SABINA EXCONDE vs. DELFIN CAPUNO, ET AL.

G.R. No. L-10134

June 29, 1957

Facts:

Dante Capuno was a member of the Boy Scouts organization and a student of Balintawak Elementary
school. On March 31, they were instructed by the school’s supervisor to attend a parade in honor of Dr.
Jose Rizal. From school, Dante and other students boarded the jeep that was going to take them to the
parade. Dante then drove the jeep, while the driver sat by his side. They have not gone too far when the
jeep turned turtle resulting to the death of two of its passengers, Amado Ticzon and Isidore Caperi.

Issue:

Whether or not Delfin capuno may be held jointly and severally liable with his son Dante Capuno, for
the civil liability of his tortuous act?

Held:

Yes. Under Art 1903, of the Spanish Civil Code paragraph 1, and 5 which provides: the father and in
case of his death or incapacity, the mother, are liable for any damages caused by the minor children
who live with them. xxx Finally, teachers or directors of arts and trades are liable for any damages
caused by their pupils or apprentices while they are under their custody. But the provision applies only
to an institution of arts and trades and not to any academic educational institution. Dante was then a
student of Balintawak Elem School and as part of his extra-curricular activity; he attended the parade
upon instruction of City school’s supervisor. It was in connection with the parade that the accident took
place Clear that neither the head of the school nor the city supervisor could be held liable for the
negligent act of Dante because he was not then a student of an institution of arts and trades.

Civil liability of father (in case of death or incapacity, the mother) for any damages caused by minor
children is a necessary consequence of the parental authority they exercise over them which imposes
upon the parents the duty of supporting them, keeping them in their company, educating them and
instructing them in proportion to their means, while on the other hand, gives them the right to correct
and punish them in moderation. The only way they could relieve themselves of liability is if they prove
that they exercised all the diligence of a good father of a family to prevent the damage.
Mercado vs. Court of Appeals
G.R. No. 87584
May 30, 1960

Facts:
Augusto Mercado and Manuel Quisumbing, Jr. are both pupils of the Lourdes Catholic School,
Kanlaon, Quezon City. A ‘pitogo’ (an empty nutshell used by children as a piggy bank) belonged to
Augusto Mercado but he lent it to Benedicto Lim and in turn Benedicto lent it to Renato Legaspi.
Renato was not aware that the ‘pitogo’ belonged to Augusto. Manuel Quisumbing, Jr. thought it was
Benedicto’s, so when Augusto attempted to get the ‘pitogo’ from Renato, Manuel, Jr. told him not to
do so because Renato was better at putting the chain into the holes of the ‘pitogo’. Augusto resented his
remark and pushed Manuel, Jr., which started the fight. After successive blows to Manuel, Jr., Augusto
cut him on the right cheek with a piece of razor. Manuel, Jr. and his father filed a complaint against
Ciriaco Mercado, Augusto’s father.

Issue:
Whether or not the teacher or head of the school should be held responsible instead of the father?

Held:
NO. CHILDREN WERE NOT IN THEIR CUSTODY. Petitioner rests his claim on the last paragraph
of Art. 2180 of the Civil Code: “Lastly, teachers or heads of establishments of arts and trades shall be
liable for damages caused by their pupils and students or apprentices, so long as they remain in their
custody.” That clause contemplates a situation where the pupil lives and boards with the teacher, such
that the control, direction and influence on the pupil supersedes those of the parents. In these
circumstances the control or influence over the conduct and actions of the pupil would pass from the
father and mother to the teacher; and so would the responsibility for the torts of the pupil. Such a
situation does not appear in the case at bar; the pupils appear to go to school during school hours and
go back to their homes with their parents after school is over
Palisoc v. Brillantes (G.R. No. L-29025 October 4, 1971)

FACTS:
Involved in this case were Dominador Palisoc (16 yrs old) and Virgilio Daffon ( of legal age), who
were students of Manila Technical Institute, a school of arts and trades. Sometime in March 1966, during recess,
while Palisoc was watching Virgilio Daffon and Desiderio Cruz work on a machine in their laboratory class,
Daffon scolded Palisoc for just standing around like a foreman. This caused Palisoc to slightly slap the face of
Daffon and a fistfight ensued between the two. Palisoc retreated but Daffon went after him until Palisoc
stumbled, falling face down. The parents of Palisoc sued Daffon, the school president (Teodosio Valenton), the
instructor (Santiago Quibulue), and the owner (Antonio Brillantes). The basis of the suit against Valenton,
Quibulue, and Brillantes was Article 2180 of the Civil Code.
The lower court, as well as the CA, ruled that only Daffon is liable for damages and that Valenton, Quibulue, and
Brillantes are not liable because under Article 2180, they are only liable “so long as they [the students] remain in
their custody.” And that this means, as per Mercado vs Court of Appeals, that teachers or heads of
establishments are only liable for the tortious acts of their students if the students are living and boarding with
the teacher or other officials of the school – which Daffon was not.

ISSUE:
Whether or not the ruling or interpretation of Art 2180 in the Mercado Case still applies.

HELD:
No. The SC abandoned the ruling in the Mercado Case as well as the ruling in the Exconde Case as they
adopted Justice JBL Reyes’ dissenting opinion in the latter case. Valenton and Quibulue as president and
teacher-in-charge of the school must be held jointly and severally liable for the quasi-delict of Daffon.

The unfortunate death resulting from the fight between the students could have been avoided, had said
defendants but complied with their duty of providing adequate supervision over the activities of the students in
the school premises to protect their students from harm, whether at the hands of fellow students or other parties.
At any rate, the law holds them liable unless they relieve themselves of such liability, in compliance with the last
paragraph of Article 2180, Civil Code, by “(proving) that they observed all the diligence of a good father of a
family to prevent damage.” In the light of the factual findings of the lower court’s decision, said defendants failed
to prove such exemption from liability.

The SC reiterated that there is nothing in the law which prescribes that a student must be living and boarding
with his teacher or in the school before heads and teachers of the school may be held liable for the tortious acts
of their students.
Amadora vs. CA
GR No. L47745, April 15, 1988

FACTS:

Alfredo Amadora, while in the auditorium of the school, was mortally hit by a gun by Pablito Daffon resulting to
the former’s death. Daffon was convicted of homicide through reckless imprudence. The victim’s parents,
herein petitioners, filed a civil action for damages against Colegio de San Jose-Recoletos, its rectors, high
school principal, dean of boys, the physics teacher together with Daffon and 2 other students. Complaints
against the students were dropped. Respondent Court absolved the defendants completely and reversed CFI
Cebu’s decision for the following reasons: 1. Since the school was an academic institution of learning and not a
school of arts and trades 2. That students were not in the custody of the school since the semester has already
ended 3. There was no clear identification of the fatal gun, and 4. In any event, defendants exercised the
necessary diligence through enforcement of the school regulations in maintaining discipline. Petitioners on othe
other hand claimed their son was under school custody because he went to school to comply with a requirement
for graduation (submission of Physics reports).

ISSUE: WON Collegio de San Jose-Recoletos should be held liable.

HELD:

The time Alfredo was fatally shot, he was in the custody of the authorities of the school notwithstanding classes
had formally ended when the incident happened. It was immaterial if he was in the school auditorium to finish
his physics requirement. What was important is that he was there for a legitimate purpose. On the other hand,
the rector, high school principal and the dean of boys cannot be held liable because none of them was the
teacher-in-charge as defined in the provision. Each was exercising only a general authority over the students
and not direct control and influence exerted by the teacher placed in-charge of particular classes.

In the absence of a teacher- in charge, dean of boys should probably be held liable considering that he had
earlier confiscated an unlicensed gun from a student and later returned to him without taking disciplinary action
or reporting the matter to the higher authorities. Though it was clear negligence on his part, no proof was shown
to necessarily link this gun with the shooting incident.

Collegio San Jose-Recoletos cannot directly be held liable under the provision because only the teacher of the
head of school of arts and trade is made responsible for the damage caused by the student. Hence, under the
facts disclosed, none of the respondents were held liable for the injury inflicted with Alfredo resulting to his
death.

Petition was denied.

PSBA v. CA (G.R. No. 84698)

Facts:
Private respondents sought to adjudge petitioner PSBA and its officers liable for the death
of Carlitos Bautista, a third year commerce student who was stabbed while on the
premises of PSBA by elements from outside the school. Private respondents are suing
under the law on quasi-delicts alleging the school and its officers’ negligence, recklessness
and lack of safety precautions before, during, and after the attack on the victim.
Petitioners moved to dismiss the suit but were denied by the trial court. CA affirmed.

Issue:
Whether or not PSBA may be held liable under quasi-delicts.

Ruling:
NO.
Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos
Bautista, the rules on quasi-delict do not really govern. A perusal of Article 2176 shows that obligations arising
from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise
bound by contract, whether express or implied.

When an academic institution accepts students for enrollment, there is established a contract between them,
resulting in bilateral obligations which both parties are bound to comply with. For its part, the school undertakes
to provide the student with an education that would presumably suffice to equip him with the necessary tools and
skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the
school’s academic requirements and observe its rules and regulations. Necessarily, the school must ensure that
adequate steps are taken to maintain peace and order within the campus premises and to prevent the
breakdown thereof.

In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract between
the school and Bautista had been breached thru the former’s negligence in providing proper security measures.
This would be for the trial court to determine. And, even if there be a finding of negligence, the same could give
rise generally to a breach of contractual obligation only.
PSBA vs. Court of Appeals G.R. No. 84698 February 4, 1992

Facts: Carlitos Bautista was a third year commerce student in PSBA. In Aug 30, 1985, he was stabbed
while on the 2nd floor of the school, causing his death. It was established that the assailants were not
students of PSBA. The parents of Carlitos filed a damage suit against PSBA and its school authorities
for the death of their child. Petitioners filed a motion to dismiss, alleging that since they are presumably
sued under Article 2180 of the Civil Code, the complaint states no cause of action against them, as
jurisprudence on the subject is to the effect that academic institutions, such as the PSBA, are beyond
the ambit of the rule in the afore-stated article. RTC dismissed the MTD. CA affirmed. The CA
ratiocinated as follows: Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the
old Spanish Civil Code. The comments of Manresa and learned authorities on its meaning should give
way to present day changes. The law is not fixed and flexible (sic); it must be dynamic. In fact, the
greatest value and significance of law as a rule of conduct in (sic) its flexibility to adopt to changing
social conditions and its capacity to meet the new challenges of progress. Construed in the light of
modern day educational system, Article 2180 cannot be construed in its narrow concept as held in the
old case of Exconde vs. Capuno and Mercado vs. Court of Appeals; hence, the ruling in the Palisoc
case that it should apply to all kinds of educational institutions, academic or vocational.At any rate, the
law holds the teachers and heads of the school staff liable unless they relieve themselves of such
liability pursuant to the last paragraph of Article 2180 by "proving that they observed all the diligence
to prevent damage." This can only be done at a trial on the merits of the case.

Issue: Whether or not PSBA and its school authorities are vicariously liable for the death of Carlitos
Bautista inside its premises.

Held: NO, THEY ARE NOT LIABLE. Article 2180, in conjunction with Article 2176 of the Civil
Code, establishes the rule of in loco parentis. This Court discussed this doctrine in the afore-cited cases
of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all such
cases, it had been stressed that the law (Article 2180) plainly provides that the damage should have
been caused or inflicted by pupils or students of he educational institution sought to be held liable for
the acts of its pupils or students while in its custody. However, this material situation does not exist in
the present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA, for
whose acts the school could be made liable.
Soliman vs. Tuazon G.R. No. 66207 May 18, 1992

Facts:
Petitioner Soliman Jr. filed a civil complaint for damages against respondents Republic Central
Colleges, R.L. Security Agency, and Solomon, a security guard at Republic. The complaint alleges that
one morning, while Soliman was in the premises of Republic, as he was still a regular enrolled student,
Solomon with intent to kill attacked and shot him in the abdomen. It is further alleged that such wound
would have caused his death, were it not for timely medical assistance, and because of this he may not
be able to attend his regular classes and perform his usual work from three to four months. Republic
Colleges filed a motion to dismiss, contending that Soliman had no action against it. It averred that it
should be free from liability because it was not the employer of the security guard. Moreover, Article
2180 (7th paragraph) did not apply, since such holds teachers and heads responsible only for damages
caused by their pupils and students/apprentices. The MTD was granted by the judge. Hence this instant
petition.

Issue:
Whether or not Republic Central Colleges may be held liable for damages.

Held:
REPUBLIC CENTRAL COLLEGES MAY NOT BE HELD LIABLE FOR DAMAGES UNDER
ARTICLE 2180 (AS AN EMPLOYER). HOWEVER, IT MAY BE LIABLE ON THE BASIS OF AN
IMPLIED CONTRACT. Petition GRANTED. Order REVERSED AND SET ASIDE. Case
REMANDED to the court a quo for further proceedings.

Under Article 2180 of the NCC, employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry. Also, teachers or heads of establishments of arts and trades shall
be liable for damages caused by their pupils, their students or apprentices, so long as they remain in
their custody. There is no basis to hold Republic liable under Article 2180. The employer of security
guard Solomon was R.L. Security Agency Inc. Where the security agency, as here, recruits, hires and
assigns the work of its watchmen or security guards, the agency is the employer of such guards or
watchmen. Liability for illegal or harmful acts committed by the security guards attaches to the
employer agency, and not to the clients or customers of such agency. The fact that a client company
may give instructions or directions to the security guards assigned to it, does not, by itself, render the
client responsible as an employer. Solomon was neither a pupil nor a student of Republic. Hence, the
provision with liable for damages.

Nevertheless, Republic may be held liable on the basis of an implied contract between it and Soliman,
because of its obligation to maintain peace and order within the campus premises and to prevent the
breakdown thereof. Should this be the case, the school may still avoid liability by proving that the
breach of its contractual obligation to the students was not due to its negligence, here statutorily
defined to be the omission of that degree of diligence which is required by the nature of obligation and
corresponding to the circumstances of person, time and place. Respondent trial judge was in serious
error when he supposed that petitioner could have no cause of action other than one based on Article
2180 of the Civil Code. Respondent trial judge should not have granted the motion to dismiss but rather
should have, in the interest of justice, allowed petitioner to prove acts constituting breach of an
obligation ex contractu or ex lege on the part of respondent Colleges.
REGINO VS. PCST
G.R No. 156109. November 18, 2004

FACTS: Petitioner Kristine Regino was a poor student enrolled at the Pangasinan College of Science and
Technology. Thus, a fund raising project pertaining to a dance party was organized by PCST, requiring all its
students to purchase two tickets in consideration as a prerequisite for the final exam.

Regino, an underprivileged, failed to purchase the tickets because of her status as well as that project was against
her religious belief, thus, she was not allowed to take the final examination by her two professors.

ISSUE: Was the refusal of the university to allow Regino to take the final examination valid?

RULING: No, the Supreme Court declared that the act of PCST was not valid, though, it can impose its
administrative policies, necessarily, the amount of tickets or payment shall be included or expressed in the student
handbooks given to every student before the start of the regular classes of the semester. In this case, the fund
raising project was not included in the activities to be undertaken by the university during the semester. The
petitioner is entitled for damages due to her traumatic experience on the acts of the university causing her to stop
studying sand later transfer to another school.

Mendoza v Soriano

Professional Services Inc. vs Agana

GR No. 126297 January 31, 2007

Facts: On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital because of difficulty of bowel
movement and bloody anal discharge. After a series of medical examinations, Dr. Miguel Ampil diagnosed her to be suffering
from Cancer of the sigmoid. On April 11, 1984, Dr. Ampil assisted by the medical staff of the Medical City Hospital performed
an Anterior resection surgery on Natividad. He found that the malignancy on her sigmoid area had spread on her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividad’s husband, Enrique
Agana, to permit Dr. Juan Fuentes to perform hysterectomy on her. After Dr. Fuentes had completed the hysterectomy, Dr.
Ampil took over, completed the operation and closed the incision after searching for the missing 2 gauzes as indicated by the
assisting nurses but failed to locate it. After a couple of days, Natividad complained of excruciating pains in her anal region
but Dr. Ampil said it is a natural consequence of the operation/surgery and recommended that she consult an oncologist to
examine the cancerous nodes which were not removed during the operation. Natividad and her husband went to the US to
seek further treatment and she was declared free from cancer. A piece of gauze portruding from Natividad’s vagina was found
by her daughter which was then removed by hand by Dr. Ampil and assured that the pains will vanished. However, it didn’t.
The pains intensified prompting Natividad to seek treatment at the Polymedic General Hospital. While confined there, Dr.
Ramon Guttierez detected the presence of another foreign object in her vagina – a foul smelling gauze measuring 1.5 inches
in width which badly infected her vagina. A recto-vaginal fistula had forced stool to excrete through her vagina. Another
surgical operation was needed to remedy the damage.

Issue: Whether or not Dr. Ampil and Fuentes are liable for medical malpractice and the PSI for damages due to the negligence
of the said doctors.

Held: Yes. No. Yes. An operation requiring the placing of sponges in the incision is not complete until the sponges are
properly removed and it is settled that the leaving of sponges or other foreign substances in the wound after the incision has
been closed is at least prima facie negligence by the operating surgeon. To put it simply, such act is considered so inconsistent
with due care as to raise inference of negligence. There are even legions of authorities to the effect that such act is negligence
per se.
This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully pursue this kind of
case, a patient must only prove that a health care provider either failed to do something which a reasonably prudent health
care provider would have done, or that he did something that a reasonably prudent provider would not have done; and that
failure or action caused injury to the patient. Simply puts the elements are duty, breach, injury, and proximate causation. Dr.
Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividad’s body before closure
of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such
breach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr.
Ampil’s negligence is the proximate cause of Natividad’s injury could be traced from his act of closing the incision despite
the information given by the attending nurses that 2 pieces of gauze were still missing. That they were later on extracted from
Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what further aggravated
such injury was his deliberate concealment of this missing gauzes from the knowledge of Natividad and her family.

The requisites for the applicability of the doctrine of res ipsa liquitor are:

1. Occurrence of an injury;
2. The thing which caused the injury was under the control and management of the defendant;
3. The occurrence was such that in the ordinary course of things would not have happened if those who had control or
management used proper care, and;
4. The absence of explanation by the defendant

Of the foregoing, the most instrumental is the “Control and management of the thing which caused the injury.”

Under the “Captain of the ship” rule, the operating surgeon is the person in complete charge of the surgery room and all
personnel connected with the operation.

The knowledge of any of the staff of Medical City constitutes knowledge of PSI.

The doctrine of corporate responsibility, has the duty to see that it meets the standards of
responsibilities for the care of patients. Such duty includes the proper supervision of the members of
its medical staff. The hospital accordingly has the duty to make a reasonable effort to monitor and
over see the treatment prescribed and administered by the physician practicing in its premises.

EQUITABLE PCI BANK, YU and APAS v. NG SHEUNG NGOR

G.R.NO. 171545, December 19, 2007

FACTS: On October 7, 2001, respondents Ngor and Go filed an action for amendment and/or reformation of
documents and contracts against Equitable and its employees. They claimed that they were induced by the bank
to avail of its peso and dollar credit facilities by offering low interests so they accepted and signed Equitable’s
proposal. They alleged that they were unaware that the documents contained escalation clauses granting
Equitable authority to increase interest without their consent. These were rebutted by the bank. RTC ordered the
use of the 1996 dollar exchange rate in computing respondent’s dollar-denominated loans. CA granted the Bank’s
application for injunction but the properties were sold to public auction.

ISSUE: Whether or not there was an extraordinary deflation

RULING: Extraordinary inflation exists when there is an unusual decrease in the purchasing power of currency
and such decrease could not be reasonably foreseen or was beyond the contemplation of the parties at the time
of the obligation. Deflation is an inverse situation.

Despite the devaluation of the peso, BSP never declared a situation of extraordinary inflation. Respondents should
pay their dollar denominated loans at the exchange rate fixed by the BSP on the date of maturity.

Decision of lower courts are reversed and set aside.

Cathay Pacific v. Vazquez
G.R. No. 150843; 14 March 2003
Facts:
Sps. Dr. Daniel and Maria Luisa Vazquez, resposdents, together with their maid and two friends went to
Hongkong for pleasure and business. On their return flight, they booked Cathay Pacific Airways. While boarding,
they were advised that there was a seat change from Business Class to First Class. Dr. Vazquez refused the
upgrade for the reason that it would not look nice for them as hosts to travel First Class and their guests, in the
Business Class; and that they were going to discuss business matter during the flight. Cathay informed the
Vazquezes that the Business Class was fully booked, and that since they are Marco Polo Club members, they
had the priority to be upgraded to first class. Dr. Vazquez eventually gave in, after being prohibited to take the
flight if they would not avail themselves of the privilege. Upon their return to Manila, the Vazquezes filed a
complaint and demanded to be indemnified for the humiliation and embarrassment caused by Cathay’s
employees.

Issues:
Are the Vazquezes obliged to avail the privilege and take the First Class flight?

Held:
No. A contract of carriage existed between Cathay and the Vazquezes. They voluntarily and freely gave their
consent to an agreement whose object was the transportation of the Vazquezes from Manila to Hong Kong and
back to Manila, with seats in the Business Class Section of the aircraft, and whose cause or consideration was
the fare paid by the Vazquezes to Cathay. The Vazquezes should have been consulted first whether they
wanted to avail themselves of the privilege or would consent to a change of seat accommodation before their
seat assignments were given to other passengers. It should not have been imposed on them over their
vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage with the Vazquezes.
Art. 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be
of the same value as, or more valuable than that which is due.

In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance
against the obligee’s will.
Singapore Airlines Ltd. vs. Fernandez, GR 142305, Dec. 10, 2003

FACTS:
Respondent Andion Fernandez is an acclaimed soprano in the Philippines and abroad. At the time of
the incident she was availing of an educational grant from the Federal Republic of Germany pursuing a
Master’s Degree in Music major in Voice. She was invited to sing before the King and Queen of
Malaysia on Feb. 3-4, 1991. For this purpose, she took an airline ticket from Singapore Airlines (SAL)
FOR THE Frankfurt-Manila-Malaysia route. Respondent had to pass by Manila in order to gather her
wardrobe and rehearse with the pianist. SAL issued ticket for Flight SQ 27 leaving Frankfurt on Jan.
27, 1991 for Singapore with connections to Manila in the morning of Jan. 28, 1991. On Jan. 27, 1991
SQ 27 LEFT Frankfurt but arrived two hours late in Singapore on Jan. 28, 1991. By then, the aircraft
bound for Manila had already left. Upon deplaning in Singapore, Fernandez approached the transit
counter at Changi Airport and was told by a lady employee that there were no more flights to Manila
on that day and that she had to stay in Singapore, if she wanted, she could fly to HK but at her own
expense. Respondent stayed with a relative in Singapore for the night. The next day, she was brought
back to the airport and approached a counter for immediate booking but was told by a male employee:
“Can’t you see I am doing something.” She explained her predicament but was told: “It’s your
problem, not ours.” The respondent never made it to Manila and was forced to take a direct flight to
Malaysia on Jan. 29, 1991 through the efforts of her mother and a travel agency in Manila. Her mother
had to travel to Malaysia with the wardrobe which caused them to incur expenses of ₱ 50,000. RTC
Manila ordered SAL to pay respondent ₱ 50k as actual damages, ₱ 250k as moral damages, ₱ 100k as
exemplary damages, ₱ 75k as attorney’s fees and costs of suit. CA affirmed RTC decision.

ISSUE:
Did SAL break the contract of carriage?

RULING:
Yes, when an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger has every right to expect that he be transported on that flight
and on that date. If he does Transportation Law Case not, then the carrier opens itself to a suit for a
breach of contract of carriage. A contract of carriage requires common carriers to transport passengers
safely as human care and foresight can provide (Art. 1755, NCC). In an action for brech of a contract of
carriage, the aggrieved party does not have to prove that the common carrier was at fault or was
negligent. All that is necessary is to prove the existence of the contract and the fact of its non-
performance by the carrier. SAL failed to inform of the delay in the turnaround aircraft in Frankfurt,
neither did it ask if the respondent and 25 other delayed passengers are amenable to a stay in
Singapore. Even SAL’s manual mandates that in cases of urgent connections the head office of
defendant in Singapore has to be informed of delays so as to make needed arrangements for connecting
passengers. When respondent conveyed her apprehension in Frankfurt of the impending delay, she was
assured by petitioner’s personnel in Frankfurt that she will be transported to Manila on the same date.
The lady employee at the counter in Singapore only allowed respondent to use the phone upon threat of
suit, the male employee at the counter marked “Immediate Attention to Passengers with Immediate
Booking” was rude to her. Petition is denied. CA decision affirmed.
EQUITABLE PCI BANK, YU and APAS v. NG SHEUNG NGOR
G.R.NO. 171545, December 19, 2007

FACTS: On October 7, 2001, respondents Ngor and Go filed an action for amendment and/or reformation of
documents and contracts against Equitable and its employees. They claimed that they were induced by the bank
to avail of its peso and dollar credit facilities by offering low interests so they accepted and signed Equitable’s
proposal. They alleged that they were unaware that the documents contained escalation clauses granting
Equitable authority to increase interest without their consent. These were rebutted by the bank. RTC ordered the
use of the 1996 dollar exchange rate in computing respondent’s dollar-denominated loans. CA granted the Bank’s
application for injunction but the properties were sold to public auction.

ISSUE: Whether or not there was an extraordinary deflation

RULING: Extraordinary inflation exists when there is an unusual decrease in the purchasing power of currency
and such decrease could not be reasonably foreseen or was beyond the contemplation of the parties at the time
of the obligation. Deflation is an inverse situation.

Despite the devaluation of the peso, BSP never declared a situation of extraordinary inflation. Respondents should
pay their dollar denominated loans at the exchange rate fixed by the BSP on the date of maturity.

Decision of lower courts are reversed and set aside.

ILEANA DR. MACALINAO v.BANK OF THE PHILIPPINE ISLANDS G.R. No. 175490, September 17, 2009,
Velasco, Jr., J.

A plaintiff should not be made to suffer for the respondent’sfailure to file an answer and concomitantly, to allow the
latter to submit additional evidence by dismissing or remanding the case for further reception of evidence.

Facts:
Macalinao is a card holder of a BPI credit facility. Upon failure of Macalinao to pay for its balance when it
became due, BPI demanded payment of 3% per month interest and an additional 3% per month penalty charge.
After the summons and a copy of the complaint were served upon petitioner Macalinao and her husband, they failed
to file their Answer. Thus, respondent BPI moved that judgment be rendered in accordance with Section 6 of the
Rule on Summary Procedure, which was granted. The MTC ruled in favor of BPI. Macalinao claims that the basis of
the re-computation of the CA was not the amount of the principal obligation. Thus, this allegedly necessitates a re-
examination of the evidence presented by the parties. For this reason, Macalinao further contends that the
dismissal of the case or its remand to the lower court would be a more appropriate disposition of the case.

Issue:
Whether or not the case shall be dismissed.

Ruling:
No. Based on the records, the summons and a copy of the complaint were served upon petitioner Macalinao and
her husband on May 4, 2004. Nevertheless, they failed to file their Answer despite such service. Thus, respondent
BPI moved that judgment be rendered accordingly. Consequently, a decision was rendered by the MeTC on the
basis of the evidence submitted by respondent BPI. Thus, respondent BPI should not be made to suffer for
petitioner Macalinao's failure to file an answer and concomitantly, to allow the latter to submit additional evidence by
dismissing or remanding the case for further reception of evidence. Significantly, petitioner Macalinao herself
admitted the existence of her obligation to respondent BPI, albeit with reservation as to the principal amount. Thus,
a dismissal of the case would cause great injustice to respondent BPI. Similarly, a remand of the case for further
reception of evidence would unduly prolong the proceedings of the instant case and render inutile the proceedings
conducted before the lower courts
Heirs of Servando Franco vs. Sps. Veronica & Danilo Gonzales;
G.R. No. 159709, June 27, 2012.

Facts:
Franco and Medel obtained successive loans from Gonzales as evidence promissory notes. When the
borrowers failed to pay the indebtedness, hence, Gonzaes filed a complaint for collection money with the RTC
who favoured the respondents. When the respondents moved for execution, it was opposed alleging that the
parties had an agreement which was embodied in a receipt whereby Franco paid P400,000.00 and promised to
pay the balance of P375,000.00. Subsequently petitioners insist that the promissory note that had been
already
novated when the principal obligation of P500,000.00 had been fixed at P750,000.00, and the maturity date had
been extended.

Issue:
WON, there was novation of the promissory Note?

Held:
No. There is novation when there is an irreconcilable incompatibility between the old and the new
obligations. There is no novation in case of only slight modifications; hence, the old obligation prevails.
The new obligation extinguishes the prior agreement only when the substitution is unequivocally
declared, or the old and the new obligations are incompatible on every point. A compromise of a final judgment
operates as a novation of the judgment obligation upon compliance with either of these two conditions.
HEIRS OF FRANCO VS. SPS. GONZALES
Petitioners: Heirs of Servando Franco
Respondent: Spouses Veronica and Danilo Gonzales

Facts:

Servando Franco and Leticia Medel obtained loans from Veronica Gonzales: November 7,1985,P50,000.00
payable in two months. On November 19, 1985, P90,000.00 payable in two months;2 promissory notes
were executed by Servando and Letecia as evidence to the loans. Upon maturity of the
promissory notes, they failed to pay the indebtedness. On June 11, 1986, the borrowers secured
from Veronica still another loan amounting to P300,000.00, maturing one month, secured by a real
estate mortgage. The borrowers executed promissory note but they still failed to pay the third loan. On
July 23, 1986, the borrowers together with Leticia's husband, consolidated all their previous unpaid loans
amounting to P440,000.00 and sought from Veronica a n o t h e r l o a n a m o u n t i n g t o P 5 0 0 , 0 0 0 . 0 0
p a y a b l e o n A u g u s t 2 3 , 1 9 8 6 . T h e y e x e c u t e d a promissory note. On maturity of the said loan,
the borrowers failed to pay the indebtedness ofP500,000.00 plus interest and penalties.

Veronica filed an action before RTC a complaint for collection of the full amount of the loan including
the interest and other charges. It was claimed by petitioner Servando that he and respondents had
agreed to fix the entire obligation at P775,000.00 which was allegedly embodied in a receipt dated February
5, 1992 whereby he made an initial payment of P400,000.00 and promised to pay the balance of
P375,000.00 on February 29,1992, superseded the July 23, 1986promissory note. RTC rendered judgment in
favor of Veronica which the CA modified.

Issue:

WON there is a novation of the August 23, 1986 promisory note when Veronica issued the February
5, 1992 receipt?

Held:

No, novation did not transpire because no irreconcilable incompatibility existed between the
promisory note and the receipt. A n o v a t i o n a r i s e s wh e n t h e r e i s a s u b s t i t u t i o n o f a n o b l i g a t i o n b y
a s u b s e q u e n t o n e t h a t extinguishes the first, either by changing the object or the principal conditions, or
by substituting the person of the debtor, or by subrogating a third person in the rights of the creditor. For a valid
novation to take place, there must be, therefore: (a) a previous valid obligation; (b) an agreement of the
parties to make a new contract; (c) an extinguishment of the old contract; and (d) a valid new contract.
In short, the new obligation extinguishes the prior agreement only when the substitution is
unequivocally declared, or the old and the new obligations are incompatible on every point. The
issuance of the receipt created no new obligation. Instead, the respondents only there by
recognized the original obligation by stating in the receipt that the P400,000.00 was partial
payment of loan and by referring to the promissory note subject of the case in imposing the
interest. The loan mentioned in the receipt was still the same loan involving the P500,000.00
extended to Servando. Advertence to the interest stipulated in the promissory note indicated that the contract
still subsisted, not replaced and extinguished.
ABSCBN BROADCASTING CORPORATION vs. HONORABLE COURT OF APPEALS, REPUBLIC
BROADCASTING CORP, VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO
G.R. No. 128690 January 21, 1999

FACTS:

In 1990, ABSCBN and Viva executed a Film Exhibition Agreement whereby Viva gave ABSCBN an exclusive
right to exhibit some Viva films.

One of the provisions of the agreement states that ABSCBN shall have the right of first refusal to the next
twenty-four Viva films for TV telecast provided, however, that such right shall be exercised by ABSCBN from the
actual offer in writing.

Viva, through defendant Del Rosario, offered ABSCBN, through its vice-president Charo Santos Concio, a list of
3 film packages (36 title) from which ABSCBN may exercise its right of first refusal under the aforesaid
agreement

ABSCBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can purchase" and
therefore did not accept said list.

On February 27, 1992, defendant Del Rosario approached ABSCBN's Ms. Concio, with a list consisting of 52
original movie titles (i.e. not yet aired on television) including the 14 titles subject of the present case, as well as
104 reruns (previously aired on television) from which ABSCBN may choose another 52 titles.

On April 2, 1992, defendant Del Rosario and ABSCBN general manager, Eugenio Lopez III, met at the Tamarind
Grill Restaurant in Quezon City to discuss the package proposal of Viva.

What transpired in that lunch meeting is the subject of conflicting versions.

Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABSCRN was granted exclusive film rights
to 14 films for a total consideration of P36 million; that he allegedly put this agreement as to the price and
number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario.

On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films;
Denied the existence of a napkin in which Lopez wrote something; and insisted that what he and Lopez
discussed at the lunch meeting was Viva's film package offer of 104 films for a total price of P60 million. Mr.
Lopez promising to make a counter proposal which came in the form of a proposal contract.
  10. On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for
Finance discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection of the
same package by ABSCBN.
 11. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note
from Ms. Concio – a draft of the counter proposal
 12. The said counter proposal was however rejected by Viva's Board of Directors in the evening
of the same day
 13. On April 29, 1992, after the rejection of ABSCBN and following several negotiations and
meetings defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million,
signed a letter of agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viv
produced and/or acquired films including the 14 films subject of the present case.
 14. RTC rendered a decision favoring respondents.
 15. According to the RTC, there was no meeting of minds on the price and terms of the offer.
 16. The alleged agreement between Lopez III and Del Rosario was subject to the approval of
the VIVA Board of Directors, and said agreement was disapproved during the meeting of the.
 17. Hence, there was no basis for ABSCBN's demand that VIVA signed the 1992 Film Exhibition
Agreement.
 18. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had
previously been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them,
which would have made the 1992 agreement an entirely new contract.


ISSUE:
Whether or not there is a perfected contract between ABSCBN and VIVA films

RULING:
A contract is a meeting of minds between two persons whereby one binds himself to give something or to
render some service to another for a consideration. There is no contract unless the following requisites concur:
(1) consent of the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the
obligation, which is established.
Once there is concurrence between the offer and the acceptance upon the subject matter, consideration,
and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the
acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal,
unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a
new proposal, constitutes a counteroffer and is a rejection of the original offer.
ABSCBN, sent, through Ms. Concio, a counterproposal in the form of a draft contract proposing
exhibition of 53 films for a consideration of P35 million. This counterproposal could be nothing less than the
counteroffer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there
was no acceptance of VIVA's offer, for it was met by a counteroffer which substantially varied the terms of the
offer.
In the case at bar, ABSCBN made no unqualified acceptance of VIVA's offer. Hence, they underwent a
period of bargaining. ABSCBN then formalized its counterproposals or counteroffer in a draft contract, VIVA
through its Board of Directors, rejected such counteroffer, Even if it be conceded arguendo that Del Rosario had
accepted the counteroffer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario
had the specific authority to do so.
Under Corporation Code, unless otherwise provided by said Code, corporate powers, such as the
power; to enter into contracts; are exercised by the Board of Directors. However, the Board may delegate such
powers to either an executive committee or officials or contracted managers. The delegation, except for the
executive committee, must be for specific purposes.

Del Rosario did not have the authority to accept ABSCBN's counteroffer was best evidenced by his
submission of the draft contract to VIVA's Board of Directors for the latter's approval. In any event, there was
between Del Rosario and Lopez III no meeting of minds.