Barredo vs.

Garcia and Almario

73 Phil. 607 Facts: A head-on collision between a taxicab owned by Barredo and a carretela occ rred. !he carretela was overt rned and one o" its #assen$ers% a &6-year old boy% the son o" Garcia and Almario% died as a res lt o" the in' ries which he received. !he driver o" the taxicab% a em#loyee o" Barredo% was #rosec ted "or the crime and was convicted. (hen the criminal case was instit ted% Garcia and Almario reserved their ri$ht to instit te a se#arate civil action "or dama$es. ) bse* ently% Garcia and Almario instit ted a civil action "or dama$es a$ainst Barredo% the em#loyer o" the taxicab driver. +eld: ,!he #ivotal * estion in this case is whether the #lainti""s may brin$ this se#arate civil action a$ainst Fa sto Barredo th s ma-in$ him #rimarily and directly res#onsible nder Article &.03 o" the /ivil /ode as an em#loyer o" Pedro Fontanilla. !he de"endant maintains that Fontanilla012s ne$li$ence bein$ # nishable by the Penal /ode% his 3de"endant012s4 liability as an em#loyer is only s bsidiary% accordin$ to said Penal /ode% b t Fontanilla has not been s ed in a civil action and his #ro#erty has not been exha sted. !o decide the main iss e% we m st c t thr the tan$le that has% in the minds o" many% con" sed and ' mbled to$ether delitos and c asi delitos% or crimes nder the Penal /ode and "a lt or ne$li$ence nder Articles &.05-&.&0 o" the /ivil /ode. !his sho ld be done beca se ' stice may be lost in a labyrinth% nless #rinci#les and remedies are distinctly envisa$ed. Fort nately% we are aided in o r in* iry by the l mino s #resentation o" this #er#lexin$ s b'ect by renowned ' rists and we are li-ewise $ ided by the decisions o" this /o rt in #revio s cases as well as by the solemn clarity o" the considerations in several sentences o" the ) #reme !rib nal o" )#ain. ,A thorities s ##ort the #ro#osition that a * asi-delict or 016c l#a a* iliana012 is a se#arate le$al instit tion nder the /ivil /ode% with a s bstantivity all its own% and individ ality that is entirely a#art and inde#endent "rom a delict or crime. 7#on this #rinci#le% and on the wordin$ and s#irit o" Article &.03 o" the /ivil /ode% the #rimary and direct res#onsibility o" em#loyers may be sa"ely anchored. xxxxx ,8t will th s be seen that while the terms o" Article &.05 o" the /ivil /ode seem to be broad eno $h to cover the driver012s ne$li$ence in the instant case% nevertheless Article &.03 limits c asi-delitos !9 A/!) 9: 9;8))89<) 016<9! P7<8)+AB=> B? =A(.012 B t inasm ch as Article 36@ o" the :evised Penal /ode # nishes not only rec-less b t even sim#le im#r dence or ne$li$ence% the "a lt or ne$li$ence nder Article &.05 o" the /ivil /ode has a##arently been crowded o t. 8t is this overla##in$ that ma-es the ,con" sion worse con"o nded.012 +owever% a closer st dy shows that s ch a conc rrence o" sco#e in re$ard to ne$li$ent acts does not destroy the distinction between the civil liability arisin$ "rom a crime and the res#onsibility "or c asi-delitos or c l#a extra-contract al. !he same ne$li$ent act ca sin$ dama$es may #rod ce civil liability arisin$ "rom a crime nder Article &00 o" the :evised Penal /odeA or create an action "or c asidelito or c l#a extra-contract al nder Articles &.05-&.&0 o" the /ivil /ode. ,!he individ ality o" c asi-delito or c l#a extra-contract al looms clear and amista-able BsicC nmista-able. !his le$al instit tion is o" ancient linea$e% one o" its early ancestors bein$ the =ex A* ilia in :oman =aw. 8n "act% in )#anish le$al terminolo$y% this res#onsibility is o"ten re"erred to as c l#a a* iliana. !he Partidas also contrib ted to the $enealo$y o" the #resent "a lt or ne$li$ence nder the /ivil /ode: x x x . ,!he distinctive nat re o" c asi-delitos s rvives in the /ivil /ode. Accordin$ to Article &0D.% one o" the "ive so rces o" obli$ations is the le$al instit tion o" c asi-delito or c l#a extra-contract al:

016 los actos . . . . en * e interven$a c al*ier $enero de c l#a or ne$li$encia.012 !hen Article &0.3 #rovides that this -ind o" obli$ation shall be $overned by /ha#ter && o" !itle EF8 o" Boo- 8F % meanin$ Articles &.05-&.&0. !his #ortion o" the civil /ode is excl sively devoted to the le$al instit tion o" c l#a a* iliana. ,)ome o" the di""erences between crimes nder the Penal /ode are: ,&. !hat crimes a""ect the # blic interest% while * asi-delitos are only o" #rivate concern. ,5. !hat conse* ently% the Penal /ode # nishes or corrects the criminal act% while the /ivil /ode% by means o" indemni"ication% merely re#airs the dama$e. ,3. !hat delicts are not as broad as * asi-delicts% beca se "or the "ormer are # nished only i" there is a #enal law clearly coverin$ them% while the latter% c asi-delitos% incl de all acts in which 016 any -ind o" "a lt or ne$li$ence intervenes.012 +owever% it sho ld be noted that not all violations o" the #enal law #rod ce civil res#onsibility% s ch as be$$in$ in contravention o" ordinances% violation o" the $ame laws% in"raction o" the r les o" tra""ic when nobody is h rt. xxxxx ,!he "ore$oin$ a thorities clearly demonstrate the se#arate individ ality o" c asi-delitos or c l#a a* iliana nder the /ivil /ode. )#eci"ically they show that there is a distinction between civil liability arisin$ "rom criminal ne$li$ence 3$overned by the Penal /ode4 and res#onsibility "or "a lt or ne$li$ence nder Articles &.05 to &.&0 o" the /ivil /ode% and that the same ne$li$ent act may #rod ce either a civil liability arisin$ "rom a crime nder the Penal /ode% or a se#arate res#onsibility "or "a lt or ne$li$ence nder Articles &.05 to &.&0 o" the /ivil /ode% and that the same ne$li$ent act may #rod ce either a civil liability arisin$ "rom a crime nder the #enal /ode% or a se#arate res#onsibility "or "a lt or ne$li$ence nder Articles &.05 to &.&0 o" the /ivil /ode. )till more concretely the a thorities above cited render it inesca#able to concl de that the em#loyer 01, in this case the de"endant-#etitioner 01, is #rimarily and directly liable nder Article &.03 o" the /ivil /ode.G !he Barredo case was decided by the ) #reme /o rt #rior to the #resent /ivil /ode. +owever% the #rinci#le en nciated in said case% that res#onsibility "or "a lt or ne$li$ence as * asi-delict is distinct and se#arate "rom ne$li$ence #enaliHed nder the :evised Penal /ode% is now s#eci"ically embodied in Art. 5&77 o" the /ivil /ode

Amadora v. CA [1988] Cruz, J. Facts: April 13, 1972: Alfredo Amadora, a high school graduating student of Colegio de San JoseRecoletos ent to school to finish a !h"sics e#periment$ %o e&er, hile he as in the auditorium, his classmate !a'lito (affon fired a gun that hit him$ %e died at 17$ (affon as con&icted of homicide thru rec)less imprudence$

Amadora*s parents filed a ci&il action for damages under CC Art$ 21+, against the school, its rector, %S principal, dean of 'o"s - !h"sics teacher, plus (affon - 2 other students thru their parents$ Complaint against students as later dropped$ C./ Ce'u: defendants ere lia'le in the sum of !290,9+0$,, 1death compensation, loss of earning capacit", costs of litigation, funeral e#penses, moral damages, e#emplar" damages attorne"*s fees2 CA: re&ersed, all defendants a'sol&ed completel"$ 1$ As per Rules of Court 1R3C2 Rule 04, CC Art$ 21+, is not applica'le since the school as an academic institution of learning - not a school of arts - trades$ 2$ Students ere not in custod" of the school at the time of the incident since the semester had alread" ended$ 3$ 5o clear identification of the fatal gun$ 0$ (efendants e#ercised necessar" diligence in pre&enting in6ur"$ !etitioners claim their son as still under school*s custod" 'ecause he ent to school to

compl" 7a re8uirement for graduation$ Respondents: Amadora ent to school to su'mit a !h"sics report - he as no longer in their custod" since the semester as o&er$ A gun as confiscated '" Sergio (amaso, dean of 'o"s, from Jose 9um'an on April 7, 1972$ /t as an unlicensed pistol 7c as later on returned to 9um'an 7o reporting such to the principal or ta)ing further action$ 9um'an as one (affon*s companions hen the incident happened$ !etitioners claim it as this gun that )illed their son 7c respondents re'utted '" sa"ing there as no proof that the" ere one and the same$ ISSUE & RATIO: WON res o!de!ts are "#a$"e. % NO. :#conde & Capuno: Capuno, a student of ;alinta a) :lementar" School - a 'o" scout attended a Ri<al (a" parade on cit" school super&isor*s instructions$ After ards, Capuno 'oarded a 6eep - dro&e it rec)lessl" that it turned turtle )illing 2 passengers$ SC e#culpated school in o'iter dictum 1it as not part" to the case2 since it as not a school of arts - trades$ Some 6ustices dissented claiming that lia'ilit" under CC Art$ 21+, applied to teachers in general - heads of schools of arts - trades in particular$ =ercado &$ CA: a student cut a classmate 7a ra<or 'lade at the >ourdes Catholic School, ?C$ :#conde ruling reiterated$ Custod" re8uirement as defined as a situation here student li&es - 'oards 7teacher such that control, direction - influences on pupil supersede those of parents$ !alisoc &$ ;rillantes: a 1@-"r old student as )illed '" a classmate 7fist 'lo s in the la' of =anila Aechnical /nstitute$ Court ruled that e&en if offender as alread" of age - not 'oarding in the school, the head - teacher-in-charge ere solidaril" lia'le 7him$ Custod" as defined as the protecti&e - super&isor" custod" that school, its heads teachers e#ercise o&er students for as long as the" are at the attendance in the school including recess time$ 5o such re8uirement as actual li&ing - 'oarding in the school 'efore such lia'ilit" is attached$ /t set aside =ercado ruling$ :&en students of age ere still co&ered '" pro&ision since the"*re e8uall" in custod" of school - su'6 to its discipline$ CC Art$ 21+, applies to all schools hether academic or non-academic$ /n the former, teacher-in-charge of student is the person responsi'le 1general rule2$ Bhereas in the latter 1arts - trades2, it is the head 1e#ception2$ SC agrees 7dissent in :#conde, sa"ing that hile the child is in school, parent is not supposed to interfere 7discipline of school nor 7authorit" - super&ision of teacher$ B7o authorit", there can 'e no responsi'ilit"$ 5o reason to differentiate the &igilance e#pected from teachers from academic institutions and non-academic ones$ %istor" of disparit": a$ head of school of arts - trades e#ercised closer tutelage o&er his students ho apprenticed to their master, the school head$ %e as personall" in&ol&ed in teaching his students ho usuall" 'oarded 7him - thus he e#ercised constant control, super&ision - influence$ '$ %ead of academic school: e#ercised onl" administrati&e duties o&er teachers ho ere directl" dealing 7students$ Ahus, teacher is lia'le$ CC Art$ 21+,*s custod" re8uirement is not limited to 'oarding 7school authorities$ /t*s not co-terminous 7sem$ /t includes periods of registration or 'efore graduation during 7c, student is still su'6 to the disciplinar" authorit" of the school$ Ahere is custod" for as long as he*s under control - influence of school - 7in its premises regardless of time and for as long as student can sho that he is in school in pursuance of a legitimate student o'6ecti&e, e#ercise - en6o"ment of a legitimate student rt7pri&ilege$ /t includes rela#ing in the campus$ Cnder similar circumstances, teacher-in-charge should 'e lia'le for his students* torts$ %e need not 'e ph"sicall" present or in a position to pre&ent the in6ur"$ Custod" refers more to his influence on the child the discipline instilled$ Applica'le as ell to head of school of arts trade$ Aeacher is lia'le regardless of student*s age$ Aeacher should 'e lia'le - not school itself unless he can pro&e that he e#ercised the diligence of a good father such as '" emplo"ing sufficient no$ of securit" guards, etc$ Ahis defense is made a&aila'le to the teacher considering that his responsi'ilit"7influence o&er the child cannot 'e e8uated to that of the parents$ !arents can e#pect more o'edience from the child since )id depends more on parents$ !arent can instill more lasting discipline on child than teacher - thus, should 'e held to a greater accounta'ilit" for tort committed '" )id$ BRA lia'ilit" for )ids of the age of ma6orit", lenienc" should 'e o'ser&ed in assessing teacher*s responsi'ilit" considering that parents are no longer lia'le for the acts of their emancipated children$ &O'(IN): *et#t#o! de!#ed.

1$ Rector, principal - dean D not lia'le 'ecause the" are not teachers-in-charge$ Ahe" onl" had general authorit" o&er students$ 2$ Aeacher-in-charge: not disclosed '" e&idence$ Just 'ecause Amadora ent to school in connection 7a ph"sics report doesn*t necessaril" ma)e ph"sics teacher the teacher-in-charge$ ;esides, there*s no sho ing that the teacher as negligent in an" manner$ %e as not e&en re8uired to report to school on that da" thus, his a'sence cannot 'e considered as negligence$ 3n the contrar", the" ha&e pro&en that the" e#ercised due diligence$ 3$ (ean of 'o"s D no proof that the gun he released as the same gun that )illed Amadora$ 0$ School D onl" teacher or head is responsi'le

+e"arde v. CA SU,,AR- OF (OCTRINE: .ailure to pa" the price in the manner prescri'ed '" the contract constitutes a su'stantial 'reach of contract A su'stantial 'reach of contract entitles in6ured part" to rescind the o'ligation$ Rescission a'rogates the contract from its inception and re8uires mutual restitution of 'enefits$ FACTS:

(a&id Ra"mundo is the o ner of a parcel of land together it$

ith the house and other impro&ements erected upon

Ahe propert" as mortgaged to the ;an) of the !hilippine /slands 1;!/2 for !1$+= through a (eed o. Rea" Estate ,ort/a/e 0(RE,1. 9eorge Ra"mundo, (a&id*s father, negotiated the sale of the propert" to spouses A&elina and =ariano Eelarde$

Ahe parties e#ecuted a (eed o. Sa"e 2#t3 Ass4m t#o! o. ,ort/a/e 0(SA,1 here the Eelardes agreed, inter alia, to: &. !a" Ra"mundo !+,,,,,,$,, 5. Assume the o'ligation to repa" the mortgage orth !1$+= 3. Strictl" and faithfull" compl" ith all terms and conditions of the mortgage agreement ith ;!/ I. !a" interests and other charges for late pa"ment le&ied '" the ;an) 1all in all, to treat the mortgage as if it ere originall" signed and e#ecuted '" them2 A&elina Eelarde also e#ecuted an U!derta5#!/ further stating, inter alia, that:

1. 2.

Bhile her application for assumption of mortgage o'ligations on the propert" as still 'eing processed, she ill still pay the mortgage obligations in the name of the o ner Ra"mundo should she &iolate an" of the terms and conditions of the (RE,, she agrees to 112 forfeit in fa&or of (a&id Ra"mundo the !+,,A plus all pa"ments made to ;!/ as li8uidated damages ithout necessit" of 6udicial declarationF 122 Ra"mundo*s resumption of total ownership of the propert"F and 132 automatic cancellation of the (SA, as not appro&ed$

%o e&er, Eelarde*s application for assumption of mortgage o'ligations .rom then on, the Eelardes stopped pa"ment of the mortgage loan

/n response, Ra"mundo rote to the Eelardes stating that their nonpa"ment of the mortgage constituted nonperformance of their o'ligation$ Eelardes replied through a letter stating their illingness to pa" the 'alance rov#ded that Ra"mundo: &. deli&er actual possession of the propert" for Eelardes* immediate occupanc"F 5. cause the release of the title and mortgage from ;!/ and ma)e the title a&aila'le free from an" liens and encum'rancesF and 3. e#ecute an a'solute deed of sale in A&elina Eelarde*s fa&or Ra"mundo then sent the Eelardes a Not#ce o. Ca!ce""at#o!6Resc#ss#o! o. t3e I!te!ded Sa"e on the grounds of failure to compl" ith the terms and conditions of the (SA, and U!derta5#!/ Ahe Eelardes filed a Complaint for: &. Specific performance 1enforcement of the (SA=2F 5. 5ullit" of CancellationF 3. /ssuance of a rit of possessionF and I. (amages Judge Gnares-Santiago of the RAC of =a)ati dismissed the complaint, 'ut a ne 6udge granted the =otion for Reconsideration after Justice Gnares-Santiago as promoted to the CA Ahe ne 6udge ruled in fa&or of the Eelardes, ordering them to pa" the !1$+= and ordering Ra"mundo to e#ecute a deed of a'solute sale and to surrender possession of the propert"

Ra"mundo appealed to the CA,

hich ruled in fa&or of him, finding that:

1. 2.
3.
ISSUES:

the nonpa"ment of the mortgage resulted in a 'reach of contract that the rescission of the contract as, therefore, 6ustified that the letter gi&ing ne conditions as an attempt to no&ate, 'et een the parties$ hich re8uires a ne agreement

8. B75 there as a ;reach of Contract$ %:>(: G:S$ Eelardes* failure to perform their correlati&e o'ligation 1pa"ment of the 'alance of !1$+=2 resulted in a 'reach$ !etitioners allege that disappro&al of their application to assume o'ligation of the mortgage e#tinguished their o'ligation to pa" the monthl" amorti<ations, hich then de&ol&ed upon Ra"mundo again$ .ailure to pa" the mortgage ould not ha&e 'een a pro'lem if the" paid the 'alance of the purchase price amounting to !1$+=, as agreed upon in the e&ent the application is disappro&ed$ Ahus, hen the application as disappro&ed, the" should ha&e proceeded to pa" Ra"mundo the 'alance of !1$+= T3e $reac3 2as !ot t3e !o! a7me!t o. t3e mort/a/e8 $4t t3e !o! er.orma!ce o. t3e#r rec# roca" o$"#/at#o! to a7 t3e r#ce 4!der t3e co!tract o. sa"e Aheir conditional offer to pa" cannot ta)e the place of actual pa"ment that ould discharge a 'u"er*s o'ligation under a contract of sale

/n a co!tract o. sa"e8 seller o'ligates itself to transfer o nership and deli&er a determinate thing, and the buyer o'ligates itself to pa" a r#ce certa#! in mone" or its e8ui&alent Bhen Ra"mundo e#ecuted the (SA,, his o'ligation has alread" 'een performed through co!str4ct#ve de"#ver7, here prior ph"sical deli&er" is not legall" re8uired$ (eed of Sale is deemed e8ui&alent to deli&er" !etitioners did not onl" fail to perform their correlati&e o'ligation, the" also tried to compel Ra"mundo to perform o'ligations 'e"ond those stipulated in the contract 'efore fulfilling their o n$

88. B75 the 'reach as su'stantial enough to 6ustif" the rescission of the contract$ %:>(: G:S$ Ahe Eelardes, in failing to pa" the purchase price under the contract of sale, &iolated the &er" essence of reciprocit" in the contract of sale$
>:9A> ;AS/S: Art#c"e 1191 o. t3e C#v#" Code: Ahe po er to rescind o'ligations is implied in reciprocal ones in case one of the o'ligors should not compl" ith hat in incum'ent upon him$ Ahe in6ured part" ma" choose 'et een fulfillment and the rescission of the o'ligation, ith the pa"ment of damages in either case$ %e ma" also see) rescission e&en after he has chosen fulfillment, if the latter should 'ecome possi'le

Since it is esta'lished that the Eelardes &iolated the reciprocit" of the contract of sale, the right of rescission under Article 1191 as &alidl" e#ercised Ahis right is predicated on a 'reach of faith Bhile it is true that the" e#pressed their illingness to pa" the price one month after it 'ecame due, this does not constitute faithful compliance of their reciprocal o'ligation, especiall" considering the HofferI as made conditional$ !etitioners tried to in&o)e the cases of Song Fo , Zepeda v. CA and Tan v. CA Ahe court held that the facts of this case are distinguisha'le from the other cases 'ecause those in&ol&ed onl" dela"s of a fe da"s and the 'u"ers* offers to pa" ere unconditional and accepted '" the seller

888.B75 the pa"ments ere forfeited %:>(: 53$ Rescission re8uires mutual restitution$

Since the 'reach consisted of the nonperformance of reciprocal o'ligation, and not a 'reach of the mortgage contract, hat applies are the Ci&il Code pro&isions and not the automatic rescission and forfeiture clause of the Cnderta)ing$ Rescission under the Ci&il Code re8uired mutual restitution to 'ring 'ac) the parties to their original situations prior to the inception of the contract Ahe pa"ments of !+,,A and monthl" amorti<ations must 'e returned, lest one part" enrich itself in the e#pense of the other 1!rinciple of Cn6ust :nrichment2 Ahis is 'ecause to resc#!d #s to dec"are t3e co!tract vo#d8 to 4t a! e!d to #t as #. #t !ever 2as8 a!d !ot mere"7 to term#!ate #t a!d re"ease t3e art#es .rom .4rt3er o$"#/at#o!s to eac3 ot3er. Wood3o4se v. &a"#"#

!onente: J$ >a'rador

.acts:

5o&em'er 29, 1907 D Boodhouse entered into a ritten agreement ith %alili$ Ahe important pro&isions of the agreement are: o 3rgani<e a partnership for the 'ottling and distri'ution of =ission soft drin)s o %alili as to decide matters of general polic" regarding the 'usiness hile Boodhouse as to attend to the operation and de&elopment of the plant$ o Boodhouse as to secure the =ission Soft (rin)s .ranchise o Boodhouse as to recei&e 3,J of the net profits$ !rior to the agreement Boodhouse as a'le to o'tain a thirt" da" option on e#clusi&e 'ottling and distri'ution rights for the !hilippines$ (ecem'er 3, 1907 D Boodhouse signed the contract (ecem'er 1,, 1907 D a franchise agreement as entered into 'et een =ission (r" Corporation granting the defendant the e#clusi&e right, license, and authorit" to produce, 'ottle, distri'ute and sell =ission 'e&erages in the !hilippines$ 3perations started during the first ee) of .e'ruar"$ Bhen the 'ottling plant as alread" in operation, plaintiff demanded that the partnership papers 'e e#ecuted$ %alili failed to compl" ith the demand of Boodhouse and such this complaint as instituted$ /n his complaint Boodhouse as as)ing for the e#ecution of the contract of partnership, an accounting of the profits, and his share of 3,J and damages$ C3./ ordered %alili to render an accounting of the profits and to pa" Boodhouse 14J thereof$ /t held that the e#ecution of the contract of partnership could not 'e enforce upon the parties, 'ut it also held that the defense of fraud as not pro&ed$

/ssues:

1$

B35 the defendant had falsel" represented that he had an e#clusi&e franchise to 'ottle =ission 'e&erages$ G:S .raud is ne&er presumed and must 'e pro&ed$ Ahe fact that the parties ould not in&alidate the agreement$ ere represented '" attorne"s

%alili insist that Boodhouse did represent that he had an e#clusi&e franchise, hen as a matter of fact, at the time of its e#ecution, he no longer had it as the same had e#pired, and that, therefore, consent of %alili as &itiated '" fraud and conse8uentl" null and &oid$ Ahe first draft that the counsel of Boodhouse prepared e#pressl" states that Boodhouse had the e#clusi&e franchise$ /n the acts or statements prior to the agreement are essential and rele&ant to the determination of B35 the Boodhouse represent that he had an e#clusi&e franchise$ .rom the statements H Kand the manager is read" and illing to allo the capitalist to use the e#clusi&e franchiseI and HK/n the e&ent of the dissolution of the partnershipK the .ranchise from =ission (r" Corporation shall 'e reassigned to the =anagerKI it can 'e seen that the conclusion that %alili 'elie&ed or as made to 'elie&e that Boodhouse as the grantee of an e#clusi&e franchise$ B35 the false representation or fraud A o t"pes of fraud: ould annul the agreement to form the partnership$ 53

2$ 3$

o o

(olo Casante D ground for the annulment of a contract (olo /ncidente D onl" lia'le for damages as the a'ilit" of Boodhouse as to 'e secured for

Ahe principal consideration for %alili in entering the partnership agreement to get the e#clusi&e franchise to 'ottle and distri'ute for the partnership$

%alili as led to 'elie&e that Boodhouse had the e#clusi&e franchise 'ut the same or transferred to the partnership$

Ahe principal o'ligation of Boodhouse as to secure the franchise for the partnership, as the 'ottler and distri'utor for the =ission (r" Corporation$ /f he as guilt" of false representation, this as not the causal consideration, or the principal inducement, that led to the partnership agreement$ Supposed o nership of an e#clusi&e franchise as the actual consideration for the 3,J sta)e in the net profits$ 1See 8uoted draft page 43+2 Boodhouse as a'le to o'tain a 'igger share in the net profit '" his representation that he had an e#clusi&e franchise$ Agreement cannot 'e considered as null and &oid$ B35 the court can compel %alili to e#ecute the agreement$ 5o Boodhouse contends that the partnership the plant$ no merit as alread" a fait accompli from the time of the operation of

>anguage of the agreement that the parties intended that the e#ecution of the agreement to form a partnership as to 'e carried out a later date$ Claim of Boodhouse is inconsistent ith their intention and incompati'le ith his o n conduct$ %alili ma" not 'e compelled against his ill to carr" out the agreement nor e#ecute the partnership papers$ Ahe la recogni<es the indi&idual*s freedom or li'ert" to do an act he has promised to do or not to do it$

0$

B35 Boodhouse is entitled to recei&e damages$ =easure of damages is the actual loss suffered and the profits reasona'l" e#pected to 'e recei&ed$ =ust set off the damage the defendant suffered '" the plaintiff*s misrepresentation that he had an e#clusi&e franchise, '" hich representation he o'tained a &er" high percentage of share in the profits Agreement to reduce the share from 3, to 14J constitutes &irtual modification of the contract$ %alili*s decision to reduce the share of Boodhouse amount to an admission on the part of each of the reasona'leness of this amount as the share$

A!to!#o +a9:4e9 +s Fra!c#sco de ;or<a

Antonio Ea<8ue<, petitioner &s$ .rancisco de ;or6a, respondent 9R 0+93, 2723700 .rancisco de ;or6a, petitioner &s$ Antonio Ea<8ue<, respondent 9R 0+931 2723700 .acts:

;or6a instituted this claim to reco&er 0,7,2$7 from 3 alleged causes from Ea<8ue<1co$ acting president and manager2 and .ernando ;usuego1co$ treasurer2$ Jan, 1932 Ea<8ue< and ;usuego o'ligated themsel&es to sell to ;or6a 0,,,, ca&ans of pala" at !2$1,7ca&an$ And the" ere a'le to recei&e the full, pa"m)ent of !+0,, from ;or6a$ Ea<8ue< and ;usuego ere onl" a'le to deli&er 2,0++ ca&ans, e8ui&alent to !4,220$ ;or6a cited 3 causes of action from his losses$:

1 2

st nd rd

:Ahe" then refused to deli&er the 'alance of 1,412 ca&ans or !3,174$2 of the mone" , after repeated demands from ;or6a$ :;or6a suffered damages of !1,,,, from theiur refusal$

3 : ;or6a had an additional !14, damages hen Ea<8ue< and ;usuego refused to return 1,41, of the unused sac)s consigned to them for the 0,,,, ca&ans2since onl" 2,0++ as deli&ered and used2$ Ea<8ue< denied the contract entered either ith or ithout ;usuego$ %e alleges that the agreement as 'et een 5ati&idad-Ea<8ue< Sa'ani (e&*t 15ES(2Co$ /nc$ %e as onl" an acting manager$ %e further claims his o n damages of !1,,,$ RAC ruled that Ea<8ue< should pa" ;or6a1plaintiff2 !3,174$2 plus sum of !377$4 and legal interest$ ;usuego as then a'sol&ed$ CA modified to reduce damages to come up ith a total of !3,310$7+ ith legal interest and cost$ Ahen the defendant Ea<8ue< filed for an =.R$ CA ruled to set aside its decision and to remand the case$ Ea<8ue< filed for certiorari to re&ie and re&erse the CA$ ;or6a filed for certiorari for CA to maintain decision$ SC denied ;or6a*s filing for certiorari 'ecause the remanding as for his 'enefit, to allo him opportunit" to refute Ea<8ue<*s contention$ An" a", the SC said this as an action on a contract$ CA as rong in the case anal"sis$ Ahe SC then found the CA*s decision of remanding the case rong$ Since the" had no 6ustification for ordering a ne trial$ Ahe parties themsel&es didn*t demand it$ And the issue in the CA of B35 the compan" had sufficient stoc) at the time the appellant sold 1,4,, ca&ans to another 'u"er1L ong ah !o"2 is irrele&ant to the real issue$

/ssue: WON "a#!t#... ;or<a e!tered #!to a co!tract 2#t3 +a9:4e9 #! 3#s erso!a" ca ac#t7 or as ma!a/er o. t3e N+S( Co. I!c. NO. Ahe Sc said that the CA itself admitted that accdg$ to preponderance of e&idence said that Ea<8ue< acted as acting manger of the 5ES( co$ /nc$, hen he sold 0,,,, ca&ans of pala"$ Ahen instead of remanding the case, the CA should ha&e dismissed the complaint 'ecause the real part" hich is the compan" is not included in the case$ :&en the plaintiff*s argument that it as Ea<8ue< contracted and ho recei&ed the mone" from ;or6a as in&alid and insufficient that the president of the corporation as personall" lia'le$ :&en if the corporation as an artificial 'eing '" la , the mere fact that it is a legal fiction and onl" a'le to act through its agents, doesn*t ma)e these agents lia'le$

Ahe RAC and CA held Ea<8ue< negligent, 'ut the" are rong$ Ahe" ha&e neglected to distinguish a contractual from an e#tra-contractual o'ligation$ Ahe fault under Art$ 11,1-11,0 of the CC are those incidental to the fulfillment or nonfulfillment of contractual o'ligation$ Bhile the fault or negligence referred to in Art$ 19,2 is the culpa a8uiliana of the ci&il la , 7c gi&es rise to o'ligation independent of an" contract$ Ahe fact that the corporation acting thru Ea<8ue< e&en if he is negligent ill not ma)e him lia'le hether principall" or su'sidiaril"$ S/5C: IT WAS T&E COR*ORATION=S CONTRACT8 T&EN IT IS 'IA;'E. So, if outside of the contract, Ea<8ue< '" a negligent act caused damage to ;or6a, then he ould 'e lia'le under Art$19,2 CC$ And ;or6a*s cause of action must 'e culpa a8uiliana and not contract$ ;" then, Ea<8ue< ould ha&e 'een principall" lia'le$ As this as not alleged then the RAC could not ha&e this in its 6urisdiction$

B35 the lo er court*s refusal to entertain Ea<ue<* s counterclaim for damagesin the lo er courts against ;or6a as rong 53 Since the lo er courts decided for ;or6a then naturall" the" ouldn*t grant Ea<8ue<*s counterclaim fro damages for 'ringing this suit to court$ Ahe court found no sufficient reason to grant the claim$ /t didn*t arrant to his claim that the suit as malicious and tortuous against him, And although, from the legal point of &ie he asn*t lia'le, the court said that it as in his moral dut" to at least see the contract through$ !Aras, J$ (issenting /t as his refusal to deli&er the remaining o'ligations that arrant his negligence$ ;ut it as also his fault that his o n negligence pre&ented the fulfillment of the o'ligation$ And hen he made the sale, he )ne the corporation to 'e insol&ent, and no dissol&ed$ Since he o ned a considera'le part of the corporation, then if he isn*t punished, then he ill profit from his o n rong$