2.

PHILIPPINE ECONOMIC ZONE AUTHORITY VS PILHINO

SALES CORPORATION
G.R. NO. 185765 SEPTEMBER 28, 2016

FACTS:
On October 4, 1997, the Philippine Economic Zone Authority
published an invitation to bid in the Business Daily for its
acquisition of two (2) brand new fire truck units with a capacity of
4,000-5,000 liters of water and 500-1,000 liters of chemical foam,
with complete accessories. Pilhino secured the contract for
P2,900,000.00 per truck and was to deliver the fire trucks within 45
days of receipt of a purchase order. Included in the contract the
stipulation that in case of failure to deliver the good on the date
specified, the Supplier agrees to pay penalty at the of 1% of the total
contract price for each day commencing on the first day after the
date stipulated. However, Pilhino failed to deliver the trucks and
this prompted the petitioner to make formal demands. As
respondent still failed to comply, petitioner filed a complaint for
rescission of contract and damages. As defense, Pilhino claimed
that there was no starting date from which its obligation to deliver
could be reckoned, considering that the Complaint supposedly
failed to allege acceptance by Pilhino of the purchase order. He even
suggested that there was not even a meeting of minds between it
and the Philippine Economic Zone Authority.
The RTC ruled in favor of petitioner and against respondent
ordering the latter to pay liquidated damages and declared the
rescission of the contract. CA modified the order by pegging the
liquidated damages because upon the failure to deliver the goods,
petitioner has not yet paid any amount to respondent. Petitioner
moved to reinstate the award of the RTC. Respondent argued that
rescission of the contract nullifies the liquidated damages, thus no
liability for the same.
ISSUE:
Whether or not a rescinded contract carries with it the obliteration
of the liability for the stipulated liquidated damages .
RULING:
Respondent's intimation that with the rescission of a contract
necessarily and inexorably follows the obliteration of liability for
what the same contracts stipulates as liquidated damages is
entirely misplaced.
A contract of. sale, such as that entered into by petitioner and
respondent, entails reciprocal obligations. As explained in Spouses
Velarde v. Court of Appeals, a contract of sale, the seller obligates
itself to transfer the ownership of and deliver a determinate thing,
and the buyer to pay therefor a price certain in money or its
equivalent.
Rescission on account of breach of reciprocal obligations is provided
for in Article 1191 of the Civil Code which provides that the power
to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible. The court shall
decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
 3. DR. RESTITUTO C. BUENVIAJE M v. SPOUSES JOVITO R.
AND LYDIA B. SALONGA, JEBSON HOLDINGS CORPORATION
AND FERDINAND JUAT BAÑEZ
G.R. No. 216023, October 05, 2016

Facts:
On May 29, 1997, Jebson, an entity engaged in the real estate
business, through its Executive Vice President, Bañez, entered into
a Joint Venture Agreement (JVA) with Sps. Salonga.
Under the JVA, Sps. Salonga, who owned three (3) parcels of land
situated in Tagaytay City, agreed for Jebson to construct a ten (10)
high-end single detached residential units, to be known as
Brentwoods Tagaytay Villas (Brentwoods). They likewise assumed
to subdivide the property into individual titles upon which Jebson
shall take the liability to pay their mortgage loan with the
Metropolitan Bank and Trust Company.
On the other hand, Jebson undertook to construct the units at its
own expense, secure the building and development permits, and the
license to sell from the HLURB, as well as the other permits
required. Out of the ten (10) units, seven (7) units, will belong to
Jebson while the remaining three (3) units, will correspond to Sps.
Salonga's share. The units allocated to Sps. Salonga must be
delivered within six (6) months after Jebson's receipt of the down
payment for the units allocated to it. Likewise, Jebson was also
allowed to sell its allocated units under such terms as it may deem
fit, subject to the condition that the price agreed upon was with the
conformity of Sps. Salonga.
On June 9, 1997, Jebson entered into a Contract to Sell with
Buenviaje over Unit 5 for a total consideration of P10,500,000.00,
without the conformity of Sps. Salonga. Out of the purchase price,
P7,800,000.00 was paid through a "swapping arrangement,"
whereby Buenviaje conveyed to Jebson a house and lot located in
Garden Villas, Tagaytay valued at P5,800,000.00 (house and lot)
and Tagaytay Highlands Golf share No. 0722 (golf share) worth
P2,000,000.00 on July 1, 1997, while the remaining balance was
paid periodically.
An additional amount for the retaining wall and air-conditioning
system was likewise paid for by Buenviaje. However, despite full
payment of the contract price, Jebson was unable to complete Unit
5 in violation of its contractual stipulation to finish the same within
12 months from the date of issuance of the building permit. Thus,
in April 1999, Buenviaje formally demanded the immediate
completion and delivery of Unit 5, to which Jebson cited the 1997
financial crisis as the reason for the delay. Accordingly, Jebson
asked to be given until the early part of the year 2000 to complete
the same but still failed to do so.
Issue:
Whether or not the remedy of specific performance in Buenviaje's
favor was proper under the prevailing circumstances of the case.

Ruling:
Specific performance and "rescission" (more accurately referred to
as resolution) are alternative remedies available to a party who is
aggrieved by a counter-party's breach of a reciprocal obligation.
This is provided for in Article 1191 of the Civil Code, which partly
reads:
Art. 1191. The power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is
incumbent upon him. The injured party may choose between the
fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he
has chosen fulfillment, if the latter should become impossible.
Specific performance is defined as "[t]he remedy of requiring exact
performance of a contract in the specific form in which it was made,
or according to the precise terms agreed upon." It pertains to the
actual accomplishment of a contract by a party bound to fulfill it."
On the other hand, resolution is defined as the "unmaking of a
contract for a legally sufficient reason does not merely terminate the
contract and release the parties from further obligations to each
other, but abrogates the contract from its inception and restores the
parties to their original positions as if no contract has been made.
Consequently, mutual restitution, which entails the return of the
benefits that each party may have received as a result of the
contract, is thus required. Particularly, resolution under Article
1191 of the Civil Code will not be permitted for a slight or casual
breach, but only for such substantial and fundamental violations as
would defeat the very object of the parties in making the agreement.
Ultimately, the question of whether a breach of contract is
substantial depends upon the attending circumstances.
 4. SPOUSES ANTONIO BELTRAN AND FELISA BELTRAN v.
SPOUSES APOLONIO CANGAYDA, JR. AND LORETA E.
CANGAYDA
G.R. No. 225033, August 15, 2018

Facts:

Sometime in August 1989, Spouses Cangayda verbally agreed to

sell the disputed property to petitioners Beltran. After making an
initial payment, petitioners took possession of the property and
built their own home. Petitioners paid 29,690.00. However, despite
demand of respondents, petitioners were not able to pay the
remaining balance of P5,310.00.00. which caused the respondent to
refer the matter to the Office of the Barangay Chairman of their
Barangay. There was an amicable settlement. However, they were
not able to pay during the period. After the expiration date of the
period to pay remaining balance, respondents served the Last and
Final Demand to vacate the disputed property within 30days from
notice. Respondents filed a complaint for recovery of possession and
damages before the RTC.
Petitioners admitted that they failed to settle their unpaid balance,
but tendered payment two days after the deadline, however,
respondent refused to accept the payment.
RTC characterized the oral agreement as contract to sell. The RTC
held that the consummation of this contract to sell was averted due
to petitioner’s failure to pay the purchase price in full. Hence, the
ownership over a disputed property never passed to petitioners. The
CA affirmed the findings of RTC.
Issue:
WON the CA erred when it affirmed the RTC decision characterizing
the oral agreement between the parties.
Ruling:
The Petition is meritorious.
The agreement between the parties is an oral contract of sale. As a
consequence, ownership of the disputed property passed to
petitioners upon its delivery. However, the CA's finding is
erroneous.
Article 1458 of the Civil Code defines a contract of sale wherein one
of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party
to pay a price certain in money or its equivalent. Meanwhile,
contract to sell is defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the
subject property despite its delivery to the prospective buyer,
commits to sell the property exclusively to the prospective buyer
upon full payment of the purchase price.
Jurisprudence defines the distinctions between a contract of sale
and a contract to sell to be as follows: In a contract of sale, title
passes to the vendee upon the delivery of the thing sold; whereas in
a contract to sell, by agreement the ownership is reserved in the
vendor and is not to pass until the full payment of the price. In a
contract of sale, the vendor has lost and cannot recover ownership
until and unless the contract is resolved or rescinded; whereas in a
contract to sell, title is retained by the vendor until the full payment
of the price.
Article 1477. The ownership of the thing sold shall be transferred to
the vendee upon the actual or constructive delivery thereof.
Article 1478. The parties may stipulate that ownership in the thing
shall not pass to the purchaser until he has fully paid the price.
In accordance with the cited provisions, ownership of the disputed
property passed to petitioners when its possession was transferred
in their favor, as no reservation to the contrary had been made.
 5. GUANIO VS MAKATI SHANGRILA
GR 190601 FEB 2011

Facts:
To make their wedding memorable, spouses Luigi Guanio and her
wife Anna booked at Shangrila Hotel in Makati. Petitioners claim
that during the3 reception, the representatives of Shangrila did not
show up despite the assurance that they would, there were
complaints of the delay of service at the dinner, other menus were
not available, waiters were rude and unapologetic when questioned
about the delay, and there was a breach of agreement of free usage
of reception until 12midnight. Petitioners filed a complaint for
breach of contract and damages before the RTC of Makati City, RTC
rendered judgement in favor of petitioners.CA reversed the decision
holding that the proximate cause of petitioner’s injury was an
unexpected increase of guests.

ISSUES:
1. Whether proximate cause is applicable to actions involving
breach of contract.

2. Whether Makati Shangri-La Hotel may be held liable for

damages.

RULING:
1. No. Proximate cause is not applicable in the case since the
petitioners’ complaint arose from a contract. The doctrine of
proximate cause is applicable only in actions for quasi-delicts and
not in actions involving breach of contract.
2. Yes. Although proximate cause is not applicable, Article 1170
of the Civil Code is. It provides that, “those who in the performance
of their obligations are guilty of fraud, negligence or delay, and
those who in any manner contravene the tenor thereof, are liable for
damages.” In culpa contractual, the mere proof of the existence of
the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief. A breach upon the contract confers
upon the injured party a valid cause for recovering that which may
have been lost or suffered. The Court ruled that the hotel could
have managed the situation better, it being held in high esteem in
the hotel and service industry.
 6. R.S. TOMAS, INC. vs. RIZAL CEMENT COMPANY, INC.
G.R. No. 173155 March 21, 2012

DOCTRINE:
Breach of contract is defined as the failure without legal reason to
comply with the terms of a contract. It is also defined as the failure,
without legal excuse, to perform any promise which forms the whole
or part of the contract.
Bad faith does not simply connote bad judgment or negligence; it
imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty through some motive or
interest or ill will that partakes of the nature of fraud.
Fraud has been defined to include an inducement through
insidious machination.
Insidious machination refers to a deceitful scheme or plot with an
evil or devious purpose.
Deceit exists where the party, with intent to deceive, conceals or
omits to state material facts and, by reason of such omission or
concealment, the other party was induced to give consent that
would not otherwise have been

FACTS:
On December 28, 1990, Rizal Cement and Tomas entered into a
contract for the supply of labor, materials, and technical
supervision for (3) job orders. Rizal agreed to pay for the job orders
while RS Tomas undertook to complete the project within 120 days
and 10% of the contract price amount for damages for any delay.
RS Tomas failed to fulfill the commitment, requested for an
extension. Despite the lapse of eleven months from the time of the
effectivity of the contract entered into between respondent and
petitioner, the latter was not able to complete the projects. Through
counsel, the respondent found out that the financial status of
petitioners showed that it it is incapable of completing the projects
as agreed upon which made them decide to terminate the contract.
A complaint for a sum of money was filed by respondent against
petitioner and Times Surety & Insurance Co., Inc praying for the
payment of the down payment and advances, plus interest and
attorney’s fees. Petitioner denied liability and claimed that it failed
to complete the projects due to respondent’s fault. It also insisted
that the proximate cause of the delay is the misrepresentation of
the respondent on the extent of the defect of the transformer.
RTC rendered a decision in favor of the petitioner and dismissed the
case with damages to be paid to R.S Tomas. The court held that the
failure of petitioner to complete the projects was not solely due to
its fault but more on respondent’s misrepresentation and bad faith.
The CA had a different conclusion and decided in favor of
respondent. It held that petitioner failed to prove that respondent
made fraudulent misrepresentations to induce the former to enter
into the contract.
ISSUE
Whether or not R.S Tomas Inc. was guilty of breach of contract -
inexcusable delay in the completion of the projects.
HELD
Yes, Petitioner tried to exempt itself from the penalties of said
breach by passing the fault to respondent. It explained that its
failure to complete the project was due to the misrepresentation of
the respondent. Records prove that petitioner asked for the price
adjustment and extension of time in order. Records show that
petitioner through letters asked for price adjustment and extension
of time within which to complete the projects and nowhere in the
said letter did petitioner claim that it could not finish the projects,
particularly the conversion of the transformer unit because the
defects were worse than the representation of respondent. In short,
there was no allegation of fraud, bad faith, concealment or
misrepresentation on the part of respondent as to the true condition
of the subject transformer.
In this case, the evidence presented is insufficient to prove that
respondent acted in bad faith or fraudulently in dealing with
petitioner. Petitioner was given the opportunity to inspect the
subject transformer; failed to obtain as much information and as a
big electrical company its failure to conduct an inspection of the
subject transformer is inexcusable. In the present case, petitioner
did not complete the projects. This gives respondent the right to
terminate the contract by serving petitioner a written notice.
 7. ALEJANDRO V. TANKEH vs. DEVELOPMENT BANK OF THE
PHILIPPINES, STERLING SHIPPING LINES, INC., RUPERTO V.
G.R. No. 171428 November 11, 2013

FACTS:
Respondent Ruperto V. Tankeh is the president of Sterling Shipping
Lines, Inc. It was incorporated to operate ocean-going vessels
engaged primarily in foreign trade. He applied for a $3.5 million
loan from public respondent Development Bank of the Philippines
for the partial financing of an ocean-going vessel named the M/V
Golden Lilac.
According to petitioner Dr. Alejandro V. Tankeh, Ruperto V. Tankeh
approached and informed him that he was operating a new
shipping line business. Petitioner claimed that respondent, who is
also petitioner’s younger brother, had told him that petitioner would
be given one thousand (1,000) shares to be a director of the
business. Petitioner signed the Assignment of Shares of Stock with
Voting Rights. He also signed the promissory note. He was the last
to sign this note as far as the other signatories were concerned.
The loan was approved by respondent Development Bank of the
Philippines and the vessel was acquired. Respondent corporation
Sterling Shipping Lines, Inc. through respondent Ruperto V.
Tankeh executed a Deed of Assignment in favor of Development
Bank of the Philippines. The deed stated that the assignor, Sterling
Shipping Lines, Inc.
Petitioner wrote a letter to respondent Ruperto V. Tankeh saying
that he was severing all ties and terminating his involvement with
Sterling Shipping Lines, Inc. He required that its board of directors
pass a resolution releasing him from all liabilities, particularly the
loan contract with Development Bank of the Philippines. In
addition, petitioner asked that the private respondents notify
Development Bank of the Philippines that he had severed his ties
with Sterling Shipping Lines, Inc.
In the Complaints, petitioner alleged that respondent Ruperto V.
Tankeh, together with Vicente L. Arenas, Jr. and Jose Maria
Vargas, had exercised deceit and fraud in causing petitioner to bind
himself jointly and severally to pay respondent Development Bank
of the Philippines the amount of the mortgage loan. Although he
had been made a stockholder and director of the respondent
corporation Sterling Shipping Lines, Inc., petitioner alleged that he
had never invested any amount in the corporation and that he had
never been an actual member of the board of directors. He alleged
that all the money he had supposedly invested was provided by
respondent Ruperto V. Tankeh. He also claimed that he only
attended one meeting of the board. During the meeting, he was
introduced to two directors representing Development Bank of the
Philippines, namely, Mr. Jesus Macalinag and Mr. Gil Corpus.
Other than that, he had never been notified of another meeting of
the board of directors.
Petitioner further claimed that he had been excluded deliberately
from participating in the affairs of the corporation and had never
been compensated by Sterling Shipping Lines, Inc. as a director and
stockholder. According to petitioner, when Sterling Shipping Lines,
Inc. was organized, respondent Ruperto V. Tankeh had promised
him that he would become part of the administration staff and
oversee company operations. Respondent Ruperto V. Tankeh had
also promised petitioner that the latter’s son would be given a
position in the company. However, after being designated as vice
president, petitioner had not been made an officer and had been
alienated from taking part in the respondent corporation.

ISSUE:
Whether or not the fraud perpetrated by respondents is serious
enough to warrant annulment of the contract.
HELD:
No. Only incidental fraud exists in this case. Therefore, it is not
sufficient to warrant the annulment of the contract’s petitioner
entered into but respondent Ruperto is liable to pay him damages.
The distinction between fraud as a ground for rendering a contract
voidable or as basis for an award of damages is provided in Article
1344: In order that fraud may make a contract voidable, it should
be serious and should not have been employed by both contracting
parties.
Jurisprudence has shown that in order to constitute fraud that
provides basis to annul contracts, it must fulfill two conditions.
First, the fraud must be dolo causante or it must be fraud in
obtaining the consent of the party. Second, this fraud must be
proven by clear and convincing evidence. In this case, it cannot be
said that fraud was serious enough to warrant the annulment of the
contract because petitioner knew of the contents of the contracts
that he signed. The required standard of proof – clear and
convincing evidence – was not met. There was no dolo causante or
fraud used to obtain the petitioner’s consent to enter into the
contract. Petitioner had the opportunity to become aware of the
facts that attended the signing of the promissory note. He even
admitted that he has a lawyer-son who the petitioner had hoped
would assist him in the administration of Sterling Shipping Lines,
Inc.
Incidental fraud only obliges the person employing it to pay
damages. There are two types of fraud contemplated in the
performance of contracts: dolo incidente or incidental fraud and
dolo causante or fraud serious enough to render a contract
voidable. If there is fraud in the performance of the contract, then
this fraud will give rise to damages. If the fraud did not compel the
imputing party to give his or her consent, it may not serve as the
basis to annul the contract, which exhibits dolo causante. However,
the party alleging the existence of fraud may prove the existence of
dolo incidente. This may make the party against whom fraud is
alleged liable for damages.
 8. SPOUSES DELFIN O. TUMIBAY and AURORA T. TUMIBAY-
deceased; GRACE JULIE ANN TUMIBAY MANUEL, legal
representative, vs. SPOUSES MELVIN A. LOPEZ and ROWENA
GAY T. VISITACION LOPEZ
G.R. No.171692 June 3, 2013

FACTS:
Petitioners alleged that they are the owners of a parcel of land
located in Sumpong, Malaybalay, Bukidnon covered by TCT No. T-
25334 in the name of petitioner Aurora that they are natural born
Filipino citizens but petitioner Delfin acquired American citizenship
while his wife, petitioner Aurora, remained a Filipino citizen; that
petitioner Aurora is the sister of Reynalda Visitacion (Reynalda);
that on July 23, 1997, Reynalda sold the subject land to her
daughter, Rowena Gay T. Visitacion Lopez (respondent Rowena),
through a deed of sale for an unconscionable amount of
P95,000.00 although said property had a market value of more
than P2,000,000.00; that the subject sale was done without the
knowledge and consent of petitioners; and that, for these fraudulent
acts, respondents should be held liable for damages. Petitioners
prayed that (1) the deed of sale dated July 23, 1997 be declared
void ab initio, (2) the subject land be reconveyed to petitioners, and
(3) respondents be ordered to pay damages.

ISSUE:
Whether or not the is sale void on grounds of public policy

RULING:
Yes. The Court held that (1) Reynalda, as agent, acted beyond the
scope of her authority under the SPA when she executed the deed of
sale dated July 23, 1997 in favor of respondent Rowena, as buyer,
without the knowledge and consent of petitioners, and conveyed the
subject land to respondent Rowena at a price not approved by
petitioners, as principals and sellers, (2) respondent Rowena was
aware of the limits of the authority of Reynalda under the SPA, and
(3) petitioners did not ratify, impliedly or expressly, the acts of
Reynalda. Under Article 1898 of the Civil Code, the sale is void and
petitioners are, thus, entitled to the reconveyance of the subject
land.
 9. TORRES-MADRID BROKERAGE, INC., vs. FEB MITSUI
MARINE INSURANCE CO., INC. and BENJAMIN P. MANALAST
AS, doing business under the name of BMT TRUCKING
SERVICES
G.R. No. 194121
Facts:
On October 7, 2000, a shipment of various electronic goods from
Thailand and Malaysia arrived at the Port of Manila for Sony
Philippines, Inc. (Sony). Previous to the arrival, Sony had engaged
the services of TMBI to facilitate, process, withdraw, and deliver the
shipment from the port to its warehouse in Biñan, Laguna. TMBI –
who did not own any delivery trucks – subcontracted the services of
Benjamin Manalastas’ company, BMT Trucking Services (BMT), to
transport the shipment from the port to the Biñan warehouse.
Incidentally, TMBI notified Sony who had no objections to the
arrangement.

Four BMT trucks picked up the shipment from the port at about
11:00 a.m. of October 7, 2000. However, BMT could not
immediately undertake the delivery because of the truck ban and
because the following day was a Sunday. Thus, BMT scheduled the
delivery on October 9, 2000. In the early morning of October 9,
2000, the four trucks left BMT’s garage for Laguna. However, only
three trucks arrived at Sony’s Biñan warehouse. At around 12:00
noon, the truck driven by Rufo Reynaldo Lapesura (NSF-391) was
found abandoned along the Diversion Road in Filinvest, Alabang,
Muntinlupa City. Both the driver and the shipment were missing.

Later that evening, BMT’s Operations Manager Melchor Manalastas

informed Victor Torres, TMBI’s General Manager, of the
development. They went to Muntinlupa together to inspect the truck
and to report the matter to the police.8
Victor Torres also filed a complaint with the National Bureau of
Investigation (NBI) against Lapesura for "hijacking." The complaint
resulted in a recommendation by the NBI to the Manila City
Prosecutor’s Office to prosecute Lapesura for qualified theft.

TMBI notified Sony of the loss through a letter dated October 10,
2000.11 It also sent BMT a letter dated March 29, 2001, demanding
payment for the lost shipment. BMT refused to pay, insisting that
the goods were "hijacked." In the meantime, Sony filed an insurance
claim with the Mitsui, the insurer of the goods. After evaluating the
merits of the claim, Mitsui paid Sony PHP7,293,386.23
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. TMBI
refused to pay Mitsui’s claim. As a result, Mitsui filed a complaint
against TMBI on November 6, 2001, TMBI, in turn, 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. TMBI 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.

On August 5, 2008, the RTC found TMBI and Benjamin Manalastas

jointly and solidarily liable to pay Mitsui PHP 7,293,386.23 as
actual damages, attorney’s fees equivalent to 25% of the amount
claimed, and the costs of the suit.14 The RTC held that TMBI and
Manalastas were common carriers and had acted negligently.
Both TMBI and BMT appealed the RTC’s verdict.

Issue:
WON TMBI is a common carrier?
Held:

Common carriers are persons, corporations, firms or associations

engaged in the business of transporting passengers or goods or
both, by land, water, or air, for compensation, offering their services
to the public. By the nature of their business and for reasons of
public policy, they are bound to observe extraordinary diligence in
the vigilance over the goods and in the safety of their passengers.

Despite TMBI’s present denials, we find that the delivery of the

goods is an integral, albeit ancillary, part of its brokerage services.
TMBI admitted that it was contracted to facilitate, process, and
clear the shipments from the customs authorities, withdraw them
from the pier, then transport and deliver them to Sony’s warehouse
in Laguna. Further, TMBI’s General Manager Victor Torres
described the nature of its services as follows: engaged in customs
brokerage business. We acquire the release documents from the
Bureau of Customs and eventually deliver the cargoes to the
consignee’s warehouse.

That TMBI does not own trucks and has to subcontract the delivery
of its clients’ goods, is immaterial. As long as an entity holds itself
to the public for the transport of goods as a business, it is
considered a common carrier regardless of whether it owns the
vehicle used or has to actually hire one. Lastly, TMBI’s customs
brokerage services including the transport delivery of the cargo –
are available to anyone willing to pay its fees. Given these
circumstances, we find it undeniable that TMBI is a common
carrier. Consequently, TMBI should be held responsible for the loss,
destruction, or deterioration of the goods it transports unless It
results from circumstances provided for in Civil Code, Art. 1734.
For all other cases - such as theft or robbery a common carrier is
presumed to have been at fault or to have acted negligently, unless
it can prove that it observed extraordinary diligence.
 10. SPOUSES ESTRADA VS. PHILIPPINE RABBIT BUS LINES
INC.,
JULY 19, 2017 G.R. NO. 203902
Facts:
On April 13, 2004, petitioners filed with the Regional Trial Court
(RTC) of Urdaneta City, Pangasinan, a Complaint for Damages
against Philippine Rabbit and respondent Eduardo R. Saylan
(Eduardo).
Dionisio Estrada argued that pursuant to the contract of carriage
between him and Philippine Rabbit, respondents were duty-bound
to carry him safely as far as human care and foresight can provide,
with utmost diligence of a very cautious person, and with due
regard for all the circumstances from the point of his origin in
Urdaneta City to his destination in Pugo, La Union. However,
through the fault and negligence of Philippine Rabbit's driver,
Eduardo, and without human care, foresight, and due regard for all
circumstances, respondents failed to transport him safely by reason
of the aforementioned collision which resulted in the amputation of
Dionisio's right arm. Dionisio filed the complaint wherein he prayed
for the following awards: moral damages of ₱500,000.00 actual
damages of ₱60,000.00, and attorney's fees of ₱25,000.00.
Denying any liability, Philippine Rabbit in its Answer averred that it
carried Dionisio safely as far as human care and foresight could
provide with the utmost diligence of a very cautious person and
with due regard for all the circumstances prevailing. While it did not
contest that its bus figured in an accident, Philippine Rabbit
nevertheless argued that the cause thereof was an extraordinary
circumstance independent of its driver's action or a fortuitous
event.
Hence, it claimed to be exempt from any liability arising therefrom.
In any case, Philippine Rabbit averred that it was the Isuzu truck
coming from the opposite direction which had the last clear chance
to avoid the mishap. Instead of slowing down upon seeing the bus,
the said truck continued its speed such that it bumped into the
right side of the bus. The proximate cause of the accident,
therefore, was the wrongful and negligent manner in which the
Isuzu truck was operated by its driver. In view of this, Philippine
Rabbit believed that Dionisio Estrada has no cause of action against
it.

Issue:
WON Petitioners entitled to Moral Damages?

Ruling:
No, Petitioners are not entitled to moral damages. Under Article
2219 of the Civil Code, a breach of contract is not one of the items
enumerated which would allow for the recovery of moral damages.
Here, there is no evidence that Philippine Rabbit induced Dionisio
to enter into a contract of carriage with the former through
insidious machination. Neither is there any indication or even an
allegation of deceit or concealment or omission of material facts by
reason of which Dionisio boarded the bus owned by Philippine
Rabbit. Likewise, it was not shown that Philippine Rabbit's breach
of its known duty, was attend by some motive, interest, or ill will.
From these, no fraud or bad faith can be attributed to Philippine
Rabbit. Hence, Petitioners are not entitled to moral damages.
11. ONA VS northstar international travel inc

12. POLO S. PANTALEON vs. AMERICAN EXPRESS

INTERNATIONAL, INC
G.R. No. 174269 May 8, 2009

Facts:
Petitioner Atty. Polo Pantaleon and his family joined a Western
Europe tour in October 1991. On the second to the last day of the
tour, the tour group arrived late in Amsterdam so they failed to
engage in their sight seeing activities. Given this delay, the group
decided to start early the next day before they end the tour.
On the last day of the tour, the group arrived at the Coster
Diamond House in Amsterdam 10 minutes before 9:00 am. The tour
should last for 30 minutes so they can still have a guided city tour
of Amsterdam.
Mrs. Pantaleon decided to purchase even before the tour a 2.5 karat
diamond brilliant cut, wherein she luckily found in the Coster
Diamond House during the tour. She also decided to purchase a
pendant and a chain along with the diamond through her
American Express Credit Card to pay for these purchases.
There was a delay of Mrs. Pantaleon’ s approval of her purchases
that caused delay on the tour group. Before heading home to
Manila, the family stopped over in the US and the same delay
happened with several purchases that they made with the AmEx
credit card.
When the family arrived in Manila from their tour, Atty. Pantaleon
sent a letter through counsel to respondent demanding an apology
for the "inconvenience, humiliation and embarrassment he and his
family thereby suffered" for respondent's refusal to provide credit
authorization for the aforementioned purchases. However, American
Express International, Inc. refused to give an apology which led to
Atty. Pantaleon instituting a complaint for damages before the
Makati RTC.
Makati RTC rendered a decision in favor of Atty. Pantaleon. Ca
reversed.
Issue:
Whether or not American Express International, Inc. had committed
a breach of its obligations to Atty. Pantaleon and is liable for
damages.
Held:
American Express International, Inc. committed a breach of its
obligations and is liable for damages because there was a delay as
provided in Article 1170, led to the particular injuries under Article
2217 of the Civil Code for which moral damages are remunerative.
The SC, however, held that Atty. Pantaleon was instead correct in
citing the principle of mora solvendi (delay on the part of the debtor
to fulfill his obligation), not mora accipiendi. The traditional role of
a credit card company as creditor applies when the cardholder has
already incurred a debt. In this case, the debt had not yet been
created; the purchase was still pending approval or disapproval by
Amex. Thus, under mora solvendi, Amex is not creditor but debtor
“insofar as it has the obligation to the customer to act promptly on
its purchases on credit.”
The delay committed by defendant was clearly attended by
unjustified neglect and bad faith, since it alleges that it took more
than an hour to look for the records of the petitioner when all data
are already stored and readily available. Likewise, it was also
attested that there were no history in the petitioner's billing history
that would warrant the imprudent suspension in the processing of
the purchase.

13. J PLUS ASIA DEVELOPMENT CORPORATION

vs. UTILITY ASSURANCE CORPORATION
G.R. No. 199650 June 26, 2013

Facts:
Martin Mabunay entered into a construction agreement with
petitioner J Plus Corporation to build a 72-room
condominium/hotel. Respondent Utility assurance Corporation
acted as a surety by providing a Performance Bond equivalent to
20% down payment.
However, upon inspection, only 31.39% the project was completed
from this, Chairman Lee of J Plus Corporation terminated the
contract and filed for arbitration with damages. Mabunay
contended however that the delay was caused by the retrofitting
and other works ordered by Mr.Lee.
The Construction Industry Arbitrary Commission held respondent
and Mabunay joint and severally liable. The CA overturned said
decision holding that Mabunay has not at all incurreddelay,
pointing out that the obligation to perform or complete the project
was not yet demandable when petitioner terminated the contract
on the account that the agreed completion date was still more than
one month away. Since the parties contemplated delay in the
completion of the entire project, the CA concluded that the failure of
the contractor to catch up with the schedule of work f acti!ities did
not constitute delay giving rise to the contractor’s liability for
damages.

Issue:
Whether or not Mabunay was in delay when Mr. Lee terminated the
contract.

Held:
Yes. Mabunay was already in delay when Mr. Lee terminated the
contract. The Court did not sustain the CA’s interpretation as it is
inconsistent with the terms of the Construction Agreement Article
1374 of the Cv!il Code requires that the various stipulations of a
contract shall be interpreted together, attributing to the doubtful
ones that sense which may result from all of them taken jointly.