Alfredo Velayo vs Shell Company 100 Phil 168 Torts and Damages Obligations arising from human relations

s Prior to 1948, Commercial Airlines (CALI) owed P170k (abt. $79k) to Shell and CAL offered its C-54 plane as payment to Shell Company (the plane was in California) but Shell at that time declined as it thought CALI had sufficient money to pay its debt. In 1948 however, CALI was going bankrupt so it called upon an informal meeting of its creditors. In that meeting, the creditors agreed to appoint representatives to a working committee that would determine the order of preference as to how each creditor should be paid. They also agreed not to file suit against CALI but CALI did reserve that it will file insolvency proceedings should its assets be not enough to pay them up. Shell Company was represented by a certain Fitzgerald to the three man working committee. Later, the working committee convened to discuss how CALIs asset should be divided amongst the creditors but while such was pending, Fitzgerald sent a telegraph message to Shell USA advising the latter that Shell Philippines is assigning its credit to Shell USA in the amount of $79k, thereby effectively collecting almost all if not the entire indebtedness of CALI to Shell Philippines. Shell USA got wind of the fact that CALI has a C-54 plane is California and so Shell USA petitioned before a California court to have the plane be the subject of a writ of attachment which was granted. Meanwhile, the stockholders of CALI were unaware of the assignment of credit made by Shell Philippines to Shell USA and they went on to approve the sale of CALIs asset to the Philippine Airlines. In September 1948, the other creditors learned of the assignment made by Shell. This prompted these other creditors to file their own complaint of attachment against CALIs assets. CALI then filed for insolvency proceedings to protect its assets in the Philippines from being attached. Velayos appointment as CALIs assignee was approved in lieu of the insolvency proceeding. In or der for him to recover the C-54 plane in California, it filed for a writ of injunction against Shell Philippines in order for the latter to restrain Shell USA from proceeding with the attachment and in the alternative that judgment be awarded in favor of CALI for damages double the amount of the C-54 plane. The C-54 plane was not recovered. Shell Company argued it is not liable for damages because there is nothing in the law which prohibits a company from assigning its credit, it being a common practice. ISSUE: Whether or not Shell is liable for damages considering that it did not violate any law. HELD: Yes. The basis of such liability, in the absence of law, is Article 21 of the Civil Code which states: Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Thus at one stroke, the legislator, if the forgoing rule is approved (as it was approved), would vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is impossible for human foresight to provide for specifically in the statutes. A moral wrong or injury, even if it does not constitute a violation of a statute law, should be compensated by damages. Moral damages (Art. 2217) may be recovered (Art. 2219). In Article 20, the liability for damages arises from a willful or negligent act contrary to law. In this article, the act is contrary to morals, good customs or public policy.

RUTTER VS. ESTEBAN [93 PHIL 68; NO.L-3708; 18 MAY 1953] Monday, February 09, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: On August 20,1941 Rutter sold to Esteban two parcels of land situated in the Manila for P9,600 of which P4,800 were paid outright, and the balance was made payable as follows: P2,400 on or before August 7, 1942, and P2,400 on or before August 27, 1943, with interest at the rate of 7 percent per annum. To secure the payment of said balance of P4,800, a first mortgage has been constituted in favor of the plaintiff. Esteban failed to pay the two installments as agreed upon, as well as the interest that had accrued and so Rutter instituted an action to recover the balance due, the interest due and the attorney's fees. The complaint also contains a prayer for sale of the properties mortgaged in accordance with law. Esteban claims that this is a prewar obligation contracted and that he is a war sufferer, having filed his claim with the Philippine War Damage Commission for the losses he had suffered as a consequence of the last war; and that under section 2 of RA 342(moratorium law), payment of his obligation cannot be enforced until after the lapse of eight years. The complaintwas dismissed. A motion for recon was made which assails theconstitutionality of RA 342.

Issue: Whether or Not RA 342 unconstitutional on non-impairment clause grounds.

Held: Yes. The moratorium is postponement of fulfillment of obligations decreed by the state through the medium of the courts or the legislature. Its essence is the application of police power. The economic interests of the State may justify the exercise of its continuing and dominant protective power notwithstanding interference with contracts. The question is not whether the legislative action affects contracts incidentally, or directly or indirectly, but whether the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end.

However based on the Presidents general SONA and consistent with what the Court believes to be as the only course dictated by justice, fairness and righteousness, declared that the continued operation and enforcement of RA 342 at the present time is unreasonable and oppressive, and should not be prolonged should be declared null and void and without effect. This holds true as regards Executive Orders Nos. 25 and 32, with greater force and reason considering that said Orders contain no limitation whatsoever in point of time as regards the suspension of the enforcement and effectivity of monetary obligations. Rutter, Royal L. vs. Placido J. Esteban G.R. No. L-3708 May 18, 1953 En Banc Facts: Rutter L. Royal, the plaintiff in this case sold two parcels of land to Placido J. Esteban, the defendant, with a total amount of 9,600 pesos. On August 20, 1941, the defendant upon entering the contract paid an immediate amount of 4,800 pesos

and both agreed to pay the remaining amount on following date; 2,400 on or before August 7, 1242 and another 2,400 on or before August 27, 1943 with 7percent interest per annum. However, the defendant failed to pay remaining balance and on August 2, 1949 the plaintiff, to recover the unpaid and accrued balance, instituted an action at the Court of First Instance of Manila. The defendant averred the complaint and instituted a defense presenting the moratorium clause of RA 342, stating that the contract is a pre-war obligation and he is a war sufferer and still covered by the effect of the statute, and payment of the said obligation cannot be enforced until the statutes expires. The court ruled in favor of the defendant and the decision been appealed questioning the constitutionality of the moratorium law.

Issue: Whether or not RA 342 is valid at the time when action of the plaintiff was instituted.

Ruling: In its decision, the Supreme Court reversed the lower court decision declaring the continued operation and effect of RA 342 null and void. It was further explained that the continued operation of the law at the present time is unreasonable and oppressive as the reason for its enactment has been accomplished. That at the present time, the economy already recovered and theres no reason for the defendant not to pay his remaining obligation. The judgement included the order for the defendant to pay the plaintiff the remaining balance including the interests as well as an additional 12% for lawyers fees. In failure to follow the order, the mortgaged properties will be sold to public auction. http://jomzlaw.blogspot.com