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BONG ABELLA vs. FRANCISCO, G.R. No. L-32336, December 20, 1930,

FACTS

Abella entered into a contract of sale with Francisco to buy from the latter parcels of land in Manila. 2 payments havebeen made in the amount of P915. The remaining balance due on December 15, 1928 and extendible 15 days thereafteras agreed by both parties.Francisco was in Cebu and so an SPA was executed in favor of a certain Mabanta authorizing him to handle thenecessary procedures to convey the properties to Abella when the remaining balance has been satisfied. However, thereexisted an option in the contract of sale that in the event Abella fails to pay the remaining balance in the designated time,the sale of the properties to him (Abella) will be cancelled and the previous payments made be returned. Mabanta gave

Abella until January 5, 1929 to settle the amount but Abella only offered to complete the payment on January 9. Mabantarefused to accept the late payment and returned the previous payment of P915.00. Hence, Abella filed case to compelthe defendant to execute the deed of sale of the lots in question, upon receipt of the balance of the price, and asks thathe be judicially declared the owner of said lots and that the defendant be ordered to deliver them to him.

ISSUE W/N the properties should be conveyed to Abella.

HELD

No, in this case time was an essential element in the contract. The parties stipulated a fixed time to fully settle thepayment on December 15, 1928, extendible for 15 days. In accordance with article 1124 of the Civil Code, the defendantis entitled to resolve the contract for failure to pay the price within the time specified. Abella failed to pay within thespecified time.

BONG Agcaoili vs GSIS, G.R. No. L-30056, August 30, 1988

FACTS

Petitioner was awarded the house by GSIS on the condition that he should reside on it immediately. As the house isuninhabitable, petitioner vacated the area after 1 day and refused to pay further installments until respondent make it

habitable. Respondent cancelled the award on grounds that petitioner incurred delay in payment due to refusal to complywith further payments.

ISSUE W/n the petitioner incurred delay in fulfilling his obligations

HELD

In reciprocal obligations, a party incurs delay if the other does not comply or is not ready to comply in a proper mannerwith what is incumbent upon him. Respondent did not fulfill its obligation to deliver the house in a habitable state,therefore, it cannot invoke the petitioners suspension of payment as a cause to cancel the contract between them. Therewas a perfected contract of sale, it was then the duty of GSIS as seller to deliver the thing sold in a condition suitable forits enjoyment by the buyer and for the purpose contemplated. The house contemplated was one that could be occupiedfor purpose of residence in reasonable comfort and convenience.

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

FACTS

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

ISSUE Was there delay in the performance of the private respondent's obligation?

HELD

Yes. Since the respondent was negligent and incurred delay in the performance of his contractual obligations, thepetitioner is entitled to be indemnified for the damage he suffered as a consequence of the delay or contractual breach.There was a specific time agreed upon for the delivery of the materials to the cemetery. This is clearly a case of non-performance of a reciprocal obligation, as in the contract of purchase and sale, the petitioner had already done his part,which is the payment of the price. It was incumbent upon respondent to immediately fulfill his obligation to deliver thegoods otherwise delay would attach. An award of moral damages is incumbent in this case as the petitioner has suffered

so much.BONG CENTRAL BANK OF THE PHILIPPINES vs. C. A., G.R. No. L-45710, October 3, 1985, October 3, 1985

FACTS

ISSUE

HELD

BONG CETUS DEVELOPMENT INC Vs. CA, G.R. No. 77647-52, August 7, 1989, (176 SCRA 72)

FACTS

Petitioner corporation bought property from Susana Realty. In said properties, there are several person who lease withthe same. The tenants who occupy the said properties had accustomed to pay their rentals monthly through a collectorsent by Susana Realty. When petitioner corporation acquired ownership, the payment of rentals continued for 3 months,however, 3 months following thereafter , the tenants failed to pay their rentals as no collector was sent to collect fromthem.

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Subsequently, a letter was sent to the tenants demanding payment for their back rentals and to vacate the premises. Thetenants complied with the payment of back rentals but did not vacate the premises. Hence petitioner corporation filedcase of ejectment in court.

ISSUE W/N petitioner has a cause of action

HELD

The decision of the lower court and the CA were affirmed by the Supreme Court. It held that there is no cause of actionon the part of petitioner corporation for a case of unlawful detainer. Records of the case show that at the time of the filingof this complaint, the rentals had all been paid. Hence, the plaintiff cannot eject the defendants from the leased premises,because at the time these cases were instituted, there are no rentals in arrears. Sec. 2. Landlord to proceed against

tenant only after demand. No landlord or his legal representative or assign, shall be such action against a tenant forfailure to pay rent due or to comply with the conditions of his lease, unless the tenant shall have failed to pay such rent orcomply with such conditions for a period of fifteen (15) days or five (5) days in case of building, after demand therefor,made upon qqqm personally, or by serving written notice of such demand upon the person found on the premises, or byposting such notice on the premises if no persons be found thereon.

JANNO CRISMINA GARMENTS vs. CA, G.R. No. 128721, March 9, 1999

FACTS

During the period between February to April 1979,Crismina Garments, Inc. contracted the services of D'WilmarGarments, for the sewing of 20,762 pieces of assorted girls denims for P76,410. At first, the Crismina was told that thesewing of some of the pants were defective so it offered to take them back but later she was informed by the petitionersrepresentative that it was good already and asked her to return for her check.Crismina failed to pay and told her that 6,164 pairs were defective and asked for actual damages ofP49,925.51.RTCfavored D'Wilmar for the payment of P76,140 with interest at 12% per annum counted from the filing of

the complaint until fully paid. CA affirmed the ruling.On appeal, the petitioner contends that the interest rate should be only at 6% for the obligation is a contract for a piece ofwork and not a forbearance of money, goods or credit as what the respondent insists.

ISSUE Whether or not the obligation is a contract for a piece of work and not a forbearance of money, goods or credit

RULING

Yes. The obligation is a contract for a piece of work and not a forbearance of money, goods or credit. Forbearance" inthe context of the usury law is a "contractual obligation of lender or creditor to refrain, during a given period of time, fromrequiring the borrower or debtor to repay a loan or debt then due and payable." Using this standard, the obligation in thiscase was obviously not a forbearance of money, goods or credit.The Court used the guidelines set in the Eastern Shipping Lines, Inc. vs. Court of Appeals case for the proper applicationof the proper interest rates wherein 2. When an obligation, not constituting a loan or forbearance of money, isbreached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6%per annum. The said ruling roots on Art 1169 of the Civil Code where the computation of the interest starts from the day

the demand is made for the fulfillment of the obligation.JANNO KENG HUA vs. CA, G.R. No. 116863, February 12, 1998

FACTS

Sea-Land Service Inc. is a foreign shipping company licensed to do business in the Philippines. On 29 June 1982, Sea-land received a sealed container of 76 bales of unsorted waste paper inits Hong Kong terminal for shipment to KengHuaPaper Products in Manila. Sea-Land issued a bill of lading.On 9 July 1982, shipment was discharged at Manila International Container Port. Notices of arrival were sent to KengHuabut the latter failed to retrieve the shipment from thecontainer during the grace period which lasted until 29 July 1982.Itremained there until Nov. 22, 1983, or for a total of 481 days, when shipment was unloaded from the container. Sea-Land sent letters to KengHua demanding payment for demurrage which the latter kept on ignoring. The obligation fordemurrage eventually amounted to P67,340.00 before Sea-Land instituted a civil action.The RTC ruled thatKengHuabe liable for demurrage with the legal interest computed from the date of extrajudicialdemand. The same is adopted by CA in toto.KengHua contends that the legal interest shall only commence from the time

the petitioner first knew of the demurrage claim of P 67,340.00 and not on the previous demands.ISSUE WON interest ran only from the time KengHuafirst knew about the actual demurrage claim.

RULING

YES.This was the first time KengHua learned of the demurrage claim of P67,340.00 thusinterest cant run from date ofextrajudicial demands since during those times, nodemand for interest was made.When obligation not constituting loan/forbearance of money is breached, interest on amount of damages may beimposed at courts discretion at rate of 6% per annum. Wheredemand is established with reasonable certainty, theinterest shall begin to run fromthe time the claim is made judicially or extrajudicially (CC Art. 1169). But whencertaintycant be established at the time the demand is made, interest shall begin torun only from the date the judgment of thecourt is made. Actual base forcomputation of leg interest shall be on the amount finally adjudgedSince bill of lading didnt specify amount of demurrage, total amount demanded cant bedeemed to have beenestablished with reasonable certainty until trial court rendered its judgment

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JANNO SANTOS VENTURA HOCORMA FDN Vs. SANTOS, G.R. No. 153004, November 5, 2004

FACTS

ISSUE

RULING

JANNO ARRIETA Vs. NATIONAL RICE AND CORN CORP. G.R. No. L-15645, January 31, 1964

FACTS

On 19 May 1952, Paz and VitaliadoArrieta participated in the public bidding called by NARIC for the supply of 20,000metric tons of Burmese rice. As her bid of $203 per metric ton was the lowest, she was awarded the contract for thesame. As a result of the delay in the opening of the letter ofcredit by NARIC, the allocation of Arrietas supplier inRangoon was cancelled and the 5% deposit amounting to an equivalent of P200,000 was forfeited. Arrieta endeavoredbut failed to restore the cancelled Burmese rice allocation, and thus offered Thailand rice instead. Such offer was rejectedby NARIC. Subsequently, Arrieta sent a letter to NARIC, demanding compensation for the damages caused her in thesum of US$286,000.00 representing unrealized profit. The demand having been rejected, she instituted the case.

ISSUEWhether or not the appellant failure to open immediately the letter of credit in disputeamounted to a breach of thecontract of July 1, 1952 for which it may be held liable indamages.

RULING

The Court ruled that the principal reason for the cancellation of the allocation contracted by the appellee in Rangoon,Burma, was the failure of NARIC to open the letter of credit within the contemplated period. The failure must, therefore,betaken as the immediate cause for the consequent damage which resulted. Secondly, from the correspondence andcommunications, it is clear that what singularly delayed the opening of the stipulated letter of credit and which, in turn,caused the cancellation of the allocation in Burma, was the inability of NARICto meet the condition imposed by the Bankfor granting the same.The liability of the appellant, however, stems not alone from the failure or inability to satisfythe requirements of the bank.Its culpability arises from its willful and deliberate assumptionof contractual obligations even as it was well aware of itsfinancial incapacity to undertake the presentation.Under the provision of Article 1170 of the Civil Code, not only debtorsguilty of fraud,negligence or defaults in the performance of obligations are decreed liable; in general, everydebtor whofails in the performance of his obligations is bound to indemnify for the losses anddamages caused.

JANNO EASTERN SHIPPING LINES vs. CA, G.R. No. 97412, July 12, 1994

FACTS

Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment was insured with a marine policy.Upon arrival in Manila, it was discharged unto the custody of Metro Port Service, which excepted to one drum, said to bein bad order and which damage was unknown to Mercantile Insurance Company. Allied Brokerage Corporation receivedthe shipment from Metro, one drum opened and without seal. Allied delivered the shipment to the consigneeswarehouse. The latter excepted to one drum which contained spillages while the rest of the contents was

adulterated/fake. As consequence of the loss, the insurance company paid the consignee, so that it became subrogatedto all the rights of action of consignee against the defendants Eastern Shipping, Metro Port and Allied Brokerage. Theinsurance company filed before the trial court. The trial court ruled in favor of plaintiff and ordered defendants to pay theformer with present legal interest of 12% per annum from the date of the filing of the complaint. On appeal by defendants,the appellate court denied the same and affirmed in toto the decision of the trial court.

ISSUEWhether or not the payment of legal interest on an award for loss or damage is to be computed from the time thecomplaint is filed or from the date the decision appealed from is rendered.

RULING

The ruling of the Court consolidated as to how the interest be determined to compute for the interest most especiallythose in the Concept of Actual and Compensatory Damages enumerated as follows:I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached,the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code governin determining the measure of recoverable damages.II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate ofinterest, as well as the accrual thereof, is imposed, as follows:1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance ofmoney, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shallitself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to theprovisions of Article 1169 23 of the Civil Code.2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount ofdamages awarded may be imposed at the discretion of the court at the rate of 6% per annum. 25 No interest, however,shall be adjudged on unliquidated claims or damages except when or until the demand can be established withreasonable certainty. 26 Accordingly, where the demand is established with reasonable certainty, the interest shall beginto run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot

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be so reasonably established at the time the demand is made, the interest shall begin to run only from the date thejudgment of the court is made (at which time the quantification of damages may be deemed to have been reasonablyascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest,whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until itssatisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

MHAI MAGAT vs. MEDIALDEA, G.R. No. L-37120, April 20, 1983

FACTS

Guerrero needs taximeters and radio transceivers to operate his fleet of taxicabs inside the US Naval Base in

Subic Bay, a requirement imposed by the US Navy Exchange for the operation of taxicabs in the area. Magat is a supplier of materials and goods from Japan to the US Navy Exchange known for his on-timedeliveries. Guerrero, through agent Aligada, entered into a contract with Magat for the purchase of the taximeters and radiotransceivers from Japan through Magats Japanese business associates. The taximeters were successfully purchasedand paid in accordance with this arrangement. As for the radio transceivers, Magat made a firm offer in writing quoting $77,620.59 as the price and thatdelivery will be made 60-90 days after receipt of advice from Guerrero of the radio frequency assigned to him by theproper authorities. Guerrero accepted this offer as shown by his signed conformity in the written offer, which acceptancewas communicated to Magat. While waiting for the assigned radio frequency, Magat, believing that the Guerrero would faithfully fulfill hiscontract and to ensure no delays in the delivery, advised his business associates in Japan to proceed with themanufacture of such transceivers. Upon receipt of the frequency assignment, Guerrero advised Magat to proceed with the purchase only after thelatter has obtained a letter of credit. It being a normal business practice to open letters of credit for importations, Magatawaited such. Guerrero failed to obtain the letter of credit and operated his taxicabs without the required radio transceivers.This was despite repeated follow-ups by Magat. Magat now sues Guerrero for breach of contract and claims for damages. Guerrero moved to dismiss on ground of lack of cause of action, stating that the damages claimed are notpresent or have not happened, and are all just anticipated.

ISSUE WON Guerrero is liable for damages

RULING

He is. The essential elements of a cause of action are present: [1] the existence of a legal r ight to the plaintiff; [2] acorrelative duty of the defendant and [3] an act or omission of the defendant in violation of the plaintiff's right, with

consequent injury or damage to the latter for which he may maintain an action for recovery of damages or otherappropriate relief.Article 1170 of the Civil Code provides:Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any mannercontravene the tenor thereof are liable for damages.The phrase "in any manner contravene the tenor" of the obligation includes any illicit act or omission which impairs thestrict and faithful fulfillment of the obligation and every kind of defective performance.

MHAI NPC, vs. EIN CHEMICAL CORP. and PHIL. INTERNATIONAL SURETY Co., G.R. No. L-24856, Nov. 14, 1986

FACTS

In March 1956, the National Power Corporation (NPC), after public bidding, awarded to the EIN ChemicalCorporation (EIN) the contract to supply and deliver 3,691 long tons of crude sulfur in one shipment to the Maria CristinaFertilizer Plant in Iligan City on or before May 10, 1956, for the price of P374,374.91 To guarantee its obligation, EIN posted a bond from the Philippine International Surety Co. (PISC) in the amount

of P74,874.98 EIN obtained from the NPC a letter of credit with Philippine National Bank (PNB), New York amounting toUS$185,794.00 with an expiry date originally set for May 30, 1956 but reset by NPC upon request of EIN to June 30,1956 Anticipating failure to deliver on the contract date, EIN requested and was granted by NPC a further extension ofthe expiry date of the letter of credit to September 30, 1956 On August 19, 1956, EIN delivered only 1,000 long tons of crude sulfur ostensibly due to lack of bottoms, butwas paid by NPC the amount of P101,764.05 Even though it failed to deliver as per contract, EIN requested to be allowed to participate in another bidding tobe conducted by NPC, but the latter disqualified EIN from participating in the said bidding. NPC instead sued EIN for damages for breach of contract.o Defenses of EIN:

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The extension of the expiry date of the letter of credit carried with it the extension of the delivery time NPC failed to inform it that it would take 45 days to ship from the U.S. Atlantic ports to the Philippines The scarcity of bottoms could have been avoided had NPC opened the letter of credit within a reasonable time.

ISSUE WON EIN committed a breach of contract which would entitle NPC to damages

RULING

EIN committed a breach of contract, entitling NPC to damages.

The provisions of the contract indicate that there is no relationship between the delivery date and the opening of the letterof credit which was anyway opened within a reasonable time after the signing of the contract. The extensions of the

expiry dates of the letter of credit cannot, by any means, be interpreted as extensions of the delivery date. As the termsshow, no other delivery date can even be inferred.

NPC had no duty to inform EIN of the shipping time between the US Atlantic ports and the Philippines since all shippersand suppliers are presumed to know this as part of their business. Also, the problem of bottoms is one that is well-knownand anticipated by suppliers and shippers, and NPC cannot be faulted for such problem since it opened the letter of crediwithin a reasonable time after the signing of the contract.

EIN clearly committed a breach of contract by failing to completely deliver on its contract in spite of the leniency of theNPC in enforcing its rights. Laxity of a contracting party in the enforcement of its rights under the contract does not in anymanner diminish its rights thereunder.

MHAI PCIB , vs. C A and FORD Phils. Inc. and CITIBANK, G.R. No. 121413, Jan. 29, 2001.

FACTS

Ford Philippines drew and issued Citibank checks in favor of the Commissioner of Internal Revenue as payments of itstaxes. The said check was deposited to PCIB and was subsequently cleared at Central Bank. Proceeds of the checkswere never received by the Commissioner, but were encashed without authority by Mr. Rivera, a confidential employee ofFord, and diverted to the accounts of members of a syndicate. The acting Commissioner of Internal Revenue officiallyinformed Ford that its check in the amount of P4,746,114.41 was not paid to the government, hence, Ford has to pay thesaid amount. Ford was forced to make second payment of its taxes. Thus, an action to recover the amounts from thecollecting and drawee banks was filed.

ISSUEWON Ford has the right to recover from the collecting bank (PCIB) and the drawee bank(Citibank) the value of thechecks intended as payment to the Commissioner of Internal Revenue

RULING

Ford has the right to recover from PCIB and Citibank.

PCIB failed to verify the authority of Mr. Rivera to negotiate the checks. The neglect of PCIB employees to verify whether

Mr. Rivera was duly authorized showed lack of care and prudence required in the circumstances. The mere fact thatforgery was committed by a drawer-payors confidential employee or agent, who by virtue of his position had unusualfacilities to perpetrate the fraud and imposing the forged paper upon the bank, does not entitle the bank to shift the loss tothe drawer-payor, in the absence of some circumstance raising estoppels against the drawer.

On the other hand, Citibank as drawee bank was likewise negligent in the performance of its duties as it failed toestablish that its payment of Fords checks was made in due course and legally in order.

Invoking the doctrine of comparative negligence, both PCIB and Citibank failed in their respective obligations and bothwere negligent in the selection and supervision of their employees resulting in the unauthorized encashment of Citibankchecks issued by Ford. Thus, they are equally liable for the loss of the proceeds of said checks.

MHAI TELEFAST COMMUNICATIONS PHILIPPINE WIRELESS INC vs. CASTRO, G.R. No. 73867, February 29, 1988

FACTS

In 1956, Sofia Castro came home from the US and was vacationing in her mothers house in Pangasinan. Her mother,Consolacion, died during such visit. Castro sent a telegram, through Telefast, to her father and siblings who were then inthe US, announcing her mothers death. The telegram was accepted by Telefast in its Dagupan office after payment ofrequired fees or charges. However, the telegram never reached the addressee. Consolacion was interred without herhusband and other children. When she returned to the US, Castro learned that the telegram never reached her father.Thus, she and her siblings and their father sued Telefast for damages arising from breach of contract. Telefast interposedthat the telegram never reached the addressee due to technicaland atmospheric factors beyond its control. It appearsthough that no attempt made was made by Telefast to inform Castro of the circumstances and explaining why thetelegram reached the addressee.

ISSUEWON Telefast is liable for damages arising from breach of contract even if there existed technical and atmosphericfactors that led to its failure to comply with the terms of the contract

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RULING

Telefast is liable.

Art. 1170 of the Civil Code provides:Those who in the performance of their obligation are guilty of fraud, delay, negligence, and those who in any mannercontravene the tenor thereof, are liable for damages.

Art. 2176 of the Civil Code also provides:Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damagedone.

In the case at bar, Sofia and Telefast entered into a contract whereby, for a fee, Telefast undertook to send Castrosmessage overseas by telegram. This, Telefast did not do, despite Castros performance of her obligation, i.e. paying therequired charges. Telefast is guilty of contravening its obligation and is thus liable for damages. Also, Telefasts not doinganything to advise Sofia of the circumstances which led to its failure to comply with its obligation tantamounts to grossnegligence or bad faith.

MHAI YHT Realty Corp. vs. CA, G.R. No. 126780, Feb. 17, 2005

FACTS

McLoughlin, an Australian businessman, had been staying at Tropicana Copacabana Apartment Hotel during his trips tothe Philippines. Such hotel is owned and operated by YHT Realty Corporation. He lost his money (US and Australiandollars) and several jewelries on two occasions during such stays in the hotel, which items he placed for safekeepinginside the hotels safety deposit box.The employees of the hotel, Lainez and Payam, who had custody of one of the two keys to the safety deposit box (theother one was with McLoughlin) admitted that they allowed Tan, a close friend of McLoughlin who introduced him to thehotel, to open the box. Tan admitted that he stole McLoughlin s items, and thereafter issued a promissory note in favor ofMcLoughlin on the payment of the amount lost. Despite the execution of promissory note by Tan, McLoughlin insistedthat it must be the hotel who must assume responsibility for the loss he suffered. The hotel, however, refused to acceptthe responsibility relying on the conditions for renting the safety deposit box entitled Undertaking For the Use Of SafetyDeposit Box, to wit:To release and hold free and blameless TROPICANA APARTMENT HOTEL from any liability arising from any loss in thecontents and/or use of the said deposit box for any cause whatsoever, including but not limited to the presentation or usethereof by any other person should the key be lost;

ISSUE WON the hotel is liable for the loss of the items left with it for safekeeping by McLoughlin

RULING

The hotel is liable.

Under Article 1170 of the New Civil Code, those who, in the performance of their obligations, are guilty of negligence, areliable for damages. As to who shall bear the burden of paying damages, Article 2180, paragraph (4) of the same Codeprovides that the owners and managers of an establishment or enterprise are likewise responsible for damages causedby their employees in the service of the branches in which the latter are employed or on the occasion of their functions.

Also, if an employee is found negligent, it is presumed that the employer was negligent in selecting and/or supervisinghim for it is hard for the victim to prove the negligence of such employer Thus, given the fact that the loss of McLoughlinsmoney was consummated through the negligence of Tropicanas employees in allowing Tan to open the safety depositbox without the guests consent, both the assisting employees and YHT Realty Corporation itself, as owner and operatorof Tropicana, should be held solidarily liable pursuant to Article 2193.

As to the Undertaking For The Use of Safety Deposit Box, the same is null and void. Article 2003 is controlling, thus:Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable forthe articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility ofthe former as set forth in Articles 1998 to 2001 is suppressed or diminished shall be void.The hotel business like the common carriers business is imbued with public interest. Catering to the public, hotelkeepersare bound to provide not only lodging for hotel guests but also security to their persons and belongings. The twin dutyconstitutes the essence of the business. The law in turn does not allow such duty to the public to be negated or dilutedby any contrary stipulation in so-called undertakings that ordinarily appear in prepared forms imposed by hotel keeperson guests for their signature.It is the loss through force majeure that may spare the hotel-keeper from liability. In the caseat bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible forceto qualify the same as force majeure.Petitioners contend that McLoughlins case was mounted on the theory of contract, but the trial court and the appellatecourt upheld the grant of the claims of the latter on the basis of tort. There is nothing anomalous in how the lower courtsdecided the controversy for this Court has pronounced a jurisprudential rule that tort liability can exist even if there arealready contractual relations. The act that breaks the contract may also be tort.

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MEGAN Ridjo Tape & Chemical Corp. vs. CA, G.R. No. 126074, Feb. 24, 1998.

FACTS:

This is a petition to review the decision of the CA which reversed that of the RTC of Quezon City, ordering petitioners topay private respondent Manila Electric Co. (MERALCO) the amount of P415,317.66 and P89,710.58 plus the costs ofsuit.

On September 4, 1991 and on July 30, 1992, petitioners received a letter from MERALCO demanding payment ofP415,317.66 and P89,710.58 , respectively, allegedly representing unregistered electric consumption for the periodNovember 7, 1990, to February 13, 1991 and for the period July 15, 1991 to April 13, 1992. MERALCO justified itsdemand on the ground that the unregistered electric consumption was due to the defects of the electric meter located inthe premises of petitioners. Since petitioners refused to pay the amount, MERALCO notified them that their electricity bedisconnected.

ISSUE: WON petitioners should pay the amounts demanded by Meralco despite the defective meter installed by the latter.

RULING:

Decision MODIFIED. Petitioners are ordered to pay MERALCO the amount P168,342.75, representing its averageelectric consumption three months prior to the period in controversy.

It must be underscored that MERALCO has the imperative duty to make a reasonable and proper inspection of i tsapparatus and equipment to ensure that they do not malfunction, and the due diligence to discover and repair defectstherein. Failure to perform such duties constitutes negligence.

The SC concludes that this is a case of negligence on the part of MERALCO for which it must bear the consequences. Its

failure to make the necessary repairs and replacement of the defective electric meter was obviously the proximate causeof the instant dispute between the parties.

MERALCO, being a public utility vested with vital public interest, is impressed with certain obligations towards itscustomers and any omission on its part would be prejudicial to its interest. For in the final analysis, the bottom line is thatthose who do not exercise such prudence in the discharge of their duties shall be made to bear the consequences ofsuch oversight.

MEGAN Meralco vs. T.E.A.M. Electronics Corp., G.R. No. 131723, Dec. 13, 2007

FACTS:

TEC is a utility company supplying electricity in Metro Manila. The TEC entered into a contract of lease with Ultra to usethe latters DCIM building for a period of 5 years. On Sept2mber 28, 1987, a team of inspectors representing thepetitioner found that the TEC allegedly tampered with two meters installed at the DCIM building and had not beenregistering the proper consumption.

MERALCO disconnected the electrical supply from the DCIM building due to the failure of the TEC to pay the differentialbilling of P 7,040,401.01. TEC demanded there connection of electrical service, claiming it had nothing to do with thealleged tampering.

MERALCO then sent out another investigative team in TECs NS building which revealed that the electric meters werealso not registering the proper energy consumption. Petitioner then demanded P280, 813.72 as the differential billing-which TEC paid.

ISSUE:

1.WoN TEC tampered with the electric meters installed at i ts DCIM and NSbuildings;2. If so, WoN it is liable for the differential billing as computed by petitioner;3. WoN petitioner was justified in disconnecting the electric power supply in TECs DCIM building

RULING:

1. Tampering in:

a. DCIM: NO, because there is a cloud of doubt over the petitioners claim of meter tampering, due to the fact that therewas no drastic difference between the consumption of the TEC before and after the petitioners inspection.b. NS: NO, because such allegation was not proven. The meters were enclosed in a metal cabinet, the metal seal ofwhich was unbroken, with the petitioner having sole access to the said meters.

2. NO. Because no tampering was committed.

3. NO. Although the petitioner sent a demand letter to the DEC for payment, it did not include any notice that electricitywould be disconnected. Disconnection was subject to the prior requirement of a 48-hour written notice of disconnectionunder P.D. No. 401. The decree penalized unauthorized water, electrical or telephone connections and such acts as theuse of tampered electrical meters.

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DOCTRINE: Basic is the rule that to recover actual damages, not only must the amount of loss be capable ofproof; it must also be actually proven with a reasonable degree of certainty, premised upon competent proof orthe best evidence obtainable.

MEGAN Rodzssen Supply Co., Inc. vs. FEBTC, 357 SCRA 618

FACTS:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the January 21, 1993Decision2 of the CA which affirmed with modification the ruling of the RTC of Bacolod City.

On January 15, 1979, defendant Rodzssen Supply, Inc. opened with plaintiff Far East Bank and Trust Co. a 30-day

domestic letter of credit, in the amount of P190,000.00 in favor of Ekman and Company, Inc. (Ekman) for the purchasefrom the latter of five units of hydraulic loaders, to expire on February 15, 1979. The three loaders were delivered todefendant for which plaintiff paid Ekman and which defendant paid plaintiff before expiry date of LC. The remaining twoloaders were delivered to defendant but the latter refused to pay. Ekman pressed payment to plaintiff. Plaintiff paidEkman for the two loaders and later demanded from defendant such amount as it paid Ekman. Defendant refusedpayment contending that there was a breach of contract by plaintiff who in bad faith paid Ekman, knowing that the twounits of hydraulic loaders had been delivered to defendant after the expiry date of subject LC.

ISSUE: WON petitioner is liable to respondent.

RULING:

The SC agrees with the CA that petitioner should pay respondent bank the amount the latter expended for the equipmentbelatedly delivered by Ekman and voluntarily received and kept by petitioner. Equitable considerations behoove us toallow recovery by respondent. True, it erred in paying Ekman, but petitioner itself was not without fault in the transaction.It must be noted that the latter had voluntarily received and kept the loaders since October 1979. When both parties to a

transaction are mutually negligent in the performance of their obligations, the fault of one cancels the negligence of theother and, as in this case, their rights and obligations may be determined equitably under the law proscribing unjustenrichment.

MEGAN CRISOSTOMO vs. CA, G.R. No. 138334, August 25, 2003, August 25, 2003

FACTS:

Petitioner Crisostomo contracted the services of respondent Caravan Travel and Tours International, to arrange andfacilitate her booking, ticketing, and accommodation in a tour called Jewels of Europe. She was given a 5% discountand a waived booking fee because her niece, Meriam Menor, was the companys ticketing manager.

Menor went to her aunts residence to deliver Crisostomos travel documents and plane tickets and get her payment.Menor told her to be in NAIA on Saturday. When Crisostomo got to the airport on Saturday, she discovered that the flightshe was supposed to take had already departed the previous day. She complained to Menor, and was urged by the latterto take another tour, instead. She took the services of British Pageant.

Upon returning from Europe, Crisostomo demanded P61,421.70 from Caravan Tours, representing the differencebetween the sun she paid for Jewels and the amount she owed the company for British Pageant. Caravan refused.

Thus, Crisostomo filed a complaint against Caravan for breach of contract of carriage and damages. The trial court heldin favor of Crisostomo, and ordered Caravan to pay her, because it was negligent in erroneously advising Crisostomo ofher departure. However, Crisostmo is also guilty of contributory negligence (for failing to verify the exact date and time ofdeparture). On appeal, CA declared that Crisostomo is more negligent. As a lawyer and well-travelled person, she shouldhave known better. MR of Crisostomo was also denied. Hence this petition.

ISSUE: W/N respondent Caravan is guilty of negligence and is liable to Crisostomo for damages.

RULING:

No. A contract of carriage or transportation is one whereby a certain person or association of persons obligatethemselves to transport persons, things, or news from one place to another for a fixed price.

Respondent is not engaged in the business of transporting either passengers of goods and is therefore not a commoncarrier. Respondents services as a travel agency include procuring tickets and facilitating travel permits or visas as wellas booking customers for tours. A common carrier is bound by law to carry as far as human care and foresight canprovide using the utmost diligence of very cautious persons and with due regard for all circumstances. But since Caravanis a travel agency, it is not bound to observe extraordinary diligence in the performance of its obligations.

For them, the standard of care required is that of a good father of a family. This connotes reasonable care consistent withthat which an ordinarily prudent person would have observed when confronted with a similar situation.

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We do not concur with the finding that Menors negligene concurred with that of Crisostomo. No evidence to proveMenors negligence.

The negligence of the obligor in the performance of the obligations renders him liable for damages for the resulting losssuffered by the obligee. Fault or negligence of an obligor consists in the his failure to exercise due care and prudence inthe performance of the obligation. The degree of diligence required depends on the circumstances of the specificobligation and whether one has been negligent is a question of fact that is to be determined in the case.Petition denied. CA affirmed.

MEGAN Sabena Belgian World Airways vs. CA,G.R. No. 104685 March 14, 1996, 255 SCRA 25

FACTS:

Mrs. Fule purchased three round trip tickets for herself and two children from Sabena; the route: Manila-Brussels-Barcelona-Madrid. During the trip, they encountered inconveniences, such as, walking under the drizzle afterdisembarking; delayed connecting flight to Barcelona; and a missing luggage, among others. They allegedly incurredmedical and hotel expenses. Thus, Mrs. Fule made a letter-complaint to Sabena office. The Madrid Office offered to payabout half of what she was asking, that the rest would be paid by the Manila Office. A certain Yancha made her sign adocument in French language which she did not understand. It turned out that the document was a quitclaim. The trialcourt awarded them actual, moral and exemplary damages, among others. CA modified the decision by reducing theamount of moral and exemplary damages.

ISSUE: WON Sabena is liable to the Fules for damages arising from breach of contract of carriage.

RULING:

Yes. In the imposition of moral damages, the defendants act must be wrongful or wanton or done in bad faith. Here,there is no finding that the carriers delay in delivering Mrs. Fules luggage was wrongful or due to bad faith. While there is

failure on the part of the carrier in protecting Mrs. Fule et al from the rain, its neglect was not so gross as to amount tobad faith or wantoness. What is involved in this case is simple negligence, considering that the rain through which Mrs.Fule et al had to walk was a slight drizzle.

Nonetheless, there is still bad faith in making Mrs. Fule sign a quitclaim without informing her of its contents.

With respect to moral damages, the rule is that the same are recoverable in a damage suit predicated upon a breach ofcontract of carriage only where (1) the mishap results in the death a of passenger and (2) it is proved that the carrier wasguilty of fraud and bad faith, even if death does not result. (Ibid, at p. 13) As the appellate court found the petitioner guiltyof bad faith in letting the respondent sign a quitclaim without her knowledge or understanding and contrary to what shewas planning to do, the reduced award of moral and exemplary damages is proper and legal.

JUVERT SARMIENTO vs. Sps. CABRIDO, G.R. No. 141258, April 9, 2003

FACTS:

Tomasa Sarmientos friend, Dra. Virginia Lao, requested her to find someone toreset a pair of diamond earrings into twogold rings. Sarmiento sent Tita Payag withthe earrings to Dingdings Jewelry Shop, owned and managed by spouses LuisandRose Cabrido, which accepted the job order for P400. Petitioner provided 12 gramsof gold to be used in crafting thepair of ring settings. After 3 days, Payag deliveredto the jewelry shop one of the diamond earrings which was earlierappraised asworth .33 carat and almost perfect in cut and clarity. Respondent Marilou Sun wenton to dismount thediamond from original settings. Unsuccessful, she asked theirgoldsmith, Zenon Santos, to do it. He removed the diamondby twisting the settingwith a pair of pliers, breaking the gem in the process. Petitioner required therespondents to replacethe diamond with the same size and quality. When theyrefused, the petitioner was forced to buy a replacement in theamount of P30,000.Rose Cabrido, manager, denied having any transaction with Payag whom she metonly after the lattercame to seek compensation for the broken piece of jewelry.Marilou, on the other hand, admitted knowing Payag to availtheir services andrecalled that when Santos broke the jewelry, Payag turned to her forreimbursement thinking she wasthe owner. Santos also recalled that Payagrequested him to dismount what appeared to him as sapphire and that the

stoneaccidentally broke. He denied being an employee of the Jewelry shop. The MTCC of Tagbilaran City rendered adecision in favor of the petitioner. On appeal,Respondents conceded to the existence of an agreement for crafting a pairof goldrings mounted with diamonds but denied they had obligation to dismount thediamonds from the original setting.Petitioner claims that dismounting the diamondsfrom the original setting was part of the obligation assumed byrespondents underthe contract of service. The RTC ruled in favor of the respondents. CA affirmed the judgment of theRTC.

ISSUE:1. WON dismounting of the diamond from its original setting was part of theobligation2. WON respondents are liable fordamages3. WON respondents are liable for moral damages

RULING:

1. YESRatioThe contemporaneous and subsequent acts of the parties reveal the scopeof obligation assumed by the jewelry shop toreset the pair of earrings.Reasoning

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Marilou expressed no reservation regarding the dismounting of thediamonds. She could have instructed Payag to havethe diamonds dismounted first,but instead, she readily accepted the job order and charged P400. After the newsettingswere completed, she called petitioner to bring the diamond earrings to bereset. She examined one of them and went onto dismount the diamond from theoriginal setting. After failing to do the same, she delegated it to the goldsmith.Havingacted the way she did, she cannot deny that the dismounting was part of the shops obligation to reset the pair ofearrings.2. YESRatioThose who, in the performance of their obligations are guilty of fraud,negligence or delay and those who in any mannercontravene the tenor thereof, areliable for damages. The fault or negligence of the obligor consists in the omission of that

diligence which is required by the nature of the obligation and correspondswith the circumstances of the persons, of thetime and of the place.ReasoningSantos acted negligently in dismounting the diamond from its originalsetting. Instead of using a miniature wire, which isthe practice of the trade, he useda pair of pliers. Marilou examined the diamond before dismounting and found thesameto be in order. The subsequent breakage could only have been caused bySantos negligence in using the wrongequipment. Res ipsa loquitur. Facts show thatMarilou, who has transacted with Payag on at least 10 occasions, andSantos, whohas been accepting job referrals through respondents for 6 mos. now, are employedat the jewelry shop. The

jewelry shop failed to perform its obligation with theordinary diligence required by the circumstances.3. YESRatioMoral damages may be awarded in a breach of contract when there is proof that defendant acted in bad faith, or wasguilty of gross negligence amounting tobad faith, or in wanton disregard of his contractual obligation.

ReasoningSantos was a goldsmith for more than 40 years. He should have knownthat using a pair of pliers would have entailedunnecessary risk of breakage. The gross negligence of their employee makes the respondents liable of moraldamages.DispositionPetition was granted and CA decision was reversed. Respondents wereordered to pay P30,000 as actual damages andP10,000 as moral damages.

JUVERT AUSTRIA vs. COURT OF APPEALS, G.R. No. L-29640, June 10, 1971

FACTS:

On Jan. 1961, Maria G. Abad acknowledged having received from Guillermo Austriaone (1) pendant with diamondsvalued at P4,500.00, to be sold on commission basisor to be returned on demand.- On Feb. 1961, however, whilewalking home Abad was said to have been accostedby two men, who hit her and snatched her purse containing thepieces of jewelryand cash. The incident became the subject of a criminal case against certainpersons.- As Abad failed toreturn the jewelry or pay for its value notwithstanding demands,Austria brought an action against her and her husband forrecovery of the pendantor of its value, and damages. Answering the allegations of the complaint,defendants spouses setup the defense that the alleged robbery had extinguishedtheir obligation.- Trial court rendered judgment for the plaintiff. Itwas held that defendants failed toprove the fact of robbery, or, if indeed it was committed, that defendant Maria Abadwasguilty of negligence when she went home without any companion, although itwas already getting dark and she wascarrying a large amount of cash andvaluables on the day in question, and such negligence did not free her from liabilityfodamages for the loss of the jewelry. - CA reversed the judgment on the basis of the lack of credibility of the twodefensewitnesses who testified on the occurrence of the robbery, and holding that the factsof robbery and defendantMaria Abad's possession of the pendant on thatunfortunate day have been duly established, declared respondents notresponsiblefor the loss of the jewelry on account of a fortuitous event. Plaintiff thereuponinstituted the presentproceeding.

ISSUE:

1. WON Court of Appeals erred in finding that there was robbery in the case, thusextinguishing Abads liability, although

nobody has been found guilty of thesupposed crime.2.

RULING:

1. No. To constitute a caso fortuito that would exempt a person from responsibility,it is necessary that (1) the event mustbe independent of the human will (or rather,of the debtor's or obligor's); (2) the occurrence must render it impossible forthedebtor to fulfill the obligation in a normal manner, and that (3) the obligor must befree of participation in, or aggravationof, the injury to the creditor.- The point at issue in this proceeding is how the fact of robbery is to be establishedin orderthat a person may avail of the exempting provision of Article 1174 of thenew Civil Code, which reads as follows:" ART.1174. Except in cases expressly specified by law, or when it is otherwisedeclared by stipulation, or when the nature of theobligation requires theassumption of risk, no person shall be responsible for those events which could notbe foreseen, orwhich, though foreseen, were inevitable."- The emphasis of the provision is on the events, not on the agents orfactorsresponsible for them. To avail of the exemption granted in the law, it is notnecessary that the persons responsiblefor the occurrence should be found orpunished; it would only be sufficient to establish that the unforeseeable event,

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therobbery in this case, did take place without any concurrent fault on the debtor'spart, and this can be done bypreponderant evidence.2.No. It is undeniable that in order to completely exonerate the debtor for reason of a fortuitous event, such debtor mustalso be free of any concurrent or contributoryfault or negligence. This is apparent from Article 1170 of the Civil Code ofthePhilippines, providing that:"ART. 1170. Those who in the performance of their obligations are guilty offraud,negligence, or delay, and those who in any manner contravene the tenor thereof.are liable for damages."- It is clearthat under the circumstances prevailing at present in the City of Manilaand its suburbs, with their high incidence of crimesagainst persons and property,that renders travel after nightfall a matter to be sedulously avoided withoutsuitableprecaution and protection. The conduct of respondent Maria G. Abad, in returningalone to her house in the

evening, carrying jewelry of considerable value, would benegligent per se, and would not exempt her from responsibilityin the case of arobbery. We are not persuaded, however, that the same rule should obtain tenyears previously, in 1961,when the robbery in question did take place, for at thattime criminality had not by far reached the levels attained in thepresent day.DispositionPetition in this case is hereby dismissed, with costs against thepetitioner.

JUVERT Southeastern College vs. CA G.R. No. 126389 July 10, 1998

FACTS:

On October 11, 1989, powerful typhoon Saling hitMetro Manila. Buffeted by very strong winds, the roof of SoutheasternColleges building was partly ripped offandblown away, landing on and destroying portions of theroofing of privaterespondents Dimaanos house. Privaterespondent alleged that the damage to their house renderedthe sameuninhabitable, forcing them to stay temporarily inothers houses. An ocular inspection of the destroyedbuilding wasconducted by a team of engineers headed bythe city building official. The fourth floor of subject schoolbuilding wasdeclared as a structural hazard. Lower courtawarded damages. CA affirmed but reduced damages.

ISSUE:WON the damage of the PRs house resulting from theimpact of the falling portions of the school buildings roof ripped offwas due to fortuitous event? NO

RULING:

Private respondents, in establishing the culpability of petitioner, merely relied on the aforementioned reportsubmitted by ateam which made an ocular inspection of petitioners school building after the typhoon. As the termimparts, an ocularinspection is one by means of actual sightor viewing. What is visual to the eye through is not alwaysreflective of the realcause behind.Petitioners obtained a permit from the city building officialbefore the construction of its building. Havingobtained bothbuilding permit and certificate of occupancy is prima facie

evidence of the regular and proper construction of subjectschool building. When part of its roof needed repairs ofthedamage inflicted by typhoon Saling, the city engineer gave thego-signal for such repairs without any deviation fromtheoriginal design. It subsequently authorized the use of the entirefourth floor of the same building. These only prove thatsubjectbuilding suffers from no structural defect.Petitioner presented its vice president for finance andadministration whotestified that an annual maintenanceinspection and repair of subject school building were regularlyundertaken. Petitionerwas even willing to present itsmaintenance supervisor to attest to the extent of such regularinspection but privaterespondents agreed to dispense with histestimony and simply stipulated that it would be corroborativeof the vicepresidents narration. Besides, no complaintregarding any defect on the same structure has ever beenlodged before hisoffice prior to the institution of the case atbench. It is a matter of judicial notice that typhoons arecommon occurrences inthis country. If subject schoolbuildings roofing was not firmly anchored to its trusses,obviously, it could not havewithstood long years and severaltyphoons even stronger than Saling.Petitioner has not been shown negligent or at faultregardingthe construction and maintenance of its school building inquestion and that typhoon Saling was the proximatecause of the damage suffered by private respondents house.

JUVERT Bricktown vs Amor Tierra Devt., G.R. No. 112182, December 12, 1994

FACTS:

Private respondents are owners of a house at 326 College Road, Pasay while petitioner owns a four-storey schoolbuilding along the same College Road. That on October 11, 1989, a powerful typhoon hitMetro Manila. Buffeted by verystrong winds, the roof ofthe petitioners building was partly ripped off andblown away, landing on and destroying portionsof the roofing of private respondents house. When thetyphoon had passed, an ocular inspection of the destroyed buildingwas conducted by a team of engineers headed by the city building official.In their report, they imputed negligence to thepetitioner for the structural defect of the building andimproper anchorage of trusses to the roof beams to cause for theroof be ripped off the building, therebycausing damage to the property of respondent.Respondents filed an action beforethe RTC for recovery of damages based on culpa aquiliana. Petitioner interposed denial of negligence and claimed thatthe typhoon as an Act of God is the sole cause of thedamage. RTC ruled in their favor relying on the testimony of the CityEngineer and the report made after the ocular inspection. Petitioners appeal before the CA which affirmed the decision ofthe RTC.Hence this present appeal.

ISSUE: (1)Whether the damage on the roof of the building of private respondents resulting from the impactof the falling portions

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of the school buildings roof ripped off by the strong winds of typhoonSaling, was, within legal contemplation, due tofortuitous event?(2)Whether or not an ocular inspection is sufficient evidence to prove negligence?

RULING:

On the first issue, Yes, petitioner should be exonerated from liability arising from the damage caused bythe typhoon.Under Article 1174 of the Civil Code, Except in cases expressly specified by the law, or when it is otherwise declared bystipulation, or when the nature of the obligation requires the assumptionof risk, no person shall be responsible for thoseevents which could not be foreseen, or which, thoughforeseen, were inevitable.In order that a fortuitous event mayexempt a person from liability, it is necessary that he be free from anyprevious negligence or misconduct by reason ofwhich the loss may have been occasioned.12

An act of God cannot be invoked for the protection of a person who has been guilty of gross negligence in nottrying toforestall its possible adverse consequences. When a persons negligence concurs with an act of God in producingdamage or injury to another, such person is not exempt from liability by showing that theimmediate or proximate cause ofthe damages or injury was a fortuitous event. When the effect is foundto be partly the result of the participation of man whether it be from active intervention, or neglect, or failure to act the whole occurrence is hereby humanized, andremoved from the rules applicable to actsof God.In the case under consideration, the lower court accorded full credenceto the finding of the investigatingteam that subject school buildings roofing had no sufficient anchorage to hold it inposition especiallywhen battered by strong winds. Based on such finding, the trial court imputed negligence to petitionerand adjudged it liable for damages to private respondents.There is no question that a typhoon or storm is a fortuitousevent, a natural occurrence which may beforeseen but is unavoidable despite any amount of foresight, diligence or care.In order to be exempt fromliability arising from any adverse consequence engendered thereby, there should have beenno humanparticipation amounting to a negligent act. In other words; the person seeking exoneration from liabilitymust not

be guilty of negligence. Negligence, as commonly understood, is conduct which naturally or reasonably creates unduerisk or harm to others. It may be the failure to observe that degree of care,precaution, and vigilance which thecircumstances justify demand, or the omission to do something whicha prudent and reasonable man, guided byconsiderations which ordinarily regulate the conduct of humanaffairs, would do.On the second issue, it bearsemphasizing that a person claiming damages for the negligence of another has the burden of proving the existence offault or negligence causative of his injury or loss. The factsconstitutive of negligence must be affirmatively established bycompetent evidence,19not merely bypresumptions and conclusions without basis in fact. Private respondents, in establishing the culpability ofpetitioner, merely relied on the aforementioned report submitted by a team which made an ocular inspection ofpetitioners school building after the typhoon. As the term imparts, an ocular inspection isone by means of actual sight orviewing. What is visual to the eye through, is not always reflective of thereal cause behind.In the present case, other than

the said ocular inspection, no investigation was conducted to determinethe real cause of the partial unroofing ofpetitioners school building.

JUVERT DIOQUINO vs. LAUREANO, May 28, 1970

FACTS:

Plaintiff Atty. Pedro Dioquino is the owner of a car which defendant FedericoLaureano borrowed.-Defendant was the sole passenger, aside from plaintiffs driver, when the car wasstoned by some mischievous boys, asa result, breaking the windshield-Dioquino sued Laureano; included in the suit are the latters wife and father.-Dioquino prevailed in the lower court but only against principal defendantLaureano; wife and father being absolved.-

Nonetheless, the appeal hence is by all three defendants.

ISSUE: WON Laureano should be liable for damages thus sustained by Dioquinos car

RULING:

Laureano has no obligation to pay for the damages sustained due to throwingof stones that broke the windshield. Theextraordinary circumstance independentof his will as obligor exempts him of the same by reason offorce majeure or casofortuito;There is no requirement of diligence beyond what human care andforesight can provide.

Reasoning- Art. 1174 of the Civil Code provides:General Rule: No person shall be responsible for those events which could notbe,foreseen, or which, though foreseen were inevitable.Obiter

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Exception: Except in cases expressly specified by the law, or when it is otherwisedeclared by stipulation, or when thenature of the obligation requires theassumption of r isk- What is contemplated in the exception is resulting liability even ifcaused by afortuitous event where the party charged may be considered as having assumedthe risk incident in the natureof the obligation to be performed.-Force Majeure or Caso Fortuitoare extraordinary events not foreseeable orunavoidable (events that though foreseen, are inevitable)-Republic v.

Luzon Stevedoring Corp

The mere difficulty to foresee the happeningis not impossibility to foresee the same. The very precautions adopted byappellantprove that the possibility of danger was not only foreseeable, but actually foreseen,and was notcaso fortuito." In that case then, the risk was quite evident and thenature of the obligation such that a party could rightfully be deemedas havingassumed itDispositionWherefore the decision of the lower court assigning liability toDefendant is Reversed; Affirmed insofar as it dismissed thecase against the twoother defendants

ELKIE Nakpil and Sons Vs Court of appeals, October 3, 1986

FACTS

Private respondents Philippine Bar Association (PBA) non-profit organization formed under corporation law, decidedto put up a building in Intramuros, Manila. Hired to plan the specifications of the building were Juan Nakpil & Sons, whileUnited Construction was hired to construct it. The proposal was approved by the BOD and signed by the Pres. RamonOzaeta. The building was completed. A strong earthquake occurred which caused the building heavy damage and led thebuilding to tilt forward, leading the tenants to vacate the premises. United Construction took remedial measures to sustainthe building. PBA filed a suit for damages against United Construction, but United Construction subsequently filed a suitagainst Nakpil and Sons, alleging defects in the plans and specifications. Technical Issues in the case were referred toMr. Hizon, as a court appointed Commissioner. PBA moved for the demolition of the building, but was opposed. PBAeventually paid for the demolition after the building suffered more damages in 1970 due to previous earthquakes. TheCommissioner found that there were deviations in the specifications and plans, as well as defects in the construction ofthe building.

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

RULING

Art. 1174 of the NCC states that no person shall be responsible for events, which could not be foreseen. But to beexempt from liability due to an act of God, the ff must occur:

a. cause of breach must be independent of the will of the debtorb. event must be unforeseeable or unavoidablec. event must be such that it would render it impossible for the debtor to fulfill the obligationd. debtor must be free from any participation or aggravation of the industry to the creditor.

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

ELKIE NPC vs CA, ECI Co., 1986

FACTS

ECI entered into a contract with NAWASA to undertake a construction of a tunnel from Ipo Dam to Bicti including allmaterials, equipment and labor for the said construction for 800 days. The project, first involves tunnel works and secondconsists of outworks at both ends of the tunnel. After ECI finished the tunnel works in Bicti, it transferred all its

equipments to Ipo Dam to finish the second phase of the project. Record shows that on Nov., typhoon Welming hitCentral Luzon, passing through defendants (NPC) Angat Hydro-electric Project and Dam at lpo, Bulacan. Strong windsstruck the project area, and heavy rains occasionally fell causing the water in the reservoir of the Angat Dam to rise at therate of 60 centimeters per hour. To prevent an overflow of water from the dam, since the water level had reached thedanger height, defendant corporation caused the opening of the spillway gates. ECI sued NPC for damages. The trialcourt and the court of appeals found that defendant NPC was negligent when opened the gates only at the height of thetyphoon holding that it could have opened thespill gates gradually and should have done so before the typhoon came.Thus both courts awarded ECI for damages.NPC assails the decision of the CA as being erroneous on the grounds, interalia, that the loss sustained by ECI was due to force majeure. It argued that the rapid rise of water level in the reservoirdue to heavy rains brought about by the typhoon is an extraordinary occurrence that could not have been foreseen. Onthe other hand, ECI assails the decision of the court of appeals modifying the decision of the trial court eliminating theawarding of exemplary damages. Hence this present appeal.

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ISSUE Whether or not NPC is liable for damages even though the cause of the damage is due to a force majeure?

RULING

Yes. NPC was undoubtedly negligent because it opened the spillway gates of the Angat Dam only at the height oftyphoon Welming when it knew very well that it was safer to have opened the same gradually and earlier, as it was alsoundeniable that NPC knew of the coming typhoon at least four days before it actually struck. And even though thetyphoon was an act of God or what we may call force majeure, NPC cannot escape liability because its negligence wasthe proximate cause of the loss and damage. Thus, if upon the happening of a fortuitous event or an act of God, thereconcurs a corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligationwhich results in loss or damage, the obligor cannot escape liability. Thus, when the negligence of a person concurs withan act of God in producing a loss, such person is not exempt from liability by showing that the immediate cause of thedamage was the act of God. To be exempt from liability for loss because of an act of God, he must be free from anyprevious negligence or misconduct by which the loss or damage may have been occasioned.

ELKIE PHILCOMSAT CORP. vs. Globe Telecom Inc., May 25, 2004

FACTS

Philcomsat & Globe entered into an agreement whereby Philcomsat obliged itself to establish, operate & provide an IBSstandard B earth station for the exclusive use of US defense communications Agency (USDCA) with term of 60 monthsor 5 yrs In turn, Globe promised to pay Philcomsat monthly rentals.

At the execution of the agreement, both parties knew that military Bases Agreement was to expire in 1991. SubsequentlyPhilcomsat installed the earth station & USDCA made use of the same. The senate passed a resolution expressing itsdecision not to concur in the ratification of the treaty of friendship. So the RP-US Military bases Agreement terminated iton Dec. 1992. Globe notified Philcomsat its instruction to discontinue effective Nov. 1992, in view of the withdrawal of USmilitary personnel. Philcomsat sent a reply to pay the stipulated rentals even after Globe shall have discontinued the use

of earth station after said date. After the US military force left Subic, Philcomsat sent a letter demanding payment.However, Globe refused to listen to Philcomsat s demand because the termination of the US military bases agreementconstitute force majeure and said event exempted it from paying rentals.

ISSUEWhether or not the termination of the RP-US Military Bases Agreement constitutes force majeure which would exemptGlobe from complying with its obligation to pay rentals under its Agreement with Philcomsat?

RULING

Yes. In order that Globe may be exempt from non-compliance with its obligation to pay rentals under Section 8, theconcurrence of the following elements must be established:a. the event must be independent of the human will;b. the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner;c. and the obligor must be free of participation in, or aggravation of, the injury to the creditor.

Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the

same expired in 1991, because the prerogative to ratify the treaty extending the life there of belonged to the Senate.Resolution No. 141 are acts, direction or request of the Government of the Philippines and circumstances beyond thecontrol of the defendant. The formal order, the letter notification from ATT and complete withdrawal of all the militaryforces and personnel are also acts and circumstances beyond the control of the defendant. Article 1174, which exemptsan obligor from liability on account of fortuitous events or force majeure, refers not only to events that are unforeseeable,but also to those which are foreseeable, but inevitable.

ELKIE REPUBLIC Vs. LUZON STEVEDORING CORPORATION, September 29, 1967

FACTS

A barge being towed by tugboats "Bangus" and "Barbero" all owned by Luzon Stevedoring Corp. smashed into one ofthe wooden piles of the Nagtahan Bailey Bridge due to the swollen current of the Pasig after heavy rains which occurreddays before. The Republic sued Luzon Stevedoring for actual and consequential damages. Luzon Stevedoring claimed ithad exercised due diligence in the selection and supervision of its employees; that the damages to the bridge werecaused by force majeure; that plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is an obstruction to

navigation.

ISSUEWhether or not the collision of appellant's barge with the supports or piers of the Nagtahan bridge was in law caused byfortuitous event or force majeure?

RULING

There is a presumption of negligence on part of the employees of Luzon Stevedoring, as the Nagtahan Bridge isstationary. For force majeure by definition, are extraordinary events not foreseeable or avoidable, "events that could notbe foreseen, or which, though foreseen, were inevitable" It is, therefore, not enough that the event should not have beenforeseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficultyto foresee the happening is not impossibility to foresee the same. Luzon Stevedoring knew the perils posed by theswollen stream and its swift current, and voluntarily entered into a situation involving obvious danger; it therefore assuredthe risk, and cannot shed responsibility merely because the precautions it adopted turned out to be insufficient. It is thusliable for damages.

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ELKIE VDA DE VILLARUEL Vs. MANILA MOTOR CO. INC. and COLMENARES, December 13, 1958

FACTS

The plaintiffs Villaruel and defendant Manila Motor Co. Inc. entered into a contract whereby the defendant agreed tolease plaintiffs building premises. The leased premises were placed in the possession of the defendant until the invasion.The Japanese military occupied and used the property leased as part of their quarters in which no payment of rentalswere made. Upon liberation of the said city, the American forces occupied the same buildings that were vacated by theJapanese. When the US gave up the occupancy of the premises, defendant decided to exercise their option to renew thecontract, in which they agreed. However, before resuming the collection of rentals, Villaruel demanded payment of rentalscorresponding to the time the Japanese military occupied the leased premises, but defendant refused . As a resultplaintiff gave notice seeking the rescission of the contract and the payment of rentals; this was rejected by the defendant.The plaintiff still demanded for rents in debts and for the rescission of the contract of lease, despite that defendant paid toplaintiff the sum of P350 for the rent. The plaintiff commenced an action before the CFC against defendant company.During the pendency of the case, the leased building was burned down. Because of the occurrence, plaintiffs demandedreimbursement from the defendants, afterwards, they filed a supplemental complaint to include a 3rd cause of action, therecovery of the value of the burned building. The trial court rendered judgment in favor of the plaintiff. Hence thedefendants appeal.

ISSUE Is Manila Motor Co. Inc. liable for the loss of the leased premises?

RULING

No. Clearly, the lessor's insistence upon collecting the occupation rentals was unwarranted in law. Hence, their refusal toaccept the current rentals without qualification placed them in default (mora creditoris or accipiendi) with the result thatthereafter, they had to bear all supervening risks of accidental injury or destruction of the leased premises. While notexpressly declared by the Code of 1889, this result is clearly inferable from the nature and effects of mora. In otherwords, the only effect of the failure to consign the rentals in court was that the obligation to pay them subsisted and thelessee remained liable for the amount of the unpaid contract rent, corresponding to the period from when it was occupiedby the Japanese; it being undisputed that when the commercial buildings were burned, the defendants appellants havepaid the contract rentals at the rate of P350 per month. But the failure to consign did not eradicate the default (mora) ofthe lessors nor the risk of loss that lay upon them.

KHALIL Tanguiling vs. CA and Herce,Jr., G.R. No. 117190, Jan. 2, 1997

FACTS

This case involves the proper interpretation of the contract entered into between the parties. Tanguilig proposed toprivate respondent Vicente Herce to construct windmill system for him. They agreed on a 60,000 pesos contract price.30,000 pesos was paid by Vicente Herce as downpayment while another 15,000 pesos was paid as an installmentleaving only a balance of 15,000 pesos. When Vicente Herce failed to pay the remaining balance to Tanguilig due to thefact that he paid it to another company named SPMGI which in turn constructed a deep well that will connect the windmillto it, Tanguilig filed a complaint on the ground that the construction of the deep well was not covered by the contract price

of 60,000 pesos and thus it should not be credited to him. The trial court ruled in favour of Tanguilig which ruled that theconstruction of the deep well was not included in the agreement. It was later reversed by the Court of Appeals whichruled that the construction of the deep well was included in the agreement because the word deep well was mention inthe proposal. Hence this appeal.

ISSUE1.) Whether or not the agreement to construct the windmill system included the installation of a deep well.2.) Whether or not petitioner is under obligation to reconstruct the windmill after it collapsed.

RULING

The Court ruled that the construction of the deep well was not included in the agreement between both parties.Thepreponderance of evidence supports the finding of the trial court that the installation of a deep well was not included inthe proposals of petitioner to construct a windmill system for respondent. Notably, nowhere in either proposal is theinstallation of a deep well mentioned, even remotely. Neither is there an itemization or description of the materials to beused in constructing the deep well. There is absolutely no mention in the two (2) documents that a deep well pump is acomponent of the proposed windmill system. 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 andsubsequent acts shall be principally considered. An examination of such contemporaneous and subsequent acts ofrespondent as well as the attendant circumstances does not persuade us to uphold him.The second issue is not a novelone. Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Interestingly, theevidence does not disclose that there was actually a typhoon on the day the windmill collapsed. Petitioner merely statedthat there was a "strong wind." But a strong wind in this case cannot be fortuitous - unforeseeable nor unavoidable. Onthe contrary, a strong wind should be present in places where windmills are constructed, otherwise the windmills will notturn.

KHALIL FIRST METRO INVEST CORP Vs. ESTE DEL SOL MOUNTAINRESERVE Inc., November 15, 2001

FACTS

Petitioner FMIC granted respondent Este del Sol a loan of (P7,385,500.00) to finance the construction and developmentof the Este del Sol Mountain Reserve, a sports/resort complex project located at Barrio Puray, Montalban, Rizal. Inaccordance with the terms of the Loan Agreement, respondent Este del Sol executed several documents as security for

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payment, among themndividual Continuing Suretyship agreements by co-respondents Valentin S. Daez, Jr., Manuel Q.Salientes, Ma. Rocio A. De Vega, Alexander G. Asuncion, Alberto M. Ladores, Vicente M. De Vera, Jr. and Felipe B.Sese, all dated February 2, 1978, to guarantee the payment of all the obligations of respondent Este del Sol up to theaggregate sum (P7,500,000 00) each.Failing to secure from the individual respondents, as sureties of the loan ofrespondent Este del Sol by virtue of their continuing surety agreements, petitioner instituted on November 11, 1980 theinstant collection suitagainst the respondents. The trial court ruled in favour of petitioner. Later on, the decision wasreversed by the CA. The appellate court found and declared that the fees provided for in the Underwriting andConsultancy Agreements were mere subterfuges to camouflage the excessively usurious interest charged by thepetitioner FMIC on the loan of respondent Este del Sol. Hence this appeal.

ISSUEWhether or not the Underwriting and Consultancy Agreements were mere subterfuges to camouflage the excessivelyusurious interest charged by the petitioner FMIC on the loan of respondent Este del Sol.

RULING

The Court ruled that in the instant case, several facts and circumstances taken altogether show that the Underwriting andConsultancy Agreements were simply cloaks or devices to cover an illegal scheme employed by petitioner FMIC toconceal and collect excessively usurious interestAll the foregoing established facts and circumstances clearly belie thecontention of petitioner FMIC that the Loan, Underwriting and Consultancy Agreements are separate and independenttransactions. Contracts and stipulations, under any cloak or device whatever, intended to circumvent the laws againstusury shall be void. The borrower may recover in accordance with the laws on usury.the instant petition is herebyDENIED, and the assailed Decision of the Court of Appeals is AFFIRMED.

KHALIL SECURITY BANK vs. RTC, October 23, 1996

FACTS

In 1983, Eusebio acquired 3 separate loans from Security Bank amounting to P265k. The agreed interest rate was 23%per annum. The promissory note was freely and voluntarily signed by both parties. Leia Ventura was the co-maker.Eusebio defaulted from paying. Security Bank sued for collection. Judge Gorospe of the Makati RTC ordered Eusebio topay but he lowered the interest rate to 12% per annum.

ISSUE Whether or not the courts have liberality to reduce stipulated interest rates to the legal rate of 12% per annum

RULING

No. From the examination of the records, it appears that indeed the agreed rate of interest as stipulated on the three(3)promissory notes is 23% per annum. The applicable provision of law is the Central Bank Circular No. 905 which tookeffect on December 22, 1982. Section 1 of Central Bank Circular No. 905 states that the rate of interest, includingcommissions, premiums, fees and other charges, on a loan or forbearance of anymoney, goods or credits, regardless ofmaturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or judicial,shall not be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended. Only in the absence ofstipulations will the 12% rate be applied or if the stipulated rate is grossly excessive. Further, Eusebio never questionedthe rate. He merely expressed to negotiate the terms and conditions. The promissory noteswere signed by both parties

voluntarily. Therefore, stipulations therein are binding between them.KHALIL ORIA VS. Mc MICKING, January 18, 1912

FACTS

Gutierrez Hermanos filed an action for recovery of a sum of money against OriaHermanos& Co. and herein plaintiff filedan action for recovery also for the same defendant. Before the institution of the suits, members of the Company dissolvedtheir relations and entered into a liquidation. Tomas Oria acting in behalf of his co-owners entered into a contract with theherein plaintiff for the purpose of transferring and selling all the property which the OriaHermanos& Co. owned andamong the goods stated on that instrument was the steamship Serpantes and which the subject of this litigation. Whenthe Trail Court resolved the action for recovery filed by Gutierrez Hermanos and judgment was in his favor, The sheriffdemanded to Tomas Oria to make payment but the latter said there were no funds to pay the same. The sheriff thenlevied on the steamer, took possession of the same and announced it for public auction. Herein plaintiff claimed that he isthe owner of the steamer by virtue of the selling of all the properties of the said Company.

ISSUE

1. Whether or not there was a valid sale between OriaHermanos& Co. to Manuel Oria y Gonzales as against the creditors

of the company.

2. Whether or not the sale was fraudulent.

RULING

The Court ruled that at the time of said sale the value of the assets of OriaHermanos& Co., as stated by the partnersthemselves, was P274,000. The vendee of said sale was a son of Tomas Oria and a nephew of the other two personsheretofore mentioned which said three brothers together constituted all of the members of said company.The plaintiff is ayoung man of 25 years old and has no property before the said selling. The court had laid down the rules in determiningwhether a there has been fraud prejudicing creditors: 1) consideration of conveyance is fictitious; 2) transfer was madewhile the suit against him (Tomas Oria y Balbas) was pending; 3) sale by insolvent debtor; 4) evidence of insolvency; 5)transfer of all properties; 6) the sale was made between father and son; 7) and the failure of the vendee to take exclusivepossession of the property. The case at bar shows every one of the badges of fraud.

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KHALIL PARKS Vs. PROVINCE OF TARLAC, July 13, 1926

FACTS

On October 18, 1910, Conception Cirer and James Hill, the owners of parcel of land No. 2 referred to in the complaint,donated it perpetually to the Municipality of Tarlac, subject to the condition that it will be absolutely and exclusively for theerection of a central school and the other for a public park, the work to commence in both cases within the period of sixmonths from the date of the ratification by the parties of the document evidencing the donation. The donation wasaccepted by Mr. Santiago de Jesus in the same document on behalf of the municipal council of Tarlac of which he wasthe municipal president and subsequently transferred the title to this property to the Province of Tarlac. On January 15,1921, Conception Cirer and James Hill sold this parcel of land to herein plaintiff George L. Parks. The plaintiff allegingthat the condition of the donation had not been complied with and invoking the sale of this parcel of land made byCorceptionCirerandJames Hill in his favor, brought this action against the Province of Tarlac, the Municipality of Tarlac,CorceptionCirer and James Hill and prayed that he be declared the absolute owner entitled to the possession of thisparcel of land.The Lower Court dismissed the complaint.

ISSUE

Whether or not the plaintiff, George L. Parks, has a right of action to recover the parcelof land from the Province of Tarlacon the ground that the condition imposed is a suspensive or condition precedent and therefore, the said municipality hadnever acquired a right theretosince the condition was never performed.

RULING

The Supreme Court ruled that the contention of the appellant that a condition precedenthaving been imposed in thedonation and the same not having been complied with, thedonation never became effective is without merit anderroneous. The characteristic of acondition precedent is that the acquisition of the right is not effected while said conditionisnot complied with or is not deemed complied with. Meanwhile, nothing is acquired and thereis only an expectancy ofright. Consequently, when a condition is imposed, the compliance of which cannot be effected except when the right isdeemed acquired, such a condition cannot be a condition precedent but a condition subsequent or resolutory condition.

BENN QUIJADA vs. CA, G.R. No. 126444

FACTS:

On April 5, 1956, Trinidad Quijada and her sisters executed a deed of conditional donation in favor of the Municipality ofTalacogon, the condition being that the land shall be used exclusively for the construction of a provincial high school.Trinidad remained in possession of the land. On July 29, 1962, Trinidad sold the land to respondent Regalado Mondejar.In 1980, the heirs of Trinidad, herein petitioners, filed a complaint for forcible entry against the respondent. In 1987, theproposed campus did not materialize, and the Sangguniang Bayan enacted a resolution donating back the land to thedonor. In the meantime, respondent Mondejar conveyed portions of the land to the other responde