1.

Piczon vs piczon
2. PCIC VS CCP
3. PALMARES V. COURT OF APPEALS
Facts: Private respondent M.B. Lending Corporation extended a loan to the spouses
Osmeña and Merlyn Azarraga, together with petitioner Estrella Palmares (co-maker), in
the amount of P30,000.00 payable on or before May 12, 1990, with compounded
interest at the rate of 6% per annum to be computed every 30 days from the date
thereof. Petitioner and the Azarraga spouses were able to pay a total of P16,300.00,
thereby leaving a balance of P13,700.00. M. B. Lending Corporation filed a complaint
against petitioner Palmares as the lone party-defendant due to the insolvency of the
principal debtors. During the pre-trial conference, the parties submitted the following
issues for the resolution of the trial court: (1) what the rate of interest, penalty and
damages should be; (2) whether the liability of the defendant (herein petitioner) is
primary or subsidiary; and (3) whether the defendant Estrella Palmares is only a
guarantor with a subsidiary liability and not a co-maker with primary liability. The RTC
of Ilo-ilo City rendered judgment dismissing the complaint without prejudice to the filing
of a separate action for a sum of money against the spouses Azarraga who are primarily
liable on the instrument, ruling that petitioner, as co-maker, is only secondarily liable
on the instrument; and that the promissory note is a contract of adhesion. The appellate
court reversed the decisions and declared that Palmares is a surety since she bound
herself to be jointly and severally or solidarily liable with the principal debtors, the
Azarraga spouses, when she signed as a co-maker. As such, petitioner is primarily liable
on the note and hence may be sued by the creditor corporation for the entire obligation
liable to the following: (1) Outstanding balance of 13,700 at six percent interest; (2)
Penalty of 3% per month, of the outstanding balance; (3) 25% Attorney’s fees; (4)
Costs of suit

Issues: a. WON the Court of Appeals erred in ruling that Palmares acted as surety and
is therefore solidarily liable to pay the promissory note. b. WON the principal debtors
cannot be considered in default in the absence of a judicial or extrajudicial demand.

Ruling: A. NO. Art. 2047. By guaranty, a person called the guarantor binds himself to
the creditor to fulfill the obligation of the principal debtor in case the latter should fail
to do so. If a person binds himself solidarily with the principal debtor, the provisions of
Section 4, Chapter 3, Title I of this Book shall be observed. In such case the contract is
called a suretyship. In the case at bar, petitioner expressly bound herself to be jointly
and severally or solidarily liable with the principal maker of the note. The terms of the
contract are clear, explicit and unequivocal that petitioner's liability is that of a surety.
A surety undertakes directly for the payment and is so responsible at once if the
principal debtor makes default. Surety is bound equally and absolutely with the
principal, and as such is deemed an original promisor and debtor from the beginning.
B. YES. There is no merit in petitioner's contention that the complaint was prematurely
filed because the principal debtors cannot as yet be considered in default, there having
been no judicial or extrajudicial demand made by respondent corporation. Petitioner
has agreed that respondent corporation may demand payment of the loan from her in
case the principal maker defaults, subject to the same conditions expressed in the
promissory note. Significantly, paragraph (G) of the note states that "should I fail to
pay in accordance with the above schedule of payment, I hereby waive my right to
notice and demand." Hence, demand by the creditor is no longer necessary in order
that delay may exist since the contract itself already expressly so declares. As a surety,
petitioner is equally bound by such waiver.
4. BINALBAGAN
FACTS: - Private respondents executed a contract to sell and a deed of sale for 42
subdivision lots to Petitioner. - Upon the transfer to Binalbagan of titles to the 42
subdivision lots, said petitioner took possession of the lots and the building and
improvements thereon. - Binalbagan started operating a school on the property - It
 appears that there was a pending case on the said lots, possession of the building and
other property was taken from petitioner Binalbagan and given to the third-party
claimants, the de la Cruz spouses (Petitioner was not in possession of the lots from
1974 to 1982) - In 1982 judgment was rendered and petitioner was restored to the
possession of the subdivision lots on May 31, 1982 - After petitioner Binalbagan was
again placed in possession of the subdivision lots, private respondent Angelina Echaus
demanded payment from petitioner Binalbagan for the subdivision lots - Petitioned
failed to effect payment, private respondent filed a case in RTC against petitioners for
recovery of title and damages

ISSUE: WON petitioner is liable for the payment of said lots

RULING: As it is evident that there was an interruption during the period from 1974 up
to 1982, the period of prescription, as correctly maintained by the appellants, was tolled
during such period, and consequently was in no position to legally demand payment of
the price. The period of prescription was interrupted, because from 1974 up to 1982,
the appellants themselves could not have restored unto the appellees the possession of
the 42 subdivision lots precisely because of the preliminary injunction mentioned
elsewhere. Consequently, the appellants could not have prospered in any suit to compel
performance or payment from the appellees-buyers, because the appellants themselves
were in no position to perform their own corresponding obligation to deliver to and
maintain said buyers in possession of the lots subject matter of the sale. A party to a
contract cannot demand performance of the other party's obligations unless he is in a
position to comply with his own obligations
5. BARZAGA
FACTS: Barzaga’s wife was succumbed to a debilitating ailment after prolonged pain
and suffering, she expresses her wish to be laid to rest before Christmas day to spare
her family from keping lonely vigil over her remains. At 3:00 on Dec. 21. Barzaga went
to a hardware store of repondent Alviar to inquire about availability of certain materials
to be used in the construction of a niche for his wife, but storekeeper had to verify.
7:00 on Dec. 22, Barzaga returned to store to follow up purchase He told the store
employees that the materials he was buying would have to be delivered at the Memorial
Cemetery in Dasmariñas, Cavite, by eight o'clock that morning since his hired workers
were already at the burial site and time was of the essence. Marina Boncales agreed to
deliver the items at the designated time, date and place. With this assurance, Barzaga
purchased the materials and paid in full the amount of P2,110.00 The construction
materials did not arrive as promised and Barzaga decided to cancel transaction and look
for cnstruction materials elsewhere. Barzaga wrote private respondent Alviar
demanding recompense for the damage he suffered. Alviar did not respond.
Consequently, petitioner sued him before the Regional Trial Court. Private respondent
contended that legal delay could not be validly ascribed to him because no specifc time
of delivery was agreed upon between them.

ISSUE: WON respondent Alviar incurred delay thus liable for damages

RULING: Respondent Angelito Alviar was negligent and incurred in delay in the
performance of his contractual obligation. This sufficiently entitles petitioner Ignacio
Barzaga to be indemnifed for the damage he suffered as a consequence of delay or a
contractual breach. The law expressly provides that those who in the performance of
their obligation are guilty of fraud, negligence, or delay and those who in any manner
contravene the tenor thereof, are liable for damages. Under the circumstances, time
was of the essence in the delivery of the materials to the grave site.
6. Financial Building Corporation v. Rudlin INternational Corporation
FACTS: Rudlin invited proposals for the construction of a 3-storey school building.The
contract was awarded to FBC with a bid of P6.9 M. Rudlin and FBC executed a
Construction Agreement which, among others, provided for the total consideration and
liability for delay. The contract also provided for completion date not later than April 30,
1986 unless an extension of time has been “authorized and approved by the OWNER
and the ARCHITECT in writing.” It appears that the construction was not finished on
said date as Rudlin wrote FBC to complete the project not later than May 31, 1986. On
June 5, 1986, Rudlin and FBC made amendments to their Construction Agreement dated
November 22, 1985 through a Letter-Agreement. On June 15, 1986, the subject school
building, “Bloomfield Academy,” was inaugurated and utilized by Rudlin upon the start
of the school year. From the exchange of correspondence between FBC and Rudlin, it
can be gleaned that no reconciliation of accounts took place pursuant to the Letter-
Agreement dated June 5, 1986. FBC demanded payment of the balance of the adjusted
contract price per its computation, but it was not heeded by Rudlin. FBC filed in the
RTC a suit for a sum of money with prayer for preliminary attachment against Rudlin.
FBC alleged that the total and final contract price, inclusive of additives and deductives
and that despite repeated demands by FBC, Rudlin refused to pay its obligations. FBC
further prayed for legal interest from the time it became due and demandable,
attorney’s fees moral and exemplary damages and the cost of suit. Rudlin denied that
the construction of the project was completed by FBC. The original completion date,
April 30, 1986, was later moved to June 10, 1986. But despite the extension given by
Rudlin, FBC still has not completed the project. Rudlin likewise claimed that many
portions of the work performed by FBC are incomplete and/or faulty, defective and
deficient (valued at P1,180,127.35), for which reason Architect Eduardo R. Quezon has
not certified on the full performance and completion of the project. The work done by
FBC was thus not accepted by Rudlin for valid reasons. Under its counterclaim, Rudlin
invoked the provision in the Construction Agreement granting the Owner the right to
terminate the contract and take over the construction works upon default of the
Contractor who abandons or fails to complete the project, or fails to carry out the work
in accordance with the provisions of the Contract Documents, and to deduct the costs
from whatever payment is due or to become due to the Contractor. Rudlin asserted that
despite demands it made upon FBC, the latter still failed and refused to complete and
make good its obligations under the Construction Agreement and to correct faulty and
defective works. FBC argued that at any rate, by the very fact that Rudlin is actually
making use of the school building constructed by FBC, it is deemed to have accepted
the work. The trial court concluded that the subject school building had several defects.
It found untenable FBC’s denial of any responsibility for the defects caused by the
inferior quality of waterproofing material used by its subcontractor, INDESCO, citing
Section Eleven of the Construction Agreement whereby the Contractor assumes full
responsibility for the acts, negligence or omissions of all its employees, as well as for
those of its subcontractor and the latter’s employees. Moreover, the modifications to
the original plans and specifications, which gave rise to the deductives and additives,
were not shown to have been approved by Rudlin. Analyzing the evidence on record,
the CA concluded that FBC was not liable for the defect in waterproofing and delay in
the completion of the works for certain reasons. The CA thus ordered Rudlin to pay FBC
the remaining balance. Rudlin filed a motion for reconsideration while FBC moved for
partial reconsideration of the CA decision. The CA denied both motions under its
Resolution dated June 23, 2004. Hence, appealed the case to the SC.

ISSUE: whether FBC is liable for the defects in the construction of the subject school
building and delay in the completion of the works

HELD: YES because Considering that FBC had not completed the corrective/repair works
in accordance with the Contract Documents and as approved or certified in writing by
the Architect as to its completion, its demand for the payment of the final balance was
premature. Under the Letter-Agreement dated June 5, 1986, final payment was subject
to reconciliation of their accounts regarding the upgrading and downgrading done on
the project. Obviously, this cannot be complied with unless FBC as the defaulting party
completes the repair/corrective works for only then can the actual cost of additives and
deductives be determined. In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper manner with what is
incumbent upon him. [41] When the substandard waterproofing caused extensive
damage to the school building, it was incumbent upon FBC to institute at its own
expense the proper repairs in accordance with the guaranty-warranty stated in the
Construction Agreement. Thus, Rudlin cannot be said to have incurred delay in the
 reconciliation of accounts, as a precondition for final payment; instead, it is FBC who
was guilty of delay by its stubborn refusal to replace or re-execute the defective
waterproofing of the subject school building.
7.
8. Aerospace Chemical Industries, Inc vs CA and Philippine Phosphate Fertilizer
Corp.
FACTS: On June 27, 1986, petitioner Aerospace Industries, Inc. purchased five hundred
metric tons of sulfuric acid from private respondent Philippine Phosphate Fertilizer
Corporation. Petitioner agreed to secure the means of transport to pick-up the sulfuric
acid from private respondents' loadports in Basay, Negros Oriental and Sangi, Cebu. On
October 3, 1986, petitioner paid the purchased price of 500 MT of sulfuric acid. Then,
it chartered M/T Sultan Kayumanggi to carry the agreed volumes of freight from
designated loading areas. But the vessel was able to withdraw a partial amount of
sulfuric acid from Basay and Sangi because it tilted. And later, it sank with a total
amount of 227.51 MT of sulfuric acid on board. Petitioner sent a demand letter to private
respondent for delivery of the 272.49 MT of sulfuric acid. Petitioner then filed a
complaint against private respondent for specific performance and/or damages before
the Regional Trial Court of Pasig. The private respondent filed an answer with
counterclaim and alleged that it was the petitioner which was remiss in the performance
of its obligation in arranging the shipping requirements of its purchases and, hence,
should pay damages. Petitioner prevailed in the trial court. However, on appeal, the
Court of Appeals reversed the decision of the trial court and instead found petitioner
guilty of delay and therefore, liable for damages. Hence, this petition.

ISSUE: Did the respondent court err in holding that the petitioner committed breach of
contract, considering that: a. the petitioner allegedly paid the full value of its purchases,
yet received only a portion of said purchases? b. petitioner and private respondent
allegedly had also agreed for the purchase and supply of an additional 227.519 MT of
sulfuric acid, hence prior delay, if any, had been waived?

HELD: No, CA did not err in absolving the private respondent from liability. Petitioner,
as the buyer, was obligated under the contract to undertake the shipping requirements
of the cargo from the private respondent's loadports to the petitioner's designated
warehouse. It was petitioner which chartered M/T Sultan Kayumanggi. The vessel was
petitioner's agent. When it failed to comply with the necessary loading conditions of
sulfuric acid, it was incumbent upon petitioner to immediately replace M/T Sultan
Kayumanggi with another seaworthy vessel.||| Where there has been breach of contract
by the buyer, the seller has a right of action for damages. Following this rule, a cause
of action of the seller for damages may arise where the buyer refuses to remove the
goods, such that buyer has to remove them. Article 1170 of Civil Code provides: "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."
9. FAR EAST BANK AND TRUST CO (FEBTC) VS. CA, LUIS LUNA
FACTS:
- Luis Luna had a credit card issued by FEBTC which also had a supplemental card for
Clarita Luna. Clarita Luna however lost her card and notified FEBTC.
- Bank procedures was to mark lost card as temporarily cancelled, along with the principal
card.
- Subsequently, Luis went to a restaurant and supposedly used his card to pay for the
bill amounting to 588.13. However, it was declined and he was forced to pay it in cash
instead. Naturally, he was embarrassed by this incident.
- Luis then demanded for damages from the bank. The bank through its VP apologized
and acknowledged their mistake in not informing Luis of such procedure. A letter was
also sent to the restaurant signifying that the Luna’s were valued clients of the bank.
- Still feeling aggrieved, Luis filed claim for damages to the RTC and RTC ruled in favor
of Luis. CA affirmed the decision
ISSUE: May Luis Luna claim for moral damages under Culpa contractual?

RULING:
No, In culpa contractual, moral damages may be recovered where the defendant is shown to
have acted in bad faith or with malice in the breach of the contract. Bad faith, in this context,
includes gross, but not simple, negligence. Concededly, the bank was remiss in indeed
neglecting to personally inform Luis of his own card's cancellation. There was no sufficient
findings however for FEBTC to cause harm to private respondents. Neither could FEBTC's
negligence in failing to give personal notice to Luis be considered so gross as to amount to
malice or bad faith.

10. PNB VS. CA & LILY PUJOL

FACTS:
- Pujol opened a “combo account” in PNB under the name of her business which enables
her to draw checks and have it charged upon her savings account in the event that her
current account’s balance deems to be insufficient.
- Having sufficient funds in her account, Pujol issued a check for her daughter in law and
to her daughter each amounting to 30,000. PNB however dishonored both checks and
charged a penalty of 250 on each checks.
- Pujol then filed a claim for moral and exemplary damages to the RTC.
- PNB claimed that at the time of issuance of checks, Pujol’s account was not yet
operational due to some insufficiency in documentary requirements. Petitioner also
admitted that it later honored private respondent's second check, debited the amount
stated therein from her account and re-credited the amount of P250.00 initially charged
as penalty.
- RTC: ruled in favor of Pujol stating that she indeed suffered embarrassment caused by
PNB.
- CA: affirmed the decision of RTC
ISSUE:
Whether or not Pujol is entitled to moral damages on the ground of negligence by PNB.
RULING:
This Court has ruled that a bank is under obligation to treat the accounts of its depositors with
meticulous care whether such account consists only of a few hundred pesos or of millions of
pesos. Responsibility arising from negligence in the performance of every kind of obligation is
demandable. While petitioner's negligence in this case may not have been attended with malice
and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation to
private respondent Lily S. Pujol for which she is entitled to recover reasonable moral damages.

11.
12. Samson v. Court of Appeals
Facts: A commercial unit owned by Susana Realty Corp. was leased to private
respondent Angel Santos who placed ‘Santos & Sons’, a haberdashery store, in the said
unit. The lease contract’s term was for one year, starting on August 1, 1983 to July 31,
1984. Lessor informed private respondent that its lease contract would not be renewed.
Nonetheless, the lease contract was extended wherein private respondent continued to
occupy said building even beyond the extended term. Enter petitioner Manolo Samson
who proposed to buy Santos & Sons and the right to lease the subject premises. Private
respondent responded with a letterproposal claiming that it has impliedly renewed its
lease contract. Petitioner affixed his signature on the letter proposal signifying his
acceptance. All was well for a few months until Susana Realty ordered that petitioner
vacate the premises stating that private respondent failed to renew the lease contract.
Petitioner then filed for an action for damages against private respondent Angel Santos,
imputing fraud and bad faith against private respondent when the latter stated in the
letter-proposal that his lease contract with Susana was impliedly renewed. The RTC
ruled in favor of petitioner. Private respondent elevated the case to the CA who modified
the RTC decision by reducing the amount awarded to petitioner. CA also finds fault in
petitioner for failing to exercise sufficient diligence in verifying first the status of private
respondent’s lease.

Issue: WON private respondent’s bad faith is a valid reason for failing to exercise
sufficient diligence in verifying the status of the lease contract before purchasing the
unit/rights to lease.
 Held: NO. The SC approves this quote from the CA: When appellant Angel C. Santos
said that the lease contract had expired but that it was impliedly renewed, that
representation should have put appellee on guard. To protect his interest, appellee
should have checked with the lessor whether that was so, and this he failed to do…
Petitioner had every opportunity to verify the status of the lease contract of private
respondent with Susana Realty. The rule caveat emptor requires the purchaser to be
aware of the supposed title of the vendor and he who buys without checking the
vendor's title takes all the risks and losses consequent to such failure.
13. Dioquino v. Laureano
Facts: Plaintiff, the owner of a car was about to register the said car with the MVO-
Masbate. Herein defendant is a patrol office of MVO-Masbate who was waiting for a
jeepney on the way to the Office of the Prov. Commander (PC) of MVO-Masbate.
Plaintiff requested for the assistance of defendant in introducing the former to a person
who may assist him in the registration process. The request was granted and defendant
rode with plaintiff on the way to the PC’s barracks. While on the way to the barracks,
mischievous children threw stones at them which resulted in the car’s windshield to be
broken. Defendant chased the children and managed to catch one of them. Defendant
refused to file charges against the boy and his parents because he thought that the
stone-throwing was accidental and was due to force majeure. This led to plaintiff filing
a complaint against defendant.

Issue: WON the defendant exercised due diligence in the case at bar.

Held: The belief on the part of defendant is justified. Since the child’s act of stone-
throwing was a fortuitous event—it being unforeseen and beyond the will of the
defendant— liability is ruled out. There is no requirement of "diligence beyond what
human care and foresight can provide”.
14. JARCO MARKETING CORPORATION V. CA (GR 129792 DEC 21 1999)
FACTS: 1.Petitioner Jarco Marketing Corp is the owner of Syvel’s Department Store
Makati City. 2.Criselda and Zhieneth were at the 2nd floor of Syvel’s Dept Store. Ciselda
was signing her credit card slip at the payment and verification counter when she felt a
sudden gust of wind and heard a loud thud. She beheld her daughter Zhieneth on the
floor, her young body pinned by the bulk of the stores gift wrapping counter/structure.
3. Her daughter died after 14days of the accident due to injuries sustained. 4. After the
burial of her daughter, demanded upon petitioner the reimbursement of hospitalization,
medical bills and funeral expenses. But, petitioner refused to pay. Consequently, private
respondents filed a complaint for damages. 5. Petitioners denied any liability for the
injuries and consequent death of Zhieneth. They claimed that Criselda was Negligent in
exercising care and diligence over her daughter by allowing her to freely roam aroun in
a store filled with glassware and appliances. In addition, Jarco Marketing Corp that it
observed the diligence of a good father of a family n the selection, supervision and
control of its employees. 6. RTC dismissed the complaint. 7. Private respondents
appealed the decision of RTC. And maintained that the proximate cause of Zhieneth’s
death, was petitioners’ negligence in failing to institute measures to have the counter
permanently nailed. The CA decided in favor of private respondents. 8. Petitioners now
seek the reversal of the Court of Appeals’ decision and the reinstatement of the
judgment of the trial court.

ISSUES: 1.WON the death of Zhieneth was accidental or attributable to negligence. 2.In
case of a finding of negligence, WON the same was attributable to private respondents
for maintaining a defective counter or CRISELDA and ZHIENETH for failing to exercise
due and reasonable care while inside the store premises.

RULING: 1. The tragedy which befell Zhieneth was no accident and that could only
attributable to negligence. Accident pertains to an unforeseen event in which no fault
or negligence attaches to the defendant while negligence is the omission to do
something which a reasonable man, would do or doing of something which a prudent
man would not do. The test of determining negligence in the landmark case of Picart v.
 Smith, thus: Did the defendant in doing allege negligence act use that reasonable care
and caution which an ordinarily prudent person would have used in the same situation?
If not, then he is guilty of negligence. 2.No. Criselda should be absolved from any
contributory negligence.It was reasonable and usual for Criselda to let go of her child.
Zhieneth was near her mother and did not loiter as petitioners would want to impress
upon us. She even admitted to the doctor who treated her at the hospital that she did
not do anything. The petition is denied and CA decision is affirmed.
15. PP V. PO3 Ferdinand Fallorina Y Fernando
FACTS: 1.Vincent played with his kite on top of the roof of abandoned carinderia beside
the basketball court with Ricardo Salvo and three friends. 2.Ricardo called Vincent and
Whilcon to come down. When the appellant saw Vincent and Whilcon, he stopped his
motorcycle and shouted “Putang inang mga batang ito, hindi kayo magsibaba
dyan!”When Vincent stood up and ready to get down, the appellant pointed his 45
calliber pistol towards the direction of Vincent and fired a shot. 3. Whilcon rushed
Vincent to the General Hospital. 4. Vincent was pronounced dead on arrival. 5. A
criminal case was filed against the appellant. 6. RTC rendered judgment convicting the
appellant of murder,qualified by treachery and aggravated by abuse of public position.
7. The appellant asserts that the trial court failed to appreciate in his favor the physical
evidence, the hole found in the rooftop of the carinderia where Vincent was when he
was shot. 8. According to the Solicitor General, the pictures relied upon by the appellant
cannot overcome the positive and straightforward testimony of the young eye witness
Ricardo Salvo.

ISSUE: WON the appellant is exempt from criminal liability.

RULING: No. The appellant failed to prove clear and convincing evidence. The basis for
the exemption is the complete absence of intent and negligence on the part of the
accused. The elements of exempting circumstance are: 1.a person is performing a
lawful act 2.with due care 3.he causes an injury to another by mere accident 4.without
any fault or intention of causing it. ‘’An accident is an occurrence that happens outside
the sway of our will, and although it comes about act of our will, lies beyond the bounds
of humanly foreseeable consequences.’’ If the consequences are plainly forseable, it will
be a case of negligence. In Jarco Marketing Corporation v. CA, SC held that accident is
fortuitive circumstance while negligence is failure to observe for the protection of
interest with another person, that the degree of care, precaution, and vigilance which
circumstances justly demand without which such person suffers injury. Accident and
negligence are intrinsically contradictory; one cannot exist without the other. “SC agrees
with RTC disquisitions: “It is beyond human comprehension that a policeman, who
professes innocence would came out into open only three days from the incident and
claim the victim was accidentally shot. The court gives credence to the testimony of
Ricardo because it was only his purest intention of ferreting out the truth in this incident
and that justice be done to the victim. Decision of RTC is affirmed with modification on.
Accused found guilty of Murder penalty of Reclusion Perpetua to death.
16. Philippine Airlines vs. CA
The Case: This is a petition for review on certiorari on the decision of CA on the case
“Jesus Samson v PAL”. The CA affirmed the decision of the RTC with modifications in
subjecting Petitioner PAL for damages and injury to Jesus Samson. •

The Facts: Jesus Samson was a regular co-pilot for the Petitioner PAL. • Petitioner
allowed Captain Bustamante despite the protest of Jesus Samson which stemmed from
Bustamante’s long standing tumor of the nasopharynx that made him slow and poor in
judgement which is not favorable for flying. • Due to Captain Bustamante’s slow reaction
and poor judgement, he overshot the airfield resulting to the accident which caused
severe head injuries to Jesus Samson. Despite Samson’s utmost diligence to avert the
accident. • Samson, having sustained major injuries, was merely referred to the
company phyisician of the Petitioner. • Samson not having received expert medical care
suffered injuries that subsequently led Petitioner to discharge him of his duties on the
grounds of physical disability. • Samson filed to the RTC and decided that Petitioner be
held liable for the injuries of Samson while Petitioner PAL’ motion to dismiss the claim
 was rejected by the RTC. • CA affirmed the decision of the lower court but modified the
award of damages by imposing legal rate of interest on the unearned income from the
filing of the complaint. •

The Issue: WON CA erred in its decision of holding Petitioner liable for the injuries
incurred by Private Respondent Samson. •

The Ruling: The Supreme Court held that the duty to exercise the utmost diligence on
the part of common carriers as required by Art. 1732 New Civil Code is for the safety
of passengers as well as for the members of the crew or the complement operating the
carrier, and agrees with the modi cation made by the Court of Appeals in ordering
payment of legal interest from the date of judicial demand.
17. La Mallorca vs CA
The Case: Petitioner seeks the review of the decision of the CA in a case that held the
petitioner liable for quasi-delict and pay 6,000 to Beltran for the death of his daughter
and an additional 400 pesos for damages. •

The Facts: Sps Mariano Beltran and his children boarded a bus operated by Petitioner
La Mallorca which was bound for Anao, Pampanga. • Upon the arrival in Anao, Mariano
Beltran left his family for a while due to the bayong he left in the bus. His daughter
,Raquel, followed him without the his knowledge. • Beltran failed to acquire his bayong
due to the bus resuming its trip notwithstanding the fact that the conductor has not
given the signal to the driver to start. • Subsequently these series of events led to the
death of Beltran’s daughter as she was run over by the very bus they rode. • RTC found
Petitioner La Mallorca liable for breach of contract of carriage and sentenced Petitioner
to pay for the death and damages incurred. • CA affirmed the decision of the RTC and
found the Petitioner guilty of quasi-delict and liable for damages. •

The Issue/s: WON CA erred in holding the Petitioner for quasi-delict, considering the
complaint of Beltran was one for breach of contract • WON CA erred in increasing the
amount for damages granted by the RTC •

The Ruling: The court held that the contract of carriage does not cease to exist when
the passenger alighted from the carrier. There must be a reasonable amount of time
for the passenger to leave the carrier which in the case at bar is not given to the
passenger Beltran. Due to the sudden start of the vehicle without the customary signal
given by the conductor to the driver, there was no reasonable time for Beltran to leave
the bus. Assuming arguendo that the contract has ended, the operator can still be held
liable for the negligence of the Petitioner’s driver. Such allegations of negligence are of
quasi-delict which in most times incompatible with a claim for contract of carriage but
is permissible under Section 2 of Rule 8 in the New Rules of Court, which allows a
plaintiff to allege causes of action in the alternative be they compatible or not as long
as it will resolve and determine the controversy. • In the matter involving the issue on
the increased amount of damages, the SC held that the CA erred in increasing said
amount, as Beltran did not appeal on the amount and seemed contented with the
amount.
18. Asian Construction & Dev Corp v PCIB
1 ST CAUSE OF ACTION Petitioner (ASIAKONSTRUKT) obtained credit accommodations
from respondent (PCIB) and secured prompt and faithful payment by executing deeds
of assignment stipulating that petitioner is authorized to collect and receive all
receivables but shall have no right to use any of the proceeds as petitioners divest
themselves of all the rights, title and interest; The promissory notes remained not fully
paid despite becoming due and demandable (despite verbal & written demands). 2 ND
CAUSE OF ACTION: Fraudulent acts of Petitioner respondent filed a complaint alleging
fraud in contracting the debt and in the performance thereof alleging petitioner
collected the contract proceeds and used them instead of remitting; petitioner claims
(1) did not fraudulently misappropriate for it own use the contract proceeds [as there
are still remaining receivables] (2) severe financial and currency crisis adversely affected
them and out them out of business – 1997 Asian Financial Crisis (3) deeds of assignment
 partake of the nature of contracts of adhesion as they were standard forms proposed
as a precondition to release of loans ISSUE: Whether or not ASIAKONSTRUKT is virtually
insolvent as a result of the regionwide economic crisis that hit Asia, causing the
Philippine peso to depreciate drastically HELD: (1) plaintiffs failed to show factual basis
for its defenses of extraordinary deflation, its financial condition before and after the
economic crisis and that the crisis was the proximate cause of its financial distress (2)
may have experienced financial difficulties but that does not constitute a valid
justification for petitioner to renege on its obligation to respondent - FINANCIAL
DIFFICULTIES =/= FORTUITOUS EVENT (3) Art 1266 “the debtor in obligations shall
be released when the presentation becomes legally or physically impossible without the
fault of the obligor” does not apply as tis refers to obligations to do only and in this case
it is an obligation to give or to deliver
19. Fil-Estate Properties v Go
Petitioner entered into a contract to sell a condo unit to respondent spouses.
Respondents paid P3,439,000.07 of the full contract price set at P3,620,000.00.
Petitioner failed to develop the condo project. Spouses demanded refund + interest.
Petitioner refused to pay claiming that respondents had no cause of action since the
delay in the construction of the condominium was caused by the 1997 Asian Financial
Crisis, a fortuitous over which it had no control. (It apparently resulted to increase cost
of materials and labor) Case was litigated before the HLURB. HLURB held that Asian
Financial crisis which resulted in the depreciation of the peso is not a fortuitous event
as any fluctuation in the value of the peso is a daily occurrence which is foreseeable
and its deleterious effects avoided by economic measures CA affirmed actions taken by
HLURB ISSUE WON the honorable Court of Appeals erred in holding that the Asian
Financial Crisis is not a fortuitous event that would excuse the delivery by petitioner of
the subject condominium unit to respondents. HELD 1997 financial crisis that ensued in
Asia did not constitute a valid justification to renege on obligations. (Asian Construction
& Dev Corp v PCIB) 1997 Asian Financial Crisis cannot be generalized as unforeseeable
& beyond control. a real estate enterprise engaged in the pre-selling of condominium
units is concededly a master in projections on commodities and currency movements
and business risks. The fluctuating movement of the Philippine peso in the foreign
exchange market is an everyday occurrence, and fluctuations in currency exchange
rates happen every day, thus, not a fortuitous event
20. Victorias Planters Assn., Et. Al. v. Victorias Milling Co., Inc.
Facts: It was agreed that for 30 years, the planters would deliver their sugar to a milling
compare. However, during the war (4 years) and during the period of reconstitution (2
years), the milling company could not operate its mill.

Issue: WON the planters should be required to deliver for six more years their sugar to
the same mill to make up for what had been lost.

Held: No, because war is a fortuitous event tyat would relieve thr planters from this
obligation since fulfillment then had been rendered impossible.
21. Ace-Agro Dev. Corp. v. CA and Cosmos
Facts: Private Respondent is engaged in the manufacture of soft drinks. Petitioner and
Respondents entered into a service contract renewable every year with Petitioner as
the cleaners of the softdrink bottles. In April 1990, a fire broke out destroying the area
where P did its work thus work has stopped. In May, P asked if they could resume work
but was advised that PR will be terminating their contract. P asked PR for
reconsideratiom but did not receive any reply, so they informed their employees of the
terminationof their employment. Employees filed a complaint for illegal dismissal of
contract before the Labor Arbiter against both P and PR . P sent another letter of
reconsideration to PR to which they replied that they could resume work but outside
the company premises. P refused the offer claiming that to work outside would incur
additional transportation costs. PR then advised P that they could resume work inside
the company premises but then P unjustifiably refused because it wanted an extension
of the contract to make up for the period of inactivity.
 Issue: WON the period during which the work has been suspended justifies an extension
of the term of contract since it was brought about by a fortuitous event?

Held: No, the suspension of work due to fire does not merit an automatic suspension.
The stipulation that in the event of a fortuitous event, the contract shall be deemed
suspended duringthe said period does not stop the period of contract. The fact that the
contract is subject to a resolutory period, which relieves the parties of their respective
obligations, does not stop thr runningof the period of their contract.
22. Cauton v. CA GR No. 158382
Facts:  Petitioner entered into a real estate mortgage with respondent with an interest
of 8% to 10% per month and in order to secure the mortgage the respondent loaned
1 Million pesos to the petitioner.  However, respondent together with her husband filed
a suit for foreclosure of real estate mortgage with damages against petitioner and his
mother in the RTC.  RTC decided that the mortgage is void and ordered petitioner to
pay back the amount of 1 Million pesos and 610,000 pesos for the interest of Feb. to
Aug. 1992 plus attorney’s fees.  Petitioner appealed the decision of the RTC in the CA
for being iniquitous and exorbitant.  CA affirmed the decision of the RTC, hence, was
appealed to the SC.

Issue:  WON the CA erred in affirming the decision of the RTC in imposing interest at
the rate of 8% to 10% per month on the one-million-peso loan of the petitioner.

Ruling:  Yes, the CA erred in affirming the decision of the RTC for imposing an
exorbitant interest rate, thus, pursuant to the guidelines decided in the recent
jurisprudence, the SC modified the interest rate from 8-10% per month to 12% per
annum which is to be paid from the date of the execution of the loan until finality of
decision.
23. Liam Law v. Olympic SawmillCo.

Facts:  Plaintiff loaned 10,000 pesos, without interest, to defendant that would be due
on January 31, 1960. However, defendant did not pay on the said due date and asked
the plaintiff for an extension of 3 months.  The extension was accepted, however, the
obligation was increased by 6,000 pesos.  Defendant failed again to pay their obligation
given the extension, thus, plaintiff instituted this collection case.  The Trial Court
decided in favor for the plaintiff for the payment of 10,000 pesos principal amount plus
6,000 as liquidated damages.  Defendant appealed to the CA and CA endorsed the
case to the SC.

Issues:  WON the Trial Court erred in deciding in favor of the plaintiff for the payment
of the 10,000 pesos principal amount plus 6,000 as liquidated damages.  WON the
6,000 pesos obligation is a usurious interest.

Ruling:  No, the Trial Court did not commit any mistake in deciding the present case.
Under Article 1354 of the Civil Code, in regards to the agreement of the parties relative
to the 6,000 pesos obligation, "it is presumed that it exists and is lawful, unless the
debtor proves the contrary". However, the defendant did prove the 6,000 pesos was
illegal.  No, the 6,000 pesos obligation is not usurious interest as it is viewed liquidated
damages suffered by plaintiff, representing loss of interest income, attorney's fees and
incidentals.