#1.SICAM VS.

JORGE
ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC. vs. SPOUSES JORGE
G.R. No. 159617, August 8, 2007
FACTS: On different dates, Lulu Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam located in
Paraaque to secure a loan.
On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry were found
inside the pawnshop vault.
On the same date, Sicam sent Lulu a letter informing her of the loss of her jewelry due to the robbery incident in the
pawnshop. Respondent Lulu then wroteback expressing disbelief, then requested Sicam to prepare the pawned
jewelry for withdrawal on November 6, but Sicam failed to return the jewelry.
Lulu, joined by her husband Cesar, filed a complaint against Sicam with the RTC of Makati seeking indemnification
for the loss of pawned jewelry and payment of AD, MD and ED as well as AF.
The RTC rendered its Decision dismissing respondents complaint as well as petitioners counterclaim. Respondents
appealed the RTC Decision to the CA which reversed the RTC, ordering the appellees to pay appellants the actual
value of the lost jewelry and AF. Petitioners MR denied, hence the instant petition for review on Certiorari.
ISSUE: are the petitioners liable for the loss of the pawned articles in their possession? (Petitioners insist that they
are not liable since robbery is a fortuitous event and they are not negligent at all.)
HELD: The Decision of the CA is AFFIRMED.
YES
Article 1174 of the Civil Code provides:
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when
the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which
could not be foreseen or which, though foreseen, were inevitable.
Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that
the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to
foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same.
To constitute a fortuitous event, the following elements must concur:
(a) the cause of the unforeseen and unexpected occurrence or of the failure of the debtor to comply with obligations
must be independent of human will;
(b) it must be impossible to foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be
impossible to avoid;
(c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a normal manner;
and,
(d) the obligor must be free from any participation in the aggravation of the injury or loss.
The burden of proving that the loss was due to a fortuitous event rests on him who invokes it. And, in order for a
fortuitous event to exempt one from liability, it is necessary that one has committed no negligence or misconduct
that may have occasioned the loss.
Sicam had testified that there was a security guard in their pawnshop at the time of the robbery. He likewise testified
that when he started the pawnshop business in 1983, he thought of opening a vault with the nearby bank for the
purpose of safekeeping the valuables but was discouraged by the Central Bank since pawned articles should only be
stored in a vault inside the pawnshop. The very measures which petitioners had allegedly adopted show that to them

the possibility of robbery was not only foreseeable, but actually foreseen and anticipated. Sicams testimony, in
effect, contradicts petitioners defense of fortuitous event.
Moreover, petitioners failed to show that they were free from any negligence by which the loss of the pawned
jewelry may have been occasioned.
Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of negligence on
the part of herein petitioners.
Petitioners merely presented the police report of the Paraaque Police Station on the robbery committed based on
the report of petitioners employees which is not sufficient to establish robbery. Such report also does not prove that
petitioners were not at fault. On the contrary, by the very evidence of petitioners, the CA did not err in finding that
petitioners are guilty of concurrent or contributory negligence as provided in Article 1170 of the Civil Code, to wit:
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof, are liable for damages.
**
Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments which are engaged
in making loans secured by pledges, the special laws and regulations concerning them shall be observed, and
subsidiarily, the provisions on pledge, mortgage and antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall take care of the
thing pledged with the diligence of a good father of a family. This means that petitioners must take care of the pawns
the way a prudent person would as to his own property.
In this connection, Article 1173 of the Civil Code further provides:
Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the persons, of time and of the place. When
negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is expected
of a good father of a family shall be required.
We expounded in Cruz v. Gangan that negligence is the omission to do something which a reasonable man, guided
by those considerations which ordinarily regulate the conduct of human affairs, would do; or the doing of something
which a prudent and reasonable man would not do. It is want of care required by the circumstances.
A review of the records clearly shows that petitioners failed to exercise reasonable care and caution that an
ordinarily prudent person would have used in the same situation. Petitioners were guilty of negligence in the
operation of their pawnshop business. Sicams testimony revealed that there were no security measures adopted by
petitioners in the operation of the pawnshop. Evidently, no sufficient precaution and vigilance were adopted by
petitioners to protect the pawnshop from unlawful intrusion. There was no clear showing that there was any security
guard at all. Or if there was one, that he had sufficient training in securing a pawnshop. Further, there is no showing
that the alleged security guard exercised all that was necessary to prevent any untoward incident or to ensure that no
suspicious individuals were allowed to enter the premises. In fact, it is even doubtful that there was a security guard,
since it is quite impossible that he would not have noticed that the robbers were armed with caliber .45 pistols each,
which were allegedly poked at the employees. Significantly, the alleged security guard was not presented at all to
corroborate petitioner Sicams claim; not one of petitioners employees who were present during the robbery
incident testified in court.
Furthermore, petitioner Sicams admission that the vault was open at the time of robbery is clearly a proof of
petitioners failure to observe the care, precaution and vigilance that the circumstances justly demanded.

The robbery in this case happened in petitioners pawnshop and they were negligent in not exercising the
precautions justly demanded of a pawnshop.
NOTES:
We, however, do not agree with the CA when it found petitioners negligent for not taking steps to insure themselves
against loss of the pawned jewelries.
Under Section 17 of Central Bank Circular No. 374, Rules and Regulations for Pawnshops, which took effect on
July 13, 1973, and which was issued pursuant to Presidential Decree No. 114, Pawnshop Regulation Act, it is
provided that pawns pledged must be insured, to wit:
Sec. 17. Insurance of Office Building and Pawns- The place of business of a pawnshop and the pawns pledged to it
must be insured against fire and against burglary as well as for the latter(sic), by an insurance company accredited
by the Insurance Commissioner.
However, this Section was subsequently amended by CB Circular No. 764 which took effect on October 1, 1980, to
wit:
Sec. 17 Insurance of Office Building and Pawns The office building/premises and pawns of a pawnshop must be
insured against fire. (emphasis supplied).
where the requirement that insurance against burglary was deleted. Obviously, the Central Bank considered it not
feasible to require insurance of pawned articles against burglary.
The robbery in the pawnshop happened in 1987, and considering the above-quoted amendment, there is no statutory
duty imposed on petitioners to insure the pawned jewelry in which case it was error for the CA to consider it as a
factor in concluding that petitioners were negligent.
Nevertheless, the preponderance of evidence shows that petitioners failed to exercise the diligence required of them
under the Civil Code.

#2.DBP v. Licuanan
DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner vs.ALEJANDRO and ADELAIDA LICUANAN,
Respondents.
G.R. No. 150097, February 26, 2007.
CORONA, J.:
In 1974, Respondent spouses Alejandro and Adelaida Licuanan ("Respondents") were granted a P4,700 loan by
petitioner Development Bank of the Philippines ("DBP") to mature in 1979, and secured by a real estate mortgage
over a 980-square meter property.
In 1975, DBP granted respondents a second loan of P12,000 payable on or before the year 1980, which was secured
by a real estate mortgage over four parcels of land.
In 1975, DBP granted Respondents a third loan of P22,000 maturing in 1985, and was secured by a real estate
mortgage over three parcels of land.
In 1979, petitioner and respondents restructured the second loan, extending the maturity date to 1982.
In 1981, DBP sent a letter to Respondents informing them that they would institute extrajudicial foreclosure
proceedings for breach of the conditions of the mortgage (of the first loan).
After an application for extrajudicial foreclosure, the properties were sold in a public auction, in which DBP was the
highest bidder for bidding a total of P16,340.
In 1984, DBP informed Respondents that the properties could be reacquired by negotiated sale. Three days later,
however, the properties were sold to one Emelita Peralta for P104,000.
After being informed of the sale, Respondents offered to repurchase the properties, but it was rejected by DBP.
Respondents then filed a complaint for recovery of real properties and damages in RTC of Lingayen against DBP
and Peralta.
In its counterclaim, DBP asserts its right to claim for deficiency since the proceeds of the sale (P104,000) did not
cover the debt of Petitioners of P131,642.33. Thus, it is entitled to claim the difference (P27,642.33) with interest.
DBP also argues that demand is not necessary as the maturity dates are already known to Respondents, and that
Respondents are estopped from questioning the foreclosure sale since they offered to repurchase the property.
The RTC ruled in favor of respondents. It held that there was no demand for payment prior to the extrajudicial
foreclosure and ordered Peralta to reconvey the properties to respondents, subject to Peraltas right to be paid. It also
held that petitioner did not deal fairly with respondents making it liable for nominal and moral damages, as well as
attorneys fees and litigation expenses.
CA affirmed RTC's findings.
1st Issue: W/N a demand for payment of the loans was made before the mortgage was foreclosed.
Ruling: No.
Whether or not demand was made is a question of fact. Both the CA and RTC found that demand was never made,
and no compelling reason has been shown by DBP to rule otherwise.
(The issue of whether demand was made before the foreclosure was effected is essential. If demand was made and
duly received by the respondents and the latter still did not pay, then they were already in default and foreclosure
was proper. However, if demand was not made, then the loans had not yet become due and demandable. This meant

that respondents had not defaulted in their payments and the foreclosure by petitioner was premature. Foreclosure is
valid only when the debtor is in default in the payment of his obligation.)
2nd Issue: W/N demand is necessary to make respondents guilty of default.
Ruling: Yes.
It is only when demand to pay is made and subsequently refused that respondents can be considered in default and
DBP obtains the right to file an action to collect the debt or foreclose the mortgage.
The maturity dates only indicate when payment can be demanded. It is the refusal to pay after demand that gives the
creditor a cause of action against the debtor.
Since demand was never made by DBP, the foreclosure was premature and therefore null and void.
Further, DBP's argument that respondents are estopped from questioning the validity of the foreclosure sale since
they offered to repurchase the foreclosed properties is incorrect.
An offer to repurchase should not be construed as a waiver of the right to question the sale. Instead, it must be taken
as an intention to avoid further litigation and thus is in the nature of an offer to compromise. By offering to redeem
the properties, respondents can attain their ultimate objective: to pay off their debt and regain ownership of their
lands.
3rd Issue: W/N respondents are liable for the deficiency claim of petitioner.
Ruling: No.
While it is true that in extrajudicial foreclosure of mortgage, the mortgagee has the right to recover the deficiency
from the debtor, this presupposes that the foreclosure must first be valid.
4th Issue: W/N petitioner is liable for damages.
Ruling: Yes
DBP is liable for moral damages. Apart from the rushed foreclosure proceedings, certain acts of DBP were most
certainly ruthless and in bad faith, which caused serious anxiety and wounded feelings to Respondents, to wit 1st: DBP granted the three loans for a total of P45,740.61 because the market value of the collaterals exceeds
P100,000.00. But 6 years later, when the value must have appreciated, DBP bidded for a measly P16,000.00 and
claimed a deficiency. That it was measly and shocking to the conscience was conclusively proven by the fact that
Peralta bought the properties for P104,000.00 barely three 3 years later.
2nd: It is odd that DBP restructured the second loan, but not the first. This lulled Respondents into a false sense of
security and a feeling of relief that the entire loan accommodation will mature in 1985. Thus, they were blindsided
by the foreclosure proceedings, causing them to suffer sleepless nights.
3rd: Respondents also made pleas to repurchase the properties, which fell on deaf ears. It also had the temerity to
unconscionably making deficiency claims plus interest.
Further, Respondents property rights were invaded or violated, hence the grant of nominal damages was also proper.
Respondents are likewise entitled to the award of attorneys fees and expenses of litigation since the premature
foreclosure by petitioner compelled them to incur expenses to protect their interest.

#3.Art 1169 Demand and Delay

G.R. No. 153004 November 5, 2004
SANTOS VENTURA HOCORMA FOUNDATION, INC.,petitioner, vs.ERNESTO V. SANTOS
andRIVERLAND, INC.,respondents.
Facts:
Ernesto V. Santos and Santos Ventura Hocorma Foundation, Inc. (SVHFI) were plaintiff and defendant,respectively,
in several civil cases. On October 26, 1990, the parties executed a Compromise Agreement wherein Foundation shall
pay Santos P14.5 Million in the following manner:
A. P1.5 Million immediately upon the execution of this agreement; and
B. The balance of P13 Million shall be paid, whether in lump sum or in installments, at the discretion of the
Foundation, within a period of not more than two (2) years from the execution of this agreement. In compliance,
Santos moved for the dismissal of the cases, while SVHFI paid the initial P1.5 million. After several demands,
SVHFI failed to pay the balance of P13 million, prompting Santos to apply for the issuance of a writ of execution of
the compromise judgment of the RTC dated September 30, 1991.
Twice, SVHFIs properties were auctioned and sold to River land, Inc.
On June 2, 1995, Santos and River land Inc. filed a Complaint for Declaratory Relief and Damages alleging delay on
the part of SVHFI in paying the balance. They further alleged that under the Compromise Agreement, the obligation
became due on October26, 1992, but payment of the remaining balance was effected only on November 22, 1994.
Thus, respondents prayed that petitioner be ordered to pay legal interest on the obligation, penalty, attorney's fees
and costs of litigation. SVHFI alleged that the legal interest on account of fault or delay was not due and payable,
considering that the obligation had been superseded by the compromise agreement. Moreover, SVHFI argued that
absent a stipulation, Santos must ask for judicial intervention for purposes of fixing the period.
Issue: WON SVHFI incurred in delay based on the compromise agreement and thereby liable for legal interest?
Ruling:
SVHFI is liable for legal interest as penalty on account of delay. The Compromise Agreement was entered into on
October 26, 1990. It was judicially approved on September30, 1991. Applying existing jurisprudence, the
compromise agreement as a consensual contract became binding between the parties upon its execution and not
upon its court approval. Hence, the two-year period should have begun on October 26, 1990.In this case, there was
non-fulfillment of the obligation with respect to time.
The requisites of mora were all met:
(1) -that the obligation be demandable and already liquidated
-the two-year period already lapsed andthe amount of payment was already determined;
(2)-that the debtor delays performance
-SVHFI paid the balance beyond the two-year period; and finally,
(3)-that the creditor requires the performance judicially or extra-judicially

a demand letter was sent in accordance with the extra-judicial demand as contemplated by law. When the debtor
knows the amount and period when he is to pay, interest as damages is generally allowed as a matter of right. The
legal interest for loan as forbearance of money is 12% per annum to be computed from the time the demand was
made under the provisions of Article 1169 of the Civil Code.
Fallo: WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 30, 2002 of the Court
of Appeals and its April 12, 2002 Resolution in CA-G.R. CV No. 55122 are AFFIRMED. Costs againstpetitioner.SO
ORDERED.

#5 BAYLA V. SILANG TRAFFIC CO. 73 PHIL 557

Facts:
The case is about recovery by petitioners of a certain sum of money which they had paid severally to
respondent corporation on account of shares of stock they individually agreed to take and pay for a certain specified
terms and conditions. Respondent, Silang Traffic Co., Inc., entered into an agreement for the sale on installment of
its shares of stock with various individuals, including the petitioners Sofrio Bayla. After the latter had paid several
installments for the purchase price of said shares of stock, the petitioners defaulted in the payment of the subsequent
installments. Thus, the board of directors passed a resolution authorizing for the refund of the amounts paid and the
reversion of the shares of stock to the corporation. Despite the said board resolution, the amounts paid by petitioners
were not returned to them since the board resolution was revoked and cancelled by a subsequent resolution. Thus,
petitioners instituted an action in the Court of First Instance of Cavite to recover the sums of money paid. The
respondent contends that the resolution does not apply to petitioners as at the time the resolution was passed, the
shares had already automatically been reverted back to the corporation, and that the resolution was no longer
effective as it was cancelled by a subsequent resolution passed by the Board. The Court of First Instance declared
that the shares of stock had already been forfeited and absolved the respondent from the complaint.
Issues: Whether or not, the failure to pay any installment of the purchase price of the shares of stock would result in
its automatic forfeiture in favor of the corporation.
Held: The contract herein involved is one of sale and not of subscription as it is an independent agreement between
the individual purchaser, which is the petitioners, and respondent corporation to buy the shares of stock at a
stipulated price. It does not involve a mutual agreement of the subscribers to take and pay for the stock of the
corporation. Whether a particular contract is a purchase or a subscription of shares of stock is a matter of
construction and depends upon its terms and the intention of the parties. It has been held that a subscription to stock
in an existing corporation is, as between the subscriber and the corporation, simply a contract of purchase and sale.
As to forfeiture, the contract did not expressly provide that the failure of the purchaser to pay any installment would
give rise to the forfeiture and cancellation without the necessity of any demand from the seller. However, being a
contract of sale, it may be rescinded by mutual agreement of the parties. In the subsequent board resolution, it was
stated that the contracts were rescinded for the good of the corporation and in order to terminate a pending civil case
involving the validity of such sales of the shares. To such rescission, petitioners apparently agreed, as shown by their
demand for the refund of the amount they had already paid to the corporation. Moreover, provisions in the contract
regarding interest on deferred payments would not have been inserted if it had been the intention of the parties to
provide for automatic forfeiture and cancelation of the contract. The Civil code states that persons obliged to deliver
or do something are not in default until the moment the creditor demands of them judicially or extra judicially the
fulfillment of their obligation, unless (1) the obligation or the law expressly provides that demand shall not be
necessary in order that default may arise, (2) by reason of the nature and circumstances of the obligation it shall
appear that the designation of the time at which that thing was to be delivered or the service rendered was the
principal inducement to the creation of the obligation. Wherefore, the judgment of the court of appeals is hereby
reversed and another judgment will be entered against the defendant Silang Traffic Co., Inc., ordering it to pay to the
petitioners Sofronio T. Bayla, Venancio Toledo, Josefa Naval, and Paz Toledo.

#6 La Mallorca v. De Jesus
17 SCRA 22 Civil Law Torts and Damages Negligence
In October 1959, Lolita de Jesus was riding a bus owned by La Mallorca and Pampanga Bus Company which had a
head on collision against a freight truck. Apparently, the bus had a tire blow out which resulted to the accident.
Lolita died and so her father, Valentin de Jesus, filed a civil case for damages against La Mallorca. The lower court
rendered judgment in favor of De Jesus and ordered La Mallorca to pay for actual, compensatory, and moral
damages including counsel fees. This decision was affirmed by the Court of Appeals. La Mallorca assailed the
decision as it argued that a tire blow out is a fortuitous event and should not be taken as negligence.
ISSUE: Whether or not a tire blow out is a fortuitous event.
HELD: No. As found by the lower court, the tire blow out in this case was due to the fact that the inner circle of the
wheel of the bus was pressed so closely to the rim which caused it to eventually explode. This mechanical defect in
the installation of the wheel could have been easily discovered had the bus been subjected to a thorough check up
before it was allowed to hit the road. La Mallorca is therefore negligent and the tire explosion is not a fortuitous
event for it could have been avoided had the bus been properly maintained.
The Supreme Court also emphasized in this case that moral damages are recoverable by reason of the death of a
passenger caused by the breach of contract of a common carrier, as provided in Article 1764, in relation to Article
2206, of the Civil Code.

#7 SALUDAGA vs. FAR EASTERN UNIVERSITY

G.R. No. 179337 April 30, 2008
Facts:
Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern University when he was shot by
Alejandro Rosete, one of the security guards on duty at the school premises on August 18, 1996. Rosete was brought
to the police station where he explained that the shooting was accidental. He was eventually released considering
that no formal complaint was filed against him.
Respondents, in turn, filed a Third-Party Complaint against Galaxy Development and Management Corporation
(Galaxy), the agency contracted by respondent FEU to provide security services within its premises and Mariano D.
Imperial (Galaxys President), to indemnify them for whatever would be adjudged in favor of petitioner.
Petitioner is suing respondents for damages based on the alleged breach of student-school contract for a safe and
secure environment and an atmosphere conducive to learning.
Issue: WON FEU was not negligent and such shooting was tantamount to a caso fortuito? NO, it was negligent and
such is not a fortuitous case.
Held: 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 schools
academic requirements and observe its rules and regulations.
Respondent FEU failed to discharge the burden of proving that they exercised due diligence in providing a safe
learning environment for their students. It failed to show that they undertook steps to ascertain and confirm that the
security guards assigned to them actually possess the qualifications required in the Security Service Agreement. It
was not proven that they examined the clearances, psychiatric test results, 201 files, and other vital documents
enumerated in its contract with Galaxy. Total reliance on the security agency about these matters or failure to check
the papers stating the qualifications of the guards is negligence on the part of respondents. A learning institution
should not be allowed to completely relinquish or abdicate security matters in its premises to the security agency it
hired. To do so would result to contracting away its inherent obligation to ensure a safe learning environment for its
students.
Respondent FEU is liable to petitioner for damages.
FEU cannot be held liable for damages under Art. 2180 of the Civil Code because respondents are not the employers
of Rosete. The latter was employed by Galaxy. The instructions issued by respondents Security Consultant to Galaxy
and its security guards are ordinarily no more than requests commonly envisaged in the contract for services entered
into by a principal and a security agency. They cannot be construed as the element of control as to treat respondents
as the employers of Rosete. It had no hand in selecting thesecurity guards. Thus, the duty to observe the diligence of
a good father of a family cannot be demanded from the said client
FALLO:
For these acts of negligence and for having supplied respondent FEU with an unqualified security guard, which
resulted to the latters breach of obligation to petitioner, it is proper to hold Galaxy liable to respondent FEU for such
damages equivalent to the above-mentioned amounts awarded to petitioner. Unlike respondent De Jesus, we deem
Imperial to be solidarily liable with Galaxy for being grossly negligent in directing the affairs of the security
agency.

#9Solar Harvest Inc., petitioner, vs. Davao Corrugated Carton Corporation, respondentG.R. no. 176868 July
26,2010
Facts: Petitioners entered into an agreement with the respondent for the purchase of
corrugated carton boxes specifically designed for petitioner's business of exporting fresh
bananas. Thea greement was not reduced into writing. Petitioner deposited in respondent's
US Dollar Savings Account as full payment for the ordered boxes. Despite such payment,
petitioner did not receive any boxes from respondent. Petitioner wrote a demand letter for
reimbursement of the amount paid. Respondent replied that the boxes had been completed
as early as April 3, 1998 and that petitioner failed to pick them up from the former's
warehouse 30 days from completion, as agreed upon. Petitioner filed a Complaint for sum of
money and damages against respondent. The Complaint averred that the parties agreed
that the boxes will be delivered within 30 days from payment but respondent failed to
manufacture and deliver the boxes within such time.
Issue: Whether or not the petitioner would have a cause of action for rescission against the
respondent.
Held: No, the petitioner would not have a cause of action for rescission against the
respondent. The Supreme Court ruled that in reciprocal obligations, as in a contract of sale,
the general rule is that the fulfillment of the parties' respective obligations should be
simultaneous. Hence, no demand is generally necessary because, once a party fulfills his
obligation and the other party does not fulfill his, the latter automatically incurs in delay. But
when different dates for performance of the obligations are fixed, the default for each
obligation must be determined by the rules given in the first paragraph of the present
article, that is, the other party would incur in delay only from the moment the other party
demands fulfillment of the former's obligation. Thus, even in reciprocal obligations, if the
period for the fulfillment of the obligation is fixed, demand upon the obligee is still necessary
before the obligor can be considered in default and before a cause of action for rescission
will accrue. The Complaint only alleged that petitioner made a "follow-up" upon respondent,
which, however, would not qualify as a demand for the fulfillment of the obligation. Without
a previous demand for the fulfillment of the obligation, petitioner would not have a cause of
action for rescission against respondent as the latter would not yet be considered in breach
of its contractual obligation.
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#9Solar Harvest, Inc. Vs. Davao Corrugated Carton Corporation

GR No. 176858, July 26, 2010
FACTS:
In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered into an unwritten
agreement. Solar Harvest placed orders for customized boxes for its business of exporting

bananas at USD 1.10 each. Petitioner 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, 2001Davao
Corrugated 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 completion as
agreed upon. Respondent mentioned that petitioner even placed additional order of
24,000.00 boxes, out of which, 14,000 had already been manufactured without any advance
payment from Solar Harvest. Davao Corrugated then demanded that Solar Harvest remove
boxes from their warehouse, pay balance of USD 15,400.00 for the additional boxes and
P132,000 as storage fee. On August 17, 2001 Solar harvest filed complaint against Davao
Corrugated for sum of money and damages claiming that the agreement was for the
delivery of the boxes, which Davao Corrugated did not do. They further alleged that
whenever repeated follow-up was made to Davao Corrugated, they would only see sample
boxes and get promise of delivery. Due to Davao Corrugateds failure to deliver, Solar Harvest
had to cancel the order and demanded payment and/or refund which Davao Corrugated
refused to pay. Davao Corrugated counterclaimed 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 that is unpaid). The agreement was for Solar Harvest to pick up the
boxes, which they did not do. They even averred that on Oct. 8, 1998 Solar Harvests
representative Bobby Que even went to the warehouse to inspect and saw that indeed boxes
were ready for pick up. On Feb. 20, 1999, Que visited the factory again and said that they
ought to sell the boxes to recoup some of the costs of the 14,000 additional orders because
their transaction to ship the bananas did not materialize. Solar Harvest denies that they
made the additional order. On March 20, 2004 the RTC ruled in favor of Davao Corrugated.
ISSUE:
Whether or not Davao Corrugated was responsible for breach of contract as Solar Harvest
had not yet demandedfrom 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 fulfillment of the
parties 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 1st paragraph of the article. Thus even in reciprocal obligations, if the period for
the fulfillment 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 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)

#8 G.R. No. 158911 : March 4, 2008MANILA ELECTRIC COMPANY, petitioner, vs. MATILDE
MACABAGDAL RAMOY, BIENVENIDO RAMOY, ROMANA RAMOY-RAMOS,
ROSEMARIERAMOY, OFELIA DURIAN and CYRENE PANADO, respondents

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 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 attorneys 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 exercise utmost care and diligence in the performance
of its obligation. Thus, MERALCOs 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 the suffered wounded feelings because of MERALCOs
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
MERALCOs acts cannot be considered wanton, fraudulent, reckless, oppressive or
malevolent. Since theCourt does not deem it proper to award exemplary damages in
this case then the CAs award of attorneys fees should likewise be deleted, as
pursuant to Article 2208 of the Civil Code of which thegrounds were not present.