SSS vs. Moonwalk Devt. and Housing Corp.

G.R. No. 73345, April 7, 1993

FACTS:

Plaintiff SSS approved the application of Defendant Moonwalk for a loan of P30,000,000 for the purpose
of developing and constructing a housing project. Out of P30,000,000 approved loan, the sum of P9,595,000 was
released to defendant Moonwalk. A third Amendment Deed of Mortgage was executed for the payment of the
amount of P9,595,000. Moonwalk made a total payment of P23,657,901.84 to SSS for the loan principal of
P12,254,700. After settlement of the account, SSS issued to Moonwalk the release of Mortgage for Moonwalk’s
Mortgaged properties. In letter to Moonwalk, SSS alleged that it committed an honest mistake in releasing
defendant. That Moonwalk has still 12% penalty for failure to pay on time the amortization, which is in the
penal clause of the contract. Moonwalk’s counsel told SSS that it had completely paid its obligation to SSS and
therefore there is no recovery of any penalty.

ISSUE:
WON the 12% penalty is still demandable even after the extinguishment of the principal obligation; WON
Moonwalk was in default

HELD:
1. No. The obligation was already extinguished by the payment by Moonwalk of its indebtedness to SSS
and by the latter’s act of cancelling the real estate mortgages executed in its favor by defendant moonwalk. What is
sought to be recovered in this case is not the 12% interest on the loan but the 12% penalty for failure to pay on time
the amortization. What is sought to be enforced therefore is a penal clause of the contract entered into between the
parties.
 
Penal clause is an accessory obligation which the parties attach to a principal obligation for the purpose of
insuring the performance thereof by imposing on the debtor a special presentation in case the obligation is not
fulfilled or is irregularly or inadequately fulfilled. Accessory obligation is dependent for its existence on the
existence of a principal obligation. In the present case, the principal obligation is the loan between the parties. The
accessory obligation of a penal clause is to enforce the main obligation of payment of the loan. If therefore the
principal obligation does not exist the penalty being accessory cannot exist.

2. No. A penalty is demandable in case of non-performance or late performance of the main obligation.
There must be a breach of the obligation either by total or partial non-fulfillment or there is non-fulfillment in the
point of time, which is called mora or delay. There is no mora or delay unless there is a demand.

In the present case, during all the period when the principal obligation was still subsisting, although there
were late amortizations, there was no demand made by the creditor, for the payment of the penalty. Therefore up to
the time of the letter of SSS there was no demand for the payment of the penalty; hence the debtor was no in mora in
the payment of the penalty.

RCBC vs. CA
FACTS:
RCBC Binondo Branch initially granted a credit facility of P30M to Goyu & Sons, Inc.  GOYU’s applied
again and through Binondo Branch key officer's Uy’s and Lao’s recommendation, RCBC’s executive committee
increased its credit facility to P50M to P90M and finally to P117M. As security, GOYU executed 2 real estate
mortgages and 2 chattel mortgages in favor of RCBC.  
 GOYU obtained in its name 10 insurance policy on the mortgaged properties from Malayan Insurance
Company, Inc. (MICO). In February 1992, he was issued 8 insurance policies in favor of RCBC. April 27, 1992:
One of GOYU’s factory buildings was burned so he claimed against MICO for the loss who denied contending
that the insurance policies were either attached pursuant to writs of attachments/garnishments or that creditors are
claiming to have a better right. GOYU filed a complaint for specific performance and damages at the RTC. RCBC,
one of GOYU’s creditors, also filed with MICO its formal claim over the proceeds of the insurance policies, but said
claims were also denied for the same reasons that MICO denied GOYU’s claims

RTC: Confirmed GOYU’s other creditors (Urban Bank, Alfredo Sebastian, and Philippine Trust Company)
obtained their writs of attachment covering an aggregate amount of P14,938,080.23 and ordered that 10 insurance
policies be deposited with the court minus the said amount so MICO deposited P50,505,594.60. Another
Garnishment of P8,696,838.75 was handed down. RTC: favored GOYU against MICO for the claim, RCBC for
damages and to pay RCBC its loan. CA: Modified by increasing the damages in favor of GOYU. In G.R. No.
128834, RCBC seeks right to intervene in the action between Alfredo C. Sebastian (the creditor) and GOYU (the
debtor), where the subject insurance policies were attached in favor of Sebastian. RTC and CA: endorsements do not
bear the signature of any officer of GOYU concluded that the endorsements favoring RCBC as defective.

ISSUE:
WON RCBC as mortgagee, has any right over the insurance policies taken by GOYU, the mortgagor, in
case of the occurrence of loss.

HELD:
YES. Mortgagor and a mortgagee have separate and distinct insurable interests in the same mortgaged
property, such that each one of them may insure the same property for his own sole benefit. Although it appears that
GOYU obtained the subject insurance policies naming itself as the sole payee, the intentions of the parties as shown
by their contemporaneous acts, must be given due consideration in order to better serve the interest of justice and
equity.
 8 endorsement documents were prepared by Alchester in favor of RCBC
 MICO, a sister company of RCBC
 GOYU continued to enjoy the benefits of the credit facilities extended to it by RCBC. GOYU is at
the very least estopped from assailing their operative effects. 
The two courts below erred in failing to see that the promissory notes which they ruled should be excluded
for bearing dates which are after that of the fire, are mere renewals of previous ones. RCBC has the right to claim
the insurance proceeds, in substitution of the property lost in the fire. Having assigned its rights, GOYU lost its
standing as the beneficiary of the said insurance policies. Insurance company to be held liable for unreasonably
delaying and withholding payment of insurance proceeds, the delay must be wanton, oppressive, or malevolent - not
shown. Sebastian’s right as attaching creditor must yield to the preferential rights of RCBC over the Malayan
insurance policies as first mortgagee.

Barzaga vs. CA
G.R. No. 115129 February 12, 1997

FACTS: 
The petitioner’s wife was suffering from a debilitating ailment and with forewarning of her impending
death, she expressed her wish to be laid to rest before Christmas day to spare her family of the long vigils as it was
almost Christmas. After his wife passed away, petitioner bought materials from herein private respondents for the
construction of her niche. Private respondents however failed to deliver on agreed time and date despite repeated
follow-ups. The niche was completed in the afternoon of the 27th of December, and Barzaga's wife was finally laid
to rest. However, it was two-and-a-half (2-1/2) days behind schedule.

ISSUE:
WON there was delay in the performance of the private respondent's obligation?

HELD:
 Yes. Since the respondent was negligent and incurred delay in the performance of his contractual
obligations, the petitioner is entitled to be indemnified for the damage he suffered as a consequence of the delay or
contractual breach. There was a specific time agreed upon for the delivery of the materials to the cemetery.

This is clearly a case of non-performance of a reciprocal obligation, as in the contract of purchase and sale,
the petitioner had already done his part, which is the payment of the price. It was incumbent upon respondent to
immediately fulfill his obligation to deliver the goods otherwise delay would attach. An award of moral damages is
incumbent in this case as the petitioner has suffered so much.

Pantaleon vs. American Express

G.R. No. 174269, May 8 2009

FACTS:
After the Amsterdam incident that happened involving the delay of American Express Card to approve his
credit card purchases worth US$13,826.00 at the Coster store, Pantaleon commenced a complaint for moral and
exemplary damages before the RTC against American Express. He said that he and his family experienced
inconvenience and humiliation due to the delays in credit authorization. RTC rendered a decision in favor of
Pantaleon. CA reversed the award of damages in favor of Pantaleon, holding that AmEx had not breached its
obligations to Pantaleon, as the purchase at Coster deviated from Pantaleon's established charge purchase pattern.

ISSUE:
1. Whether or not AmEx had committed a breach of its obligations to Pantaleon.
2. Whether or not AmEx is liable for damages.

RULING:

1. Yes. The popular notion that credit card purchases are approved “within seconds,” there really is no
strict, legally determinative point of demarcation on how long must it take for a credit card company to approve or
disapprove a customer’s purchase, much less one specifically contracted upon by the parties. One hour appears to be
patently unreasonable length of time to approve or disapprove a credit card purchase.
The culpable failure of AmEx herein is not the failure to timely approve petitioner’s purchase, but the more
elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming that AmEx’s credit
authorizers did not have sufficient basis on hand to make a judgment, we see no reason why it could not have
promptly informed Pantaleon the reason for the delay, and duly advised him that resolving the same could take some
time.

2. Yes. The reason why Pantaleon is entitled to damages is not simply because AmEx incurred delay, but
because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of
the Civil Code for which moral damages are remunerative. The somewhat unusual attending circumstances to the
purchase at Coster – that there was a deadline for the completion of that purchase by petitioner before any delay
would redound to the injury of his several traveling companions – gave rise to the moral shock, mental anguish,
serious anxiety, wounded feelings and social humiliation sustained by Pantaleon, as concluded by the RTC. 

Lorenzo Shipping vs. BJ Marthel

443 SCRA 163, November 19, 2004

FACTS: 
Petitioner Lorenzo Shipping is engaged in coastwise shipping and owns the cargo M/V Dadiangas Express.
BJ Marthel is engaged in trading, marketing an dselling various industrial commodities. Lorenzo Shipping ordered
for the second time cylinder lines from the respondent stating the term of payment to be 25% upon delivery, the
balance payable in 5 bi-monthly equal installments, no again stating the date of the cylinder’s delivery. It was
allegedly paid through post dated checks but the same was dishonored due to insufficiency of funds. Despite due
demands by the respondent, petitioner falied contending that time was of the essence in the delivery of the cylinders
and that there was a delay since the respondent committed said items “ within two months after receipt of fir order”.
RTC held respondents bound to the quotation with respect to the term of payment, which was reversed by the Court
of appeals ordering appellee to pay appellant P954,000 plus interest. There was no delay since there was no
demand. 

ISSUE: 
Whether or not respondent incurred delay in performing its obligation under the contract of sale 

HELD: 
By accepting the cylinders when they were delivered to the warehouse, petitioner waived the claimed delay
in the delivery of said items. Supreme Court geld that time was not of the essence. There having been no failure on
the part of the respondent to perform its obligations, the power to rescind the contract is unavailing to the
petitioner. Petition is denied. Court of appeals decision is affirmed.

Solar Harvest vs. Davao Corrugated Carlon Corp.

G.R. No. 176868 (July 26, 2010)

FACTS:
The petitioner (Solar Harvest, Inc., Solar for brevity) entered into an agreement with respondent, Davao
Corrugated Carton Corporation (DCCC for brevity), for the purchase of corrugated carton boxes, specifically
designed for petitioners business of exporting fresh bananas. The agreement was not reduced into writing. To start
the production, Solar deposited in DCCC’s US Dollar Savings Account with Westmont bank, as full payment for the
ordered boxes. Despite such payment, Solar did not receive any boxes from DCCC. Solar wrote a demand letter for
reimbursement of the amount paid. DCCC replied that the boxes had been completed as early as April 3, 1998 and
that Solar failed to pick them up from the formers warehouse 30 days from completion, as agreed upon. It was also
mentioned that Solar placed an additional order, out of which, half had been manufactured without any advanced
payment from Solar. (Solar alleges that the agreement was for DCCC to deliver within 30 days from payment the
said cartons to Tagum Agricultural Development Corporation (TADECO) which the latter failed to manufacture and
deliver within such time.) DCCC then demanded Solar to remove the boxes from the factory and to pay the balance
for the additional boxes.

ISSUE:
Whether or not the respondent (Davao Corrugated Carton Corporation) is in default.

HELD:
No. It was unthinkable that, over a period of more than two years, Solar did not even demand for the
delivery of the boxes. Even assuming that the agreement was for DCCC to deliver the boxes, the latter would not be
liable for breach of contract as Solar had not yet demanded from it the delivery of the boxes.

In reciprocal obligations, as in contract of sale, the general rule is that the fulfillment of the parties
respective obligation should be simultaneous. Hence, no demand is generally necessary because, once a party fulfills
his obligation and the other party does not fulfill his, the latter automatically incurs delay. But when different dates
for performance of the obligation are fixed, the default for each obligation must be determined, that is, the other
party would incur in delay only from the moment the other party demands fulfillment of the formers obligation.
Thus, even in reciprocal obligations, if the period for the fulfillment of the formers obligation is fixed, demand upon
the obliged is still necessary before the obligor can be considered in default and before a cause of action for
rescission will accrue.
  
Cathay Pacific Airways vs. Sps. Vasquez
G.R. No. 150843, March 14, 2003

FACTS:
Cathay is a common carrier engaged in the business of transporting passengers and goods by air. It services
the Manila-Hongkong-Manila course, among many others. As part of its marketing strategy, it accords its
frequent flyers membership in its Marco Polo Club. Members enjoy priority for upgrading of booking without any
extra charge whenever opportunity arises. So a frequent flyer booked in Business Class has priority for upgrading to
First Class if the Business Class Section is fully booked. Dr. Vasquez and Maria Vasquez are frequent flyers
of Cathay and are Gold Card members of the Polo Club. On Sept 1996, Vasquezes with their maid and 2
friends Cruz and De Dios went to HK for pleasure and business. For their return flight on Sept 28, 1996, they were
booked on a Cathay flight at 9:20pm. 2 hours before, they checked in their luggage and were given their boarding
passes, to wit, BUSINESS CLASS for Vasquezes and 2 friends, ECONOMY for the maid. They went to the BC
passenger lounge. Boarding time. They went to the Departure Gate 28, designated for BC passengers. Dr. Vasquez
presented his boarding pass to the stewardess. It was inserted into an electronic machine reader or computer.
Another ground attendant Chiu assisted. When Chiu glanced at the monitor, she saw a message that there was a
“seat change” from BC to First Class for the Vasquezes. Dr. Vasquez REFUSED the upgrade because they had 2
guests who will be in the BC and they would be discussing business during the flight. The stewardess insisted saying
that BC is already fully booked and that if they would not avail, they would not be allowed to take the flight.
Vasquezes acceded and took the First Class Cabin. In a letter, the Vasquezes demanded 1M
indemnification from Cathay for “humiliation and embarrassment ”caused by its employees and a written apology
from a person from Cathay preferably with a rank of no lessthan Country Manager and Mrs. Chiu w/in 15 days.
Asst. Country Manager Robson informed them that Cathay would investigate the incident and get back to them
within a week’s time. No feedback come deadline, so Vasquezes filed a case for DAMAGES against Cathay. Asked
for temperate, moral, exemplary and attorney’s fees.

ISSUE:
WON Cathay is guilty of breach of contractin upgrading the seats without Vasquezes’ consent? WON the
upgrade was tainted with fraud or bad faith?

HELD:
THERE WAS BREACH OF CONTRACT. BUT NO BF/FRAUD, SO NO DAMAGES. A contract of
carriage existed between Cathay and the Vazquezes. They voluntarily and freely gave their consent to an agreement
whose object was the transportation of the Vazquezes from Manila to Hong Kong and back to Manila, with seats in
the Business Class Section of the aircraft, and whose cause or consideration was the fare paid by the Vazquezes to
Cathay. Breach of contract is defined as the “failure without legal reason to comply with the terms of a contract.” In
previous cases, the breach consisted in either the bumping off of a passenger with confirmed reservation or the
downgrading of a passenger’s seat accommodation from one class to a lower class. In this case, what happened was
the reverse. In all their pleadings, the Vazquezes never denied that they were members of Cathay’s Marco Polo
Club. They knew that as members of the Club, they had priority for upgrading of their seat accommodation at no
extra cost when an opportunity arises. But, just like other privileges, such priority could be waived. The
Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege or would
consent to a change of seat accommodation before their seat assignments were given to other passengers. . They
clearly waived their priority or preference when they asked that other passengers be given the upgrade. It should not
have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay breached its contract
of carriage with the Vazquezes.
 Meralco vs. Ramoy
G.R. No. 158911, March 4, 2008
FACTS:
In the year 1987, the National Power Corporation (NPC) filed with the MTC Quezon City a case for
ejectment against several persons allegedly illegally occupying its properties in Baesa, Quezon City.among the
defendants in the ejectment case was Leoncio Ramoy, one of the plaintiffs in the case at bar.On April 28, 1989 the
MTC rendered judgment for MERALCO to demolish or remove the building andstructure they built on the land of
the plaintiff and to vacate the premises. On June 20, 1999 NPC wroteto MERALCO requesting the immediate
disconnection of electric power supply to all residential andcommercial establishments beneath the NPC
transmission lines along Baesa, Quezon City.In a letter dated August 17, 1990 MERALCO requested NPC for a
joint survey to determine all theestablishments which are considered under NPC property. In due time, the electric
service connection of the plaintiffs was disconnected. During the ocular inspection ordered by the Court, it was
found out thatthe residence of the plaintiffs-spouses was indeed outside the NPC property.

ISSUES:
(1) WON the Court of Appeals gravely erred when it found MERALCO negligent when it disconnected the
subject electric service of respondents.

(2) WON the Court of Appeals gravely erred when it awarded moral and exemplary damages and
attorney’s fees against MERALCO under the circumstances that the latter acted in good faith in the disconnection of
the electric services of the respondents.

HELD:
(1) No. The Court agrees with the CA that under the factual milieu of the present case, MERALCO failed
to exercise the utmost degree of care and diligence required of it, pursuant to Articles 1170 & 1173 of  the Civil
Code. It was not enough for MERALCO to merely rely on the Decision of the MTC without ascertaining whether it
had become final and executory. Verily, only upon finality of the said Decision can it be said with conclusiveness
that respondents have no right or proper interest over the subject property, thus, are not entitled to the services of
MERALCO.

(2) No. MERALCO willfully caused injury to Leoncio Ramoy by withholding from him and his tenants the
supply of electricity to which they were entitled under the Service Contract. This is contrary to public policy
because, MERALCO, being a vital public utility, is expected to exercise utmost care and diligence in the
performance of its obligation. Thus, MERALCO’s failure to exercise utmost care and diligence in the performance
of its obligation to Leoncio Ramoy is tantamount to bad faith. Leoncio Ramoy testified thathe suffered wounded
feelings because of MERALCO’s actions. Furthermore, due to the lack of power supply, the lessees of his four
apartments on subject lot left the premises. Clearly, therefore LeoncioRamoy is entitled to moral damages in the
amount awarded by the CA. Nevertheless, Leoncio is the soleperson entitled to moral damages as he is the only who
testified on the witness stand of his wounded feelings. Pursuant to Article 2232 of the Civil Code, exemplary
damages cannot be awarded as
MERALCO’s acts cannot be considered wanton, fraudulent, reckless, oppressive or malevolent. Since the Court
does not deem it proper to award exemplary damages in this case then the CA’s award of attorney’s fees should
likewise be deleted, as pursuant to Article 2208 of the Civil Code of which the grounds were not present.

AREOLA vs. CA
G.R. No. 95641, September 22, 1994

FACTS:
 December 17, 1984: Prudential Guarantee And Assurance, Inc. issued collector's provisional receipt
amounting to P1,609.65. June 29, 1985: 7 months after the issuance of petitioner Santos Areola's Personal Accident
Insurance Policy, Prudential Guarantee And Assurance, Inc. unilaterally cancelled it for failing to pay his premiums
through its manager Teofilo M. Malapit.

Shocked by the cancellation of the policy, Santos approached Carlito Ang, agent of Prudential and
demanded the issuance of an official receipt. Ang told Santos that it was a mistake and assured its rectification. July
15, 1985: Santos demanded the same terms and same rate increase as when he paid the provincial receipt but
Malapit insisted that the partial payment he made was exhausted and that he should pay the balance or his policy
will cease to operate. July 25, 1985: Assistant Vice-President Mariano M. Ampil III apologized. August 6, 1985:
had filed a complaint for breach of contract with damages before the lower court. August 13, 1985: Santos received
through Carlito Ang the leeter of Assistant Vice-President Mariano M. Ampil III finding error on their part since
premiums were not remitted Malapit, proposed to extend its lifetime to December 17, 1985.

RTC: favored Santos - Prudential in Bad Faith

CA: Reversed - not motivated by negligence, malice or bad faith in cancelling subject policy

ISSUE:
WON the Areolas can file against damages despite the effort to rectify the cancellation

HELD:
YES. RTC reinstated Malapit's fraudulent act of misappropriating the premiums paid is beyond doubt
directly imputable to Prudential Art. 1910. The principal must comply with all the obligations, which the agent may
have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he
ratifies it expressly or tacitly. Subsequent reinstatement could not possibly absolve Prudential there being an obvious
breach of contract. A contract of insurance creates reciprocal obligations for both insurer and insured

Article 1191: choice between fulfillment or rescission of the obligation in case one of the obligors fails to
comply with what is incumbent upon him; entitles the injured party to payment of damages, regardless of whether he
demands fulfillment or rescission of the obligation.

Nominal damages are "recoverable where a legal right is technically violated and must be vindicated
against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract
and no substantial injury or actual damages whatsoever have been or can be shown.

Tanguiling vs. CA
January 2, 1997

FACTS:
Herce contracted Tanguilig to construct a windmill system for him, for consideration of 60,000.00.
Pursuant to the agreement Herce paid the downpayment of 30,000.00 and installment of 15,000.00 leaving a
15,000.00 balance. 

Herce refused to pay the balance because he had already paid this amount to SPGMI which constructed a
deep well to which the windmill system was to be connected since the deepwell, and assuming that he owed the
15,000.00 this should be offset by the defects in the windmill system which caused the structure to collapse after
strong winds hit their place. According to Tanguilig, the 60,000.00 consideration is only for the construction of the
windmill and the construction of the deepwell was not part of it. The collapse of the windmill cannot be attributed to
him as well, since he delivered it in good and working condition and Herce accepted it without protest. Herce
contested that the collapse is attributable to a typhoon, a force majeure that relieved him of liability.  The RTC ruled
in favor of Tanguilig, but this decision was overturned by the Court of Appeals which ruled in favor of Herce.

ISSUE:
Can the collapse of the windmill be attributed to force majeure? Thus, extinguishing the liability of
Tanguilig?

HELD:
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, the S.C. held that 4 requisites must concur that there must be a (a) the
cause of the breach of the obligation must be independent of the will of debtor (b) the event must be either
unforeseeable or unavoidable; (c) the event be such to render it impossible for the debtor to fulfill his obligation in a
normal manner; and (d) the debtor must be free from any participation in or aggravation of the injury to the creditor.

Tanguilig merely stated that there was a strong wind, and a strong wind in this case is not fortuitous, it was
not unforeseeable nor unavoidable, places with strong winds are the perfect locations to put up a windmill, since it
needs strong winds for it to work.

WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to
pay petitioner JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of
the filing of the complaint. In return, petitioner is ordered to "reconstruct subject defective windmill system, in
accordance with the one-year guaranty" and to complete the same within three (3) months from the finality of this
decision.

Obligations and Contracts Terms:

Fortuitous Events - Refers to an occurrence or happening which could not be foreseen, or even if foreseen, is
inevitable. It is necessary that the obligor is free from negligence. Fortuitous events may be produced by two (2)
general causes: (1) by Nature, such as but not limited to, earthquakes, storms, floods, epidemics, fires, and (2) by the
act of man, such as but not limited to, armed invasion, attack by bandits, governmental prohibitions, robbery,
provided that they have the force of an imposition which the contractor or supplier could not have resisted.
Nakpil & Sons vs. CA
October 3, 1986

FACTS:
Private respondents – Philippine Bar Association (PBA) – a non-profit organization formed under the
corporation law decided to put up a building in Intramuros, Manila. Hired to plan the specifications of the building
were Juan Nakpil & Sons, while United Construction was hired to construct it. The proposal was approved by the
Board of Directors and signed by the President, Ramon Ozaeta. The building was completed in 1966.

In 1968, there was an unusually strong earthquake which caused the building heavy damage, which led the
building to tilt forward, leading the tenants to vacate the premises. United Construction took remedial measures to
sustain the building.

PBA filed a suit for damages against United Construction, but United Construction subsequently filed a suit
against Nakpil and Sons, alleging defects in the plans and specifications.

Technical Issues in the case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved
for the demolition of the building, but was opposed. PBA eventually paid for the demolition after the building
suffered more damages in 1970 due to previous earthquakes. The Commissioner found that there were deviations in
the specifications and plans, as well as defects in the construction of the building.

ISSUE:
 Whether or not an act of God (fortuitous event) exempts from liability parties who would otherwise be due
to negligence?

HELD:
Art. 1723 dictates that the engineer/architect and contractor are liable for damages should the building
collapse within 15 years from completion. Art. 1174 of the NCC, however, states that no person shall be responsible
for events, which could not be foreseen. But to be exempt from liability due to an act of God, the ff. must occur:
1) Cause of breach must be independent of the will of the debtor
2) Event must be unforeseeable or unavoidable
3) Event must be such that it would render it impossible for the debtor to fulfill the obligation
4) Debtor must be free from any participation or aggravation of the industry to the creditor.

In the case at bar, although the damage was ultimately caused by the earthquake which was an act of God,
the defects in the construction, as well as the deviations in the specifications and plans aggravated the damage, and
lessened the preventive measures that the building would otherwise have had.

Republic vs. Luzon Stevedoring Corporation

GR No. L-21749, September 29, 1967

FACTS:
A barge being towed by tugboats "Bangus" and "Barbero" all owned by Luzon Stevedoring Corp. rammed
one of the wooden piles of the Nagtahan Bailey Bridge due to the swollen current of the Pasig after heavy rains days
before. The Republic sued Luzon Stevedoring for actual and consequential damages. Luzon Stevedoring claimed
it had exercised due diligence in the selection and supervision of its employees; that the damages to the bridge were
caused by force majeure; that plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is an obstruction
to navigation.

ISSUE: 
Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan bridge was in
law caused by fortuitous event or force majeure.

HELD:
There is a presumption of negligence on part of the employees of Luzon Stevedoring, as the Nagtahan
Bridge is stationary. For caso fortuito or force majeure (which in law are identical in so far as they exempt an
obligor from liability) by definition, are extraordinary events not foreseeable or avoidable, "events that could not be
foreseen, or which, though foreseen, were inevitable" (Art. 1174, CC). It is, therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to
avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same. Luzon Stevedoring knew
the perils posed by the swollen stream and its swift current, and voluntarily entered into a situation involving
obvious danger; it therefore assured the risk, and cannot shed responsibility merely because the precautions it
adopted turned out to be insufficient. It is thus liable for damages.