G.R. No.

206806               June 25, 2014

ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS, Petitioners,

vs.
DAN T. LIM, doing business under the name and style of QUALITY PAPERS &
PLASTIC PRODUCTS ENTERPRISES, Respondent.

Ponente: Leonen

Facts:

1. Dan T. Lim (Lim) works in the business of supplying scrap papers, cartons, and other raw
materials, under the name and Quality Paper and Plastic Products, Enterprises, to
factories engaged in the paper mill business. He delivered scrap papers to Arco Pulp and
Paper Company, Inc. (Arco Pulp and Paper) through its CEO and President, Candida A.
Santos. The parties allegedly agreed that Arco Pulp and Paper would either pay Lim the
value of the raw materials or deliver to him their finish products of equivalent value.
2. Lim alleged that when he delivered the raw materials, Arco Pulp and Paper issued a post-
dated check, with the assurance that the check would not bounce. When he deposited the
check, it was dishonored for being drawn against a closed account.
3. On the same day, Arco Pulp and Paper, and a certain Eric Sy executed a memorandum of
agreement where Arco Pulp and Paper bound themselves to deliver their finished
products to Megapack Container Corp., owned by Eric Sy. According to the
memorandum, the raw materials would be supplied by Lim, through his company,
Quality Paper and Plastic Products.
4. Lim sent a demand letter to Arco Pulp and Paper but no payment was made to him.
Hence, he filed a complaint for collection of sum of money.
5. The RTC rendered a judgment in favor of Arco Pulp and Paper and dismissed the
complained, holding that when Arco Pulp and Paper and Eric Sy and entered into the
memorandum of agreement, novation took place, which extinguished Arco Pulp and
Paper;s obligation to Lim.
6. On appeal, Lim argued that novation did not take place since the memorandum of
agreement between Arco Pulp and Paper and Eric Sy was an exclusive and private
agreement between them.
7. The CA reversed the RTC decision and ruled that the facts and circumstances in this case
clearly showed the existence of an alternative obligation.

Issue: Whether the obligation between the parties was an alternative obligation.

Held: Yes. The obligation between the parties was an alternative obligation. The rule on
alternative obligation is governed by Article 1199 of the Civil Code.
In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient,
determined by the choice of debtor who generally has the right of election. The right of election
is extinguished when the party who may exercise that option categorically and unequivocally
makes his or her choice known. The choice of the debtor must also be communicated to the
creditor who must receive notice of it since the object of this notice is to give the creditor
opportunity to express his consent, or to impugn the election made by the debtor, and only after
said notice shall the election take legal effect when consented by the creditor, or if impugned by
the latter, when declared proper by a competent court.

According to the factual findings of the trial court and appellate court, the original contract
between the parties was for respondent to deliver scrap papers worth Php7,220,968.31 to
petitioner Arco Pulp and Paper. The payment for this delivery became petitioner Arco Pulp and
Paper’s obligation. By agreement, petitioner Arco Pulp and Paper, as the debtor, had the option
to either (1) pay the price or (2) deliver the finished products of equivalent value of respondent.

The appellate court, therefore, correctly identified the obligation between the parties as an
alternative obligation, whereby petitioner, Arco Pulp and Paper, after receiving the raw materials
from respondent, would either pay him the price of the raw materials or in the alternative, deliver
to him the finished products of equivalent value.

When petitioner Arco Pulp and Paper tendered a check to respondent in partial payment for the
scrap papers, they exercised their options to pay the price. Respondent’s receipt of the check and
his subsequent act of depositing it constituted his notice of petitioner Arco Pulp and Paper’s
option to pay.

This choice was also shown by the terms of the memorandum of agreement, which was executed
on the same day. The memorandum declared in clear terms that the delivery of petitioner Arco
Pulp and Paper’s finished products would be to a third person, thereby extinguishing the option
to deliver the finished product of equivalent value to respondent.

DISPOSITIVE: WHEREFORE, the petition is DENIED in part. The decision in CA-G.R. CV

No. 95709 is AFFIRMED.
 G.R. No. 167615 January 11, 2016

SPOUSES ALEXANDER AND JULIE LAM, Doing Business Under the Name and Style
"COLORKWIK LABORATORIES" AND "COLORKWIK PHOTO
SUPPLY", Petitioners,
vs.
KODAK PHILIPPINES, LTD., Respondent.

Ponente: Leonen

The Lam Spouses and Kodak Philippines, Ltd. entered into an agreement (Letter Agreement) for
the sale of three (3) units of the Kodak Minilab System 22XL (Minilab Equipment). Kodak
Philippines, Ltd. delivered one (1) unit of the Minilab Equipment in Tagum, Davao Province.
The Lam Spouses issued postdated checks amounting to P35,000.00 each for 12 months as
payment for the first delivered unit. The Lam Spouses requested that Kodak Philippines, Ltd. not
negotiate the check dated March 31, 1992 allegedly due to insufficiency of funds. The same
request was made for the check due on April 30, 1992. However, both checks were negotiated by
Kodak Philippines, Ltd. and were honored by the depository bank. The 10 other checks were
subsequently dishonored after the Lam Spouses ordered the depository bank to stop payment.

Kodak Philippines, Ltd. canceled the sale and demanded that the Lam Spouses return the unit it
delivered together with its accessories. The Lam Spouses ignored the demand but also rescinded
the contract through the letter dated November 18, 1992 on account of Kodak Philippines, Ltd.'s
failure to deliver the two (2) remaining Minilab Equipment units. A Complaint for replevin
and/or recovery of sum of money was filed by Kodak in the RTC which ruled in their favor.

The Lam Spouses then filed before the Court of Appeals a Petition to Set Aside the Orders
issued by the trial court and the Orders were subsequently set aside by the Court of Appeals and
the case was remanded to the RTC. The Trial Court found that Kodak Philippines, Ltd. defaulted
in the performance of its obligation under its Letter Agreement with the Lam Spouses for its
failure to deliver two (2) out of the three (3) units of the Minilab Equipment. Nevertheless, the
trial court also ruled that when the Lam Spouses accepted delivery of the first unit, they became
liable for the fair value of the goods received.

The Lam Spouses were under obligation to pay for the amount of one unit, and the failure to
deliver the remaining units did not give them the right to suspend payment for the unit already
delivered. However, the trial court held that since Kodak Philippines, Ltd. had elected to
cancel the sale and retrieve the delivered unit, it could no longer seek payment for any
deterioration that the unit may have suffered while under the custody of the Lam Spouses.

Petitioners argue that the Letter Agreement it executed with respondent for three (3) Minilab
Equipment units was not severable, divisible, and susceptible of partial performance.
Respondent's recovery of the delivered unit was unjustified. With the obligation being
indivisible, petitioners argue that respondent's failure to comply with its obligation to deliver the
two (2) remaining Minilab Equipment units amounted to a breach. Petitioners claim that the
breach entitled them to the remedy of rescission and damages under Article 1191 of the New
Civil Code. Respondent argues that the parties' Letter Agreement contained divisible obligations
susceptible of partial performance as defined by Article 1225 of the New Civil Code. In
respondent's view, it was the intention of the parties to be bound separately for each individually
priced Minilab Equipment unit to be delivered to different outlets. With the contract being
severable in character, respondent argues that it performed its obligation when it delivered one
unit of the Minilab Equipment. Since each unit could perform on its own, there was no need to
await the delivery of the other units to complete its job.

Issue:

Whether the contract between petitioners and respondent pertained to obligations that are
severable, divisible, and susceptible of partial performance.

Ruling:

The Letter Agreement contained an indivisible obligation. Both parties rely on the Letter
Agreement as basis of their respective obligations. Written by respondent's Jeffrey T. Go and
Antonio V. Mines and addressed to petitioner Alexander Lam, the Letter Agreement
contemplated a "package deal" involving three (3) units of the Kodak Minilab System 22XL. The
intention of the parties is for there to be a single transaction covering all three (3) units of the
Minilab Equipment. Respondent's obligation was to deliver all products purchased under a
"package," and, in turn, petitioners' obligation was to pay for the total purchase price, payable in
installments.

The intention of the parties to bind themselves to an indivisible obligation can be further
discerned through their direct acts in relation to the package deal. There was only one agreement
covering all three (3) units of the Minilab Equipment and their accessories. The Letter
Agreement specified only one purpose for the buyer, which was to obtain these units for three
different outlets. If the intention of the parties were to have a divisible contract, then
separate agreements could have been made for each Minilab Equipment unit instead of
covering all three in one package deal.

Furthermore, the 19% multiple order discount as contained in the Letter Agreement was applied
to all three acquired units. The "no downpayment" term contained in the Letter Agreement was
also applicable to all the Minilab Equipment units. Lastly, the fourth clause of the Letter
Agreement clearly referred to the object of the contract as "Minilab Equipment Package."

In Nazareno v. Court of Appeals, the indivisibility of an obligation is tested against whether it

can be the subject of partial performance: An obligation is indivisible when it cannot be
validly performed in parts, whatever may be the nature of the thing which is the object thereof.
The indivisibility refers to the prestation and not to the object thereof.
 G.R. No. 183794, June 13, 2016
SPOUSES JAIME AND MATILDE POON, Petitioners,
vs
PRIME SAVINGS BANK REPRESENTED BY THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION AS STATUTORY LIQUIDATOR, Respondent.:

Ponente: Sereno

Facts:

The petitioners owned a commercial building. They executed a 10-year contract of lease over
building with respondent Prime Savings Bank for the latter to use it as a branch office. They
agreed to a fixed monthly rental with an advance payment. The contract also provided: Should
the lease[d] premises be closed, deserted or vacated by the LESSEE, the LESSOR shall have the
right to terminate the lease ... x x x The LESSOR shall thereupon have the right to enter into a
new contract with another party. All advanced rentals shall be forfeited in favor of the LESSOR.
Three years later, the BSP placed respondent under receivership of the PDIC and eventually
ordered its litigation. The respondent vacated petitioner’s building and PDIC then demanded
return of the advance rentals. Petitioners refused to return the advanced rentals. Thus respondent
commenced this case for rescission of contract and recovery of sum of money. The RTC ruled in
favor of Petitioners and ordered the partial rescission of the contract insofar as the advance
payment was forfeited. It held that the PDIC’s closure of their business was a fortuitous event.
The CA affirmed but applied Art. 1229 instead.

Issue:
Whether or not the forfeiture of the advance rentals was a penal clause.

Ruling:
It is settled that a provision is a penal clause if it calls for the forfeiture of any remaining deposit
still in the possession of the lessor, without prejudice to any other obligation still owing, in the
event of the termination or cancellation of the agreement by reason of the lessee's violation of
any of the terms and conditions thereof. This kind of agreement may be validly entered into by
the parties. The clause is an accessory obligation meant to ensure the performance of the
principal obligation by imposing on the debtor a special prestation in case of nonperformance or
inadequate performance of the principal obligation.
It is evident from the above-quoted testimony of Jaime Poon that the stipulation on the forfeiture
of advance rentals under paragraph 24 is a penal clause in the sense that it provides for liquidated
damages.
 G.R. No. 194121

TORRES-MADRID BROKERAGE, INC., Petitioner

vs.
FEB MITSUI MARINE INSURANCE CO., INC. and BENJAMIN P. MANALAST AS,
doing business under the name of BMT TRUCKING SERVICES, Respondents

Ponente: Brion

Facts:

On October 7, 2000, a shipment of electronic goods arrived at the Port of Manila for Sony
Philippines, Inc. Previous to the arrival, Sony had engaged the services of petitioner Torres-
Madrid Brokerage, Inc. (TMBI) to facilitate, process, withdraw, and deliver the shipment to its
warehouse in Biñan, Laguna.

Since TMBI did not own any delivery trucks, it subcontracted the services of Benjamin
Manalastas’ company, BMT Trucking Services to transport the shipment from the port to Sony’s
warehouse in Biñan. TMBI then notified Sony who had no objections to the arrangement.

On the said day of shipment at 11AM, four BMT trucks picked up the shipment. However, it
could not immediately deliver to Sony’s warehouse because of the truck ban and because the
following day was a Sunday. Thus, it scheduled the delivery to October 9.

In the early morning of October 9, four trucks left BMT’s garage for Laguna. However, only
three trucks arrived at Sony’s warehouse. o At around 12NN, the truck driven by Rufo Reynaldo
Lapesura was found abandoned along the Diversion Road in Filinvest, Alabang. Both the driver
and shipment were missing.

Later that evening, BMT’s Operations Manager informed TMBI’s General Manager of the
development. They then went to Muntinlupa together to inspect the truck and report the matter to
the police. o TMBI’s General Manager also filed a complaint with the NBI against the missing
driver, Lapesura for “hijacking”. The NBI then recommended the prosecution of Lapesura for
qualified theft.

On October 10, TMBI notified Sony of the loss through a letter. It also sent BMT a letter dated
March 29, 2001, demanding payment for the lost shipment. o However, BMT refused to pay,
insisting that the goods were “hijacked.”

In the meantime, Sony filed an insurance claim with Mitsui, the insurer of the goods. o After
evaluating the merits of the claim, Mitsui paid Sony P7.2M corresponding to the value of the lost
goods.
After being subrogated to Sony’s rights, Mitsui sent TMBI a demand letter dated August 30,
2001 for payment of the lost goods but the latter refused to pay Mitsui's claim. o As a result,
Mitsui filed a complaint against TMBI on November 6, 2001.

In turn, TMBI impleaded Benjamin Manalastas, the proprietor of BMT, as a third- party
defendant. TMBI alleged that BMT's driver, Lapesura, was responsible for the theft/hijacking of
the lost cargo and claimed BMT's negligence as the proximate cause of the loss. It prayed that in
the event it is held liable to Mitsui for the loss, it should be reimbursed by BMT.

At the trial, it was revealed that BMT and TMBI have been doing business with each other since
the early 80's. It also came out that there had been a previous hijacking incident involving Sony's
cargo in 1997, but neither Sony nor its insurer filed a complaint against BMT or TMBI. RTC’s
RULING: In its Decision, it ruled that TMBI and Manalastas were common carriers and had
acted negligently. It found both of them jointly and solidarily liable to pay Mitsui
PHP7,293,386.23 as actual damages, attorney's fees equivalent to 25% of the amount claimed,
and the costs of the suit. CA’s RULING: On appeal, the CA AFFIRMED the RTC’s decision but
reduced the award of attorney’s fees to PHP200,000.

Issues:

Whether or not TMBI and BMT are solidarily liable to Mitsui?

Ruling:

NO. TMBI’s liability to Mitsui does NOT stem from a quasidelict (culpa aquiliana) but from its
breach of contract (culpa contractual). The tie that binds TMBI with Mitsui is contractual, albeit
one that passed on to Mitsui as a result of TMBI's contract of carriage with Sony to which Mitsui
had been subrogated as an insurer who had paid Sony's insurance claim. The legal reality that
results from this contractual tie precludes the application of quasi-delict based Article 2194.
 G.R. No. 204866               January 21, 2015

RUKS KONSULT AND CONSTRUCTION, Petitioner,

vs.
ADWORLD SIGN AND ADVERTISING CORPORATION* and TRANSWORLD
MEDIA ADS, INC., Respondents.

Ponente: Perlas-Bernabe

Facts:
Adworld is the owner of a 75 ft. x 60 ft. billboard structure located at EDSA Tulay, Guadalupe,
Barangka Mandaluyong, which was misaligned and its foundation impaired when. On August
11, 2003, the adjacent billboard structure owned by Transworld and used by Comark collapsed
and crashed against the former billboard structure.
Adworld sent Transworld and Comark a letter demanding payment for the repairs of its billboard
payment for the repairs of its billboard as well as loss of rental income. In its reply, Transworld
admitted the damage caused by its billboard structure on Adworld’s billboard, but nevertheless,
refused and failed to pay.
Adworld’s final demand letter also went unheeded, it filed a complaint for damages.
In its Answer with Counterclaim, Transworld averred that the collapse of its billboard structure
was due to extraordinarily strong winds that occurred instantly and unexpectedly, and maintained
that the damage caused to Adworld’s billboard structure was hardly noticeable.Transworld
likewise filed a Third-Party Complaint against Ruks as alleged therein that the structure
constructed by Ruks had a weak and poor foundation not suited for billboards, thus, prone to
collapse, and as such, Ruks should ultimately be held liable for the damages caused to Adworld’s
billboard structure.
Ruks admitted that it entered into a contract with Transworld for the construction of the latter’s
billboard structure, but denied liability for the damages caused by its collapse. It contended that
when Transworld hired its services, there was already an existing foundation for the billboard
and that it merely finished the structure according to the terms and conditions of its contract with
the latter.
RTC Ruling:
The RTC ultimately ruled in Adworld’s favor, and accordingly, declared, inter alia, Transworld
and Ruks jointly and severally liable to Adworld. The RTC found both Transworld and Ruks
negligent in the construction of the collapsed billboard as they knew that the foundation
supporting the same was weak and would pose danger to the safety of the motorists and the other
adjacent properties, such as Adworld’s billboard, and yet, they did not do anything to remedy the
situation. The RTC then concluded that these negligent acts were the direct and proximate cause
of the damages suffered by Adworld’s billboard.
CA Ruling:

CA denied Ruk’s appeal and affirmed the RTC’s. It adhered to the RTS’s finding of negligence
on the part of Transworld and Ruks which brought about the damage to Adworld’s billboard. It
found that Transworld failed to ensure that Ruks will comply with the approved plans and
specification of the structure, and that Ruks continued to install and finish the billboard structure
despite the knowledge that there were no adequate columns to support the same.

Issue:

Whether or not Ruks is jointly and severally liable with Transworld for damages sustained by
Adworld.

Ruling:

Yes. The CA correctly affirmed the ruling of the RTC declaring Ruks jointly and severally liable
with Transworld for damages sustained by Adworld.

Jurisprudence defines negligence as the omission to do something which a reasonable man,

guided by those considerations which ordinarily regulate the conduct of human affairs, would do,
or the doing of something which a prudent and reasonable man would not do. It is the failure to
observe for the protection of the interest of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such other person suffers injury.

In this case, the CA correctly affirmed the RTC’s finding that Transworld’s initial construction
of its billboard’s lower structure without the proper foundation, and that of Ruks’s finishing its
upper structure and just merely assuming that Transworld would reinforce the weak foundation
are the two (2) successive acts which were the direct and proximate cause of the damages
sustained by Adworld. Worse, both Transworld and Ruks were fully aware that the foundation
for the former’s billboard was weak; yet, neither of them took any positive step to reinforce the
same. They merely relied on each other’s word that repairs would be done to such foundation,
but none was done at all.

Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty of
negligence in the construction of the former’s billboard, and perforce, should be held liable for
its collapse and the resulting damage to Adworld’s billboard structure. As joint tortfeasors,
therefore, they are solidarily liable to Adworld. Verily, "[j]oint tortfeasors are those who
command, instigate, promote, encourage, advice, countenance, cooperate in, aid or abet the
commission of a tort, or approve of it after it is done, if done for their benefit. They are also
referred to as those who act together in committing wrong or whose acts, if independent of each
other, unite in causing a single injury. Under Article 2194 of the Civil Code, joint tortfeasors are
solidarily liable for the resulting damage. In other words, joint tortfeasors are each liable as
principals, to the same extent and in the same manner as if they had performed the wrongful act
themselves."
WHEREFORE, the petition is DENIED. The Decision dated November 16, 2011 and the
Resolution dated December 10, 2012 of the Court of Appeals in CA-G.R. CV No. 94693 are
hereby AFFIRMED.
 G.R. No. 190696               August 3, 2010
ROLITO CALANG and PHILTRANCO SERVICE ENTERPRISES, INC., Petitioners,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.

Ponente: Brion

Facts:

Rolito Calang was driving a bus owned by Philtranco, when its rear left side hit the front left
portion of a Sarao jeep coming from the opposite direction. The jeep’s driver, lost control of the
vehicle, and bumped and killed a bystander who was standing along the highway’s shoulder. The
jeep turned turtle three (3) times before finally stopping at about 25 meters from the point of
impact. Two of the jeep’s passengers, were instantly killed, while the other passengers sustained
serious physical injuries.

Calang was charged with multiple homicide, multiple serious physical injuries and damage to
property thru reckless imprudence before the Regional Trial Court (RTC) of Calbayog City. The
RTC found Calang guilty beyond reasonable for the same. The RTC ordered Calang and
Philtranco, jointly and severally liable.

The petitioners appealed the RTC decision to the Court of Appeals (CA). The CA ruled that
petitioner Calang failed to exercise due care and precaution in driving the Philtranco bus.
According to the CA, various eyewitnesses testified that the bus was traveling fast and
encroached into the opposite lane when it evaded a pushcart that was on the side of the road. In
addition, he failed to slacken his speed, despite admitting that he had already seen the jeep
coming from the opposite direction when it was still half a kilometer away. The CA further ruled
that Calang demonstrated a reckless attitude when he drove the bus, despite knowing that it was
suffering from loose compression, hence, not roadworthy.

The CA affirmed the RTC decision.

Issue: Whether or not Philtranco is Philtranco jointly and severally liable with Calang

Ruling:

Philtranco's liability is subsidiary.

Calang was charged criminally before the RTC hence, Philtranco was not a direct party in this
case. Since the cause of action against Calang was based on delict, both the RTC and the CA
erred in holding Philtranco jointly and severally liable with Calang, based on quasi-delict under
Articles 2176  and 2180 of the Civil Code which pertain to the vicarious liability of an employer
for quasi-delicts that an employee has committed. Such provision of law does not apply to civil
liability arising from delict.
Article 102 of the Revised Penal Code states the subsidiary civil liabilities of innkeepers,
tavernkeepers and proprietors of establishments, as follows:

In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or
corporations shall be civilly liable for crimes committed in their establishments, in all cases
where a violation of municipal ordinances or some general or special police regulations shall
have been committed by them or their employees..

The foregoing subsidiary liability applies to employers, according to Article 103 of the Revised
Penal Code, which reads:

The subsidiary liability established in the next preceding article shall also apply to employers,
teachers, persons, and corporations engaged in any kind of industry for felonies committed by
their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

Nonetheless, before the employers’ subsidiary liability is enforced, adequate evidence must exist
establishing that (1) they are indeed the employers of the convicted employees; (2) they are
engaged in some kind of industry; (3) the crime was committed by the employees in the
discharge of their duties; and (4) the execution against the latter has not been satisfied due to
insolvency. The determination of these conditions may be done in the same criminal action in
which the employee’s liability, criminal and civil, has been pronounced, in a hearing set for that
precise purpose, with due notice to the employer, as part of the proceedings for the execution of
the judgment.
 G.R. No. L-36413 September 26, 1988

MALAYAN INSURANCE CO., INC., petitioner,

vs.
THE HON. COURT OF APPEALS (THIRD DIVISION) MARTIN C. VALLEJOS, SIO
CHOY, SAN LEON RICE MILL, INC. and PANGASINAN TRANSPORTATION CO.,
INC., respondents.

Ponente: Padilla

Facts:

Malayan Insurance issued in favor of Sio Choy, a Private Car Comprehensive Policy effective
from April 18, 1967 to April 18, 1968 covering a Willys jeep. The insurance coverage for third-
party liability was amounting to P20,000. During the effectivity of the said policy, the insured
jeep while being driven by one Juan Campollo, an employee of San Leon Rice Mill, collided
with a passenger bus owned by Pangasinan Transportation Co. (Pantranco) causing damage to
the insured vehicle and injuries to the driver and Martin Vallejos who was riding in an ill-fated
jeep. Vallejos sued for damages against Sio Choy, Malayan Insurance and Pantranco. However
the trial court only ordered Sio Choy, Malayan and San Leon to pay Vallejos a total of P29,103
(jointly and severally liable) but Malayan will be liable only up to P20,000, the consideration in
the policy. CA affirmed the judgment of the trial court that Sio Choy, the San Leon Rice Mill,
Inc. and the Malayan Insurance Co., Inc. are jointly and severally liable for the damages awarded
to the plaintiff Martin C. Vallejos. It ruled, however, that the San Leon Rice Mill, Inc. has no
obligation to indemnify or reimburse the petitioner insurance company for whatever amount it
has been ordered to pay on its policy, since the San Leon Rice Mill, Inc. is not a privy to the
contract of insurance between Sio Choy and the insurance company.

Issue:

Whether or not Malayan Insurance is solidarily liable with Sio Choy and San Leon Rice Mill to
Vallejos.

Ruling:

NO. It is only respondents Sio Choy and San Leon Rice Mill, Inc, that are solidarily liable to
respondent Vallejos for the damages awarded to Vallejos. It must be observed that respondent
Sio Choy is made liable to said plaintiff as owner of the illfated Willys jeep, pursuant to Article
2184 of the Civil Code. It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc.
are the principal tortfeasors who are primarily liable to respondent Vallejos. The law states that
the responsibility of two or more persons who are liable for a quasi-delict is solidarily. On the
other hand, the basis of petitioner's liability is its insurance contract with respondent Sio Choy. If
petitioner is adjudged to pay respondent Vallejos in the amount of not more than P20,000.00, this
is on account of its being the insurer of respondent Sio Choy under the third party liability clause
included in the private car comprehensive policy existing between petitioner and respondent Sio
Choy at the time of the complained vehicular accident. In solidary obligation, the creditor may
enforce the entire obligation against one of the solidary debtors. On the other hand, insurance is
defined as "a contract whereby one undertakes for a consideration to indemnify another against
loss, damage, or liability arising from an unknown or contingent event."