Sarmiento v. Sps.
Cabrido
Petitioner: Tomasa Sarmiento
Respondent: Sps Luis & Rose Sun-Cabrido and Maria Lourdes Sun
Appeal by certiorari
Corona, J.
Facts:
Petitioner, states that in 1994 she, thru a certain Tita Payag, she acquired the services of
DingDing’s Jewelry Shop, owned and managed by the Cabridos, for the purpose of
converting Dra Virginia Lao’s pair of diamond earrings into two gold rings.
When the rings were finished, Marilou Sun of DingDing’s Jewelry Shop, with whom Tita
Payag discussed the resetting job, notified her that the rings were finished and that she
could bring them to the store for dismounting. Marilou was unable to dismount the
diamond so she asked their goldsmith, Zenon Santos to do it. Using pliers, Zenon Santos
twisted the diamond breaking it in the process.
Petitioner was forced to buy a replacement for Php 30,000 and sought to recover damages
from the respondents. The Municipal Trial Court in Cities of Tagbilaran found in favor of
the petitioner but the appellate courts reversed the MTCC’s decision.
Issue:
1) WON the dismounting of the diamond from its original setting was part
of the contract? YES
2) WON respondents are liable for damages? YES
Ratio:
The Court sides with the petitioner
1) The respondents initially denied accepting the said resetting job, but eventually
admitted to its existence nonetheless denying that they had any obligation to dismount
the diamonds from their original setting. Such statements were found to be inconsistent
with the acts of Marilou who, upon examining the diamonds, expressed no reservation as
to their dismounting, which was after all an integral part of the job order.
She should have asked Tita Payag to take the diamonds someplace else for dismounting if
she really intended to spare the shop of dismounting them. Furthermore, upon completion
of the rings, she was the one who called up the petitioner to bring the diamonds in for
resetting, she even attempted to reset them herself before eventually delegating the task
to Santos.
2) Obligations arising from contracts have the force of law between the contracting
parties, corollarily, 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.
Santos, who had 40 years experience as a goldsmith, was negligent in dismounting the
diamonds because he did not employ a miniature wire, as was the practice of the trade,
but instead used a pair of pliers.
It should be pointed out that when Marilou examined the diamonds before dismounting it
from the original setting , they were in order, their subsequent breakage in the hands of
Santos could only have been caused by his negligence in using the wrong equipment (Res
ipsa loquitor).
The respondents tried to avoid liability by denying Santos and Marilou were employees of
DingDing’s Jewelry Shop. But facts show that Santos had been working for DingDing’s for
about 6 months, accepting job orders while Tita Payag states that on at least 10 previous
occasions she had transacted with DingDing’s through Marilou. Therefore there exists an
obligation by the owner’s of DingDing’s to pay actual damages to the petitioner
Moral damages may be awarded in a breach of contract if it is proven that the defendant
acted in 1) bad faith or was 2) guilty of gross negligence amounting to bad faith or in 3)
wanton disregard of his contractual obligation.
In this case, due to the gross negligence of Santos, their employee, the respondent
spouses are liable for moral damages.
Held: Petition granted. Respondent spouses ordered to pay jointly and severally to the
petitioner Php 30,000 in actual damages and Php 10,000 in moral damages.
Crisostomo v. CA
Facts:
 Estela L. Crisostomo contracted the services of Caravan Travel and Tours
International (CTTI) in order to arrange and facilitate her booking, ticketing and
accommodations for a tour dubbed “Jewels of Europe”
 The entire package cost P74, 322.70, which includes booking airfare
 Because here niece Meriam Menor was ticketing manager for the company, she was
given discounts
 On June 12, 1991, a Wednesday, Menor went to her aunt’s house to deliver the plane
tickets and other travel documents. She told her aunt that her flight would be on
Saturday
 Crisostomo did not bother to look at the tickets or travel documents to confirm this,
but went to to the airport on Saturday morning, only to be informed that her flight
took off the day before
 She complained to Menor, who afterwards prevailed upon her aunt to take another
tour called “British Pageant,” which cost P20,881.00
 She paid a partial payment of $300 and went on the trip
 Upon coming back, she refused to pay the remainder of the amount, and instead
asked for the reimbursement of the difference between the P74, 322.70 she paid for
the first trip and the balance for the second trip CTTI refused saying that the sum
was non-refundable
 Due to their refusal, Crisistomo filed a complaint for breach of contract of
carriage and damages
 She alleges that she deserves the reimbursement because:
1. her failure to go on the first trip was respondent’s failure to clearly indicate the
departure date on the plain ticket
2. the company was also negligent in misinforming her about the flight schedule
3. the “British Pageant Tour” was only a substitute for the “Jewels of Europe” tour,
and, therefore, the cost of the former should be set-off against the sum paid for
the latter
 CTTI prayed that petitioner be ordered to pay the balance of P12, 901.00
 It, alleges that:
1. departure date was clearly and legibly indicated on the plane ticket
2. the ticket and travel documents were delivered to Crisostomo 2 days before her
departure date, giving her ample time to read and examine them
3. her failure to join the tour was her own fault for not bothering to read o r
confirm her flight schedule as printed on the ticket
4. it is an accepted industry practice to disallow refund because the cost of the
entire package tour is determined by the minimum number of projected
participants
 5. “British Pageant” tour was not a substitute, but rather a separate tour that
Crisostomo contracted after realizing her mistake for the first tour
 Trial Court decided in favor of Crisostomo, but found her guilty of contributory
negligence, which is its basis for lowering the damages awarded
 Both parties appealed to the CA, which found them both at fault
 However, it found Crisostomo more negligent because as a lawyer and a well-
traveled person, she should have known better than to simply rely on what
she was told
 CA ordered her to pay the balance because she had already forfeited her right to
the “Jewels of Europe” tour
 She appealed to the SC, saying:
1. as a common carrier it failed to exercise the extraordinary diligence that the law
requires from it
2. If she were negligent, it was only contributory and not the proximate cause of
the damages she suffered
ISSUE: WON CTTI was required to exercise extraordinary diligence in fulfilling
its obligation.
HELD: NO. The contract involved is not one of carriage and transportation, nor
is CTTI a common carrier. It is but a travel agency and, therefore, it
is only required to exercise the ordinary diligence of a good father of
a family.
 Contract of carriage or transportation – whereby a person or association of persons
obligate themselves to transport persons, things, or news from one place to another
for a fixed price
− Classified as private (or special) carriers and
common (or public) carriers
 Common carrier (accdg. to Art. 1732 of the CC)- persons or associations engaged in
the business of carrying or transporting passengers or goods or both by lane, water
or air for compensation, offering their services to the public
 For reasons of public policy, common carriers are required to carry passengers as far
as human care and foresight can provide using the utmost diligence of a very
cautious persons and with due regard for all circumstances (Art. 1755, CC)
 In this case, CTTI did not undertake to transport petitioner, it merely obligated itself
to make travel arrangements, such as procuring tickets, facilitating travel permits or
visas, booking customers for tours, etc.
 At most, it is merely an agent of the airline
 There was only an ordinary contract between the parties, which only requires the
diligence of a good father of a family (Art. 1173 of the CC) (reasonable care of an
ordinarily prudent person)
 Test to determine W/N a party is negligent: DID THE DEFENDANT IN DOING
THE ALLEGED NEGLIGENT ACT USE THAT REASONABLE CARE AND CAUTION
WHICH AN ORDINARILY PRUDENT PERSON WOULD HAVE USED INTHESAME
SITUATION?
 Fault or negligence consists in his failure to exercise due care and prudence in the
performance of the obligation as the nature of the obligation demands. There is no
fixed standard of diligence applicable to each and every contractual obligation. In
each case, the degree of diligence requires depends on the circumstances of the
specific obligation and whether one has been negligent is a question of fact that is to
be determined after taking into account the particulars of each case
 Where the ticket and travel documents were delivered sufficiently ahead scheduled
flight, and where date and time of flight was legibly written of the plane ticket, CTTI
exercised due diligence and performed all its obligations to enable Crisostomo to join
the tour
 Had petitioner exercised due diligence, there would have been no reason for her to
miss the flight. After travel papers were delivered to petitioner, it became incumbent
upon her to take ordinary care of her concerns, which requires that she at least read
the documents to assure herself of the important details of her trip
 The negligence of the obligor in the performance of the obligation renders him liable
for damages for the resulting loss suffered by the obligee.
Therefore, petitioner is ordered to pay respondent the balance of the price of the “British
Pagent” tour with legal interest of 6% from the time the counterclaim was filed until the
finality of this Decision. After Decision becomes final and executory, the legal interest
would be 12% because the obligation is now the equivalent to a credit
Cetus Development Corp. v. CA
Facts:
♦ Ederlina Navalta, Ong Teng, Jose Liwanag, Leandro Canlas, Victoria Sudario,
and Flora Nagbuya were the lessees of the premises located at No. 512 Quezon
Boulevard, Quiapo, Manila, originally owned by the Susana Realty. Payments of
the rentals were paid by the lessees to a collector of the Susana Realty who
went to the premises monthly
♦ March 1984 - Susana Realty sold the leased premises to Cetus Development,
Inc.
♦ April to June 1984 – he lessees continued to pay their monthly rentals to a
collector sent Cetus. For July, August and September the lessees failed to pay
their monthly individual rentals as no collector came.
♦ October 9, 1984 – Cetus sent a letter to each of the lessees demanding that
they vacate the premises and to pay the back rentals for the months of July to
September, within 15 days upon the receipt thereof. The lessees paid the
respective arrearage in rent which were accepted by Cetus subject to the
unilateral condition that the acceptance was without prejudice to the filing of an
ejectment suit. Subsequent monthly rental payments were likewise accepted.
♦ The lessees failed to vacate he remises and as such the Cetus Inc. filed with the
MTC of Manila complaints for ejectment. The lessees claimed that since the
occupancy of the premises they paid their monthly rental regularly through a
collector of the lessor; that their non-payment of the rentals for the months of
July, August and September, 1984, was due to the failure of the petitioner (as
the new owner) to send its collector; that they were at a loss as to where they
should pay their rentals.
♦ The MTC dismissed the cases. The acceptance of the back rental by the plaintiff
before the filing of the complaint, as in this case, the alleged rental arrearages
were paid immediately after receipt of the demand letter, removes its cause of
action in an unlawful detainer case, even if the acceptance was without
prejudice.
♦ Cetus appealed to the RTC and the case was dismissed for lack of merit.
Issue
WON there exists a cause of action when the complaints for unlawful detainer. WON the
lessees incurred delay in the performance of their obligation. NO Abella v. Francisco
♦ Section 2, Rule 70 provides: Landlord to proceed against tenant only after
demand. — No landlord or his legal representative or assign, shall be such
action against a tenant for failure to pay rent due or to comply with the
conditions of his lease, unless the tenant shall have failed to pay such rent or
comply with such conditions for a period of fifteen (15) days or five (5) days in
case of building, after demand therefor, made upon qqqm personally, or by
serving written notice of such demand upon the person found on the premises,
or by posting such notice on the premises if no persons be found thereon.
♦ The demand required here is a jurisdictional for the purpose of bringing an
unlawful detainer suit for failure to pay rent or comply with the conditions of
lease. It partakes of an extrajudicial remedy that must be pursued before
resorting for judicial action so much so that when there is full compliance with
the demand, there arises no necessity for court action.
♦ Section 2 presupposes the existence of a cause of action for unlawful detainer
as it speaks of failure to pay rent due or comply with the conditions of the
lease.
♦ The existence of the cause of action gives the lessor the right under Article
1659 of the New Civil Code to (1) ask for the rescission of the contract of lease
and indemnification for damages, or (2) only the latter, allowing the contract to
remain in force. If the option chosen is (2) then the demand referred to is to
pay rent or to comply with the conditions of the lease violated. However, if (2)
the demand must be for the lessee to pay rents or to comply with the
conditions of the lease and to vacate. Accordingly, if rescission is clearly the
option taken, then both demands to pay rent and to vacate are necessary to
make a lessee a deforciant in order that an ejectment suit may be filed.
♦ For the purpose of bringing an ejectment suit two requisites must concur:
o there must be failure to pay rent or comply with the conditions of the
lease
o there must be demand both to pay or to comply and vacate within
the periods specified in Section 2, Rule 70, namely 15 days in case of
lands and 5 days in case of buildings.
♦ In this case no cause of action for ejectment has accrued because there was no
failure on the part of the lessees to pay rents for three consecutive months
♦ Petitioner has not shown that its case falls on any of the following exceptions
where demand is not required:
o when the obligation or the law so declares
o when from the nature and circumstances of the obligation it can be
inferred that time is of the essence of the contract
o when demand would be useless, as when the obligor has rendered it
beyond his power to perform.
♦ Article 1169 of the CC provides that; those obliged to deliver or to do
something incur in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation. The demand required
here is different from the demand required by section 2 of Rule 70.
♦ There was no proof that the petitioner demanded the payment of the rentals
when the obligation matured. In addition no collector was sent. The lessees
cannot be held guilty of mora solvendi or delay in the payment of rentals.
♦ Demand to vacate was premature as it was an exercise of a non-existing right
to rescing.
♦ The lessor is not obligated to send a collector but it has been customary for the
lessees to pay the rentals through a collector. Art. 1257 provides that where
no agreement has been designated for the payment of the rentals, the place of
payment is the domicile of the defendants.
 Vda. De Villaruel v. Manila Motor Co.
Facts
May 31, 1940. The Villaruels entered into a 5 year contract with Manila Motors.
The contract stipulates that they will lease a 500 square meter floor space of a
building of strong materials for a showroom, office and stockroom. This will be worth
P300. And they also agreed to rent out a 5 room residence for the manager of the Manila
Motors(MMCI) for another P50. The contract was subject to renewal for another 5 years.
All was going well, until the Japanese occupation. Then the structures were used by
the Japanese from June 1, 1942 to March 29, 1945. No rent was paid in those times.
Then the liberation came, and the structures were rented by the Americans from
March to October 31, 1945.
And from Oct 1945-June 1946 continued the rent after the Americans.
MMCI then decided through its then manager Grey to renew the contract for an
additional five years excluding the occupation of the US.
MMCI subleased the building to Mr. Arturo Colmenares except for the residence.
Then before the rentals could be collected, Dr Villaruel who was in charge of the
collection of rentals asked a lawyer if they can recover the rentals from the Japanese
occupation. And the lawyer said yes, so they asked this from the MMCI.
MMCI refused to pay, so the Villaruels notified them of rescission of the contract and
P11,900 owed rentals from the Jap occupation.
Still MMCI refused to pay. But then MMCI paid what they owed for July 1946 they and
stayed in the leased structure and the Villaruels accepted this, clarifying that it didn’t
prejudiced their rights to the past rentals.
But the next month up to Nov 1946, there was no payment since no accord was
arrived at. And the payment only resumed on Dec 1946, now to be paid by Mr. Colmares.
The Villaruels accepted this but again said that it did not erase their rights to past rents
and the rescission of the contract( I think they wanted a higher price).
April 26, 1947, they finally reached the courts. But pending the case, a fire started in
the City Theatre, one of the sublessee. It burned the two business structures.
And now besides the first action of past rents, and the 2nd cause of action for the legal
interest, a 3rd cause of action was instituted by the Villaruels.
MMCI countered that they wouldn’t pay the rent because of the DEBT MORATORIUM
and that they can’t add a 3rd cause of action as this was not in line with their petition for
recovery of rentals and rescission.
To these, the court answered that they can add the 3rd cause of action, as the courts
recognized a rule of court that wants all the disputes regarding real matter in a dispute be
in one proceeding. And the Rutter vs Esteban case already resolved that the Debt
Moratorium has been lifted, when they contend that it still exists so that the 1st and 2nd
cause of action canbe dismissed. ( the lower court granted the respondents freedom to
not pay because of the Debt Moratorium)
ISSUES.
WON the respondents need to pay the rents for the Jap occupation. NO based
on the international and domestic law, recognition of fortuitous event and
Spanish Civil Code.
The difference between the trespass(perturbacion de hecho) or trespass with
title(perturbacion de derecho), shows that MMCI was really dispossessed by the Japs.
1st support: the principles of international law recognizes that belligerent occupants(in
times of war) get rights even if temporary when they occupy properties for the
necessities of war.(Oppenheim, Lauterpach, International Law) (Hyde, International
Law quoting the U.S. War Dep’t 1940, Rules of Land Warfare) (Forest and Tucker)
legal writers
2nd support: the jurisprudence in Haw Pia vs China Banking Corp. expressly
recognized that the rights of the Japs to take temporary control over enemy private
property in its military effort.
SO the Spanish civil code provision in saying lessor is not liable for the
property if there are mere acts of disturbance, does not hold. Since Art 1560
says the acts of disturbance doesn’t apply to 3rd parties who use the leased
property upon a right (the int’l and domestic law recognized the rights of the
Japs).
And the contention that it was upto the lessees to file a direct action against
trespassers is untenable. The dissenting opinion in Reyes vs Caltex said that the victims
would have no way to bring the Japs to court, and that it would have brought the severest
penalties for the defiance to the enemies.
Also if we look at it as a fortuitous event, the respondent moreso would have no
liability.
Instead it is Art. 1554 which apply in this case, that the lessor had a duty to
maintain the peaceful enjoyment of the lease during the entire term of the
contract. A lease is reciprocal and repetitive, therefore prestations is required
from both parties, and if one party fails to fulfill his obligations gives rise to a
failure of consideration(causa) excusing the other party. No lessee would pay for
the premises if he can’t use it. Civil law requires the debtors maintenance of the
property.
By the way, in the common law, it is different, here they say that in leases, they vest
ownership to the lessee. So whatever happens to the estate , the lessee is liable.
In any case, by the passivity of the lessors to recover the rent before showed a waiver
of their rights, in fact they accepted the payment from Oct 1945-June 1946.
Anyway, the first cause of action for the rents is exempted by the Japanese occupation.
And when they demanded the rent in 1946, the moratorium law was still in place until it
was lifted in 1948. So with the legal interest.
WON the liability of the 3rd cause of action(the fire) can be attributed against
MMCI.
No, When the lessors didn’t accept the payment because of their insistence upon
collecting the 1942-1945 rent which was against the law, the were placed in default (mora
accipiendi). The result of this is, they bear all supevening risks of accidental injury or
destruction of the leased premises.
Art. 1585, “when the obligation to deliver a certain and determinate thing arises from
the commission of a crime or misdemeanor the obligor shall not be exempted from the
payment of its value, whatever the cause of its loss may have been, unless, having
offered the thing to the person entitled to receive it, the latter should have refused
without reason to accept it”.
Art. 1452 tells about the liability of the seller until the fungible things until weighed,
counted, measured or purchaser is in default.
Art 1589 the person who bound himself to work has liability of the thing until he
delivers it or the other party is in default.
While there is a presumption that the loss of the thing is the fault of the lessee, it
wasn’t invoked here. The trial court and parties, in any case, accepted the event to be
fortuitous.
And the contention that the payment that the debtor didn’t accept wasn’t consigned in
court so renders the debtor not liable is untenable. For the reason that PNB vs Relativo
says that the only effect from this is that the obligation stills stands, nothing more.
Decision modified. The lower court is wrong to make the respondents-appelants pay
P2,165 a month for the Jap occupation and P30,000 for the burned building. This court
only demands the payment of the respondents for the July-Nov 1946 rents of P350
amounting to P1,750.
CENTRAL BANK OF THE PHILIPPINES and Acting Director Antonio T. Castro, Jr.
of the Dept. of Commercial and Savings Bank, in his capacity as statutory
receiver of Island Savings Bank, petitioners, vs. COURT OF APPEALS and Sulpicio
M. Tolentino, respondents [1985]
 Apr 28, 1965: Tolentino’s loan application of P80k w/the Island Savings Bank (ISB)
was approved. As security, he executed a real estate mortgage over his 100-hec land
in Cubo, Las Nievas, Agusan. Terms of the loan:
 1. lump sum loan of P80k
2. repayable in semi-annual installments for 3 yrs w/12% annual interest
3. loan to be used solely as an additional capital to develop his other property into
a subdivision
 May 22, 1965: P17k partial release. Tolentino & his wife signed a promissory note for
such amount at 12% annual interest payable in 3yrs from date of execution of
contract at semi-annual installments of P3,459.00. Advance 6-month interest for the
P80k loan was deducted from the P17k amounting to P4,800.00. But such amount
was refunded to Tolentino on July 23, 1965. No fund available yet for the P63k
balance.
 Aug. 13, 1965: Monetary Board of Central Bank issued Resolution No. 1049 finding
ISB suffering liquidity problems. Bank was prohibited making new loans &
investments except in gov’t securities & loans already approved subj to the review of
the Supt of Banks who may impose certain limitations.
 June 14, 1968: Monetary Board issued Resolution No. 967 finding that ISB failed to
put up required capital to restore its solvency. Bank prohibited from doing business
in RP & Acting Supt of Banks to take charge of ISB’s assets.
 Aug. 1, 1968: due to Tolentino’s failure to pay P17k covered by promissory note, ISB
filed for extra judicial foreclosure of the real estate mortgage. Sheriff scheduled
auction for Jan. 22, 1969.
 Jan. 20, 1969: Tolentino filed a petition for injunction, specific performance or
recission & damages w/prelim injunction alleging that since ISB failed to deliver P63k
balance, he’s entitled to specific performance by ordering delivery of balance w/12%
per annum interest from Apr. 28, 1965 & if such can’t be done, to rescind mortgage.
Court issued TRO.
 CFI: ordered Tolentino to pay ISB P17k + legal interest & charges due and TRO lifted
so foreclosure may proceed.
 CA: Affirmed dismissal of Tolentino’s petition but ruled that ISB can neither foreclose
mortgage nor collect P17k loan.
Issues & Ratio:
1. WON ISB’s defenses in its failure to fulfill its obligation are acceptable – NO
 In reciprocal obligations such as in this case, obligation/promise of each party is the
consideration for that of the other. When one party has performed or is ready &
willing to perform his part, the other party who has not yet performed or is not ready
& willing incurs in delay (CC Art. 1169). Thus, consideration for Tolentino’s promise
to pay was ISB’s obligation to furnish P80k loan. Oblig began when Tolentino
executed real estate mortgage and it lasted until Central Bank issued Resolution No.
967 w/c made it legally impossible for ISB to furnish the balance. Resolution No.
1049 can’t interrupt ISB’s default in complying w/its oblig since it did not prohibit
bank from releasing the loan balance of loan agreements previously contracted.
 Mere pecuniary inability to fulfill an engagement does not discharge the oblig of the
contract nor does it constitute any defense to a decree of specific performance
(Gutierrez Repide v. Afzelius) and mere fact of insolvency of a debtor is never an
excuse for the non-fulfillment of an oblig but instead it’s taken as a breach of
contract by him (CJS).
 Fact that Tolentino demanded & accepted the refund of pre-deducted 6-month
interest of P4,800 can’t be taken as a waiver of his rt to collect balance. In fact,
collection of the pre-deducted interest was improper considering that only P17k was
released. A person can’t be legally charged interest for a non-existing debt. In
accepting the refund, Tolentino was only exercising his rt.
 ISB claims that there was an overvaluation of the loan collateral. But such does not
exempt it from complying w/its reciprocal oblig. Bank officials should exercise caution
& prudence in the discharge of their functions by investigating existence & valuation
of properties being offered as loan security. They can’t rely merely on the customer’s
representation. Besides, lower court prevented petitioner from presenting proof on
alleged over-valuation because of their failure to raise the same in their pleadings in
effect waiving their right to do so (ROC Sec. 9, Rule 9). Thus, such can’t be raised in
the SC.
2. WON a an action for specific performance can prosper – NO
ISB is now prohibited from doing further business by Monetary Board Resolution No.
967.
3. WON recission is proper – YES
 But only for the P63k balance w/c ISB failed to deliver.
 Tolentino is bound by the promissory note he released WRT the P17k loan. He has a
reciprocal oblig to pay such when it falls due. So WRT to this amount, he’s not
entitled to recission since he’s also a party in default (CC Art. 1191). As a matter of
fact, rt to rescind belongs to the aggrieved party, ISB. Had he not signed a
promissory note, Tolentino would be entitled to ask for recission of entire loan there
being no date for him to perform his reciprocal oblig to pay.
 Since both parties were in default, they’re both liable for damages.
 CC Art. 1192: In case both parties committed a breach of their reciprocal obligations,
the liability of the first infractor shall be equitably tempered by the courts. Thus,
ISB’s liability for damages is offset by Tolentino’s liability for damages in the form of
penalties & surcharges.
 The liability of Tolentino for the interest of the P17k debt shall not be included in
offsetting the liabilities of both parties since he derived some benefit for his use of
said amount. But Tolentino’s real estate mortgage can’t be entirely foreclosed to
satisfy his P17k debt. Note that the consideration of the accessory contract of the
real estate mortgage is the same as that of the principal contract. In both instances,
the consideration of the debtor’s oblig to pay is the existence of a valid, voidable or
unenforceable debt (CC Art. 2086 in relation to Art. 2052). The consideration in
executing a mortgage may either be a prior or subsequent matter. But when the
consideration is subsequent, the mortgage can only take effect when the debt
secured by it is created as a binding contract to pay. And when there’s partial failure
of consideration, the mortgage becomes unenforceable to the extent of such failure.
The mortgage can’t be enforced for more than the actual sum due (Metropolitan Life
Ins. v Peterson). Since ISB failed to furnish the P63k balance, the mortgage is
unenforceable to such extent w/c is 78.75% of the total loan. Thus, 78.75 of the
100-hec mortgage is unenforceable. The remaining 21.25 hec is more than sufficient
to secure the P17k debt.
 CC Art. 2089’s rule on indivisibility of real estate mortgage is not applicable since
such rule presupposes several heirs of the debtor/creditor w/c is not the case here.
Holding:
1. Tolentino to pay ISB P17k + P41,210.00 as 12% interest per annum from May 22,
1965 to Aug. 22, 1985 and 12% interest on total amount counted from Aug. 22,
1985 until paid.
2. In case Tolentino fails to pay, his real estate mortgage of 21.25 hec shall be
foreclosed to satisfy his total indebtedness.
3. 78.75 hec real estate mortgage is unenforceable & ordered released in favor of
Tolentino.
Chavez v. Gonzales
 Plaintiff Rosendo O. Chavez delivered to defendant Fructuoso Gonzales a portable
typewriter for routine cleaning and servicing.
 Gonzales, despite repeated reminders by Chavez, was not able to finish the job
after some time. He merely gave assurances but failed to comply.
 He even asked for P6 to purchase spare parts
 After getting exasperated with the delay of the repair, Chavez went to Gonzales’s
house and asked for its return. Gonzales gave it in a wrapped package
 When Chavez opened it at home, the typewriter appeared to be “in shambles”
with some parts missing. Chavez sent a letter to Gonzales formally demanding
the return of the missing parts and the P6. Gonzales returned some of the
missing parts and the money.
  Chavez then had the typewriter repaired by Freixas Business Machines, the
repair job totaling P89.95
 Hence, Chavez filed a suit for breach of oral contract and recovery of damages
demanding P90 as actual and compensatory damages, P100 for temperate
damages, P500 for moral damages and P500 as attorney’s fees.
 TC held that repair done by Freixas shouldn’t be fully chargeable against
Gonzales since the missing parts had a total value of only P31.10. Hence this
appeal.
Issues:
1. WON Gonzales is not liable at all since his contract did not contain a
period, thus Chavez should have first filed a petition for the Court to fix
the period as per Art. 1197, CC
 NO. By the time Chavez ask for the return of the typewriter and Gonzales
complied, they already had a perfected contract where it was intended that
Gonzales finish it at some future time although such time was not specified.
 Such time had passed without work being done, for Gonzales returned the
typewriter cannibalized and unrepaired [w/c in itself is a breach] without
demanding that he be given more time to finish the job or compensation for
the work already done. To first petition the court to fix a period is academic
and will only serve as a mere formality which would only cause delay
2. WON TC erred in awarding only the value of the missing parts of the
typewriter instead of the whole cost of labor and materials that went to
the machines repair, as per Art. 1167, CC
 YES. Art. 1167 provides that: “If a person obliged to do something fails to do
it, the same shall be executed at his cost. This same rule shall be observed if
he does it in contravention of the tenor of the obligation. Furthermore, it
may be decreed that what has been poorly done be undone.”
 Clearly, Gonzales contravened the tenor of his obligation because not only
did he not repair the typewriter but returned it in “shambles”.
 He is thus liable for the cost of executing the obligation in a proper manner
which is the cost of the labor expended in the repair (P58.75) because the
obligation was to repair it.
 He is also liable, under Art. 1170, for the cost of the missing parts (P31.10)
for in his obligation to repair, he was bound to return it in the same condition
it was when he received it, which he failed or neglected to do.
 However, the claim for moral and temperate damages and attorney’s fees
cannot be sustained since they must be alleged in the complaint and the
existence of the actual basis thereof must be proved.
Holding: Gonzales made to pay P89.98 with interest at the legal rate.
Telefast v. Castro
Petitioner: Telefast Communications Wireless/Phil. Wireless Inc.
Respondent: Ignacio Castro Sr. and his children (Sofia Crouch et. al.)
Petition for review by certiorari
Padilla, J.
Facts:
On Nov. 2, 1956, Consolacion Castro, wife of Ignacio Castro Sr. and mother of the other
respondents died. On the same day Sofia C. Crouch, Consolacion’s daughter, addressed a
telegram to her father, who was then residing in the U.S. announcing Consolacion’s death.
The petitioner accepted the telegram for transmission after payment of the required fees.
The telegram never reached Ignacio Castro Sr. Consolacion was interred with only her
daughter in attendance. Her husband and all her other children, who were all residing in
the U.S. did not know of her death until Sofia returned to the U.S.
The Castro family subsequently filed an action for damages against Telefast Inc in the
Court of First Instance of Pangasinan, who rendered a decision awarding them a total of
Php 160,000 in moral damages. The Intermediate Appellate Court sustained the CFI’s
decision with slight modifications.
Petitioner, Telefast Inc, now seeks that the award of moral damages be eliminated. They
contend that they are only liable for Php 31.92, the fee charged for the telegram.
Issue:
1) WON petitioner is liable for moral damages? YES
Ratio:
The Court sides with the Castro family.
1) Art. 1170 of the Civil Code provides that “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.” Art. 2176 also provides that
“whoever by act or omission causes damage to another there being fault or negligence, is
obliged to pay for the damage done.”
Sofia entered into a contract with Telefast, wherein Telefast, for a fee, would send Sofia’s
message overseas. This the petitioner did not do, despite the payment of the required fee
therefore petitioner is guilty of contravening its obligation to Sofia and is thus liable for
damages.
Such liability is not limited to actual or quantified damages, Art 2217 of the Civil Code
provides “Moral damages include physical suffering, mental anguish, … and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are
the proximate results of the defendant’s wrongful act or omission.”
Petitioner’s act or omission, which amounted to gross negligence was precisely the cause
of the “mental anguish and the sorrow that the overseas children must have suffered
upon learning of the death of their mother after she had already been interred, without
being given the opportunity to even make a choice on whether they wanted to pay her
their last respects.”
Held: Petition denied. Petitioner ordered to pay:
Php 10,000 as moral and Php 1,000 as exemplary damages to each of the 12 respondents
plus Php 16,000 compensatory damages to Sofia Crouch (for expenses she incurred in
returning to the Philippines to testify in trial) and Php 5,000 in atty’s fees.
Arrieta v. Naric
FACTS:
 The National Rice and Corn Corporation (NARIC) held a public bidding for the supply
of 20,000 metric tons of Burmese rice
 Paz Arrieta participated and made the lowest bid at $203 per metric ton (pmt)
 The two parties entered in to a Contract of Sale of Rice:
o Arrieta obligated herself to deliver 20,000 metric tons of Burmese rice at $203
pmt
o NARIC obligated itself to pay for the imported rice by means of an
irrevocable, confirmed and assignable letter of credit (LOC)in US
currency in favor of Arrieta and/or the supplier in Burma
 On July 30, 1962, a full month after execution of contract, NARIC took the first step
to open a letter of credit with the PNB
 It informed PNB of the imperativeness of meeting the August 4
 Beyond that date, Arrieta’s deposit to the supplier in Burma equivalent to 5% of the
FOB price of the supply would be confiscated if the LOC is not received
 On August 2, NARIC sent a message to PNB requesting that the application be
considered a special case because NARIC “is not in a financial position to meet the
requirement of 50% marginal cash deposit
 On August 4, PNB approved application for LOC, but still with the condition that
50% marginal cash deposit be paid, and drafts be paid upon presentment,
and that the application will be held in abeyance until fulfillment with the
requirement
 Consequently, it was only on Sept. 8 (more than 2 months after the execution of the
contract) that NARIC was able to open an LOC
 As a result of the delay, Arrieta’s deposit was cancelled and forfeited. However, the
forfeiture was not made immediately after expiration of Aug. 4 deadline, but was
made only on Aug. 20, which means NARIC was given a 15-day grace period to
make good on its commitment
 Arrieta tried, but failed, to restore the cancelled allocation of rice. She offered NARIC
to substitute Thai rice instead but NARIC rejected her offer
 Arrieta then asked NARIC to compensate her for the damages she suffered because
of unrealized profit in the sum of $286,000 in US currency
 NARIC blamed Arrieta for the delay, alleging that she did not seasonably furnish the
data necessary and required for the opening of the LOC
ISSUE: W/N NARIC was guilty of breach of contract through contravention of
tenor, thereby making it liable for damages suffered by Arrieta.
HELD: YES. NARIC’s failure to immediately open an LOC, which is the sole and
principal reason for the cancellation of the allocation contracted by
Arrieta, amounted to a breach of the Contract of Sale of Rice for
which NARIC can be held liable for damages
 Article 1170, CC: … Those who in any manner contravene the tenor [of their
obligation] are liable in damages
 The phrase “contravene the tenor of” includes any illicit act which impairs the strict
and faithful fulfillment of the obligation, or every kind of defective performance
 The question of who was to blame is a question of fact that trial judges are better
situated to make conclusion on
 In this case, TC accepted Arrieta’s contention that the data needed for the opening of
the LOC was already made known to NARIC even before the execution of the
contract because the same data was necessary for her to even qualify as a bidder. It
was again made known to NARIC after the execution of the contract on various
occasions when Arrieta pressed for the opening of the LOC
 Also, as early as August 4, the LOC could have been opened had NARIC been able to
comply with the bank’s requirement
 The August 2 letter indicates that
1. NARIC knew of the bank requirements for opening LOCs
2. it also knew that it could not meet those requirements
Therefore, the root of NARIC’s culpability is it’s willful and deliberate assumption of
contractual obligations that it knew it was financially incompetent to undertake
Tanguilig v. CA
Facts:
♦ April 1987 - Jacinto M. Tanguilig doing business under the name and style J.M.T.
Engineering and General Merchandising proposed to respondent Vicente Herce
Jr. to construct a windmill system for him. Hey agreed on the construction of a
windmill system for P60,000 with a one year guaranty from the date of
completion and acceptance by the respondent.
♦ Herce paid Tanguilig DP of P30,000 and an instalment payment of P15,000,
leaving a balance of P15,000.
♦ March 14, 1988 due to the refusal and failure of respondent to pay the balance,
petitioner filed a complaint to collect the amount.
♦ Herce claimed that he had already paid this amount to the San Pedro General
Merchandising Inc. (SPGMI) which constructed the deep well to which the
windmill system was to be connected. Since the deep well formed part of the
system the payment he tendered to SPGMI should be credited to his account by
petitioner. Moreover, assuming that he owed petitioner a balance of P15,000.00,
this should be offset by the defects in the windmill system which caused the
structure to collapse after a strong wind hit their place.
♦ Petitioner denied that the construction of a deep well was included in the
agreement to build the windmill system, for the contract price of P60,000.00
was solely for the windmill assembly and its installation. He also disowned any
obligation to repair or reconstruct the system and insisted that he delivered it in
good and working condition to respondent who accepted the same without
protest. Besides, its collapse was attributable to a typhoon, a force majeure,
which relieved him of any liability.
♦ Trial Court held that the construction of the deep well was not part of te
contract and that there is no clear and convincing proof that the windmill
system fell down due to the defect of the construction.
♦ CA reversed the decision of the trial court. It ruled that the deep well was
included and that Tanguilig should reconstruct the windmill in accordance with
the one year guaranty.
Issues:
1. WON the agreement to construct the windmill system included the installation
of a deep well? NO
♦ Note: please see page 82-83 for the proposal.
♦ In the proposal there was no mention that the deep well is a component of the
proposed windmill system
♦ 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.
♦ Cardinal rule: the intention of the parties shall be accorded primordial
consideration and in case of doubt their contemporaneous and subsequent acts
shall be principally considered.
♦ It strains credulity that respondent would keep silent on this matter and leave it
all to petitioner Tanguilig to verbally convey to Pili that the deep well was part of
the windmill construction and that its payment would come from the contract
price of P60,000.00.
♦ It is unusual that Pili would readily consent to build a deep well the payment for
which would come supposedly from the windmill contract price on the mere
 representation of petitioner, whom he had never met before, without a written
commitment at least from the former.
♦ Herce Jr. himself who paid for the deep well by handing over to Pili the amount
of P15,000.00 clearly indicates that the contract for the deep well was not part
of the windmill project but a separate agreement between respondent and Pili.
♦ Herce cannot claim the benefit of the law concerning "payments made by a
third person." The Civil Code provisions do not apply because no creditor-debtor
relationship between petitioner and Guillermo Pili and/or SPGMI has been
established regarding the construction of the deep well. 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.
2. WON the petitioner is under the obligation to reconstruct the windmill? YES
♦ In order for a party to claim exemption from liability by reason of fortuitous
event under Art. 1174 of the Civil Code the event should be the sole and
proximate cause of the loss or destruction of the object of the contract. In
Nakpil vs. Court of Appeals, four (4) requisites must concur:
o the cause of the breach of the obligation must be independent of the
will of the debtor
o the event must be either unforeseeable or unavoidable
o the event must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner
o the debtor must be free from any participation in or aggravation of
the injury to the creditor.
♦ Petitioner failed to show that the collapse of the windmill was due solely to a
fortuitous event. Interestingly, the evidence does not disclose that there was
actually a typhoon on the day the windmill collapsed.
♦ Argument that Herce 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, Herce cannot be said to have incurred in delay; instead, it
is Tanguilig 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.

Khe Hong Cheng v. CA

 Juan Nakpil and Sons vs CA
Facts.- a consolidated case of 3 petitions finding errors in the lower court judgment.
PBA(Phil. Bar Assoc.) plaintiff, decided to construct an office building at Aduana and
Arzobispo Streets, Intramuros Manila. (840 sq. m.)
Their construction was undertaken by United Construction Inc.(UCI) on an
“administration” basis on the suggestion of Juan Carlos, their president and Gen. Manager.
The proposal was approved by plaintiff’s Board of Director President, Ramon Ozaeta(a
defendant but not important in this case).
The plans and specifications for the bldg. were provided by the Juan F. Nakpil and
Sons.
June 1966, the building was completed.
August 2, 1968, 2 years later, there was an earthquake, (7.3 in the richter) and the
building dangerously tilted forward from major damages.
Repairs were badly needed, UCI performed the repairs to make the building
tenantable at P13,661.28
PBA then filed suits against the architects and contractors along with their presidents
and Ramon Ozaeta.
Then the trial court divided the issues to technical and non-technical.
For the technical it asked the Commissioner Mr. Andres to Hizon to find out whether
the damage to the building during the earthquake was directly or indirectly caused by:
the inadequacies of the plans or specifications, deviations from the plans and
specifications( and how have these contributed), failure to observe the quality and
workmanship needed, failure of supervision required from the archi and contractor, even
the owner and act of God. And if it is a combination, then the proportion and individual
factor it contributed. And lastly, the recommendation on what to do with the building.
Then the non-technical issues were tackled by the court, meanwhile the plaintiff
moved twice for the demolition, and finally on April 30, 1970, after several earthquakes
causing no further damage, it was demolished.
Sept 25, 1970, the Commissioner finally submitted a report, putting blame to the
earthquake, the defects in the plans and specifications, deviations from it, failure to
observe the required quality and workmanship and the owners’ lack of supervision.
The trial court agreed to the full report except to the charge of full time supervision of
the construction. All objected and appealed.
May 11, 1978, the United Architects of the Phils, Association of Civil Engineers, and
the Phil. Institute of Architecture as amicus curiae intervened and on Nov, 24 they
submitted a reversed finding that the plans and the specification were not defective.
The Commissioner using the same basis, the Manila Code and ASEP Code, said that
even if defects can be found in the construction alone, it can’t be argued that even the
original designer admitted that the deficiency in design(overload of the groundfloor), and
lack of specific provisions against torsion contributed to the damage. Then the parties
argued over the award of damages.
The defendants contends the additional 200,000 awarded to the PBA.
PBA wanted the whole cost of the building(P1,830,000 from scratch) not (900,000
counted initially when it wasn’t totally a loss), and not only the rental for 6 months but for
the whole time(P178,671.76/year) until the judgment of the court.
Issues:
WON an Act of god which caused the failure of the building exempts from the liability,
parties who are otherwise liable because of negligence. NO
Art. 1723, says that within fifteen years if the building collapses by reason of defect
with the design and specs the architect or engineer is liable for damages, the contractor
too is liable if the materials are inferior and there are defects in construction. If the
engineer or architect supervises the construction, he shall be solidarily liable with the
contractor. Acceptance of the building after completion, does not imply a waiver.
Prescription is ten years after collapse.
An act of God- an accident, due directly and exclusively to natural causes without
human intervention, which by no amount of foresight, pains or care, reasonably to have
been expected, could have been prevented. (Corpus Juris)
Here it is accepted that there were acts of men that contributed(from the report), and
not that of fortuitous events alone. Art. 1174 holds that for it to be a fortuitous event, the
breach must be independent of the will of the debtor, unforeseen or unavoidable, event
renders impossibility for the debtor to fulfill his obligation in a normal manner, debtor
must be free form from aggravation and participation to the injury of the creditor.
Art. 1770, if there is fraud, negligence, delay or violation or contravention in any
manner of the tenor of the obligation, liability exists for the obligor.
Several older buildings withstood the earthquakes, and the SC normally (exceptions
stated in the case, i.e. error, misapprehension) accepts the facts found by the trial court.
Thus the reports are accepted. The defendants did acts to cause damage to the building.
They can’t reason out fortuitous events. An erudite decision by Justice Hugo says that
it it is accepted that floods cyclones, lightning are acts of God, it does not necessarily
follow however that specific losses and suffering resulting from these occurrences are acts
of God. From the thousand of buildings, God couldn’t have just singled out PBA, the
record is replete with the deficiencies caused by negligent men and not to a perfect God.
If they cay that this is an act of God, then following that line of thinking, why do we still
have buildings standing.
Only if you have time:
Additional facts why the court accepted the fault on the Architect and Contractor.
From the report of the Commissioner, we first learn of the design that put Sun Baffles
on the two sides and front causing the inertia forces to move the bldg. forward and create
a stiffness imbalance. A 4” diameter cast iron downspout reduced the cross sectional area
of each columns and the strength thereof. The two front corners, A7 and D& columns
were very much less reinforced.
A7 and D7 suffered the severest fracture and maximum sagging, more sagging and
leaning and damages were on the sides and front than on the back.Floors showed
maximum sagging on the sides and fronts.
Even if the commissioner concedes that the specs may have come from the code that
is not as earthquake ready. And the defendants content that the Commissioner might only
be speculating and further uses the current standards as basis.
But they can’t refute that there are clearly deficiencies, when the spirals are cut, there
is a cavity(although not proven to have caused damage) in column A4, the spacings in
between the spirals were more than what was specified in the plans, absent spirals, etc.
They have neglected some gen. principles of engineering design for reinforced
concrete or not applicable to the requirements for ductility and strength.
Even if they blame the plumbers on some cut spirals, they were supposed to watch
and supervise. And even if the cavity wasn’t proven to cause damage, it was an evidence
of poor construction.
These facts clearly indicate the wanton negligence of the defendants, the court holds
this to be bad faith in the performance of their respective tasks.
One who creates dangerous condition, although acts of 3rd persons or God, intervenes
to precipitate a loss, can’t escape the natural and probable consequences of his acts.
The court imposes on the defendants except Ramon Ozaeta, solidarily liability for P5m to
PBA plus damages for lost rentals and interest, P100,000. And a provision upon failure to
pay, a 12% per annum is recoverable until paid.
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee vs. LUZON STEVEDORING
CORPORATION, defendant-applellant [1967]
 Aug. 17, 1960: barge L-1892 owned by Luzon Stevedoring Corp. (LSC) was being
towed down the Pasig River by said corporation’s tugboats, Bangus & Barbero. Barge
hit one of the wooden piles of the Nagtahan bailey bridge, smashing the posts &
 causing the bridge to list/tilt. The river was swollen & had swift current then due to
the heavy downpour in Manila & surrounding provinces the previous days.
 RP sued LSC for actual & consequential damages caused by its employees amounting
to P200k.
 LSC denied liability claiming that:
1. it exercised due diligence in selecting its supervisors & employees
2. the damages were caused by force majeure
3. RP has no capacity to sue
4. the Nagtahan Bailey Bridge is an obstruction to navigation.
 CFI: LSC liable for damages caused by employees & ordered to pay actual cost of
repair amounting to P192,561.72 w/legal interest from date of filing complaint.
 On appeal to the SC, LSC raised some questions of fact w/c of course the SC can’t
decide since it’s limited to questions of law.
Issues & Ratio:
1. WON the collision was caused by a fortuitous event/force majeure. – NO.
 Note that the bridge is immovable & stationary w/adequate openings for the passage
of water craft such as LSC’s barge. It is undeniable that a barge exclusively
controlled by appellant rammed the bridge supports the presumption of negligence
on the part of the person manning the barge or the tugs that towed it since in the
ordinary course of events, such does not happen if proper care is used. Res ipsa
loquitur.
 LSC claims it took certain precautions on the day in question: 2 of its most powerful
tugboats were assigned to tow the barge, the more competent & experienced
patrons had the towlines, engines & equipment double-checked & inspected and
these patrons were instructed to take extra precautions & concludes that id had done
all that it was called to do. But these very precautions destroy their defense of force
majeure. Fortuitous events are defined as extraordinary events not foreseeable or
avoidable or events that could not be foreseen or w/c though foreseen were
inevitable (CC Art. 1174). Mere difficulty to foresee the happening is not equivalent
to an impossibility to foresee. By taking these precautions, LSC proved that the
possibility of danger was not only foreseeable but actually foreseen & was not caso
fortuito. They knew the perils posed by swollen stream & its swift current yet they
voluntarily entered into the situation involving obvious danger. It assumed the risk &
thus, it can’t shed responsibility merely because the precautions it adopted were
insufficient.
 Even if the bridge was improperly located, fact remains that it has been there for
many years and LSC can’t safely ignore the danger it poses, if any. These
circumstances merely emphasize the need of even higher degree of care on their
part.
2. WON the lower court abused its discretion in admitting RP’s additional
evidence after it rested its case. – NO.
 LSC is trying to insinuate that this was done deliberately to manipulate the evidence
to prejudice said corporation.
 Admission of additional evidence after resting the case lies w/in the sound discretion
of the trial judge & this can’t be reviewed except in clear case of abuse.
 No abuse of discretion was shown since additional evidence included vouchers &
papers to support an item of P1,558.00 spent for the reinforcement of the bailey
bridge which already appeared in a previous exhibit. Besides, LSC also did the same
– it presented additional evidence even after it has rested its case so there’s no
reason to charge the trial court of being unfair.
Holding: CFI decision affirmed.
Dioquino v. Laureano
 Plaintiff Atty. Pedro Dioquino went to the office of the MVO to register his car. He
met defendant Federico Laureano, a patrol officer of said MVO office. Dioquino
requested Laureano to introduce him to one of the clerks in the MVO Office who
could facilitate the registration of the car. Laureano complied
 After that, Dioquino gave Laureano a ride to the Provincial Commander (PC)
Barracks. On the way there, Dioquino’s car driven by his driver with Laureano as
the sole passenger was stoned by mischievous boys and its windshield broke.
 Laureano chased the boys & caught one of them and brought the boy to
Dioquino. The boy admitted his mischief & his father, Dioquino & Laureano
returned to the barracks but no satisfactory arrangements were made about the
damage to the windshield.
 Dioquino held Laureano liable for the damages and included Laureano’s wife and
father in his complaint. Laureano refused to file any charges against the boy and
his parents, believing that the stone-throwing was force majeure. He also
refused to pay for the windshield himself, despite Dioquino’s attempts to settle
the matter extra-judicially.
Issues:
1. WON Laureano may be held liable.
 NO. Art. 1174 provides that: “Except in cases expressly specified by the law,
or when it is otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be responsible for
those events which could not be foreseen, or which, though foreseen, were
inevitable.”
 Basis of this rule: major casus est, cui humana infirmitas resistere non
potest
 Essential element of caso fortuito: some extraordinary circumstance
independent of the will of the obligor or his employees
 Under Art. 1174, no diligence beyond what human care & foresight can
provide is necessary
 Here, what happened was clearly unforeseen. It was a fortuitous event
resulting in a loss which must be borne by the owner of the car.
 The TC was perhaps misled by the inclusion of the exemption from the
operation of such a provision of a party assuming the risk, considering the
nature of the obligation undertaken. What is therein contemplated is the
resulting even if caused by a fortuitous event where the party charged may
be considered as having assumed the risk incident in the nature of the
obligation to be performed. Laureano could not be held as bound to
assume a risk of this nature. There was no such obligation on his part.
 In Rep. v. Luzon Stevedoring Corp., the risk was quite evident & the nature
of the obligation such that a party could rightfully be deemed to have
assumed it. It is not so in this case.
2. WON Dioquino may be held for damages for having impleaded Laureano’s
wife and father.
 NO. Dioquino explained that the father was included as he was the
administrator of the inheritance of an undivided property to which Laureano
could lay claim while the wife was impleaded since the conjugal partnership
would be made to respond for whatever liability would be adjudicated
against the husband.
 Although such an explanation cannot be sustained, it cannot be concluded
that he was prompted solely by the desire to inflict needless and unjustified
vexation on them.
 Since he has already suffered a broken windshield and such perhaps would
not have occurred if Laureano did not borrow his car, he is not to be
penalized further by his mistaken view of the law in including them in his
complaint.
Austria v. CA
 NPC v. CA
FACTS:
 Engineering Constriction, Inc. (ECI) was the successful bidder for the construction of
the “2nd Ipo-Bicti Tunnel, Intake and Outlet Structures, and Appurtenant Structures,
and Appurtenant Features” in Norzagaray, Bulacan.
 It, therefore, entered into a contract with the National Waterworks and Sewerage
Auhtority (NAWASA) to complete the said works within 800 calendar days from the
date of formal notice.
 The project involved 2 major phases.;
 By Sept 1967, ECI had already completed the first phase.
 On Nov, typhoon “Welming” hit Central Luzon.
 Due to the heavy downpour, the water in Angat Dam was rising perilously at the rate
of 60cm/h.
 To prevent the overflow, since the water level already reached the danger height of
212m above sea level, NPC caused the opening of the spillways gates.
 Because of the NOC’s actions, an extraordinarily large volume of water hit the
installations and construction works of ECI with terrific impact, which resulted in the
loss and destruction of its stockpile of materials and supplies, camp facilities and
permanent structures
 CA sustained the findings of the TC that the destruction was due to the negligent
manner with which the spillway gates of Angat Dam were opened. It found that:
 NPC knew very well that it was safer to open the spillway gates
gradually, but they were only opened when the typhoon was already at
its height
 Action could have been taken as early as Nov 3 when water reservoir
was still low
 Appellant knew of the coming typhoon four days before it actually hit
the project area
 It made the following decision:
1. upheld TC’s award of actual or compensatory damages of P675,785.31
2. did not sustain award of consequential damages of P333,200
3. rejected award of unrealized bonus from NAWASA considering the completion
was already long overdue (1,170 days after formal notice to begin) at the time
of the incident
4. eliminated award for exemplary damages because NPC was not grossly
negligent
5. reduced attorney’s fees from P50T to P30T
 Both parties appealed
 NPC assails the decision, alleging that:
1. Loss and destruction of ECI’s equipment and facilities were due to force
majeure because the rapid rise of water level in the reservoir was brought
about by the typhoon, which is an extraordinary occurrence that could not have
been foreseen
 ECI assails the lowering of the award for damages
ISSUES:
I. W/N there was fault on the part of NPC concurrent with the force majeure.
YES. 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, the obligor cannot escape
liability
 Juan Nakpil & Sons v. CA:
The Act of God Doctrine strictly requires that the act must be one
occasioned exclusively by the violence of nature, and human agencies are to be
excluded from creating or entering into the cause of the mischief. When the
effect is found to be in part the result of the participation of man, whether it be
from active intervention or neglect, the whole occurrence is humanized and
removed from the rules applicable to the acts of God
To be exempt from liability for loss because of an act of God, he must be
free from any previous negligence or misconduct by which the loss or damage
may have been occasioned.
 Question of W/N NPC was negligent is a question of fact that properly falls within the
jurisdiction of the CA and will not be disturbed by the SC unless conclusion is clearly
unfounded
 NPC knew of the coming typhoon at least four days before it actually struck.
 Even though the typhoon was an act of God, NPC cannot escape liability because its
negligence was the proximate cause of the loss and damage.
II. W/N CA erred in eliminating award for exemplary damages.
NO. NPC was not shown to have acted in wanton, fraudulent, reckless or oppressive
manner. (see Art 2234 of CC)
II. W/N CA erred in reducing consequential damages
NO. There was no categorical statement by NPC that it bought a new crane. Also,
damaged crane was subsequently repaired and reactivated.
III. W/N CA erred in eliminating award for lost bonus
NO. It was not shown that NAWASA imposed the opposite of a bonus (i.e. payment for
liquidated damages for failure to finish project within stipulated period at the rate of
P4,000/day of delay)
Yobido vs. Court of Appeals
Petition for review on certiorari of a decision of the CA
Facts:
♦ April 26, 1988 - Tito and Leny Tumboy and their minor children named Ardee
and Jasmin, bearded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound
for Davao City.
♦ The left front tire of the bus exploded and the bus fell into a ravine around three
feet from the road and struck a tree. The incident resulted in the death of 28-
year-old Tito Tumboy and physical injuries to other passengers
♦ November 21, 1988 – a complaint for breach of contract of carriage, damages
and attorney's fees was filed by Leny and her children against Alberta Yobido,
the owner of the bus, and Cresencio Yobido, its driver, before the Regional Trial
Court of Davao City.
♦ The defendants raised an affirmative defense of caso fortuito. The plaintiffs
asserted that violation of the contract of carriage between them and the
defendants was brought about by the driver's failure to exercise the diligence
required of the carrier in transporting passengers safely to their place of
destination.
 ♦ According to Leny Tumboy, she cautioned the driver to slow down but he merely
stared at her through the mirror. At around 3:30 p.m., in Trento, she heard
something explode and immediately, the bus fell into a ravine.
♦ The defense tried to establish that the accident was due to a fortuitous event.
The tire that exploded was brand new and the driver underwent actual driving
test before they were employed.
♦ Lower court dismissed the case for lack of merit.
♦ Court of Appeals reversed the decision of the trial court

Issue: WON the explosion of a newly installed tire of a passenger vehicle is a fortuitous
event that exempts the carrier from liability for the death of a passenger? NO

♦ As a rule, when a passenger boards a common carrier, he takes the risks

incidental to the mode of travel he has taken. However, when a passenger is
injured or dies while travelling, the law presumes that the common carrier is
negligent.
♦ Art. 1755 provides that: a common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the circumstances.
♦ In culpa contractual once a passenger dies or is injured, the carrier is presumed
to have been at fault or to have acted negligently. This disputable presumption
may only be overcome by evidence that the carrier had observed extraordinary
diligence as prescribed by Articles 1733, 1755 and 1756 of the Civil Code or that
the death or injury of the passenger was due to a fortuitous event.
Consequently, the court need not make an express finding of fault or negligence
on the part of the carrier to hold it responsible for damages sought by the
passenger
♦ A fortuitous event possess the following characteristics:
o 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
o 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
o the occurrence must be such as to render it impossible for the debtor
to fulfill his obligation in a normal manner
o the obliger must be free from any participation in the aggravation of
the injury resulting to the creditor
♦ The explosion of the new tire may not be considered as 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.
♦ 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.
♦ 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.
♦ The defense failed to rebut he testimony of Leny Tumboy that the bus was
running so fast that she cautioned the driver to slow down.