Distinction Between Contractual Damages and Quisidelictual Liabilities

FGU INSURANCE CORPORATION VS. G.P. SARMIENTO TRUCKING CORPORATION AND LAMBERT M. EROLES G.R. NO. 141910; AUGUST 6, 2002 DIGEST NO. 21 Facts: G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of Concepcion Industries, Inc. While the truck was traversing the north diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee of the rights and interests of Concepcion Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the trucking company failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver Lambert Eroles with the Regional Trial Court, of Makati City. In its answer, respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not so engaged in business as a common carrier. Respondents further claimed that the cause of damage was purely accidental. The issues having thus been joined, FGU presented its evidence, establishing the extent of damage to the cargoes and the amount it had paid to the assured. GPS, instead of submitting its evidence, filed with leave of court a motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove that it was a common carrier. The trial court, granted the motion to dismiss. The subsequent motion for reconsideration having been denied, plaintiff interposed an appeal to the Court of Appeals, contending that the trial court had erred (a) in holding that the appellee corporation was not a common carrier defined under the law and existing jurisprudence; and (b) in dismissing the complaint on a demurrer to evidence. The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. Petitioner's motion for reconsideration was likewise denied; hence, the instant petition. Issue: Whether respondent gps, have been negligent when the goods it undertook to transport safely were subsequently damaged while in its protective custody and possession. Held: In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries, Inc., the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof. A breach upon the contract confers upon the injured party a valid cause for recovering that which may have been lost or suffered. The remedy serves to preserve the interests of the promisee that may include his "expectation interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed, or his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made; or his "restitution interest," which is his interest in having restored to him any benefit that he has Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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conferred on the other party. Indeed, agreements can accomplish little, either for their makers or for society, unless they are made the basis for action. The effect of every infraction is to create a new duty, that is, to make recompense to the one who has been injured by the failure of another to observe his contractual obligation unless he can show extenuating circumstances, like proof of his exercise of due diligence (normally that of the diligence of a good father of a family or, exceptionally by stipulation or by law such as in the case of common carriers, that of extraordinary diligence) or of the attendance of fortuitous event, to excuse him from his ensuing liability. Respondent trucking corporation recognizes the existence of a contract of carriage between it and petitioners assured, and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In such a situation, a default on, or failure of compliance with, the obligation in this case, the delivery of the goods in its custody to the place of destination - gives rise to a presumption of lack of care and corresponding liability on the part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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Negligence
FABARE VS. COURT OF APPEALS 259 SCRA 426 DIGEST NO. 22 Facts: Petitioner Engracio Fabare , jr. and his wife were owners of the 1982 Mazda minibus used principally in connection with a bus service children , which they operated in manila . The couples had a driver, Porfirio J. Cabil. Private respondent Word for World Christian Fellowship, Inc. (WWCF) arranged with the petitioners for the transportation of 33 members of it Young Adults Ministry from Manila to La Union and Back. The usual route was not used since the bridge at Carmen was under repair. Cabil came upon a sharpe sure on the highway , running on south to east direction. The road was slippery because it was raining , causing the bus which was running at the speed of 50 kph, to skid to the left road and rammed the fence of one Jesus Escano, then turned over and landed on its left side , coming to a full stop only after a series of impacts. Several passengers was injured. Private respondent Amyline Antonio was thrown on the floor of the bus and pinned down by a wooden seat , which came off after being unscrewed. The case was filed with the Lengayen RTC. Petitioner Fabare paid Escano for the damages on the latters fence. On the basis of Escanos affidavit of desistance , the case against the Fabare wad dismissed. Amyline Antonio brought this case in the RTC of Makati. The trial court found the Fabare Spouses and Cabil jointly and severally liable. The Court of Appeals affirmed the decision with respect to Amyline but dismissed with respect to the other plaintiffs on the ground that they failed to prove their respective claims. The CA also modified the award of damages hence , this petition. Issue : Whether or not the driver was negligent thus making the bus company liable for damges. Held: The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred with the negligence of a third party who was the driver of another vehicle, thus causing an accident. In Anuran v. Buo, Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, and Metro Manila Transit Corporation v. Court of Appeals, the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injured passenger or the latters' heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals, thus: Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. Some members of the Court, though, are of the view that under the circumstances they are liable on quasi-delict. It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals this Court exonerated the jeepney driver from liability to the injured passengers and their families while holding the owners of the jeepney jointly and severally liable, but that is because that case was expressly tried and decided exclusively on the theory of culpa contractual. The trial court was therefore right in finding that Manalo (the driver) and spouses Mangune and Carreon (the jeepney owners) were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot be held jointly and severally liable with carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is between the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver. Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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METRO MANILA TRANSIT CORPORATION VS. COURT OF APPEALS 223 SCRA 1 DIGEST NO. 23 Facts: Nenita Custodio boarded as a paying passenger a public utility jeepny defendant Agudo Calebag and owned by co-defendant Victorino Lamayo. As the PUJ approached the intersection, it collided with Metro Manila Transit Corp: (MMTC) bus driven by defendant Godofredo C. Leonardo. Custodio suffered serious physical injuries and was confine for 24 days . A complaint for damages was filed by private respondent , who being a minor was assisted by her parents. The trial court found both drivers and the colliding vehicles concurrently negligent for non-observance of traffic rules and regulation and for failure to take the usual precautions when approaching an intersection. As a joint tortfeasors, both drivers , as well as defendant Lamayo, were held solidarily liable for damages sustained by Custodio. Defendant MMTC , on the other hand , was absolved form the liability of the accident on the ground that it was not only careful and diligent in choosing and screening the applicants for the job opening but was also strict and diligent in supervising its employees. Finding the appeal meritorious, appellate court modified the trial courts decision by holding the MMTC solidarily liable with the other defendant. The court of appeals was resolute in its conclusion and denied the motion for reconsideration of appellee Custodio and appellant MMTC , thus prompting MMTC to file the instant petition invoking the review power of this Court over the decision of the Court of Appeals. Issue: Whether or not MMTC should be liable for damages incurred by Nenita Custodio. Held: Yes, Petitioner MMTC falls short of the required evidentiary quantum as would convincingly and undoubtedly prove its observance of a good father of a the family. Due diligence in the supervision of employees includes formulation of suitable rules and regulatiors required for the guidance of the employees and issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations thru his or its employees and the imposition of the disciplinary measures upon employees incase of breach or as maybe warranted to insure the performance of acts indispensable to the business of and beneficial TO THEIR EMPLOYER. To this, we add that actual implementation and monitoring of consistent compliance with the said rule should be the constant concern of the employer, acting thru the dependable supervisors who should regularly report on their supervisory functions. In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. As the negligence of the employee give rise to the presumption on the part of the employer , the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies, without anything more, is decidedly no sufficient such presumption.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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ST. MARYS ACADEMY VS. WILLIAM CARPITANOS, ET AL. G.R. NO. 143363. FEBRUARY 6, 2002 DIGEST NO. 24 Facts: Claiming damages for the death of their son, Sherwin Carpitanos, spouses William Carpitanos and Lucia Carpitanos filed on June 9, 1995 a case against James Daniel II and his parents, James Daniel Sr. and Guada Daniel, the vehicle owner, Vivencio Villanueva and St. Marys Academy before the Regional Trial Court of Dipolog City. On 20 February 1997, Branch 6 of the Regional Trial Court of Dipolog City rendered its decision in favor of the respondent. February 1995, defendant-appellant St. Marys Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. A facet of the enrollment campaign was the visitation of schools from where prospective enrollees were studying. As a student of St. Marys Academy, Sherwin Carpitanos was part of the campaigning group. Accordingly, on the fateful day, Sherwin, along with other high school students were riding in a Mitsubishi jeep owned by defendant Vivencio Villanueva on their way to Larayan Elementary School, Larayan, Dapitan City. The jeep was driven by James Daniel II then 15 years old and a student of the same school. Allegedly, the latter drove the jeep in a reckless manner and as a result the jeep turned turtle. Sherwin Carpitanos died as a result of the injuries he sustained from the accident. In due time, petitioner St. Marys academy appealed the decision to the Court of Appeals.On February 29, 2000, the Court of Appeals only reducing the actual damages but affirming the decision a quo, in toto. Hence, this appeal. Issue: Whether or not the petitioner is liable for damages for the death of Sherwin Carpitanos. Held: We reverse the decision of the Court of Appeals. The Court of Appeals held petitioner St. Marys Academy liable for the death of Sherwin Carpitanos under Articles 218 and 219 of the Family Code, pointing out that petitioner was negligent in allowing a minor to drive and in not having a teacher accompany the minor students in the jeep. However, for petitioner to be liable, there must be a finding that the act or omission considered as negligent was the proximate cause of the injury caused because the negligence must have a causal connection to the accident. In this case, the respondents failed to show that the negligence of petitioner was the proximate cause of the death of the victim. Hence, liability for the accident, whether caused by the negligence of the minor driver or mechanical detachment of the steering wheel guide of the jeep, must be pinned on the minors parents primarily. The negligence of petitioner St. Marys Academy was only a remote cause of the accident. Between the remote cause and the injury, there intervened the negligence of the minors parents or the detachment of the steering wheel guide of the jeep.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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JULIAN C. SINGSON, ET AL. VS. BANK OF THE PHILIPPINE ISLANDS, ET AL. G.R. NO. L-24837; JUNE 27, 1968 DIGEST NO. 25 Facts: Singson, was one of the defendants in civil casein which judgment had been rendered sentencing him and his co-defendants therein, namely, Celso Lobregat and Villa-Abrille & Co., to pay the sum of P105,539.56 to the plaintiff, as against which said judgment, accordingly, became final and executory. In due course, a writ of garnishment was subsequently served upon the Bank of the Philippine Islands in which the Singsons had a current. Upon receipt of the said Writ of Garnishment, a clerk of the bank in charge of all matters of execution and garnishment, upon reading the name of the plaintiff herein in, prepared a letter for the signature of the President of the Bank informing the plaintiff Julian C. Singson of the garnishment of his deposits. Subsequently, two checks issued by the plaintiff Julian C. Singson, one for the amount of P383 and the other for P100, the checks were dishonored and were refused payment. A letter, written to the plaintiff, advising him that his checks was not honored by the bank for the reason that his account therein had already been garnished. Singson wrote the defendant bank a letter claiming that his name was not included in the Writ of Execution and Notice of Garnishment, which was served upon the bank. The bank took steps to verify this information and after having confirmed the same, apologized.Thus, the defendants lost no time to rectify the mistake that had been inadvertently committed, resulting in the temporary freezing of the account of the plaintiff with the said bank for a short time. On May 8, 1963, the Singsong commenced the present action against the Bank. After appropriate proceedings, the Court of First Instance of Manila rendered judgment dismissing the complaint. The lower court held that plaintiffs' claim for damages cannot be based upon a tort or quasi-delict, their relation with the defendants being contractual in nature. Issue: Whether or not Singson is entitled for his claims of damages against respondents. Held: We have repeatedly held, however, that the existence of a contract between the parties does not bar the commission of a tort by the one against the order and the consequent recovery of damages therefor. Indeed, this view has been, in effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso, involving an airplane passenger who, despite his first-class ticket, had been illegally ousted from his first-class accommodation and compelled to take a seat in the tourist compartment, was held entitled to recover damages from the air-carrier, upon the ground of tort on the latter's part, for, although the relation between a passenger and a carrier is "contractual both in origin and nature ... the act that breaks the contract may also be a tort". In view, however, of the facts obtaining in the case at bar, and considering, particularly, the circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank realized the mistake he and his subordinate employee had committed, the Court finds that an award of nominal damages the amount of which need not be proven in the sum of P1,000, in addition to attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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Art. 1174 : Elements Of Fortuitous Events

BACOLOD MURCIA MILLING CO., INC. VS. COURT OF APPEALS 182 SCRA 25 DIGEST NO. 26 Facts: BMMC was engaged in the transportation of sugarcane of the adhered planters to the plantation via rail way owned and operated by it. The alleged railway system traversed the land of Central wherein BMMC obtained the right of way for a period of 45 years. The contract expired which resulted to the impossibility of the transportation sugarcanes. Petitioner is being sued for its failure to transport sugarcanes. It alleges that the revocation of the right of way was a fortuitous event, thus absolving it from liability. Issue: Whether or fortuitous event. not the revocation of the right of way was a

Held: No, the terms of the milling contracts were clear and undoubtedly there was no reason for BMMC to expect otherwise. The petitioner Central should have anticipated and should have provided for the eventuality before committing itself. Under the circumstances it has no one to blame but itself and cannot claim exemption from the liability. In the language of the law , the even must have been impossible to foresee, or it could be foreseen, must have been impossible to avoid. In the case at bar, despite its awareness that the conventional contract of lease would expire in Crop year 1964-1965 and that refusal on the part of any one of the land owners to renew their milling contracts and the corresponding use of the right of way on their lands would render impossible compliance of its commitments , petitioner took a calculated risk that all the landowners would renew their contracts. Thus the closure of the rail way lines was not an act of God , nor it constitute force majeure. It was due to the termination of the contractual relationship of the parties , for which petitioner is charged with knowledge. Verily, the lower court that the Angela Estate , Inc. , notified BMMC as far back as August or September 1965of its intention not to allow the passage of the railway system thru its land after the aforesaid crop year. Adequate measures should have been adopted by the BMMC to forestall such paralyzation but the records show none. All its efforts were geared towards the out come of the court litigation but provided no solutions to the transport problem early enough in case of an adverse decision.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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TANGUILIG VS. COURT OF APPEALS 266 SCRA 78 DIGEST NO. 27 Facts: Jacinto M. Tanguilig , doing business under the name of JMT Engeneering and General Merchandizing proposed to the respondent Henrce Jr. to construct a windmill system , for him. They to agreed on the construction project for a consideration of P60,0000.00 with aone year guaranty from the date of completion and acceptance by respondent Herce Jr. of the project. Pursuant to the agreement 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. Due to the refusal and failure of the respondent to pay the balance , petitioner filed a complaint to collect the amount. Respondent denied the allegation and further contends that he ha already paid the amount to San Pedro General Merchandise INC. (SPGMI), which constructed the deep well to which the windmill system was to be connected . 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. The trial court held that the construction of the deep well was no part of the windmill project as evidenced clearly by the letter proposals submitted by the petitioner to respondent . With respect to the repair of the windmill system , 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 reversed the trial court decision, hence this petition. Issue: Whether or not petitioner windmill after it collapsed. is obligated to reconstruct the

Held: The petitioner failed to show that the collapse of the structure 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. Petitioner merely stated that there was a strong wind. But a strong wind in this case cannot be fortuitousunforeseeable or unavoidable . On the contrary , a strong wind should be present in places where windmills are constructed , otherwise the windmills will not turn. The appellate court correctly observed that given the newly constructed windmill system, the same would not have collapsed had there been no inherent defect in it which could only be attributed to the appellee. It emphasized that respondent had , in his favor the presumption that things have happened according to the ordinary course of nature and the ordinary habits of life. This presumption have not been rebutted by the petitioner. In reciprocal obligation , 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 wind mill failed to function properly it became incumbent upon petitioner to institute the proper repairs in accordance with the guaranty stated upon in the contract. Thus, respondent cannot be said to have incurred in delay ; instated it is petitioner who should bear the expenses for the reconstruction of the windmill. Art 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.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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JIMMY CO VS. COURT OF APPEALS 291 SCRA 111 DIGEST NO. 28 Facts: On July 18, 1990, petitioner entrusted his Nissan pick-up car 1988 model to private respondent which is engaged in the sale, distribution and repair of motor vehicles for a series of job repair services and supply of parts. Private respondent undertook to return the vehicle on July 21, 1990 fully serviced and supplied in accordance with the job contract. After petitioner paid in full the repair bill in the amount of P1,397.00 private respondent issued to him a gate pass for the release of the vehicle on said date. But came July 21, 1990, the latter could not release the vehicle as its battery was weak and was not yet replaced. Left with no option, petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the same day. However, the battery was not installed and the delivery of the car was rescheduled to July 24, 1990 or three (3) days later. When petitioner sought to reclaim his car in the afternoon of July 24, 1990, he was told that it was carnapped earlier that morning while being road-tested by private respondent's employee along Pedro Gil and Perez Streets in Paco, Manila. Private respondent said that the incident was reported to the police. Having failed to recover his car and its accessories or the value thereof, petitioner filed a suit for damages against private respondent anchoring his claim on the latter's alleged negligence. For its part, private respondent contended that it has no liability because the car was lost as result of a fortuitous event the carnapping. They likewise agreed that the sole issue for trial was who between the parties shall bear the loss of the vehicle which necessitates the resolution of whether private respondent was indeed negligent. After trial, the court a quo found private respondent 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 (CA) reversed the ruling of the lower court and ordered the dismissal of petitioner's damage suit. The CA ruled that: (1) the trial court was limited to resolving the issue of negligence as agreed during pretrial; hence it cannot pass on the issue of delay; and (2) the vehicle was lost due to a fortuitous event. Issue: Whether or not the private respondent should be held liable for the loss of the petitioners car. Held: Car-napping per se is not a fortuitous event. To be considered as such , car-napping entails more than the mere forceful taking of anothers 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 alleged to be negligent has any participation. Even assuming arguendo that car-napping was duly establish as fortuitous event, private respondent cannot escape liability, art 1165 of the civil code makes an obligor who is guilty of delay responsible even for fortuitous event until he has effected the delivery . in this case, private respondent is already in delay as it was supposed to deliver petitioners car 3 days before it was lost. The agreement to reschedule delivery does not defeat his claim. Assuming further that there was no delay, still working against private respondent is the legal presumption under Art. 1265 that its possession of the thing at the time it was lost was due to its fault. It must likewise be emphasized that pursuant to Art. 1174 and Art.1262, liability attached even if the loss was due to fortuitous event if the nature of the obligation requires the assumption of risk. Car-napping is normal business risk for those engaged in repair of motor vehicles. Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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FORTUNE EXPRESS, INC. VS. COURT OF APPEALS 305 SCRA 14 DIGEST NO. 29 Facts: A bus of the petitioner figured in an accident with a jeepney resulting in the death of several passengers of the jeepney, including two Maranos. Petitioner received a written report from a member of the Regional Trial Security Unit, Constabulary Security Group, that the tribal/ethnic group of the two deceased or certain Maranaos were planning to burn five buses of petitioner out of revenge. On November 22, 1989, three aremed Maranaos who pretended to be a passengers seized a bus of petitioner. Among the passengers of the bus was Atty. Caorong . The leader of the Maranaos order Cabatuan, the driver , to stop the bus on the side of the steering wheel. Then one of the Maranaos started pouring gasoline inside the bus as the other held the passengers to get off the bus. The passengers, including Atty. Caorong , stepped out of the bus and went behind the bushes in a field distance from the highway . However Atty. Caorong returned to retrieve something from the over head rack. At the time one of the armed men was pouring gasoline on the of the driver. Cabatuan who at the meantime regained consciousness, heard Atty. Caorong pleading for the life of the driver as he was innocent of any wrong doing and was only trying to make a living. During this conversation the driver, Cabatuan climed out of the window of the bus and crawled to the canal on the opposite side of the highway . The driver heard shots from the inside of the bus , then the bus was set on fire . Some of the passengers where able to pull Atty. Caorong out of the burning bus and rush him to a hospital , but he died while undergoing operations. The private respondent , widow of the deceased Atty. Caorong and his hires brought the suit for breach of contract of carriage in the RTC of Iligan City. The trial court dismissed the complaint whereas the Court of Appeals reversed said decision and held that the petitioner is negligent and liable for breach of contract of carriage. Hence this petition. Issue: Whether or not the seizure of the petitioner s bus is a case of force majeure. Held: Art 1174 of the Civil Code defines a fortuitous event as an occurrence which could not be foreseen or which through forseen, is inevitable. Despite the report of PC agent Generalao that the Maranaos were going to attack its buses. Petitioner took no step to safeguard the lives and properties of its passengers. The seizure of the bus of the petitioner was foreseeable , and therefore was not a fortuitous event, which would exempt petitioner from liability.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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Art. 1182
SECURITY BANK & TRUST COMPANY,ET AL. VS. COURT OF APPEALS G.R. NO. 117009; OCTOBER 11, 1995 DIGEST NO. 30 Facts: Ysmael C. Ferrer was contracted by herein petitioners Security Bank and Trust Company (SBTC) and Rosito C. Manhit to construct the building of SBTC in Davao City for the price of P1,760,000.00. The contract dated 4 February 1980 provided that Ferrer would finish the construction in two hundred (200) working days. Respondent Ferrer was able to complete the construction of the building within the contracted period, but he was compelled by a drastic increase in the cost of construction materials to incur expenses of about P300,000.00 on top of the original cost. The additional expenses were made known to petitioner SBTC. Respondent Ferrer made timely demands for payment of the increased cost. SBTC thru Assistant Vice-President Susan Guanio and a representative of an architectural firm consulted by SBTC, verified Ferrer's claims for additional cost. A recommendation was then made to settle Ferrer's claim but only for P200,000.00. SBTC, instead of paying the recommended additional amount, denied ever authorizing payment of any amount beyond the original contract price. SBTC likewise denied any liability for the additional cost based on Article IX of the building contract which states was stipulated in the contract. Ysmael C. Ferrer then filed a complaint for breach of contract with damages. The trial court ruled for Ferrer, the Court of Appeals affirmed the trial court decision. Hence this Petition. Issue: Whether or not, contract constitute a violation of the New Civil Code, hence be void. Held: Under Article 1182 of the Civil Code, a conditional obligation shall be void if its fulfillment depends upon the sole will of the debtor. In the present case, the mutual agreement, the absence of which petitioner bank relies upon to support its non-liability for the increased construction cost, is in effect a condition dependent on petitioner bank's sole will, since private respondent would naturally and logically give consent to such an agreement which would allow him recovery of the increased cost. Further, it cannot be denied that petitioner bank derived benefits when private respondent completed the construction even at an increased cost. Hence, to allow petitioner bank to acquire the constructed building at a price far below its actual construction cost would undoubtedly constitute unjust enrichment for the bank to the prejudice of private respondent. Such unjust enrichment, as previously discussed, is not allowed by law.

Rafael M. Soro 1-M ; Obligations & Contracts SY 2005- 2006 ; San Beda College of Law

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