Oblicon Digests 1

1) BAYLA V. SILANG TRAFFIC CO. 73 PHIL 557

Group 1 (Pelayo, Prieto, Da Silva, Hernandez, Talatala)

G.R. Nos. L-48195

May 1, 1942

SOFRONIO T. BAYLA, ET AL., petitioners, vs.SILANG TRAFFIC CO., INC., respondent.

Facts:

The case is about recovery by petitioners of a certain sum of money which they had paid severally to respondent corporation on account of shares of stock they individually agreed to take and pay for a certain specified terms and conditions.

Respondent, Silang Traffic Co., Inc., entered into an agreement for the sale on installment of its shares of stock with various individuals, including the petitioners Sofrio Bayla. After the latter had paid several installments for the purchase price of said shares of stock, the petitioners defaulted in the payment of the subsequent installments. Thus, the board of directors passed a resolution authorizing for the refund of the amounts paid and the reversion of the shares of stock to the corporation. Despite the said board resolution, the amounts paid by petitioners were not returned to them since the board resolution was revoked and cancelled by a subsequent resolution. Thus, petitioners instituted an action in the Court of First Instance of Cavite to recover the sums of money paid. The respondent contends that the resolution does not apply to petitioners as at the time the resolution was passed, the shares had already automatically been reverted back to the corporation, and that the resolution was no longer effective as it was cancelled by a subsequent resolution passed by the Board. The Court of First Instance declared that the shares of stock had already been forfeited and absolved the respondent from the complaint.

Issues:

Whether or not, the failure to pay any installment of the purchase price of the shares of stock would result in its automatic forfeiture in favor of the corporation.

Held:

The contract herein involved is one of sale and not of subscription as it is an independent agreement between the individual purchaser, which is the petitioners, and respondent corporation to buy the shares of stock at a stipulated price. It does not involve a mutual agreement of the subscribers to take and pay for the stock of the corporation. Whether a particular contract is a purchase or a subscription of shares of stock is a matter of construction and depends upon its terms and the intention of the parties. It has been held that a subscription to stock in an existing corporation is, as between the subscriber and the corporation, simply a contract of purchase and sale.

As to forfeiture, the contract did not expressly provide that the failure of the purchaser to pay any installment would give rise to the forfeiture and cancellation without the necessity of any demand from the seller. However, being a contract of sale, it may be rescinded by mutual agreement of the parties. In the subsequent board resolution, it was stated that the contracts were rescinded for the good of the corporation and in order to terminate a pending civil case involving the validity of such sales of the shares. To such rescission, petitioners apparently agreed, as shown by their demand for the refund of the amount they had already paid to the corporation. Moreover, provisions in the contract regarding interest on deferred payments would not have been inserted if it had been the intention of the parties to provide for automatic forfeiture and cancelation of the contract. The Civil code states that persons obliged to deliver or do something are not in default until the moment the creditor demands of them judicially or extra judicially the fulfillment of their obligation, unless (1) the obligation or the law expressly provides that demand shall not be necessary in order that default may arise, (2) by reason of the nature and circumstances of the obligation it shall appear that the designation of the time at which that thing was to be delivered or the service rendered was the principal inducement to the creation of the obligation. Wherefore, the judgment of the court of appeals is hereby reversed and another judgment will be entered against the defendant Silang Traffic Co., Inc., ordering it to pay to the petitioners Sofronio T. Bayla, Venancio Toledo, Josefa Naval, and Paz Toledo.

2) PICART V. SMITH, 37 PHIL 809

PICART VS SMITH

GR # L-12219

Justice Street

FACTS:

On December 12, 1912, Amado Picart was riding his pony over the Carlatan Bridge at San Fernando, La Union. Halfway across the bridge, Frank Smith approached in an automobile from the opposite direction and gave a honk when he saw Picart riding his pony was in the middle of the road. Picart confused on how to react to the speed of Smiths approach, veered instead on the wrong side of the road. Instead of slowing down or halting, Smith maintained his speed. The approach of the automobile startled the animal, thus leading to an accident. Picart received contusions and temporary unconsciousness and required medical attention for several days. The pony sustained injuries and died soon after. Picart filed an action to recover damages caused by the automobile driven by Smith. The Court of First Instance absolved Smith from civil liabilities, to which Picart appeals.

ISSUE:

Whether or not Smith was guilty of negligence in his method of driving his automobile as to give rise to a civil obligation.

HELD:

Yes. The court finds Smith liable. Control of the situation is within Smith. The test to determine negligence is to see if a prudent man would have acted the same as the person accused of negligence. The court determined that there was negligence on the part of smith. Had he acted in a prudent manner, he would have instead slowed down his automobile or put it to a stop. The judgment of the lower court is reversed and rendered the plaintiff to recover damages.

3) CANGCO V. MLA RAILROAD 38 PHIL 768

Cangco vs Manila Railroad Co.

38 Phil 768

Facts: Jose Cangco, was in the employment of Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of Rizal, which is located upon the line of the defendant railroad company; and in coming daily by train to the company's office in the city of Manila where he worked, he used a pass, supplied by the company, which entitled him to ride upon the company's trains free of charge. One day, during his ride on the train, he met an accident. When the train was still in motion and had proceeded a little farther from the platform, plaintiff Jose Cangco stepped off from the train, but one or both of his feet came in contact with a sack of watermelons with the result that his feet slipped from under him and he fell violently on the platform. His body at once rolled from the platform and was drawn under the moving car, where his right arm was badly crushed and lacerated. It appears that after the plaintiff alighted from the train the car moved forward possibly six meters before it came to a full stop.

The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was the customary season for harvesting these melons and a large lot had been brought to the station for the shipment to the market. It is clear that the fall of the plaintiff was due to the fact that his foot alighted upon one of these melons at the moment he stepped upon the platform. His statement that he failed to see these objects in the darkness is readily to be credited since the accident happened at around 7PM-8PM. Cangco incurred very serious injuries which necessitated the amputation of his arm. When the result of his operation was unsatisfactory, he was amputated again in another hospital. His total expenses were P790.25 for medical and surgical fees. On August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of the defendant company, founding his action upon the negligence of the servants and employees of the defendant in placing the sacks of melons upon the train platform. At the hearing in the Court of First Instance, his Honor, the trial judge, found that the plaintiff himself had failed to use due caution in alighting from the coach and was therefore precluded from recovering. Cangco appealed.

The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing an obstruction upon the platform was a breach of its contractual obligation to maintain safe means of approaching and leaving its trains, the direct and proximate cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until the train had come to a complete stop before alighting. In this particular instance, that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop within six meters from the place where he stepped from it. Thousands of persons alight from trains under these conditions every day of the year, and sustain no injury where the company has kept its platform free from dangerous obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it not been for defendant's negligent failure to perform its duty to provide a safe alighting place.

Issue: Whether or not Cancgo can recover damages from Manila Railroad Co. for the negligence of their servants and employees in placing the sacks of melons upon the train platform.

Held: The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving railway train, is that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex and condition of the passenger, would have acted as the passenger acted under the circumstances disclosed by the evidence. This care has been defined to be, not the care which may or should be used by the prudent man generally, but the care which a man of ordinary prudence would use under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)

As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was guilty of contributory negligence is that he stepped off the car without being able to discern clearly the condition of the platform and while the train was yet slowly moving. In considering the situation thus presented, it should not be overlooked that the plaintiff was, as we find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to the contrary, that the platform was clear. The place, as we have already stated, was dark, or dimly lighted, and this also is proof of a failure upon the part of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any possibility concede that it had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their presence would be revealed.

It may be noted that the place was perfectly familiar to the plaintiff as it was his daily custom to get on and off the train at this station. There could, therefore, be no uncertainty in his mind with regard either to the length of the step which he was required to take or the character of the platform where he was alighting. The Courts conclusion is that the conduct of the plaintiff in undertaking to alight while the train was yet slightly under way was not characterized by imprudence and that therefore he was not guilty of contributory negligence.

The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, and for the costs of both instances (permanent disability in the sum of P2,500 and P790.25 for medical attention, hospital services, and other incidental expenditures connected with the treatment of his injuries).

4) LUZON STEVEDORING V. REPUBLIC (21 SCRA 279)

REPUBLIC VS LUZON STEVEDORING CO.,

21 SCRA 279

Facts: Two tugboats (Bangus and Barbero) towed down barge L-1892 on the Pasig River on the afternoon of August 17, 1960. The three boats were owned by the Luzon Stevedoring Corporation, herein defendant. As there was torrential rain in Manila and the surrounding provinces on August 15 and 16, the river was swollen and there was a swift current so the barge rammed against a wooden pile of the Nagtahan bailey bridge. L-1892 smashed the posts of the said bridge and caused the bridge to tilt. The Republic of the Philippines, herein plaintiff, sued the defendant for actual and consequential damages caused by its employees; the defendant denied having any liability, claiming it exercised due diligence in selecting and supervising its employees and that the destruction of the bridge was due to force majeure. It further claimed that the plaintiff did not have any capacity to sue and that the bridge was an obstruction to navigation. After due trial, the defendant was held liable for the damage on the bridge and was ordered to pay the plaintiff the actual cost of the repair of the bridge (Php 192, 561.72) with legal interest from the time the complaint was filed. The defendant directly appealed to the Supreme Court, therefore this case.

Issue: Whether or not the collision of Luzon Stevedoring Corporations barge with the Nagtahan bridge was in law caused by a fortuitous event or force majeure

Held: Given the fact that the bridge is an immovable structure and stationary object and uncontrovertibly provided adequate openings for vessels to traverse the river, negligence could be presumed on the part of the defendant as it is quite unusual that the barge, which was under its exclusive control, would hit the supports of Nagtahan bridge. As provided for by Article 1174 of the Civil Code, force majeure are extraordinary events which are unforeseen or unavoidable, or if foreseen, were inevitable. No credit is given to the defendant even if it assigned two of its most powerful tugboats to tow the barge and assigned the most competent and experienced patrons and double checked and inspected the towlines, equipment and engines. The defendant knew the dangers posed by a swollen river and the swift current but still proceeded with the towing, therefore assuring the risk. It cannot be absolved of responsibility simply due to its insufficient precautions. The contention of force majeure was not honoured. The decision of the Court of First Instance holding the defendant liable was affirmed.

4.2) AUSTRIA VS CA

29 SCRA 527

FACTS:

On January 30, 1961, Maria Abad received one pendant with diamonds worth P4,500.00 from Guillermo Austria. She was obliged to sell it on commission basis or to return it on demand.

On February 1, 1961, Abads purse, containing jewelry and cash, was robbed from her by two men. Included in the purse was the consigned pendant. The incident became the subject of a criminal case filed in CFI of Rizal.

Despite Austrias demand, Abad failed to return the pendant or pay for its value. Thus, the former filed an action against the latter and her husband for the recovery of the pendant or of its value, including damages. The spouses averred that the alleged robbery extinguished their obligation.

The trial court decided in favour of Austria as the spouses failed to prove the fact of robbery or even if such was committed, Abad was negligent when she went home alone after nightfall while carrying a large amount of cash and valuables. Such negligence did not free her from liability for damages for the loss of the jewelry.

The spouses appealed to the CA and prayed for the reversal of the judgment. The appellate court overruled the decision of the trial court and declared spouses not accountable for the loss of the jewelry due to a fortuitous event. They were relieved from liability for damages.

Thus, the present petition for review of the decision rendered by the Court of Appeals.

Petitioner invoked Article 1174 of the new Civil Code and asserted that for robbery to be considered a fortuitous event and relieve the obligor from his obligation under a contract, there must be a prior finding on the guilt of the accused and that the fact of robbery should be proven by a final judgment of conviction in the criminal case.

ISSUE: WON the spouses should be held liable for the loss of the jewelry

HELD:

No. They are not liable for the loss of the jewelry due to fortuitous event. To exempt a person from liability due to fortuitious event, the following requisites should be present: (1) the event must be independent of the human will; (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. A fortuitous event can be produced by nature or by the act of man such as robbery provided that the requisites are present.

It was not disputed that Abad was a victim of robbery. However, to avail of the exemption granted under Article 1174, it is not necessary that the persons responsible for the occurrence should be found or punished. It is sufficient that an enforceable event, such as robbery, did take place without any concurrent fault on the debtor's part. Abad was not negligent when she walked home alone after nightfall while carrying jewelry and cash as the event happened when the incidence of crimes against persons and property was not high.

5) LA MALLORCA V. DE JESUS (17 SCRA 23)

La Mallorca and Pampanga Bus Company vs Valentin De Jesus (GR. L-21486)

FACTS: De Jesus and Tolentino filed a case for damages against petitioner. The trial court awarded P10,000.00 worth of moral damages, among others, which was affirmed by the CA. Petitioner contests the awarding of moral damages to petitioners.

The suit arose by reason of the death of Lolita de Jesus, 20-year old daughter of De Jesus and wife of Tolentino, in a head-on collision between petitioners bus, on which she was a passenger, and a freight truck traveling in the opposite direction, in a barrio in Marilao Bulacan. The immediate cause of the collision was the fact that the driver of the bus lost control of the wheel when its left front tire suddenly exploded. Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence, citing the rulings of the Court of Appeals in Rodriguez vs. Red Line Transportation Co. and People vs. Palapad.

ISSUE:

(1) Whether or not a blow-out of one of the tires of the bus and in not considered as caso fortuito, and

(2) Whether or not petitioners are liable for moral damages.

HELD: On the first issue, the rulings on the cases cited by petitioners not only are not binding on the SC but were based on considerations quite different from those that obtain in the at bar. The appellate Court in said cases made no findings of any specified acts of negligence on the part of the defendants therein and confined itself to the question of whether or not a tire blow-out, by itself alone and without a showing as to the causative factors, would generate liability. In the present case, the cause of the blow-out was known. The inner tube of the left front tire, according to petitioners own evidence and as found by the Court of Appeals was pressed between the inner circle of the left wheel and the rim which had slipped out of the wheel. This was, as CA correctly held, a mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more thorough, or rigid check-up before it took to the road that morning. Both the trial court and the CA found as a fact that the bus was running quite fast immediately before the accident. Considering that the tire which exploded was not new petitioner describes it as hindi masyadong kalbo, or not so very worn out the plea of caso fortuito cannot be entertained.

The second issue raised by petitioner is already a settled one. In this jurisdiction moral damages are recoverable by reason of the death of apassenger caused by the breach of contract of a common carrier, as provided in Article 1764, in relation to Article 2206, of the Civil Code.

6) TUGADE V. CA (85 SCRA 226)

INOCENCIO TUGADE, petitioner, vs.

COURT OF PEALS, and PEOPLE OF THE PHILIPPINES, respondents.

G.R. No. L-47772 August 31, 1978

FACTS

At about 9:15 o'clock in the morning of January 4, 1972, Rodolfo [Rayan- dayan] was driving a Hodlen Kingswood car (the [Holden] car), plate No. 52-19V (L-Rizal '71) owned by the Sta. Ines Corp. and assigned for use of its manager. In Ayala Avenue in Makati, Rizal, going northwards, at the intersection of Ayala Avenue and Makati Avenue, [Rayan-dayan] was going to turn left on Makati Avenue but he stopped to wait for the left-turn signal and because a jeep in front of him was also at a stop ... While in that sup position, the [Holden] car was bumped from behind by Blue Car Taxi bearing Plate No. 55-71R (TX-QC '71) and by Inocencio [Tugade] causing damage to the [Holden] car, the repairs of which cost P778.10 ... [Tugade] was then charged with Reckless Imprudence Resulting in Damage to Property. He pleaded not guilty and while admitting that the collision was caused by faulty brakes of his taxicab, sought to expeculate himself with an explanation that this fault could not and should not be traced to him.The lower court held that accused Inocencio Tugade guilty beyond reasonable doubt of the crime of reckless imprudence resulting in damage to property. [Tugade], appealed from the judgment reiterating that 'the malfunctioning of the brakes at the time of the accident was due to a mechanical defect which even the exercise of due diligence of a good father of a family cannot have prevented. Respondent Court of Appeals, after stating that upon review of the record, it agreed with the trial court, its decision affirming in toto their judgment appealed from.

ISSUE

Whether or not malfunctioning of the brakes is a fortuitous event.

HELD

The Supreme Court held that it does not constitute a fortuitous event. Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence, citing the rulings of the Court of Appeals in Rodriguez V. Red Line Transportation Co., CA-G.R. No. 8136, December 29, 1954, and People v. Palapal, CA-G.R. No. 18480, June 27, 1958. These rulings, however, not only are not binding on this Court but were based on considerations, quite different from those that obtain in the case at bar." It is this Supreme Court, not respondent Court of Appeals, that speaks authoritatively.

As will be seen, these authorities agree that some extraordinary circumstance independent of the will of the obligor, or of his employees, is an essential element of a caso fortuito. Turning to the present case, it is at once apparent that this element is lacking. It is not suggested that the accident in question was due to an act of God or to adverse road conditions which could not have been foreseen. As far as the record shows, the accident was caused either by defects in the automobile or else through the negligence of its driver. That is not a caso fortuito."

WHEREFORE, The decision of respondent Court of Appeals of December 15, 1977 is affirmed. No costs.

7) TANGUILIG V. CA & HERCE, January 2, 1997

7. TANGUILIG v. CA & HERCE

G.R. No. 117190; January 2, 1997

FACTS: Petitioner, Jacinto M. Tanguilig doing business under the name and style J.M.T. Engineering and General Merchandising, had an agreement with respondent, Vicente Herce Jr., to construct a windmill system for the respondent for P60,000.00 with a one-year guaranty. Respondent paid petitioner a down payment of P30,000.00 and an installment payment of P15,000.00, leaving a balance of P15,000.00.

Respondent refused and failed to pay the balance to the petitioner, thus, the petitioner filed a complaint to collect the amount. Respondent denied the claim saying that he had already paid to San Pedro General Merchandising Inc. (SPGMI) which constructed the deep well to which the windmill system was to be connected. According to respondent, since the deep well was part of the windmill system, his payment to SPGMI should be credited to his account by petitioner. Also, this should compensate the defects in the windmill system which caused the structure to collapse after a strong wind hit their place.

Petitioner said that the P60,000.00 was solely for the windmill assembly and its installation, exclusive of other incidental materials needed for the project. He also disowned any obligation to repair or reconstruct the system because its collapse was attributable to a typhoon, a force majeure, which relieved him of any liability, and insisted that he delivered it in good and working condition to respondent who accepted the same without protest.

The trial court held that the construction of the deep well was not part of the windmill project as evidenced clearly by the letter proposals submitted by petitioner to respondent. Also, the trial court found that there is no clear and convincing proof that the windmill system fell down due to the defect of the construction.

The Court of Appeals ruled that the construction of the deep well was included in the agreement of the parties because the term "deep well" was mentioned in both proposals. Also, respondent's witness, Guillermo Pili, the proprietor of SPGMI which installed the deep well, stated that petitioner told him that the cost of constructing the deep well would be deducted from the contract price of P60,000.00. Therefore, the appellate court concluded that respondent's payment of P15,000.00 to SPGMI should be applied to his remaining balance with petitioner, thus, effectively extinguishing his contractual obligation. However, it rejected petitioner's claim of force majeure and ordered the latter to reconstruct the windmill in accordance with the stipulated one-year guaranty.

The Court of Appeals denied his motion for reconsideration, thus, this petition.

ISSUES:

1.Whether or not the agreement to construct the windmill system included the installation of a deep well

2.Whether or not petitioner is under obligation to reconstruct the windmill after it collapsed

HELD: The court held that there was no agreement to construct the windmill system in the installation of a deep well, neither was it mentioned in any of the proposals. The court further held that petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Petitioner only stated that there was a "strong wind" on the day that the windmill collapsed which does not fall under the requisites of a fortuitous event. The 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 and that 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 unforeseeable 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. It can clearly be inferred that a strong wind in this case cannot be fortuitous unforeseeable nor unavoidable as it is necessary for the windmills to turn and operate. Furthermore, respondent cannot be made liable for his own loss as he has not incurred any delay. It is said that 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 in reciprocal obligations. 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, and therefore petitioner should bear the cost in reconstructing the windmill.

8 )BISHOP OF JARO V. DE LA PEA, 26 PHIL 144

The Roman Catholic Bishop of Jaro vs Gregorio De la Pena

Facts:

This is an appeal by the defendant from a judgment of the Court of First Instance of Iloilo, awarding to the plaintiff the sum of P6,641, with interest at the legal rate from the beginning of the action.

The plaintiff is the trustee of a charitable bequest made for the construction of a leper hospital. The defendant is the administrator of the estate of Father De la Pea, as a trustee he deposited P6,641, collected by him for the charitable purposes. In the same year he deposited in his personal account. Shortly thereafter and during the war of the revolution, Father De la Pea was arrested as a political prisoner. The arrest of Father De la Pea and the confiscation of the funds in the bank were the result of the claim of the military authorities that he was an insurgent and that the funds thus deposited had been collected by him for revolutionary purposes. The money was taken from the bank by the military authorities by virtue of such order, was confiscated and turned over to the Government.

Issue:

Whether or not Father de la Pea is liable for the loss of the money under his trust? That he did not preserve the money as a good father of a family.

Ruling:

Civil Code states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family. Father De la Pea was not responsible for its loss. Whether he acted more or less negligently by depositing the money in the bank than he would if he had left it in his home; or whether he was more or less negligent by depositing the money in his personal account than he would have been if he had deposited it in a separate account as trustee. By placing the money in the bank and mixing it with his personal funds. If it had been forcibly taken from his pocket during a state of war, it is clear that under the provisions of the Civil Code he would have been exempt from responsibility. The fact that he placed the trust fund in the bank in his personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at all hazards.

9) GUTIERREZ V. FUENTEBELLA, 13 PHIL 741

FACTS:

On August 26, 2903, Mariano Fuentebella (defendant) signed a document which stated that he is indebted $22,509.03, Mexican currency to the late Don Tomas R. Perez which he will pay to his widow, Dona Concepcion Valero.

When the plaintiffs as assignees of Dona Concepcion Valero brought this action against the amount mentioned in Exhibit A, he claimed that there were two mistakes had been committed against him.

First, he claimed that on the 12th and 23d of October, 1902, he had delivered hemp of the value of 5,424.30 pesos which had not been credited to him at the time when he signed Exhibit A and never has been credited to him. He himself produced a statement of account which was marked Exhibit 1, delivered to him by the agent of Dona Concepcion Valero some days before Exhibit A was signed and which formed the basis of the settlement and showed that he was given credit for this hemp at the time of the settlement and effectually disposes of his claim to the contrary.

The other mistake relates to a delivery of hemp on the 20th of November, 1901, of the value of 1,612.20 pesos. The doubt entry of this amount upon Exhibit 1 is explained by the witnesses for the plaintiffs who testified that this particular hemp was delivered by one Miguel Estela; that it was credited to the defendant because it was at first thought that it was his hemp, and that it was afterwards charged back to him on the theory that it was the hemp of Estela.

The defendant having signed Exhibit A, is bound by it unless at least he shows affirmatively that there was some mistake or error in the settlement. The burden of proof was on him to show such mistake or error, and, if this amount of 1,612.20 pesos was not included in the 6,178.62 pesos it was his duty to show it as he easily could have done. He testified that he himself kept books of account, but he did not offer them in evidence at the trial. Having before him when he signed Exhibit A his own books, showing the amount of hemp he had delivered, in which book the amount represented by this 1,612.20 pesos must have appeared, it is impossible to believe that he did not then make a claim for an allowance on account of that delivery.

The business between the parties was entirely closed on the 20th of June, 1904. This action was commenced on the 22nd of June, 1906. The defendant claims that the balance which appeared against him on the 20th of June, 1904, constituted a mercantile loan made by the creditor to him and that, in accordance with the provisions of the Code of Commerce, no action could be maintained upon it until a notarial demand for its payment had been made by the creditor, and no such demand having been made, the action was prematurely brought. The account between the parties was an ordinary current account between a commercial house in Manila and a dealer in the provinces and embraces a great variety of transactions. It is apparent that the balance which results from the settlement of such a current account can in o sense be called a mercantile loan

ISSUE:

W/N the plaintiffs are entitled to interest only from the time of the presentation of the complaint

HELD:

The court below allowed the plaintiffs interest from the 20th of June, 1904. The court erred and that the plaintiffs are entitled to interest only from the time of the presentation of their complaint. There was no agreement as to interest. The transaction did not constitute a mercantile loan so as to fall within the provisions of article 316 of the Code of Commerce relating to interest. Nor can the balance due on a current account be said to be due for the sale of merchandise, so as to bring the case within article 341 of the same code. It rather falls under articles 1108 and 1100 of the Civil Code. No demand for payment having been made before the bringing of this suit, interest can be allowed only from the presentation of the complaint.

The judgment of the court below is modified by providing for interest only from the 22nd day of June, 1906. In all other respects it is affirmed, with the costs of this instance against the appellant.

10) ALBERT V. UNIVERSITY PUBLISHING, 55 OG 1348

Mariano A. Albert vs. University Publishing Co., Inc.

GR No. L-9300. April 18, 1958

Facts:

Mariano A. Albert sued University Publishing Co. Inc. for an alleged breach of contract. The said company was given the exclusive right to publish a manuscript containing commentaries on The Revised Penal Code of the Philippines and in turn the publishing company agreed to pay Albert P30,000 payable in 8 quarterly payments. This contract was executed on July 19, 1948. Unfortunately, Mariano died before the case proceeded to trial, and Justo R. Albert, his estates administrator substituted.

Albert claimed that defendant failed to pay him the the full amount of the installment for the first quarter despite him delivering to the publishing company the said manuscripts not later than December 31, 1948. Evidence show that on December 16, 1948 he wrote a letter advising the defendant corporation that The manuscripts of my Commentaries on the Revised Penal Code, subject matter of our Contract executed on July 19, 1948, is now at your disposal. They agreed to sell 1,000 copies are to and another 1,500 are to be reprinted.

On the other hand, the defendant corporation only paid a total of P7,000 and made no other or further payement to Albert on account of the contract. They contended that Albert failed to deliver the manuscripts on the date stipulated in the contract and for that reason it was no longer under obligation to pay the unpaid balance of the installments. While denying to have received the letter from Albert, they also claimed that the manuscript was not ready for publication.

Issue: Whether or not there is a breach of contract.

Held:

The courts said that the first point that should be determined is whether the plaintiff had performed his part of the contract.

According to the court, the mere denial by the defendant corporation is not sufficient to overcome the evidence showing that they have at their disposal the said manuscripts. The defendant corporation failed to pay on or before the first installment due (October 15, 1948) because they have only paid in partial (P2,000). However, the delay in payment may not amount to a breach to justify the enforcement of the stipulation set forth in the contract because the plaintiff accepted the payment of P2,000 on November 10, 1948, which completed and paid the full amount of the first installment due and the balance of P250 to be credited to the second installment. As the defendant corporation has made no further payment, the stipulation in the contract has to be enforced.

The action brought by the plaintiff is not for recission of a contract, under which theory or belief both parties seem to have proceeded and labored, but for a resolution of reciprocal obligations because one of the obligors failed to comply with that which was incumbent upon him. The injured party could choose between requiring specific performance of the obligation or its resolution with indemnity for losses and payment of interested.

The counterclaim of the defendant was correctly dismissed by the trial court, because it found that the one who had breached the contract is the defendant corporation. Such being the case, the defendant corporation cannot claim any damage against the plaintiff.

Although the defendant corporation breached the contract, as found by the trial court, and there is no reason which may find support in the evidence for disturbing such finding. However, the courts find that the amount of liquidated damages is rather excessive highlighting the testimony of the defendant corporation that all expenses like the cost of paper, printing, binding, advertising, sales promotion and other incidental disbursements should be deducted from the gross proceeds.

For that reason and in accordance with the provisions of article 2227 of the new Civil Code, the reasonable amount of liquidated damages that must be awarded to the plaintiff as a result of the breach by the defendant corporation of the contract is equitably reduced to P15,000.

With this modification as to the amount of liquidated damages, the judgment appealed from is affirmed, with costs against the appellant.

11) PSBA ET AL V. CA, Feb. 2, 1992

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION (PSBA) ET AL vs. COURT OF APPEALS

FACTS:

Carlitos Bautista, a third year commerce student in the Philippine School of Business Administration (PSBA) was stabbed on the second-floor premises of the school by assailants who were not members of the schools academic community. His parents then filed a suit in the RTC of Manila for damages against PSBA and its corporate officers.

The plaintiffs (now private respondents) sought to adjudge them liable for the victims untimely demise due to their alleged negligence, recklessness and lack of security precautions, means and methods before, during and after the attack on the victim.

Defendants (now petitioners) sought to have the suit dismissed, alleging that since they are sued under Article 2180 of the Civil Code, the complaint states no cause of action and not within the scope of the said provision since it is an academic institution. The trial court, however, overruled the petitioners contention and its decision was later affirmed by the appellate court.

ISSUE:

Whether or not the decision of the appellate court anchored on the law of quasi-delicts is valid.

HELD:

The Supreme Court held that although they agreed on the decision of the Court of Appeals to deny the petition of motion to dismiss by the PSBA, they do not agree to the premises stated by the appellate courts ruling.

Article 2180, in the conjunction with Article 2176 of the Civil Code establishes the rule of in loco parentis, they cannot be held liable to the acts of Carlitos assailants which were not students of the PSBA and because of the contractual relationship.

When an academic institution accepts students for enrollment, there is a contract between them, resulting in bilateral obligations which both parties are bound to comply with. The institution must provide their students with an atmosphere that promotes or assists its primary undertaking of imparting knowledge and maintain peace and order within its premises.

In the circumstances, there is no finding that the contract between the school and Bautista had been breached thru the formers negligence in providing proper security measures.

Therefore, the Supreme Court dismissed the petition and the case was remanded to the Trial Court to determine if the school neglected its obligation to perform based on the contractual relation of them and the students.

12) ONGSIAKO V. IAC, 152 SCRA 627

ANTONIO RAMN ONGSIAKO v. INTERMEDIATE APPEL

LATE COURT

G.R. No. L-69901 JULY 31, 1987

FACTS:

On December 30, 1981, at around 4 pm, petitioners car collided with a jeep being driven by Robert Ha at MacArthur Highway, in Moncada, Tarlac. The petitioner was with Len Miguel Heras. Ha was at the wheel of his vehicle, which had seven passengers on board. Ongsiako was southbound toward Manila, and the jeep was headed toward the opposite direction; that a Philippine Rabbit bus ahead of the jeep swerved into the petitioners lane to overtake and bypass a tricycle; and, as a result, the petitioner, wishing to avoid a head-on collision, immediately veered his car to the shoulder of the highway. The car went out of control when it hit the soft shoulder, moved back diagonally across the highway and then collided with Has jeep, damaging it and causing multiple physical injuries to its passengers. The Philippine Rabbit bus sped away.

Prosecuted for reckless imprudence resulting in multiple physical injuries and damage to property, Antonio Ongsiako was convicted by the trial court of simple negligence resulting in serious physical injuries and damage to property. He was sentenced to two months of arresto mayor and to pay an indemnity of P143, 131.04 for medical expenses. On appeal, the conviction was affirmed but the Intermediate Appellate Court reduced the moral damages to P61, 131.04.

ISSUE:

Whether or not Antonio Ongsiako had enough opportunity to avoid the collision with Robert Has jeep.

Whether or not Antonio Ongsiako should be liable for damages caused on the jeep passengers and operator out of criminal negligence.

RULING:

The Court ruled that the petitioner shall not be liable for damages caused by criminal negligence. It had reviewed the allegations given by the parties in the proceedings and reversed those that did not conform to the facts. The trial court, and the respondent court, affirmed that the jeep was still 150 meters away from the Philippine Rabbit bus when the accused drove his car toward the shoulder of the road to avoid the collision with the oncoming bus, meaning that Ongsiako had feasible time to avoid hitting the jeep. The judge should have been more careful in reaching its conclusion for it was not founded on the facts established. The evidence on record was that the distance was not 150 meters but 150 feet. The correct distance, incidentally, was established by the trial court itself which, in its examination of Robert Ha, elicited from him the said information.

The respondent court carelessly rejected the petitioners side of the story on the grounds that the police sketch of the collision scene failed to reveal any skid marks of the appellants car on the highway. Both the trial court and the IAC did not consider that the sketch was made five days after the collision, as emphasized by the petitioner, and that the skid marks would have already disappeared by that time. The IAC also carelessly concluded that petitioners failure to present Heras as his primary witness much to the adversity of his cause. In fact, Heras was presented as petitioners witness, and Heras did testify in support of the petitioner, substantially corroborating the petitioners account of the collision.

The real culprit of the collision should have been the driver of the Philippine Rabbit bus that caused Ongsiakos car to go out of control and accidentally hit Has jeep. Unfortunately, the bus was not sought after nor its driver was investigated by the authorities.

There is no question that Antonio Ongsiako must be acquitted from the crime of simple negligence for lack of proof beyond reasonable doubt given the trial court and IACs misappreciation of evidence of record.

While the quantum of proof necessary for conviction had not been established, there is preponderance of evidence to hold the petitioner liable for damages sustained by the victims of the accident. A little more caution and discretion on his part in reacting to the threat of a head-on collision with the bus could have been used by the petitioner so as to avoid the accident. Petitioner is liable for the hospitalization expenses and unearned salaries of the victims as itemized by the trial court and affirmed by respondent court. His total civil liability was to be reduced to P46, 131.04.

13) SANTOS VENTURA HACORMA FOUNDATION, INC. V. ERNESTO SANTOS, ET AL , Nov. 5, 2004

Santos Ventura Hocorma Foundation, Inc. VS. Ernesto V. Santos and Riverland, Inc.

Facts:

The petition for review of certiorari is presented in its decision dated January 30, 2002, as well as the resolution filed in the court of appeals dated April 12, 2002.

Santos had filed several civil cases against Santos Ventura Hocorma Foundation, Inc. (SVHFI). They developed and executed a Compromise Agreement on October 26, 1990 which would end all pending litigations subject to the following; (1) The defendant foundation shall pay plaintiff Santos P14.5 Million upon execution of the agreement and (2) the mode of payment shall either be in lump sum or installment with the discretion of the foundation and upon payment the civil cases to be filed shall be dropped without prejudice. (3) Failure of compliance of any of the forgoing terms shall entitle the aggrieved party a writ of execution for the enforcement of the agreement.

The balance of P14.5 million was then cut down to P13 Million when the respondent paid a sum of P1.5 Million. However after being pushed to pay the remainder of the debt the petitioner filed a writ of execution of the compromise agreement and was granted.

Issue:

Whether or Not there was delay on the part of SVHFI, which will result to, legal interest in the case at bar, the compromise agreement was entered as a consensual contract between the parties and becomes the source of the rights and obligations of the parties thereto. The terms and conditions posted in the compromise agreement are clear and unambiguous.

WHEREFORE, the petition is denied for lack of merit.

Held:

The courts ruled that the obligation is demandable and liquidated. Due to the lapse of 2 years from the execution of the contract. When the respondent gave a demand letter, the obligation was already due

14) DBP V. LICUANAN, Feb. 26, 2007, 516 SCRA 644

DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner

vs.

ALEJANDRO and ADELAIDA LICUANAN, Respondents.

G.R. No. 150097 February 26, 2007

FACTS:

The Respondent loaned from DBP the following amount: (1) P4,700 evidenced by a promissory note dated September 20, 1974 and secured by a real estate mortgage, (2) an additional loan of P12,000 evidenced by a promissory note dated May 29, 1975 payable on or before the year 1980 and was secured by a real estate mortgage over four parcels of land and (3) another loan of P22,000 evidenced by a promissory note maturing on October 3, 1985 which was secured by a real estate mortgage executed in favor of petitioner over three parcels of land.

On August 6, 1979, petitioner and respondents restructured the P12,000 loan, extending the maturity date from June 22, 1979 to June 22, 1982 and also executed a promissory note for P12,320.73 and another for P6,519.90.

On July 6, 1981, petitioner sent a letter informing petitioner that the conditions of the mortgage had been breached, petitioner would have the mortgaged properties sold by the sheriff and the total amount due from the three loans had by then ballooned to P75,298.32. Petitioner later filed an application for extrajudicial foreclosure and the mortgaged properties were sold in a public auction on December 16, 1981. Petitioner acquired the said land as the highest bidder.

On October 16, 1984, petitioner wrote respondents informing them that the properties would be disposed of by public auction; petitioner published an advertisement stating that on November 14, 1984, the properties would be sold by oral bidding. On this date, however, there were no bidders. On November 16, 1984, petitioner sent respondents a letter informing them that the properties could be reacquired by negotiated sale for cash or installment Three days later the properties were sold through negotiated sale to one Emelita A. Peralta. Respondents were informed of the sale by petitioner through a letter dated December 6, 1984. On the same day, petitioner executed a deed of conditional sale in favor of Peralta. On December 11, 1984, respondents offered to repurchase the properties from petitioner but they had already been sold to Peralta.

Respondents then filed a complaint for recovery of real properties and damages on July 18, 1985 in the Regional Trial Court (RTC) of Lingayen, Pangasinan, Branch 39 against petitioner and Peralta. The RTC rendered judgment dated September 17, 1991 in favor of respondents and the CA affirmed the RTC but decreased the amount of nominal damages from P75,000 to P50,000.

ISSUE:

1) Whether a demand for payment of the loans was made before the mortgage was foreclosed;

2) Whether demand is necessary to make respondents guilty of default;

HELD:

Unless demand is proven, one cannot be held in default. Petitioners cause of action did not accrue on the maturity dates stated in the promissory notes. It is only when demand to pay is made and subsequently refused that respondents can be considered in default and petitioner obtains the right to file an action to collect the debt or foreclose the mortgage.

Cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.

The cause of action cannot be said to accrue on the uniform maturity date of the Home Notes as petitioner suggests because at that point, the third essential element of a cause of action, namely, an act or omission on the part of petitioner violative of the right of private respondent or constituting a breach of the obligation of petitioner to private respondent, had not yet occurred

The trial court found that there was no demand for payment prior to the extrajudicial foreclosure. Thus, the foreclosure proceedings were null and void. It ordered Peralta to reconvey the properties to respondents subject to Peraltas right to be paid by respondents the amount of P104,000 in consideration of such reconveyance.

Since the petitioner did not deal fairly with respondents they were made liable for nominal and moral damages to the latter. The RTC further ordered petitioner to pay respondents attorneys fees and litigation expenses, which the SC court affirmed.

15) BARZAGA V. CA, 268 SCRA 105

BARZAGA VS CA

G.R. NO. 115129

FACTS :

On the nineteenth of December Ignacio Barzaga's wife before joining our creator expressed her dying wish to be buried before Christmas day to let her family not grieve on the said day. Ignacio Barzaga, herein petitioner, set out to arrange for her interment on the twenty-fourth of December. Petitioner then went to the hardware store of respondent Angelito Alviar to inquire about the availability of certain materials to be used in the construction of a niche for his wife. The storekeeper agreed to deliver the items and so Barzaga purchased the materials and paid in the full amount.

On the day that materials should be transported, no delivery was made. Barzaga then decided to dismiss his laborers for the day and proceeded to the nearest police station and filed a complaint against Alviar. In the afternoon of that day, petitioner was able to buy from another store and was able to finish the niche but it was already behind the schedule.

On 21 January 1991, tormented perhaps by his inability to fulfill his wife's dying wish, Barzaga wrote private respondent Alviar demanding recompense for the damage he suffered. Alviar did not respond. Consequently, petitioner sued him before the Regional Trial Court. The trial court favored Barzaga, and asked respondent to pay for the damages, but Alviar filed an appeal where the decision was then reversed. Alviar defends that it was a fortuitous event, since his truck suffered a flat tire on the way to pick up the materials.

ISSUE:

Whether or not Alviar is liable to compensate the damages incurred by Barzaga for the delay of the materials delivery even with respondents claim of fortuitous event

HELD:

Yes. Respondents defense of a fortuitous event of a flat tire was forseeable according to the trial court, and as such should have been reasonably guarded against. The nature of private respondent's business requires that he should be ready at all times to meet contingencies of this kind. 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.

The court then affirmed the trial courts decision but deleted the temperate damages.

16) PHIL. COMMUNICATION SATELLITE CORP. V. GLOBE TELECOM, May 25, 2004

G.R. No. 147324 May 25, 2004

PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION,

vs.

GLOBE TELECOM, INC.

FACTS:For several years, Globe Mckay Cable and Radio Corporation (now Globe Telecom) had been engaged in the coordination of the provision of various communication facilities for the military bases of the USA in Clark Air Base, Angeles, Pampanga and Subic Naval Base in Cubi Point, Zambales for the exclusive use of the US Defense Communications Agency (USDCA), and for security reasons, were operated only by its personnel or those of American companies contracted by it to operate said facilities. The USDCA contracted with said American companies, and the latter, in turn, contracted with Globe for the use of the facilities. Globe, on the other hand, contracted with local service providers such as the Philippine Communications Satellite Corporation (Philcomsat) for the provision of the communication facilities.

Philcomsat and Globe entered into an Agreement whereby Philcomsat obligated itself to establish, operate and provide an IBS Standard B earth station (earth station) within Cubi Point for the exclusive use of the USDCA. The term of the contract was for 60 months, or five (5) years. In turn, Globe promised to pay Philcomsat monthly rentals for each leased circuit involved.

At the time of the execution of the Agreement, both parties knew that the Military Bases Agreement between the Republic of the Philippines and the US (RP-US Military Bases Agreement), which was the basis for the occupancy of the Clark Air Base and Subic Naval Base in Cubi Point, was to expire in 1991. Under Section 25, Article XVIII of the 1987 Constitution, foreign military bases, troops or facilities shall not be allowed in the Philippines unless a new treaty is duly concurred in by the Senate and ratified by a majority of the votes cast by the people in a national referendum when the Congress so requires, and such new treaty is recognized as such by the US Government.

Subsequently, Philcomsat installed and established the earth station at Cubi Point and the USDCA made use of the same.

The Senate passed and adopted Senate Resolution No. 141, expressing its decision not to concur in the ratification of the Treaty of Friendship, Cooperation and Security.

The Philippine Government sent a Note Verbale to the US Government through the US Embassy, notifying it of the Philippines termination of the RP-US Military Bases Agreement and that the withdrawal of all US military forces from Subic Naval Base should be effected.

In a letter Globe notified Philcomsat of its intention to discontinue the use of the earth station in view of the withdrawal of US military personnel from Subic Naval Base after the termination of the RP-US Military Bases Agreement. Globe invoked as basis for the letter of termination Section 8 (Default) of the Agreement, which provides:

Neither party shall be held liable or deemed to be in default for any failure to perform its obligation under this Agreement if such failure results directly or indirectly from force majeure or fortuitous event. Either party is thus precluded from performing its obligation until such force majeure or fortuitous event shall terminate.

Philcomsat sent a reply letter to Globe, stating that "we expect [Globe] to know its commitment to pay the stipulated rentals for the remaining terms of the Agreement even after [Globe] shall have discontinue[d] the use of the earth station.

After the US military forces left Subic Naval Base, Philcomsat demanded payment of its outstanding obligations under the Agreement amounting to US$4,910,136.00. However, Globe refused to heed Philcomsats demand.

Philcomsat filed with the RTC a Complaint against Globe, praying that the latter be ordered to pay liquidated damages under the Agreement with damages. Globe filed an Answer, insisting that it was constrained to end the Agreement due to the termination of the RP-US Military Bases Agreement and the non-ratification by the Senate of the Treaty of Friendship and Cooperation, which events constituted force majeure under the Agreement. Globe explained that the occurrence of said events exempted it from paying rentals for the remaining period of the Agreement. The trial court rendered its Decision ordering the defendant to pay the plaintiff the amount representing rentals until the amount is fully paid;

Both parties appealed the trial courts Decision to the Court of Appeals. The Court of Appeals promulgated its Decision dismissing Philcomsats appeal for lack of merit and affirming the trial courts finding that certain events constituting force majeure occurred and justified the non-payment by Globe of rentals for the remainder of the term of the Agreement.

ISSUE: Whether or not the termination of the RP-US Military Bases Agreement, the non-ratification of the Treaty of Friendship, Cooperation and Security, and the consequent withdrawal of US military forces and personnel from Cubi Point constitute force majeure which would exempt Globe from complying with its obligation to pay rentals under its Agreement with Philcomsat

HELD: Yes. Article 1174, which exempts an obligor from liability on account of fortuitous events or force majeure, refers not only to events that are unforeseeable, but also to those which are foreseeable, but inevitable:

A fortuitous event under Article 1174 may either be an "act of God," or natural occurrences such as floods or typhoons, or an "act of man," such as riots, strikes or wars.

There is no merit is Philcomsats argument that Section 8 of the Agreement cannot be given effect because the enumeration of events constituting force majeure therein unduly expands the concept of a fortuitous event under Article 1174 of the Civil Code and is therefore invalid.

Furthermore, under Article 1306 of the Civil Code, parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem fit, as long as the same do not run counter to the law, morals, good customs, public order or public policy.

Courts cannot stipulate for the parties nor amend their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect thereto.

In order that Globe may be exempt from non-compliance with its obligation to pay rentals, the concurrence of the following elements must be established:

(1) the event must be independent of the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor.31

The Court ruled that the abovementioned requisites are present in the instant case. Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired in 1991, because the prerogative to ratify the treaty extending the life thereof belonged to the Senate. Neither did the parties have control over the subsequent withdrawal of the US military forces and personnel from Cubi Point.These events made impossible the continuation of the Agreement until the end of its five-year term without fault on the part of either party. Thus, it would be unjust to require Globe to continue paying rentals even though Philcomsat cannot be compelled to perform its corresponding obligation under the Agreement.

17) CO V. CA, 353 PHIL 305

SICAM, ET AL V. JORGE, August 8, 2007

JIMMY CO, doing business under the name & style DRAGON METAL MANUFACTURING, petitioner, vs. COURT OF APPEALS and BROADWAY MOTOR SALES CORPORATION, respondents.

G.R. No. 124922 June 22, 1998

FACTS

On July 18, 1990, petitioner Co entrusted his car to private respondent, Broadway Motor Sales Corp. for repair services including battery replacement, the latter undertaking to return the vehicle on July 21, 1990 fully serviced and supplied in accordance with the job contract. However when the date agreed upon came, the respondent could not release the vehicle as its battery was weak and was not yet replaced. Left with no option, petitioner himself bought a new battery nearby and delivered it to respondent for installation on the same day. However, the battery was not installed and the delivery of the car was rescheduled to July 24, 1990. When petitioner sought to reclaim his car on the stated date, he was told that it was carnapped earlier that morning while being road-tested by an employee of respondent.

The RTC, in a suit for damages filed by petitioner against private respondent, found the latter guilty of delay in the performance of its obligation and held it liable to petitioner for the value of the lost vehicle and its accessories plus interest and attorney's fees. On appeal, the Court of Appeals reversed the lower court's ruling. It ruled that the vehicle was lost due to a fortuitous event; hence the petition for review.

ISSUE

Whether or not a repair shop can be held liable for the loss of a customer's vehicle while the same is in its custody for repair or other job services

HELD

The Supreme Court reversed the ruling of the Court of Appeals. It was held that carnapping per se cannot be considered as 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.

Even assuming arguendo that carnapping was duly established as a fortuitous event, Article 1165 of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the delivery, hence respondent may still be liable. In the case at bar, respondent was already in delay as it was supposed to deliver petitioner's car three (3) days before it was lost. Agreement to the rescheduled delivery does not defeat petitioners claim as respondent had already breached its obligation.

Moreover, 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 considered a normal business risk for those engaged in the repair of motor vehicles. Hence, repair shops are required to first register with the Department of Trade and Industry (DTI) and to secure an insurance policy as a pre-requisite for such registration/accreditation. Violation of this statutory duty constitutes negligence per se. Having taken custody of the vehicle, private respondent is obliged not only to repair the vehicle but must also provide the customer with some form of security for his property over which he loses immediate control.

On the assumption that private respondent's repair business is duly registered, it presupposes that its shop is covered by insurance from which it may recover the loss. If private respondent can recover from its insurer, then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies. With respect to the value of the lost vehicle and its accessories for which the repair shop is liable, it should be based on the fair market value that the property would command at the time it was entrusted to it or such other value as agreed upon by the parties subsequent to the loss. Such recoverable value is fair and reasonable considering that the value of the vehicle depreciates.

17.2) SICAM, ET AL V. JORGE, August 8, 2007

ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC., petitioners,

vs.

LULU V. JORGE and CESAR JORGE, respondents.

FACTS

A Petition for Review on Certiorari was filed by Roberto C. Sicam, Jr. and Agencia deR.C. Sicam, Inc., seeking to annul the decision of the Court of Appeals.

On different dates from September to October 1987, respondent Jorge pawned several pieces of jewelry with petitioner-corporation Agencia de R. C. Sicam to secure a loan in the total amount of P59,500.00. On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry found inside the pawnshop vault.

Sicam sent respondent a letter informing her of the loss of her jewelry due to the robbery incident in the pawnshop. Respondent expressed disbelief stating that when the robbery happened, all jewelry pawned were deposited with Far East Bank near the pawnshop since it had been the practice that before they could withdraw, advance notice must be given to the pawnshop so it could withdraw the jewelry from the bank. Respondent requested petitioner to prepare the pawned jewelry for withdrawal however petitioner Sicam failed to return the jewelry.

Respondent Lulu is seeking indemnification for the loss of pawned jewelry and payment of damages. Petitioner is interposing the defense of caso fortuito on the robber committed against the pawnshop.

The RTC rendered its decision dismissing respondents complaint as well as petitioners counterclaim. Respondents appealed the RTC Decision to the CA which reversed the formers ruling, ordering Sicam to pay Jorge the actual value of the lost jewelry.

ISSUE

Whether or not petitioner may be liable for the loss of the pawned articles in their possession

HELD

The Supreme Court sustained the CA ruling. It was held that fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is 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.

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. Petitioner were guilty of negligence in the operation of their pawnshop business since there was no sufficient precaution and vigilance adopted by petitioner to protect the pawnshop from unlawful intrusion. Moreover, there was no clear showing that there was any security guard at all.

Sicams admission that the vault was open at the time of robbery is clearly a proof of petitioners failure to observe the care, precaution and vigilance that the circumstances justly demanded. Petitioner Sicam testified that once the pawnshop was open, the combination was already off. Instead of taking the precaution to protect them, they let open the vault, providing no difficulty for the robbers to cart away the pawned articles.

The robbery in this case happened in petitioners pawnshop and was negligent in not exercising the precautions justly demanded of a pawnshop, hence liable for the loss of the jewelry.

18) NPC V. CA, May 16, 1998

18. NPC v. CA

FACTS: On August 4, 1964, plaintiff Engineering Construction, Inc. (ECI) executed a contract in Manila with the National Waterworks and Sewerage Authority (NAWASA), whereby the former undertook to furnish all tools, labor, equipment, and to construct the proposed 2nd lpo - Bicti Tunnel in Norzagaray, Bulacan.

By September 1967, plaintiff ECI already completed the tunnel excavation work. However, some portions of the outworks at the Bicti site were still under construction. As soon as the plaintiff corporation had finished the tunnel excavation work at the Bicti site, all the equipment no longer needed there were transferred to the Ipo site where some projects were yet to be completed.

On November 4,1967, typhoon 'Welming' hit Central Luzon, passing through the Angat Dam at lpo, Norzagaray, Bulacan. Due to the heavy downpour, the water in the reservoir of the Angat Dam was rising dangerously. To prevent the overflow of water from the dam, defendant NPC caused the opening of the spillway gates. A large volume of water rushed out of the gates, and hit the equipment and construction works of ECI at the lpo site. As a result, the ECIs materials, camp facilities, structures and accessories were either washed away, lost or destroyed.

ISSUES:

1.Whether or not NPC is liable for damages.

2.Whether or not there was negligence on the part of NPC when it opened the spillway gates of the Angat Dam.

HELD: The Court ruled that NPC was undoubtedly negligent because it opened the spillway gates of the Angat Dam only at the height of typhoon when it knew very well that it was safer to have opened the dam gradually and earlier. Also, NPC knew of the coming typhoon at least four days before it actually struck. And even though the typhoon was an act of God or what we may call force majeure, NPC cannot escape liability because its negligence was the proximate cause of the loss and damage.

The obligor cannot escape liability, if upon the happening of a fortuitous event or an act of God, there concurs a corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligation as provided for in Article 1170 of the Civil Code which results in loss or damage.

19) RCPI V. VA, August 29, 1986

Radio Communications of the Philippines vs Court of Appeals and Loreto Dionela

G.R. No. L-44748. August 29, 1986

Facts:

The complaint is based on a telegram sent by the defendant corporation through its Manila office to petitioner Dionela. The said telegram contained defamatory words Sa iyo walang pakinabang dumating ka diyan wala kang padala dito kahit bulbul mo which not only caused petitioners feelings to be wounded but also caused him undue embarrassment and affected his business. The defendant corporation alleges that such words were not intended for the petitioner Dionela but instead was a private joke between the sending and receiving operators. The telegram was detached from the machine and place inside a sealed envelope and mistakenly included the additional words in Tagalog. The trial court ruled that there is no question that the additional words in Tagalog are libellous and it is immaterial whether or not they were intended for the petitioner for the effects of receiving such are the same. The defendant corporation is to transmit telegrams which will open doors to frauds if it will not be held liable for acting, through its employees, beyond the scope of their assigned task. Also, the office file which contains the copies of telegrams received are open and held together only by a metal fastener which makes it accessible to third parties. According to the trial court, the defendant corporation is liable for the violation of articles 19, 20 and 33 of the Civil Code of the Philippines.

The respondent appellate court confirmed the findings of the lower court. The additional Tagalog words were correctly found by the lower court libellous. The proximate cause, which resulted to injury to the petitioner Dionela, is negligence imputable to the defendant corporation and not to its employees because it failed to take precautionary measure to avoid the possibility of such incident to happen. The law implies damages in this instance.

After a motion for reconsideration was denied by the appellate court, the RCPI petitioned for review by certiorari of the decision of the CA. The contentions are that the CA erred in holding that the petitioner corporation should answer directly and primarily for the civil liability arising from the criminal act of its employee and that the liability of petitioner-corporation is predicated on Articles 19 and 20 of the Civil Code.

Issue:

Whether or not the petitioner corporation should answer directly and primarily for the civil liability arising from the criminal act of its employee and that the liability of petitioner-corporation is predicated on Articles 19 and 20 of the Civil Code.

Ruling:

The court held that the action for damages filed in the lower court is directly against the RCPI and not as an employer. The cause of action is based on Articles 19 and 20 of the Civil Code as well as on the RCPIs breach of contract through negligence of its own employees. The RCPI is a business engaged in receiving and transmitting messages. When a person transmits a message through the RCPI, a contract is entered into and it is expected that the message will be delivered accurately. There is a clear case of breach of contract by the RCPI in adding extraneous and libellous matters in the message sent to Loreto Dionela. This business can act only through its employees therefore the acts of the latter are acts of the former. Hence, the corporation is directly liable for the acts of its employees.

20) RURAL BANK OF STA. MARIA, PANGASINAN V. CA (Sept. 14, 1999)

Rural Bank of Sta Maria Pangasinan vs CA: 110672

Facts:

The Court Finds that a parcel of land of about 49,969 square meters, located in Residence Section J, Camp 7, Baguio City is registered in the name of Manuel Behis, married to Cristina Behis. Said land originally was part of a bigger tract of land owned by Behis, father of Manuel Behis. And upon the latters death on September 24, 1971, his children in an extrajudicial settlement with Simultaneous Sale of Inheritance dated September 28, 1978, agreed to sell the land to Manuel Behis, married to Cristina Behis but which subsequently was explained as only an arrangement adopted by them to facilitate transactions over the land in a Confirmation of Rights of Co-Ownership over real Property dated September 26, 1983, showing that the Behis brothers and sisters, including Manuel Behis, are still co-owners Manuel Behis mortgaged said land in favor of the Bank in a Real Estate Mortgage dated October 23, 1978 as security for loans obtained, covered by six promissory notes and trust receipts under the Supervised Credit Program in the total sum of P156,750.00 The mortgage, the promissory notes and trust receipts bear the signatures of both Manuel Behis and Cristina Behis.

Unfortunately thereafter, Manuel Behis was delinquent in paying his debts.

And then a Deed of Absolute Sale with Assumption of Mortgage was executed between Manuel Behis as vendor/assignor and Rayandayan and Arceo as vendees/assignees for the sum of P250,000.00. On the same day, Rayandayan and Arceo together with Manuel Behis executed another Agreement embodying the real consideration of the sale of the land in the sum of P2,400,000.00. Thereafter, Rayandayan andArceo negotiated with the principal stockholder of the bank, Engr. Edilberto Natividad in Manila, for the assumption of the indebtedness of Manuel Behis and the subsequent release of the mortgage on theproperty by the bank.Rayandayan and Arceo did not show to the bank the Agreement with Manuel Behis providing for the real consideration of P2,400,000.00 for the sale of the property to the former. Subsequently, the bankconsented to the substitution of plaintiffs as mortgage debtors in place of Manuel Behis in a Memorandum of Agreement between private respondents and the bank with restructured and liberalized terms for the payment of the mortgage debt. Instead of the bank foreclosing immediately for non-payment of the delinquent account, petitioner bank agreed to receive only a partial payment of P143,000.00 by installment on specified dates. After payment thereof, the bank agreed to release the mortgage of Manuel Behis; to give its consent to the transfer of title to the private respondents; and to the payment of the balance of P200,000.00 under new terms with anew mortgage to be executed by the private respondents over the same land. However, petitioner bank did not comply with the MEMORANDUM OF AGREEMENT with respondents because of a supervening event namely the protest made by Cristina Behis, wife of Manual Behis, alleging that she did not consent to the negotiation made as regards the Deed of absolute sale with Assumption of Mortgage by her husband with the respondents and that her signature was forged by respondents. The petitioner bank then told respondents to settle the matter with Mrs. Behis. At that point, petitioner bank cancelled its MEMORANDUM OF AGREEMENT with respondents because: first, the latter failed to settle the protest of Mrs. Behis; and, secondly, the terms of the Memorandum of Agreement have not been fully complied with as the payments were not made on time on the dates fixed therein; and third, their consent to the Memorandum of Agreement was secured by the plaintiffs thru fraud as the Bank was not shown the Agreement containing the real consideration of P2,400.000.00 of the sale of the land of Manuel Behis to plaintiffs. Thereafter, the petitioner bank returned the initial payment of P143,000.00 to respondents. In the meantime, petitioner entered into an agreement with Halsema Bank that the latter would assume the mortgage of Manuel Behis in consideration of P521,765.45. Thereafter, respondents brought the matter before the RTC which ruled that the MEMORANDUM OF AGREEMENT is valid. The case was elevated to the CA on certiorari. The respondent Court affirmed the validity of the MEMORANDUM OF AGREEMENT dismissing the claim of the respondent that their consent to the agreement made with respondents to assume the mortgage of Manuel Behis, and awarding the respondents for damages. Hence this present appeal.

Issues:

Whether or not respondents are guilty of fraud when it did not show or it concealed from the petitioner the Agreement between respondents and Manuel Behis the consideration of P2.4m, and rather what was only shown was the first agreement with regard to the Deed of Sale with Assumption of Mortgage?

Held:

No. This brings us to the first issue raised by petitioner bank that the Memorandum of Agreement is voidable on the ground that its consent to enter said agreement was vitiated by fraud because private respondents withheld from petitioner bank the material information that the real consideration for the sale with assumption of mortgage of the property by Manuel Behis to Rayandayan and Arceo isP2,400,000.00, and not P250,000.00 as represented to petitioner bank. According to petitioner bank, had it known of the real consideration for the sale, it would not have consented into entering the Memorandum of Agreement with Rayandayan and Arceo as it was put in the dark as to the real capacity and financial standing of private respondents to assume the mortgage from Manuel Behis. Petitioner bank pointed out that it would not have assented to the agreement, as it could not expect the private respondents to pay the bank the approximately P343,000.00 mortgage debt when private respondents have to pay at the same time P2,400,000.00 to Manuel Behis on the sale of the land.

The kind of fraud that will vitiate a contract refers to those insidious words or machinations resorted to by one of the contracting parties to induce the other to enter into a contract which without them he would not have agreed to.

Simply stated, the fraud must be the determining cause of the contract, or must have caused the consent to be given. It is believed that the non-disclosure to the bank of the purchase price of the sale of the land between private respondents and Manuel Behis cannot be the fraud contemplated by Article 1338 of the Civil Code.

From the sole reason submitted by the petitioner bank that it was kept in the dark as to the financial capacity of private respondents, we cannot see how the omission or concealment of the real purchase price could have induced the bank into giving its consent to the agreement; or that the bank would not have otherwise given its consent had it known of the real purchas e price. The deceit which voids the contract exists where the party who obtains the consent does so by means of concealing or omitting to state material facts, with intent to deceive, by reason of which omission or concealment the other party was induced to give a consent which he would not otherwise have given (Tolentino, Commentaries and Jurisprudence on the Civil Code, Vol. IV, p. 480). In this case, the consideration for the sale with assumption of mortgage was not the inducement to defendant bank to give a consent which it would not otherwise have given. Consequently, not all the elements of fraud vitiating consent for purposes of annulling a contract concur, to wit: (a) It was employed by a contracting party upon the other; (b) It induced the other party to enter into the contract; (c) It was serious; and; (d) It resulted in damages and injury to the party seeking annulment.

Petitioner bank has not sufficiently shown that it was induced to enter into the agreement by the non-disclosure of the purchase price, and that the same resulted in damages to the bank. Indeed, the general rule is that whosoever alleges fraud or mistake in any transaction must substantiate his allegation, since it is presumed that a person takes ordinary care for his concerns and that private transactions have been fair and regular. Petitioner banks allegation of fraud and deceit have not been established sufficiently and competently to rebut the presumption of regularity and due execution of the agreement.

the petition was DENIED and the decision of the Court of Appeals, dated March 17, 1993 is AFFIRMED. No cost.

21) ARIETA V. NATIONAL RIVRE AND COMM CORP, 10 SCRA 79

Arrieta vs National Rice and Corn Corporation

Facts:

Paz Arrieta is a rice dealer/importer. In May 1952, she participated in a public bidding held by the National Rice and Corn Corporation (NARIC). NARIC was looking for someone to supply 20,000 metric tons of Burmese Rice. Arrieta was the lowest bidder at $203.00 per metric ton hence she won the bidding. So a contract was made whereby Arrieta is to deliver the rice supply and NARIC is to pay for the imported rice by means of an irrevocable, confirmed and assignable letter of credit in U.S. currency in favor of the Arrieta and/or supplier in Burma, immediately. Arrieta then proceeded to contact her supplier in Burma (Thiri Setkya) and arranged the sale of the 20k metric ton of Burmese Rice, Arrieta promised Setkya that he will be paid by NARIC on August 4, 1952. Arrieta also made a 5% deposit (P200k) as advance payment to Setkya.

Meanwhile, NARIC tried to open a letter of credit ion the amount of $3,614,000.00 with the Philippine National Bank. PNB agreed to open the letter of credit but only on the condition that NARIC deposits 50% of the said amount. NARIC failed to do this and the letter of credit was not opened when the obligation to pay Setkya became due. Because of this, Arrieta lost the opportunity to profit from the sale as the agreement was eventually forfeited. Her 5% depoit was likewise forfeited pursuant to Burma laws.

ISSUE: Whether or not Arrieta is entitled to damages.

HELD:

Yes. One who assumes a contractual obligation and fails to perform the same on account of his inability to meet certain bank which inability he knew and was aware of when he entered into contract, should be held liable in damages for breach of contract.

Under Article 1170 of the Civil Code, not only debtors guilty of fraud, negligence or default but also debtor of every, in general, who fails in the performance of his obligations is bound to indemnify for the losses and damages caused thereby.

Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

22) MAGUT V. MEDIALDEN, April 20, 1983

VICTORINO D. MAGAT VS. HON. LEO D. MEDIALDEA AND SANTIAGO A. GUERRERO

FACTS:

The Defendant (herein private respondent) entered into a contract with the U.S. Navy Exchange in Subic Bay for the operation of a fleet of taxicabs with a required taximeter and radio transceiver. An agent acting on the Defendant's behalf proposed to the Plaintiff (herein petitioner) to import such taximeters and radio transceivers from Japan through the latter's business connections to fulfill the former's contract. The Plaintiff, through various dealings, was a regular supplier of materials or goods for the U.S. Navy in the Philippines from either the local origin or imported from U.S. or Japan. As such, the Defendant and his agent were able to import the taximeters required in the contract with the help of the Plaintiff and his Japanese business associates. The Defendant's agent then made representations with the Plaintiff to procure radio transceivers, amounting to $77,620.59, to be delivery to the Defendant within 60-90 days after the receipt of the proper radio frequency. While awaiting for it, the Plaintiff had instructed his agent to secure the radio transceivers. Later upon receiving the said required