CASE NO.

1
Cetus Development, Inc. vs. Court of Appeals
G.R. No. 77648, August 7, 1989, 176 SCRA 72

FACTS:
The private respondents were the lessees of the premises originally owned by the Susana
Realty. These individual verbal leases were on a month-to-month basis and were paying to a
collector of the Susana Realty who went to the premises monthly. Sometime on March 1984,
Susana Realty sold the leased premises to the petitioner, Cetus Development, Inc. From April
to June 1984, the respondents continued to pay their monthly rentals to a collector sent by the
petitioner, but in the succeeding months, they failed to pay as no collector came.

On October 9, 1984, the petitioner sent a letter to each of the private respondents demanding
that they vacate the subject premises and to pay the back rentals for the unpaid monthly
rentals. Immediately upon receipt thereof, the private respondents paid their respective
arrearages in rent which were accepted by the petitioner. However, private respondents did
not vacate the leased premises. Hence, petitioner filed with the Metropolitan Trial Court of
Manila complaints for ejectment against the private respondents.

The private respondents, in their respective answers assailed that they were paying their
monthly rental regularly since they occupied such premises, that their non-payment of the
rentals was due to the failure of the petitioner to send its collector, that they were at a loss as
to where they should pay their rentals, that one of them called the office of the petitioner to
inquire as to where they would make payment and was told that a collector would be sent to
receive the same, that no collector was subsequently sent, and that instead they received a
uniform demand letter.

The trial court rendered its decision dismissing the six cases. It held that the plaintiff cannot
eject the defendants from the leased premises because at the time cases were instituted, there
are no rentals in arrears. The alleged rental arrearages were paid immediately after receipt of
the demand letter and that the rentals of the tenants are relatively small to which the ejectment
may not lie on grounds of equity and for humanitarian reasons. Petitioner appealed to the
Regional Trial Court and the Court of Appeals, but both dismissed the appeal for lack of merit,
affirming the decision of the trial court. Hence, this case.

ISSUE:
Whether or not there exists a cause of action when the complaints for unlawful detainer were
filed considering the fact that upon demand by petitioner from private respondents for payment
of their back rentals, the latter immediately tendered payment which was accepted by
petitioner.

RULING:
No, there is lack of cause of action. We held that the demand required and contemplated by
law is a jurisdictional requirement for the purpose of bringing an unlawful detainer suit for failure
to pay rent or comply with the conditions of the 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.

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For the purpose of bringing an ejectment suit, two requisites must concur, namely: (1) there
must be failure to pay rent or comply with the conditions of the lease and (2) there must be
demand both to pay or to comply and vacate within the periods specified by law.

In the case at bar, it is very clear that no cause of action for ejectment has accrued. There
was no failure yet on the part of the private respondents to pay rents for three consecutive
months. As the terms of the individual verbal leases which were on a month-to- month basis
were not alleged and proved, the general rule on necessity of demand applies, to wit: there is
default in the fulfillment of an obligation when the creditor demands payment at the maturity
of the obligation or at any time thereafter.

CASE NO. 2
Gen. Milling Corp. v. Ramos, 64 SCRA 256 (2011)

Doctrine: Article 1169 of the Civil Code states that: those obligated 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. Demand is necessary for delay to exist unless the contract states
that no such demand is needed.

FACTS:
General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado and
Remedios Ramos (Spouses Ramos). Under the contract, GMC was to supply broiler chickens
for the spouses to raise on their land. To guarantee full compliance, the Growers Contract was
accompanied by a Deed of Real Estate Mortgage over a piece of real property and a surety
bond. Spouses Ramos eventually were unable to settle their account with GMC.

The property was extrajudicially foreclosed and GMC was the highest bidder. Spouses Ramos
questioned the validity of the foreclosure proceedings. The CA found that GMC made no
demand to spouses Ramos for the full payment of their obligation. A perusal of the letters
presented and offered as evidence by defendant-appellant GMC did not “demand” but only
request spouses Ramos to go to the office of GMC to “discuss” the settlement of their account.

ISSUE:
WON GMC made sufficient demand to the spouses Ramos to fulfill their obligation - NO

HELD:
No. There are three requisites necessary for a finding of default.

First, the obligation is demandable and liquidated; second, the debtor delays performance; and
third, the creditor judicially or extrajudicially requires the debtor's performance.

According to the CA, GMC did not make a demand on Spouses Ramos but merely requested
them to go to GMCs office to discuss the settlement of their account. In spite of the lack of
demand made on the spouses, however, GMC proceeded with the foreclosure proceedings.
Neither was there any provision in the Deed of Real Estate Mortgage allowing GMC to
extrajudicially foreclose the mortgage without need of demand.

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Article 1169 of the Civil Code states that: those obligated 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. However, the demand by the creditor shall not be necessary in order that delay
may exist, when the obligation or the law expressly so declares. The Deed of Real Estate
Mortgage (contract) in the instant case has no such provision stating that demand is not
necessary for delay to exist. GMC should have first made a demand on the spouses before
proceeding to foreclose the real estate mortgage.

CASE NO. 3
Abella v. Francisco, 55 Phil.447 (1931)

FACTS:
Guillermo Francisco (defendant) purchased from the Government on installments, lots 937-
945 of the Tala Estate in Novaliches, Caloocan, Rizal.

He was behind in payment for these installments and on October 31, 1928, he signed a
document stating that he received P500 from Julio Abella (plaintiff) on account of lots no. 937-
945, containing an area of 221 hectares, at the rate of 100/hectare, the balance of which is
due on or before December 15 of the same year, extendible fifteen days thereafter. On
Novemer 13, 1928, Abella made another payment of P415.31, upon demand made by
Francisco

On December 27,1928, Francisco, being in Cebu, wrote a letter to Roman

Mabanta, attaching a power of attorney authorizing him to sign in behalf of the defendant all
the documents required by the Bureau of Land for the transfer of lots to the plaintiff. In the
same letter, defendant instructed Mabanta to inform the plaintiff that the option would be
considered cancelled, and to return the amount of P915.31, in the event that the plaintiff failed
to pay the remainder of the selling price

On January 3, 1929, Mabanta notified the plaintiff that he had received the power of attorney
to sign the deed of conveyance of the lots to him, and that he was willing to execute the deed
of sale upon payment of the balance due

The plaintiff asked for a few days’ time, but Mabanta only gave him until January 5

Plaintiff failed to pay the rest of the price on January 5, but attempted to do so on January 9,
but Mabanta refused to accept it and instead returned by check the sum of P915.31.

Plaintiff brought an action to compel the defendant to execute the deed of sale upon receipt of
the balance of the price, and asked that he be judicially declared the owner of said lots, and
that the defendant be ordered to deliver it to him

The CFI absolved the defendant from the complaint, and the plaintiff appealed

ISSUE:
WON the time was an essential element in the contract, and therefore, the defendant was
entitled to rescind the contract for failure of plaintiff to pay the price within the time specified

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HELD:
Yes. The defendant is entitled to resolve the contract for failure to pay the price within the time
specified.

Reasoning:
In holding that the time was an essential element in the contract, the CFI considered that the
agreement in question was an option for the purchase of the lots. The SC, however, was
divided on the question of whether the agreement was an option or a sale. But the SC ruled
that regardless of whether it was an option or a sale, having agreed that the selling price would
be paid not later than December, 1928, and in view of the fact that the vendor executed the
contract to pay off with the proceeds thereof certain obligations which fell due in the same
month of December, the time fixed for the payment of the selling price was essential in the
transaction.

CASE NO. 5
Central Bank v. CA, 139 SCRA 46 (1985)

FACTS:
Island Savings Bank approved the loan application for P80K of Sulpicio Tolentino who
executed a real estate mortgage over his 100 hectare land.

The loan called for a lump sum of P80K, repayable in semi-annual installments for 3 yrs, w/
12% annual interest. It was required that Tolentino shall use the loan solely as additional capital
to develop his other property into a subdivision.

A mere P17K partial release of the loan was made by the bank and Tolentino and his wife
signed a promissory note for the P17K at 12% annual interest payable w/in 3 yrs. An advance
interest was deducted from the partial release but this pre-deducted interest was refunded to
Tolentino after being informed that there was no fund yet for the release of the P63K balance.

The bank VP and Treasurer promised release of the balance.

Monetary Board of Central Bank, after finding that bank was suffering liquidity problems,
prohibited the bank fr making new loans and investments. And after the bank failed to restore
its solvency, the Central Bank prohibited Island Savings Bank fr doing business in the
Philippines.

Island Savings Bank in view of the non-payment of the P17K filed an application for foreclosure
of the real estate mortgage.

Tolentino filed petition for specific performance or rescission and damages w/ preliminary
injunction, alleging that since the bank failed to deliver P63K, he is entitled to specific
performance and if not, to rescind the real estate mortgage.

Trial court found Tolentino’s petition unmeritorious.

CA affirmed dismissal of Tolentino’s petition for specific performance, but it ruled that the bank
can neither foreclose the real estate mortgage nor collect the P17K loan.

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ISSUES
1. WON Tolentino’s action for specific performance can prosper
2. WON Tolentino is liable to pay the P17K covered by the promissory note
3. If liable to pay P17K, WON Tolentino’s real estate mortgage can be foreclosed

HELD

1. NO. The loan agreement implied reciprocal obligations. When one party is willing and ready
to perform, the other party not ready nor willing incurs in delay. When Tolentino executed real
estate mortgage, he signified willingness to pay. That time, the bank’s obligation to furnish the
P80K loan accrued. Now, the Central Bank resolution made it impossible for the bank to furnish
the P63K balance. Insolvency of debtor is not an excuse for non-fulfillment of obligation but is
a breach of contract. The bank’s asking for advance interest for the loan is improper
considering that the total loan hasn’t been released. A person can’t be charged interest for
non-existing debt. The bank was in default and Tolentino may choose bet specific performance
or rescission w/ damages in either case. But considering that the bank is now prohibited from
doing business, specific performance cannot be granted. Rescission is the only remedy left,
but the rescission should only be for the P63K balance.

2. YES. The promissory note gave rise to this liability. His failure to pay made him party in
default, hence, not entitled to rescission. This time, it is the bank which has right to rescind the
promissory note. Since both Tolentino and the bank are in default, both are liable for damages.
Liability may be offset.

3. NO. Since the bank failed to furnish the balance, the real estate mortgage became
unenforceable to such extent.

CASE NO. 6
Guanio v. Makati Shangri-la Hotel, G.R. No. 190601, Feb. 7, 2011

FACTS:
Spouses Luigi and Anna Guanio (petitioner) entered into contract with Makati Shangri-La Hotel
and Resort, Inc. (respondent) for the latter to render its catering services to the former’s
wedding reception.

Reportedly during the reception, respondent’s representatives, Catering Director Bea Marquez
and Sales Manager Tessa Alvarez did not show up; there was a delay in the service of the
dinner; certain items in the published menu were unavailable; respondent’s waiters were rude
and unapologetic when confronted by the guest about the delay; wine and liquor brought by
the petitioners in accordance with their open bar agreement were not served to the guests and
thus the latter were forced to pay for their drinks; and despite Sales Manager Alvarez’s promise
that would be no charge for the extension of the reception beyond 12:00 midnight, petitioners
were billed PHP 8,000.00 per hour for the three-hour extension of the event which they paid
for.

In view of the foregoing, petitioner’s sent a letter-complaint to respondent and received an

apologetic reply from respondent’s Hotel Executive Assistant Krister Svenson. Nevertheless,
the former filed a complaint for breach of contract and damages before the Regional Trial Court
of Makati City.

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In its Answer, respondent claimed that Marquez and Alvarez were present during the event,
albeit they were not permanently stationed thereat as they were also attending to three other
functions; that the said delay in the service dinner was occasioned by the sudden increase of
guests to 470 from the guaranteed expected minimum number of 350–380. In bears
mentioning in this regard, that said increase of guests was not relayed by petitioners to
respondents beforehand which is remiss on the part of the former as they are required to do
so at least 48 hours before the scheduled date and time of the function which is stipulated in
the Banquet and Meeting Services Contract between both parties.

Notwithstanding respondent’s contentions, the Makati RTC rendered judgement in favor of the
petitioners and ordered respondent to pay the petitioners actual, moral and exemplary
damages; and attorney’s fees.

However, on appeal, the Court of Appeals reversed the trial court’s decision, it holding that the
proximate cause of petitioners’ injury was the increase in their guests which respondent did
not expect.

ISSUE:
Whether or not the doctrine of proximate cause is applicable to actions involving breach of
contract.

HELD:
The Supreme Court held that proximate cause is applicable only in actions for quasi-delicts,
not in action involving breach of contract. What applies in the instant case is rather Art. 1170
of the Civil Code which reads:

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

The mere proof of the existence of the contract and the failure of its compliance justify a
corresponding right of relief by the injured contracting party.

However, it must be stressed that petitioner’s failure to inform respondent of the change in the
number of the guests is a clear failure on the part of the former to discharge such obligation
which is stipulated in the Banquet and Meeting Services Contract between them.

The failure of petitioner to inform respondent about the change in the number of guests
notwithstanding, the Court notes that respondent could have managed the situation better in
view of its vast experience in the business which warrants the safe presumption that this is not
the first time they have encountered booked events exceeding the guaranteed cover. It is
therefore reasonable to expect that certain measures are placed in case predicaments such
as the instant case crops up. That regardless of these measures, respondent still received
complaints from the petitioner. As such, the Court deems it just to award petitioners only
nominal damages.

The Decision of the Court of Appeals is PARTIALLY REVERSED.

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 CASE NO. 7
Song Fo v. Hawaiian Phil. 47 Phil. 821

SPECIAL NOTE
This is the previous digest made by Belle, I only added some notes, so just check that out. 

DOCTRINE Rescission will not be permitted for a slight or casual breach of the contract, but
only for such breaches as are so substantial and fundamental as to defeat the object of the
parties in making the agreement.

(SHORT VERSION)
Parties agreed to deliver 300,000 gallons of molasses and added 100,000 if means be
possible. Defendant rescinded the contract on the ground that the plaintiff defaulted the
payment.

FACTS:
A written contract between Song Fo & Co. and Hawaiian-Philippine Co. was made. They have
agreed to deliver 300,000 gallons of molasses. Mr. Song Heng, the representative of Song Fo
& Co., demanded that an additional 100,000 gallons be delivered. It was written as follows:
“Mr. Song Fo also asked if we could supply him with another 100,000 gallons of molasses, and
we stated we believe that this is possible and will do our best to let you have these extra
100,000 gallons…” The payment for these molasses shall be done at the end of each month.

Plaintiff presented a complaint with two causes of action for breach of contract against the
defendant, in which judgment was asked for P70,369.50. Defendant set up the special defense
that the plaintiff delayed the payment for the molasses, compelling the former to cancel and
rescind the contract.

ISSUES/HELD:
(1) Did defendant agree to sell to the plaintiff 400,000 gallons of molasses or 300,000 gallons
of molasses? – 300,000

(2) Had the Hawaiian-Philippine Co. the right to rescind the contract of sale made with Song
Fo & Co.? – No.

(3) On the basis first, of a contract for 300,000 gallons of molasses, and second, of a contract
imprudently breached by Hawaiian Philippine Co., what is the measure for damages? – See
Ratio.

RATIO:

(1) The contract has clearly shown the agreed 300,000 gallons of molasses to be delivered. It
was the additional 100,000 gallons that Mr. Song Ho requested that this issue has arisen.
Although the defendant mentioned that providing such an amount was possible, it only
constituted a definite promise and not an obligation.

(2) Plaintiff was to pay defendant at the end of each month. The records show, however, that
for the delivery made in December 1922, the payment was not made until February 20, 1923.
The Supreme Court stated a delay in payment for a small quantity of molasses for some twenty

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days is not such a violation of an essential condition of the contract as warrants rescission for
non-performance.

(3) The first cause of action of the plaintiff is based on the greater expense to which it was put
in being compelled to secure molasses from other sources to which Supreme Court ruled that
P3000 should be paid by Hawaiian-Philippine Co. with legal interest from October 2, 1923 until
payment.

The second cause of action was based on the lost profits on account of the breach of contract.
The Supreme Court, however, did not affirm any recovery as regards this cause. It reasoned
out that it has found the decision of the trial court unsustainable; the testimony of Mr. Song
Heng will follow the same line of thought. In addition, his testimony was thought to be
insufficient proof of allegations of the complaint and will lead only to a mere conclusion and not
a proven fact. The Supreme Court said that it did not have the means of knowing the alleged
lost profits of P14000.

“We rule that the plaintiff is entitled to recover damages from the defendant for breach of
contract on the first cause of action in the amount of P3000 and on the second cause of action
in no amount.”

DECISION
Agreeable to the foregoing, the judgment appealed from shall be modified and the plaintiff shall
have and recover from the defendant the sum of P3000, with legal interest from October 2,
1923, until payment. Without special finding as to costs in either instance, it is so order.

NOTE
Take note that the reason why there is no breach in the part of Song-Fo while there is in the
part of Hawaiian-Phil is that the court did not recognize the non-payment of Song-Fo to
Hawaiian-Phil as a breach but still Hawaiian-Phil, upon non-payment of Song-Fo, moved to
cancel and rescind the said contract. Thus in the eyes and reasoning of the court, it was the
Hawaiian-Phil which first violated the contract.

Also, the reason why the court did not recognize that the non-payment of Song-Fo as a breach
is for the fact that after month of non-payment, Song-Fo suddenly resumed to pay their monthly
obligations to Hawaiian-Phil and that the latter accepted it. The court reasoned that a delay in
payment for a small quantity of molasses for some twenty days is not such a violation if an
essential condition of the contract as warrants rescission for non-performance.

CASE NO. 9
Woodhouse v. Halili, 93 Phil.526 (1953)

FACTS:
On November 29, 1947, plaintiff Woodhouse entered into a written agreement with defendant
Halili stating among others that: 1) that they shall organize a partnership for the bottling and
distribution of Missionsoft drinks, plaintiff to act as industrial partner or manager, and the
defendant as a capitalist, furnishing the capital necessary therefore; 2) that plaintiff was to
secure the Mission Soft Drinks franchise for and in behalf of the proposed partnership and 3)
that the plaintiff was to receive 30 per cent of the net profits of the business.

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Prior to entering into this agreement, plaintiff had informed the Mission Dry Corporation of Los
Angeles, California, that he had interested a prominent financier (defendant herein) in the
business, who was willing to invest half a milliondollars in the bottling and distribution of the
said beverages, and requested, in order that he may close the deal with him, that the right to
bottle and distribute be granted him for a limited time under the condition that it will finally be
transferred to the corporation. Pursuant to this request, plaintiff was given “a thirty days’ option
on exclusive bottling and distribution rights for the Philippines”. The contract was finally signed
by plaintiff on December 3, 1947.

When the bottling plant was already in operation, plaintiff demanded of defendant that the
partnership papers be executed. Defendant Halili gave excuses and would not execute said
agreement, thus the complaint by the plaintiff.

Plaintiff prays for the : 1.execution of the contract of partnership; 2) accounting of profits and
3)share thereof of 30 percent with 4) damages in the amount of P200,000. The Defendant on
the other hand claims that: 1) the defendant’s consent to the agreement, was secured by the
representation of plaintiff that he was the owner, or was about to become owner of an exclusive
bottling franchise, which representation was false, and that plaintiff did not secure the franchise
but was given to defendant himself 2) that defendant did not fail to carry out his undertakings,
but that it was plaintiff who failed and 3)that plaintiff agreed to contribute to the exclusive
franchise to the partnership, but plaintiff failed to do so with a 4) counterclaim for P200,00 as
damages.

The CFI ruling: 1) accounting of profits and to pay plaintiff 15 % of the profits and that the 2)
execution of contract cannot be enforced upon parties. Lastly, the 3) fraud wasn’t proved

ISSUES:
1. WON plaintiff falsely represented that he had an exclusive franchise to bottle Mission
beverages
2. WON false representation, if it existed, annuls the agreement to form the partnership

HELD:
1. Yes. Plaintiff did make false representations and this can be seen through his letters to
Mission Dry Corporation asking for the latter to grant him temporary franchise so that he could
settle the agreement with defendant. The trial court reasoned, and the plaintiff on this appeal
argues, that plaintiff only undertook in the agreement “to secure the Mission Dry franchise for
and in behalf of the proposed partnership.” The existence of this provision in the final
agreement does not militate against plaintiff having represented that he had the exclusive
franchise; it rather strengthens belief that he did actually make the representation. The
defendant believed, or was made to believe, that plaintiff was the grantee of an exclusive
franchise. Thus it is that it was also agreed upon that the franchise was to be transferred to the
name of the partnership, and that, upon its dissolution or termination, the same shall be
reassigned to the plaintiff.

Again, the immediate reaction of defendant, when in California he learned that plaintiff did not
have the exclusive franchise, was to reduce, as he himself testified, plaintiff’s participation in
the net profits to one half of that agreed upon. He could not have had such a feeling had not
plaintiff actually made him believe that he(plaintiff) was the exclusive grantee of the franchise.

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2. No. In consequence, article 1270 of the Spanish Civil Code distinguishes two kinds of (civil)
fraud, the causal fraud, which may be ground for the annulment of a contract, and the incidental
deceit, which only renders the party who employs it liable for damages only. The Supreme
Court has held that in order that fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental (dolo incidente) inducement to the making of the contract.

The record abounds with circumstances indicative of the fact that the principal consideration,
the main cause that induced defendant to enter into the partnership agreement with plaintiff,
was the ability of plaintiff to get the exclusive franchise to bottle and distribute for the defendant
or for the partnership. The original draft prepared by defendant’s counsel was to the effect that
plaintiff obligated himself to secure a franchise for the defendant. But if plaintiff was guilty of a
false representation, this was not the causal consideration, or the principal inducement, that
led plaintiff to enter into the partnership agreement. On the other hand, this supposed
ownership of an exclusive franchise was actually the consideration or price plaintiff gave in
exchange for the share of 30 per cent granted him in the net profits of the partnership business.
Defendant agreed to give plaintiff 30 per cent share in the net profits because he was
transferring his exclusive franchise to the partnership.
Having arrived at the conclusion that the contract cannot be declared null and void, may the
agreement be carried out or executed? The SC finds no merit in the claim of plaintiff that the
partnership was already a fait accompli from the time of the operation of the plant, as it is
evident from the very language of the agreement that the parties intended that the execution
of the agreement to form a partnership was to be carried out at a later date. , The defendant
may not be compelled against his will to carry out the agreement nor execute the partnership
papers. The law recognizes the individual’s freedom or liberty to do an act he has promised to
do, or not to do it, as he pleases.

Dispostive Postion: With modification above indicated, the judgment appealed from is hereby
affirmed.

CASE NO. 10
Chavez v. Gonzales, 32 SCRA 547 (1970)

Facts:
July 1963, Rosendo Chavez, plaintiff, brought his typewriter to Fructuoso Gonzales, defendant,
a typewriter repairman for the cleaning and servicing of the said typewriter. Three months later,
the plaintiff paid P6.00 to the defendant for the purchase of spare parts. Because of the delay
of the repair the plaintiff decided to recover the typewriter from the defendant which was
wrapped like a package. When he opened and examined it, the interior cover and some parts
and screws were missing. October 29, 1963 the plaintiff sent a letter to the defendant for the
return of the missing parts, the interior cover and the sum of P6.00. The following day, the
defendant returned to the plaintiff only some of the missing parts, the interior cover and the
P6.00.

August 29, 1964, the plaintiff had his typewriter repaired by Freixas Business Machines, that
cost him a total of P89.85. A year later, the plaintiff filed an action before the City Court of
Manila, demanding from the defendant the payment for total of P1,190.00 for
damages including attorney’s fees. The defendant made no denials.

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The repair invoice shows that the missing parts had a total value of P31.10 only.

Wherefore, judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of
P31.10, and the costs of suit.

Chaves appealed, because it only awarded the value of the missing parts of the typewriter,
instead of the whole cost of labor and materials that went into the repair of the machine. It is
clear that the defendant-appellee contravened the tenor of his obligation because not only did
he not repair the typewriter but returned it “in shambles”.

IN VIEW OF THE FOREGOING REASONS, the appealed judgment is hereby modified, by

ordering the defendant-appellee to pay, as he is hereby ordered to pay, the plaintiff-appellant
the sum of P89.85, with interest at the legal rate from the filing of the complaint. Costs in all
instances against appellee Fructuoso Gonzales.

Issue:
Whether or not the defendant is liable for the total cost of repair.

Held:
Yes. For such contravention, he is liable under Article 1167 of the Civil Code. For the cost of
executing the obligation in a proper manner. The cost of the execution of the obligation in this
case should be the cost of the labor or service expended in the repair of the typewriter.

CASE NO. 11
Telefast v. Castro, 158 SCRA 445 (1988)

FACTS:
The petitioner is a company engaged in transmitting telegrams. The plaintiffs are the children
and spouse of Consolacion Castro who died in the Philippines. One of the plaintiffs, Sofia sent
a telegram thru Telefast to her father and other siblings in the USA to inform about the death
of their mother. Unfortunately, the deceased had already been interred but not one from the
relatives abroad was able to pay their last respects. Sofia found out upon her return in the US
that the telegram was never received. Hence the suit for damages on the ground of breach of
contract. The defendant-petitioner argues that it should only pay the actual amount paid to it.

The lower court ruled in favor of the plaintiffs and awarded compensatory, moral, exemplary,
damages to each of the plaintiffs with 6% interest p.a. plus attorney’s fees. The Court of
Appeals affirmed this ruling but modified and eliminated the compensatory damages to Sofia
and exemplary damages to each plaintiff, it also reduced the moral damages for each. The
petitioner appealed contending that, it can only be held liable for P 31.92, the fee or charges
paid by Sofia C. Crouch for the telegram that was never sent to the addressee, and that the
moral damages should be removed since defendant's negligent act was not motivated by
"fraud, malice or recklessness.

ISSUE:
Whether or not the award of the moral, compensatory and exemplary damages is proper.

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RULING:
Yes, there was a contract between the petitioner and private respondent Sofia C. Crouch
whereby, for a fee, petitioner undertook to send said private respondent's message overseas
by telegram. Petitioner failed to do this despite performance by said private respondent of her
obligation by paying the required charges. Petitioner was therefore guilty of contravening its
and is thus liable for damages. This liability is not limited to actual or quantified damages. To
sustain petitioner's contrary position in this regard would result in an inequitous situation where
petitioner will only be held liable for the actual cost of a telegram fixed thirty (30) years ago.

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."

Award of Moral, compensatory and exemplary damages is proper.

The petitioner's act or omission, which amounted to gross negligence, was precisely the cause
of the suffering private respondents had to undergo. Art. 2217 of the Civil Code states: "Moral
damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, 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."

Then, the award of P16,000.00 as compensatory damages to Sofia C. Crouch representing

the expenses she incurred when she came to the Philippines from the United States to testify
before the trial court. Had petitioner not been remiss in performing its obligation, there would
have been no need for this suit or for Mrs. Crouch's testimony.

The award of exemplary damages by the trial court is likewise justified for each of the private
respondents, as a warning to all telegram companies to observe due diligence in transmitting
the messages of their customers.

CASE NO. 12
Arrieta v. NARIC, 10 SCRA 79 (1964)

FACTS:
Mrs. Paz Arrieta participated in public bidding called by NARIC on May 19, 1952 for the supply
of 20,000 metric tons of Burmese rice. Her bid was $ 203.00 per metric ton, it was the lowest
that’s why the contract was awarded to her. On July 1,1952, Arrieta and NARIC entered into
contract. Arrieta was obligated to deliver 20,000 metric ton of Burmese rice at $203.00 per
metric ton to NARIC. In return, NARIC committed itself to pay for the imported rice “ by means
of an irrevocable, confirmed and assignable letter of credit in US currency in favour of Arrieta
and/or supplier in Burma (THIRI SETKYA), immediately.” NARIC took the first step to open the
letter of credit on July 30, 1952 by forwarding to the PNB its application for commercial letter
of credit. Arrieta with the help of a counsel, advised NARIC of the necessity for the opening of
the letter because she tender her supplier in Ragoon, Burma of 5 % of the price of 20,000
tons at $180.70 and if she didn’t comply the 5% will be confiscated if the required letter of credit
is not received by them before August 4, 1952. PNB informed NARIC that their application of

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credit letter amounting to $3,614,000.00 was approved with the condition of 50% marginal cash
be paid. NARIC does not meet the condition. The allocation of Arrieta’s supplier in Ragoon
was cancelled and the 5% deposit was forfeited.

ISSUE:
Does NARIC liable for damages?

HELD:
Yes, because the reason of the cancellation of the contract by Arrieta in Ragoon, Burma was
the failure of NARIC to open the letter of credit within a specific period of time. One who
assumes contractual obligation and fails to perform in which he knew and was aware when he
entered in the contract, should be liable for his failure to do what is required by a law. Under
the Art. 1170 of the Civil Code, not only the debtors guilty of fraud, negligence or default but
also a debtor of every, in general, who fails in the performance of his obligation is bound to
indemnify for the losses and damages caused thereby.

CASE NO. 13
Tanguilig v. CA, 266 SCRA 778 (1997)

FACTS:
In April 1987, Tanguilig of JMT Engineering and General Merchandising proposed to construct
a windmill system for Herce, Jr. They agreed on the construction of the windmill for P60,000.00
with a one-year guaranty from the date of completion and acceptance by Herce of the project.

Herce paid PHP 30k as down payment and PHP 15k as installment, leaving a balance of PHP
15k.

In March 1988, Tanguilig filed a complaint to collect PHP 15k due to Herce’s refusal and failure
to pay the balance.Herce contends that the PHP 15k was already paid to San Pedro General
Merchandising Inc. (SPGMI) which constructed a deep well to which the windmill system was
to be connected. He claimed that since the deep well formed part of the system, Tanguilig
should credit the amount to Herce’s account. Moreover, assuming that Herce owed Tanguilig,
this should be offset by defects in the windmill system which caused the structure to
collapse after it was hit by strong wind.

Tanguilig replied that the deep well was not included in the agreement, for the P60k was solely
for the windmill assembly and its installation. He disowned any obligation to repair or
reconstruct the system, claiming that the windmill system was delivered in good and working
condition, and that Herce accepted it without protest. Besides, since the collapse was
attributable to a typhoon, a force majeure, he believed he is relieved from liability.

The trial court ruled that the deep well was not part of the windmill project as evidenced by the
proposal letters of Tanguilig to Herce. It said that if such was the intention of the parties, it
should have been included. With respect to the repair of the windmill, there was no clear and
convincing proof that it fell down due to defect of construction.

The CA reversed the trial court’s ruling, saying that the construction of the deep well was part
of the windmill system. Credence was given to the testimony of Guillermo Pili of SPGMI that

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Tanguilig told him that the deep well construction cost would be deducted from the contract
price of P60k. It also rejected Tanguilig’s claim of force majeure. Thus, it ordered Tanguilig to
reconstruct the windmill in accordance with the stipulated one-year guaranty.

ISSUES:
WON Tanguilig is under obligation to reconstruct the collapsed windmill

RULING:
YES. In order for a party to claim exemption from liability by reason of fortuitous event, the
event should be the sole and proximate cause of the loss or destruction of the object of the
contract.

According to Nakpil vs. CA, four requisites must concur: 1) the cause of the breach must be
independent of the will of the debtor; 2) the event must be unforeseeable or unavoidable; 3)
the event must such as to render it impossible for the debtor to fulfill his obligation in a normal
manner; and 4) the debtor must be free from any participation in or aggravation of the injury to
the creditor.

Tanguilig failed to show that the collapse of the windmill was due solely to a fortuitous event.
The evidence does not disclose that there was actually a typhoon on the day the windmill
collapsed. Tanguilig merely stated that there was a "strong wind." But a strong wind in this
case cannot be fortuitous – unforeseeable nor unavoidable. On the contrary, a strong wind
should be present in places where windmills are constructed; otherwise the windmills will not
turn.

Tanguilig’s argument that Herce was already in default and hence should bear his own loss is
untenable. When the windmill failed to function properly it became incumbent upon Tanguilig
to institute the proper repairs in accordance with the guaranty stated in the contract. Thus,
Herce cannot be said to have incurred delay. Instead, it is Tanguilig who should bear the
expenses for the reconstruction of the windmill. A1167 of the Civil Code is explicit that if a
person obliged to do something fails to do it, the same shall be executed at his cost.

NOTES:
WoN the agreement to construct the windmill included the installation of a deep well

NO. Although the words “deep well” and “deep well pump” appear in the proposal, they are
preceded by the prepositions “for” and “suitable for” which were meant only to convey the idea
that the proposed windmill would be appropriate for a deep well pump of a specific size. If the
real intent was to include the deep well, “and” or “with” would have been used.

In case of doubt in the interpretation of contracts, contemporaneous and subsequent acts shall
be principally considered. An examination of such acts of respondent as well as the attendant
circumstances does not persuade the court to uphold respondent.

Herce insists that Tanguilig verbally agreed that the contract price covered the installation of a
deep well and that since petitioner did not have the capacity to do so, SPGMI was hired to do
the work, the cost of which was to be deducted from the contract price. Such agreement is
unsubstantiated since no evidence of such agreement was presented to the court. Moreover,

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it was Herce who paid P15k to Pili, indicating that the contract for the deep well was not part
of the windmill project but a separate agreement between Herce and Pili.

Neither can Herce claim that Pili accepted his payment on behalf of Tanguilig as per NCC,
A1240 since it does not appear that Pili was authorized to do so.

A1236 and 1237 do not apply because no creditor-debtor relationship between Tanguilig and
Pili has been established regarding the deep well construction.

CASE NO. 14
Metropolitan Bank & Trust Co., v. International Exchange Bank, G.R. No. 176008,
August 10, 2011

FACTS:
Sacramento Steel Corporation (SSC) is a Steel manufacturing and producing corporation. SSC
entered into a Credit Agreement with International Exchange Bank (IEB) and as security for its
loan obligations, the former executed five separate deeds of chattel mortgage.

SSC defaulted in the payment of its obligations, where subsequently, IEB filed a petition for
extrajudicial foreclosure of chattel mortgage.
Meanwhile, while the case were still pending between SSC and IEB, petitioner METROBANK
filed a motion contending that it has legal interest in the properties subject of the litigation
between IEB and SSC because it is a creditor of SSC and that the mortgage contracts between
IEB and SSC were entered into to defraud the latter’s creditors. Metrobank prayed for the
rescission of the chattel mortgages executed by SSC in favor of IEB.

ISSUE:
Whether the chattel mortgages executed by SSC in favor of IEB may be rescinded.

HELD:
In the current jurisprudence, the following successive measures must be taken by a creditor
before he may bring an action for rescission of an allegedly fraudulent contract:

-exhaust the properties of the debtor through levying by attachment and execution upon all the
property of the debtor, except such as are exempt by law from execution;

-exercise all the rights and actions of the debtor, save those personal to him (accion
subrogatoria); and

-seek rescission of the contracts executed by the debtor in fraud of their rights (accion
pauliana).

It is thus apparent that an action to rescind, or an accion pauliana, must be of last resort,
availed of only after the creditor has exhausted all the properties of the debtor not exempt from
execution or after all other legal remedies have been exhausted and have been proven futile.

Without availing of the first and second remedies, Metrobank simply undertook the third
measure and filed an action for annulment of the chattel mortgages. Rescission can only be

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availed of in the absence of any other legal remedy to obtain reparation for the injury. This fact
is not present in this case. No evidence was presented nor even an allegation was offered to
show that Metrobank had availed of the abovementioned remedies before it tried to question
the validity of the contracts of chattel mortgage between IEB and SSC.

CASE NO. 15
Khe Hong Cheng c CA 355 SCRA 701 (2001)

FACTS:
Petitioner Khe Hong Cheng, alias Felix Khe, is the owner of Butuan Shipping Lines. The
Philippine Agricultural Trading Corporation shipped on board the vessel M/V PRINCE ERIC,
owned by petitioner Khe Hong Cheng, 3,400 bags of copra at Masbate, Masbate, for delivery
to Dipolog City, Zamboanga del Norte.

The said shipment of copra was covered by a marine insurance policy issued by American
Home Insurance Company (respondent Philam's assured). M/V PRINCE ERIC sank
somewhere between Negros Island and Northeastern Mindanao, resulting in the total loss of
the shipment.
Because of the loss, the insurer, American Home, paid the amount of P354,000.00 (the value
of the copra) to the consignee.

Having been subrogated into the rights of the consignee, American Home instituted a civil case
to recover the money paid to the consignee, based on breach of contract of carriage. While
the case was still pending, on December 20, 1989, petitioner Khe Hong Cheng executed deeds
of donations of parcels of land in favor of his children, herein co-petitioners Sandra Joy and
Ray Steven.

The trial court rendered judgment against petitioner in the civil case on December 29, 1993,
four years after the donations were made and the TCTs were registered in the donees’ names
ordering him to pay herein respondents.

After the said decision became final and executory, a writ of execution was forthwith. Said writ
of execution, however, was not served. An alias writ of execution was, thereafter, applied for
and granted. Despite earnest efforts, the sheriff found no property under the name of Butuan
Shipping Lines and/or petitioner Khe Hong Cheng to levy or garnish for the satisfaction of the
trial court's decision.

When the sheriff, accompanied by counsel of respondent Philam, went to Butuan City on
January 17, 1997, to enforce the alias writ of execution, they discovered that petitioner Khe
Hong Cheng no longer had any property and that he had conveyed the subject properties to
his children. Respondent Philam filed a complaint for the rescission of the deeds of donation
executed by petitioner Khe Hong Cheng in favor of his children and for the nullification of their
titles. Respondent Philam alleged, that petitioner executed the aforesaid deeds in fraud of his
creditors, including respondent Philam.

The trial court denied the motion to dismiss. It held that respondent Philam's complaint had not
yet prescribed. According to the trial court, the prescriptive period began to run only from
December 29, 1993, the date of the decision of the trial court in Civil Case No. 13357.

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On appeal by petitioners, the CA affirmed the trial court's decision in favor of respondent
Philam. The CA declared that the action to rescind the donations had not yet prescribed. Citing
Articles 1381 and 1383 of the Civil Code, the CA ruled that the four year period to institute the
action for rescission began to run only in January 1997, and not when the decision in the civil
case became final and executory on December 29, 1993. The CA reckoned the accrual of
respondent Philam's cause of action on January 1997, the time when it first learned that the
judgment award could not be satisfied because the judgment creditor, petitioner Khe Hong
Cheng, had no more properties in his name.

Prior thereto, respondent Philam had not yet exhausted all legal means for the satisfaction of
the decision in its favor, as prescribed under Article 1383 of the Civil Code. Petitioners’ motion
for reconsideration was likewise dismissed in the appellate court's resolution dated July 11,
2000.

ISSUE
1. WON the action to rescind the donations has already prescribed.

HELD
1. NO. The action to rescind the donations has already prescribed.

Ratio: Article 1389 of the Civil Code simply provides that, “The action to claim rescission must
be commenced within four years.” Since this provision of law is silent as to when the
prescriptive period would commence, the general rule, i.e, from the moment the cause of action
accrues, therefore, applies.

- Art. 1150. The time for prescription for all kinds of actions, when there is no special provision
which ordains otherwise, shall be counted from the day they may be brought.

The Court enunciated the principle that it is the legal possibility of bringing the action which
determines the starting point for the computation of the prescriptive period for the action.

- Art. 1383. An action for rescission is subsidiary; it cannot be instituted except when the party
suffering damage has no other legal means to obtain reparation for the same.

- An action to rescind or an accion pauliana must be of last resort, availed of only after all other
legal remedies have been exhausted and have been proven futile.

Reasoning: Petitioners argument that the Civil Code must yield to the Mortgage and
Registration Laws is misplaced, for in no way does this imply that the specific provisions of the
former may be all together ignored. To count the four year prescriptive period to rescind an
allegedly fraudulent contract from the date of registration of the conveyance with the Register
of Deeds, as alleged by the petitioners, would run counter to Article 1383 of the Civil Code as
well as settled jurisprudence. It would likewise violate the third requisite to file an action for
rescission of an allegedly fraudulent conveyance of property, i.e., the creditor has no other
legal remedy to satisfy his claim.

Disposition The petition was DENIED for lack of merit.

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 CASE NO. 17
Republik v. Luzon Stevedoring Co, 21 SCRA 279 (1967)

FACTS:
Barge L-1892 owned by Luzon. was being towed down the Pasig river by two tugboats
"Bangus" and "Barbero” (also owned by Luzon). The barge rammed against one of the wooden
piles of Nagtahan bailey bridge, smashing the posts and causing the bridge to list. At the time,
the river’s current was swift and the water was high due to heavy rains in Manila.

The Republic sued the company for the actual and consequential damages caused
(P200,000). Luzon disclaimed liability, on the grounds that it had exercised due diligence in
the selection and supervision of its employees; that the damages to the bridge were caused
by force majeure; that plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is
an obstruction to navigation.

CFI held Luzon liable for the damage caused by its employee and ordered it to pay the actual
cost of the repair of the Nagtahan bailey bridge (P192,561.72), with legal interest thereon from
the date of the filing of the complaint. Luzon appealed directly to SC, raising questions both of
fact and of law.

ISSUES:
WON the collision of Luzon’s barge with the supports or piers of the Nagtahan bridge was in
law caused by fortuitous event or force majeure

RULING:
NO. Considering that the Nagtahan bridge was an immovable and stationary object and
provided with adequate openings for the passage of water craft, including barges, it is
undeniable that the unusual event that the barge, exclusively controlled by appellant, rammed
the bridge supports raises a presumption of negligence on Luzon’s part or its employees
manning the barge or the tugs that towed it. For in the ordinary course of events, such a
thing does not happen if proper care is used. In Anglo American Jurisprudence, the
inference arises by what is known as the "res ipsa loquitur" rule.

Luzon strongly stresses the precautions taken by it: that it assigned two of its most powerful
tugboats to tow down river its barge; that it assigned to the task the more competent and
experienced among its patrons, had the towlines, engines and equipment double-checked and
inspected; that it instructed its patrons to take extra precautions; and concludes that it had
done all it was called to do, and that the accident, therefore, should be held due to force
majeure or fortuitous event.

These very precautions, however, completely destroy the appellant's defense. For caso
fortuito or force majeure (which in law are identical in so far as they exempt an obligor from
liability) by definition, are extraordinary events not forseeable or avoidable, "events that could
not be foreseen, or which, though foreseen, were inevitable" (A1174, NCC). It is, therefore,
not enough that the event should not have been fore seen or anticipated, as is
commonly believed but it must be one impossible to foresee or to avoid. The mere
difficulty to foresee the happening is not impossibility to foresee the same.

NOTES:

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SC: when a party appeals directly to the Supreme Court, and submits his case there for
decision, he is deemed to have waived the right to dispute any finding of fact made by the trial
Court. The only questions that may be raised are those of law.

CASE NO. 18
Dioquino v. Laureano, 33 SCRA 65 (1970)

FACTS:
Atty. Pedro Dioquino went to the MVO’s office in Masbate to register his car. There he met
Federico Laureano, patrol officer of the office, who was about to leave for the Provincial
Commander’s office. Dioquino asked Laureano to introduce him to one of the clerks in the
MVO office to facilitate the registration of his car. Laureano graciously attended to it.

Laureano then rode in Dioquino’s car, with a driver on the wheel, going to the Provincial
Commander’s office. (Note: Dioquino was not with them; Laureano was the sole passenger.)
En route, the car was stoned by some boys and its windshield was broken. Laureano chased
the boys and was able to catch one of them. The boy was taken to Dioquino, and the father
was called, but no arrangements were made about the damage.

Laureano refused to file any charges against the boy and his parents because he thought that
the stone-throwing was merely accidental and that it was due to force majeure. Thus, Dioquino
tried to convince Laureano to pay for the value of the windshield and he even came to the
extent of asking the wife to convince her husband to settle the matter amicably but Laureano
refused to make any settlement, but the latter refused, clinging to the same force majeure
belief.

Dioquino filed an action for damages in CFI against Laureano, his wife, and his father. CFI
ruled in favor of Dioquino, but only made Laureano pay – not the wife and father.

ISSUES:
WON the incident was force majeure

RULING:
YES. The situation falls under A1174. What happened was clearly unforeseen. It was a
fortuitous event resulting in a loss that must be borne by the owner of the car.

Re: A1174: It is not enough that the event should not have been foreseen or anticipated, but it
must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is
not impossibility to foresee the same.

The express language of A1174, except for the addition of the nature of an obligation requiring
the assumption of risk, compels the conclusion that in the absence of a legal provision or an
express covenant, “no one should be held to account for fortuitous cases.”

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 CASE NO. 19
Austria v. CA, 39 SCRA 527 (1971)

FACTS:
Maria G. Abad received from Guillermo Austria one (1) pendant with diamonds to be sold on
commission basis or to be returned on demand.
Maria Abad while walking home, two men snatched her purse containing jewelry and cash,
and ran away.

Thus, Abad failed to return the jewelry or pay its value notwithstanding demands. Austria filed
an action against Abad and Abad’s husband for recovery of the pendant or of its value, and
damages. Abad raised the
defense that the alleged robbery had extinguished their obligation.

ISSUE/S:
Whether or not in a contract of agency (consignment of good for sole) it is necessary that there
be prior conviction for robbery before the loss of the article shall exempt the consignee from
liability for such loss.
Whether or not Abad was negligent.

RULING:
No. To avail of the exemption granted in the law, it is not necessary that the persons
responsible for the occurrence should be found or punished, it would only be sufficient to
establish that the enforceable event, the robbery in this case did take place without any
concurrence fault on the debtor’s part, and this can be done by preponderance of evidence.

A court finding that a robbery has happened would not necessary mean that those accused in
the criminal action should be found guilty of the crime; nor would a ruling that those actually
accused did not commit the robbery be inconsistent with a finding that a robbery did take place.
No. In 1961, when the robbery in question did take place, for at that time criminality had not by
far reached the levels attained in the present day. The diligence that Abad portrayed when she
went home before she was robbed was not a sign of negligence on her part.

CASE NO. 20
Yobido v. CA, 281 SCRA 1 (1997)

FACTS
1. Tito and Lenoy Tumboy, together with their minor children boarded a Yobido Liner bus
bound for Davao City from Surigao del Sur. But while driving in Agusan del Sur, the left
front tire of the bus exploded, in which the bus fell into ravine
2. This caused the death of Tito TUmboy and physical injuries to other passengers.
Complaint for breach of contract was filed by Leny against the owner of the bus,
3. Alberta Yobido and its driver. The Yobidos used as a defense that the case was a caso
fortuito. More so, a separate charge was filed against the Philippine Phoenix Surety and
Insurance but was dismissed
4. During the trip to Davao, Leny cautioned the driver that the bus was running fast but he
merely stared at her

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 5. The tire that exploded, however was a new one installed only five days before the
incident. Drivers on the other hand, underwent driving tests before they were employed

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 passenger

HELD: When a passenger boards a common carrier, he takes the risks incidental to the mode
of travel he has taken as a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without injury. However, when a
passenger is injured or dies while traveling, the law presumes that the carrier is negligent
based on CC Art. 1756; as this is the presumption in culpa contractual, unless the defendant
proves that the case was caso fortuito . If carrier be unable to debunk this presumption, there
even be no need to make an express finding of negligence or fault. CC 1755 provides that
passengers must be carried safely as far as human care and foresight can provide, using
utmost diligence of very cautious persons, with a due regard for all circumstances. Liability for
a tire blow-out is not a fortuitous event as the requisites for these are:

a. The Cause of the unforeseen and unexpected occurrence or the failure of the debtor to
comply with his obligations, must be independent of human will
b. It must be impossible to foresee the event which constitutes the caso fortuito, or if it can
be foreseen, it must be impossible to avoid
c. The occurrence must be such as to render impossible for the debtor to fulfill his
obligation in a normal manner
d. The obligor must be free from any participation in the aggravation of the injury resulting
to the creditor
e. The fact that a new tire was installed nor even the existence of force majeure does not
imply caso fortuito immediately as the carrier must still prove that it was not negligent in
causing the death or injury resulting from the accident

Driver must have taken precautionary measures given the circumstances but the driver did not
do anything to this effect. For failing to overthrow the presumption of negligence with clear an
convincing evidence, the Yobidos are held liable for damages amounting to 50,000 pesos.
While moral damages are not recoverable in culpa contractual, damages may be recovered in
breach of contract of carriage resulting in the death of a passenger, notwithstanding exemplary
damages as the carrier through its driver acted recklessly.

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