payment made by a buyer in a
subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of
the owner or developer when the buyer, after due notice to the owner or developer, desists from
further payment due to the failure of the owner or developer to develop the subdivision or
condominium project according to the approved plans and within the time limit for complying with the
same. Such buyer may, at his option, be reimbursed the total amount paid including amortization
interests but excluding delinquency interests, with interest thereon at the legal rate.

Same; Same; Same; Respondents are entitled to rescind the contract and demand reimbursement for
the payments they had made to petitioners.—Respondents are entitled to rescind the contract and
demand reimbursement for the payments they had made to petitioners. Notably, the issues had already
been settled by the Court in the case of Fil-Estate Properties, Inc. v. Spouses Go, 530 SCRA 621 (2007),
promulgated on 17 August 2007, where the Court stated that the Asian financial crisis is not an instance
of caso fortuito. Bearing the same factual milieu as the instant case, G.R. No. 165164 involves the same
company, Fil-Estate, albeit about a different condominium property. The company likewise reneged on
its obligation to respondents therein by failing to develop the condominium project despite substantial
payment of the contract price. Fil-Estate advanced the same argument that the 1997 Asian financial
crisis is a fortuitous event which justifies the delay of the construction project. First off, the Court
classified the issue as a question of fact which may not be raised in a petition for review considering that
there was no variance in the factual findings of the HLURB, the Office of the President and the Court of
Appeals. Second, the Court cited the previous rulings of Asian Construction and Development
Corporation v. Philippine Com-mercial International Bank, 488 SCRA 192 (2006), and Mon-dragon
Leisure and Resorts Corporation v. Court of Appeals, 460 SCRA 279 (2005), holding that the 1997 Asian
financial crisis did not constitute a valid justification to renege on obligations. The Court expounded:
Also, we cannot generalize that the Asian financial crisis in 1997 was unforeseeable and beyond the
control of a business corporation. It is unfortunate that petitioner apparently met with considerable
difficulty e.g., increase cost of materials and labor, even before the scheduled commencement of its real
estate project as early as 1995. However, a real estate enterprise engaged in the pre-selling of
condominium units is concededly a master in projections on commodities and currency movements and
business risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an
everyday occurrence, and fluctuations in currency exchange rates happen everyday, thus, not an
instance of caso fortuito.

Civil Law; Breach of Contracts; Damages; We sustain the award of moral damages. In order that moral
damages may be awarded in breach of contract cases, the defendant must have acted in bad faith, must
be found guilty of gross negligence amounting to bad faith, or must have acted in wanton disregard of
contractual obligations. The Arbiter found petitioners to have acted in bad faith when they breached
their contract, when they failed to address respondents’ grievances and when they adamantly refused
to refund respondents’ payment.

16. Metro Concast Steel Corp. vs. Allied Bank Corp. G.R. No. 177921, Dec. 13, 2013

Civil Law; Obligations; Extinguishment of Obligations; Article 1231 of the Civil Code states that
obligations are extinguished either by payment or performance, the loss of the thing due, the
condonation or remission of the debt, the confusion or merger of the rights of creditor and debtor,
compensation or novation.—Article 1231 of the Civil Code states that obligations are extinguished either
by payment or performance, the loss of the thing due, the condonation or remission of the debt, the
confusion or merger of the rights of creditor and debtor, compensation or novation.
Same; Same; Same; Fortuitous Events; Words and Phrases; Fortuitous events by definition are
extraordinary events not foreseeable or avoidable.—Anent petitioners’ reliance on force majeure,
suffice it to state that Peakstar’s breach of its obligations to Metro Concast arising from the MoA cannot
be classified as a fortuitous event under jurisprudential formulation. As discussed in Sicam v. Jorge, 529
SCRA 443 (2007): Fortuitous events by definition are extraordinary events not foreseeable or avoidable.
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 mere difficulty to foresee the
happening is not impossibility to foresee the same. To constitute a fortuitous event, the following
elements must concur: (a) the cause of the unforeseen and unexpected occurrence or of the failure of
the debtor to comply with obligations must be independent of human will; (b) it must be impossible to
foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be impossible to
avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a
normal manner; and, (d) the obligor must be free from any participation in the aggravation of the injury
or loss.

17. Sene vs. Franco, 24 Phil 309

1.MORTGAGE REDEEMABLE AT THE WILL OF THE DEBTOR.—A mortgage was executed on the 13th day
of October, 1884, to secure the payment of the sum of P4,876.01, the mortgagor agreeing ,to pay the
sum "little by little." Held: That the obligation was payable at the will of the debtor.

2.ID.; OBLIGATION NOT DUE UNTIL ACTION BROUGHT AND DATE FIXED BY COURT.—Where it is
apparent from the nature of the obligation and the circumstances of the case that there was an
intention to grant to the debtor a time for payment and such time has been left to the will of the debtor,
the obligation is not due and payable until an action has been commenced by the creditor against the
debtor for the purpose of having the court fix the date on and after which the obligation is payable and,
in pursuance of said action, such date has been fixed.

3.ID.; ID.; PREMATURE ACTION; DISMISSAL.—An action to recover upon such an obligation, before a
time for payment has been set by the court pursuant to an action for the purpose, is premature and
must be dismissed upon the proper representations.

4.ID.; ID.; STATUTE OF LIMITATIONS.—An action for the purpose of having the court set the date of
maturity of an obligation of the character above described must be brought within ten years from the
time when the Code of Civil Procedure went into effect under section 38 of said Code.

18. Jimmy Co vs. CA, Broadway Motors Corp, June 22, 1998

Civil Law; Damages; Negligence; Carnapping per se cannot be considered as a fortuitous event.—It is 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.

Same; Same; Same; 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—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 establish the
carnapping.
Same; Same; Same; Pursuant to Articles 1174 and 1262 of the New Civil Code, liability attaches even if
the loss was due to a fortuitous event if “the nature of the obligation requires the assumption of risk.”—
It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil Code, liability
attaches even if the loss was due to a fortuitous event if “the nature of the obligation requires the
assumption of risk.” Carnapping is a normal business risk for those engaged in the repair of motor
vehicles. For just as the owner is exposed to that risk so is the repair shop since the car was entrusted to
it. That is why, repair shops are required to first register with the Department of Trade and Industry
(DTI) and to secure an insurance policy for the “shop covering the property entrusted by its customer for
repair, service or maintenance” as a pre-requisite for such registration/accreditation. Violation of this
statutory duty constitutes negligence per se.

19. Sicam vs. Jorge 529 SCRA 443

Obligations and Contracts; Fortuitous Events; Elements; Words and Phrases; Fortuitous events by
definition are extraordinary events not foreseeable or avoidable—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.—Fortuitous events by definition are extraordinary events not
foreseeable or avoidable. 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 mere
difficulty to foresee the happening is not impossibility to foresee the same. To constitute a fortuitous
event, the following elements must concur: (a) the cause of the unforeseen and unexpected occurrence
or of the failure of the debtor to comply with obligations must be independent of human will; (b) it must
be impossible to foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill
obligations in a normal manner; and, (d) the obligor must be free from any participation in the
aggravation of the injury or loss.

Same; Same; In order for a fortuitous event to exempt one from liability, it is necessary that one has
committed no negligence or misconduct that may have occasioned the loss; When the effect is found to
be partly the result of a person’s participation—whether by active intervention, neglect or failure to
act—the whole occurrence is humanized and removed from the rules applicable to acts of God.—The
burden of proving that the loss was due to a fortuitous event rests on him who invokes it. And, in order
for a fortuitous event to exempt one from liability, it is necessary that one has committed no negligence
or misconduct that may have occasioned the loss. It has been held that an act of God cannot be invoked
to protect a person who has failed to take steps to forestall the possible adverse consequences of such a
loss. One’s negligence may have concurred with an act of God in producing damage and injury to
another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a
fortuitous event would not exempt one from liability. When the effect is found to be partly the result of
a person’s partici pation—whether by active intervention, neglect or failure to act—the whole
occurrence is humanized and removed from the rules applicable to acts of God.

Same; Same; Pawnshops; Robbery; Robbery per se, just like carnapping, is not a fortuitous event;
Merely presenting the police report on the robbery committed based on the report of the employees of
the pawnshop owner is not sufficient to establish robbery.—Robbery per se, just like carnapping, is not a
fortuitous event. It does not foreclose the possibility of negligence on the part of herein petitioners. In
Co v. Court of Appeals, 291 SCRA 111 (1998), the Court held: It is 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. 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—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 establish 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.
Just like in Co, petitioners merely presented the police report of the Parañaque Police Station on the
robbery committed based on the report of petitioners’ employees which is not sufficient to establish
robbery. Such report also does not prove that petitioners were not at fault.

Same; Same; Same; Article 2123 of the Civil Code provides that with regard to pawnshops and other
establishments which are engaged in making loans secured by pledges, the special laws and regulations
concerning them shall be observed, and subsidiarily, the provisions on pledge, mortgage and antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall take
care of the thing pledged with the diligence of a good father of a family. This means that petitioners
must take care of the pawns the way a prudent person would as to his own property.

Same; Same; Same; Negligence; Words and Phrases; Negligence is the omission to do something which a
reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs,
would do, or the doing of something which a prudent and reasonable man would not do.—We
expounded in Cruz v. Gangan, 211 SCRA 517 (1992).It is want of care required by the circumstances. A
review of the records clearly shows that petitioners failed to exercise reasonable care and caution that
an ordinarily prudent person would have used in the same situation. Petitioners were guilty of
negligence in the operation of their pawnshop business.

Same; Same; Same; Same; The Central Bank considered it not feasible to require insurance of pawned
articles against burglary—there was no statutory duty imposed on the pawnshop owner to insure the
pawned jewelry.

Same; Same; Same; Same; The diligence with which the law requires the individual at all times to govern
his conduct varies with the nature of the situation in which he is placed and the importance of the act
which he is to perform.—The preponderance of evidence shows that petitioners failed to exercise the
diligence required of them under the Civil Code. Thus, the cases of Austria v. Court of Appeals, 39 SCRA
527 (1971), Hernandez v. Chairman, Commission on Audit, 179 SCRA 39 (1989), and Cruz v. Gangan, 211
SCRA 517 (1992), cited by petitioners in their pleadings, where the victims of robbery were exonerated
from liability, find no application to the present case.
20. Austria vs. CA

Words and phrases; Requisites of fortuitous event.—It is recognized in this jurisdiction that to constitute
a caso fortuito that would exempt a person from responsibility, it is necessary that (1) the event must be
independent of the human will (or rather, of the debtor's or obligor's); (2) the occurrence must render it
impossible for the debtor to fulfill the obligation in a normal manner; and that (3) the obligor must be
free of participation in, or aggravation of, the injury to the creditor (Reyes & Puno, Outline of Philippine
Civil Law, Vol. IV, pages 25-26, citing Lasam v. Smith, 45 Phil. 657, 661). A fortuitous event, therefore,
can be produced by nature, e.g., earthquakes. Austria vs. Court of Appeals, 39 SCRA 527, No. L-29640
June 10, 1971 storms, floods, etc., or by the act of man, such as war, attack by bandits, robbery,
(Tolentino, Civil Code of the Philippines, Vol. IV, 1962 ed., page 117, citing 3 Salvat 83-84), provided that
the event has all the characteristics ennumerated above.

Agency; Receipt of thing for sale on commission basis; Robbery as defense against civil action for loss of
thing.—Where MA received from GA a pendant with diamonds to be sold on commission basis, which
MA later on failed to return because of a robbery committed upon her, it is not necessary that there be
a conviction for robbery for MA to be relieved from civil liability of returning the pendant under Art,
1174, New Civil Code, as it would only be sufficient to establish that the unforseeable event, the robbery
in this case, did take place without any concurrent fault on the debtor's part, and this can be done by
preponderant evidence. To require, moreover. prior conviction in order to establish robbery as a fact,
would demand proof beyond reasonable doubt to prove a fact in a civil case.

21. Hernandez vs. Chairman, COA

Same; Same; Same; Fortuitous Event; Petitioner should not be blamed for the lost of his co-employees
salaries entrusted upon him.—As for Hernandez’s choice between Marilao, Bulacan, and Ternate,
Cavite, one could easily agree that the former was the safer destination, being nearer, and in view of the
comparative hazards in the trips to the two places. It is true that the petitioner miscalculated, but the
Court feels he should not be blamed for that. The decision he made seemed logical at the time and was
one that could be expected of a reasonable and prudent person. And if, as it happened, the two robbers
attacked him in broad daylight in the jeep while it was on a busy highway, and in the presence of other
passengers, it cannot be said that all this was the result of his imprudence and negligence. This was
undoubtedly a fortuitous event covered by the said provisions, something that could not have been
reasonably foreseen although it could have happened, and did.

Same; Same; Same; Same; Petitioner is entitled to be relieved from accountability for the money forcibly
taken from him.—We find, in sum, that under the circumstances as above narrated, the petitioner is
entitled to be relieved from accountability for the money forcibly taken from him in the afternoon of
July 1, 1983. To impose such liability upon him would be to read the law too sternly when it should be
softened by the proven facts. Hernandez vs. Chairman, Commission on Audit, 179 SCRA 39, G.R. No.
71871 November 6, 1989
22. Yobido vs. CA Oct. 17, 1997

Common Carriers; When a passenger boards a common carrier, he takes the risks incidental to the mode
of travel he has taken—after all, a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without injury.—As a rule, when a passenger
boards a common carrier, he takes the risks incidental to the mode of travel he has taken. After all, a
carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events to
carry them safely and without injury. However, when a passengers is injured or dies while travelling, the
law presumes that the common carrier is negligent. Thus, the Civil Code provides: “Art. 1756. In case of
death or injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733
and 1755.”

Same; Fortuitous Events; Words and Phrases; Characteristics of a Fortuitous Event.—In view of the
foregoing, petitioners’ contention that they should be exempt from liability because the tire blowout
was no more than a fortuitous event that could not have been foreseen, must fail. A fortuitous event is
possessed of the following characteristics: (a) the cause of the unforeseen and unexpected occurrence,
or the failure of the debtor to comply with his obligations, must be independent of human will; (b) it
must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it
must be impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner; and (d) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor. As Article 1174 provides, no person shall be
responsible for a fortuitous event which could not be foreseen, or which, though foreseen, was
inevitable. In other words, there must be an entire exclusion of human agency from the cause of injury
or loss.

Same; Same; Under the circumstances of the present case, the explosion of the new tire may not be
considered a fortuitous event.— There are human factors involved in the situation. The fact that the tire
was new did not imply that it was entirely free from manufacturing defects or that it was properly
mounted on the vehicle. Neither may the fact that the tire bought and used in the vehicle is of a brand
name noted for quality, resulting in the conclusion that it could not explode within five days’ use. Be
that as it may, it is settled that an accident caused either by defects in the automobile or through the
negligence of its driver is not a caso fortuito that would exempt the carrier from liability for damages.

Same; Same; A common carrier may not be absolved from liability in case of force majeure or fortuitous
event alone—the common carrier must still prove that it was not negligent in causing the death or injury
resulting from an accident.— This Court has had occasion to state: “While it may be true that the tire
that blew-up was still good because the grooves of the tire were still visible, this fact alone does not
make the explosion of the tire a fortuitous event. No evidence was presented to show that the accident
was due to adverse road conditions or that precautions were taken by the jeepney driver to compensate
for any conditions liable to cause accidents. The sudden blowing-up, therefore, could have been caused
by too much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and
speeding at the time of the accident.”

Same; Same; Damages; Where a common carrier failed to exercise the extraordinary diligence required
of it, which resulted in the death of a passenger, it is deemed to have acted recklessly, and the heirs of
the passenger shall be entitled to exemplary damages.—Moral damages are generally not recoverable in
culpa contractual except when bad faith had been proven. However, the same damages may be
recovered when breach of contract of carriage results in the death of a passenger, as in this case.
Exemplary damages, awarded by way of example or correction for the public good when moral damages
are awarded, may likewise be recovered in contractual obligations if the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner. Because petitioners failed to exercise the
extraordinary diligence required of a common carrier, which resulted in the death of Tito Tumboy, it is
deemed to have acted recklessly. As such, private respondents shall be entitled to exemplary damages.

23. Juntilla vs. Fontanar, May 31, 1985

Civil Law; Contracts; Common Carriers; Breach of Contract; Fortuitous Event; Tire blow-out of a jeep, not
a fortuitous event, where there exists specific acts of negligence by the carrier consisting of the fact that
the jeepney was overloaded and speeding at the time of the accident.—In the case at bar, there are
specific acts of negligence on the part of the respondents. The records show that the passenger jeepney
turned turtle and jumped into a ditch immediately after its right rear tire exploded. The evidence shows
that the passenger jeepney was running at a very fast speed before the accident. We agree with the
observation of the petitioner that a public utility jeep running at a regular and safe speed will not jump
into a ditch when its right rear tire blows up. There is also evidence to show that the passenger jeepney
was overloaded at the time of the accident. The petitioner stated that there were three (3) passengers
in the front seat and fourteen (14) passengers in the rear. While it may be true that the tire that blew-up
was still good because the grooves of the tire were still visible, this fact alone does not make the
explosion of the tire a fortuitous event. No evidence was presented to show that the accident was due
to adverse road conditions or that precautions were taken by the jeepney driver to compensate for any
conditions liable to cause accidents. The sudden blowing-up, therefore, could have been caused by too
much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and
speeding at the time of the accident.

Same; Same; Same; Same; Characteristics of a fortuitous event.—In Lasam v. Smith (45 Phil. 657), we
laid down the following essential characteristics of caso fortuito: “x x x ‘In a legal sense and,
consequently, also in relation to contracts, a caso fortuito presents the following essential
characteristics: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible
to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to
avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner. And (4) the obligor (debtor) must be free from any participation in the aggravation of
the injury resulting to the creditor.’ (5 Encyclopedia Juridica Española, 309.)”

Same; Same; Same; Same; Accident not caused by a fortuitous event, 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 their 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.

Same; Same; Same; Same; Legal Liability of a common carrier under the contract of carriage.—It is
sufficient to reiterate that the source of a common carrier’s legal liability is the contract of carriage, and
by entering into the said contract, it binds itself to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of a very cautious person, with a due regard for all the
circumstances. The records show that this obligation was not met by the respondents.
24. Perla Compania de Seguros vs. Sarangay, 474 SCRA 191

Civil Law; Quasi-Delicts; Torts; Res Ipsa Loquitur; Words and Phrases; Res ipsa loquitur is a Latin phrase
which literally means “the thing or the transaction speaks for itself.”—Res ipsa loquitur is a Latin phrase
which literally means “the thing or the transaction speaks for itself.” It relates to the fact of an injury
that sets out an inference to the cause thereof or establishes the plaintiff’s prima facie case. The
doctrine rests on inference and not on presumption. The facts of the occurrence warrant the
supposition of negligence and they furnish circumstantial evidence of negligence when direct evidence
is lacking. The doctrine is based on the theory that the defendant either knows the cause of the accident
or has the best opportunity of ascertaining it and the plaintiff, having no knowledge thereof, is
compelled to allege negligence in general terms. In such instance, the plaintiff relies on proof of the
happening of the accident alone to establish negligence.

Same; Same; Same; Test to determine the existence of negligence.— The test to determine the
existence of negligence in a particular case may be stated as follows: did the defendant in committing
the alleged negligent act, use reasonable care and caution which an ordinarily prudent person in the
same situation would have employed? If not, then he is guilty of negligence.

Same; Same; Same; Fortuitous Event; Exempting Circumstances; In a vehicular accident, a mechanical
defect will not release the defendant from liability if it is shown that the accident could have been
prevented had he properly maintained and taken good care of the vehicle.—The exempting
circumstance of caso fortuito may be availed only when: (a) the cause of the unforeseen and
unexpected occurrence was independent of the human will; (b) it was impossible to foresee the event
which constituted the caso fortuito or, if it could be foreseen, it was impossible to avoid; (c) the
occurrence must be such as to render it impossible to perform an obligation in a normal manner and (d)
the person tasked to perform the obligation must not have participated in any course of conduct that
aggravated the accident. In fine, human agency must be entirely excluded as the proximate cause or
contributory cause of the injury or loss. In a vehicular accident, for example, a mechanical defect will not
release the defendant from liability if it is shown that the accident could have been prevented had he
properly maintained and taken good care of the vehicle.

Same; Same; Same; Vicarious Liability; In the supervision of employees, the employer must formulate
standard operating procedures, monitor their implementation and impose disciplinary measures for the
breach thereof.— To fend off vicarious liability, employers must submit concrete proof, including
documentary evidence, that they complied with everything that was incumbent on them. Here,
petitioner-corporation’s evidence hardly included any rule or regulation that Pascual should have
observed in performing his functions. It also did not have any guidelines for the maintenance and
upkeep of company property like the vehicle that caught fire. Petitioner-corporation did not require
periodic reports on or inventories of its properties either. Based on these circumstances, petitioner-
corporation clearly did not exert effort to be apprised of the condition of Pascual’s car or its
serviceability.
25. Fil-Estate Properties vs. Go, 530 SCRA 621

Obligations and Contracts; Fortuitous Events; Appeals; The question of whether or not an event is
fortuitous is a question of fact.—The question of whether or not an event is fortuitous is a question of
fact. As a general rule, questions of fact may not be raised in a petition for review for as long as there is
no variance between the findings of the lower court and the appellate court, as in this case where the
HLURB, the Office of the President, and the Court of Appeals were agreed on the fact.

Same; Same; The 1997 financial crisis that ensued in Asia did not constitute a valid justification to
renege on obligations—the Asian financial crisis in 1997 is not among the fortuitous events
contemplated under Article 1174 of the Civil Code. We emphatically stressed the same view in
Mondragon Leisure and Resorts Corporation v. Court of Appeals, 460 SCRA 279 (2005), that the Asian
financial crisis in 1997 is not among the fortuitous events contemplated under Article 1174 of the Civil
Code.

Same; Same; Subdivisions and Condominiums; A real estate enterprise engaged in the pre-selling of
condominium units is conced-edly a master in projections on commodities and currency movements
and business risks; The fluctuating movement of the Philippine peso in the foreign exchange market is
an everyday occurrence, and fluctuations in currency exchange rates happen everyday, thus, not an
instance of caso fortuito.