Sarmiento v. Sps.

Cabrido Petitioner: Tomasa Sarmiento Respondent: Sps Luis & Rose Sun-Cabrido and Maria Lourdes Sun Appeal by certiorari Corona, J. Facts: Petitioner, states that in 1994 she, thru a certain Tita Payag, she acquired the services of DingDing’s Jewelry Shop, owned and managed by the Cabridos, for the purpose of converting Dra Virginia Lao’s pair of diamond earrings into two gold rings. When the rings were finished, Marilou Sun of DingDing’s Jewelry Shop, with whom Tita Payag discussed the resetting job, notified her that the rings were finished and that she could bring them to the store for dismounting. Marilou was unable to dismount the diamond so she asked their goldsmith, Zenon Santos to do it. Using pliers, Zenon Santos twisted the diamond breaking it in the process. Petitioner was forced to buy a replacement for Php 30,000 and sought to recover damages from the respondents. The Municipal Trial Court in Cities of Tagbilaran found in favor of the petitioner but the appellate courts reversed the MTCC’s decision. Issue: 1) WON the dismounting of the diamond from its original setting was part of the contract? YES 2) WON respondents are liable for damages? YES Ratio: The Court sides with the petitioner 1) The respondents initially denied accepting the said resetting job, but eventually admitted to its existence nonetheless denying that they had any obligation to dismount the diamonds from their original setting. Such statements were found to be inconsistent with the acts of Marilou who, upon examining the diamonds, expressed no reservation as to their dismounting, which was after all an integral part of the job order. She should have asked Tita Payag to take the diamonds someplace else for dismounting if she really intended to spare the shop of dismounting them. Furthermore, upon completion of the rings, she was the one who called up the petitioner to bring the diamonds in for resetting, she even attempted to reset them herself before eventually delegating the task to Santos. 2) Obligations arising from contracts have the force of law between the contracting parties, corollarily, 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. Santos, who had 40 years experience as a goldsmith, was negligent in dismounting the diamonds because he did not employ a miniature wire, as was the practice of the trade, but instead used a pair of pliers. It should be pointed out that when Marilou examined the diamonds before dismounting it from the original setting , they were in order, their subsequent breakage in the hands of Santos could only have been caused by his negligence in using the wrong equipment (Res ipsa loquitor). The respondents tried to avoid liability by denying Santos and Marilou were employees of DingDing’s Jewelry Shop. But facts show that Santos had been working for DingDing’s for about 6 months, accepting job orders while Tita Payag states that on at least 10 previous occasions she had transacted with DingDing’s through Marilou. Therefore there exists an obligation by the owner’s of DingDing’s to pay actual damages to the petitioner

Moral damages may be awarded in a breach of contract if it is proven that the defendant acted in 1) bad faith or was 2) guilty of gross negligence amounting to bad faith or in 3) wanton disregard of his contractual obligation. In this case, due to the gross negligence of Santos, their employee, the respondent spouses are liable for moral damages. Held: Petition granted. Respondent spouses ordered to pay jointly and severally to the petitioner Php 30,000 in actual damages and Php 10,000 in moral damages. Crisostomo v. CA Facts:

Estela L. Crisostomo contracted the services of Caravan Travel and Tours International (CTTI) in order to arrange and facilitate her booking, ticketing and accommodations for a tour dubbed “Jewels of Europe” The entire package cost P74, 322.70, which includes booking airfare Because here niece Meriam Menor was ticketing manager for the company, she was given discounts On June 12, 1991, a Wednesday, Menor went to her aunt’s house to deliver the plane tickets and other travel documents. She told her aunt that her flight would be on Saturday Crisostomo did not bother to look at the tickets or travel documents to confirm this, but went to to the airport on Saturday morning, only to be informed that her flight took off the day before She complained to Menor, who afterwards prevailed upon her aunt to take another tour called “British Pageant,” which cost P20,881.00 She paid a partial payment of $300 and went on the trip Upon coming back, she refused to pay the remainder of the amount, and instead asked for the reimbursement of the difference between the P74, 322.70 she paid for the first trip and the balance for the second trip CTTI refused saying that the sum was non-refundable Due to their refusal, Crisistomo filed a complaint for breach of contract of carriage and damages She alleges that she deserves the reimbursement because: 1. her failure to go on the first trip was respondent’s failure to clearly indicate the departure date on the plain ticket 2. the company was also negligent in misinforming her about the flight schedule 3. the “British Pageant Tour” was only a substitute for the “Jewels of Europe” tour, and, therefore, the cost of the former should be set-off against the sum paid for the latter CTTI prayed that petitioner be ordered to pay the balance of P12, 901.00 It, alleges that: 1. departure date was clearly and legibly indicated on the plane ticket 2. the ticket and travel documents were delivered to Crisostomo 2 days before her departure date, giving her ample time to read and examine them 3. her failure to join the tour was her own fault for not bothering to read o r confirm her flight schedule as printed on the ticket 4. it is an accepted industry practice to disallow refund because the cost of the entire package tour is determined by the minimum number of projected participants

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“British Pageant” tour was not a substitute, but rather a separate tour that Crisostomo contracted after realizing her mistake for the first tour

Trial Court decided in favor of Crisostomo, but found her guilty of contributory negligence, which is its basis for lowering the damages awarded Both parties appealed to the CA, which found them both at fault However, it found Crisostomo more negligent because as a lawyer and a welltraveled person, she should have known better than to simply rely on what she was told CA ordered her to pay the balance because she had already forfeited her right to the “Jewels of Europe” tour She appealed to the SC, saying: 

Fault or negligence consists in his failure to exercise due care and prudence in the performance of the obligation as the nature of the obligation demands. There is no fixed standard of diligence applicable to each and every contractual obligation. In each case, the degree of diligence requires depends on the circumstances of the specific obligation and whether one has been negligent is a question of fact that is to be determined after taking into account the particulars of each case Where the ticket and travel documents were delivered sufficiently ahead scheduled flight, and where date and time of flight was legibly written of the plane ticket, CTTI exercised due diligence and performed all its obligations to enable Crisostomo to join the tour Had petitioner exercised due diligence, there would have been no reason for her to miss the flight. After travel papers were delivered to petitioner, it became incumbent upon her to take ordinary care of her concerns, which requires that she at least read the documents to assure herself of the important details of her trip

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as a common carrier it failed to exercise the extraordinary diligence that the law requires from it If she were negligent, it was only contributory and not the proximate cause of the damages she suffered

ISSUE: WON CTTI was required to exercise extraordinary diligence in fulfilling its obligation. HELD: NO. The contract involved is not one of carriage and transportation, nor is CTTI a common carrier. It is but a travel agency and, therefore, it is only required to exercise the ordinary diligence of a good father of a family.  Contract of carriage or transportation – whereby a person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price − Classified as private (or special) carriers and common (or public) carriers Common carrier (accdg. to Art. 1732 of the CC)- persons or associations engaged in the business of carrying or transporting passengers or goods or both by lane, water or air for compensation, offering their services to the public For reasons of public policy, common carriers are required to carry passengers as far as human care and foresight can provide using the utmost diligence of a very cautious persons and with due regard for all circumstances (Art. 1755, CC) In this case, CTTI did not undertake to transport petitioner, it merely obligated itself to make travel arrangements, such as procuring tickets, facilitating travel permits or visas, booking customers for tours, etc. At most, it is merely an agent of the airline There was only an ordinary contract between the parties, which only requires the diligence of a good father of a family (Art. 1173 of the CC) (reasonable care of an ordinarily prudent person) Test to determine W/N a party is negligent: DID THE DEFENDANT IN DOING THE ALLEGED NEGLIGENT ACT USE THAT REASONABLE CARE AND CAUTION WHICH AN ORDINARILY PRUDENT PERSON WOULD HAVE USED INTHESAME SITUATION?

The negligence of the obligor in the performance of the obligation renders him liable for damages for the resulting loss suffered by the obligee. Therefore, petitioner is ordered to pay respondent the balance of the price of the “British Pagent” tour with legal interest of 6% from the time the counterclaim was filed until the finality of this Decision. After Decision becomes final and executory, the legal interest would be 12% because the obligation is now the equivalent to a credit  Cetus Development Corp. v. CA Facts: ♦ Ederlina Navalta, Ong Teng, Jose Liwanag, Leandro Canlas, Victoria Sudario, and Flora Nagbuya were the lessees of the premises located at No. 512 Quezon Boulevard, Quiapo, Manila, originally owned by the Susana Realty. Payments of the rentals were paid by the lessees to a collector of the Susana Realty who went to the premises monthly March 1984 - Susana Realty sold the leased premises to Cetus Development, Inc. April to June 1984 – he lessees continued to pay their monthly rentals to a collector sent Cetus. For July, August and September the lessees failed to pay their monthly individual rentals as no collector came. October 9, 1984 – Cetus sent a letter to each of the lessees demanding that they vacate the premises and to pay the back rentals for the months of July to September, within 15 days upon the receipt thereof. The lessees paid the respective arrearage in rent which were accepted by Cetus subject to the unilateral condition that the acceptance was without prejudice to the filing of an ejectment suit. Subsequent monthly rental payments were likewise accepted. The lessees failed to vacate he remises and as such the Cetus Inc. filed with the MTC of Manila complaints for ejectment. The lessees claimed that since the occupancy of the premises they paid their monthly rental regularly through a collector of the lessor; that their non-payment of the rentals for the months of July, August and September, 1984, was due to the failure of the petitioner (as the new owner) to send its collector; that they were at a loss as to where they should pay their rentals. The MTC dismissed the cases. The acceptance of the back rental by the plaintiff before the filing of the complaint, as in this case, the alleged rental arrearages were paid immediately after receipt of the demand letter, removes its cause of action in an unlawful detainer case, even if the acceptance was without prejudice. Cetus appealed to the RTC and the case was dismissed for lack of merit.

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WON there exists a cause of action when the complaints for unlawful detainer. WON the lessees incurred delay in the performance of their obligation. NO

Abella v. Francisco

Section 2, Rule 70 provides: Landlord to proceed against tenant only after demand. — No landlord or his legal representative or assign, shall be such action against a tenant for failure to pay rent due or to comply with the conditions of his lease, unless the tenant shall have failed to pay such rent or comply with such conditions for a period of fifteen (15) days or five (5) days in case of building, after demand therefor, made upon qqqm personally, or by serving written notice of such demand upon the person found on the premises, or by posting such notice on the premises if no persons be found thereon. The demand required here is a jurisdictional for the purpose of bringing an unlawful detainer suit for failure to pay rent or comply with the conditions of 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. Section 2 presupposes the existence of a cause of action for unlawful detainer as it speaks of failure to pay rent due or comply with the conditions of the lease. The existence of the cause of action gives the lessor the right under Article 1659 of the New Civil Code to (1) ask for the rescission of the contract of lease and indemnification for damages, or (2) only the latter, allowing the contract to remain in force. If the option chosen is (2) then the demand referred to is to pay rent or to comply with the conditions of the lease violated. However, if (2) the demand must be for the lessee to pay rents or to comply with the conditions of the lease and to vacate. Accordingly, if rescission is clearly the option taken, then both demands to pay rent and to vacate are necessary to make a lessee a deforciant in order that an ejectment suit may be filed. For the purpose of bringing an ejectment suit two requisites must concur: o there must be failure to pay rent or comply with the conditions of the lease o there must be demand both to pay or to comply and vacate within the periods specified in Section 2, Rule 70, namely 15 days in case of lands and 5 days in case of buildings. In this case no cause of action for ejectment has accrued because there was no failure on the part of the lessees to pay rents for three consecutive months Petitioner has not shown that its case falls on any of the following exceptions where demand is not required: o when the obligation or the law so declares o when from the nature and circumstances of the obligation it can be inferred that time is of the essence of the contract o when demand would be useless, as when the obligor has rendered it beyond his power to perform. Article 1169 of the CC provides that; those obliged 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. The demand required here is different from the demand required by section 2 of Rule 70. There was no proof that the petitioner demanded the payment of the rentals when the obligation matured. In addition no collector was sent. The lessees cannot be held guilty of mora solvendi or delay in the payment of rentals. Demand to vacate was premature as it was an exercise of a non-existing right to rescing. The lessor is not obligated to send a collector but it has been customary for the lessees to pay the rentals through a collector. Art. 1257 provides that where no agreement has been designated for the payment of the rentals, the place of payment is the domicile of the defendants.

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Vda. De Villaruel v. Manila Motor Co. Facts May 31, 1940. The Villaruels entered into a 5 year contract with Manila Motors. The contract stipulates that they will lease a 500 square meter floor space of a building of strong materials for a showroom, office and stockroom. This will be worth P300. And they also agreed to rent out a 5 room residence for the manager of the Manila Motors(MMCI) for another P50. The contract was subject to renewal for another 5 years. All was going well, until the Japanese occupation. Then the structures were used by the Japanese from June 1, 1942 to March 29, 1945. No rent was paid in those times. Then the liberation came, and the structures were rented by the Americans from March to October 31, 1945. And from Oct 1945-June 1946 continued the rent after the Americans. MMCI then decided through its then manager Grey to renew the contract for an additional five years excluding the occupation of the US. MMCI subleased the building to Mr. Arturo Colmenares except for the residence. Then before the rentals could be collected, Dr Villaruel who was in charge of the collection of rentals asked a lawyer if they can recover the rentals from the Japanese occupation. And the lawyer said yes, so they asked this from the MMCI. MMCI refused to pay, so the Villaruels notified them of rescission of the contract and P11,900 owed rentals from the Jap occupation. Still MMCI refused to pay. But then MMCI paid what they owed for July 1946 they and stayed in the leased structure and the Villaruels accepted this, clarifying that it didn’t prejudiced their rights to the past rentals. But the next month up to Nov 1946, there was no payment since no accord was arrived at. And the payment only resumed on Dec 1946, now to be paid by Mr. Colmares. The Villaruels accepted this but again said that it did not erase their rights to past rents and the rescission of the contract( I think they wanted a higher price). April 26, 1947, they finally reached the courts. But pending the case, a fire started in the City Theatre, one of the sublessee. It burned the two business structures. And now besides the first action of past rents, and the 2nd cause of action for the legal interest, a 3rd cause of action was instituted by the Villaruels. MMCI countered that they wouldn’t pay the rent because of the DEBT MORATORIUM and that they can’t add a 3rd cause of action as this was not in line with their petition for recovery of rentals and rescission. To these, the court answered that they can add the 3rd cause of action, as the courts recognized a rule of court that wants all the disputes regarding real matter in a dispute be in one proceeding. And the Rutter vs Esteban case already resolved that the Debt Moratorium has been lifted, when they contend that it still exists so that the 1st and 2nd cause of action canbe dismissed. ( the lower court granted the respondents freedom to not pay because of the Debt Moratorium) ISSUES. WON the respondents need to pay the rents for the Jap occupation. NO based on the international and domestic law, recognition of fortuitous event and Spanish Civil Code. The difference between the trespass(perturbacion de hecho) or trespass with title(perturbacion de derecho), shows that MMCI was really dispossessed by the Japs. 1st support: the principles of international law recognizes that belligerent occupants(in times of war) get rights even if temporary when they occupy properties for the necessities of war.(Oppenheim, Lauterpach, International Law) (Hyde, International Law quoting the U.S. War Dep’t 1940, Rules of Land Warfare) (Forest and Tucker) legal writers 2nd support: the jurisprudence in Haw Pia vs China Banking Corp. expressly recognized that the rights of the Japs to take temporary control over enemy private property in its military effort. SO the Spanish civil code provision in saying lessor is not liable for the property if there are mere acts of disturbance, does not hold. Since Art 1560

says the acts of disturbance doesn’t apply to 3rd parties who use the leased property upon a right (the int’l and domestic law recognized the rights of the Japs). And the contention that it was upto the lessees to file a direct action against trespassers is untenable. The dissenting opinion in Reyes vs Caltex said that the victims would have no way to bring the Japs to court, and that it would have brought the severest penalties for the defiance to the enemies. Also if we look at it as a fortuitous event, the respondent moreso would have no liability. Instead it is Art. 1554 which apply in this case, that the lessor had a duty to maintain the peaceful enjoyment of the lease during the entire term of the contract. A lease is reciprocal and repetitive, therefore prestations is required from both parties, and if one party fails to fulfill his obligations gives rise to a failure of consideration(causa) excusing the other party. No lessee would pay for the premises if he can’t use it. Civil law requires the debtors maintenance of the property. By the way, in the common law, it is different, here they say that in leases, they vest ownership to the lessee. So whatever happens to the estate , the lessee is liable. In any case, by the passivity of the lessors to recover the rent before showed a waiver of their rights, in fact they accepted the payment from Oct 1945-June 1946. Anyway, the first cause of action for the rents is exempted by the Japanese occupation. And when they demanded the rent in 1946, the moratorium law was still in place until it was lifted in 1948. So with the legal interest. WON the liability of the 3rd cause of action(the fire) can be attributed against MMCI. No, When the lessors didn’t accept the payment because of their insistence upon collecting the 1942-1945 rent which was against the law, the were placed in default (mora accipiendi). The result of this is, they bear all supevening risks of accidental injury or destruction of the leased premises. Art. 1585, “when the obligation to deliver a certain and determinate thing arises from the commission of a crime or misdemeanor the obligor shall not be exempted from the payment of its value, whatever the cause of its loss may have been, unless, having offered the thing to the person entitled to receive it, the latter should have refused without reason to accept it”. Art. 1452 tells about the liability of the seller until the fungible things until weighed, counted, measured or purchaser is in default. Art 1589 the person who bound himself to work has liability of the thing until he delivers it or the other party is in default. While there is a presumption that the loss of the thing is the fault of the lessee, it wasn’t invoked here. The trial court and parties, in any case, accepted the event to be fortuitous. And the contention that the payment that the debtor didn’t accept wasn’t consigned in court so renders the debtor not liable is untenable. For the reason that PNB vs Relativo says that the only effect from this is that the obligation stills stands, nothing more. Decision modified. The lower court is wrong to make the respondents-appelants pay P2,165 a month for the Jap occupation and P30,000 for the burned building. This court only demands the payment of the respondents for the July-Nov 1946 rents of P350 amounting to P1,750. CENTRAL BANK OF THE PHILIPPINES and Acting Director Antonio T. Castro, Jr. of the Dept. of Commercial and Savings Bank, in his capacity as statutory receiver of Island Savings Bank, petitioners, vs. COURT OF APPEALS and Sulpicio M. Tolentino, respondents [1985]  Apr 28, 1965: Tolentino’s loan application of P80k w/the Island Savings Bank (ISB) was approved. As security, he executed a real estate mortgage over his 100-hec land in Cubo, Las Nievas, Agusan. Terms of the loan:

lump sum loan of P80k repayable in semi-annual installments for 3 yrs w/12% annual interest loan to be used solely as an additional capital to develop his other property into a subdivision  May 22, 1965: P17k partial release. Tolentino & his wife signed a promissory note for such amount at 12% annual interest payable in 3yrs from date of execution of contract at semi-annual installments of P3,459.00. Advance 6-month interest for the P80k loan was deducted from the P17k amounting to P4,800.00. But such amount was refunded to Tolentino on July 23, 1965. No fund available yet for the P63k balance.  Aug. 13, 1965: Monetary Board of Central Bank issued Resolution No. 1049 finding ISB suffering liquidity problems. Bank was prohibited making new loans & investments except in gov’t securities & loans already approved subj to the review of the Supt of Banks who may impose certain limitations.  June 14, 1968: Monetary Board issued Resolution No. 967 finding that ISB failed to put up required capital to restore its solvency. Bank prohibited from doing business in RP & Acting Supt of Banks to take charge of ISB’s assets.  Aug. 1, 1968: due to Tolentino’s failure to pay P17k covered by promissory note, ISB filed for extra judicial foreclosure of the real estate mortgage. Sheriff scheduled auction for Jan. 22, 1969.  Jan. 20, 1969: Tolentino filed a petition for injunction, specific performance or recission & damages w/prelim injunction alleging that since ISB failed to deliver P63k balance, he’s entitled to specific performance by ordering delivery of balance w/12% per annum interest from Apr. 28, 1965 & if such can’t be done, to rescind mortgage. Court issued TRO.  CFI: ordered Tolentino to pay ISB P17k + legal interest & charges due and TRO lifted so foreclosure may proceed.  CA: Affirmed dismissal of Tolentino’s petition but ruled that ISB can neither foreclose mortgage nor collect P17k loan. Issues & Ratio: 1. WON ISB’s defenses in its failure to fulfill its obligation are acceptable – NO  In reciprocal obligations such as in this case, obligation/promise of each party is the consideration for that of the other. When one party has performed or is ready & willing to perform his part, the other party who has not yet performed or is not ready & willing incurs in delay (CC Art. 1169). Thus, consideration for Tolentino’s promise to pay was ISB’s obligation to furnish P80k loan. Oblig began when Tolentino executed real estate mortgage and it lasted until Central Bank issued Resolution No. 967 w/c made it legally impossible for ISB to furnish the balance. Resolution No. 1049 can’t interrupt ISB’s default in complying w/its oblig since it did not prohibit bank from releasing the loan balance of loan agreements previously contracted.  Mere pecuniary inability to fulfill an engagement does not discharge the oblig of the contract nor does it constitute any defense to a decree of specific performance (Gutierrez Repide v. Afzelius) and mere fact of insolvency of a debtor is never an excuse for the non-fulfillment of an oblig but instead it’s taken as a breach of contract by him (CJS).  Fact that Tolentino demanded & accepted the refund of pre-deducted 6-month interest of P4,800 can’t be taken as a waiver of his rt to collect balance. In fact, collection of the pre-deducted interest was improper considering that only P17k was released. A person can’t be legally charged interest for a non-existing debt. In accepting the refund, Tolentino was only exercising his rt.

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effect waiving their right to do so (ROC Sec. 9, Rule 9). Thus, such can’t be raised in the SC. WON a an action for specific performance can prosper – NO ISB is now prohibited from doing further business by Monetary Board Resolution No.

967. 3. WON recission is proper – YES  But only for the P63k balance w/c ISB failed to deliver.  Tolentino is bound by the promissory note he released WRT the P17k loan. He has a reciprocal oblig to pay such when it falls due. So WRT to this amount, he’s not entitled to recission since he’s also a party in default (CC Art. 1191). As a matter of fact, rt to rescind belongs to the aggrieved party, ISB. Had he not signed a promissory note, Tolentino would be entitled to ask for recission of entire loan there being no date for him to perform his reciprocal oblig to pay.  Since both parties were in default, they’re both liable for damages.  CC Art. 1192: In case both parties committed a breach of their reciprocal obligations, the liability of the first infractor shall be equitably tempered by the courts. Thus, ISB’s liability for damages is offset by Tolentino’s liability for damages in the form of penalties & surcharges.  The liability of Tolentino for the interest of the P17k debt shall not be included in offsetting the liabilities of both parties since he derived some benefit for his use of said amount. But Tolentino’s real estate mortgage can’t be entirely foreclosed to satisfy his P17k debt. Note that the consideration of the accessory contract of the real estate mortgage is the same as that of the principal contract. In both instances, the consideration of the debtor’s oblig to pay is the existence of a valid, voidable or unenforceable debt (CC Art. 2086 in relation to Art. 2052). The consideration in executing a mortgage may either be a prior or subsequent matter. But when the consideration is subsequent, the mortgage can only take effect when the debt secured by it is created as a binding contract to pay. And when there’s partial failure of consideration, the mortgage becomes unenforceable to the extent of such failure. The mortgage can’t be enforced for more than the actual sum due (Metropolitan Life Ins. v Peterson). Since ISB failed to furnish the P63k balance, the mortgage is unenforceable to such extent w/c is 78.75% of the total loan. Thus, 78.75 of the 100-hec mortgage is unenforceable. The remaining 21.25 hec is more than sufficient to secure the P17k debt.  CC Art. 2089’s rule on indivisibility of real estate mortgage is not applicable since such rule presupposes several heirs of the debtor/creditor w/c is not the case here. Holding: 1. Tolentino to pay ISB P17k + P41,210.00 as 12% interest per annum from May 22, 1965 to Aug. 22, 1985 and 12% interest on total amount counted from Aug. 22, 1985 until paid. 2. In case Tolentino fails to pay, his real estate mortgage of 21.25 hec shall be foreclosed to satisfy his total indebtedness. 3. 78.75 hec real estate mortgage is unenforceable & ordered released in favor of Tolentino. Chavez v. Gonzales Plaintiff Rosendo O. Chavez delivered to defendant Fructuoso Gonzales a portable typewriter for routine cleaning and servicing. Gonzales, despite repeated reminders by Chavez, was not able to finish the job after some time. He merely gave assurances but failed to comply. He even asked for P6 to purchase spare parts After getting exasperated with the delay of the repair, Chavez went to Gonzales’s house and asked for its return. Gonzales gave it in a wrapped package When Chavez opened it at home, the typewriter appeared to be “in shambles” with some parts missing. Chavez sent a letter to Gonzales formally demanding the return of the missing parts and the P6. Gonzales returned some of the missing parts and the money.

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ISB claims that there was an overvaluation of the loan collateral. But such does not exempt it from complying w/its reciprocal oblig. Bank officials should exercise caution & prudence in the discharge of their functions by investigating existence & valuation of properties being offered as loan security. They can’t rely merely on the customer’s representation. Besides, lower court prevented petitioner from presenting proof on alleged over-valuation because of their failure to raise the same in their pleadings in

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Chavez then had the typewriter repaired by Freixas Business Machines, the repair job totaling P89.95 Hence, Chavez filed a suit for breach of oral contract and recovery of damages demanding P90 as actual and compensatory damages, P100 for temperate damages, P500 for moral damages and P500 as attorney’s fees. TC held that repair done by Freixas shouldn’t be fully chargeable against Gonzales since the missing parts had a total value of only P31.10. Hence this appeal.

The telegram never reached Ignacio Castro Sr. Consolacion was interred with only her daughter in attendance. Her husband and all her other children, who were all residing in the U.S. did not know of her death until Sofia returned to the U.S. The Castro family subsequently filed an action for damages against Telefast Inc in the Court of First Instance of Pangasinan, who rendered a decision awarding them a total of Php 160,000 in moral damages. The Intermediate Appellate Court sustained the CFI’s decision with slight modifications. Petitioner, Telefast Inc, now seeks that the award of moral damages be eliminated. They contend that they are only liable for Php 31.92, the fee charged for the telegram. Issue: 1) WON petitioner is liable for moral damages? YES Ratio: The Court sides with the Castro family. 1) 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.” Sofia entered into a contract with Telefast, wherein Telefast, for a fee, would send Sofia’s message overseas. This the petitioner did not do, despite the payment of the required fee therefore petitioner is guilty of contravening its obligation to Sofia and is thus liable for damages. Such liability is not limited to actual or quantified damages, Art 2217 of the Civil Code provides “Moral damages include physical suffering, mental anguish, … 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.” Petitioner’s act or omission, which amounted to gross negligence was precisely the cause of the “mental anguish and the sorrow that the overseas children must have suffered upon learning of the death of their mother after she had already been interred, without being given the opportunity to even make a choice on whether they wanted to pay her their last respects.” Held: Petition denied. Petitioner ordered to pay: Php 10,000 as moral and Php 1,000 as exemplary damages to each of the 12 respondents plus Php 16,000 compensatory damages to Sofia Crouch (for expenses she incurred in returning to the Philippines to testify in trial) and Php 5,000 in atty’s fees. Arrieta v. Naric FACTS:  The National Rice and Corn Corporation (NARIC) held a public bidding for the supply of 20,000 metric tons of Burmese rice  Paz Arrieta participated and made the lowest bid at $203 per metric ton (pmt)  The two parties entered in to a Contract of Sale of Rice: o Arrieta obligated herself to deliver 20,000 metric tons of Burmese rice at $203 pmt

Issues: 1. WON Gonzales is not liable at all since his contract did not contain a period, thus Chavez should have first filed a petition for the Court to fix the period as per Art. 1197, CC  NO. By the time Chavez ask for the return of the typewriter and Gonzales complied, they already had a perfected contract where it was intended that Gonzales finish it at some future time although such time was not specified.  Such time had passed without work being done, for Gonzales returned the typewriter cannibalized and unrepaired [w/c in itself is a breach] without demanding that he be given more time to finish the job or compensation for the work already done. To first petition the court to fix a period is academic and will only serve as a mere formality which would only cause delay 2. WON TC erred in awarding only the value of the missing parts of the typewriter instead of the whole cost of labor and materials that went to the machines repair, as per Art. 1167, CC  YES. Art. 1167 provides that: “If a person obliged to do something fails to do it, the same shall be executed at his cost. This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone.”  Clearly, Gonzales contravened the tenor of his obligation because not only did he not repair the typewriter but returned it in “shambles”.  He is thus liable for the cost of executing the obligation in a proper manner which is the cost of the labor expended in the repair (P58.75) because the obligation was to repair it.  He is also liable, under Art. 1170, for the cost of the missing parts (P31.10) for in his obligation to repair, he was bound to return it in the same condition it was when he received it, which he failed or neglected to do.  However, the claim for moral and temperate damages and attorney’s fees cannot be sustained since they must be alleged in the complaint and the existence of the actual basis thereof must be proved. Holding: Gonzales made to pay P89.98 with interest at the legal rate. Telefast v. Castro Petitioner: Telefast Communications Wireless/Phil. Wireless Inc. Respondent: Ignacio Castro Sr. and his children (Sofia Crouch et. al.) Petition for review by certiorari Padilla, J. Facts: On Nov. 2, 1956, Consolacion Castro, wife of Ignacio Castro Sr. and mother of the other respondents died. On the same day Sofia C. Crouch, Consolacion’s daughter, addressed a telegram to her father, who was then residing in the U.S. announcing Consolacion’s death. The petitioner accepted the telegram for transmission after payment of the required fees.


NARIC obligated itself to pay for the imported rice by means of an

irrevocable, confirmed and assignable letter of credit (LOC)in US currency in favor of Arrieta and/or the supplier in Burma On July 30, 1962, a full month after execution of contract, NARIC took the first step to open a letter of credit with the PNB

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It informed PNB of the imperativeness of meeting the August 4 Beyond that date, Arrieta’s deposit to the supplier in Burma equivalent to 5% of the FOB price of the supply would be confiscated if the LOC is not received On August 2, NARIC sent a message to PNB requesting that the application be considered a special case because NARIC “is not in a financial position to meet the requirement of 50% marginal cash deposit On August 4, PNB approved application for LOC, but still with the condition that 50% marginal cash deposit be paid, and drafts be paid upon presentment, and that the application will be held in abeyance until fulfillment with the requirement Consequently, it was only on Sept. 8 (more than 2 months after the execution of the contract) that NARIC was able to open an LOC As a result of the delay, Arrieta’s deposit was cancelled and forfeited. However, the forfeiture was not made immediately after expiration of Aug. 4 deadline, but was made only on Aug. 20, which means NARIC was given a 15-day grace period to make good on its commitment Arrieta tried, but failed, to restore the cancelled allocation of rice. She offered NARIC to substitute Thai rice instead but NARIC rejected her offer Arrieta then asked NARIC to compensate her for the damages she suffered because of unrealized profit in the sum of $286,000 in US currency NARIC blamed Arrieta for the delay, alleging that she did not seasonably furnish the data necessary and required for the opening of the LOC


April 1987 - Jacinto M. Tanguilig doing business under the name and style J.M.T. Engineering and General Merchandising proposed to respondent Vicente Herce Jr. to construct a windmill system for him. Hey agreed on the construction of a windmill system for P60,000 with a one year guaranty from the date of completion and acceptance by the respondent. Herce paid Tanguilig DP of P30,000 and an instalment payment of P15,000, leaving a balance of P15,000. March 14, 1988 due to the refusal and failure of respondent to pay the balance, petitioner filed a complaint to collect the amount. Herce claimed that he had already paid this amount to the San Pedro General Merchandising Inc. (SPGMI) which constructed the deep well to which the windmill system was to be connected. Since the deep well formed part of the system the payment he tendered to SPGMI should be credited to his account by petitioner. Moreover, assuming that he owed petitioner a balance of P15,000.00, this should be offset by the defects in the windmill system which caused the structure to collapse after a strong wind hit their place. Petitioner denied that the construction of a deep well was included in the agreement to build the windmill system, for the contract price of P60,000.00 was solely for the windmill assembly and its installation. He also disowned any obligation to repair or reconstruct the system and insisted that he delivered it in good and working condition to respondent who accepted the same without protest. Besides, its collapse was attributable to a typhoon, a force majeure, which relieved him of any liability. Trial Court held that the construction of the deep well was not part of te contract and that there is no clear and convincing proof that the windmill system fell down due to the defect of the construction. CA reversed the decision of the trial court. It ruled that the deep well was included and that Tanguilig should reconstruct the windmill in accordance with the one year guaranty.


W/N NARIC was guilty of breach of contract through contravention of tenor, thereby making it liable for damages suffered by Arrieta. HELD: YES. NARIC’s failure to immediately open an LOC, which is the sole and principal reason for the cancellation of the allocation contracted by Arrieta, amounted to a breach of the Contract of Sale of Rice for which NARIC can be held liable for damages

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Article 1170, CC: … Those who in any manner contravene the tenor [of their obligation] are liable in damages The phrase “contravene the tenor of” includes any illicit act which impairs the strict and faithful fulfillment of the obligation, or every kind of defective performance The question of who was to blame is a question of fact that trial judges are better situated to make conclusion on In this case, TC accepted Arrieta’s contention that the data needed for the opening of the LOC was already made known to NARIC even before the execution of the contract because the same data was necessary for her to even qualify as a bidder. It was again made known to NARIC after the execution of the contract on various occasions when Arrieta pressed for the opening of the LOC

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Also, as early as August 4, the LOC could have been opened had NARIC been able to comply with the bank’s requirement  The August 2 letter indicates that 1. NARIC knew of the bank requirements for opening LOCs 2. it also knew that it could not meet those requirements Therefore, the root of NARIC’s culpability is it’s willful and deliberate assumption of contractual obligations that it knew it was financially incompetent to undertake

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Tanguilig v. CA

WON the agreement to construct the windmill system included the installation of a deep well? NO Note: please see page 82-83 for the proposal. In the proposal there was no mention that the deep well is a component of the proposed windmill system The words "deep well" preceded by the prepositions "for" and "suitable for" were meant only to convey the idea that the proposed windmill would be appropriate for a deep well pump with a diameter of 2 to 3 inches. For if the real intent of petitioner was to include a deep well in the agreement to construct a windmill, he would have used instead the conjunctions "and" or "with." Since the terms of the instruments are clear and leave no doubt as to their meaning they should not be disturbed. Cardinal rule: the intention of the parties shall be accorded primordial consideration and in case of doubt their contemporaneous and subsequent acts shall be principally considered. It strains credulity that respondent would keep silent on this matter and leave it all to petitioner Tanguilig to verbally convey to Pili that the deep well was part of the windmill construction and that its payment would come from the contract price of P60,000.00. It is unusual that Pili would readily consent to build a deep well the payment for which would come supposedly from the windmill contract price on the mere

representation of petitioner, whom he had never met before, without a written commitment at least from the former. Herce Jr. himself who paid for the deep well by handing over to Pili the amount of P15,000.00 clearly indicates that the contract for the deep well was not part of the windmill project but a separate agreement between respondent and Pili. Herce cannot claim the benefit of the law concerning "payments made by a third person." The Civil Code provisions do not apply because no creditor-debtor relationship between petitioner and Guillermo Pili and/or SPGMI has been established regarding the construction of the deep well. Pili did not testify that he entered into a contract with petitioner for the construction of respondent's deep well. If SPGMI was really commissioned by petitioner to construct the deep well, an agreement particularly to this effect should have been entered into. WON the petitioner is under the obligation to reconstruct the windmill? YES In order for a party to claim exemption from liability by reason of fortuitous event under Art. 1174 of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract. In Nakpil vs. Court of Appeals, four (4) requisites must concur: o the cause of the breach of the obligation must be independent of the will of the debtor o the event must be either unforeseeable or unavoidable o the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner o the debtor must be free from any participation in or aggravation of the injury to the creditor. Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Interestingly, the evidence does not disclose that there was actually a typhoon on the day the windmill collapsed. Argument that Herce was already in default in the payment of his outstanding balance of P15,000.00 and hence should bear his own loss, is untenable. 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. When the windmill failed to function properly it became incumbent upon petitioner to institute the proper repairs in accordance with the guaranty stated in the contract. Thus, Herce cannot be said to have incurred in delay; instead, it is Tanguilig who should bear the expenses for the reconstruction of the windmill. Article 1167 of the Civil Code is explicit on this point that if a person obliged to do something fails to do it, the same shall be executed at his cost. Khe Hong Cheng v. CA


Juan Nakpil and Sons vs CA Facts.- a consolidated case of 3 petitions finding errors in the lower court judgment. PBA(Phil. Bar Assoc.) plaintiff, decided to construct an office building at Aduana and Arzobispo Streets, Intramuros Manila. (840 sq. m.) Their construction was undertaken by United Construction Inc.(UCI) on an “administration” basis on the suggestion of Juan Carlos, their president and Gen. Manager. The proposal was approved by plaintiff’s Board of Director President, Ramon Ozaeta(a defendant but not important in this case). The plans and specifications for the bldg. were provided by the Juan F. Nakpil and Sons. June 1966, the building was completed. August 2, 1968, 2 years later, there was an earthquake, (7.3 in the richter) and the building dangerously tilted forward from major damages. Repairs were badly needed, UCI performed the repairs to make the building tenantable at P13,661.28 PBA then filed suits against the architects and contractors along with their presidents and Ramon Ozaeta. Then the trial court divided the issues to technical and non-technical. For the technical it asked the Commissioner Mr. Andres to Hizon to find out whether the damage to the building during the earthquake was directly or indirectly caused by: the inadequacies of the plans or specifications, deviations from the plans and specifications( and how have these contributed), failure to observe the quality and workmanship needed, failure of supervision required from the archi and contractor, even the owner and act of God. And if it is a combination, then the proportion and individual factor it contributed. And lastly, the recommendation on what to do with the building. Then the non-technical issues were tackled by the court, meanwhile the plaintiff moved twice for the demolition, and finally on April 30, 1970, after several earthquakes causing no further damage, it was demolished. Sept 25, 1970, the Commissioner finally submitted a report, putting blame to the earthquake, the defects in the plans and specifications, deviations from it, failure to observe the required quality and workmanship and the owners’ lack of supervision. The trial court agreed to the full report except to the charge of full time supervision of the construction. All objected and appealed. May 11, 1978, the United Architects of the Phils, Association of Civil Engineers, and the Phil. Institute of Architecture as amicus curiae intervened and on Nov, 24 they submitted a reversed finding that the plans and the specification were not defective. The Commissioner using the same basis, the Manila Code and ASEP Code, said that even if defects can be found in the construction alone, it can’t be argued that even the original designer admitted that the deficiency in design(overload of the groundfloor), and lack of specific provisions against torsion contributed to the damage. Then the parties argued over the award of damages. The defendants contends the additional 200,000 awarded to the PBA. PBA wanted the whole cost of the building(P1,830,000 from scratch) not (900,000 counted initially when it wasn’t totally a loss), and not only the rental for 6 months but for the whole time(P178,671.76/year) until the judgment of the court. Issues: WON an Act of god which caused the failure of the building exempts from the liability, parties who are otherwise liable because of negligence. NO Art. 1723, says that within fifteen years if the building collapses by reason of defect with the design and specs the architect or engineer is liable for damages, the contractor too is liable if the materials are inferior and there are defects in construction. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor. Acceptance of the building after completion, does not imply a waiver. Prescription is ten years after collapse.

An act of God- an accident, due directly and exclusively to natural causes without human intervention, which by no amount of foresight, pains or care, reasonably to have been expected, could have been prevented. (Corpus Juris) Here it is accepted that there were acts of men that contributed(from the report), and not that of fortuitous events alone. Art. 1174 holds that for it to be a fortuitous event, the breach must be independent of the will of the debtor, unforeseen or unavoidable, event renders impossibility for the debtor to fulfill his obligation in a normal manner, debtor must be free form from aggravation and participation to the injury of the creditor. Art. 1770, if there is fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligation, liability exists for the obligor. Several older buildings withstood the earthquakes, and the SC normally (exceptions stated in the case, i.e. error, misapprehension) accepts the facts found by the trial court. Thus the reports are accepted. The defendants did acts to cause damage to the building. They can’t reason out fortuitous events. An erudite decision by Justice Hugo says that it it is accepted that floods cyclones, lightning are acts of God, it does not necessarily follow however that specific losses and suffering resulting from these occurrences are acts of God. From the thousand of buildings, God couldn’t have just singled out PBA, the record is replete with the deficiencies caused by negligent men and not to a perfect God. If they cay that this is an act of God, then following that line of thinking, why do we still have buildings standing. Only if you have time: Additional facts why the court accepted the fault on the Architect and Contractor. From the report of the Commissioner, we first learn of the design that put Sun Baffles on the two sides and front causing the inertia forces to move the bldg. forward and create a stiffness imbalance. A 4” diameter cast iron downspout reduced the cross sectional area of each columns and the strength thereof. The two front corners, A7 and D& columns were very much less reinforced. A7 and D7 suffered the severest fracture and maximum sagging, more sagging and leaning and damages were on the sides and front than on the back.Floors showed maximum sagging on the sides and fronts. Even if the commissioner concedes that the specs may have come from the code that is not as earthquake ready. And the defendants content that the Commissioner might only be speculating and further uses the current standards as basis. But they can’t refute that there are clearly deficiencies, when the spirals are cut, there is a cavity(although not proven to have caused damage) in column A4, the spacings in between the spirals were more than what was specified in the plans, absent spirals, etc. They have neglected some gen. principles of engineering design for reinforced concrete or not applicable to the requirements for ductility and strength. Even if they blame the plumbers on some cut spirals, they were supposed to watch and supervise. And even if the cavity wasn’t proven to cause damage, it was an evidence of poor construction. These facts clearly indicate the wanton negligence of the defendants, the court holds this to be bad faith in the performance of their respective tasks. One who creates dangerous condition, although acts of 3rd persons or God, intervenes to precipitate a loss, can’t escape the natural and probable consequences of his acts. The court imposes on the defendants except Ramon Ozaeta, solidarily liability for P5m to PBA plus damages for lost rentals and interest, P100,000. And a provision upon failure to pay, a 12% per annum is recoverable until paid. REPUBLIC OF THE PHILIPPINES, plaintiff-appellee vs. LUZON STEVEDORING CORPORATION, defendant-applellant [1967]  Aug. 17, 1960: barge L-1892 owned by Luzon Stevedoring Corp. (LSC) was being towed down the Pasig River by said corporation’s tugboats, Bangus & Barbero. Barge hit one of the wooden piles of the Nagtahan bailey bridge, smashing the posts &

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causing the bridge to list/tilt. The river was swollen & had swift current then due to the heavy downpour in Manila & surrounding provinces the previous days. RP sued LSC for actual & consequential damages caused by its employees amounting to P200k. LSC denied liability claiming that: 1. it exercised due diligence in selecting its supervisors & employees 2. the damages were caused by force majeure 3. RP has no capacity to sue 4. the Nagtahan Bailey Bridge is an obstruction to navigation. CFI: LSC liable for damages caused by employees & ordered to pay actual cost of repair amounting to P192,561.72 w/legal interest from date of filing complaint. On appeal to the SC, LSC raised some questions of fact w/c of course the SC can’t decide since it’s limited to questions of law.

requested Laureano to introduce him to one of the clerks in the MVO Office who could facilitate the registration of the car. Laureano complied After that, Dioquino gave Laureano a ride to the Provincial Commander (PC) Barracks. On the way there, Dioquino’s car driven by his driver with Laureano as the sole passenger was stoned by mischievous boys and its windshield broke. Laureano chased the boys & caught one of them and brought the boy to Dioquino. The boy admitted his mischief & his father, Dioquino & Laureano returned to the barracks but no satisfactory arrangements were made about the damage to the windshield. Dioquino held Laureano liable for the damages and included Laureano’s wife and father in his complaint. Laureano refused to file any charges against the boy and his parents, believing that the stone-throwing was force majeure. He also refused to pay for the windshield himself, despite Dioquino’s attempts to settle the matter extra-judicially.

Issues & Ratio: 1. WON the collision was caused by a fortuitous event/force majeure. – NO.  Note that the bridge is immovable & stationary w/adequate openings for the passage of water craft such as LSC’s barge. It is undeniable that a barge exclusively controlled by appellant rammed the bridge supports the presumption of negligence on the part of the person manning the barge or the tugs that towed it since in the ordinary course of events, such does not happen if proper care is used. Res ipsa loquitur.  LSC claims it took certain precautions on the day in question: 2 of its most powerful tugboats were assigned to tow the barge, the more competent & experienced patrons had the towlines, engines & equipment double-checked & inspected and these patrons were instructed to take extra precautions & concludes that id had done all that it was called to do. But these very precautions destroy their defense of force majeure. Fortuitous events are defined as extraordinary events not foreseeable or avoidable or events that could not be foreseen or w/c though foreseen were inevitable (CC Art. 1174). Mere difficulty to foresee the happening is not equivalent to an impossibility to foresee. By taking these precautions, LSC proved that the possibility of danger was not only foreseeable but actually foreseen & was not caso fortuito. They knew the perils posed by swollen stream & its swift current yet they voluntarily entered into the situation involving obvious danger. It assumed the risk & thus, it can’t shed responsibility merely because the precautions it adopted were insufficient.

Even if the bridge was improperly located, fact remains that it has been there for many years and LSC can’t safely ignore the danger it poses, if any. These circumstances merely emphasize the need of even higher degree of care on their part. 2. WON the lower court abused its discretion in admitting RP’s additional evidence after it rested its case. – NO.  LSC is trying to insinuate that this was done deliberately to manipulate the evidence to prejudice said corporation.  Admission of additional evidence after resting the case lies w/in the sound discretion of the trial judge & this can’t be reviewed except in clear case of abuse.  No abuse of discretion was shown since additional evidence included vouchers & papers to support an item of P1,558.00 spent for the reinforcement of the bailey bridge which already appeared in a previous exhibit. Besides, LSC also did the same – it presented additional evidence even after it has rested its case so there’s no reason to charge the trial court of being unfair. Holding: CFI decision affirmed. Dioquino v. Laureano Plaintiff Atty. Pedro Dioquino went to the office of the MVO to register his car. He met defendant Federico Laureano, a patrol officer of said MVO office. Dioquino

Issues: 1. WON Laureano may be held liable.  NO. Art. 1174 provides that: “Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.”  Basis of this rule: major casus est, cui humana infirmitas resistere non potest  Essential element of caso fortuito: some extraordinary circumstance independent of the will of the obligor or his employees  Under Art. 1174, no diligence beyond what human care & foresight can provide is necessary  Here, what happened was clearly unforeseen. It was a fortuitous event resulting in a loss which must be borne by the owner of the car.  The TC was perhaps misled by the inclusion of the exemption from the operation of such a provision of a party assuming the risk, considering the nature of the obligation undertaken. What is therein contemplated is the resulting even if caused by a fortuitous event where the party charged may be considered as having assumed the risk incident in the nature of the obligation to be performed. Laureano could not be held as bound to assume a risk of this nature. There was no such obligation on his part.  In Rep. v. Luzon Stevedoring Corp., the risk was quite evident & the nature of the obligation such that a party could rightfully be deemed to have assumed it. It is not so in this case. 2. WON Dioquino may be held for damages for having impleaded Laureano’s wife and father.  NO. Dioquino explained that the father was included as he was the administrator of the inheritance of an undivided property to which Laureano could lay claim while the wife was impleaded since the conjugal partnership would be made to respond for whatever liability would be adjudicated against the husband.  Although such an explanation cannot be sustained, it cannot be concluded that he was prompted solely by the desire to inflict needless and unjustified vexation on them.  Since he has already suffered a broken windshield and such perhaps would not have occurred if Laureano did not borrow his car, he is not to be penalized further by his mistaken view of the law in including them in his complaint. Austria v. CA

NPC v. CA FACTS:  Engineering Constriction, Inc. (ECI) was the successful bidder for the construction of the “2nd Ipo-Bicti Tunnel, Intake and Outlet Structures, and Appurtenant Structures, and Appurtenant Features” in Norzagaray, Bulacan.  It, therefore, entered into a contract with the National Waterworks and Sewerage Auhtority (NAWASA) to complete the said works within 800 calendar days from the date of formal notice.  The project involved 2 major phases.;  By Sept 1967, ECI had already completed the first phase.  On Nov, typhoon “Welming” hit Central Luzon.  Due to the heavy downpour, the water in Angat Dam was rising perilously at the rate of 60cm/h.  To prevent the overflow, since the water level already reached the danger height of 212m above sea level, NPC caused the opening of the spillways gates.  Because of the NOC’s actions, an extraordinarily large volume of water hit the installations and construction works of ECI with terrific impact, which resulted in the loss and destruction of its stockpile of materials and supplies, camp facilities and permanent structures

Civil Code, which results in loss or damage, the obligor cannot escape liability

Juan Nakpil & Sons v. CA: The Act of God Doctrine strictly requires that the act must be one occasioned exclusively by the violence of nature, and human agencies are to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the result of the participation of man, whether it be from active intervention or neglect, the whole occurrence is humanized and removed from the rules applicable to the acts of God To be exempt from liability for loss because of an act of God, he must be free from any previous negligence or misconduct by which the loss or damage may have been occasioned.

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CA sustained the findings of the TC that the destruction was due to the negligent manner with which the spillway gates of Angat Dam were opened. It found that:  NPC knew very well that it was safer to open the spillway gates gradually, but they were only opened when the typhoon was already at its height  Action could have been taken as early as Nov 3 when water reservoir was still low  Appellant knew of the coming typhoon four days before it actually hit the project area It made the following decision: 1. upheld TC’s award of actual or compensatory damages of P675,785.31 2. did not sustain award of consequential damages of P333,200 3. rejected award of unrealized bonus from NAWASA considering the completion was already long overdue (1,170 days after formal notice to begin) at the time of the incident 4. eliminated award for exemplary damages because NPC was not grossly negligent 5. reduced attorney’s fees from P50T to P30T Both parties appealed NPC assails the decision, alleging that: 1. Loss and destruction of ECI’s equipment and facilities were due to force majeure because the rapid rise of water level in the reservoir was brought about by the typhoon, which is an extraordinary occurrence that could not have been foreseen ECI assails the lowering of the award for damages

Question of W/N NPC was negligent is a question of fact that properly falls within the jurisdiction of the CA and will not be disturbed by the SC unless conclusion is clearly unfounded NPC knew of the coming typhoon at least four days before it actually struck. Even though the typhoon was an act of God, NPC cannot escape liability because its negligence was the proximate cause of the loss and damage. W/N CA erred in eliminating award for exemplary damages. NO. NPC was not shown to have acted in wanton, fraudulent, reckless or oppressive manner. (see Art 2234 of CC) W/N CA erred in reducing consequential damages NO. There was no categorical statement by NPC that it bought a new crane. Also, damaged crane was subsequently repaired and reactivated.



III. W/N CA erred in eliminating award for lost bonus NO. It was not shown that NAWASA imposed the opposite of a bonus (i.e. payment for liquidated damages for failure to finish project within stipulated period at the rate of P4,000/day of delay) Yobido vs. Court of Appeals Petition for review on certiorari of a decision of the CA Facts:

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ISSUES: I. W/N there was fault on the part of NPC concurrent with the force majeure. YES. If upon the happening of a fortuitous event or an act of God there concurs a corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligation as provided for in Article 1170 of the

April 26, 1988 - Tito and Leny Tumboy and their minor children named Ardee and Jasmin, bearded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City. The left front tire of the bus exploded and the bus fell into a ravine around three feet from the road and struck a tree. The incident resulted in the death of 28year-old Tito Tumboy and physical injuries to other passengers November 21, 1988 – a complaint for breach of contract of carriage, damages and attorney's fees was filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver, before the Regional Trial Court of Davao City. The defendants raised an affirmative defense of caso fortuito. The plaintiffs asserted that violation of the contract of carriage between them and the defendants was brought about by the driver's failure to exercise the diligence required of the carrier in transporting passengers safely to their place of destination.

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According to Leny Tumboy, she cautioned the driver to slow down but he merely stared at her through the mirror. At around 3:30 p.m., in Trento, she heard something explode and immediately, the bus fell into a ravine. The defense tried to establish that the accident was due to a fortuitous event. The tire that exploded was brand new and the driver underwent actual driving test before they were employed. Lower court dismissed the case for lack of merit. Court of Appeals reversed the decision of the trial court

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 a passenger? NO

As a rule, when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he has taken. However, when a passenger is injured or dies while travelling, the law presumes that the common carrier is negligent. Art. 1755 provides that: a common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. In culpa contractual once a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted negligently. This disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733, 1755 and 1756 of the Civil Code or that the death or injury of the passenger was due to a fortuitous event. Consequently, the court need not make an express finding of fault or negligence on the part of the carrier to hold it responsible for damages sought by the passenger A fortuitous event possess the following characteristics: o 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 fortuito, or if it can be foreseen, it must be impossible to avoid the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner o the obliger must be free from any participation in the aggravation of the injury resulting to the creditor The explosion of the new tire may not be considered as a fortuitous event. There are human factors involved in the situation. The fact that the tire was new did not imply that it was entirely free from manufacturing defects or that it was properly mounted on the vehicle. o An accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liability for damages. A common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. The common carrier must still prove that it was not negligent in causing the death or injury resulting from an accident. The defense failed to rebut he testimony of Leny Tumboy that the bus was running so fast that she cautioned the driver to slow down.


it must be impossible to foresee the event which constitutes the caso

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