CASES FOR OBLICON
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SSS v Moonwalk
FACTS:
Plaintiff SSS approved the application of Defendant Moonwalk fora loan of
P30,000,000 for the purpose of developing and constructing a housing
project. Out of P30,000,000 approved loan, the sum of P9,595,000 was
released to defendant Moonwalk. A third Amendment Deed of Mortgage
was executed for the payment of the amount of P9,595,000. Moonwalk
made a total payment of P23,657,901.84 to SSS for the loan principal of
P12,254,700. After settlement of the account, SSS issued to Moonwalk the
release of Mortgage for Moonwalk’s Mortgaged properties. In letter to
Moonwalk, SSS alleged that it committed an honest mistake in releasing
defendant. That Moonwalk has still 12% penalty for failure to pay on time
the amortization which is in the penal clause of the contract. Moonwalk’s
counsel told SSS that it had completely paid its obligation to SSS and
therefore there is no recovery of any penalty.
ISSUE:
Is the penalty demandable even after the extinguishment of the principal
obligation?
HELD:
No. There has been a waiver of the penal clause as it was not demanded
before the full obligation was fully paid and extinguished. Default begins
from the moment the creditor demands the performance of the
obligation.In this case, although there were late amortizations there was no
demand made by SSS for the payment of the penalty
henceMoonwalk is not in delay in the payment of the penalty.No delay
occurred and there was no occasion when the penalty became demandable
and enforceable.
Since there was no default in the performance of the main obligation-
payment of the loan- SSS was never entitled to recover any penalty.
If the demand for the payment of the penalty was made prior to the
extinguishment of the obligation which are: 1. e principal obligation 2. The
interest of 12% on the principal obligation 3.The penalty of 12% for late
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payment for after demand, Moonwalk would be in delay and therefore
liable for the penalty.
RCBC v CA
FACTS
GOYU was granted credit facilities and accommodations by the RCBC
initially in the amount of P 30 million. Upon GOYU’s application, the credit
was increased to P50 Million, then P90 Million, then P117 Million. As
security, GOYU executed 2 REM and 2 CM in favor of RCBC, which were
registered with the RD. Under the 4 contracts, GOYU committed itself to
insure the mortgaged properties with an insurance company approved by
RCBC, and subsequently endorse and deliver the insurance policies to
RCBC. GOYU then obtained 10 policies from MICO. GOYU’s buildings
were gutted by fire and it claimed indemnity from MICO but the latter
denied the claim on the ground that the insurance policies were either
attached pursuant to writs of attachments/garnishments issued by various
courts or that the proceeds were also claimed by other creditors of GOYU.
GOYU, alleging better rights to the proceeds, filed for specific performance
and damges before the RTC of Manila Br 3. The trial court ruled in favor of
GOYU for the fire loss claims but ordered it to pay RCBC its loan
obligations. On appeal to the CA, it affirmed the ruling with regard to the
liabilities of MICO and RCBC. The trial court and appellate courts both
held that, since the endorsements do not bear the signature of any officer of
GOYU, they concluded that the endorsements are defective. The CA then
ordered GOYU to pay its obligation to RCBC without any interest,
surcharges and penalties.
ISSUE
            Whether or not the ruling of the appellate court is correct.
HELD
The Court held in the negative. The essence or rationale for the payment of
interest or cost of money is separate and distinct  from that of surcharges
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and penalties. The charging of interest for loans forms a very essential and
fundamental element of the banking business.
Petitions granted.
Barzaga v CA
Facts:
The petitioner’s wife was suffering from a debilitating ailment and with
forewarning of her impending death, she expressed her wish to be laid to
rest before Christmas day to spare her family of the long vigils as it was
almost Christmas. After his wife passed away, petitioner bought materials
from herein private respondents for the construction of her niche. Private
respondents however failed to deliver on agreed time and date despite
repeated follow-ups. The niche was completed in the afternoon of the 27th
of December, and Barzaga's wife was finally laid to rest. However, it was
two-and-a-half (2-1/2) days behind schedule.
Issue: Was there delay in the performance of the private
respondent's obligation?
Ruling: Yes. Since the respondent was negligent and incurred delay in the
performance of his contractual obligations, the petitioner is entitled to be
indemnified for the damage he suffered as a consequence of the delay or
contractual breach. There was a specific time agreed upon for the delivery
of the materials to the cemetery.
This is clearly a case of non-performance of a reciprocal obligation, as in
the contract of purchase and sale, the petitioner had already done his part,
which is the payment of the price. It was incumbent upon respondent to
immediately fulfill his obligation to deliver the goods otherwise delay
would attach. An award of moral damages is incumbent in this case as the
petitioner has suffered so much.
Pantaleon v American Express
FACTS:
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After the Amsterdam incident that happened involving the delay of
American Express Card to approve his credit card purchases worth US
$13,826.00 at the Coster store, Pantaleon commenced a complaint for
moral and exemplary damages before the RTC against American Express.
He said that he and his family experienced inconvenience and humiliation
due to the delays in credit authorization. RTC rendered a decision in favor
of Pantaleon. CA reversed the award of damages in favor of Pantaleon,
holding that AmEx had not breached its obligations to Pantaleon, as the
purchase at Coster deviated from Pantaleon's established charge purchase
pattern.
ISSUE:
1. Whether or not AmEx had committed a breach of its obligations to
Pantaleon.
2. Whether or not AmEx is liable for damages.
RULING:
1. Yes. The popular notion that credit card purchases are approved “within
seconds,” there really is no strict, legally determinative point of
demarcation on how long must it take for a credit card company to approve
or disapprove a customer’s purchase, much less one specifically contracted
upon by the parties. One hour appears to be patently unreasonable length
of time to approve or disapprove a credit card purchase.
The culpable failure of AmEx herein is not the failure to timely approve
petitioner’s purchase, but the more elemental failure to timely act on the
same, whether favorably or unfavorably. Even assuming that AmEx’s credit
authorizers did not have sufficient basis on hand to make a judgment, we
see no reason why it could not have promptly informed Pantaleon the
reason for the delay, and duly advised him that resolving the same could
take some time.
2. Yes. The reason why Pantaleon is entitled to damages is not simply
because AmEx incurred delay, but because the delay, for which culpability
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lies under Article 1170, led to the particular injuries under Article 2217 of
the Civil Code for which moral damages are remunerative. The somewhat Solar Harvest v Davao Corrugated Carlon Corp
unusual attending circumstances to the purchase at Coster – that there was
a deadline for the completion of that purchase by petitioner before any FACTS:
delay would redound to the injury of his several traveling companions – In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered
gave rise to the moral shock, mental anguish, serious anxiety, wounded into an unwritten agreement. Solar Harvest placed orders for customized
feelings and social humiliation sustained by Pantaleon, as concluded by the boxes for its business of exporting bananas at USD 1.10 each. Petitioner
RTC.  made a full payment of USD 40,150.00. By Jan. 3, 2001 petitioner had not
received any of the ordered boxes. On Feb. 19, 2001 Davao Corrugated
Lorenzo Shipping Corp v BJ Mathel International replied that as early as April 3, 1998, order/boxes are completed and Solar
Harvest failed to pick them up from their warehouse within 30 days from
FACTS: Petitioner Lorenzo Shipping is engaged in coastwise shipping and completion as agreed upon. Respondent mentioned that petitioner even
owns the cargo M/V Dadiangas Express. BJ Marthel is engaged in trading, placed additional order of 24,000.00 boxes, out of which, 14,000 had
marketing an dselling various industrial commodities. Lorenzo Shipping already been manufactured without any advance payment from Solar
ordered for the second time cylinder lines from the respondent stating the Harvest. Davao Corrugated then demanded that Solar Harvest remove
term of payment to be 25% upon delivery, the balance payable in 5 bi- boxes from their warehouse, pay balance of USD 15,400.00 for the
monthly equal installments, no again stating the date of the cylinder’s additional boxes and P132,000 as storage fee. On August 17, 2001 Solar
delivery. It was allegedly paid through post dated checks but the same was harvest filed complaint against Davao Corrugated for sum of money and
dishonored due to insufficiency of funds. Despite due demands by the damages claiming that the agreement was for the delivery of the boxes,
respondent, petitioner falied contending that time was of the essence in the which Davao Corrugated did not do. They further alleged that whenever
delivery of the cylinders and that there was a delay since the respondent repeated follow-up was
committed said items “ within two months after receipt of fir order”. RTC made to Davao Corrugated, they would only see sample boxes and get
held respondents bound to the quotation with respect to the term of promise of delivery. Due to Davao Corrugated’s failure to deliver, Solar
payment, which was reversed by the Court of appeals ordering appellee to Harvest had to cancel the order and demanded payment and/or refund
pay appellant P954,000 plus interest. There was no delay since there was which Davao Corrugated refused to pay. Davao Corrugated counterclaimed
no demand.  that they had already completed production of the 36,500 boxes plus an
additional 14,000 boxes (which was part of the additional 24,000 order
ISSUE:  Whether or not respondent incurred delay in performing its that is unpaid). The agreement was for Solar Harvest to pick up the boxes,
obligation under the contract of sale  which they did not do. They even averred that on Oct. 8, 1998 Solar
Harvest’s representative Bobby Que even went to the warehouse to inspect
RULING:  By accepting the cylinders when they were delivered to the and saw that indeed boxes were ready for pick up. On Feb. 20, 1999, Que
warehouse, petitioner waived the claimed delay in the delivery of said visited the factory again and said that they ought to sell the boxes to recoup
items. Supreme Court geld that time was not of the essence. There having some of the costs of the 14,000 additional orders because their transaction
been no failure on the part of the respondent to perform its obligations, the to ship the bananas did not materialize. Solar Harvest denies that they
power to rescind the contract is unavailing to the petitioner.  made the additional order. On March 20, 2004  the RTC ruled in favor of
Davao Corrugated.
Petition is denied. Court of appeals decision is affirmed.
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ISSUE:
Whether or not Davao Corrugated was responsible for breach of contract as
Solar Harvest had not yet demanded from it the delivery of the boxes?
HELD: NO. The CA held that it was unthinkable that for around 2 years
petitioner merely followed up and did not demand the delivery of the
boxes. Even assuming that the agreement is for delivery by Davao
Corrugated, respondent would not be liable for breach of contract as
petitioner had not yet demanded from it the delivery of the boxes. There is
no error in the decision of the RTC. Furthermore, the claim for
reimbursement is actually one for rescission or resolution of contract under
Article 1191 of the Civ. Code. The right to rescind contracts arises once the
party defaults in the performance of his obligation. Article 1191 should be
taken in conjunction with Article 1169: Those obliged to deliver or to do
something in delay from the time the obligee judicially or extrajudicially
demands form them the fulfilment of their
obligation. However the demand from creditor shall not be necessary in
order that delay may exist.:
1.When the obligation or the law expressly so declares, or
2.When from the nature and the circumstance of the obligation it appears
that the designation of the time
when the thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; OR
3.When the demand would be useless, as when the obligor has rendered it
beyond his power to perform.
In reciprocal obligations, the general rule is that the fulfilment of the
parties s respective obligations should be simultaneous. No demand is
necessary because once a party fulfills his obligation and the other party
fails to do his, the latter automatically incurs delay. When dates are set, the
default for each obligation is determined by the rules given in the 1 st
paragraph of the article. Thus even in reciprocal obligations, if the period
for the fulfilment of the obligation is fixed, demand from the obligee is still
necessary before the obligor can be considered in default and before a
cause of  action for rescission will accrue. In the case of Solar Harvest,
merely following up the order was not the same as demanding for the
boxes. The SC held that Solar Harvests petition is denied and that Davao
Corrugated did not commit
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breach of contract and may remove the boxes from their premises after
petitioner is given a period of time to remove them from their warehouse as
they deem proper (Court gave 30day period to comply with this)
Cathay Pacific Airways v Vasquez
FACTS:
In respondents’ return flight to Manila from Hongkong, they were deprived
of their original seats in Business Class with their companions because of
overbooking. Since respondents were privileged members, their seats were
upgraded to First Class. Respondents refused but eventually persuaded to
accept it. Upon return to Manila, they demanded that they be indemnified
in the amount of  P1million for the “humiliation and embarrassment”
caused by its employees. Petitioner’s Country Manager failed to respond.
Respondents instituted action for damages. The RTC ruled in favor of
respondents. The Court of Appeals affirmed the RTC decision with
modification in the award of damages.
ISSUE:
Whether or not the petitioners (1) breached the contract of carriage, (2)
acted with fraud and (3) were liable for damages.
RULING:
(1) YES. Although respondents have the priority of upgrading their seats,
such priority may be waived, as what respondents did. It should have not
been imposed on them over their vehement objection.
(2) NO. There was no evident bad faith or fraud in upgrade of seat neither
on overbooking of flight as it is within 10% tolerance.
(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the amount
of P5,000.00. Moral damages (Art.2220, NCC) and attorney’s fees were set
aside and deleted from the Court of Appeals’ ruling.
Meralco v Ramoy
FACTS:
In the year 1987, the National Power Corporation (NPC) filed with the MTC
Quezon City a case for ejectment against several persons allegedly illegally
CASES FOR OBLICON
occupying its properties in Baesa, Quezon City. among the defendants in
the ejectment case was Leoncio Ramoy, one of the plaintiffs in the case at
bar. On April 28, 1989 the MTC rendered judgment for MERALCO to
demolish or remove the building and structure they built on the land of the
plaintiff and to vacate the premises. On June 20, 1999 NPC wrote to
MERALCO requesting the immediate disconnection of electric power
supply to all residential and commercial establishments beneath the NPC
transmission lines along Baesa, Quezon City. In a letter dated August 17,
1990 MERALCO requested NPC for a joint survey to determine all the
establishments which are considered under NPC property. In due time, the
electric service connection of  the plaintiffs was disconnected. During the
ocular inspection ordered by the Court, it was found out that the residence
of the plaintiffs-spouses was indeed outside the NPC property.
ISSUES:
(1)WON the Court of Appeals gravely erred when it found MERALCO
negligent when it disconnected the subject electric service of respondents.
(2) WON the Court of Appeals gravely erred when it awarded moral and
exemplary damages and attorney’s fees against MERALCO under the
circumstances that the latter acted in good faith in the disconnection of the
electric services of the respondents.
RULING:
(1) No. The Court agrees with the CA that under the factual milieu of the
present case, MERALCO failed to exercise the utmost degree of care and
diligence required of it, pursuant to Articles 1170 & 1173 of the Civil Code.
It was not enough for MERALCO to merely rely on the Decision of the MTC
without ascertaining whether it had become final and executory. Verily,
only upon finality of the said Decision can it be said with conclusiveness
that respondents have no right or proper interest over the subject property,
thus, are not entitled to the services of MERALCO.
(2) No. MERALCO willfully caused injury to Leoncio Ramoy by
withholding from him and his tenants the supply of electricity to which
they were entitled under the Service Contract. This is contrary to public
policy because, MERALCO, being a vital public utility, is expected to
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exercise utmost care and diligence in the performance of its obligation.
Thus, MERALCO’s failure to exercise utmost care and diligence in the
performance of its obligation to Leoncio Ramoy is tantamount to bad faith.
Leoncio Ramoy testified that he suffered wounded feelings because of
MERALCO’s actions. Furthermore, due to the lack of power supply, the
lessees of his four apartments on subject lot left the premises. Clearly,
therefore Leoncio Ramoy is entitled to moral damages in the amount
awarded by the CA. Nevertheless, Leoncio is the sole
person entitled to moral damages as he is the only who testified on the
witness stand of his wounded feelings. Pursuant to Article 2232 of the Civil
Code, exemplary damages cannot be awarded as MERALCO’s acts cannot
be considered wanton, fraudulent, reckless, oppressive or malevolent.
Since the Court does not deem it proper to award exemplary damages in
this case then the CA’s award of attorney’s fees should likewise be deleted,
as pursuant to Article 2208 of the Civil Code of which the grounds were not
present.
Areola v CA & Prudential Guarantee Insurance
FACTS:
- December 17, 1984:  Prudential Guarantee And Assurance, Inc.  issued
collector's provisional receipt amounting to P1,609.65 
- June 29, 1985: 7 months after the issuance of petitioner Santos Areola's
Personal Accident Insurance Policy,  Prudential Guarantee And
Assurance, Inc.  unilaterally cancelled it for failing to pay his
premiums through its manager Teofilo M. Malapit
- Shocked by the cancellation of the policy, Santos approached  Carlito
Ang, agent of Prudential and demanded the issuance of an official
receipt.   Ang told Santos that it was a mistake and assured its
rectification.
- July 15, 1985: Santos demanded the same terms and same rate increase
as when he paid the provincial receipt but Malapit insisted that
the partial payment he made was exhausted and that he should
pay the balance or his policy will cease to operate
- July 25, 1985 :  Assistant Vice-President Mariano M. Ampil III
apologized 
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- August 6, 1985 had filed a complaint for breach of contract with damages
before the lower court
- August 13, 1985: Santos received through Carlito Ang the leeter
of Assistant Vice President Mariano M. Ampil III finding error on
their part since premiums were not remitted Malapit, proposed to
extend its lifetime to December 17, 1985
- RTC: favored Santos - Prudential in Bad Faith
- CA: Reversed -  not motivated by negligence, malice or bad faith in
cancelling subject policy
ISSUE: W/N the Areolas can file against damages despite the effort to
rectify the cancellation
HELD: YES. RTC reinstated
- Malapit's fraudulent act of misappropriating the premiums paid is
beyond doubt directly imputable to Prudential
- Art. 1910.  The principal must comply with all the obligations which the
agent may have contracted within the scope of his authority.
- As for any obligation wherein the agent has exceeded his power, the
principal is not bound except when he ratifies it expressly or tacitly.
- Subsequent reinstatement  could not possibly absolve Prudential  there
being an obvious breach of contract a contract of insurance
creates reciprocal obligations for both insurer and insured
- Article 1191 choice between fulfillment or rescission of the obligation in
case one of the obligors  fails to comply with what is incumbent
upon him entitles the injured party to payment of damages,
regardless of whether he demands fulfillment or rescission of the
obligation
- Nominal damages are "recoverable where a legal right is technically
violated and must be vindicated against an invasion that has
produced no actual present loss of any kind, or where there has
been a breach of contract and no substantial injury or actual
damages whatsoever have been or can be shown.
Tanguilig v CA
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FACTS OF THE CASE:
Herce contracted Tanguilig to construct a windmill system for him, for
consideration of 60,000.00. Pursuant to the agreement Herce paid the
downpayment of 30,000.00 and installment of 15,000.00 leaving a
15,000.00 balance.
Herce refused to pay the balance because he had already paid this amount
to SPGMI which constructed a deep well to which the windmill system was
to be connected since the deepwell, and assuming that he owed the
15,000.00 this should be offset by the defects in the windmill system which
caused the structure to collapse after strong winds hit their place.
According to Tanguilig, the 60,000.00 consideration is only for the
construction of the windmill and the construction of the deepwell was not
part of it. The collapse of the windmill cannot be attributed to him as well,
since he delivered it in good and working condition and Herce accepted it
without protest. Herce contested that the collapse is attributable to a
typhoon, a force majeure that relieved him of liability.
The RTC ruled in favor of Tanguilig, but this decision was overturned by
the Court of Appeals which ruled in favor of Herce
ISSUES OF THE CASE:
Can the collapse of the windmill be attributed to force majeure? Thus,
extinguishing the liability of Tanguilig?
- Yes, in order for a party to claim exemption from liability by reason of
fortuitous event under Art 1174 of the Civil Code the event should be the
sole and proximate cause of the loss or destruction of the object of the
contract.
- In Nakpil vs. Court of Appeals, the S.C. held that 4 requisites must concur
that there must be a (a) the cause of the breach of the obligation must be
independent of the will of debtor (b) the event must be either unforeseeable
or unavoidable; (c) the event be such to render it impossible for the debtor
CASES FOR OBLICON
to fulfill his obligation in a normal manner; and (d) the debtor must be free
from any participation in or aggravation of the injury to the creditor.
- Tanguilig merely stated that there was a strong wind, and a strong wind in
this case is not fortuitous, it was not unforeseeable nor unavoidable, places
with strong winds are the perfect locations to put up a windmill, since it
needs strong winds for it to work.
HELD:
WHEREFORE, the appealed decision is MODIFIED. Respondent
VICENTE HERCE JR. is directed to pay petitioner JACINTO M.
TANGUILIG the balance of P15,000.00 with interest at the legal rate from
the date of the filing of the complaint. In return, petitioner is ordered to
"reconstruct subject defective windmill system, in accordance with the one-
year guaranty" and to complete the same within three (3) months from the
finality of this decision.
Obligations and Contracts Terms:
Fortuitous Events- Refers to an occurrence or happening which could
not be foreseen, or even if foreseen, is inevitable. It is necessary that the
obligor is free from negligence. Fortuitous events may be produced by two
(2) general causes: (1) by Nature, such as but not limited to, earthquakes,
storms, floods, epidemics, fires, and (2) by the act of man, such as but not
limited to, armed invasion, attack by bandits, governmental prohibitions,
robbery, provided that they have the force of an imposition which the
contractor or supplier could not have resisted.
Nakpil & Sons v CA
FACTS:
Private respondents – Philippine Bar Association (PBA) – a non-profit
organization formed under the corporation law decided to put up a
building in Intramuros, Manila. Hired to plan the specifications of the
building were Juan Nakpil & Sons, while United Construction was hired to
construct it. The proposal was approved by the Board of Directors and
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signed by the President, Ramon Ozaeta. The building was completed in
1966.
In 1968, there was an unusually strong earthquake which caused the
building heavy damage, which led the building to tilt forward, leading the
tenants to vacate the premises. United Construction took remedial
measures to sustain the building.
PBA filed a suit for damages against United Construction, but United
Construction subsequently filed a suit against Nakpil and Sons, alleging
defects in the plans and specifications.
Technical Issues in the case were referred to Mr. Hizon, as a court
appointed Commissioner. PBA moved for the demolition of the building,
but was opposed. PBA eventually paid for the demolition after the building
suffered more damages in 1970 due to previous earthquakes. The
Commissioner found that there were deviations in the specifications and
plans, as well as defects in the construction of the building.
ISSUE:
Whether or not an act of God (fortuitous event) exempts from liability
parties who would otherwise be due to negligence?
HELD:
Art. 1723 dictates that the engineer/architect and contractor are liable for
damages should the building collapse within 15 years from completion.
Art. 1174 of the NCC, however, states that no person shall be responsible
for events, which could not be foreseen. But to be exempt from liability due
to an act of God, the ff must occur:
1) cause of breach must be independent of the will of the debtor
2) event must be unforeseeable or unavoidable
3) event must be such that it would render it impossible for the debtor to
fulfill the obligation
4) debtor must be free from any participation or aggravation of the
industry to the creditor.
CASES FOR OBLICON
In the case at bar, although the damage was ultimately caused by the
earthquake which was an act of God, the defects in the construction, as well
as the deviations in the specifications and plans aggravated the damage,
and lessened the preventive measures that the building would otherwise
have had.
Republic v Luzon Stevedoring
FACTS:
In the early afternoon of August 17, 1960, barge L-1892, owned by the
Luzon Stevedoring Corporation was being towed down the Pasig River by
two tugboats when the barge rammed against one of the wooden piles of
the
Nagtahan bailey bridge, smashing the posts and causing the bridge to list.
The river, at the time, was swollen and the current swift, on account of the
heavy downpour in Manila and the surrounding provinces on August 15
and
16, 1960.
The Republic of the Philippines sued Luzon Stevedoring for actual and
consequential damage caused by its employees, amounting to P200,000.
Defendant Corporation disclaimed liability on the grounds that it had
exercised due diligence in the selection and supervision of its employees
that the damages to the bridge were caused by force majeure, that plaintiff
has no capacity to sue, and that the Nagtahan bailey bridge is an
obstruction to
navigation.
After due trial, the court rendered judgment on June 11, 1963, holding the
defendant liable for the damage caused by its employees and ordering it to
pay plaintiff the actual cost of the repair of the Nagtahan bailey bridge
which amounted to P192,561.72, with legal interest from the date of the
filing of the complaint.
ISSUE:
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Was the collision of appellant's barge with the supports or piers of the
Nagtahan bridge caused by fortuitous event or force majeure?
RULING:
Yes. Considering that the Nagtahan bridge was an immovable and
stationary object and uncontrovertibly provided with adequate openings
for the passage of water craft, including barges like of appellant's, it was
undeniable that the unusual event that the barge, exclusively controlled by
appellant, rammed the bridge supports raises a presumption of negligence
on the part of appellant or its employees manning the barge or the tugs that
towed it. For in the ordinary course of events, such a thing will not happen
if proper care is used. In Anglo American Jurisprudence, the inference
arises by what is known as
the "res ipsa loquitur" rule.
The appellant strongly stressed the precautions taken by it on the day in
question: that it assigned two of its most powerful tugboats to tow down
river its barge L-1892; that it assigned to the task the more competent and
experienced among its patrons, had the towlines, engines and equipment
double-checked and inspected' that it instructed its patrons to take extra
precautions; and concludes that it had done all it was called to do, and that
the accident, therefore, should be held due to force majeure or fortuitous
event.
These very precautions, however, completely destroyed the appellant's
defense. For caso fortuito or force majeure (which in law are identical in so
far as they exempt an obligor from liability) by definition, are extraordinary
events not foreseeable or avoidable, “events that could not be foreseen, or
which, though foreseen, were inevitable" (Art. 1174, Civ. Code of the
Philippines). It was, therefore, not enough that the event should not have
been
foreseen or anticipated, as was commonly believed but it must be one
impossible to foresee or to avoid. The mere difficulty to foresee the
happening was not impossibility to foresee the same. The very measures
adopted by appellant prove that the possibility of danger was not only
foreseeable, but actually foreseen, and was not caso fortuito.
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Far East Bank and Trust Co vs CA
Facts:
Luis Luna applied for a far east card issued by far east bank at its Pasig
branch. Upon his request, the bank also issued a supplemental card to
private respondent Clarita Luna. Then Clarita lost her credit card and
submitted an affidavit of loss. Later on October 6, 1988 in a restaurant,
Luis' credit card was not honored.
Luis thru a counsel then demanded from far east to pay damages for the
humiliation he felt. The vice-president of the bank expressed bank's
apologies to Luis.
Still evidently feeling aggrieved, private respondents, on 05 December
1988, filed a complaint for damages with the Regional Trial Court ("RTC")
of Pasig against FEBTC.
On 30 March 1990, the RTC of Pasig, given the foregoing factual settings,
rendered a decision ordering FEBTC to pay private respondents (a)
P300,000.00 moral damages; (b) P50,000.00 exemplary damages; and (c)
P20,000.00 attorney's fees.
On appeal to the Court of Appeals, the appellate court affirmed the decision
of the trial court.
Its motion for reconsideration having been denied by the appellate court,
FEBTC has come to this Court with this petition for review.
There is merit in this appeal.
In culpa contractual, moral damages may be recovered where the
defendant is shown to have acted in bad faith or with malice in the breach
of the contract. The Civil Code provides:
Art. 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.
Bad faith, in this context, includes gross, but not simple, negligence.
Exceptionally, in a contract of carriage, moral damages are also allowed in
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case of death of a passenger attributable to the fault (which is presumed) of
the common carrier.
Issue:
Whether or not private respondents are entitled with moral damages
Held:
The Court has not in the process overlooked another rule that a quasi-delict
can be the cause for breaching a contract that might thereby permit the
application of applicable principles on tort 9 even where there is a pre-
existing contract between the plaintiff and the defendant. This doctrine,
unfortunately, cannot improve private respondents' case for it can aptly
govern only where the act or omission complained of would constitute an
actionable tort independently of the contract. The test (whether a quasi-
delict can be deemed to underlie the breach of a contract) can be stated
thusly: Where, without a pre-existing contract between two parties, an act
or omission can nonetheless amount to an actionable tort by itself, the fact
that the parties are contractually bound is no bar to the application of
quasi-delict provisions to the case. Here, private respondents' damage
claim is predicated solely on their contractual relationship; without such
agreement, the act or omission complained of cannot by itself be held to
stand as a separate cause of action or as an independent actionable tort.
Saludaga vs FEU
Facts:
It is the obligation of any college institution to provide a safe and secure
environment for every student. As for the students, they have the obligation
to give back the respect for their respective colleges and to excel and do
well with the institution’s goals. Far Eastern University failed to comply
with their obligation when a student of theirs, whose name is Joseph
Saludaga was shot inside the campus by their security guard named
Alejandro Rosete. The victim petitioned a case against FEU and Edilberto
C. De Jesus, president of FEU. The University also failed to check the
qualifications of the security guards hired through Galaxy, the third party
which hires security guards for the university. From there, there are also
complaints for Galaxy being the first employers of Rosete. It is also said
CASES FOR OBLICON
that the safety of the university should not only be within the hands of the
security guards. Damages are taken by Saludaga by surprised including
physical and moral damages obtained from the said accidental shooting by
Rosete who claimed that it was an accident.
Issues:
Whether Far Eastern University failed to comply with their obligation in
implementing a safe and secure learning environment.
Held:
The court dismissed the the petitioner’s complaints for Edilberto C. De
Jesus as well as the counterclaims of the respondents. The Regional Trial
Court of Manila found FEU to be liable for the damages and a breach of
their obligation to the petitioner. FEU was ordered to pay actual damage of
35,298.25, plus 6%interest per annum from the filing of the case until the
finality of decision. After the execution, the rate shall be 12& per annum
until its satisfaction. FEU was ordered to pay temperate damages in the
amount of P20,000.00. Moral damage for P100,000.00, attorney’s fees
and litigation expense for 50,000.00
Galaxy was and its presidents were ordered to jointly and severely pay the
respondent FEU damages equivalent to the amount awarded to Saludaga.
Fil-Astate Properties v Sps. Ronquillo
FACTS:
                Petitioner Fil-Estate Properties, Inc. is the owner and developer of
the Central Park Place Tower while co-petitioner Fil-Estate Network, Inc. is
its authorized marketing agent. Respondent Spouses Conrado and Maria
Victoria Ronquillo purchased from petitioners an 82-square meter
condominium unit for a pre-selling contract price of P5,174,000.00. On 29
August 1997, respondents executed and signed a Reservation Application
Agreement wherein they deposited P200,000.00 as reservation fee. As
agreed upon, respondents paid the full downpayment of P1,552,200.00 and
had been paying the P63,363.33 monthly amortizations until September
1998.
                Upon learning that construction works had stopped, respondents
likewise stopped paying their monthly amortization. Claiming to have paid
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a total of P2,198,949.96 to petitioners, respondents through two (2)
successive letters, demanded a full refund of their payment with interest.
When their demands went unheeded, respondents were constrained to file
a Complaint for Refund and Damages before the Housing and Land Use
Regulatory Board (HLURB). Respondents prayed for reimbursement/
refund of P2,198,949.96 representing the total amortization payments,
P200,000.00 as and by way of moral damages, attorney’s fees and other
litigation expenses.
                On 13 June 2002, the HLURB in favor of herein respondents. The
Arbiter considered petitioners’ failure to develop the condominium project
as a substantial breach of their obligation which entitles respondents to
seek for rescission with payment of damages. The Arbiter also stated that
mere economic hardship is not an excuse for contractual and legal delay.
ISSUES:
1 Whether or not the Asian financial crisis constitute a fortuitous
event which would justify delay by petitioners in the performance of
their contractual obligation;
2 Assuming that petitioners are liable, whether or not 12% interest
was correctly imposed on the judgment award
HELD:
FIRST ISSUE: NO
                              The Supreme Court held that the Asian financial crisis is not a
fortuitous event that would excuse petitioners from performing their
contractual obligation.
                The Court ruled that “we cannot generalize that the Asian financial
crisis in 1997 was unforeseeable and beyond the control of a business
corporation. It is unfortunate that petitioner apparently met with
considerable difficulty e.g. increase cost of materials and labor, even before
the scheduled commencement of its real estate project as early as 1995.
However, a real estate enterprise engaged in the pre-selling of
condominium units is concededly a master in projections on commodities
and currency movements and business risks. The fluctuating movement of
the Philippine peso in the foreign exchange market is an everyday
occurrence, and fluctuations in currency exchange rates happen everyday,
thus, not an instance of caso fortuito.”
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11
SECOND ISSUE: NO of the Code of Civil Procedure states that all rights of action which have
                The Court held that 6% is the proper legal interest rate. already accrued must be vindicated by the commencement of an action to
                The resulting modification of the award of legal interest is, also, in enforce the same within ten (10) years after the Code comes into effect.
line with our recent ruling in Nacar v. Gallery Frames, embodying the
amendment introduced by the Bangko Sentral ng Pilipinas Monetary Board
in BSP-MB Circular No. 799 which pegged the interest rate at 6%
regardless of the source of obligation.
FALLO:
WHEREFORE, the petition is PARTLY GRANTED. The appealed
Decision is AFFIRMED with the MODIFICATION that the legal interest to
be paid is SIX PERCENT (6%) on the amount due computed from the time
of respondents’ demand for refund on 8 October 1998.

Seoane vs Franco

FACTS: Plaintiff borrowed money from defendant. To secure the payment

of the loan, a mortgage was executed on the 13th of October 1884. Plaintiff
agreed to pay the sum âlittle by littleâ. Defendant demanded payment of
the loan in 1911 on the 8th of August. At this point, nothing has been paid
either of the principal or of interest. The Court of First Instance decided in
favor of plaintiff and held that the right of action upon the mortgage debt,
which was the basis of the claim against the plaintiffâs estate, had
prescribed. Defendant appealed.

ISSUE: Has the defendantâs cause of action upon the mortgage debt
prescribed?

RULING: YES. The Court held that the applicable provision in this case is
Article 1128 of the Civil Code. The nature of the obligation shows that the
duration of the period for the payment thereof was left to the will of the
debtor by stating that the same can pay âlittle by littleâ. In such a case, the
defendant should first petition the court to fix a date on which the
instrument should become due and payable as per Art. 1128. Only after the
fixing of the date can a suit for recovery of the amount can be made. As
such, the instant suit for recover of the money is premature. Though the
defendant can hereafter file a suit for the court to fix a date, the same will
not prosper because his cause of action has already prescribed. Section 28