EH403 | OBLICON REVIEW CASE DIGESTS | ATTY.
DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
OBLIGATIONS
Law (1158)
1) Bautista vs. F.O. Borromeo, Inc. (30 SCRA
119)
FACTS: On September 15, 1964, Quintin Delgado, a
helper in Borromeo's delivery panel truck, sustained
injuries which resulted in his instantaneous death.
Borromeo had to pay Delgado's widow the sum of
P4,444 representing the compensation (death benefit)
and funeral expenses due Delgado under the
Workmen's Compensation Act. On June 17, 1965,
upon the averment that the said vehicular accident
was caused by Bautista's negligence, Borromeo
started suit in the Municipal Court of Mandaluyong,
Rizal to recover from petitioners the compensation
and funeral expenses it paid to the widow of Quintin
Delgado.
ISSUE: Whether or not Borromeo is entitled for
reimbursement from Bautista.
RULING: Yes. Under the Workmen’s Compensation
Act, the employer (Borromeo) who chooses to pay the
injured employee is subgrogated to the rights of the
employee to recover from the party liable (Bautista)
what he has paid to the employee.
Borromeo paid the widow of its employee, Quintin
Delgado, compensation (death benefit) and funeral
expenses for the latter's death while in the course of
employment. This obligation arises from law —
Section 2 of the Workmen's Compensation Act. The
same law in its Section 6 also provides that "[i]n case
an employee suffers an injury for which compensation
is due under this Act by any other person besides his
employer, it shall be optional with such injured
employee either to claim compensation from his
employer, under this Act, or sue such other person for
damages, in accordance with law; and in case
compensation is claimed and allowed in accordance
with this Act, the employer who paid such
compensation or was found liable to pay the
same, shall succeed the injured employee to the
right of recovering from such person what he paid: .
. ."
It is evident from the foregoing that "if compensation
is claimed and awarded, and the employer pays it, the
employer becomes subrogated to and acquires, by
operation of law, the worker's rights against the
tortfeasor."
No need then there is to establish any contractual
relationship between Quintin Delgado and herein
petitioners. Indeed, there is none. The cause of action
of respondent corporation is one which does not
spring from a creditor-debtor relationship. It arises
by virtue of its subrogation to the right of Quintin
Delgado to sue the guilty party. Such subrogation is
sanctioned by the Workmen's Compensation Law
aforesaid. It is as a subrogee to the rights of its
deceased employee, Quintin Delgado, that Borromeo
filed a suit against petitioners in the Municipal Court
of Mandaluyong, Rizal.
2) Pelayo vs. Lauron (12 Phil. 453)
FACTS: The plaintiff was called to the house of the
defendants, and that upon arrival he was requested
by them to render medical assistance to their
daughter-in-law who was about to give birth to a child
which operation was performed by the plaintiff. The
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just and equitable value of the services rendered by
him was P500, which the defendants refuse to pay.
ISSUE: Whether or not the defendant is obliged to
pay the plaintiff for the service performed. If not, who
is liable.
RULING: The husband is liable by virtue of the
provisions of the Civil Code. Defendant, being only the
father and mother in law, is not obligated to pay.
According to article 1089 of the Civil Code, obligations
are created by law, by contracts, by quasi-contracts,
and by illicit acts and omissions or by those in which
any kind of fault or negligence occurs. Obligations
arising from law are not presumed. Those expressly
determined in the code or in special laws, etc., are the
only demandable ones. Obligations arising from
contracts have legal force between the contracting
parties and must be fulfilled in accordance with their
stipulations. (Arts. 1090 and 1091.) The rendering of
medical assistance in case of illness is comprised
among the mutual obligations to which spouses are
bound by way of mutual support. (Arts. 142 and
143.).
If every obligation consists in giving, doing, or not
doing something (art. 1088), and spouses are
mutually bound to support each other, there can be
no question but that, when either of them by reason
of illness should be in need of medical assistance, the
other is under the unavoidable obligation to furnish
the necessary services of a physician in order that
health may be restored, and he or she may be freed
from the sickness by which life is jeopardized; the
party bound to furnish such support is therefore
liable for all expenses, including the fees of the
medical expert for his professional services. This
liability originates from the above-cited mutual
obligation which the law has expressly established
between the married couple. In the face of the above
legal precepts it is unquestionable that the person
bound to pay the fees due to the plaintiff for the
professional services that he rendered to the
daughter-in-law of the defendants during her
childbirth is the husband of the patient and not her
father and mother- in-law, the defendants herein.
3) Martinez vs. Martinez (1 Phil. 647)
FACTS: The titles to the steamer Balayan and the
coasting vessel Ogoño are registered in the name of
the defendant. However, the money with which the
vessels were purchased was furnished by the plaintiff,
the father of the defendant and the father had
exercised acts of ownership over the vessel.
ISSUE: Who is the owner of the property?
RULING: The defendant, since the title belongs to his.
The plaintiff never acquired the title to these vessels
in any one of the ways therein described. He did not
acquire it by donation or succession. He did not
acquire it by means of any contract. There is only the
bare fact that the price of property which was
conveyed to the defendant by a third person was paid
by the plaintiff. It cannot be said that the law by
reason of this fact transfers any title or interest in the
thing itself to the plaintiff.
Article 1090 of the Civil Code provides that
"obligations derived from the law are not to be
presumed. Only those expressly provided for in this
Code or in special laws are enforceable." It is provided
in Article 161 of the same Code, relating to minors,
that "the ownership or enjoyment of property
acquired by a minor child with funds of his parents,
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
pertain to the latter." This article does not apply to the
present case, for the son was of age. This is the only
provision which we have found anywhere in the laws
now in force that declares the property to belong to
the person who paid the money. It was found as a
fact the father had exercised acts of ownership over
the vessel. That finding is entirely consistent with the
legal ownership by the son. The exercise of such acts
could not transfer such ownership from the son.
Contracts (1159; 1305)
4) Perez vs. Palomar (2 Phil. 682)
FACTS: The plaintiff, Perez, did on various occasions
render Don Eugenio Pomar services as interpreter of
English; and that he obtained passes and
accompanied the defendant upon his journeys to
some of the towns in the Province of Laguna.
However, there is no written contract entered into
between the parties for the employment of the
plaintiff as interpreter, or that any other innominate
contract was entered into.
ISSUE: WON Perez is entitled for compensation for
interpreting for Pomar.
RULING: YES. The plaintiff's services were solicited
or whether they were offered to the defendant for his
assistance, inasmuch as these services were accepted
and made use of by the latter, we must consider that
there was a tacit and mutual consent as to the
rendition of the services. This gives rise to the
obligation upon the person benefited by the services
to make compensation therefor, since the bilateral
obligation to render service as interpreter, on the one
hand, and on the other to pay for the services
rendered, is thereby incurred. (Arts. 1088, 1089, and
1262 of the Civil Code). The supreme court of Spain
in its decision of February 12, 1889, holds, among
other things, "that not only is there an express and
tacit consent which produces real contracts but there
is also a presumptive consent which is the basis of
quasi contracts, this giving rise to the multiple
juridical relations which result in obligations for the
delivery of a thing or the rendition of a service."
Notwithstanding the denial of the defendant, it is
unquestionable that it was with his consent that the
plaintiff rendered him-services as interpreter, thus
aiding him at a time when, owing to the existence of
an insurrection in the province, the most disturbed
conditions prevailed. It follows, hence, that there was
consent on the part of both in the rendition of such
services as interpreter. Such service not being
contrary to law or to good custom, it was a perfectly
licit object of contract, and such a contract must
necessarily have existed between the parties, as
alleged by the plaintiff. (Art. 1271, Civil Code.)
The consideration for the contract is also evident, it
being clear that a mutual benefit was derived in
consequence of the service rendered. It is to be
supposed that the defendant accepted these services
and that the plaintiff in turn rendered them with the
expectation that the benefit would be reciprocal. This
shows the concurrence of the three elements
necessary under article 1261 of the Civil Code to
constitute a contract of lease of service, or other
innominate contract, from which an obligation has
arisen and whose fulfilment is now demanded.
The fact that no fixed or determined consideration
for the rendition of the services was agreed upon
does not necessarily involve a violation of the
provisions of article 1544 of the Civil Code, because
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at the time of the agreement this consideration was
capable of being made certain.
5) Maritime Company of the Philippines vs.
Reparations Commission (40 SCRA 170)
FACTS:
Petitioner entered into a contract with the defendant
stipulating that the defendant will be the one liable for
the freight charges as the consignee of reparations
goods. However, under Section 11 of the Reparations
Act, it states that ocean freight and other expenses
incident to importation shall be paid by the end-user
and not by such agency.
ISSUE:
WON the stipulation in the contract is valid when it is
contrary to the Reparations Act.
RULING:
Invalid.
According to the Civil Code, the contracting party may
“establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs,
public order, or public policy." The law thus sets limits.
It is a fundamental requirement that the contract
entered into must be in accordance with, and not
repugnant to, an applicable statute. Its terms are
embodied therein. The contracting parties need not
repeat them. They do not even have to be referred to.
6) NHA vs. Grace Baptist Church and CA (G.R.
No. 156437, March 1, 2004)
FACTS:
On June 13, 1986, respondent Grace Baptist Church
(hereinafter, the Church) wrote a letter to petitioner
National Housing Authority (NHA), manifesting its
interest in acquiring Lots 4 and 17 of the General
Mariano Alvarez Resettlement Project in Cavite.
Respondent entered into possession of the lots and
introduced improvements thereon even if there was
indeed no contract of sale between the parties
On February 22, 1991, the NHA's Board of Directors
passed Resolution No. 2126, approving the sale of the
subject lots to respondent Church at the price of
P700.00 per square meter, or a total price of
P430,500.00. However, the price quoted to them by
the NHA Field Office is in the amount of P55,350.00.
ISSUE:
Can the NHA be compelled to sell the subject lots to
Grace Baptist Church at the price of P700.00 per
square meter in the absence of any perfected contract
of sale between the parties?
RULING:
No, NHA cannot be compelled. There was no perfected
contract of sale with respect to Lots 4 and 17 and
ordering the plaintiff to return possession of the
property to the defendant and to pay the latter
reasonable rental for the use of the property at
P200.00 per month computed from the time it took
possession thereof until finally vacated.
The offer of the NHA to sell the subject property, as
embodied in Resolution No. 2126, was similarly not
accepted by the respondent. Thus, the alleged
contract involved in this case should be more
accurately denominated as inexistent. There being no
concurrence of the offer and acceptance, it did not
pass the stage of generation to the point of perfection.
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
As such, it is without force and effect from the very
beginning or from its incipiency, as if it had never been
entered into, and hence, cannot be validated either by
lapse of time or ratification. Equity cannot give validity
to a void contract, and this rule should apply with
equal force to inexistent contracts.
Quasi-Contracts (1160; 2142; 2144; 2154)
7) Cruz vs. J.M. Tuason & Co., Inc. (76 SCRA
543)
FACTS:
By virtue of an agreement between X and Y, X assisted
Y in improving a large tract of land which was later
declared by the court as belonging to Z.
ISSUE:
Does X have the right to be reimbursed by Z for X’s
services and expenses on the ground that the
improvements are being used and enjoyed by Z?
RULING:
No. From the language of Article 2142, it is obvious
that a presumed quasi-contract cannot emerge as
against one party when the subject matter thereto is
already covered by an existing contract with another
party. X’s cause of action should be against Y who, in
turn, may seek relief against Z.
8) National Commercial Bank of Saudi Arabia
vs. Court of Appeals, G. R. No. 124267, Jan.
31, 2003)
FACTS:
National Commercial Bank of Saudi Arabia (NCBSA)
filed a case against respondent Philippine Banking
Corporation (PBC) to recover the duplicate payment of
the proceeds of a letter of credit issued by NCBSA in
view of the fact that both the head office and Makati
branch of PBC collected the proceeds.
ISSUE: WON there is a double payment which arises
obligation through quasi-contracts
RULING: No.
Solutio indebiti applies where:
(1) a payment is made when there exists no binding
relation between the payor, who has no duty to
pay, and the person who received the payment,
and
(2) the payment is made through mistake, and not
through liberality or some other cause
In the case at bar, PBC and NCBSA were bound by their
contract, the letter of credit, under which NCBSA
obliged itself to pay PBC, subject to compliance by the
latter with certain conditions provided therein.
Therefore, the cause of action is through contract and
NOT quasi-contracts for there exist a binding relation
between the parties involved.
9) Sebastian Siga-an vs. Alicia Villanueva, G.R.
No. 173227, January 20, 2009
FACTS:
In 1992, petitioner approached the respondent and
offered to loan her the amount of P540,000.00. She
accepted petitioner's proposal however, the loan
agreement was not reduced in writing. Also, there was
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no stipulation as to the payment of interest for the
loan.
On 31 August 1993, respondent issued a check worth
P500,000.00 to petitioner as partial payment of the
loan. On 31 October 1993, she issued another check
in the amount of P200,000.00 to petitioner as
payment of the remaining balance of the loan.
Petitioner told her that since she paid a total amount
of P700,000.00 for the P540,000.00 worth of loan, the
excess amount of P160,000.00 would be applied as
interest for the loan. Upon being advised by her
lawyer that she made overpayment to petitioner, she
sent a demand letter to petitioner asking for the
return of the excess amount of P660,000.00.
Petitioner, despite receipt of the demand letter,
ignored her claim for reimbursement.
Petitioner presented a handwritten promissory note
dated 12 September 1994 herein respondent
purportedly admitted owing petitioner "capital and
interest". However, it was shown that it is evident that
respondent did not really consent to the payment of
interest for the loan and that she was merely tricked
and coerced by petitioner to pay interest. Hence, it
cannot be gainfully said that such promissory note
pertains to an express stipulation of interest or written
agreement of interest on the loan between petitioner
and respondent.
ISSUE:
WON the petitioner (creditor) is obliged to return the
excess amount for interest.
RULING:
YES. Solutio Indebiti will apply.
2 kinds of Interest. Interest is a compensation fixed
by the parties for the use or forbearance of money.
This is referred to as monetary interest. Interest may
also be imposed by law or by courts as penalty or
indemnity for damages. This is called compensatory
interest.
Article 1956 of the Civil Code, which refers to
monetary interest, specifically mandates that no
interest shall be due unless it has been expressly
stipulated in writing. As can be gleaned from the
foregoing provision, payment of monetary interest is
allowed only if: (1) there was an express stipulation
for the payment of interest; and (2) the agreement
for the payment of interest was reduced in writing.
The concurrence of the two conditions is required for
the payment of monetary interest. Thus, we have held
that collection of interest without any stipulation
therefor in writing is prohibited by law.
The principle of solutio indebiti applies where
(Elements):
(1) a payment is made when there exists no binding
relation between the payor, who has no duty to
pay, and the person who received the payment;
and
(2) the payment is made through mistake, and not
through liberality or some other cause.
It was duly established that respondent paid interest
to petitioner. Respondent was under no duty to make
such payment because there was no express
stipulation in writing to that effect. There was no
binding relation between petitioner and respondent as
regards the payment of interest. The payment was
clearly a mistake. Since petitioner received something
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
when there was no right to demand it, he has an
obligation to return it.
Delict (1161; 2177; Art. 100, 104 of RPC)
10) DMPI Employees Credit Cooperative, Inc.
vs. Velez, 371 SCRA 72
FACTS:
On February 18, 1994, the prosecuting attorney filed
with the Regional Trial Court, an information for
estafa against Carmen Mandawe for alleged failure to
account to respondent Eriberta Villegas the amount
of P608,532.46. (CRIMINAL CASE)
On March 29, 1994, respondent Eriberta Villegas filed
with the Regional Trial Court, Misamis Oriental,
Branch 20, a complaint against Carmen Mandawe and
petitioner DMPI-ECCI for a sum of money and
damages with preliminary attachment arising out of
the same transaction. (CIVIL CASE)
ISSUE:
WON the civil case could proceed independently of the
criminal case for estafa without having reserved the
filing of the civil action.
RULING:
Yes. Civil Case No. CV-94-214, an independent civil
action for damages on account of the fraud
committed against respondent Villegas under Article
33 of the Civil Code, may proceed independently even
if there was no reservation as to its filing.
"every person criminally liable for a felony is also
civilly liable."
Rule 111, Section 1 of the Revised Rules of Criminal
Procedure, provides that:
"(a) When a criminal action is instituted, the
civil action for the recovery of civil liability
arising from the offense charged shall be
deemed instituted with the criminal action
unless the offended party waives the civil
action, reserves the right to institute it
separately or institutes the civil action prior
to the criminal action."
Rule 111, Section 2 further provides that —
"After the criminal action has been commenced, the
separate civil action arising therefrom cannot be
instituted until final judgment has been entered in the
criminal action."
In the cases provided in Articles 32, 33, 34 and 2176
of the Civil Code of the Philippines, the independent
civil action may be brought by the offended party. It
shall proceed independently of the criminal action and
shall require only a preponderance of evidence.
In no case, however, may the offended party recover
damages twice for the same act or omission charged
in the criminal action.
11) Hun Hyung Park v. Eung Won Choi, G.R. No.
165496, 12 February 2007, 515 SCRA 502
FACTS:
Respondent, Eung Won Choi, was charged for
violation of Batas Pambansa Blg. 22, otherwise known
as the Bouncing Checks Law. However, the
prosecution failed to prove that he received the notice
of dishonor, hence, the presumption of the element of
knowledge of insufficiency of funds did not arise.
Thus, case was dismissed.
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Petitioner appealed the civil aspect of the case but the
petitioners failed to implead the People of the
Philippines as party-respondent in the petition.
ISSUE:
WON failure to implead the People of the Philippines
precludes the party to file the civil aspect of the case.
RULING:
NO.
Unless the offended party waives the civil action or
reserves the right to institute it separately or
institutes the civil action prior to the criminal action,
there are two actions involved in a criminal case. The
first is the criminal action for the punishment of the
offender. The second is the civil action arising from
the delict. The private complainant is the plaintiff and
the accused is the defendant. There is a merger of the
trial of the two cases to avoid multiplicity of suits.
It bears recalling that the MeTC acquitted respondent.
As a rule, a judgment of acquittal is immediately final
and executory and the prosecution cannot appeal the
acquittal because of the constitutional prohibition
against double jeopardy.
Either the offended party or the accused may,
however, appeal the civil aspect of the judgment
despite the acquittal of the accused. The public
prosecutor has generally no interest in appealing the
civil aspect of a decision acquitting the accused. The
acquittal ends his work. The case is terminated as far
as he is concerned. The real parties in interest in
the civil aspect of a decision are the offended
party and the accused.
12) Jeffrey Reso Dayap vs. Sendiong, G.R. No.
177960, January 29, 2009
FACTS:
Petitioner Jeffrey Reso Dayap with the crime of
Reckless Imprudence resulting to Homicide, Less
Serious Physical Injuries, and Damage to Property.
However, prosecution failed to prove beyond
reasonable doubt that he is criminally liable for
reckless imprudence, thus, acquitted.
RTC affirmed the acquittal of petitioner but ordered
the remand of the case to the MTC for further
proceedings on the civil aspect of the case.
ISSUE:
WON remand of the case to the MTC for further
proceedings on the civil aspect of the case valid.
RULING:
Not always. Acquittal of the accused does not always
preclude the filing of the civil aspect of the case. This
is because the quantum of proof in the Criminal aspect
and the Civil aspect of the same case is different. The
offended party may still enforce their cause of action
by ‘preponderance of evidence’ if ‘proof beyond
reasonable doubt’ is not acquired.
The acquittal of the accused does not automatically
preclude a judgment against him on the civil aspect of
the case. The extinction of the penal action does not
carry with it the extinction of the civil liability where:
(a) the acquittal is based on reasonable doubt
as only preponderance of evidence is
required (in the civil aspect);
(b) the court declares that the liability of the
accused is only civil; and
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(c) the civil liability of the accused does not
arise from or is not based upon the crime
of which the accused is acquitted.
However, the civil action based on delict may be
deemed extinguished if there is a finding on the final
judgment in the criminal action that the act or
omission from which the civil liability may arise did not
exist or where the accused did not commit the acts or
omission imputed to him.
Thus, if demurrer is granted and the accused is
acquitted by the court, the accused has the right to
adduce evidence on the civil aspect of the case unless
the court also declares that the act or omission from
which the civil liability may arise did not exist. This is
because when the accused files a demurrer to
evidence, he has not yet adduced evidence both on
the criminal and civil aspects of the case. The only
evidence on record is the evidence for the
prosecution.
What the trial court should do is issue an order or
partial judgment granting the demurrer to evidence
and acquitting the accused, and set the case for
continuation of trial for the accused to adduce
evidence on the civil aspect of the case and for the
private complainant to adduce evidence by way of
rebuttal. Thereafter, the court shall render judgment
on the civil aspect of the case.
A scrutiny of the MTC's decision supports the
conclusion that the acquittal was based on the findings
that the act or omission from which the civil liability
may arise did not exist and that petitioner did not
commit the acts or omission imputed to him; hence,
petitioner's civil liability has been extinguished by his
acquittal. It should be noted that the MTC
categorically stated that it cannot find any evidence
which would prove that a crime had been committed
and that accused was the person responsible for it. It
added that the prosecution failed to establish that it
was petitioner who committed the crime as charged
since its witnesses never identified petitioner as the
one who was driving the cargo truck at the time of the
incident. Furthermore, the MTC found that the
proximate cause of the accident is the damage to the
rear portion of the truck caused by the swerving of the
Colt Galant into the rear left portion of the cargo truck
and not the reckless driving of the truck by petitioner,
clearly establishing that petitioner is not guilty of
reckless imprudence. Consequently, there is no more
need to remand the case to the trial court for
proceedings on the civil aspect of the case, since
petitioner's acquittal has extinguished his civil liability.
13) PP vs. Bayotas (1994)
FACTS:
Bayotas died on February 4, 1992 at the National
Bilibid Hospital due to cardio respiratory arrest.
Consequently, the Supreme Court in its Resolution of
May 20, 1992 dismissed the criminal aspect of the
appeal. However, it required the Solicitor General to
file its comment with regard to Bayotas' civil liability
arising from his commission of the offense charged.
ISSUE: WON the death of the accused Bayotas
extinguished his criminal liability and civil liability
based solely on the act complained.
Held: Yes
The Supreme Court held that the death of the accused
Bayotas extinguished his criminal liability and civil
liability based solely on the act complained of, i.e.,
rape. The Court ruled that: (1) death of the accused
pending appeal of his conviction extinguishes his
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criminal liability as well as the civil liability based
solely thereon; (2) the claim for civil liability survives
notwithstanding the death of accused, if the same
may also be predicated on a source of obligation other
than delict, such as law, contracts, quasi-contracts or
quasi-delicts; (3) where the civil liability survives, as
explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a
separate civil action and subject to Section 1, Rule 111
of the 1985 Rules on Criminal Procedure; and (4) the
private offended party need not fear a forfeiture of his
right to file this separate civil action by prescription,
in cases where during the prosecution of the criminal
action and prior to its extinction, the private-offended
party instituted together therewith the civil action for
in such case, the statute of limitations on the civil
liability is deemed interrupted during the pendency of
the criminal case.
Quasi-delict (1162; 2176)
14) Lasam vs. Smith (45 Phil. 657)
FACTS:
The defendant is engaged in the business of carrying
passengers for hire from one point to another. The
plaintiffs are husband and wife, customer of the
defendant, sustained physical injuries in an
automobile accident.
The trial court held, however, that the cause of action
rests on the defendant's breach of the contract of
carriage and that, consequently, articles 1101-1107
of the Civil Code, and not article 1903, are applicable.
The court further found that the breach of the contract
was not due to fortuitous events and that, therefore,
the defendant was liable in damages
ISSUE:
WON the defendant is liable for damages to the
plaintiff for the accident through quasi-delict.
RULING:
No. Defendant is liable only through contract (of
carriage) and NOT through quasi-delict
The source of the defendant's legal liability is the
contract of carriage; the by entering into that contract
he bound himself to carry the plaintiffs safely and
securely to their destination; and that having failed to
do so he is liable in damages unless he shows that the
failure to fulfill his obligation was due to causes
mentioned in article 1174 of the Civil Code, which
reads as follows:
"No one shall be liable for events which could not be
foreseen or which, even if foreseen, were inevitable,
with the exception of the cases in which the law
expressly provides otherwise and those in which the
obligation itself imposes such liability." – fortuitous
events/ caso fortuito.
Caso fortuito presents the following essential
characteristics:
(1) The cause of the unforeseen and unexpected
occurrence, or of the failure of the debtor to
comply with his obligation, must be independent
of the human will;
(2) It must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid;
(3) The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation
in a normal manner; and
(4) the obligor (debtor) must be free from any
participation in the aggravation of the injury
resulting to the creditor.
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It is not suggested that the accident in question was
due to an act of God or to adverse road conditions
which could not have been foreseen. As far as the
record shows, the accident was caused either by
defects in the automobile or else through the
negligence of its driver. That is not a caso fortuito.
A CASE HELD THAT CARRIER IS NOT LIABLE FOR
ACCIDENT
The case of Alba vs. Sociedad Anonima de Tranvias,
Jurisprudencia Civil, vol. 102, p. 928, cited by the
defendant in support of his contentions, affords a good
illustration of the application of this principle. In that
case Alba, a passenger on a street car, was standing
on the platform of the car while it was in motion. The
car rounded a curve causing Alba to lose his balance
and fall off the platform, sustaining sever injuries. In
an action brought by him to recover damages, the
supreme court of Spain held that inasmuch as the car
at the time of the accident was travelling at a
moderate rate of speed and there was no infraction of
the regulations, and the plaintiff was exposed to no
greater danger than that
inherent in that particular mode of travel, the plaintiff
could not recover, especially so since he should have
been on his guard against a contingency as natural as
that of losing his balance to a greater or less extent
when the car rounded the curve.
But such is not the present case; here the passengers
had no means of avoiding the danger or escaping the
injury.
NOTE:
Determining the extent of the liability for losses or
damages resulting from negligence in the fulfillment
of a contractual obligation, the courts have " a
discretionary power to moderate the liability according
to the circumstances" (De Guia vs. Manila Electric
Railroad & light Co., 40 Phil., 706 Phil; art. 1103, Civil
Code)
15) Elcano vs. Hill (77 SCRA 98)
FACTS:
Plaintiffs filed a case for recovery of damages from
defendant Reginald Hill, a minor, married at the time
of the occurrence, and his father, the defendant
Marvin Hill, with whom he was living and getting
subsistence, for the killing by Reginald of the son of
the plaintiffs, named Agapito Elcano, of which, when
criminally prosecuted, the said accused was acquitted
on the ground that his act was not criminal, because
of "lack of intent to kill, coupled with mistake.
ISSUE:
Is the present civil action for damages barred by the
acquittal of Reginald in the criminal case wherein the
action for civil liability was not reversed?
RULING:
No. Acquittal from an accusation of criminal
negligence, whether on reasonable doubt or not, shall
not be a bar to a subsequent civil action, which is for
damages due to a quasi-delict or 'culpa aquiliana'.
Therefore, that the acquittal of Reginal Hill in the
criminal case has not extinguished his liability for
quasi-delict, hence that acquittal is not a bar to the
instant action against him.
NOTE:
criminal and civil negligence
-The former is a violation of the criminal law, while the
latter is a 'culpa aquilian' or quasi-delict, of ancient
origin, having always had its own foundation and
individuality, separate from criminal negligence.
6|Page
We do hold, that Article 2176, where it refers to "fault
or negligence," covers not only acts "not punishable
by law" but also acts criminal in character, whether
intentional and voluntary or negligent. Consequently,
a separate civil action lies against the offender in a
criminal act, whether or not he is criminally
prosecuted and found guilty or acquitted, provided
that the offended party is not allowed, if he is actually
charged also criminally, to recover damages on both
scores, and would be entitled in such eventuality only
to the bigger award of the two, assuming the awards
made in the two cases vary.
16) Virata vs. Ochoa (81 SCRA 472)
FACTS:
Arsenio Virata died as a result of having been bumped
by a passenger jeepney driven by Maximo Borilla, and
registered in the name of Victorio Ochoa; that Borilla
is the employee driver of Ochoa. A criminal action for
homicide through reckless imprudence was instituted
against Maximo Borilla. The heirs of Arsenio Virata
reserved their right to institute in separate civil action
and commenced civil case for damages based on
quasi-delict against the Maximo Borilla and Ochoa.
Private respondents, filed a motion to dismiss on the
ground that there is another action, Criminal Case No.
3162-P, pending between the same parties for the
same cause. Court of First Instance rendered in
decision in Criminal Case No. 3612-P acquitting the
accused, Maximo Borilla, on the ground that he
caused an injury by mere accident; and granted the
motion to dismiss Civil Case No. B-134 for damages.
ISSUE:
Whether or not the petitioners, can prosecute an
action for damages based on quasi-delict.
RULING:
Yes.
It is settled that in negligence cases the aggrieved
parties may choose between an action under the
Revised Penal Code or for quasi-delict under Article
2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code of the
Philippines is to recover twice for the same negligent
act.
The petitioners are not seeking to recover twice for
the same negligent act. Before Criminal Case No.
3162-P was decided, they manifested in said criminal
case that they were filing a separate civil action for
damages. The source of the obligation sought to be
enforced in Civil Case No. B-134 is quasi-delict, not an
act or omission punishable by law. Under Article 1157
of the Civil Code of the Philippines, quasi-delict and an
act or omission punishable by law are two different
sources of obligation.
17) Neplum, Inc. vs. Orbeso, (G.R. No. 141986,
July 11, 2002)
FACTS:
On 29 October 1999, the trial court promulgated its
judgment (the 'Judgment') in Criminal Case No. 96-
246 acquitting the accused of the crime of estafa on
the ground that the prosecution failed to prove the
guilt of the accused beyond reasonable doubt. The
accused and her counsel as well as the public and
private prosecutors were present during such
promulgation.
On 12 November 1999, the petitioner, through the
private prosecutor, received its copy of the Judgment.
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On 29 November 1999, petitioner filed its 25
November 1999 Motion for Reconsideration (Civil
Aspect) of the Judgment. Considering that 27
November 1999 was a Saturday, petitioner filed its
Motion for Reconsideration on 29 November 1999, a
Monday.
ISSUE:
Within what period may private offended parties
appeal the civil aspect of a judgment acquitting the
accused based on reasonable doubt?
RULING:
From the time the offended party had actual or
constructive knowledge of the judgment, whether it
be during its promulgation or as a consequence of the
service of the notice of the decision.
18) PP vs Sayo (G.R. No. 227704, 2019)
FACTS: Sayo was charged with recruiting and
transporting AAA and BBB (minors), as well as CCC
(of legal age) for prostitution. In the same
Information, Roxas was separately accused of
managing and operating a room in his apartment to
be used for prostitution. Both were held guilty of
Qualified Trafficking in Persons by the RTC. On appeal,
the CA affirmed the RTC Decision with modification,
by adding an award of moral and exemplary damages,
but only to two victims.
In a Certification issued on May 12, 2017, the
Correctional Institution for Women, Bureau of
Corrections, certified that Sayo had died on November
30, 2011 due to multiple organ failure, secondary to
cervical cancer, attaching thereto the Certificate of
Death23 issued by the Office of the Civil Registrar.
ISSUE: Did Sayo’s death extinguish her criminal and
civil liability?
Held: Sayo's death extinguished her criminal and civil
liability. The Court notes that Sayo had already died
on November 30, 2011. Thus, the death of Sayo
extinguished her criminal liability. Article 89,
paragraph 1 of the Revised Penal Code provides:
ART. 89. How criminal liability is totally extinguished.
— Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal
penalties; and as to pecuniary penalties, liability
therefor is ·extinguished only when the death of
the offender occurs before final judgment[.]
Likewise, the civil liability of Sayo arising from her
criminal liability is extinguished upon her death. The
rules on the effect of the death of the accused on civil
liability pending appeal are summarized in People v.
Bayotas:
1. Death of the accused pending appeal of his
conviction extinguishes his criminal liability as well
as the civil liability based solely thereon. As
opined by Justice Regalado, in this regard, "the
death of the accused prior to final judgment
terminates his criminal liability and only the civil
liability directly arising from and based solely on
the offense committed, i.e., civil liability ex delicto
in senso strictiore."
2. Corollarily, the claim for civil liability survives
notwithstanding the death of accused, if the same
may also be predicated on a source of obligation
other than delict Article 1157 of the Civil Code
enumerates these other sources of obligation from
7|Page
which the civil liability may arise as a result of the
same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) Delicts
e) Quasi-delicts
3. Where the civil liability survives, as explained in
Number 2 above, an action for recovery therefor
may be pursued but only by way of filing a
separate civil action and subject to Section I, Rule
111 of the 1985 Rules on Criminal Procedure as
amended. This separate civil action may be
enforced either against the
executor/administrator or the estate of the
accused, depending on the source of obligation
upon which the same is based as explained above.
Applying these established rules in the instant case,
the death of Sayo extinguished her criminal and civil
liability inasmuch as she is no longer a defendant to
stand as the accused; the civil action is also
extinguished, as it is grounded on the criminal action.
Nature and Effects of Obligations (Arts. 1163-
1178)
19) Fidelity & Deposit Co. vs. Wilson (8 Phil. 51)
FACTS:
The defendant Wilson was, on the 1st of October,
1902, an employee of the Government of the
Philippine Islands, as disbursing officer of the Bureau
of Coast Guard and Transportation. For the security of
the Government the plaintiff company and another
company,. The American Surety Company of New
York, became sureties on the official bond of Wilson
for the sum of $ 15,000. Wilson defaulted in the sum
of $ 8,931.80, and the said two surety companies,
after demand duly made upon them by the
Government, were compelled to pay and, as a matter
of fact, did pay to said Government, in accordance
with said bond, the sum of $ 4,465.90 each.
Wilson, who had left the Philippine Islands, was
captured in the city of Montreal, Canada, for the
purpose of being tried before the courts of the
Philippine Islands for the defalcation of said sum.
When apprehended, Wilson had on his person the sum
of $ 785 in gold.
On October 26, 1904, H.D. Terrell filed a complaint as
intervenor in the case, alleging that on September 3,
of the same year, the defendant Wilson had ceded and
transferred to the said Terrell all of his, the said
Wilson's rights in and to the said $785 in payment on
account of a larger sum then owed by said Wilson to
the said H.D. Terrell for professional services already
rendered and to be rendered as attorney for said
Wilson, under agreement with the same; that
Treasurer Branagan was duly notified on the 17th day
of October, 1904, of this transfer, at which time the
Treasurer had said sum in his care, and this before the
notifications of the appointment of said depositary in
the principal case. Basing his claim on these facts,
Terrell claims the right of ownership in and to the said
sum and asks that the same be delivered to him as
the legitimate owner to the exclusion of the other
parties in the case.
Judgment was rendered against Wilson and Terrell
was awarded the $785 gold.
ISSUE:
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FIRST SEMESTER | A.Y. 2020-2021
Whether or not the lower court erred in awarding
Terrel the $785 from the hands of the depository.
RULING:
Yes. by reason of the non-delivery, Terrell did not
acquire the ownership of the property transferred to
him by Wilson.
We are of the opinion that the transfer by itself, and
afterwards the notification of the same of Treasurer
Branagan, did not produce nor could it produce the
effect of transfer to Terrell of the ownership of the
funds so transferred and which were then in the
possession of the said Treasurer. To have this effect,
it would have been necessary that the delivery of the
funds had been made directly Terrell, which fact has
not been proved at any time.
Terrel claims the right of ownership from the mere fact
of having derived the same, not from the fact of any
delivery, but from the very fact of the transfer and of
his subsequent notification to Treasurer Branagan, it
being, in addition, very clear that such notification
does not constitute, in any manner, the fact of
delivery as established by articles 1462, 1463, and
1464 of the Civil Code, all of which cover, in full this
subject-matter.
As established in paragraph 2 of article 609 of said
code, that "the ownership and other property rights
are acquired and transmitted by law, by gift, by
testate or intestate succession, and, in consequence
of certain contracts, by tradition." And as the logical
application of this disposition article 1095 prescribes
the following: "A creditor has the rights to the fruits
of a thing from the time the obligation to deliver it
arises. However, he shall not acquire a real right."
(and the ownership is surely such) "until the property
has been delivered to him."
In accordance with such disposition and provisions the
delivery of a thing constitutes a necessary and
indispensable requisite for the purpose of acquiring
the ownership of the same by virtue for a contract.
"The transfer of the ownership in the contract of such
transfer, does not produce the effect by the fact of the
mere consent, but is acquired by tradition and in the
due observance of general precepts." Therefore, by
reason of the non- delivery Terrell did not acquire the
ownership of the property transferred to him by
Wilson.
It is only the jus and rem (right to a thing), and not
the jus in re (real and complete right), that was
acquired by Terrell by virtue of the transfer, made by
the consent of the transferor and the transferee but
not consummated by the delivery which never came
to pass and which delivery was the object of such
transfer.
20) Cruzado vs. Bustos (34 Phil. 17)
FACTS:
Agapito Cruzado (plaintiff’s father) was a poor man
living in Pampanga, he had a job in court but was still
not enough to support his family. He aspired to hold
the office of procurador in the CFI in Pamapanga but
he was unable to give the required bond, an
indispensable condition for his appointment.
He asked Estafania Bustos to simulate a mortgage
deed of a certain property and have it executed in
court in his favor only to pose that he has real
property to enable him to qualify to such position of
procurador. In truth, the said mortgage was a front
8|Page
and fraudulent but was effected by making a
pretended contract which bore the appearance of
truth.
Plaintiff Santiago Cruzado, the son, brought an action
for recovery of possession, founded on the right
transmitted to him by his father at his death – a right
arising from the said simulated deed of sale of the land
in question
ISSUE:
Whether or not the rights of transmission acquired by
Santiago Cruzado from the death of his father,
pertaining to the said land in contest is valid and
without defect.
RULING:
No. The sale is simulated. Even assuming arguendo
that it is not simulated, Cruzado did not acquire real
right over the said land since it was not delivered.
Note: for there to be delivery of a land, the concerned
party must enter the said land.
This action for recovery is of course improper, not only
because the sale was simulated but also because it
was not consummated. The price of the land was not
paid nor did the vendee take possession of the
property from the 7th of September, 1875, when the
said sale was feigned, until the time of his death; nor
did any of his successors, nor the plaintiff himself until
the date of his claim, enter into possession of the land.
(Entering into the land is a delivery. Therefore, since
he did not enter the said land, he did not acquire real
right over it).
It is indeed true that it is not necessary that the thing
sold or its price should have been delivered in order
that the contract of purchase and sale be deemed
perfect on account of its being consensual and from it
reciprocal obligations arise mutually to compel the
parties to effect its fulfilment; but there is no
transmission of ownership until the thing, as in the
case at bar, the land, has been delivered, and the
moment such delivery is made the contract of
purchases and sale is regarded as consummated.
Article 1450 of the Civil Code, relied upon in this
connection by the appellant, refers solely to the
perfection of the contract and not to its
consummation.
21) Pornellosa vs. Land Tenure Administration
(1 SCRA 375)
FACTS:
The lot in controversy is a part of the Santa Clara
Estate on which many families have settled through
the consent of its owner, each paid a rental. In May
1941, through C.A. 539, the said Estate was acquired
by the Government and was entrusted to the Land
Tenure Agreement. The plaintiff acquired by purchase
the right of occupation of the lot in question from
Vicenta San Jose, predecessor-in-interest. After the
purchase of the Santa Clara Estate by the
Government, the plaintiffs were allowed to make
payments on account of the purchase price of the lot,
as fenced, included two hundred (200) sq. m.
Thereafter, the plaintiffs found out that the lot had
been subdivided into two (2) smaller lots, No 44 and
78. Lot 44 had been sold to Hermino Guzman.
ISSUE:
Whether plaintiffs can compel the Director of Lands to
execute a deed of sale of the residential lot no. 44 in
their favor.
RULING:
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No. The lot on which San Jose’s house stood had not
been specified nor had the boundaries thereof been
mentioned. Petitioners have failed to prove that lot 44
is included in the lot formerly occupied by Vicenta San
Jose.
she has violated the provisions of Section 5, Batas
Pambansa Blg. 25 which is a ground for Ejectment.
Sec. 5 Grounds for judicial ejectment. Ejectment
shall be allowed on the following grounds:

Significantly, the plaintiff cannot show a contract a) Subleasing or assignment of lease of

whereby the Rural Progress Admin., has sold or residential units in whole or in part, with the
promised to sell the lot of 200 sq m. A party claiming written consent of the owner/lessor: Provided
a right granted or created by law must prove his claim that in the case of subleases or assignments
by competent evidence. He must rely on the strength executed prior to the approval of this Act, the
of his evidence and not on the weakness of that of his sublessor/assignor shall have sixty days from
opponent. the effectivity of this Act within which to
Moreover, the Deed of Sale allegedly executed by obtain the written approval of the
Vicente San Jose in favor of Pornellosa is a mere owner/lessor or terminate the sublease or
private document and does not conclusively establish assignment.
their right to the parcel of land. Acts and contracts
which have for their subject the creation,
transmission, modification or extinguishment of real
rights over immovable property must appear in a 2) No. The perfected contract is not absolute since
public document. police power is involved. The court ruled that the
constitutional guaranty of non-impairment of
22) Caleon vs. Agus Development Corp. (207 obligations of contract is limited by and subject
SCRA 748) to the exercise of police power of the state in the
FACTS: interest of public health, safety, morals and
general welfare. Batas Pambansa Blg. 25 is
Agus Development Corporation (ADC) is the
derived from P.D. No. 20 which has been
owner of a parcel of land which it leased to Rita
declared by this Court as a police power
Caleon for a monthly rental of P180.00. ADC
legislation, applicable to leases entered into prior
constructed on the lot leased a 4-door apartment
to July 14, 1971 (effectivity date of RA 6539), so
building. Without the consent of ADC, Caleon sub-
that the applicability thereof to existing contracts
leased 2 of the 4 doors of the apartment to Guevarra
cannot be denied.
and Estrada. Upon learning of the sub-lease, ADC
through counsel demanded in writing that Caleon
23) Chavez vs. Gonzales (32 SCRA 547)
vacate the leased premises. For Caleon’s failure to
comply with the demand, ADC filed a complaint for
FACTS:
ejectment with Metropolitan Trial Court (MTC) of
Plaintiff delivered to Defendant, a type writer repairer,
Manila (Branch 12), citing the provisions of Batas
a portable typewriter for routine cleaning and
Pambansa 25, Section 5, as ground, which is the
servicing. Defendant was not able to finish the job
unauthorized sub-leasing of part of the leased
after some time despite repeated reminders made by
premises to third persons without securing the
plaintiff. Finally, defendant returned the typewriter
consent of the lessor within the required 60-day
unrepaired, some of the parts missing. A had the
period from the promulgation of the new law (BP 25).
typewriter repaired by F Business Machines, and the
After trial, the court a quo rendered its decision
repair job cost him P58.75 for labor or service and
ordering Caleon and all persons claiming possession
P31.10 for the missing parts or a total of P89.85.
under her
ISSUE:
(a) to vacate the premises alluded to in the
WON is defendant liable also for P58.75, the cost of
complaint;
the service expended in the repair?
(b) to remove whatever improvement she
introduced on the property;
RULING:
(c) to pay ADC the amount of P2,000.00 as
Yes. Defendant contrived the tenor of his obligation
attorney’s fees; and
because he not only did not repair the typewriter but
(d) to pay the costs.
returned it “in shambles.” For such contravention, he
is liable under Art 1167 for the cost of executing the
Caleon appealed the decision to the Regional Trial
obligation in a proper manner, which in the case
Court (RTC) and on 24 November 1980, the RTC
should be the cost of the labor or service expended in
affirmed the decision of the MTC. The RTC decision
its repair, because the obligation or contract was to
was appealed to the Court of Appeals for review. The
repair it
appellate court, on 28 January 1987, dismissed the
In addition, he is liable under Art 1170 for the cost of
petition outright for not being prima facie meritorious.
the missing parts for in his obligation to repair the
Caleon filed the petition for review on certiorari with
typewriter he was bound, but failed or neglected to
the Supreme Court. Thus, this case.
return it in the same condition it was when he received
it.
ISSUE:
1) Whether or not there is a ground for Ejection "ART. 1167. If a person obliged to do something fails
for violating BP 25? to do it, the same shall be executed at his cost.
2) Whether or not BP 25 does not apply for there
is already a perfected contract making the This same rule shall be observed if he does it in
application of said law (BP 25) to the case at contravention of the tenor of the obligation.
bar as unconstitutional as an impairment of the Furthermore it may be decreed that what has been
obligation of contracts. poorly done he undone."

RULING: 24) Tanguilig vs. CA (266 SCRA 78)

1) Yes. Petitioner in leasing her apartment has also
subleased the lot on which it is constructed which FACTS:
lot belongs to private respondent. Consequently,

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Jacinto Tanguilig [owner of JMT Engineering and
General merchandise] was contracted by Vicente
Herce to construct a “windmill” for P 60,000 with a
one-year guaranty from the date of completion.
Herce paid P30,000 down-payment, an installment of
P15,000, and left a balance of P15,000. Petitioner
[Tanguilig] filed a complaint for non-payment of the
remaining balance. Respondent answered saying that
the remaining balance is complied with since the
payment was tendered to San Pedro General
Merchandising Inc., who constructed the deep well to
which the windmill system was to be connected.
According to respondent, 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.
Respondent contends that since petitioner did not
have the capacity to install the pump, he agreed to
have a third party do the work the cost of which was
to be deducted from the contract price. To prove his
point, Respondent presented Guillermo Pili (third
party) of SPGMI who declared that petitioner
Tanguilig approached him with a letter from
respondent Herce Jr. asking him to build a deep-well
pump as "part of the price/contract which Engineer
(Herce) had with Mr. Tanguilig."
ISSUE:
1) W/N deep well was part of the contract.
2) W/N petitioner should reconstruct the
windmill since there was no fortuitous event
as argued.
3) W/N respondent can claim that Pili accepted
his payment on behalf of petitioner?
RULING:
1) Deep well was not part of the contract
The preponderance of evidence supports the finding
of the trial court that the installation of a deep well
was not included in the proposals of petitioner to
construct a windmill system for respondent. Notably,
nowhere in either proposal is the installation of a deep
well mentioned, even remotely. Neither is there an
itemization or description of the materials to be used
in constructing the deep well.
Moreover, it is a cardinal rule in the interpretation of
contracts that the intention of the parties shall be
accorded primordial consideration and, in case of
doubt, their contemporaneous and subsequent acts
shall be principally considered. An examination of
such contemporaneous and subsequent acts of
respondent as well as the attendant circumstances
does not persuade us to uphold him.
2) Petitioner should reconstruct the windmill
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:
10 | P a g e
1) the cause of the breach of the obligation must be
independent of the will of the debtor;
2) the event must be either unforeseeable or
unavoidable;
3) the event must be such as to render it impossible
for the debtor to fulfill his obligation in a normal
manner; and,
4) the debtor must be free from any participation in
or aggravation of the injury to the creditor.
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.
3) No. The law is clear that "payment shall be made
to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person
authorized to receive it," It does not appear from the
record that Pili and/or SPGMI was so authorized to
receive payment on behalf of the petitioners.
25) Vil-Rey Planners and Builders vs. Lexber,
Inc., G.R. No. 189401, June 15, 2016
FACTS:
Vil-Rey and Lexber entered into a Construction
Contract dated 17 April 19963 (first contract) whereby
the former undertook to work on the compacted
backfill of the latter's property.
Based on the first contract, Vil-Rey shall complete the
project in 60 days for a consideration of P5,100,000.
Lexber released to Vil-Rey a mobilization
downpayment of P500,000 secured by Surety Bond
G(16) No. 066915 (first surety bond) issued by
Stronghold. For its part, Vil-Rey agreed to indemnify
Stronghold for whatever amount the latter might be
adjudged to pay Lexber under the surety bond.
Vil-Rey and Lexber mutually terminated the first
contract and entered into a Construction Contract
dated 1 July 1996 (second contract) to cover the
remaining works, but under revised terms and
conditions. The contract amount was P2,988,700.20,
and the scope of work was required to be completed
in 60 days.
On 23 December 1996, Vil-Rey and Lexber executed
Work Order No. CAB-96-09 (third contract) for the
completion of the remaining works by 15 January
1997. Under the third contract, a consideration of
P1,168,728.37 shall be paid on the following basis:
50% downpayment to be secured by a surety bond in
the same amount issued by Stronghold upon approval
of the work order and 50% balance upon completion
of the works.
Accordingly, Stronghold, issued Surety Bond G(16)
No. 077258 (second surety bond) in the amount of
P584,364. in favor of Lexber. Vil-Rey again obligated
itself to indemnify Stronghold for whatever amount
the latter might be held to pay under the surety bond.
In a letter dated 21 January 1997 addressed to
Lexber, Vil-Rey requested the extension of the
contract period to 31 January 1997. Lexber granted
the request for extension. However, Vil-Rey failed to
complete the works by the end of the extended period,
or even after Lexber gave it another five days to finish
the works. Lexber then wrote Stronghold seeking to
collect on the two surety bonds issued in favor of the
former.
ISSUES:
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
Whether Vil-Rey is liable for breach of contract.
RULING:
Vil-Rey is liable for breach of contract.
Breach of contract is the failure of a party, without
legal reason, to comply with the terms of a contract
or perform any promise that forms either a part or the
whole of it. The failure of Vil-Rey to complete the
works under the third contract was never an issue in
this case. In fact, that failure was readily admitted by
Moises Villarta, its managing partner, in his testimony
before the trial court:
Q.What happened after you accomplished 95% under the
[third contract]?
A.The only remaining there would be the compaction and fill
density test.
Q.Could you please tell us why you did not finish the
compaction and density test under the [third] contract.
A.Because I lacked funds. 1 was not paid anymore.
To clarify, aside from this testimony, no proof was
presented to show that Vil-Rey was able to accomplish
95% of the works under the third contract.
Nevertheless, even if we were to assume that this
claim is true, it still falls short of the obligation to finish
100% of the works.
In the third contract, Vil-Rey and Lexber agreed on
the following terms of payment:
50% downpayment upon approval of this work order against
a surety bond from Stronghold Insurance Corporation
50% balance upon completion of work
The work will be completed on or before 15 January 1997 x
x x.25
It is clear that the next payment for Vil-Rey would
have fallen due upon completion of the works. Thus,
it cannot put up the defense that its failure to comply
with its obligation was because it was not paid.
Under the above provisions, the parties clearly took
on reciprocal obligations. These are obligations that
arise from the same cause, such that the obligation of
one is dependent upon that of the other.
The reciprocal obligation in this case was Lexber's
payment of the 50% balance upon Vil-Rey's
completion of the works on or before 15 January
1997. However, despite the grant of extension until
31 January 1997, and even after the lapse of another
five-day grace period, Vil-Rey failed to finish the
works under the third contract.
The law provides that the obligation of a person
who fails to fulfill it shall be executed at that
person's cost. The CA was correct in ruling that Vil-
Rey should be held liable for the amount paid by
Lexber to another contractor to complete the works.
Furthermore, Article 2201 of the Civil Code provides:
Article 2201. In contracts and quasi-contracts, the
damages for which the obligor who acted in good faith
is liable shall be those that are the natural and
probable consequences of the breach of the
obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude,
the obligor shall be responsible for all damages which
may be reasonably attributed to the non-performance
of the obligation.
Other Issues:
11 | P a g e
 The extension of the third contract did not
extinguish stronghold's liability under the second
surety bond.
 Lexber is entitled to reduced attorney's fees.
Breach of Obligations and Grounds for Liability
(1170)
26) Areola vs. CA (236 SCRA 645)
FACTS:
On June 29, 1985, seven months after the issuance of
petitioner Santos Areola's Personal Accident
Insurance Policy No. PA-20015, respondent insurance
company unilaterally cancelled the same since
company records revealed that petitioner-insured
failed to pay his premiums.
On August 3, 1985, respondent insurance company
offered to reinstate same policy it had previously
cancelled and even proposed to extend its lifetime to
December 17, 1985, upon a finding that the
cancellation was erroneous and that the premiums
were paid in full by petitioner-insured but were not
remitted by Teofilo M. Malapit, respondent insurance
company's branch manager.
These, in brief, are the material facts that gave rise to
the action for damages due to breach of contract
instituted by petitioner-insured before Branch 40 RTC,
Dagupan City against respondent insurance company.
ISSUE:
(1) Did the erroneous act of cancelling subject
insurance policy entitle petitioner-insured to payment
of damages?
(2) Did the subsequent act of reinstating the
wrongfully cancelled insurance policy by respondent
insurance company, in an effort to rectify such error,
obliterate whatever liability for damages it may have
to bear, thus absolving it therefrom?
RULING:
1. Yes, respondent insurance company is liable by
way of damages for the fraudulent acts committed by
Malapit that gave occasion to the erroneous
cancellation of subject insurance policy.
We uphold petitioner-insured's submission. Malapit's
fraudulent act of misappropriating the premiums paid
by petitioner-insured is beyond doubt directly
imputable to respondent insurance company. A
corporation, such as respondent insurance company,
acts solely thru its employees. The latters' acts are
considered as its own for which it can be held to
account.
It is beyond doubt that he represented its interests
and acted in its behalf. His act of receiving the
premiums collected is well within the province of his
authority. Thus, his receipt of said premiums is receipt
by private respondent insurance company who, by
provision of law, particularly under Article 1910 of the
Civil Code, is bound by the acts of its agent.
Article 1910 thus reads:
"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."
2. No. Its earlier act of reinstating the insurance
policy cannot obliterate the injury inflicted on
petitioner-insured.
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
Respondent company should be reminded that a
contract of insurance creates reciprocal obligations for
both insurer and insured. Reciprocal obligations are
those which arise from the same cause and in which
each party is both a debtor and a creditor of the other,
such that the obligation of one is dependent upon the
obligation of the other.
Under the law governing reciprocal obligations,
particularly the second paragraph of Article 1191, the
injured party, petitioner-insured in this case, is given
a choice between fulfillment or rescission of the
obligation in case one of the obligors, such as
respondent insurance company, fails to comply with
what is incumbent upon him. However, said article
entitles the injured party to payment of damages,
regardless of whether he demands fulfillment or
rescission of the obligation. Untenable then is
respondent insurance company's argument, namely,
that reinstatement being equivalent to fulfillment of
its obligation, divests petitioner-insured of a rightful
claim for payment of damages. Such a claim finds no
support in our laws on obligations and contracts.
The nature of damages to be awarded, however,
would be in the form of nominal damages. Although
the erroneous cancellation of the insurance policy
constituted a breach of contract, private respondent
insurance company, within a reasonable time took
steps to rectify the wrong committed by reinstating
the insurance policy of petitioner. Moreover, no actual
or substantial damage or injury was inflicted on
petitioner Areola at the time the insurance policy was
cancelled. 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."
Negligence (1172; 2201 (2); 1173)
27) Picart vs. Smith (37 Phil. 809)
FACTS:
The plaintiff was riding on his pony over the Carlatan
Bridge, at San Fernando, La Union. Before he had
gotten half way across, the defendant approached
from the opposite direction in an automobile. As the
defendant neared the bridge he saw a horseman on it
and blew his horn to give warning of his approach. He
continued his course and after he had taken the bridge
he gave two more successive blasts, as it appeared to
him that the man on horseback before him was not
observing the rule of the road. The plaintiff, saw the
automobile coming and heard the warning signals.
However, being perturbed by the novelty of the
apparition or the rapidity of the approach, he pulled
the pony closely up against the railing on the right side
of the bridge instead of going to the left. The pony had
not as yet exhibited fright, and the rider had made no
sign for the automobile to stop. Seeing that the pony
was apparently quiet, the defendant, instead of
veering to the right while yet some distance away or
slowing down, continued to approach directly toward
the horse without diminution of speed. When he had
gotten quite near, there being then no possibility of
the horse getting across to the other side, the
defendant quickly turned his car sufficiently to the
right to escape hitting the horse alongside of the
railing where it was then standing; but in so doing the
automobile passed in such close proximity to the
animal that it became frightened and turned its body
across the bridge with its head toward the railing. As
a result defendant suffered injuries and the horse
died.
12 | P a g e
ISSUE:
Whether or not the defendant in maneuvering his car
in the manner above described was guilty of
negligence such as gives rise to a civil obligation to
repair the damage done; and we are of the opinion
that he is so liable.
RULING:
Yes, the defendant is guilty.
The test by which to determine the existence of
negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution
which an ordinarily prudent person would have used
in the same situation? If not, then he is guilty of
negligence.
It goes without saying that the plaintiff himself was
not free from fault, for he was guilty of antecedent
negligence in planting himself on the wrong side of the
road. But as we have already stated, the defendant
was also negligent; and in such case the problem
always is to discover which agent is immediately and
directly responsible. It will be noted that the negligent
acts of the two parties were not contemporaneous,
since the negligence of the defendant succeeded the
negligence of the plaintiff by an appreciable interval.
Under these circumstances the law is that the person
who has the last fair chance to avoid the impending
harm and fails to do so is chargeable with the
consequences, without reference to the prior
negligence of the other party.
NOTE: "[t]he principle about the 'last clear chance'
would call for application in a suit between the owners
and drivers of the two colliding vehicles. It does not
arise where a passenger demands responsibility from
the carrier to enforce its contractual obligations. For it
would be inequitable to exempt the negligent driver of
the jeepney and its owners on the ground that the
other driver was likewise guilty of negligence."
The decision in the case of Rakes vs. Atlantic, Gulf and
Pacific Co.(7 Phil. Rep., 359) should perhaps be
mentioned in this connection. This Court there held
that while contributory negligence on the part of the
person injured did not constitute a bar to recover, it
could be received in evidence to reduce the damages
which would otherwise have been assessed wholly
against the other party.
28) Layugan vs. IAC (107 SCRA 363)
FACTS:
The plaintiff was standing beside the truck while his
company was repairing the tire of their cargo truck
(was parked, occupying almost half of the light lane,
light after the curve; but installed early warning
devices 3-4 meters from the truck). The plaintiff was
bumped by the defendant's truck driven recklessly by
Daniel Serrano; that as a result, plaintiff was injured
and hospitalized; that he spent TEN THOUSAND
PESOS (P10,000.00) and will incur more expenses as
he recuperates from said injuries; that because of said
injuries he would be deprived of a lifetime income in
the sum of SEVENTY THOUSAND PESOS
(P70,000.00); and that he agreed to pay his lawyer
the sum of TEN THOUSAND PESOS (P10,000.00).
ISSUE:
Who is negligent?
RULING:
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
Defendant. Res ipsa loquitur does not apply in this
case. Defendant failed to prove they exercised
diligence of a good father of a family.
DOCTRINE OF RES IPSA LOQUITUR.
This doctrine is stated thus: "Where the thing which
causes injury is shown to be under the management
of the defendant, and the accident is such as in the
ordinary course of things does not happen if those
who have the management used proper care, it
affords reasonable evidence, in the absence of an
explanation by the defendant, that the accident arose
from want of care."
The doctrine of Res ipsa loquitur as a rule of evidence
is peculiar to the law of negligence which recognizes
that prima facie negligence may be established
without direct proof and furnishes a substitute for
specific proof of negligence. The doctrine is not a rule
of substantive law but merely a mode of proof or a
mere procedural convenience. The rule, when
applicable to the facts and circumstances of a
particular case, is not intended to and does not
dispense with the requirement of proof of culpable
negligence on the part of the party charged. It merely
determines and regulates what shall be prima facie
evidence thereof and facilitates the burden of plaintiff
of proving a breach of the duty of due care. The
doctrine can be invoked when and only when, under
the circumstances involved, direct evidence is absent
and not readily available. Hence, it has generally been
held that the presumption of inference arising from
the doctrine cannot be availed of, or is overcome,
where plaintiff has knowledge and testifies or presents
evidence as to the specific act of negligence which is
the cause of the injury complained of or where there
is direct evidence as to the precise cause of the
accident and all the facts and circumstances attendant
on the occurrence clearly appear. Finally, once the
actual cause of injury is established beyond
controversy, whether by the plaintiff or by the
defendant, no presumptions will be involved and the
doctrine becomes inapplicable when the
circumstances have been so completely eludicated
that no inference of defendant's liability can
reasonably be made, whatever the source of the
evidence, as in this case.
Art. 2176 in relation to Art. 2180, paragraph 5, of the
Civil Code states, when an injury is caused by the
negligence of a servant or employee there instantly
arises a presumption of law that there was negligence
on the part of the master or employer either in the
selection of the servant or employee, or in supervision
over him after selection, or both. Such presumption
isjuris tantum and not juris et de jure and
consequently, may be rebutted. If follows necessarily
that if the employer shows to the satisfaction of the
court that in the selection and in the supervision he
has exercised the care and diligence of a good father
of a family, the presumption is overcome and he is
relieved from liability.
we hold that Isidro failed to prove the diligence of a
good father of a family in the supervision of his
employees which would exculpate him from solidary
liability with his driver to the petitioner. Accordingly,
the responsibility of Isidro as employer treated in
Article 2180, paragraph 5, of the Civil Code has not
ceased.
UNDER THE RPC, the liability of employer is
subsidiary.
UNDER THE Civil Code, the liability of employer is
primary. The employer is negligent not because of the
13 | P a g e
act of the employer but because he did not exercise
due care in selecting his employee.
29) PNB vs. CA (315 SCRA 309)
FACTS: Sometime prior to 23 October 1990 private
respondent Lily S. Pujol opened with petitioner
Philippine National Bank,
Mandaluyong Branch (PNB for brevity), an account
denominated as "Combo Account," a combination of
Savings Account and Current Account in private
respondent's business name "Pujol Trading," under
which checks drawn against private respondent's
checking account could be charged against her
Savings Account should the funds in her Current
Account be insufficient to cover the value of her
checks. Hence, private respondent was issued by
petitioner a passbook on the front cover of which was
typewritten the words "Combo Deposit Plan."
On 23 October 1990, private respondent issued a
check in the amount of P30,000.00 in favor of her
daughter-in-law, Dr. Charisse M. Pujol. And on 24
October 1990 private respondent issued another
check in the amount of P30,000.00 in favor of her
daughter, Ms. Venus P. De Ocampo. Both checks were
dishonored despite private respondent had sufficient
funds in her Savings Account. On 4 November 1990,
after realizing its mistake, petitioner accepted and
honored the second check for P30,000.00 and re-
credited to private respondent's account the P250.00
previously debited as penalty.
Private respondent Lily S. Pujol filed with the Regional
Trial Court of Pasig City a complaint for moral and
exemplary damages against petitioner for dishonoring
her checks despite sufficiency of her funds in the
bank.
Petitioner admitted in its answer that private
respondent Pujol opened a "Combo Account," a
combination of Savings Account and Current Account,
with its Mandaluyong branch. It however justified the
dishonor of the two (2) checks by claiming that at the
time of their issuance private respondent Pujol's
account was not yet operational due to lack of
documentary requirements.
ISSUE:
WON Pujol should be rewarded for moral and
exemplary damages for the negligence of PNB to
notify Pujol that her account was not yet operative
WON the award by the trial court of moral damages of
P100,000.00 and attorney's fees of P20,000.00 was
inordinately disproportionate and unconscionable.
RULING:
Yes. respondent Pujol had justifiable reason to
believe, based on the description in her passbook, that
her accounts were effectively covered by the
arrangement during the issuance of the checks.
Although petitioner presented evidence before the
trial court to prove that the arrangement was not yet
operational at the time respondent Pujol issued the
two (2) checks, it failed to prove that she had actual
knowledge that it was not yet operational at the time
she issued the checks considering that the passbook
in her Savings Account already indicated the words
"Combo Deposit Plan." Hence, respondent Pujol had
justifiable reason to believe, based on the description
in her passbook, that her accounts were effectively
covered by the arrangement during the issuance of
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
the checks. Either by its own deliberate act, or its
negligence in causing the "Combo Deposit Plan" to be
placed in the passbook, petitioner is considered
estopped to deny the existence of and perfection of
the combination deposit agreement with respondent
Pujol.
Estoppel in pais or equitable estoppel arises when
one, by his acts, representations or admissions, or by
his silence when he ought to speak out, intentionally
or through culpable negligence, induces another to
believe certain facts to exist and such other rightfully
relies and acts on such belief so that he will be
prejudiced if the former is permitted to deny the
existence of such facts.
Damages are not intended to enrich the complainant
at the expense of the defendant, and there is no hard-
and-fast rule in the determination of what would be a
fair amount of moral damages since each case must
be governed by its own peculiar facts. The yardstick
should be that it is not palpably and scandalously
excessive. In this case, the award of P100,000.00 is
reasonable considering the reputation and social
standing of private respondent Pujol and applying our
rulings in similar cases involving banks' negligence
with regard to the accounts of their depositors. The
award of attorney's fees in the amount of P20,000.00
is proper for respondent Pujol was compelled to
litigate to protect her interest.
30) PNB vs. Pike (470 SCRA 328)
FACTS:
Complainant Pike often traveled to and from Japan as
a gay entertainer in said country. Sometime in 1991,
he opened U.S. Dollar Savings Account No. 0265-
704591-0 with herein petitioner PNB Buendia branch
for which he was issued a corresponding passbook.
The complaint alleged in substance that before
complainant Pike left for Japan on 18 March 1993, he
kept the aforementioned passbook inside a cabinet
under lock and key, in his home; that on 19 April
1993, a few hours after he arrived from Japan, he
discovered that some of his valuables were missing
including the passbook; that he immediately reported
the incident to the police which led to the arrest and
prosecution of a certain Mr. Joy Manuel Davasol; that
complainant Pike also discovered that Davasol made
two (2) unauthorized withdrawals from his U.S. Dollar
Savings Account No. 0265-704591-0, both times at
the PNB Buendia branch.
Mr. Pike also informed AVP Val that he is leaving for
abroad (Japan) and made verbal instruction to honor
all withdrawals to be transmitted by his Talent
Manager and Choreographer, Joy Davasol who shall
present pre-signed withdrawal slips bearing his
(Pike's) signature.
ISSUE:
WON PNB is Negligent in accepting the withdrawal
slips without asking for any proof of identification and
did not counter check the signature.
WON Pike is entitled for damages.
RULING:
1. Yes. PNB was not able to prove that it exercised
more than that of a good father of a family.
From the foregoing, petitioner PNB's witness was
utterly remiss in protecting the bank's client, as well
as the bank itself, when he allowed an account holder
to make it appear as if he was the one actually
withdrawing from an account and actually receiving
the withdrawn amount. Ordinarily, banks allow
14 | P a g e
withdrawal by someone who is not the account holder
so long as the account holder authorizes his
representative to withdraw and receive from his
account by signing on the space provided particularly
for such transactions, usually found at the back of
withdrawal slips
Having admitted that pre-signed withdrawal slips do
not constitute the normal procedure with respect to
withdrawals by representatives should have already
put petitioner PNB's employees on guard. Rather than
readily validating and permitting said withdrawals,
they should have proceeded more cautiously. Clearly,
petitioner bank's employee, Lorenzo T. Bal, an
Assistant Vice President at that, was exceedingly
careless in his treatment of respondent Pike's savings
account. From the foregoing, the evidence clearly
showed that the petitioner bank did not exercise the
degree of diligence that it ought to have exercised in
dealing with their clients.
With banks, the degree of diligence required, contrary
to the position of petitioner PNB, is more than that of
a good father of a family considering that the business
of banking is imbued with public interest due to the
nature of their functions. The stability of banks largely
depends on the confidence of the people in the
honesty and efficiency of banks.
Likewise, in the case of The Consolidated Bank and
Trust Corporation v. Court of Appeals, 29 we clarified
that said fiduciary relationship means that the bank's
obligation to observe "highest standards of integrity
and performance" is deemed written into every
deposit agreement between a bank and its depositor.
The fiduciary nature of banking requires banks to
assume a degree of diligence higher than that of a
good father of a family. Article 1172 of the New Civil
Code states that the degree of diligence required of
an obligor is that prescribed by law or contract, and
absent such stipulation then the diligence of a family.
In every case, the depositor expects the bank to treat
his account with the utmost fidelity, whether such
accounts consist only of a few hundred pesos or of
millions of pesos.
2. Yes.
The award of moral and exemplary damages is left to
the sound discretion of the court, and if such
discretion is well exercised, as in this case, it will not
be disturbed on appeal. In the case of Philippine
Telegraph & Telephone Corporation
v. Court of Appeals, we had the occasion to reiterate
the conditions to be met in order that moral damages
may be recovered. In said case we stated:
An award of moral damages would require, firstly,
evidence of besmirched reputation, or physical,
mental or psychological suffering sustained by the
claimant; secondly, a culpable act or omission
factually established; thirdly, proof that the wrongful
act or omission of the defendant is the proximate
cause of the damages sustained by the claimant; and
fourthly, that the case is predicated on any of the
instances expressed or envisioned by Articles 2219 35
and 2220 36 of the Civil Code.
Specifically, in culpa contractual or breach of contract,
as here, moral damages are recoverable only if the
defendant has acted fraudulently or in bad faith, or is
found guilty of gross negligence amounting to bad
faith, or in wanton disregard of his contractual
obligations. Verily, the breach must be wanton,
reckless, malicious, or in bad faith, oppressive or
abusive.
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
31) Samson vs. CA (238 SCRA 309)
FACTS:
Angel Santos leased the building owned by Susana
Realty Corporation and operated a haberdashery
store, Santos & Sons, Inc. Thus, the lease contract in
force between the parties in the year 1983 provided
that the term of the lease shall be one (1) year,
starting on August 1, 1983 until July 31, 1984.
On June 28, 1984, the lessor Susana Realty
Corporation, informed respondents that the lease
contract which was to expire on July 31, 1984 would
not be renewed. Nonetheless, private respondent's
lease contract was extended until December 31, 1984.
Private respondent also continued to occupy the
leased premises beyond the extended term.
On February 5, 1985, private respondent received a
letter from the lessor, through its Real Estate
Accountant Jane F. Bartolome, informing him of the
increase in rentals, retroactive to January 1985,
pending renewal of his contract until the arrival of Ms.
Ma. Rosa Madrigal (one of the owners of Susana
Realty).
Four days later or on February 9, 1985, petitioner
Manolo Samson offered to buy the store of Santos &
Sons and his right to lease the subject premises. On
February 15, 1985, petitioner returned to private
respondent's house to confirm his offer. On said
occasion, private respondent presented petitioner
with a letter containing his counter proposal.
Petitioner affixed his signature on the letter-proposal
signifying his acceptance. They agreed that the
consideration for the sale of the store and leasehold
right of Santos & Sons, Inc. shall be P300,000.00.
Both also agreed that the “The lease contract between
Santos and Sons, Inc. and Madrigal was impliedly
renewed. It will be formally renewed this monthly (sic)
when Tanya Madrigal arrives.”
On February 20, 1985, petitioner paid P150,000.00 to
private respondent representing the value of existing
improvements in the Santos & Sons store. The parties
agreed that the balance of P150,000.00 shall be paid
upon the formal renewal of the lease contract between
private respondent and Susana Realty. It was also a
condition precedent to the transfer of the leasehold
right of private respondent to petitioner.
All went well for a few months. In July 1985, however,
petitioner received a notice from Susana Realty,
addressed to Santos & Sons, Inc., directing the latter
to vacate the leased premises on or before July 15,
1985. Private respondent failed to renew his lease
over the premises and petitioner was forced to vacate
the same on July 16, 1985
ISSUE:
1. whether or not private respondent Angel Santos
committed fraud or bad faith in representing to
petitioner that his contract of lease over the subject
premises has been impliedly renewed by Susana
Realty.
2. WON petitioner was negligent in not verifying the
title of the vendor before pursuing into a contract as
required by “rule caveat emptor”
RULING:
1. NO
private respondent was neither guilty of fraud nor bad
faith in claiming that there was implied renewal of his
contract of lease with Susana Realty. The records will
bear that the original contract of lease between the
lessor Susana Realty and the lessee private
15 | P a g e
respondent was for a period of one year, commencing
on August 1, 1983 until July 31, 1984. Subsequently,
however, private respondent's lease was extended
until December 31, 1984. At this point, it was clear
that the lessor had no intention to renew the lease
contract of private respondent for another year.
However, on February 5, 1985, the lessor, thru its
Real Estate Accountant, sent petitioner a letter which
led private respondent to believe and conclude that
his lease contract was impliedly renewed and that
formal renewal thereof would be made upon the
arrival of Tanya Madrigal. This much was admitted by
petitioner himself when he testified during
crossexamination that private respondent initially told
him of the fact that his lease contract with Susana
Realty has already expired but he was anticipating its
formal renewal upon the arrival of Madrigal. Thus,
from the start, it was known to both parties that,
insofar as the agreement regarding the transfer of
private respondent's leasehold right to petitioner was
concerned, the object thereof relates to a future right.
The efficacy of the contract between the parties was
thus made dependent upon the happening of this
suspensive condition.
2. Yes.
Petitioner failed to exercise sufficient diligence in
verifying first the status of private respondent's lease.
When appellant Angel C. Santos said that the lease
contract had expired but that it was impliedly
renewed, that representation should have put
appellee on guard. To protect his interest, appellee
should have checked with the lessor whether that was
so, and this he failed to do; or he would have simply
deferred his decision on the proposed sale until Miss
Madrigal's arrival, and this appellee also failed to do.
In short, as a buyer of the store and lease right in
question — or as a buyer of any object of commerce
for that matter — appellee was charged with the
obligation of caution aptly expressed in the universal
maxim caveat emptor.
Rule caveat emptor requires the purchaser to be
aware of the supposed title of the vendor and he who
buys without checking the vendor's title takes all the
risks and losses consequent to such failure.
appellants Santos & Sons, Inc. and Angel C. Santos
are ordered to pay appellee, by way of
reimbursement, the P150,000.00 which the latter
gave appellants as advance payment for their store
and lease right with legal interest to be reckoned from
the promulgation date of this decision
Definitions
Bad faith is essentially a state of mind affirmatively
operating with furtive design or with some motive of
ill-will. It does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of wrong. Bad
faith is thus synonymous with fraud and involves a
design to mislead or deceive another, not prompted
by an honest mistake as to one's rights or duties, but
by some interested or sinister motive.
Dolo causante or causal fraud- the kind of fraud
that will vitiate consent is one where, through
insidious words or machinations of one of the
contracting parties, the other is induced to enter into
a contract which, without them, he would not have
agreed to. Which is basically a deception employed by
one party prior to or simultaneous to the contract in
order to secure the consent of the other.
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32) Dioquino vs. Laureano (33 SCRA 65)
FACTS:
Atty. Dioquino, a practicing lawyer, went to the office
of the MVO, Masbate to register his car. He asked
Laureano to introduce him to one of the clerks in the
office who could facilitate the registration and the
request was attended to. Laureano rode on the car of
Atty. Dioquino. While about to reach their destination,
the car was stoned by some mischievous boys and the
windshield broke. Laureano refused to file any charges
against the boy and his parents because he
thought that stone-throwing was accidental and
was due to force majeure. He refused to pay the
damage caused and challenged the case for
adjudication. The plaintiff tried to convince the
defendant and even the latter’s wife to settle amicably
by paying the damages but the defendant refused.
ISSUE: Whether or not there was fortuitous event
and Laureano is liable for the damages.
RULING:
NO and NO.
Art 1177 of the Civil Code States 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."
Authorities of repute are in agreement, more
specifically concerning on obligation arising from
contract “that some extraordinary circumstance
independent of the will of the obligor, or of
his employees, is an essential element of a caso
fortuito”. If it could be shown that such indeed was
the case, liability is ruled out. There is no requirement
of “diligence beyond what human care and foresight
can provide”. The throwing of the stone by
the child was clearly unforeseen or if foreseen,
was inevitable. Hence, the law being what it is, such
a belief on the part of defendant Laureano was
justified and he shall not be held liable for the
damages caused to the car.
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, Civ. Code of the Philippines). 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
The very measures adopted by appellant prove that
the possibility of danger was not only foreseeable, but
actual]y foreseen, and was not caso fortuito."
33) La Mallorca vs. CA (17 SCRA 739)
FACTS: Robert De Alban and his family rode a bus
owned by Joeben Bus Company. Upon reaching their
desired destination, they alighted from the bus but
Robert returned to get their baggage. However, his
youngest daughter followed him without his
knowledge. When he stepped into the bus again, the
bus accelerated that resulting to Robert’s daughter
death. The bus ran over her.
ISSUE: Is the bus company liable?
16 | P a g e
RULING: Yes. The relation of carrier and passenger
does not cease at the moment the passenger alights
from the carrier’s vehicle at a place selected by the
carrier at the point of destination, but continues until
the passenger has had a reasonable time or
reasonable opportunity to leave the current premises.
34) PAL vs. CA (106 SCRA 391)
FACTS: Jesus V. Samson averred that he flew as co-
pilot on a regular flight from Manila to Legaspi with
stops at Daet, Camarines Norte with Captain Delfin
Bustamante as commanding pilot of a C-47 plane
belonging to defendant Philippine Air Lines, Inc.; that
on attempting to land the plane at Daet airport,
Captain Delfin Bustamante due to his very slow
reaction and poor judgment overshot the airfield and
as a result, notwithstanding the diligent efforts of the
plaintiff co-pilot to avert an accident, the airplane
crashlanded beyond the runway; that the jolt caused
the head of the plaintiff to hit and break through the
thick front windshield of the airplane causing him
severe brain concussion, wounds and abrasions on the
forehead with intense pain and suffering.
He further averred that instead of giving plaintiff
expert and proper medical treatment called for by the
nature and severity of his injuries, defendant simply
referred him to a company physician, a general
medical practitioner, who limited the treatment to the
exterior injuries without examining the severe brain
concussion and that he was later discharged from
PAL’s employ on December 21, 1953 on grounds of
physical disability, thereby causing plaintiff not only to
lose his job but to become physically unfit to continue
as aviator due to defendant’s negligence in not giving
him the proper medical attention.
ISSUE: Whether or not PAL exercised utmost
diligence required of them as a common carriage.
RULING: No.
There was gross negligence by PAL for allowing Capt.
Bustamante to fly on the that fateful day of the
accident, even if he was sick, having tumor on his
nose. No one will certify the fitness to fly a plane of
one suffering from the disease.
The dizziness, headaches and general debility of
Samson were after-effects of the crash-landing. And
therefore there is causal connection between the
accident and said after-effects. The negligence of PAL
is clearly a quasi-delict and therefore Art. 2219(2) is
applicable, justifying the recovery of moral damages.
Even from the standpoint of the PAL that there is an
employee-employer relationship between it and
Samson arising from the contract of employment, the
latter is still entitled to moral damages in view of the
finding of bad faith or malice, applying the provisions
of Article 2220.
35) Philippine National Construction
Corporation vs. CA (467 SCRA 569)
FACTS: PASUDECO transports sugarcane from
Mabalacat and Magalang, Pampanga. When the Mount
Pinatubo eruption of 1991 heavily damaged the
national bridges, it had to pass through a temporary
detour. On November 5, 1991, TRB (Toll Regulatory
Board) and PASUDECO entered into a Memorandum
of Agreement (MOA), where the latter was allowed to
enter and pass through the NLEX (North Luzon
Express Way) on the following terms and conditions:
1. PASUDECO trucks should move in convoy;
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
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2. Said trucks will stay on the right lane;
3. A vehicle with blinking lights should be assigned
at the rear end of the convoy with a sign
which should read as follows: Caution:
CONVOY AHEAD!!!;
4. Tollway safety measures should be properly
observed;
5. Accidents or damages to the toll facilities arising
out of any activity related to this approval
shall be the responsibility of PASUDECO;
6. PASUDECO shall be responsible in towing their
stalled trucks immediately to avoid any
inconvenience to the other motorists;
7. This request will be in force only while the
national bridges along Abacan-Angeles and
Sapang Maragul via Magalang remain
impassable.
PASUDECO furnished the PNCC (Philippine National
Construction Corporation), the franchisee that
operates and maintains the toll facilities in the North
and South Luzon Toll Expressways, with a copy of the
MOA. In a Letter dated October 22, 1992, the PNCC
informed PASUDECO that it interposed no objection to
the MOA.
At around 2:30 a.m Alex Sendin, the PNCC security
supervisor, and his co-employees were patrolling Km.
72 going north of the NLEX. They saw a pile of
sugarcane in the middle portion of the north and
southbound lanes of the road. They placed lit cans
with diesel oil in the north and southbound lanes,
including lane dividers with reflectorized markings, to
warn motorists of the obstruction. Sendin, Ducusin
and Pascual proceeded to the PASUDECO office,
believing that the pile of sugarcane belonged to it
since it was the only milling company in the area. They
requested for a payloader or grader to clear the area.
However, Engineer Oscar Mallari, PASUDECOs
equipment supervisor and transportation
superintendent, told them that no equipment operator
was available as it was still very early.[8]
Nonetheless, Mallari told them that he would send
someone to clear the affected area. Thereafter,
Sendin and company went back to Km. 72 and
manned the traffic. At around 4:00 a.m., five (5)
PASUDECO men arrived, and started clearing the
highway of the sugarcane. They stacked the
sugarcane at the side of the road. The men left the
area at around 5:40 a.m., leaving a few flattened
sugarcanes scattered on the road. Sendin thought
there was no longer a need to man the traffic. As dawn
was already approaching, Sendin and company
removed the lighted cans and lane dividers. 9 Sendin
went to his office in Sta. Rita, Guiguinto, Bulacan, and
made the necessary report.
At about 6:30 a.m., Rodrigo S. Arnaiz was driving
along the NLEX. He was with his sister Regina
Latagan, and his friend Ricardo Generalao; they were
on their way to Baguio to attend their grandmothers
first death anniversary. As the vehicle ran over the
scattered sugarcane, it flew out of control and turned
turtle several times. The accident threw the car about
fifteen paces away from the scattered sugarcane.
ISSUE:
Under the Civil Code, Can the petitioner be considered
negligent in taking the warning devices despite the
present of few flattened sugarcanes scattered on the
road when a person incurred accident because of the
scattered sugarcanes? Furthermore, is the respondent
barred to claim damages for recklessly driving?
RULING:
17 | P a g e
PASUDECO and PNCC, should jointly and severally
liable for being negligent
PNCC, in charge of the maintenance of the
expressway, has been negligent in the performance of
its duties. The obligation of PNCC should not be
relegated to, by virtue of a private agreement, to
other parties. It is clear that the petitioner (PNCC)
failed to exercise the requisite diligence in maintaining
the NLEX safe for motorists. The lighted cans and lane
dividers on the highway were removed even as
flattened sugarcanes lay scattered on the ground.[36]
The highway was still wet from the juice and sap of
the flattened sugarcanes.[37] The petitioner should
have foreseen that the wet condition of the highway
would endanger motorists passing by at night or in the
wee hours of the morning.
PASUDECOs negligence in transporting sugarcanes
without proper harness/straps, and that of PNCC in
removing the emergency warning devices, were two
SUCCESSIVE NEGLIGENT acts which were the direct
and proximate cause of Latagans injuries. Negligence
in order to render a person liable need not be the sole
cause of an injury. As such, PASUDECO and PNCC are
jointly and severally liable.
As the Court held in the vintage case of Sabido v.
Custodio:
According to the great weight of authority, where the
concurrent or successive negligent acts or omission of
two or more persons, although acting independently
of each other, are, in combination, the direct and
proximate cause of a single injury to a third person
and it is impossible to determine in what proportion
each contributed to the injury, either is responsible for
the whole injury, even though his act alone might not
have caused the entire injury, or the same damage
might have resulted from the acts of the other tort-
feasor. . . .
The petitioner cannot escape liability under the MOA
between PASUDECO and TRB, since respondent
Latagan was not
a party thereto.
Anent respondent Arnaiz's negligence in driving his
car, both the trial court and the CA agreed that it was
only contributory, and considered the same in
mitigating the award of damages in his favor as
provided under Article 2179 of the New Civil Code.
Contributory negligence is conduct on the part of the
injured party, contributing as a legal cause to the
harm he has suffered, which falls below the standard
to which he is required to conform for his own
protection.
36) Prudential Bank vs. Rapanot, et al., G.R.
No. 191536, January 16, 2017
FACTS:
Golden Dragon Real Estate Corporation (Golden
Dragon) is the developer of Wack-Wack Twin Towers
Condominium in Mandaluyong City. Ronald Rapanot
(Ronald) bought Unit 2308-B2, on May 9, 1995. On
September 13, 1995, the Bank of the Philippine
Islands, formerly known as Prudential Bank (Bank),
extended a loan to Golden Dragon in the amount of
P50,000,000.00 to be utilized by the latter as
additional working capital. To secure the loan, Golden
Dragon executed a mortgage Agreement in favor of
the Bank, which had the effect of constituting a real
estate mortgage over several condominium units
owned and registered under Golden Dragon’s name.
Unit 2308-B2 is among said units subject of said
mortgage agreement.
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Ronald made several verbal demands for the delivery
of Unit 2308-B2, being its lawful owner, but to no
avail. Hence he filed a complaint before the Expanded
National Capital Region Field Office of the Housing and
Land Use Regulatory Board (HLURB). No settlement
was arrived at before the said Office. The Arbiter
rendered a decision on July 3, 2002, in favor of
Ronald, directing Golden Dragon and the Bank to
deliver to Ronald the title of the condominium unit and
to pay damages and costs.
On January 16, 2003, the Bank filed a Petition for
Review with the HLURB Board Commissioner, who, in
turn affirmed the decision of the HLURB. Thereafter
the Bank went to the Office of the President, which
denied its appeal declaring that the Bank was given
due process, and adopted the ruling of the HLURB.
Again, the Bank appealed to the Court of Appeals, who
in turn affirmed the decision of the HLURB and ruled
that petitioner should have ascertained that the
required authority to mortgage the condominium
units was obtained from the HLURB before it approved
Golden Dragon's loan. It cannot feign lack of
knowledge of the sales activities of Golden Dragon
since, as an extender of credit, it is aware of the
practices, both good or bad, of condominium
developers. Since petitioner was negligent in its duty
to investigate the status of the properties offered to it
as collateral, it cannot claim that it was a mortgagee
in good faith.
ISSUE:
1. Whether or not the CA erred when it
affirmed the resolution of the OP holding
that the Bank cannot be considered a
mortgagee in good faith.
2. WON the bank exercised due diligence
before it entered into the Mortgage
Agreement with Golden Dragon
RULING:
1. The bank cannot be considered a mortgagee
in good faith. Petitioner argues that, as a
mortgagee in good faith and for value, it must be
accorded protection and should not be held jointly
and severally liable with Golden Dragon. The
doctrine of "mortgagee in good faith" is based on
the rule that all persons dealing with property
covered by a certificate of title, as mortgagees,
are not required to go beyond what appears on
the face of the title.
However, while a mortgagee is not under
obligation to look beyond the certificate of title,
the nature of petitioner's business requires it to
take further steps to assure that there are no
encumbrances or liens on the mortgaged
property, especially since it knew that it was
dealing with a condominium developer. It should
have inquired deeper into the status of the
properties offered as collateral and verified if the
HLURB's authority to mortgage was in fact
previously obtained. This it failed to do.
2. Bank was negligent. In loan transactions, banks
have the particular obligation of ensuring that
clients comply with all the documentary
requirements pertaining to the approval of their
loan applications and the subsequent release of
their proceeds.
If only the Bank exercised the highest degree of
diligence required by the nature of its business as
a financial institution, it would have discovered
that (i) Golden Dragon did not comply with the
18 | P a g e
approval requirement imposed by Section 18 of
PD 957, and (ii) that Rapanot already paid a
reservation fee and had made several installment
payments in favor of Golden Dragon, with a view
of acquiring Unit 2308-B2.66
The Bank's failure to exercise the diligence
required of it constitutes negligence, and negates
its assertion that it is a mortgagee in good faith.
Kinds of Negligence as ground for liability
37) Lasam vs. Smith (45 Phil. 657)
FACTS: Smith was the owner of a public garage in the
town of San Fernando, La Union, and engaged in the
business of carrying passengers for hire from one
point to another in the such province and the
surrounding provinces. Defendant undertook to
convey the plaintiffs from San Fernando to Currimao,
Ilocos Norte. On leaving San Fernando, the
automobile was operated by a licensed chauffeur, but
after having reached the town of San Juan, the
chauffeur allowed his assistant, Bueno, to drive the
car. Bueno held no driver’s license, but had some
experience in driving. The car functioned well until
after the crossing of the Abra River in Tagudin, when,
according to the testimony of the witnesses for the
plaintiffs, defects developed in the steering gear so as
to make accurate steering impossible, and after
zigzagging for a distance of about half kilometer, the
car left the road and went down a steep embankment.
The automobile was overturned and the plaintiffs
pinned down under it. Mr. Lasam escaped with a few
contusions and a dislocated rib, but his wife, Joaquina,
received serious injuries, among which was a
compound fracture of one of the bones in her left
wrist. She also suffered nervous breakdown from
which she has not fully recovered at the time of trial.
The complaint was filed about a year and a half after
and alleges that the accident was due to defects in the
automobile as well as to the incompetence and
negligence of the chauffeur.
ISSUE:
What is the source of the obligation?
Can the defendant recover damages from the
plaintiff?
RULING:
1) The source of the defendant's legal liability is
the Contract of Carriage, that by entering into that
contract, Smith bound himself to carry the plaintiffs
safely and securely to their destination; and that
having failed to do so he is liable in damages unless
he shows that the failure to fulfill his obligation was
due to causes mentioned in article 1105 (caso
fortuito) of the Civil Code.
2) Yes. The passengers had no means of avoiding
the danger or escaping the injury.
In Alba vs. Sociedad Anonima de Tranvias,
Alba, a passenger on a street car, was standing on the
platform of the car while it was in motion. The car
rounded a curve causing Alba to lose his balance and
fall off the platform, sustaining severe injuries. In an
action brought by him to recover damages, the
supreme court of Spain held that inasmuch as the car
at the time of the accident was travelling at a
moderate rate of speed and there was no infraction of
the regulations, and the plaintiff was exposed to no
greater danger than that inherent in that particular
mode of travel, the plaintiff could not recover,
especially so since he should have been on his guard
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against a contingency as natural as that of losing his
balance to a greater or less extent when the car
rounded the curve.
But such is not the case in Lasam vs. Smith; here the
passengers had no means of avoiding the danger or
escaping the injury. Therefore, they can recover
damages.
38) Ramos vs. Pepsi Cola (L-22533, Feb. 9,
1967)
FACTS: The car driven by Augusto Ramos (son of co-
plaintiff Placido Ramos) collided with the truck of
PEPSI, driven by the driver and co-defendant Andres
Bonifacio. As a result, the Ramoses sued Bonifacio and
Pepsi. Juan T. Anasco, personnel manager of
defendant company.
Defendant company, to relieve of his liabilities,
contested that they exercised due diligence in the
selection of their employees. They allege that
defendant driver (Andres Bonifacio) was first hired as
a member of the bottle crop in the production
department. They testified that when he was hired as
a driver, he was asked to submit clearances, previous
experience, physical examination and later on, was
sent to the pool house to take the usual driver's
examination, consisting of: first, theoretical
examination and second, the practical driving
examination. Moreover, the defendant company was
a member of the Safety Council.
ISSUE: Whether or not PEPSI-COLA is liable for the
damages caused by their driver
RULING: No, the company is not liable as it exercised
due diligence in the selection of its employee.
From this article two things are apparent:
(1) That when an injury is caused by the negligence
of a servant or employee there instantly arises
a presumption of law that there was negligence
on the part of the master or employer either in
the selection of the servant or employee, or in
supervision over him after the selection, or
both; and
(2) that the presumption is juris tantum and not
juris et de jure, and consequently may be
rebutted. It follows necessarily that if the
employer shows to the satisfaction of the court
that in selection and supervision he has
exercised the care and diligence of a good father
of a family, the presumption is overcome and he
is relieved from liability.
There can be no doubt that PEPSI-COLA exercised the
required due diligence in the selection of its driver. As
ruled by this Court in Campo vs. Camarote 53 O.G.
2794, 2797: "In order that the defendant may be
considered as having exercised all diligence of a good
father of a family, he should not be satisfied with the
mere possession of a professional driver's license; he
should have carefully examined the applicant for
employment as to his qualifications, his experience
and record of service.“
Hence, PEPSI-COLA shall be relieved from liability as
it has taken necessary steps and has exercised the
care and diligence of a good father of a family in the
selection and supervision of its employees.
39) Vinluan vs. CA (L-21477-81, April 29,
1966)
19 | P a g e
FACTS: On February 16, 1958, seven persons were
killed and thirteen others were injured in Bangar, La
Union when a passenger bus on which they were
riding caught fire after hitting a post and crashing
against a tree. The bus, owned by Francisca Viluan
and driven by Hermenegildo Aquino, came from San
Fernando, La Union and was on its way to Candon,
Ilocos Sur.
It appears that, as the bus neared the gate of the
Gabaldon school building in the municipality of
Bangar, another passenger bus owned by Patricio
Hufana and driven by Gregorio Hufana tried to
overtake it but that instead of giving way, Aquino
increased the speed of his bus and raced with the
overtaking bus. Aquino lost control of his bus as a
result of which it hit a post, crashed against a tree and
then burst into flames.
Gregorio Sibayan’s heirs sued petitioner and the
latter's driver, Hermenegildo Aquino, for damages for
breach of contract of carriage. Carolina Sabado, one
of those injured, also sued petitioner and the driver
for damages. The complaints were filed in the Court
of First Instance of La Union.
ISSUE: Whether or not Patricio Hufana and Gregorio
Hufana are liable
RULING: Yes. Patricio Hufana and Gregorio Hufana
are jointly and severally liable with Francisca Viluan
Since the proximate cause of the accident was found
to be the concurrent negligence of the drivers of the
two buses, then Francisca Viluan and respondent
Patricio and Gregorio Hufana should have been held
equally liable to the plaintiffs in the damage suits. The
fact that the respondents were not sued as principal
defendants but were brought into the cases as third
party defendants should not preclude a finding of their
liability
In Gutierrez vs. Gutierrez, it was held that “In case of
injury to a passenger due to the negligence of the
driver of the bus on which he was riding and of the
driver of another vehicle, the drivers as well as the
owners of the two vehicles are jointly and severally
liable for damages.”
40) Elcano vs. Hill (77 SCRA 98)
FACTS: Reginald Hill, a minor, married at the time of
the occurrence (NOTE: Will not apply now since the
family code requires age of at least 18 to marry.),
caused the death of Agapito (son of Elcano). Elcano
filed a criminal case against Reginald but Reginald was
acquitted for “lack of intent coupled with mistake.”
Elcano then filed a civil action against Reginald and his
dad (Marvin Hill) for damages based on Article 2180
of the Civil Code. Hill argued that the civil action is
barred by his son’s acquittal in the criminal case; and
that if ever, his civil liability as a parent has been
extinguished by the fact that his son is already an
emancipated minor by reason of his marriage.
ISSUE:
Whether or not Marvin Hill may be held civilly liable
Whether or not Marvin Hill cannot be liable under
quasi-delict since his son is already emancipated
RULING:
1) Yes. The acquittal of Reginald Hill in the criminal
case has not extinguished his liability for quasi-delict,
hence that acquittal is not a bar to the instant action
against him.
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ART. 2177. Responsibility for fault or negligence under
the preceding article (Quasi-delicts) is entirely
separate and distinct from the civil liability arising
from negligence under the Penal Code. But the
plaintiff cannot recover damages twice for the same
act or omission of the defendant.
Acquittal from an accusation of criminal negligence,
whether on reasonable doubt or not, shall not be a bar
to a subsequent civil action, not for civil liability arising
from criminal negligence, but for damages due to a
quasi-delict or 'culpa aquiliana'.
2) Marvin Hill is still liable for quasi-delicts.
ART. 2180. "The obligation imposed by article 2176 is
demandable not only for one's own acts or omissions,
but also for those of persons for whom one is
responsible.”
While it is true that parental authority is terminated
upon emancipation of the child (Article 327, Civil
Code), and under Article 397, emancipation takes
place “by the marriage of the minor child”, it is,
however, also clear that pursuant to Article 399,
emancipation by marriage of the minor is not really
full or absolute.” Therefore, Reginald Hill, although
married, is still a responsibility of Marvin Hill.
41) Baliwag Transit vs. CA (262 SCRA 230)
FACTS: On 2 November 1990, petitioner's Bus No.
117 was driven by Juanito Fidel to its terminal for
repair of its brake system. Juanito Fidel told mechanic
Mario Dionisio to repair the brakes. Fidel then alighted
from the bus and told the gasman to fill up the gas
tank.
Shortly after, Juanito Fidel returned to the bus and sat
on the driver's seat. Suddenly the bus moved; he felt
something was hit. When he went down to investigate
he saw Mario Dionisio lying on the ground bleeding
and convulsive, sandwiched between Bus No. 117 and
another bus parked thereat owned by the same
petitioner. Mario Dionisio died.
ISSUE:
Whether or not this is a case of quasi-delict or quasi-
aquiliana
Whether or not Juanito Fidel and Baliwag Transit are
solidarily liable
RULING:
1) This is a case of quasi-delict or quasi-aquiliana.
ART.2176 “Whoever by act or omission causes
damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.”
2) Juanito Fidel and Baliwag Transit are both
solidarily liable
On Juanito Fidel’s liability:
The circumstances clearly show that the proximate
cause of the death of Mario Dionisio was the
negligence of driver Juanito Fidel when he failed to
take the necessary precaution to prevent the accident.
He boarded his bus, sat on the driver's seat and was
at the steering wheel when the bus moved pinning
down the deceased who was repairing the defective
brake system below. Driver Fidel should have known
that his brake system was being repaired as he was
in fact the one who told Dionisio to do the repair. Fidel
20 | P a g e
should have parked the bus properly and safely. After
alighting from the bus to tell the gasman to fill the
tank, he should have placed a stopper or any hard
object against a tire or two of the bus. But without
taking the necessary precaution he boarded Bus No.
117 causing it to move and roll, pinning down the
deceased which resulted in his serious injuries and
eventual death.
The reckless imprudence of Juanito Fidel makes him
liable to the heirs of offended party for damages
together with his employer
On Employer’s liability:
ART. 2180 “The obligation imposed by article 2176 is
demandable not only for one's own acts or omissions,
but also for those of persons for whom one is
responsible.”
Moreover, when an injury is caused by the negligence
of an employee there instantly arises a presumption
of the law that there was negligence on the part of the
employer either in the selection of his employee or in
the supervision over him after such selection. The
presumption however may be rebutted by a clear
showing on the part of the employer that it had
exercised the care and diligence of a good father of a
family in the selection and supervision of his
employee.
Hence, to escape solidary liability for quasi-delict
committed by an employee, the employer must
adduce sufficient proof that it exercised such degree
of care. Petitioner's failure to prove that it exercised
the due diligence of a good father of a family in the
selection and supervision of its driver Juanito Fidel will
make it solidarily liable with the latter for damages
caused by him.
42) Metro Manila Transit Corp. vs. CA (223
SCRA 521)
FACTS: In the afternoon of December 24, 1986, she,
her daughter Maria Zenia and the victim, Florentina
Sabalburo, were on their way to Baclaran to buy
foodstuffs for their Noche Buena. For some time, they
stood on the island at the intersection waiting for the
traffic light to change so they could cross to the other
side where they intended to take a ride for Baclaran.
When the traffic light turned red and the vehicles had
stopped, the three of them stepped off the island. Just
as they started to cross the street, she (Baylon) saw
an MMTC bus coming from their right (Tramo) which
was moving at a fast speed. The next moment, the
left front portion of the bus hit the victim on the right
side of her head. The impact was of such force that
the victims right ear was slashed off and she
thereupon fell on the cement and became
unconscious. The victim was brought by the bus
driver, Apolinario Ajoc and the bus conductress to the
San Juan de Dios Hospital where she was given
medical attention. Florentina Sabalburo never
regained consciousness.
MMTC’s argument: The incident happened at around
3:30 in the afternoon of December 24, 1986 or barely
eight (8) hours before Christmas Eve. Thus, the
victims’ thoughts were naturally directed towards the
Noche Buena. The victim then crossed for the purpose
of getting a ride to Baclaran to buy food for the
Christmas Eve celebration. Since her thoughts were
on the Christmas Eve feast, she crossed where there
was no pedestrian lane and while the green light for
vehicular traffic was on. Petitioner MMTC submits that
petitioner Ajoc cannot be charged with negligence
considering that he cannot see what is in the mind of
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FIRST SEMESTER | A.Y. 2020-2021
a pedestrian. Considering that the victims’ own
negligence was the direct and proximate cause of her
injuries and untimely demise, it was error for the
Court of Appeals not to have applied Article 2179 of
the Civil Code to the instant case
ISSUE:
Whether or not Article 2176 or 2179 applies
Whether or not MMTC (the employer) exercised the
diligence of a good father of a family
RULING:
1)Article 2176 applies
ART. 2176 “Whoever by act or omission causes
damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this chapter.”
ART. 2179 “When the plaintiff’s own negligence was
the immediate and proximate cause of his injury, he
cannot recover damages...”
We have thoroughly perused the records of this case,
and nowhere do we find evidence to support
petitioners claim that the victim was so engrossed in
thinking about Noche Buena while crossing a busy
street. Petitioners stance regarding the victims
alleged negligence is non sequitur. It simply does not
follow that one who is run over by a vehicle on
Christmas Eve (or any other holiday for that matter)
is negligent because his thoughts were on the holiday
festivities. Therefore, the applicable law in this case is
Article 2176 of the Civil Code and not Article 2179.
2) No. The claim that Ajocs act of bringing the victim
to the nearest medical facility shows adequate
supervision by MMTC over its employees is without
merit. The act was after the fact of negligence on
Ajocs part. For another, the evidence on record shows
that Ajocs act was neither voluntary nor spontaneous;
he had to be prevailed upon by the victims’
companions to render assistance to his victim.
Moreover, the evidence to show that MMTC had
exercised due diligence in the selection and
supervision of its employees consisted merely of the
pertinent guidelines for the screening and selection of
its drivers, as well as periodic seminars on road safety.
Petitioner MMTC failed to show that its driver, Ajoc,
had actually undergone such screening or had
attended said seminars. It is incumbent upon
petitioner to show that in recruiting and employing the
erring driver the recruitment procedures and company
policies on efficiency and safety were followed.
ART. 2180. “The obligation imposed by Article 2176 is
demandable not only for one’s own acts or omissions,
but also for those of persons for whom one is
responsible.”
-The father and, in case of his death or incapacity, the
mother, are responsible for the damages caused by
the minor children who live in their company.
-Guardians are liable for damages caused by the
minors or incapacitated persons who are under their
authority and live in their company.
-The owners and managers of an establishment or
enterprise are likewise responsible for damages
caused by their employees in the service of the
branches in which the latter are employed or on the
occasion of their functions. -Employers shall be liable
for the damages caused by their employees and
household helpers acting within the scope of their
21 | P a g e
assigned tasks, even though the former are not
engaged in any business or industry.
-The State is responsible in like manner when it acts
through a special agent; but not when the damage
has been caused by the official to whom the task done
properly pertains, in which case what is provided in
Article 2176 shall be applicable.
-Teachers or heads of establishments of arts and
trades shall be liable for damages caused by their
pupils and students or apprentices, so long as they
remain in their custody.
The responsibility treated of in this article shall cease
when the persons herein mentioned prove that they
observed all the diligence of a good father of a family
to prevent damage.
The owners of public utilities fall within the scope of
this article. As earlier stated, MMTC is a public utility,
organized and owned by the government for public
transport service. Hence, its liability to private
respondents, for the negligent and reckless acts of its
driver, Ajoc, under Article 2180 of the Civil Code is
both manifest and clear.
43) Calalas vs. CA (332 SCRA 356)
FACTS:
Private respondent Eliza Jujeurche G. Sunga, took a
passenger jeepney owned and operated by petitioner
Vicente Calalas. As the jeepney was filled to capacity
of about 24 passengers, Sunga was given by the
conductor an "extension seat," a wooden stool at the
back of the door at the rear end of the vehicle.
On the way to Poblacion Sibulan, Negros Occidental,
the jeepney stopped to let a passenger off. As she was
seated at the rear of the vehicle, Sunga gave way to
the outgoing passenger. Just as she was doing so, an
Isuzu truck driven by Iglecerio Verena and owned by
Francisco Salva bumped the left rear portion of the
jeepney. As a result, Sunga was injured.
ISSUE:
whether Calalas is liable on his contract of carriage.
RULING:
YES. Calalas failed to prove that he exercised
extraordinary diligence as prescribed in Art. 1733 and
1755.
Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Art. 1755. 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 due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed by articles 1733 and
1755.
In the case at bar, upon the happening of the
accident, the presumption of negligence at once
arose, and it became the duty of petitioner to prove
that he had to observe extraordinary diligence in the
care of his passengers.
Now, did the driver of jeepney carry Sunga "safely as
far as human care and foresight could provide, using
the utmost diligence of very cautious persons, with
due regard for all the circumstances" as required by
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Art. 1755? We do not think so. For the following
reasons: (1) the jeepney was not properly parked and
(2) driver took in more passengers than the allowed
seating capacity of the jeepney. Therefore, not only
was petitioner unable to overcome the presumption of
negligence imposed on him for the injury sustained by
Sunga, but also, the evidence shows he was actually
negligent in transporting passengers.
It is however immaterial that the proximate cause of
the collision between the jeepney and the truck was
the negligence of the truck driver. The doctrine of
proximate cause is applicable only in actions for quasi-
delict, not in actions involving breach of contract.
DAMAGES
As a general rule, moral damages are not recoverable
in actions for damages predicated on a breach of
contract for it is not one of the items enumerated
under Art. 2219 of the Civil Code. As an exception,
such damages are recoverable: (1) in cases in which
the mishap results in the death of a passenger, as
provided in Art. 1764, in relation to Art. 2206(3) of
the Civil Code; and (2) in the cases in which the carrier
is guilty of fraud or bad faith, as provided in Art. 2220
3 KINDS OF NEGLIGENCE
The first, quasi-delict, also known as culpa aquiliana
or culpa extra contractual, has as its source the
negligence of the tortfeasor. The second, breach of
contract or culpa contractual, is premised upon the
negligence in the performance of a contractual
obligation.
Consequently, in quasi-delict, the negligence or fault
should be clearly established because it is the basis of
the action, whereas in breach of contract, the action
can be prosecuted merely by proving the existence of
the contract and the fact that the obligor, in this case
the common carrier, failed to transport his passenger
safely to his destination.
44) Air France vs. Carrascoso (18 SCRA 155)
FACTS:
On March 28, 1958, the defendant, Air France,
through its authorized agent, Philippine Air Lines, Inc.,
issued to plaintiff a 'first class' round trip airplane
ticket from Manila to Rome. From Manila to Bangkok,
plaintiff traveled in 'first class', but at Bangkok, the
Manager of the defendant airline forced plaintiff to
vacate the 'first class' seat that he was occupying
because, in the words of the witness Ernesto G.
Cuento, there was a 'white man', who, the Manager
alleged, had a 'better right to the seat. When asked to
vacate his 'first class' seat, the plaintiff, as was to be
expected, refused, and told defendant's Manager that
his seat would be taken over his dead body; a
commotion ensued, and, according to said Ernesto G.
Cuento, many of the Filipino passengers got nervous
in the tourist class; when they found out that Mr.
Carrascoso was having a hot discussion with the white
man [manager], they came all across to Mr.
Carrascoso and pacified Mr. Carrascoso to give his
seat to the 'white man' (Transcript, p. 12, Hearing of
May 26, 1959); and plaintiff reluctantly gave his 'first
class' seat in the plane.
Defendant seems to capitalize on the argument that
the issuance of a first-class ticket was no guarantee
that the passenger to whom the same had been
issued, would be accommodated in the first-class
compartment, for as in the case of plaintiff he had yet
to make arrangements upon arrival at every station
for the necessary first class reservation. (The SC did
not believe in this argument)
22 | P a g e
ISSUE:
WON Air France is liable in breaching the contract with
Carrascoso when it failed to furnish first class
transportation at Bangkok.
RULING:
YES.
Passengers do not contract merely for transportation.
They have a right to be treated by the carrier's
employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected
against personal misconduct, injurious language,
indignities and abuses from such employees. So it is,
that any rude or discourteous conduct on the part of
employees towards a passenger gives the latter an
action for damages against the carrier.
BREACH OF CONTRACT MAY BE A TORT. — Although
the relation of passenger and carrier is contractual
both in origin and nature, nevertheless, the act that
breaks the contract may also be a tort.
Petitioner's contract with Carrascoso is one attended
with public duty. The stress of Carrascoso's action as
we have said, is placed upon his wrongful expulsion.
This is a violation of public duty by the petitioner-air
carrier — a case of quasi-delict. Damages are proper.
45) Barredo vs. Garcia (73 Phil. 607)
FACTS:
There was a collision between a taxi of the Malate
Taxicab driven by Pedro Fontanilla and a carretela
guided by Pedro Dimapilis. The carretela was
overturned, and one of its passengers, 16-year-old
boy Faustino Garcia, suffered injuries from which he
died two days later. Fausto Barredo is the sole
proprietor of the Malate Taxicab and employer of
Pedro Fontanilla.
A criminal action was filed against Fontanilla in the
Court of First Instance of Rizal, and he was convicted
and sentenced to an indeterminate sentence of one
year and one day to two years of prision correccional.
The court in the criminal case granted the petition that
the right to bring a separate civil action be reserved.
The Court of Appeals affirmed the sentence of the
lower court in the criminal case. Severino Garcia and
Timotea Almario, parents of the deceased, on March
7, 1939, brought an action in the Court of First
Instance of Manila against Fausto Barredo as the sole
proprietor of the Malate Taxicab and employer of
Pedro Fontanilla. On July 8, 1939, the Court of First
Instance of Manila awarded damages in favor of the
plaintiffs for P2,000 plus legal interest from the date
of the complaint. This decision was modified by the
Court of Appeals by reducing the damages to P1,000
with legal interest from the time the action was
instituted. It is undisputed that Fontanilla's negligence
was the cause of the mishap, as he was driving on the
wrong side of the road, and at high speed.
ISSUE: Who is liable?
RULING: It is undisputed that Fontanilla's negligence
was the cause of the mishap, as he was driving on the
wrong side of the road, and at high speed. As to
Barredo's responsibility, there is no proof that he
exercised the diligence of a good father of a family to
prevent the damage. (See p. 22, appellant's brief.) In
fact it is shown he was careless in employing
Fontanilla who had been caught several times for
violation of the Automobile Law and speeding (Exhibit
A) — violations which appeared in the records of the
Bureau of Public Works available to the public and to
himself.
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INTERPRETATION OF ART 2176 & 2180
"From this article two things are apparent: (1) That
when an injury is caused by the negligence of a
servant or employee there instantly arises a
presumption of law that there was negligence on the
part of the master or employer either in the selection
of the servant or employee, or in supervision over him
after the selection, or both; and (2) that that
presumption is juris tantum and not juris et de jure,
and consequently, may be rebutted. It follows
necessarily that if the employer shows to the
satisfaction of the court that in selection and
supervision he has exercised the care and diligence of
a good father of a family, the presumption is
overcome and he is relieved from liability.
"This theory bases the responsibility of the master
ultimately on his own negligence and not on that of
his servant."
DISTINCTION BETWEEN CIVIL LIABILITY ARISING
FROM A CRIME, WHICH IS GOVERNED BY THE PENAL
CODE, AND THE RESPONSIBILITY FOR CUASI-DELITO
OR CULPA AQUILIANA UNDER THE CIVIL CODE:
 EMPLOYERS LIA UNDER RPC: subsidiary
liability
 EMPLOYERS LIA UNDER CIVIL CODE: primary
and direct responsibility
"In view of the foregoing considerations, we are of
opinion and so hold, (1) that the exemption from civil
liability established in article 1903 of the Civil Code for
all who have acted with the diligence of a good father
of a family, is not applicable to the subsidiary civil
liability provided in article 20 of the Penal Code."
Some of the differences between crimes under the
Penal Code and the culpa aquiliana or cuasi-delito
under the Civil Code are:.
3. That crimes affect the public interest, while cuasi-
delitos are only of private concern.
4. That, consequently, the Penal Code punishes or
corrects the criminal act, while the Civil Code, by
means of indemnification, merely repairs the
damage.
5. That delicts are not as broad as quasi-delicts,
because the former are punished only if there is a
penal law clearly covering them, while the latter,
cuasi-delitos, include all acts in which "any kind of
fault or negligence intervenes." However, it
should be noted that not all violations of the penal
law produce civil responsibility, such as begging in
contravention of ordinances, violation of the game
laws, infraction of the rules of traffic when nobody
is hurt. (See Colin and Capitant, "Curso Elemental
de Derecho Civil," Vol. 3, p. 728.).
46) Manalo, et al. vs. Robles Trans. Co., Inc. L-
8171, August 16,1956)
FACTS:
On August 9, 1947, a taxicab owned and operated by
defendant appellant Robles Transportation
(Company) and driven by Edgardo Hernandez its
driver, collided with a passenger truck at Parañaque,
Rizal. In the course of and as a result of the accident,
the taxicab ran over Armando Manalo, an eleven year
old, causing him physical injuries which resulted in his
death several days later. Edgardo Hernandez was
prosecuted for homicide through reckless imprudence
and after trial was found guilty of the charge and
sentenced to one year prision correccional, to
indemnify the heirs of the deceased in the amount of
P3,000, in case of insolvency to suffer subsidiary
23 | P a g e
imprisonment, and to pay costs. Edgardo Hernandez
served out his sentence but failed to pay the
indemnity. Two writs of execution were issued against
him to satisfy the amount of the indemnity, but both
writs were returned unsatisfied by the sheriff who
certified that no property, real or personal, in
Hernandez' name could be found.
On February 17, 1953, plaintiffs Emilio Manalo and his
wife Clara Salvador, father and mother respectively of
Armando, filed the present action against the
Company to enforce its subsidiary liability, pursuant
to Articles 102 and 103 of the Revised Penal Code.
ISSUE:
WON Robles Transportation is liable to pay the
petitioner by reason of insolvency of Edgardo
Hernandez, its driver. WON Articles 102 and 103 of
the Revised Penal Code were repealed by the New
Civil Code, promulgated in 1950.
RULING:
1 Yes.
Defendant is subsidiarily liable pursuant to Articles
102 and 103 of the Revised Penal Code.
2. No.
Article 2177 of the New Civil Code expressly
recognizes civil liabilities arising from negligence
under the Penal Code, only that it provides that
plaintiff cannot recover damages twice for the same
act of omission of the defendant.
47) Virata vs. Ochoa (81 SCRA 472)
FACTS:
Arsenio Virata died as a result of having been bumped
by a passenger jeepney driven by Maximo Borilla, and
registered in the name of Victorio Ochoa; that Borilla
is the employee driver of Ochoa. A criminal action for
homicide through reckless imprudence was instituted
against Maximo Borilla. The heirs of Arsenio Virata
reserved their right to institute in separate civil action
and commenced civil case for damages based on
quasi-delict against the Maximo Borilla and Ochoa.
Private respondents, filed a motion to dismiss on the
ground that there is another action, Criminal Case No.
3162-P, pending between the same parties for the
same cause. Court of First Instance rendered in
decision in Criminal Case No. 3612-P acquitting the
accused, Maximo Borilla, on the ground that he
caused an injury by mere accident; and granted the
motion to dismiss Civil Case No. B-134 for damages.
ISSUE:
Whether or not the petitioners, can prosecute an
action for damages based on quasi-delict.
RULING:
Yes.
It is settled that in negligence cases the aggrieved
parties may choose between an action under the
Revised Penal Code or for quasi-delict under Article
2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code of the
Philippines is to recover twice for the same negligent
act.
The petitioners are not seeking to recover twice for
the same negligent act. Before Criminal Case No.
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3162-P was decided, they manifested in said criminal
case that they were filing a separate civil action for
damages. The source of the obligation sought to be
enforced in Civil Case No. B-134 is quasi-delict, not an
act or omission punishable by law. Under Article 1157
of the Civil Code of the Philippines, quasi-delict and an
act or omission punishable by law are two different
sources of obligation.
48) Philippine Rabbit Bus Lines, Inc. vs. IAC
(189 SCRA 158)
FACTS:
Catalina Pascua, Caridad Pascua, Adelaida Estomo,
Erlinda Meriales, Mercedes Lorenzo, Alejandro Morales
and Zenaida Parejas boarded the jeepney owned by
spouses Isidro Mangune and Guillerma Carreon and
driven by Tranquilino Manalo at Dau, Mabalacat,
Pampanga bound for Carmen, Rosales, Pangasinan to
spend Christmas at their respective homes.
Upon reaching barrio Sinayoan, San Manuel, Tarlac,
the right rear wheel of the jeepney was detached, so
it was running in an unbalanced position. Manalo
stepped on the brake, as a result of which, the
jeepney which was then running on the eastern lane
(its right of way) made a U-turn, invading and
eventually stopping on the western lane of the road in
such a manner that the jeepney's front faced the
south (from where it came) and its rear faced the
north (towards where it was going). The jeepney
practically occupied and blocked the greater portion of
the western lane, which is the right of way of vehicles
coming from the north, among which was Bus No. 753
of petitioner Philippine Rabbit Bus Lines, Inc. (Rabbit)
driven by Tomas delos Reyes. Almost at the time
when the jeepney made a sudden U-turn and
encroached on the western lane of the highway as
claimed by Rabbit and delos Reyes, or after stopping
for a couple of minutes as claimed by Mangune,
Carreon and Manalo, the bus bumped from behind the
right rear portion of the jeepney. As a result of the
collision, three passengers of the jeepney (Catalina
Pascua, Erlinda Meriales and Adelaida Estomo) died
while the other jeepney passengers sustained physical
injuries.
ISSUE:
who is liable for the death and physical injuries
suffered by the passengers of the jeepney. WON these
will apply:
(1) the doctrine of last clear chance,
(2) the presumption that drivers who bump the rear
of another vehicle guilty and the cause of the accident
unless contradicted by other evidence, and
RULING:
The owners of the jeepney only.
We find that the proximate cause of the accident was
the negligence of Manalo and spouses Mangune and
Carreon. They all failed to exercise the precautions
that are needed precisely pro hac vice.
In culpa contractual, the moment a passenger dies or
is injured, the carrier is presumed to have been at
fault or to have acted negligently, and this disputable
presumption may only be overcome by evidence that
he had observed extraordinary diligence as prescribed
in Articles 1733, 1755 and 1756 of the New Civil Code
2 or that the death or injury of the passenger was due
to a fortuitous event 3 (Lasam v. Smith, Jr., 45 Phil.
657).
The negligence of Manalo was proven during the trial
by the unrebutted testimonies of Caridad Pascua,
Police Investigator Tacpal, Police Corporal Cacalda,
24 | P a g e
his (Manalo's) conviction for the crime of Multiple
Homicide and Multiple Serious Injuries with Damage
to Property thru Reckless Imprudence, and the
application of the doctrine of res ipsa loquitur, supra.
The driver cannot be held jointly and severally liable
with the carrier in case of breach of the contract of
carriage. The rationale behind this is readily
discernible. Firstly, the contract of carriage is between
the carrier and the passenger, and in the event of
contractual liability, the carrier is exclusively
responsible therefore to the passenger, even if such
breach be due to the negligence of his driver (see
Viluan v. The Court of Appeals, et al., G.R. Nos. L-
21477-81, April 29, 1966, 16 SCRA 742).
In other words, the carrier can neither shift his liability
on the contract to his driver nor share it with him, for
his driver's negligence is his. Secondly, if We make
the driver jointly and severally liable with the carrier,
that would make the carrier's liability personal instead
of merely vicarious and consequently, entitled to
recover only the share which corresponds to the
driver, contradictory to the explicit provision of Article
2181 of the New Civil Code.
1.
"[t]he principle about the 'last clear chance' would call
for application in a suit between the owners and
drivers of the two colliding vehicles. It does not arise
where a passenger demands responsibility from the
carrier to enforce its contractual obligations. For it
would be inequitable to exempt the negligent driver of
the jeepney and its owners on the ground that the
other driver was likewise guilty of negligence."
2.
On the presumption that drivers who bump the rear
of another vehicle guilty and the cause of the accident,
unless contradicted by other evidence, the respondent
court said (p. 49, Rollo):
". . ., the jeepney had already executed a complete
turnabout and at the time of impact was already facing the
western side of the road. Thus the jeepney assumed a new
frontal position vis a vis, the bus, and the bus assumed a
new role of defensive driving. The spirit behind the
presumption of guilt on one who bumps the rear end of
another vehicle is for the driver following a vehicle to be at
all times prepared of a pending accident should the driver in
front suddenly come to a full stop, or change its course either
through change of mind of the front driver, mechanical
trouble, or to avoid an accident. The rear vehicle is given the
responsibility of avoiding a collision with the front vehicle for
it is the rear vehicle who has full control of the situation as it
is in a position to observe the vehicle in front of it."
The above discussion would have been correct were it
not for the undisputed fact that the U-turn made by
the jeepney was abrupt.
49) Macalinao vs. Ong (477 SCRA 740) -Santos
vs. Pizarro (465 SCRA 232)
FACTS:
Macalinao and Ong were employed as utility man and
driver, respectively, at the Genetron International
Marketing (Genetron), a single proprietorship owned
and operated by Sebastian. On 25 April 1992,
Sebastian instructed Macalinao, Ong and two truck
helpers to deliver a heavy piece of machinery — a
reactor/motor for mixing chemicals, to Sebastian's
manufacturing plant in Angat, Bulacan. While in the
process of complying with the order, the vehicle
driven by Ong, Genetron's Isuzu Elf truck hit and
bumped the front portion of a private jeepney.
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
Both vehicles incurred severe damages while the
passengers sustained physical injuries as a
consequence of the collision. Macalinao incurred the
most serious injuries among the passengers of the
truck. Macalinao's body was paralyzed and
immobilized from the neck down as a result of the
accident and per doctor's advice, his foot was
amputated. He also suffered from bed sores and
infection. His immedicable condition, coupled with the
doctor's recommendation, led his family to bring him
home where he died on 7 November 1992.
ISSUE:
Who is liable for the death of Macalinao?
RULING:
Ong and Sebastaian are jointly liable to pay actual,
moral, and exemplary damages as well as civil
indemnity for Macalinao's death.
The issue of negligence is factual and, in quasi-delicts,
crucial in the award of damages.
In this present case, direct evidence is absent and not
readily available because Macalinao could no longer
testify as to the cause of the accident since he is dead.
Petitioners, while substituting their son as plaintiff,
have no actual knowledge about the event since they
were not present at the crucial moment. The driver of
the private jeepney who could have shed light on the
circumstances is likewise dead. The only ones left with
knowledge about the cause of the mishap are the two
truck helpers who survived, both employees of
Sebastian, and Ong, who is not only Sebastian's
previous employee but his co-respondent in this case
as well. In the circumstances, evidence as to the true
cause of the accident is, for all intents and purposes,
accessible to respondents but not to petitioners. The
witnesses left are unlikely to divulge to petitioners
what they knew about the cause of the accident if the
same militates against the interest of their employer.
This justifies the invocation of the doctrine Res ipsa
loquitur.
Res ipsa loquitur recognizes that parties may establish
prima facie negligence without direct proof, thus, it
allows the principle to substitute for specific proof of
negligence. It permits the plaintiff to present along
with proof of the accident, enough of the attending
circumstances to invoke the doctrine, create an
inference or presumption of negligence and thereby
place on the defendant the burden of proving that
there was no negligence on his part. The doctrine can
be invoked only when under the circumstances, direct
evidence is absent and not readily available.
Under local jurisprudence, the following are the
REQUISITES FOR THE APPLICATION OF RES
IPSA LOQUITUR:
1) The accident is of a kind which ordinarily does
not occur in the absence of someone's
negligence;
2) It is caused by an instrumentality within the
exclusive control of the defendant or
defendants; and (3)The possibility of
contributing conduct which would make the
plaintiff responsible is eliminated.
3) (ONLY IN AMERICAN JURISPRUDENCE): that
the defendant fails to offer any explanation
tending to show that the injury was caused by
his or her want of due care.
We are convinced that all the above requisites are
present in the case at bar.
25 | P a g e
No two motor vehicles traversing opposite lanes will
collide as a matter of course unless someone is
negligent, thus, the first requisite for the application
of the doctrine is present. Ong was driving the Isuzu
truck which, from the evidence adduced, appears to
have precipitated the collision with the private
jeepney. Driving the Isuzu truck gave Ong exclusive
management and control over it, a fact which shows
that the second requisite is also present. No
contributory negligence could be attributed to
Macalinao relative to the happening of the accident
since he was merely a passenger in the Isuzu truck.
Respondents' allegation that Macalinao was guilty of
contributory negligence for failing to take the
necessary precautions to ensure his safety while
onboard the truck 43 is too specious for belief
particularly as respondents did not even present any
evidence to prove such allegation. The last requisite
is, therefore, likewise present. Under the 4th
requisite: while respondents claimed that Ong drove
cautiously and prudently during the time in question,
no evidence was proffered to substantiate the same.
In fact, Ong did not bother to testify to explain his
actuations and to show that he exercised due care
when the accident happened, so even this requisite is
fulfilled.
All the requisites for the application of the rule of res
ipsa loquitur are present, thus a reasonable
presumption or inference of Ong's negligence arises.
In consonance with the effect of the doctrine, the
burden of proving due care at the time in question
shifts to respondents. Unfortunately, Ong and
Sebastian failed to counter the presumption by
presenting convincing evidence.
SOLIDARY LIABILITY BASIS
Such liability of Ong is solidary with Sebastian
pursuant to Art. 2176 in relation to Art. 2180 of the
Civil Code which provide:
Art. 2176.Whoever by act or omission causes damage
to another, there being fault or negligence is obliged
to pay for the damage done.
Art. 2180.The obligation imposed by Art. 2176 is
demandable not only for one's own acts or omissions
but also for those of persons for whom one is
responsible.
xxx xxx xxx
Employers shall be liable for the damage caused by
their employees and household helpers acting within
the scope of their assigned tasks even though the
former are not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease
when the persons herein mentioned prove that they
observed all the diligence of a good father of a family
to prevent damage.
Ong's gross negligence in driving the Isuzu truck
precipitated the accident. This is lucidly portrayed in
the photographs on record and it justifies the award
of exemplary damages in petitioners' favor.
Delay (1169; 1165; 1170)
50) Bayala vs. Silang Traffic Co. (73 Phil. 557)
FACTS:
Petitioner (subscriber) entered into an agreement
with respondent (seller) regarding the purchase of
fifteen (15) shares of capital stock by the former from
the latter for the sum of P1,500.00. Said agreement
has with it certain terms and conditions, among which
are cases where the subscriber shall fail to pay the
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installments or to perform the conditions or if said
shares shall be attached or levied upon by creditors of
the subscriber, said shares are to be automatically
reverted to the seller and the payments already made
are to be forfeited in favor of the seller.
On or before July 31, 1937, petitioners failed to pay
the installment due that day resulting for the
automatic forfeiture of the payments they already
made. On the other hand, on August 1, 1937, the
respondent corporation issued a resolution
authorizing the refund of the installments already paid
by their subscribers. Said resolution was issued by
respondent for the purpose of terminating the pending
civil case involving the validity of the shares in
question which was subsequently dismissed. Based on
the said resolution, the petitioners instituted an action
for the recovery of the sum of money which they have
paid severally to the corporation.
The corporation set up a defense stating that said
resolution was no longer applicable to the petitioners
since their shares was already reverted in favor of the
seller due to their failure to pay on the due date long
before the resolution was issued. Moreover, another
resolution was issued by the corporation on August
22, 2937 revoking and cancelling the earlier
resolution. The trial court issued an order against the
petitioners; and on appeal, the CA affirmed the
decision of the trial court with some modifications as
to the cancellation of the petitioner’s subscription
which was reversed by said appellate court. Hence,
an appeal by both parties for certiorari.
ISSUE:
WON the failure of the purchaser to pay any
instalment would give rise to a forfeiture in favor of
the seller
RULING:
No. There was no forfeiture for the buyer was not in
delay since there was no judicial or extrajudicial
demand.
The contract did not expressly provide that the failure
of the purchaser to pay any instalment would give rise
to forfeiture and cancellation without the necessity of
any demand from the seller; and
Under article 1100 of the Civil Code (now Article 1169)
persons obliged to deliver or do something are not in
default until the moment the creditor demands of
them judicially or extrajudicially the fulfilment of their
obligation, unless:
1) the obligation or the law expressly provides that
demand shall not be necessary in order that
default may arise, or
2) by reason of the nature and circumstances of
the obligation it shall appear that the
designation of the time at which the thing was
to be delivered or the service rendered was the
principal inducement to the creation of the
obligation.
51) Aerospace Chemical Industries, Inc. vs. CA
(315 SCRA 309)
FACTS:
On June 27, 1986, petitioner Aerospace Industries,
Inc. purchased five hundred metric tons of sulfuric
acid from private respondent Philippine Phosphate
Fertilizer Corporation. Petitioner agreed to secure the
means of transport to pick-up the sulfuric acid from
private respondents' loadports in Basay, Negros
Oriental and Sangi, Cebu.
On October 3, 1986, petitioner paid the purchased
price of 500 MT of sulfuric acid. Then, it chartered M/T
26 | P a g e
Sultan Kayumanggi to carry the agreed volumes of
freight from designated loading areas. But the vessel
was able to withdraw a partial amount of sulfuric acid
from Basay and Sangi because it tilted. And later, it
sank with a total amount of 227.51 MT of sulfuric acid
on board, leaving 272.49MT of acid left.
Petitioner then ordered for the delivery of remaining
272.49 MT of sulfuric acid. Petitioner then filed a
complaint against private respondent for specific
performance and/or damages before the Regional
Trial Court of Pasig.
The private respondent filed an answer with
counterclaim and alleged that it was the petitioner
which was remiss in the performance of its obligation
in arranging the shipping requirements of its
purchases and, hence, should pay damages.
Petitioner prevailed in the trial court. However, on
appeal, the Court of Appeals reversed the decision of
the trial court and instead found petitioner guilty of
delay and therefore, liable for damages. Hence, this
petition.
ISSUE:
1. Did the respondent court err in holding that the
petitioner committed breach of contract,
considering that:
a. the petitioner allegedly paid the full value
of its purchases, yet received only a
portion of said purchases?
b. petitioner and private respondent allegedly
had also agreed for the purchase and
supply of an additional 227.519 MT of
sulfuric acid, hence prior delay, if any, had
been waived?
2. Did the respondent court err in awarding
damages to private respondent?
3. Should expenses for the storage and
preservation of the purchased fungible goods,
namely sulfuric acid, be on seller's account
pursuant to Article 1504 of the Civil Code?
RULING:
1. No, CA did not err in absolving the private
respondent from liability.
Petitioner, as the buyer, was obligated under the
contract to undertake the shipping requirements of
the cargo from the private respondent's loadports to
the petitioner's designated warehouse. It was
petitioner which chartered M/T Sultan Kayumanggi.
The vessel was petitioner's agent. When it failed to
comply with the necessary loading conditions of
sulfuric acid, it was incumbent upon petitioner to
immediately replace M/T Sultan Kayumanggi with
another sea worthy vessel. Court of Appeals did not
err in ruling that petitioner was guilty of delay and
negligence in the performance of its obligation.
Where there has been breach of contract by the buyer,
the seller has a right of action for damages. Following
this rule, a cause of action of the seller for damages
may arise where the buyer refuses to remove the
goods, such that buyer has to remove them. Article
1170 of Civil Code provides: "Those who in the
performance of their obligations are guilty of fraud,
negligence, or delay and those who in any manner
contravene the tenor thereof, are liable for damages."
2. No, respondent court did not err in
awarding damages to private respondent.
Article 1170 of Civil Code provides: "Those who in the
performance of their obligations are guilty of fraud,
negligence, or delay and those who in any manner
contravene the tenor thereof, are liable for damages."
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Delay begins from the time the obligee judicially or
extrajudicially demands from the obligor the
performance of the obligation. Art. 1169 states: "Art.
1169. 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." In order that the debtor may be in
default, it is necessary that the following requisites be
present:
(1) that the obligation be demandable and
already liquidated;
(2) that the debtor delays performance; and
(3) that the creditor requires the performance
judicially or extrajudicially.
Records reveal that a tanker ship had to pick up
sulfuric acid in Basay, then proceed to get the
remaining stocks in Sangi, Cebu. A period of three
days appears to us reasonable for a vessel to travel
between Basay and Sangi. Logically, the computation
of damages arising from the shipping delay would
then have to be from December 15, 1986, given said
reasonable period after the December 12th letter.
More important, private respondent was forced to
vacate Basay wharf only on December 15th. Its Basay
expenses incurred before December 15, 1986, were
necessary and regular business expenses for which
the petitioner should not be obliged to pay.
3. No, Article 1504 is not applicable.
The general rule that before delivery, the risk of loss
is borne by the seller who is still the owner, is not
applicable in this case because petitioner had incurred
delay in the performance of its obligation. Article 1504
of the Civil Code clearly states: "Unless otherwise
agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but
when the ownership therein is transferred to the buyer
the goods are at the buyer's risk whether actual
delivery has made or not except that: . . . (2) Where
actual delivery had been delayed through the fault of
either the buyer or seller the goods are at the risk of
the party at fault.
As pointed out earlier, petitioner is guilty of delay,
after private respondent made the necessary
extrajudicial demand by requiring petitioner to lift the
cargo at its designated loadports. When petitioner
failed to comply with its obligations under the contract
it became liable for its shortcomings. Petitioner is
indubitably liable for proven damages.
52) Binalbagan Tech, Inc. vs. CA (219 SCRA
777)
FACTS:
Luis Pontabella is the deceased owner of the lots in
this dispute. His judicial administrator, Angelina
Puentevella, sold them to Raul Javellana with the
condition that the vendee-promisee would not
transfer his rights to said lots without the express
consent of Puentevella and that in case of the
cancellation of the contract by reason of the violation
of any of the terms thereof, all payments therefor
made and all improvements introduced on the
property shall pertain to the promissor and shall be
considered as rentals for the use and occupation
thereof.
Javellana failed to pay the installments for a period of
5 years. Puentevella filed case for rescission of
contract and recovery for possession of lots plus
damages from Javellana and Southern Negros
Colleges who had actual possession of the lots. Lower
court ruled in favour of Puentevella and execution was
levied on October 27, 1965. On December 29, 1965,
the plaintiffs filed their 3rd party claim based on an
27 | P a g e
alleged Deed of Sale executed in their favor by
spouses Jose and Lolita Lopez, thus Puentevella was
constrained to assert physical possession of the
premises to counteract the fictitious and
unenforceable claim of herein plaintiffs.
On January 3, 1966, a case for injunction and
damages was filed and trial court issued an ex-parte
writ of preliminary injunction which was dissolved by
the CA pending the resolution of the civil case. Thus,
defendant Puentevella was restored to the possession
of the lots and buildings subject of this case.
On May 11, 1967, private respondents, through
Angelina P. Echaus, in her capacity as Judicial
Administrator of the intestate estate of Luis B.
Puentevella, executed a Contract to Sell and a Deed
of Sale of forty-two subdivision lots within the Phib-
Khik Subdivision of the Puentebella family, conveying
and transferring said lots to petitioner Binalbagan
Tech., Inc. (hereinafter referred to as Binalbagan). In
turn Binalbagan, through its president, petitioner
Hermilio J. Nava (hereinafter referred to as Nava),
executed an Acknowledgment of Debt with Mortgage
Agreement, mortgaging said lots in favor of the estate
of Puentebella. Upon the transfer to Binalbagan of
titles to the 42 subdivision lots, said petitioner took
possession of the lots and the building and
improvements thereon.
Binalbagan started operating a school on the property
from 1967 when the titles and possession of the lots
were transferred to it. However, plaintiffs filed a
petition for review with the Supreme Court which
issued a restraining order against the sale of the
properties claimed by the spouses-plaintiffs. When the
Supreme Court dissolved the aforesaid petition of
injunction issued by the Court of Appeals, possession
of the building and other property was taken from
petitioner Binalbagan and given to the third-party
claimants, the de la Cruz spouses. Petitioner
Binalbagan transferred its school to another location.
On Appeal, petitioner was restored to the possession
of the subdivision lots on May 31, 1982. It will be
noted that petitioner was not in possession of the lots
from 1974 to May 31, 1982. After petitioner
Binalbagan was again placed in possession of the
subdivision lots, private respondent Angelina Echaus
demanded payment from petitioner Binalbagan for the
subdivision lots, enclosing in the letter of demand a
statement of account as of September 1982 showing
a total amount due of P367,509.93, representing the
price of the land and accrued interest as of that date.
As petitioner Binalbagan failed to effect payment,
private respondent Angelina P. Echaus filed on
October 8, 1982 Civil Case No. 1354 of the Regional
Trial Court of the Sixth Judicial Region stationed in
Himamaylan, Negros Occidental against petitioners
for recovery of title and damages. An amended
complaint was filed by private respondent Angelina P.
Echaus by including her mother, brothers, and sisters
as co-plaintiffs, which was admitted by the trial court
on March 18, 1983. Hence this petition.
ISSUE:
Whether respondents can demand payment from
petitioner during 1974 to 1982, when petitioner was
dispossessed of the said lot.
RULING:
No. Petitioner was evicted from the subject
subdivision lots in 1974 by virtue of a court order and
was restored to his possession thereof only in 1982.
During 1974 to 1982, private respondent Echaus was
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
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not in a legal position to demand compliance of the
prestation of petitioner to pay the price of said
subdivision lots. In short, her right to demand
payment was suspended during that period, 1974-
1982.
A party to a contract cannot demand performance of
the other party's obligations unless he is in a position
to comply with his own obligations. Similarly, the right
to rescind a contract can be demanded only if a party
thereto is ready, willing and able to comply with his
own obligations thereunder (Art. 1191, Civil Code). In
a contract of sale, the vendor is bound to transfer the
ownership of and deliver, as well as warrant, the thing
which is the object of the sale (Art. 1495, Civil Code);
he warrants that the buyer shall, from the time
ownership is passed, have and enjoy the legal and
peaceful possession of the thing.
53) Agcaoili vs. GSIS (165 SCRA 1)
FACTS:
In this case, appellant GSIS approved an application
of the appellee Agcaoli for the purchase of a house
and lot in the GSIS Housing Project at Nangka,
Marikina, subject to the condition that the latter
should forthwith occupy the house, a condition that
Agcaoli tried to fulfill but could not because the house
was absolutely uninhabitable - ceiling, stairs, double
walling, lighting facilities, water connection,
bathroom, toilet, kitchen, drainage, were inexistent.
However, Agcaoli ask a homeless friend, a certain
Villanueva, to stay in the premises as some sort of
watchman, pending completion of the construction of
the house. Petitioner paid the 1st installment and the
other fees but refused to make further payments until
GSIS makes the house habitable. GSIS refused to do
so and opted to cancel the award and demanded that
petitioner vacate the said premised. Petitioner filed
action for specific performance with damages against
GSIS. Other awardees of the housing units in the
same subdivision also lodged a written protest against
GSIS. TC ruled in petitioner’s favour. Hence this
petition
ISSUE:
Whether or not Agcaoli is entitled for specific
performance with damages.
RULING:
Yes, Agcaoilo is entitled to such. Appeal of GSIS must
fail.
An agreement for the sale of a house and lot on
installments stipulating that the buyer must occupy
the house within a specified period under pain of
cancellation if he failed to do so, implies that the seller
has the obligation to deliver a reasonably habitable
dwelling place, one that is in a condition suitable for
its enjoyment by the buyer for the purpose
contemplated.
The seller's delivery of a mere shell of a house
consisting of four walls, openings and a roof is a
breach of said obligation which prevents him from
cancelling the sale on the ground of the purchaser's
suspension of payment of the amortizations that the
latter had undertaken to pay, it being axiomatic that
"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."
(Art. 1169, last paragraph, Civil Code)
The party to a contract who is responsible for alleged
imprecision or ambiguity in its terms will not be
permitted to make capital of such imprecision or
28 | P a g e
ambiguity; the question of interpretation arising
therefrom should be resolved against it.
Where specific performance according to the literal
terms of a contract would result in inequity by reason
of the circumstances obtaining at the time of
judgment being significantly different from those
existing at the generation of the rights litigated, the
Court may exercise its equity jurisdiction to adjust
those rights and, in determining the precise relief to
be given, "balance the equities" or the respective
interests of the parties and take account of the
relative hardship that one form of relief or another
may occasion to them.
54) Bricktown Development Corp. vs. Amor
Tierra Development Corp. (239 SCRA 126)
FACTS:
Bricktown Development Corporation, executed two
Contracts to Sell in favor of Amor Tierra Development
Corporation, covering a total of 96 residential. The
total price of P21,639,875.00 was stipulated to be
paid by private respondent in such amounts and
maturity dates, as follows: P2,200,000.00 on 31
March 1981; P3,209,968.75 on 30 June 1981;
P4,729,906.25 on 31 December 1981; and the
balance of P11,500,000.00 to be paid by means of an
assumption by private respondent of petitioner
corporation's mortgage liability to the Philippine
Savings Bank or, alternately, to be made payable in
cash.
Private respondent was only able to pay petitioner
corporation the sum of P1,334,443.21. However, the
parties continued to negotiate for a possible
modification of their agreement, but nothing
conclusive happened. And on October 12, 1981,
petitioner’s counsel sent private respondent a “Notice
of Cancellation of Contract” because of the latter’s
failure to pay the agreed amount.
Several months later, private respondent’s counsel,
demanded the refund of private respondent's various
payments to petitioner corporation, allegedly
"amounting to P2,455,497.71," with interest within
fifteen days from receipt of said letter, or, in lieu of a
cash payment, to assign to private respondent an
equivalent number of unencumbered lots at the same
price fixed in the contracts. When the demand was
not heeded, Amor Tierra filed an action with the court
a quo which rendered a decision in its favor. The
decision of the lower court was affirmed in toto by the
Court of Appeals.
Hence, this petition.
ISSUE:
1. Whether or not the contract was properly
rescinded?
2. Whether or not Bricktown properly forfeited the
payments of Amor Tierra?
RULING:
1. Yes. A 60-day grace period was provided in the
stipulation of the Contracts to Sell which makes the
rescission valid. Were it not for the grace period, there
must first exist a delay on the part of the other party
before rescission may take place.
In this case, Bricktown acted well within its right, in
accordance with the agreement. The contract between
Bricktown and Amor Tierra was validly rescinded
because of the failure of the latter to pay the agreed
amounts stipulated in the contract on the proper date
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even after the sixty-days grace period. Furthermore,
the records showed that private respondent
corporation paid less than the amount agreed upon.
The Supreme Court also added that such cancellation
must be respected. It may also be noteworthy to add
that in a contract to sell, the non-payment of the
purchase price can prevent the obligation to convey
title from acquiring any obligatory force.
Paragraph 15 of the Contracts to Sell provided thusly:
“Should the PURCHASER fail to pay when due any of
the installments mentioned in stipulation No. 1 above,
the OWNER shall grant the purchaser a sixty (60)-day
grace period within which to pay the amount/s due,
and should the PURCHASER still fail to pay the due
amount/s within the 60-day grace period, the
PURCHASER shall have the right to ex-parte cancel or
rescind this contract, provided, however, that the
actual cancellation or rescission shall take effect only
after the lapse of thirty (30) days from the date of
receipt by the PURCHASER of the notice of
cancellation of this contract or the demand for its
rescission by a notarial act, and thereafter, the
OWNER shall have the right to resell the lot/s subject
hereof to another buyer and all payments made,
together with all improvements introduced on the
aforementioned lot/s shall be forfeited in favor of the
OWNER as liquidated damages, and in this
connection, the PURCHASER obligates itself to
peacefully vacate the aforesaid lot/s without necessity
of notice or demand by the OWNER.”
A GRACE PERIOD IS A RIGHT, NOT AN OBLIGATION,
OF THE DEBTOR. WHEN UNCONDITIONALLY
CONFERRED, SUCH AS IN THIS CASE, THE GRACE
PERIOD IS EFFECTIVE WITHOUT FURTHER NEED OF
DEMAND EITHER CALLING FOR THE PAYMENT OF THE
OBLIGATION OR FOR HONORING THE RIGHT.
The grace period must not be likened to an obligation,
the non-payment of which, under Article 1169 of the
Civil Code, would generally still require judicial or
extrajudicial demand before "default" can be said to
arise. On this score, the provisions of Article 1169 of
the Civil Code would find no relevance (in grace
period) whatsoever.
2. On the second issue, the Supreme Court ruled that
since the private respondent did not actually
possessed the property under the contract, the
petitioner is then ordered to return to private
respondent the amount remitted. However, to
adjudge any interest payment by petitioners on the
amount to be thus refunded, private respondent
should not be allowed to totally free itself from its own
breach.
55) Enriquez vs. Ramos (73 SCRA 116)
FACTS:
It is alleged that on November 24, 1958 defendant
purchased from plaintiffs 20 parcels of land located in
Quezon City and covered by transfer certificates of
title for the amount of P235,056.00 of which only the
amount of P35,056.00 was paid on the date of sale,
the balance of P200,000.00 being payable within two
years from the date of sale, provided that at least
P100.000.00 should be paid during the first year,
otherwise the whole unpaid balance would become
immediately demandable; that to secure the payment
of the balance of P200,000.00 defendant executed a
mortgage in favor of plaintiff upon the 20 parcels of
land sold and on a half interest over a parcel of land
in Bulacan which was embodied in the same deed of
sale. And that as defendant broke certain stipulations,
29 | P a g e
nonpayment of the monthly due, contained in said
deed of sale with mortgage, plaintiffs instituted the
present foreclosure proceedings.
Defendant’s defense in nonpayment was the failure of
the plaintiff to construct roads in the lands which they
agreed orally. Defendant also set up as affirmative
defense that the contract mentioned in the complaint
does not express the true agreement of the parties
because a stipulation was omitted from the contract
and that was the promise assumed by plaintiffs that
they would construct roads in the lands which were to
be subdivided for sale on or before January, 1959;
that said condition was not placed in the contract
because, according to plaintiffs' counsel, it was a
superfluity, inasmuch as there is an ordinance in
Quezon City which requires the construction of roads
in a subdivision before lots therein could be sold; and
that, upon the suggestion of plaintiffs' counsel, their
promise to construct the roads was not included in the
contract because the ordinance was deemed part of
the contract. Defendant further claims that the true
purchase price of the sale was not P235,056.00 but
only P185,000.00, the difference of P50,000.00 being
the voluntary contribution of defendant to the cost of
the construction of the roads which plaintiffs assumed
to do as abovementioned.
ISSUE:
Was an oral agreement, coetaneous to the execution
of the contract of sale, entered into between the
parties to the effect that plaintiffs would undertake the
construction of the roads on the lots sold before
defendant could be required to comply with her
financial obligation?
RULING:
Yes. The Court is of the opinion that the construction
of the roads was a condition precedent to the
enforcement of the terms of the contract based on the
evidence presented by the defendant. Hence, it
appearing that plaintiffs have failed to comply with the
condition precedent relative to the construction of the
roads in the subdivision in question, it follows that
their action is premature as found by the court a quo.
The failure of defendant to pay the realty and income
taxes as agreed upon, as well as to register the
mortgage with respect to the Bulacan property, aside
from being minor matters, appear sufficiently
explained in the brief of defendant-appellee.
56) Leaño vs. CA (369 SCRA 36)
FACTS:
On November 13, 1985, Carmelita Leaño bound
herself to pay Hermogenes Fernando the sum of one
hundred seven thousand and seven hundred and fifty
pesos (P107,750.00) as the total purchase price of the
lot. The manner of paying the total purchase price was
as follows:
"The sum of TEN THOUSAND SEVEN HUNDRED SEVENTY
FIVE (P10,775.00) PESOS, shall be paid at the signing of this
contract as DOWN PAYMENT, the balance of NINETY SIX
THOUSAND NINE HUNDRED SEVENTY FIVE PESOS
(P96,975.00) shall be paid within a period of TEN (10) years
at a monthly amortization of P1,747.30 to begin from
December 7, 1985 with interest at eighteen per cent (18%)
per annum based on balances."
The contract also provided for a grace period of one
month within which to make payments, together with
the one corresponding to the month of grace. Should
the month of grace expire without the installments for
both months having been satisfied, an interest of 18%
per annum will be charged on the unpaid installments.
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FIRST SEMESTER | A.Y. 2020-2021
Should a period of ninety (90) days elapse from the
expiration of the grace period without the overdue and
unpaid installments having been paid with the
corresponding interests up to that date, respondent
Fernando, as vendor, was authorized to declare the
contract cancelled and to dispose of the parcel of land,
as if the contract had not been entered into. The
payments made, together with all the improvements
made on the premises, shall be considered as rents
paid for the use and occupation of the premises and
as liquidated damages.
After the execution of the contract, Carmelita Leaño
made several payments in lump sum. Thereafter, she
constructed a house on the lot valued at P800,000.00.
The last payment that she made was on April 1, 1989
and no payment were made thereafter.
The respondent then filed an ejectment case against
petitioner and on September 16, 1991, the trial court
rendered a decision ordering petitioner Leaño to
vacate the premises.
ISSUE:
1. Whether or not the transaction was an absolute
and not a conditional sale?
2. Whether or not there was proper cancellation of
the contract to sell?
3. Whether or not there was delay on the
petitioner’s part in the payment of the monthly
amortization?
RULING:
1. ABSOLUTE SALE because the intention of the
parties was to reserve the ownership of the land in the
seller until the buyer has paid the total purchase price.
2. NO. Article 1592 of the Civil Code is inapplicable to
the case at bar. However, any attempt to cancel the
contract to sell would have to comply with the
provisions of Republic Act No. 6552, the "Realty
Installment Buyer Protection Act."
R.A. No. 6552
"If the contract is cancelled, the seller shall refund to the
buyer the CASH SURRENDER VALUE OF THE PAYMENTS ON
THE PROPERTY equivalent to fifty percent of the total
payments made and, after five years of installments, an
additional five percent every year but not to exceed ninety
percent of the total payments made: Provided, That the
actual cancellation of the contract shall take place after thirty
days from receipt by the buyer of the notice of cancellation
or the demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to the
buyer." [Emphasis supplied]
The decision in the ejectment case operated as the
notice of cancellation required by Sec. 3(b). As
petitioner Leaño was not given the cash surrender
value of the payments that she made, there was still
no actual cancellation of the contract. Consequently,
petitioner Leaño may still reinstate the contract by
updating the account during the grace period and
before actual cancellation.
Article 1169 of the Civil Code provides that 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.
From the moment one of the parties fulfills his
obligation, delay by the other begins.
In the case at bar, respondent Fernando performed
his part of the obligation by allowing petitioner Leaño
to continue in possession and use of the property.
Clearly, when petitioner Leaño did not pay the
monthly amortizations in accordance with the terms
30 | P a g e
of the contract, she was in delay and liable for
damages. However, we agree with the trial court that
the default committed by petitioner Leaño in respect
of the obligation could be compensated by the interest
and surcharges imposed upon her under the contract
in question.
3. YES. On the issue of whether petitioner Leaño was
in delay in paying the amortizations, we rule that while
the contract provided that the total purchase price
was payable within a ten-year period, the same
contract specified that the purchase price shall be paid
in monthly installments for which the corresponding
penalty shall be imposed in case of default. Petitioner
Leaño cannot ignore the provision on the payment of
monthly installments by claiming that the tenyear
period within which to pay has not elapsed.
57) Lee vs. De Guzman, Jr. (187 SCRA 276)
FACTS:
On November 8, 1983, a free-lance salesman of
respondent Motorcars, Inc., (then Delta Motors
Corporation) named Arsenio Tumibay signed in behalf
of Domingo Tupaz its Branch Manager in Makati, a
price quotation (Exhibit "A") and delivered the said
quotation to petitioner Alex B. Lee for the sale of one
(1) unit Toyota Corolla Liftback, 1983 model, with the
quoted price of P149,700.00 plus miscellaneous
expenses of P10,033.00. On the same date, petitioner
Lee as customer, signed the vehicle sales order
(Exhibit "C") The delivery of the subject vehicle was
within the month of November, 1983. However,
indicated in the sales order is the provision: "This
order is not valid unless signed and accepted by the
dealer principal, President, Executive Vice President or
General Sales Manager of the dealership . . ." (supra).
In view of such order, petitioner Lee deposited the
amount of P1,000.00 on November 10, 1983 as
required in the aforesaid price quotation. Thereupon,
on December 15, 1983, petitioner's counsel, Atty.
Doroteo A. Dadal, wrote Mr. Nicolas O. Carranceja, Jr.,
Executive Vice-President of Motorcars, demanding for
delivery of the said Toyota car. The respondent car
company replied on December 19, 1983, through its
counsel Atty. Benjamin S. Benito, that due to the
sudden change of prices by the car manufacturer,
they had decided to exercise the option contained in
the vehicle sales order, (Exhibits "C") which states:
"Whenever deposits are made by customers for
vehicles, parts and services ordered, the sales for
such vehicles, parts or services shall be at the option
of Motorcars, Inc., and refund of the deposits shall be
made upon request and without undue delay should
such option be exercised." (p. 21, Rollo)
However, the obligation of the defendant has become
impossible to comply on the ground that the Delta
Motors Corporation has closed shop and no longer
manufacturing 1983 models of Toyota.
ISSUES:
1. WON there was a perfected contract considering
the provision stated in the sales order.
2. WON there is delay and should respondent
Motorcars be made liable to fulfill a seemingly
impossible obligation.
RULING:
1. Yes, there is a perfected contract.
Unfortunately, it is not possible for Motorcars to
comply with the writ of execution since admittedly,
the then Delta Motors who manufactured 1983 models
of Toyota Liftback had already closed shop, but be this
as it may, there is no question that indeed there was
a perfected contract of sale between petitioner Lee
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and private respondent Motorcars pursuant to this
Court's (through the Third Division) resolution dated
August 31, 1987.
2. The relief left for petitioner Lee is that found
under Article 1170 of the Civil Code which provides:
"(T)hose 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."
The reply letter of private respondent company dated
December 19, 1983 which said that "due to the
sudden change of prices by the car manufacturer,
they have decided to exercise the option . . ." did not
relieve Motorcars from the contract it had entered into
with petitioner Lee. There was therefore delay in the
delivery of the subject vehicle which entitles petitioner
to be awarded damages. The records show that the
subject vehicle should have been delivered within the
month of November, 1983. (Annex C, Records).
Considering the circumstances attendant to this case,
a total amount of damages worth Fifty Thousand
Pesos (P50,000.00) would be reasonable, twenty
thousand pesos (P20,000.00) of which as temperate
damages inclusive of attorney's fees and the
remaining thirty thousand pesos (P30,000.00) as
exemplary damages.
58) Tanguilig vs. CA (G.R. No. 117190, January
2, 1997)
FACTS:
Jacinto Tanguilig [owner of JMT Engineering and
General merchandise] was contracted by Vicente
Herce to construct a “windmill” for P 60,000 with a
one-year guaranty from the date of completion. Herce
paid P30,000 down-payment, an installment of
P15,000, and left a balance of P15,000. Petitioner
[Tanguilig] filed a complaint for non-payment of the
remaining balance. Respondent answered saying that
the remaining balance is complied with since the
payment was tendered to San Pedro General
Merchandising Inc., who constructed the deep well to
which the windmill system was to be connected. (SC
Ruled the deep well is not part in the contract, refer
in case digest no. 24 for the discussion) Moreover, the
windmill system was collapse after a strong wind hit
their place within the warranty period.
Hence, the petitioner argued that private respondent
was already in default in the payment of his
outstanding balance of P15,000.00 and hence should
bear his own loss.
ISSUE:
WON respondent incurs delay in nonpayment and
should shoulder her own loss.
RULING:
No. 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, respondent
cannot be said to have incurred in delay in paying the
remaining balance; instead, it is petitioner 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.
59) Vermen Realty vs. CA (224 SCRA 549)
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FACTS:
Petitioner and Respondent entered into a so-called
“Offsetting Agreement”, Under the agreement, private
respondent, Seneca Hardware, shall deliver to
petitioner, Vermen Realty, construction materials
worth P552,000.00 under the conditions set forth in
the Offsetting Agreement. Petitioner's obligation
under the agreement is three-fold: he shall pay
private respondent P276,000.00 in cash; he shall
deliver possession of units 601 and 602, Phase I,
Vermen Pines Condominiums (with total value of
P276,000.00) to private respondent; upon completion
of Vermen Pines Condominiums Phase II, private
respondent shall be given option to transfer to similar
units therein.
In 1983, the loan application for the construction of
the Vermen Pines Condominium Phase II was denied.
Consequently, construction of the condominium
project stopped and has not been resumed since then.
On June 21, 1985, private respondent filed a
complaint with the Regional Trial Court of Quezon City
(Branch 92) for rescission of the Offsetting Agreement
with damages. In said complaint, private respondent
alleged that petitioner Vermen Realty Corporation had
stopped issuing purchase orders of construction
materials after April, 1982, without valid reason, thus
resulting in the stoppage of deliveries of construction
materials on its (Seneca Hardware) part, in violation
of the Offsetting Agreement.
ISSUE:
1. WON the Offsetting Agreement arise a
reciprocal obligation.
2. WON respondent can rescind the contract in
accordance with Art. 1191 of the Civil Code.
RULING:
1. There is no controversy that the provisions of
the Offsetting Agreement are reciprocal in nature.
Reciprocal obligations are those created or established
at the same time, out of the same cause, and which
results in a mutual relationship of creditor and debtor
between parties. In reciprocal obligations, the
performance of one is conditioned on the
simultaneous fulfillment of the other obligation (Abaya
vs. Standard Vacuum Oil Co., 101 Phil. 1262 [1957]).
2. YES.
Article 1191 of the Civil Code provides the remedy of
rescission in (more appropriately, the term is
"resolution") in case of reciprocal obligations, where
one of the obligors fails to comply with what is
incumbent upon him.
The general rule is that rescission of a contract will not
be permitted for a slight or causal breach, but only for
such substantial and fundamental breach as would
defeat the very object of the parties in executing the
agreement. The question of whether a breach of
contract is substantial depends upon the attendant
circumstances (Universal Food Corp. vs. Court of
Appeals, 33 SCRA 1, [1970]).
Petitioner would never be able to fulfill its obligation
in allowing private respondent to exercise the option
to transfer from Phase I to Phase II, as the
construction of Phase II has ceased and the subject
condominium units will never be available.
The impossibility of fulfillment of the obligation on the
part of petitioner necessitates resolution of the
contract for indeed, the non-fulfillment of the
obligation aforementioned constitutes substantial
breach of the Offsetting Agreement. The possibility of
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
exercising the option of whether or not to transfer to
condominium units in Phase II was one of the factors
which were considered by private respondent when it
entered into the agreement. Since the construction of
the Vermen Pines Condominium Phase II has stopped,
petitioner would be in no position to perform its
obligation to give private respondent the option to
transfer to Phase II. It would be the height of injustice
to make private respondent wait for something that
may never come.
60) Hrs. of Luis Bacus vs. CA (371 SCRA 295)
FACTS:
On June 1, 1984, Luis Bacus leased to private
respondent Faustino Duray a parcel of agricultural
land in Bulacao, Talisay, Cebu. The lease was for six
years, ending May 31, 1990. The contract contained
an option to buy clause. Under said option, the lessee
had the exclusive and irrevocable right to buy 2,000
square meters of the property within five years from
a year after the effectivity of the contract, at P200 per
square meter.
Close to the expiration of the contract, Luis Bacus died
on October 10, 1989. Thereafter, on March 15, 1990,
the Duray spouses informed Roque Bacus, one of the
heirs of Luis Bacus, that they were willing and ready
to purchase the property under the option to buy
clause. They requested Roque Bacus to prepare the
necessary documents, such as a Special Power of
Attorney authorizing him to enter into a contract of
sale, on behalf of his sisters who were then abroad.
However, Roque Bacus refused to do so.
Subsequently, on April 5, 1990, Duray filed a
complaint for specific performance against the heirs of
Luis Bacus with the Lupon Tagapamayapa of Barangay
Bulacao, asking that he be allowed to purchase the lot
specifically referred to in the lease contract with
option to buy. At the hearing, Duray presented a
certification from the manager of Standard Chartered
Bank, Cebu City, addressed to Luis Bacus, stating that
at the request of Mr. Lawrence Glauber, a bank client,
arrangements were being made to allow Faustino
Duray to borrow funds of approximately P700,000 to
enable him to meet his obligations under the contract
with Luis Bacus.
Petitioners contend that private respondents failed to
comply with their obligation because there was
neither actual delivery to them nor consignation in
court or with the Municipal, City or Provincial
Treasurer of the purchase price before the contract
expired. Thus, is considered in delay.
ISSUE:
WON private respondents incur in delay when they did
not deliver the purchase price or consign it in court on
or before the expiration of the contract.
RULING:
No.
Obligations under an option to buy are reciprocal
obligations. The performance of one obligation is
conditioned on the simultaneous fulfillment of the
other obligation. In other words, in an option to buy,
the payment of the purchase price by the creditor is
contingent upon the execution and delivery of a deed
of sale by the debtor. In this case, when private
respondents opted to buy the property, their
obligation was to advise petitioners of their decision
and their readiness to pay the price. They were not
yet obliged to make actual payment. Only upon
petitioners' actual execution and delivery of the deed
32 | P a g e
of sale were they required to pay. As earlier stated,
the latter was contingent upon the former. In Nietes
vs. Court of Appeals, 46 SCRA 654 (1972), we held
that notice of the creditor's decision to exercise his
option to buy need not be coupled with actual
payment of the price, so long as this is delivered to
the owner of the property upon performance of his
part of the agreement. Consequently, since the
obligation was not yet due, consignation in court of
the purchase price was not yet required.
Consignation is the act of depositing the thing due
with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment
and it generally requires a prior tender of payment. In
instances, where no debt is due and owing,
consignation is not proper. Therefore, petitioners'
contention that private respondents failed to comply
with their obligation under the option to buy because
they failed to actually deliver the purchase price or
consign it in court before the contract expired and
before they execute a deed, has no leg to stand on.
Corollary, private respondents did not incur in delay
when they did not yet deliver payment nor make a
consignation before the expiration of the contract. 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.
Only from the moment one of the parties fulfills his
obligation, does delay by the other begin.
In this case, private respondents, as early as March
15, 1990, communicated to petitioners their intention
to buy the property and they were at that time
undertaking to meet their obligation before the
expiration of the contract on May 31, 1990. However,
petitioners refused to execute the deed of sale and it
was their demand to private respondents to first
deliver the money before they would execute the
same which prompted private respondents to institute
a case for specific performance in the Lupong
Tagapamayapa and then in the RTC. On October 30,
1990, after the case had been submitted for decision
but before the trial court rendered its decision, private
respondents issued a cashier's check in petitioners'
favor purportedly to bolster their claim that they were
ready to pay the purchase price. The trial court
considered this in private respondents' favor and we
believe that it rightly did so, because at the time the
check was issued, petitioners had not yet executed a
deed of sale nor expressed readiness to do so.
Accordingly, as there was no compliance yet with what
was incumbent upon petitioners under the option to
buy, private respondents had not incurred in delay
when the cashier's check was issued even after the
contract expired.
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
BSP Monetary Board Circular No. 799,
Series of 2013
61) Nacar vs. Gallery Frames, GR 189871,
August 13, 2013
FACTS:
Dario Nacar filed a labor case against Gallery Frames
and its owner Felipe Bordey, Jr. Nacar alleged that he
was dismissed without cause by Gallery Frames on
January 24, 1997. On October 15, 1998, the Labor
Arbiter (LA) found Gallery Frames guilty of illegal
dismissal hence the Arbiter awarded Nacar
P158,919.92 in damages consisting of backwages and
separation pay.
Gallery Frames appealed all the way to the Supreme
Court (SC). The Supreme Court affirmed the decision
of the Labor Arbiter and the decision became final on
May 27, 2002. After the finality of the SC decision,
Nacar filed a motion before the LA for recomputation
as he alleged that his backwages should be computed
from the time of his illegal dismissal (January 24,
1997) until the finality of the SC decision (May 27,
2002) with interest. The LA denied the motion as he
ruled that the reckoning point of the computation
should only be from the time Nacar was illegally
dismissed (January 24, 1997) until the decision of the
LA (October 15, 1998). The LA reasoned that the said
date should be the reckoning point because Nacar did
not appeal hence as to him, that decision became final
and executory.
ISSUE: whether or not a re-computation in the course
of execution of the labor arbiter's original computation
of the awards made is legally proper.
RULING: Yes.
For backwages, it will be computed from the date of
illegal dismissal until the date of the decision of the
Labor Arbiter. But if the employer appeals, then the
end date shall be extended until the day when the
appellate court’s decision shall become final. Hence,
as a consequence, the liability of the employer, if he
loses on appeal, will increase – this is just but a risk
that the employer cannot avoid when it continued to
seek recourses against the Labor Arbiter’s decision.
This is also in accordance with Article 279 of the Labor
Code.
Anent the issue of award of interest in the form of
actual or compensatory damages, the Supreme Court
33 | P a g e
ruled that the old case of Eastern Shipping Lines vs
CA is already modified by the promulgation of the
Bangko Sentral ng Pilipinas Monetary Board
Resolution No. 796 which lowered the legal rate of
interest from 12% to 6%. Specifically, the rules on
interest are now as follows:
1. Monetary Obligations ex. Loans:
a. If stipulated in writing:
a.1. shall run from date of judicial demand (filing of
the case)
a.2. rate of interest shall be that amount stipulated
b. If not stipulated in writing
b.1. shall run from date of default (either failure to
pay upon extra-judicial demand or upon judicial
demand whichever is appropriate and subject to the
provisions of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum
2. Non-Monetary Obligations (such as the case at bar)
a. If already liquidated, rate of interest shall be 6%
per annum, demandable from date of judicial or extra-
judicial demand (Art. 1169, Civil Code)
b. If unliquidated, no interest
Except: When later on established with certainty.
Interest shall still be 6% per annum demandable from
the date of judgment because such on such date, it is
already deemed that the amount of damages is
already ascertained.
3. Compounded Interest– This is applicable to both
monetary and non-monetary obligations– 6% per
annum computed against award of damages (interest)
granted by the court. To be computed from the date
when the court’s decision becomes final and executory
until the award is fully satisfied by the losing party.
4. The 6% per annum rate of legal interest shall be
applied prospectively:– Final and executory
judgments awarding damages prior to July 1, 2013
shall apply the 12% rate;– Final and executory
judgments awarding damages on or after July 1, 2013
shall apply the 12% rate for unpaid obligations until
June 30, 2013; unpaid obligations with respect to said
judgments on or after July 1, 2013 shall still incur the
6% rate.
62) University of Pangasinan, Inc. vs.
Fernandez, GR 211228, November 12,
2014
FACTS:
IN A complaint for illegal dismissal filed by
respondents Florentino Fernandez and Nilda
Fernandez against petitioners University of
Pangasinan, Inc. (UPI), Cesar Duque, Juan Llamas
Amor and Dominador Reyes, Labor Arbiter (LA)
Rolando D. Gambito ruled that respondents were
illegally dismissed as college instructors. The
petitioners were ordered to pay respondents’
backwages, allowances, and other benefits computed
from the date of their dismissal on May 9, 2000 up to
Nov. 6, 2000, date of promulgation of decision.
Instead of reinstatement, the petitioners were
ordered to pay separation pay equivalent to one
month salary for every year of service.
The National Labor Relations Commission (NLRC) first
affirmed the LA’s decision in a resolution dated June
29, 2001. Upon motion for reconsideration filed by the
petitioners, the NLRC in a resolution dated Feb. 21,
2002, set aside its previous resolution and reversed
the LA’s decision. Respondents filed a petition for
certiorari with the Court of Appeals (CA) which
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
reversed and set aside the NLRC resolution dated Feb.
21, 2002 and reinstated the LA’s decision.
UPI appealed the CA’s decision to the Supreme Court
but was denied in a resolution dated Feb. 21, 2005 on
the ground that UPI failed to properly verify its
petition. A motion for reconsideration was likewise
denied with finality in a resolution dated June 6, 2005.
An entry of judgment was issued declaring its
resolution dated Feb. 21, 2005 final and executory as
of July 11, 2005. Subsequently, the respondents
moved for a recomputation of their award to include
their backwages and other benefits from the date of
the decision of LA Gambito up to the finality of the
decision on July 11, 2005. Is there merit to
respondents’ motion? Verification in the position
paper and the manifestation/compliance filed by
respondent Romy Bastol before the labor arbiter was
signed only by his counsel.
ISSUE:
Petitioner Oriental Ship Management Co., Inc. argued
that the lack of proper verification has rendered the
pleadings without legal effect as unsigned pleadings.
Was there merit to the argument?
RULING: Yes.
In Session Delights aptly quoted by the CA and
reiterated in several cases including Nacar and
Gonzales v. Solid Cement Corp., G.R. No. 198423,
Oct. 23, 2012, 684 SCRA 344, the Court was emphatic
that:
No essential change is made by a re-computation as
this step is a necessary consequence that flows from
the nature of the illegality of dismissal declared in that
decision. A re-computation (or an original
computation, if no previous computation has been
made) is a part of the law—specifically, Article 279 of
the Labor Code and the established jurisprudence on
this provision—that is read into the decision. By the
nature of an illegal dismissal case, the reliefs continue
to add on until full satisfaction, as expressed under
Article 279 of the Labor Code. The re-computation of
the consequences of illegal dismissal upon execution
of the decision does not constitute an alteration or
amendment of the final decision being implemented.
The illegal dismissal ruling stands; only the
computation of monetary consequences of this
dismissal is affected and this is not a violation of the
principle of immutability of final judgments.
xxxx
That the amount the petitioner shall now pay has
greatly increased is a consequence that it cannot
avoid as it is the risk that it ran when it continued to
seek recourses against the labor arbiter’s decision.
Article 279 provides for the consequences of illegal
dismissal in no uncertain terms, qualified only by
jurisprudence in its interpretation of when separation
pay in lieu of reinstatement is allowed. When that
happens, the finality of the illegal dismissal decision
becomes the reckoning point instead of the
reinstatement that the law decrees. In allowing
separation pay, the final decision effectively declares
that the employment relationship ended so that
separation pay and backwages are to be computed up
to that point.
xxxx
Prescinding from the above, the Court finds no
reversible error committed by the CA when it affirmed
LA Flores’ Order dated August 22, 2006, which
allowed the updating beyond November 6, 2000 of the
34 | P a g e
computation of backwages and separation pay
awarded to the respondents. The CA correctly ruled
that the backwages should be computed from May 9,
2000, the date of illegal dismissal, up to July 11, 2005,
the date of the Entry of Judgment, while separation
pay should be reckoned from the respective first days
of employment of Florentino and Nilda up to July 11,
2005 as well.
63) Republic vs. Hon. Mupas, GR 181892,
September 8, 2015
FACTS: (4 consolidated cases; very long case )
On October 5, 1994, Asia’s Emerging Dragon Corp.
(AEDC) submitted an unsolicited proposal to the
Government for the construction and development of
the Ninoy Aquino International Airport Passenger
Terminal III (NAIA-IPT III) under a build-operate-
and-transfer (BOT) arrangement. The DOTC and the
MIAA invited the public to submit competitive and
comparative proposals to AEDC’s unsolicited proposal.
Both AEDC and Paircargo Consortium offered to build
the NAIA-IPT III for at least $350 million at no cost to
the Government and to pay the Government: 5%
share in gross revenues for the first five years of
operation, 7.5% share in gross revenues for the next
ten years of operation, and 10% share in gross
revenues for the last ten years of operation.
However, Paircargo Consortium offered to pay the
Government a total of P17.75 billion as guaranteed
payment for 27 years while AEDC offered to pay the
Government a total of P135 million for the same
period. After the AEDC’s failure to match the
competitive bid, the DOTC awarded, the project to the
Paircargo Consortium (that later organized itself as
PIATCO).
On July 12, 1997, the Government executed a
Concession Agreement with PIATCO. On March 31,
2000, PIATCO engaged the services of Takenaka, a
local branch of a foreign corporation duly organized
under the laws of Japan and doing business in the
Philippines, for the construction of the NAIA-IPT III.
On the same date, PIATCO, likewise contracted the
services of Asahikosan, a foreign corporation duly
organized under the laws of Japan, for the design,
manufacture, purchase, test and delivery of the Plant
in the NAIA-IPT III. On November 29, 2002, President
Gloria Macapagal Arroyo declared in her speech that
the Government would not honor the PIATCO
contracts. On the same day, Takenaka and
Asahikosan notified PIATCO that they were
suspending the construction of the NAIA-IPT III for
PIATCO’s failure to provide adequate security.
On May 5, 200, in the Agan v. PIATCO Case, the Court
nullified the PIATCO contracts after finding that
Paircargo Consortium (that later incorporated into
PIATCO) was not a duly pre-qualified bidder for failure
to meet the minimum equity requirements for the
NAIA-IPT III project, as required under the BOT Law
and the Bid Documents. On December 21, 2004 (The
Expropriation Case, Civil Case No. 04-0876), the
Government filed a complaint for expropriation of the
NAIA-IPT III and informed the RTC that it had
deposited with the Land Bank the amount of
P3,002,125,000.00, representing the NAIA-IPT III’s
assessed value. On the same day, the RTC issued a
writ of possession in favor of the Government.
On January 7, 2005, the RTC appointed three
Commissioners to determine just compensation
without consulting the Government and PIATCO. Due
to these successive adverse rulings, the Government
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
sought to inhibit Judge Henrick F. Gingoyon, the RTC’s
presiding judge, from hearing the case. (The judge
was ambushed and killed on December 31, 2005.) On
December 14, 2005, Asahikosan filed a motion for
leave to intervene and Takenaka manifested its
voluntary appearance before the RTC. Pending the
RTC’s resolution of Takenaka and Asahikosan’s
motions for leave to intervene in the expropriation
case, the Government went directly to the Court
seeking Judge Gingoyon’s inhibition from the case;
the nullification of the order of release of the sum of
$62.3 million (P3,002,125,000.00) to PIATCO; and
the nullification as well of the appointment of the
commissioners.
On May 5, 2006, the RTC ordered the engagement of
the services of an internationally accepted
independent appraiser who shall conduct the
valuation of the NAIA-IPT III. Thereafter, the
Government and PIATCO submitted their list of
nominees for the appointment of an independent
appraiser. On May 3, 2007, the RTC appointed DG
Jones and Partners as independent appraiser.
The Government directly challenged the order in a
petition for certiorari with prayer for the issuance of a
temporary restraining order and/or a writ of
preliminary injunction , which, the Court thereafter
issued. Subsequently, the parties and the BOC
conducted a preliminary conference on April 22, 2010,
to adopt an alternative course of action to avoid
further delay in the determination of just
compensation. On August 5, 2010, the RTC ordered
the parties to submit their appraisal reports of NAIA-
IPT III with supporting documents and affidavits. The
Government appraised the NAIA-IPT III at
$149,448,037.00 while PIATCO concluded that its
replacement cost was $905,867,549.47. On the other
hand,Takenaka and Asahikosan claimed that the
NAIA-IPT III’s construction cost amounted to
$360,969,790.82.
RTC: The RTC adopted the Government’s computed
just compensation of $149,448,037.00. The RTC
rejected PIATCO, Takenaka, Asahikosan, and the
BOC’s computation for lack of factual and legal basis.
CA: the CA modified the RTC rulings and arrived at its
own formula of the NAIA-IPT III’s cost.
ISSUE:
1. Whether or not the CA erred in computing just
compensation in the expropriation of the NAIA-IPT
III.
2. Is the Republic legally obliged to pay interest?
HELD:
1.
Eminent domain is a fundamental state power that is
inseparable from sovereignty. It is an inherent power
and is not conferred by the Constitution. The 1987
Constitution embodies two constitutional safeguards
against the arbitrary exercise of eminent domain:
first, private property shall not be taken for public use
without just compensation; and second, no person
shall be deprived of life, liberty, or property without
due process of law.
Just compensation is defined as “the full and fair
equivalent of the property taken from its owner by the
expropriator. To achieve this monetary equivalent, we
use the standard value of “fair market value” of the
property at the time of the filing of the complaint for
expropriation or at the time of the taking of property,
whichever is earlier.
35 | P a g e
In cases where the fair market value of the property
is difficult to ascertain, the court may use other just
and equitable market methods of valuation in order to
estimate the fair market value of a property.
In the case at bar, this Court exercises its judicial
function to fix just compensation in eminent domain
cases on the basis of the law, the rules, and the
evidence — including the appraisal reports and the
embedded formula on how the parties arrived at the
amounts of just compensation — presented by the
parties before the trial court and the entire record of
the consolidated cases.
2.
The arguments of the Republic and PIATCO on
the imposition of interest:
Before we separately address the Republic and
PIATCO's arguments, we first expound on the reason
for the imposition of interest in case of delay in the
payment of just compensation. While we have
exhaustively discussed in our Decision the legal and
jurisprudential bases for the imposition of interest we
find it helpful to review the basic facts of the case and
highlight key legal concepts that can illuminate our
ruling.
We stress that the Republic chose to expropriate the
NAIA-IPT III, and was fully cognizant of the legal and
practical effects of filing an expropriation complaint.
After choosing this legal remedy, the Republic cannot
now disclaim knowledge or feign ignorance of the
implications of this choice in an attempt to evade
paying interest.
The Republic owes PIATCO a specific sum of
money.
We remind the Republic that PIATCO, through its
subcontractors, built the NAIA-IPT III.
The Republic later took over the NAIA-IPT III in the
exercise of its power of eminent domain. By so doing,
the Republic became legally obliged to pay PIATCO the
value of the property taken. This obligation arises
from the constitutional mandate that private property
shall not be taken for public use without just
compensation.
Subsequently, the Court determined the monetary
value of the NAIA-IPT III, which sum the Republic now
owes PIATCO as payment for the NAIA-IPT III. In
short, it is currently indebted to PIATCO for the
monetary value of the NAIA-IPT III less the proffered
value.
The Republic has not yet fully paid its debt.
The Republic took over the NAIA-IPT III on September
11, 2006 upon payment of the proffered value. The
Republic's possession of the NAIA-IPT III had twin
effects: (1) PIATCO was effectively deprived of the
possession of the property; and (2) PIATCO's right to
the payment of the just compensation accrued as a
matter of right.
Applying Section 10 of Rule 67, we held in our
Decision that the condemnor incurs delay if it does not
pay the property owner the full amount of just
compensation on the date of taking.[120] This rule
requires the Republic to perform two essential acts in
order not to incur delay: (1) pay the full amount of
just compensation and (2) pay the full amount of just
compensation on time, i.e., on the date of taking.
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
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Upon its failure to pay, the Republic has been in
continuing delay, which delay carries legal
consequences.
As a consequence of the Republic's continuing
delay in paying the full amount of just
compensation, it is legally obliged to pay
interest.
64) Odiamar vs. Valencia, GR 213582,
September 12, 2018
FACTS:
Respondent filed a complaint for sum of money and
damages against petitioner, alleging that the latter
owed her P2,100,000.00.
Petitioner sought the dismissal of the complaint on the
ground that it was her deceased parents who owed
respondent money.
Respondent countered that petitioner personally
borrowed almost half of the P2, 100,000.00 from her,
as evidenced by the check which she issued after
agreeing to settle the same in installments. While
respondent conceded that petitioner made several
installment payments from December 29, 2000 until
May 31, 2003, she pointed out that the latter failed to
make any succeeding payments. Moreover,
respondent denied participating in the proceedings for
the settlement of the estates of petitioner's parents.
the RTC ruled in favor of respondent and ordered
petitioner to pay: (a) ₱1,710,049.00 which represents
the unpaid portion of the ₱2,100,000.00 debt; (b)
twelve percent (12%) interest computed from the
time judicial demand was made on August 20, 2003
until fully paid.
ISSUE: Is the award of interest proper?
RULING: No. respondent herself admitted that there
was no written agreement that interest would be due
on the sum loaned, only that there was an implicit
understanding that the same would be subject to
interest. Respondent also testified on cross
examination that the ₱2,100,000.00 corresponds only
to the principal and does not include interest
It is fundamental that for monetary interest to be due,
there must be an express written agreement therefor.
Article 1956 of the Civil Code provides that "[n]o
interest shall be due unless it has been expressly
stipulated in writing." In this relation, case law states
that the lack of a written stipulation to pay interest on
the loaned amount bars a creditor from charging
monetary interest and the collection of interest
without any stipulation therefor in writing is prohibited
by law.
65) Hrs. of Roger Jarque vs. Marcial Jarque,
Lelia Jarque-Lagsit, And Teresita Jarque-
Bailon, GR 196733, November 21, 2018
FACTS:
The subject lot was declared under the name of
Laureano Jarque, who was married to Servanda.
Petitioners claim that Roger inherited the subject lot
from their grandfather Laureano upon his death in
1946. Roger mortgaged the lot twice, and on the
second one, Lupo, his brother, was the one who
redeemed the property. Roger tried to redeem the
property back from Lupo and his family thrice but
failed to do so as the family needs it as their source of
income. Roger acceded to their requests.
36 | P a g e
When Roger’s sons would finally take the property
back for good, they were surprised to find out that
respondents were already claiming ownership over
the subject property.
Respondents’ claim on the other hand, that their
grandmother mortgaged the lot. When the period to
repurchase the same was about to expire, she
requested her granddaughter to redeem the property.
Thereafter, she took possession of the lot and then,
transferred all her rights over the property to Lelia.
ISSUE:
Who has the better right over the subject property.
HELD:
The Heirs of Roger Jarque have the better right.
MCTC Decision that was upheld by the SC:
The MCTC rendered a Decision in favor of petitioners.
It: (1) declared petitioners as the rightful owners and
possessors of the property; and (2) directed
respondents to vacate the property and surrender
ownership and possession to petitioners. The MCTC
concluded that redemption is not a mode of
acquisition of property and found no other instrument
which shows that Lot No. 2560 was conveyed to
Dominga. It further ruled that respondents'
possession cannot ripen into ownership because it was
not adverse, but was only by petitioners' mere
tolerance. The MCTC also ruled that Dominga and
respondents are possessors in bad faith. Lastly, it
ruled that prescription does not lie against petitioners
because the deed of ratification is void.
Relevant Part:
From the foregoing, we reinstate the MCTC Decision.
We, nevertheless, modify the interest rates in
accordance with our ruling in Nacar v. Gallery
Frames.70 Since the obligation of P950.00 is a
forbearance of money, the amount of P950.00 shall
earn interest from the time of demand in the
counterclaim. The awards of moral and exemplary
damages and attorney's fees shall earn interest at the
rate of 6% per annum from the time they became
determinable, i.e., date of the MCTC Decision, until
finality of this judgment. The total amount shall
thereafter earn interest at the rate of 6% per annum
from such finality of judgment until its satisfaction.71
WHEREFORE, the petition is GRANTED. The MCTC
Decision dated March 7, 2007 is REINSTATED subject
to the following MODIFICATIONS: (1) The amount of
P950.00 representing the payment made by Dominga
Jarque shall earn interest at the rate of 12% per
annum from the date of judicial demand on August
26, 200572 until June 30, 2013, and interest at the
rate of 6% per annum, computed from July 1, 2013
up to the date of finality of this Decision; and (2) the
awards of moral and exemplary damages and
attorney's fees shall likewise earn interest at the rate
of 6% per annum from the time of the finality of this
Decision. The total monetary awards shall thereafter
earn interest at the rate of 6% per annum from the
finality of judgment until its satisfaction.
Contravention of tenor of obligations (1170)
66) Pacmac vs. IAC (150 SCRA 555)
FACTS: PACMAC Incorporated alleged that by virtue
of an existing contract and arrangement with VULCAN
Manufacturing Company Incorporated, the former
since 1953 continuously up to August 3, 1965 has
been the exclusive distributor of the latter's products
and that in said arrangement VULCAN was obliged to
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
periodically deliver and sell, at its own dictated price
any number or volume of its products exclusively to
PACMAC. PACMAC would, in turn, exclusively sell and
distribute said products to the open market, whether
in wholesale or retail, at a price set and commanded
by VULCAN, and that on August 3, 1965 VULCAN
unilaterally terminated the contract of exclusive
distributorship causing damages to PACMAC.
In its answer, VULCAN denied the contract of
exclusive distributorship with PACMAC. By way of
counterclaim, VULCAN alleged that PACMAC is
indebted to it as of September 30, 1965 in the sum of
P320,220.25 plus interest representing the unpaid
purchase price of VULCAN's products sold and
delivered to PACMAC.
On December 6, 1962, both parties entered into a
written contract of exclusive distributorship for two
years beginning November 16, 1962 over two
products manufactured by defendant.
On August 3, 1965, defendant wrote plaintiff a letter
advising the latter that as of that date defendant
would no longer deliver any of its products to plaintiff
except those items for which orders had already been
booked, unless the same would be cancelled by
plaintiff. It does not appear, however, that deliveries
on the pending orders were thereafter made, as it is
admitted that defendant stopped deliveries as of
August 3, 1965.
ISSUE: Whether or not VULCAN contravened the
tenor of agreement between the two parties.
RULING:
Yes, VULCAN contravened the tenor of agreement.
The records establish that after the termination of the
two-year written contract, the parties agreed on
another term regarding the duration of their
distributorship arrangement. They also agreed that
the distributorship arrangement would remain in full
force until one year from and after notice of its
termination would have been given to PACMAC. The
inevitable conclusion, therefore, is that the parties'
contract of exclusive distributorship arrangement was
still in existence on August 3, 1965 when VULCAN
decided to stop deliveries of its products to PACMAC.
VULCAN's unilateral act of terminating the contract
without legal justification makes it liable for damages
suffered by PACMAC pursuant to Article 1170 of the
New Civil Code.
67) Llorente, Jr. vs. Sandiganbayan (287 SCRA
382)
FACTS: Private complainant Leticia C. Fuertes is the
duly appointed Assistant Municipal Treasurer in the
Municipality of Sindangan, Zamboanga del Norte,
since October 18, 1985. Starting 1986, she was
detailed to different offices, and returned to her post
in Sindangan only in July, 1990.
On March 12, 1991, accused Mayor received a letter
from the Sangguniang Bayan of the Municipality of
Pinan, Zamboanga del Norte, demanding from the
private complainant return of the amount overpaid to
her as salaries.
Private complainant filed a Petition for Mandamus with
Damages against the accused Mayor and the
Municipality of Sindangan for the alleged unjustified
refusal of Mayor Llorente to sign and/or approve her
payrolls and/or vouchers representing her salaries
and other emoluments. She also alleged that although
she rendered services at the municipality of Pinan for
the month of June, 1990, she could not collect her
salary there considering that as of that month, the
municipality of Pinan had already appointed an
37 | P a g e
Assistant Municipal Treasurer. She was advised to
claim her salary with her mother agency, the
Municipality of Sindangan. In an amicable settlement,
private complainant was paid her salaries but only for
January to August 1991. She was able to receive
complete payment of her claims only on January 4,
1993 in the form of checks. For causing an undue
injury in the discharge of his official functions through
evident bad faith, accused Mayor was charged and
found guilty with violation of Sec. 3 of R.A. No. 3019,
the AntiGraft and Corrupt Practices Act
ISSUE:
Did the accused contravene the tenor of the
agreement when he did not sign the vouchers?
Can Fuertes be awarded for actual or compensatory
damages for the withholding of salaries resulting to
breach of contract?
RULING:
1) No. His failure to approve the vouchers was due
to some legal obstacles and not entirely without
reason. Thus, not in bad faith. Given the lack of
corresponding appropriation ordinance and
certification of availability of funds for such persons,
llorente had the duty not to sign the vouchers
2) No. Actual damages, if not supported by
evidence on record, cannot be considered.
Complainant's testimony regarding her family's
financial stress was inadequate and largely
speculative. Without giving specific details, she made
only vague references to the fact that her four children
were all going to school and that she was the
breadwinner in the family. She, however, did not say
that she was unable to pay their tuition fees and the
specific damage brought by such nonpayment. The
fact that the "injury" to her family was unspecified or
unquantified does not satisfy the element of undue
injury, as akin to actual damages. As in civil cases,
actual damages, if not supported by evidence on
record, cannot be considered.
Fundamental in the law on damages is that one
injured by a breach of a contract, or by a wrongful or
negligent act or omission shall have a fair and just
compensation commensurate to the loss sustained as
a consequence of the defendant's act. Actual
pecuniary compensation is awarded as a general rule,
except where the circumstances warrant the
allowance of other kinds of damages. Actual damages
are primarily intended to simply make good or replace
the loss caused by the wrong.
Furthermore, damages must not only be capable of
proof, but must be actually proven with a reasonable
degree of certainty. They cannot be based on flimsy
and non-substantial evidence or upon speculation,
conjecture or guesswork. They cannot include
speculative damages which are too remote to be
included in an accurate estimate of the loss or injury.
"Art. 2199. Except as provided by law or by
stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by
him as he has duly proved. Such compensation is
referred to as actual or compensatory damages."
68) FGU Insurance Corp. vs. G.P. Sarmiento
Trucking Corp. (G.R. No. 141910, August 6,
2002)
FACTS: GPS agreed to transport thirty (30) units of
Condura refrigerators for Conception Industries.
While delivering, the truck collided with another
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021

truck resulting in the damage of said appliances. 81) Cauton vs. CA (G.R. No. 158382, Jan. 27,
FGU, an insurer of the shipment, paid Conception 2004)
Industries the value of the covered cargoes in the 82) Integrated Realty Corp. vs. PNB (174 SCRA
sum of P204,450.00. 295)
83) David vs. CA (316 SCRA 710)
FGU, being the subrogee of the rights and interests 84) PNB vs. CA (236 SCRA 766)
of Conception, sought reimbursement of the amount 85) Eastern Shipping Lines, Inc. vs CA (234
it had paid to the latter from GPS. Since the trucking SCRA 78)
company failed to heed the claim, FGU filed a 86) Almeda vs. Cariño (G.R. No. 152143, Jan.
complaint for damages and breach of contract of 13, 2003)
carriage against GPS and its driver Lambert Erole. 87) Sebastian Siga-an vs. Alicia Villanueva,
G.R. No. 173227, January 20, 2009
Note: In this case, there was subrogation. FGU 88) ASIATRUST Development Bank vs. Tuble,
Insurance Corp, being the subrogee, now has the G.R. No. 183987, July 25, 2012
legal right to sue GPS in lieu of Concection. 89) Sps. Bonrostro vs. Sps. Luna, G.R. No.
172346, July 24, 2013
ISSUE:
1. WON the laws on common carriers apply Presumptions (1176)
2. WON GPS, either as common carrier or a
private carrier, may be held liable 90) Manila Trading & Supply Co. vs. Medina (2
SCRA 549)
91) Ledesma vs. Realubin (8 SCRA 608)
RULING:
1) No. In order for the presumption of negligence Remedies of Creditors for Breach of Obligations
provided for under the law governing common
carrier (Article 1735, Civil Code) to arise, the 92) Siy vs. CA (138 SCRA 536)
appellant must first prove that the appellee is a 93) Molina vs. CA (G.R. No. 125755, Feb. 24,
common carrier. Should the appellant fail to prove 2003)
that the appellee is a common carrier, the 94) Lim vs. CA (263 SCRA 569)
presumption would not arise. 95) Deiparine, Jr. vs. CA (221 SCRA 503)
96) Velarde vs. CA (361 SCRA 56)
Based on the foregoing, the trucking company has 97) Campos Assets Corp. vs. Club X.O.
been 'its exclusive contractor, hauler since 1970. Company (328 SCRA 520)
The inevitable conclusion is that the appellee is a 98) Philippine National Construction
private carrier. Corporation vs. Mars
99) Construction Enterprises, Inc. ( 325 SCRA
2) Yes. GPS cannot escape from liability. 624)
In culpa contractual, the mere proof of the existence 100) DBP vs. CA ( 344 SCRA 492)
of the contract and the failure of its compliance 101) Central Bank of the Philippines vs. Bichara
justify, prima facie, a corresponding right of relief. (328 SCRA 807)
The law, recognizing the obligatory force of 102) Hrs. of the late Justice J.B.L. Reyes vs. CA
contracts, will not permit a party to be set free from (338 SCRA 282)
liability for any kind of misperformance of the 103) Pangilinan vs. CA (279 SCRA 590)
contractual undertaking or a contravention of the 104) Lim vs. CA (182 SCRA 564)
tenor thereof. A breach upon the contract confers 105) Goldenrod, Inc. vs. CA (299 SCRA 141)
upon the injured party a valid cause for recovering
that which may have been lost or suffered.
Kinds of Obligations
Effects of Fortuitous Events in obligations (1174)
106) Pay vs. Vda. De Palanca (57 SCRA 18)
107) Luzon Brokerage Co., Inc. vs. Maritime
69) Lasam vs. Smith (supra.) Bldg Co., Inc. (46 SCRA 381)
70) Republic of the Philippines vs. Luzon 108) Coronel vs. CA (263 SCRA 15)
Stevedoring Corp. (21 SCRA 279) 109) Rillo vs. Court of Appeals (274 SCRA 461)
71) Austria vs. Court of Appeals (39 SCRA 527) 110) Davies, Inc. vs. CA (333 SCRA 684)
72) Tugade vs. Court of Appeals (85 SCRA 226) 111) Rustan Pulp & Paper Mills, Inc. vs. IAC
73) Southwestern College, Inc. vs. CA (292 (214 SCRA 665)
SCRA 422) 112) Baluran vs. Navarro (79 SCRA 309)
74) Mindex Resources Development vs. Morillo 113) Smith, Bell and Co. vs. Sotelo (44 Phil. 875)
(G.R. No. 138123, March 12, 2002) 114) Hermosa vs. Longara (93 Phil. 971)
75) Herbosa vs. CA (374 SCRA 578) 115) Trillana vs. Quezon Colleges (93 Phil. 383)
76) FGU Insurance Corporation vs. CA (454 116) Philippine Long Distance Company vs.
SCRA 337) Jeturian, et al (97 Phil. 981)
77) Schmitz Transport and Brokerage Corp. vs. 117) De la Rama Steamship Co. vs. Tan (99 Phil.
Transport Venture, Inc. (456 SCRA 557) 1034)
78) Sps. Poon vs. Prime Savings Bank, G.R. 118) Sancho vs. Lizarraga (55 Phil. 601)
183794, June 13, 2016. 119) Tayag vs. CA (G.R. No. 103577, Oct. 7,
1996)
120) Naga Telephone Company, Inc. vs. CA (230
SCRA 351)
Usurious Transactions; Interests (1175; 1956; 121) Universal Food Corp. vs. Court of Appeals
1957; 1306) (33 SCRA 1)
122) Central Philippine University vs. CA (246
79) Security Bank and Trust Co. vs. RTC of SCRA 511)
Makati (263 SCRA 483) 123) Santos vs. CA (337 SCRA 67)
80) Solangon vs. Salazar (360 SCRA 379) 124) Casano, Jr. vs. CA (470 SCRA 57)

38 | P a g e
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021
125) F.F. Cruz & Co., Inc. vs. HR Construction
Corp., G.R. No. 187521, March 14, 2012
126) International Hotel Corporation vs.
Joaquin, Jr. & Suarez, G.R. No. 158361,
April 10, 2013
127) Wellex Group, Inc. vs. U-Land Airlines Co.,
Ltd., G.R. No. 167519, January 14, 2015
128) Nolasco vs. Cuerpo, et al., GR No. 210215,
December 9, 2015 -Fong vs. Dueñas, GR
No. 185592, June 15, 2015.
129) Sergio Osmeña III, vs. Power Sector
Assets and Liabilities
130) Management Corporation, et. al., GR No.
212686, October 5, 2016
131) PEZA vs. Pilhino Sales Corporation, GR No.
185765, Sept. 28, 2016
132) Development Bank of the Philippines vs.
Sta. Ines Melale Forest Products
Corporation, GR 193068 & 193099,
February 1, 2017
With a Period (1193-1198)
133) Nepomuceno vs. Narciso (84 Phil. 542)
134) Berg vs. Magdalena Estate, Inc. (92 Phil.
110)
135) Victorias Planters vs. Victorias Milling Co.
(97 Phil. 318)
136) Gonzales vs. Jose (66 Phil. 369)
137) Borromeo vs. Court of Appeals (47 SCRA
65)
138) Gaite vs. Fonacier (112 Phil. 728)
139) Radiowealth Finance Company vs. Del
Rosario (335 SCRA 288)
140) Fernandez vs. CA (166 SCRA 577)
Alternative and Facultative (1199-1206)
141) Agoncillo and Mariano vs. Javier (38 Phil.
424)
142) Ong Guan Can vs. Century Insurance Co.
(46 Phil. 492)
Joint and Solidary (1207-1222)
143) Lafarge Cement Phils. Vs. Continental
Cement Corp., et al. (G.R. No. 155173,
November 23, 2004)
144) Agoncillo vs. Javier (38 Phil. 424)
145) Ynchausti vs. Yulo (34 Phil. 978)
146) International Finance Corporation vs.
Imperial Textile Mills, Inc. (475 SCRA 149)
147) Sps. Ibañez vs. James, GR No. 194272,
February 15, 2017
Divisible and Indivisible (1223-1225
148) Nazareno vs. CA (G.R. No. 138842, October
18, 2000)
With Penal Clause (1226-1230)
149) SSS vs. Moonwalk Development and
Housing Corporation (221 SCRA 119)
150) Rizal Commercial Banking Corp. vs. CA (
289 SCRA 242)
151) Ligutan vs. CA (G. R. No. 138677, Feb. 12,
2002)
152) Luneta Motor Co. vs. Moral (73 Phil. 80)
153) Cabarroguis, et al. vs. Vicente (107 Phil.
340)
154) Palmares vs. Court of Appeals (288 SCRA
423)
155) Umali vs. Miclat (105 Phil. 1109)
39 | P a g e
156) Filinvest Land, Inc. vs. CA (470 SCRA 260)
157) Lough, Jr., et al. vs. Bank of the Philippine
Islands, GR 225562, March 8, 2017
Payment or Performance (1232-1251)
158) Filinvest Credit Corporation vs. Philippine
Acetylene Co. (197 Phil. 394)
159) Golez vs. Camara (101 Phil. 363)
160) Quiros vs. Tan Guinlay (5 Phil. 675)
161) New Pacific Timber & Supply Co. vs.
Seneris (101 SCRA 686)
162) Singson vs. Caltex (G.R. No. 137798, Oct.
4, 2000)
163) Serra vs. CA (229 SCRA 60)
164) CF Sharp and Co., Inc. vs. Northwest
Airlines, Inc. (G.R. No. 133498, April 12,
2002)
165) Velasco vs. Manila Electric Co. (42 SCRA
556)
166) Lantion vs. NLRC (181 SCRA 513)
167) Roman Catholic Bishop of Malolos, Inc. vs.
IAC (191 SCRA 411)
168) Far East Bank and Trust Co. (FEBTC) vs.
Diaz Realty, Inc. (G.R. No. 138588, Aug.
23, 2001)
169) Jespay Realty Corp. vs. CA, et al. (G.R. No.
113626, Sept. 27, 2002)
170) Aquintey vs. Tibong (511 SCRA 414)
171) Telengtan Brothers & Sons, Inc. vs. United
States Lines, Inc. (483 SCRA 458)
172) International Hotel Corporation vs.
Joaquin, Jr. & Suarez, G.R. No. 158361,
April 10, 2013
173) Sps. Bonrostro vs. Sps. Luna, G.R. No.
172346, July 24, 2013
174) National Power Corporation vs. Ibrahim, et
al., GR 175863, February 18, 2015
175) Sinamban vs. China Banking Corporation,
GR 193890, March 11, 2015
176) Marquez vs. Elisan Credit Corporation GR
194642, April 6, 2015
177) Sps. Tan, et al. vs. China Banking
Corporation, GR 200299, August 17, 2016
178) Georgia Osmeña-Jalandoni vs. Carmencita
Encomienda, GR 205578, March 1, 2017
Loss of The Thing Due (1262-1269)
179) Ortigas & Co. vs. Feati Bank and Trust Co.
(94 SCRA 533)
180) Naga Telephone Co., et al. vs. CA (Feb. 24,
1994)
181) Eastern Telecommunications Philippines,
Inc. vs. Eastern Telecoms Employees
Union, (G.R. No. 185665, February 8,
2012)
182) Tagaytay Realty Co., Inc. vs. Gacutan, GR
160033, July 1, 2015
Condonation or Remission of Debt (1270-1274)
Confusion or Merger of Rights (1275-1277)
183) Yek Tong Lin Fire and Marine Insurance Co.
vs. Yusingco (46 Phil. 473)
184) 5. Compensation (1278-1290)
185) Gullas vs. National Bank (62 Phil. 519)
186) Garcia vs. Lim Chiu Sing (59 Phil. 562)
187) Union Bank of the Philippines vs.
Development Bank of the Philippines, GR
191555, January 20, 2014
 EH403 | OBLICON REVIEW CASE DIGESTS | ATTY. DARYL BRETCH LARGO
FIRST SEMESTER | A.Y. 2020-2021

Novation (1291-1304)

188) Zapanta vs. De Rostaeche (21 Phil. 54)

189) Uraca, et al. vs. Court of Appeals (G.R. No.
115158, Sept. 5, 1997)
190) Reyes vs. CA, et al. (G.R. No. 120817,
November 4, 1996)
191) Magdalena Estate, Inc. vs. Rodriguez (18
SCRA 967)
192) Pascual vs. Lacsamana (100 Phil. 381)
193) La Tondeña, Inc. vs. Alto Surety &
Insurance Co. (101 Phil. 879)
194) Dungo vs. Lopeña (6 SCRA 1007)
195) Kabankalan Sugar Co. vs. Pacheco (55 Phil.
55)
196) GSIS vs. Court of Appeals (169 SCRA 744)
197) Cochingyan, Jr. vs. R & B Surety and
Insurance Co., Inc. (151 SCRA 339)
198) Chester Babst vs. Court of Appeals (G.R.
Nos. 9939 and 104625, January 26, 2001)
199) Villanueva vs. Girged (110 Phil. 478) -
Hodges vs. Rey (111 Phil. 219)
200) South City Homes, Inc., et al. vs. Court of
Appeals (G. R. No. 135462, December 7,
2001)
201) Rodriguez vs. Court of Appeals (207 SCRA
553)
202) Philippine Savings Bank vs. Manalac, Jr.
(457 SCRA 203)
203) Odiamar vs. Valencia, GR 213582, June 28,
2016
204) Ever Electrical Manufacturing, Inc. vs.
Philippine Bank of
205) Communications, GR 187822-23, August 3,
2016
206) Figuera vs. Ang, GR 204264, June 29, 2016
207) Liam vs. United Coconut Planters Bank, GR
194664, June 15, 2016
208) SM Systems Corporation vs. Camerino, et
al., GR 178591, March 29, 2017

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