OBLICON DIGESTS

6) NPC vs. CA

GR 124378

Facts: By virtue of Memorandum Order No. 398 - "Prescribing Measures to Preserve the Lake Lanao
Watershed, To Enforce the Reservation of Areas Around the Lake Below Seven Hundred And Two
Meters Elevation, and for Other Purposes.", petitioner herein built and operated the Agus Regulation
Dam at the mouth of Agus River in Lanao del Sur, at a normal maximum water level of Lake Lanao at 702
meters elevation in 1978. In 1986, private respondents fishponds and other improvements were washed
away when the water level of the lake escalated and the subject lakeshore area was flooded. NPC
refused to compensate them so they filed an action for damages, alleging that the negligence and
inexperience of NPC’s employees assigned to operate the Agus Regulation Dam were the proximate
causes of the damage caused to their properties and livelihood. NPC denied the allegations and alleged
that: 1) the water level of Lake Lanao never went beyond 702 meters, 2) their employees were not
negligent, 3) private respondents fishponds were located below the 702-water level, which is prohibited.

Issue: WON, NPC is liable for damages.

Ruling: Yes. By virtue of MO 398, NPC had two duties: 1) maintain the normal maximum lake elevation at
702 meters, and 2) build benchmarks to warn the inhabitants in the area that cultivation of land below
said elevation is forbidden. Now upon ocular inspection by the lower courts, it was established that in
the subject areas, the benchmarks as pointed out by the NPC representative, could not be seen nor
reached because they were totally covered with water. Thus, an application of the doctrine of res ipsa
loquitur, the thing speaks for itself, is proper. The doctrine states that: Where the thing which causes
injury is shown to be under the management of the defendant, and the accident is such as in the
ordinary course of things does not happen if those who have the management use proper care, it
affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose
from want of care. In the case at bar, the fact that the benchmarks could not be seen nor reached, is by
itself, constitute proof that the water level did rise above the benchmarks and inundated the properties
in the area. Thus, In the absence of any clear explanation on what other factors could have explained
the flooding in the neighboring properties of the dam, it is fair to reasonably infer that the incident
happened because of want of care on the part of NPC to maintain the water level of the dam within the
benchmarks at the maximum normal lake elevation of 702 meters

7) GAISANO CAGAYAN v. INSURANCE CO. OF NORTH AMERICA

GR No. 147839 June 08, 2006

FACTS

Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. While Levi Strauss
(Phils.)Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co. IMC
andLSPI separately obtained from respondent Insurance Company of North America (ICNA) fire
insurancepolicies for their book debt endorsements related to their ready-made clothing materials
which have beensold or delivered to various customers and dealers of the Insured anywhere in the
Philippines which areunpaid45 days after the time of the loss.Petitioner Gaisano Cagayan, Inc. is a
customer and dealer of IMC and LSPI products. It owns the GaisanoSuperstore Complex which was
consumed by fire in 1991. Included in the items destroyed in the fire werestocks of ready-made clothing
materials sold and delivered by IMC and LSPI.Respondent filed a complaint for damages against Gaisano
Cagayan, Inc. alleging that IMC and LSPI filedtheir claims under their respective fire insurance policies
which it paid, thus it was subrogated to their rights.Petitioner averred it not be held liable because the
items were destroyed due to fortuitous event or forcemajeure. The RTC ruled that IMC and LSPI retained
ownership of the delivered goods until fully paid, itmust bear the loss (res perit domino). The CA ruled
otherwise and ordered petitioner to pay respondentPhp 2,119,205.60 and Php 535,613.00 the amount
paid by the latter to IMC and LSPI, respectively.

ISSUE

WON respondent may claim against petitioner for the insured debt.

HELD

Yes, but the order to pay Php 535,613 is deleted for lack of factual basis.The insurance policy is clear
that the subject of the insurance is the book debts and not goods sold anddelivered to the customers
and dealers of the insured.Under Art. 1504 of the Civil code, unless otherwise agreed, the goods remain
at the seller's risk until theownership therein is transferred to the buyer, but when the ownership
therein is transferred to the buyer thegoods are at the buyer's risk whether actual delivery has been
made or not;

except where delivery of thegoods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller merely to
secure performance by thebuyer of his obligations under the contract, the goods are at the buyer's risk
from the time of such delivery. IMC and LSPI did not lose complete interest over the goods. They have
an insurable interest until full payment of the value of the delivered goods. Unlike the civil law concept
of res perit domino, where ownership is the basis for consideration of who bears the risk of loss, in
property insurance, one's interest isnot determined by concept of title, but whether insured has
substantial economic interest in the property. Section 13 of our Insurance Code defines insurable
interest as "every interest in property, whether real or personal, or any relation thereto, or liability in
respect thereof, of such nature that a contemplated peril might directly damnify the insured."
Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a)
an existing interest; (b) an inchoate interest founded on existing interest; or (c)an expectancy, coupled
with an existing interest in that out of which the expectancy arises.

8) Telefast vs Castro (1988)

Facts:

In 1956, Sofia Castro-Crouch (plaintiff-respondent) was vacationing in Pangasinan in her parent’s house.
That same year in November, her mother, Consolacion died. On the day of her mother’s death she
addressed a telegram to her father Ignacio who was then in the US announcing Consolacion’s death. The
telegram was accepted by Telefast (defendant-petitioner) in its Dagupan office after payment of
required fees or charges. The telegram never reached the addressee. Consolacion was interred without
her husband and children besides Sofia. Sofia went back to the US and learned that the telegram never
reached her father. Thus, she and her siblings and their father sued Telefast for damages arising from
the breach of contract by the defendant. Petitioner-defendant Telefast interposed that the reason why
the telegram never reached the addressee is because of “technical and atmospheric factors beyond its
control.” It appears though that no attempt made by defendant to inform Sofia for that matter or any
reason at all that explains why the telegram reached the addressee. The CFI ruled in favor of Sofia and
her co plaintiffs awarding her damages she prayed for. Telefast appealed before the IAC which affirmed
the decision of the CFI. Hence this appeal.

Issues: Whether or not petitioner is liable for damages arising from the breach of contract even though
that there was a technical and atmospheric factors that lead to its failure to comply with terms of the
contract?

Held: Yes. Art. 1170 of the Civil Code provides, “Those who in the performance of their obligation are
guilty of fraud, delay, negligence, 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 .In the case at bar, petitioner and
private respondent Sofia C. Crouch entered into a contract whereby, for a fee, petitioner undertook to
send said private respondent’s message overseas by telegram. This, petitioner did not do, despite
performance by said private respondent of her obligation by paying there quired charges. Petitioner was
therefore guilty of contravening its obligation to said private respondent and is thus liable for damages.
Also, it is evident that petitioner did not do anything to advise the plaintiff of the circumstances which
lead to its failure to comply with its obligation. It is apparent that such tantamount to gross negligence.
Hence bad faith.