EK LEE STEEL WORKS CORPORATION vs.

MANILA CASTOR
OIL CORPORATION, ROMY LIM, and THE COURT OF APPEALS
G.R. No. 119033, July 9, 2008

FACTS: Ek Lee Steel Works Corporation (petitioner) is engaged in

the construction business while Manila Castor Oil Corporation
(respondent) claims to be a pioneer in the castor oil industry with
Romy Lim (Lim) as its President.
respondent contracted petitioner for the construction of
respondents castor oil plant and office complex in Sasa, Davao
City. Petitioner agreed to undertake the construction.
petitioner alleged that respondent verbally agreed to have another
building (Building II-Warehouse) constructed on the project site
worth P349,249.25. Respondent denied the existence of this
contract because it never approved such contract. Therefore,
petitioner discontinued its construction of Building II-Warehouse
after finishing its foundation and two side walls.
petitioner submitted a Statement of Account to respondent
showing respondents accumulated payables totaling P764,466.5
Respondent paid P500,000 as shown in a letter of even date. In the
same letter, respondent promised to pay certain amounts
thereafter upon the completion of specific portions of the project.

Respondents Defense: petitioner was already in delay. They

claimed that petitioner abandoned the project on 16 July 1988.
Respondents further alleged that certain portions of the
construction work did not conform to the specifications agreed
upon by the parties.
The trial court ruled in favor of petitioner. The trial court held that
petitioner was justified in abandoning its construction of the
project. The Court of Appeals reversed the decision of the trial
court. The appellate court ruled that the 16 May 1988 letter
novated all the earlier agreements between the parties; that
petitioner was not entitled to further payments from respondent
because petitioner failed to comply with its obligation of finishing
all the contracted work, except the office building, on 15 June 1988
as clearly stipulated in the 16 May 1988 letter.
However, the Court of Appeals faulted respondent for the trial
courts failure to correspondingly reduce the amount recoverable
by petitioner. Hence, this petition.
ISSUE: Whether petitioner can validly collect from respondent the
remaining balance of the total contract price
HELD: NO
Petitioner, on the other hand, was behind schedule in its
construction work because the project should be fully operational
by April 1988.

On 5 July 1988, respondent paid petitioner P70,000.

petitioner allegedly demanded payment of respondents remaining
balance, but to no avail. Hence, petitioner stopped its construction
in the project site.
petitioner filed a collection suit against respondent and Lim, with
an application for a writ of preliminary attachment.

To remedy the situation, the 16 May 1988 letter fixed a period for
the completion of the other structures of the project, except the
office building. Petitioner was given a month to finish this portion of
the project and the records show that it was aware of this deadline.
At the same time, the 16 May 1988 letter specified the amounts
still payable to petitioner conditioned upon the accomplishment of
certain portions of the project.

There is no doubt that petitioner failed to comply with its

undertaking to complete the project, except the office building, on
15 June 1988. Consequently, respondents obligation to pay the
P200,000 did not arise. Respondent could not be considered in
delay when it failed to pay petitioner at that time. According to the
last paragraph of Article 1169 of the Civil Code, [i]n reciprocal
obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is
incumbent upon him. From the moment one of the parties fulfills
his obligation, delay by the other begins.
WHEREFORE, we DENY the petition

Telefast v. Castro Digest

Facts:
1.
The petitioner is a company engaged in transmitting
telegrams. The plaintiffs are the children and spouse of
Consolacion Castro who died in the Philippines. One of the
plaintiffs, Sofia sent a telegram thru Telefast to her father and
other siblings in the USA to inform about the death of their mother.
Unfortunately, the deceased had already been interred but not one
from the relatives abroad was able to pay their last respects. Sofia
found out upon her return in the US that the telegram was never
received. Hence the suit for damages on the ground of breach of
contract. The defendant-petitioner argues that it should only pay
the actual amount paid to it.
2.
The lower court ruled in favor of the plaintiffs and awarded
compensatory, moral, exemplary, damages to each of the plaintiffs
with 6% interest p.a. plus attorneys fees. The Court of Appeals
affirmed this ruling but modified and eliminated the compensatory
damages to Sofia and exemplary damages to each plaintiff, it also
reduced the moral damages for each. The petitioner appealed
contending that, it can only be held liable for P 31.92, the fee or

charges paid by Sofia C. Crouch for the telegram that was never
sent to the addressee, and that the moral damages should be
removed since defendant's negligent act was not motivated by
"fraud, malice or recklessness.
Issue: Whether or not the award of the moral,
compensatory and exemplary damages is proper.
RULING: Yes, there was a contract between the petitioner and
private respondent Sofia C. Crouch whereby, for a fee, petitioner
undertook to send said private respondent's message overseas by
telegram. Petitioner failed to do this despite performance by said
private respondent of her obligation by paying the required
charges. Petitioner was therefore guilty of contravening its and is
thus liable for damages. This liability is not limited to actual or
quantified damages. To sustain petitioner's contrary position in this
regard would result in an inequitous situation where petitioner will
only be held liable for the actual cost of a telegram fixed thirty (30)
years ago.
Art. 1170 of the Civil Code provides that "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." Art. 2176 also provides that "whoever by
act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done."
CATHAY PACIFIC AIRWAYS LTD., petitioner,
vs. SPOUSES DANIEL VASQUEZ and MARIA LUISA MADRIGAL
VASQUEZ, respondents.
FACTS:
In respondents return flight to Manila from Hongkong, they were
deprived of their original seats in Business Class with their
companions because of overbooking. Since respondents were
privileged members, their seats were upgraded to First Class.
Respondents refused but eventually persuaded to accept it. Upon
return to Manila, they demanded that they be indemnified in the
amount of P1million for the humiliation and embarrassment
caused by its employees. Petitioners Country Manager failed to
respond. Respondents instituted action for damages. The RTC ruled
in favor of respondents. The Court of Appeals affirmed the RTC
decision with modification in the award of damages.

ISSUE:
Whether or not the petitioners (1) breached the contract of
carriage, (2) acted with fraud and (3) were liable for damages.
RULING:
(1) YES. Although respondents have the priority of upgrading their
seats, such priority may be waived, as what respondents did. It
should have not been imposed on them over their vehement
objection.
(2) NO. There was no evident bad faith or fraud in upgrade of seat
neither on overbooking of flight as it is within 10% tolerance.

(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the
amount of P5,000.00. Moral damages (Art.2220, NCC) and
attorneys fees were set aside and deleted from the Court of
Appeals ruling

Africa vs Caltext

In March 1948, in Rizal Avenue, Manila, a tank truck was hosing

gasoline into the underground storage of Caltex. Apparently, a fire
broke out from the gasoline station and the fire spread and burned
several houses including the house of Spouses Bernabe and
Soledad Africa. Allegedly, someone (a passerby) threw a cigarette
while gasoline was being transferred which caused the fire. But
there was no evidence presented to prove this theory and no other
explanation can be had as to the real reason for the fire.
Apparently also, Caltex and the branch owner (Mateo Boquiren)
failed to install a concrete firewall to contain fire if in case one
happens.
ISSUE: Whether or not Caltex and Boquiren are liable to pay for
damages.
HELD: Yes. This is pursuant to the application on the principle of
res ipsa loquitur (the transaction speaks for itself) which states:
where the thing which caused injury, without fault of the injured
person, is under the exclusive control of the defendant and the
injury is such as in the ordinary course of things does not occur if
he having such control use proper care, it affords reasonable
evidence, in the absence of the explanation, that the injury arose
from defendants want of care. The gasoline station, with all its
appliances, equipment and employees, was under the control of
Caltex and Boquiren. A fire occurred therein and spread to and
burned the neighboring houses. The persons who knew or could
have known how the fire started were Boquiren, Caltex and their
employees, but they gave no explanation thereof whatsoever. It is
a fair and reasonable inference that the incident happened
because of want of care.
Note that ordinarily, he who charges negligence shall prove it.
However, res ipsa loquitur is the exception because the burden of
proof is shifted to the party charged of negligence as the latter is

the one who had exclusive control of the thing that caused the
injury complained of.

Fabre vs. CA
Facts:
Petitioner and his wife were owners of 1982 Mazda minibus. They
were using the said vehicle as a school bus service for children in
Manila. They hired Cabil as their driver. On November 2, 1982
private respondent word for world Christian fellowship arranged
the petitioner for transportation of members of young adult
ministry from manila to la union and back. While travelling, they
met an accident. The bus hit a fence and a coconut tree that
caused the passenger to be injured including respondent Antonio.
The WWCF and Antonio filed a criminal complaint against the
driver, the trial court showed in favor of respondents. All evidence
presented showed the negligence of the defendants ultimately
resulted to the accident. The court of appeals affirmed the decision
of the trial court.
ISSUE:
Whether or the petitioner are liable for the injuries suffered by the
respondents based on culpa aquiliana
HELD:
The court ruled that damages should be award based on the theory
that petitioners are liable for breach of contract of carriage or culpa
aquiliana . Holding that the relation of the passenger and carrier is
contractual both origin and in nature, nevertheless the act that
breaks the contract may also be tort. In both sources of obligation,
the existence of negligence of the petitioners must be determined.
In this case, Cabil drove his bus negligently , while his employer ,
the Fabres, who owned the bus, failed to exercise the diligence of a
good father of the family in the selection supervision of their
employee fully supported by the evidence on record.
MMTC vs. CA(Gr no. 104408)
Facts:
The case arose from Nenita who incurred injuries from being
thrown out of the windshield of the jeepney that she was riding

that collided with a bus operated by MMTC (petitioner). Nenita filed

for damages for neither the operator of the jeepney nor the MMTC
would pay for the damages sustained by Nenita. The RTC ruled that
MMTC is abstained from liability for it has proven that it has shown
diligence of a good father of a family in employing and supervising
its employees. MMTC stated that it goes through a process of
screening! Interviewing! and seminar attending before they hire
their employees. The C" reversed the decision of the RTC holding
that the MMTC was not able to further prove that its employees
complied with its requirements.
Issue:
Whether or not diligence of a good father has been observed by
MMTC.
Ruling:
The SC ruled that MMTC being sued as employer of the bus driver
&Leonardo under "Article 2180 vicarious liability! was not able to
prove that it had exercised due diligence of a good father of a
family in the selection and supervision of its employees as it has
not proven that it exercised due diligence in supervising its
employees for mere imposition of hiring procedures and
supervisory policies without anything more is not sufficient to
overcome the presumption of negligence imposed upon them by
the law. The basis of the employer-s vicarious liability is that the
responsibility imposed by the article arises by reason of a
presumption of negligence on the part of the persons made
responsible under the article from their failure to exercise due care
and vigilance over the acts of subordinates to present them from
causing damage. Negligence is imputed to them by law unless they
prove the contrary by showing that they exercised diligence of a
good father of a family to prevent damage. It is clear that it is the
non-performance
certain duties of precaution and prudence
imposed upon them why they are made answerable for damages
caused by their employees.
For the doctrine to apply! it must first be shown that there is
employer0employee relationship and that the plaintiff must show
that the tort complained of was committed in the scope of his
assigned tas2 and that is when the employer may and it necessary
to interpose a defense of due diligence of a good father of a family.
The diligence of a good father of a family required to be observed
by the employer to prevent damages under "Art. 2118* refers to

due diligence in the selection and supervision the employees to

protect the public
PRECILLANO NECESITO, ETC. vs. NATIVIDAD PARAS, ET AL.
G.R. No. L-10605, June 30, 1958)
FACTS:
A mother and her son boarded a passenger auto-truck of the
Philippine Rabbit Bus Lines. While entering a wooden bridge, its
front wheels swerved to the right, the driver lost control and the
truck fell into a breast-deep creek. The mother drowned and the
son sustained injuries. These cases involve actions ex contractu
against the owners of PRBL filed by the son and the heirs of the
mother. Lower Court dismissed the actions, holding that the
accident
was
a
fortuitous
event.
ISSUE:
Whether or not the carrier is liable for the manufacturing defect of
the steering knuckle, and whether the evidence discloses that in
regard thereto the carrier exercised the diligence required by law
(Art.
1755,
new
Civil
Code)
HELD:
Yes.
While the carrier is not an insurer of the safety of the passengers,
the manufacturer of the defective appliance is considered in law
the agent of the carrier, and the good repute of the manufacturer
will not relieve the carrier from liability. The rationale of the
carriers liability is the fact that the passengers has no privity with
the manufacturer of the defective equipment; hence, he has no
remedy against him, while the carrier has. We find that the defect
could be detected. The periodical, usual inspection of the steering
knuckle did not measure up to the utmost diligence of a very
cautious person as far as human care and foresight can provide
and therefore the knuckles failure cannot be considered a
fortuitous event that exempts the carrier from responsibility.
MANILA INTERNATIONAL AIRPORT AUTHORITY VS. ALA INDUSTRIES
CORPORATION
G.R.
No.
147349.
February
13,
2004

Facts: The contract for the structural repair and waterproofing of

the IPT and ICT building of the NAIA airport was awarded, after a
public bidding, to respondent ALA. Respondent made the
necessary
repair
and
waterproofing.
After submission of its progress billings to the petitioner,
respondent received partial payments. Progress billing remained
unpaid despite repeated demands by the respondent. Meanwhile
petitioner unilaterally rescinded the contract on the ground that
respondent failed to complete the project within the agreed
completion
date.
Respondent objected to the rescission made by the petitioner and
reiterated its claims. The trial court directed the parties to proceed
to arbitration. Both parties executed a compromise agreement and
jointly filed in court a motion for judgment based on the
compromise agreement. The Court a quo rendered judgment
approving
the
compromise
agreement.
For petitioners failure to pay within the period stipulated,
respondent filed a motion for execution to enforce its claim.
Petitioner filed a comment and attributed the delays to its being a
government agency. The trial court denied the respondents
motion. Reversing the trial court, the CA ordered it to issue a writ
of execution to enforce respondents claim. The appellate court
ratiocinated that a judgment rendered in accordance with a
compromise agreement was immediately executory, and that a
delay
was
not
substantial
compliance
therewith.
Issues: 1) Whether or not decision based on compromise
agreement
is
final
and
executory.
2) Whether or not delay by one party on a compromise justifies
execution.
Held: 1) A compromise once approved by final orders of the court
has the force of res judicata between the parties and should not be
disturbed except for vices of consent or forgery. Hence, a decision
on a compromise agreement is final and executory. Such
agreement has the force of law and is conclusive between the
parties. It transcends its identity as a mere contract binding only
upon the parties thereto, as it becomes a judgment that is subject
to execution in accordance with the Rules. Judges therefore have
the ministerial and mandatory duty to implement and enforce it.
2. The failure to pay on the date stipulated was clearly a violation
of the Agreement. Thus, non-fulfillment of the terms of the

compromise justified execution. It is the height of absurdity for

petitioner to attribute to a fortuitous event its delayed payment.
Petitioners explanation is clearly a gratuitous assertion that
borders callousness.
PHILIPPINE COMMUNICATION SATELLITE CORPORATION.vs
GLOBE TELECOM, INC
Facts:
Globe Telecom, Inc., formerly known as Globe McKay Cable and
Radio Corporation installed and configured communication facilities
for the exclusive use of the US Defense Communications Agency
(USDCA) in Clark Air Base and Subic Naval Base. Globe Telecom
later contracted the Philippine Communications Satellite
Corporation (Philcomsat) for the provision of the communication
facilities. As both companies entered into an Agreement, Globe
obligated itself to operate and provide an IBS Standard B earth
station with Cubi Point for the use of the USDCA. The term of the
contract was for 60 months, or five (5) years. In turn, Globe
promised to pay Philcomsat monthly rentals for each leased circuit
involved.
As the saga continues, the Philippine Senate passed and adopted
Senate Resolution No. 141 and decided not to ratify the Treaty of
Friendship, Cooperation and Security, and its Supplementary
Agreements to extend the term of the use by the US of Subic Naval
Base, among others. In other words, the RP-US Military Bases
Agreement was suddenly terminated.
Because of this event, Globe notified Philcomsat of its intention to
discontinue the use of the earth station effective 08 November
1992 in view of the withdrawal of US military personnel from Subic
Naval Base after the termination of the RP-US Military Bases
Agreement.
After the US military forces left Subic Naval Base, Philcomsat sent
Globe a letter in 1993 demanding payment of its outstanding
obligations under the Agreement amounting to US$4,910,136.00
plus interest and attorneys fees. However, Globe refused to heed
Philcomsats demand. On the other hand, the latter with the
Regional Trial Court of Makati a Complaint against Globe, however,
Globe filed an Answer to the Complaint, insisting that it was
constrained to end the Agreement due to the termination of the

RP-US Military Bases Agreement and the non-ratification by the

Senate of the Treaty of Friendship and Cooperation, which events
constituted force majeure under the Agreement. Globe explained
that the occurrence of said events exempted it from paying rentals
for the remaining period of the Agreement.
Four years after, the trial court its decision but both parties
appealed to the Court of Appeals.
Issues:
1. Whether or not the non-ratification by the Senate of the Treaty
of Friendship, Cooperation and Security and its Supplementary
Agreements constitutes force majeure which exempts Globe from
complying with its obligations under the Agreement;
2. Whether Globe is not liable to pay the rentals for the remainder
of the term of the Agreement; and
3. Whether Globe is liable to Philcomsat for exemplary damages.
Held:

Article 1174, which exempts an obligor from liability on account of

fortuitous events or force majeure, refers not only to events that
are unforeseeable, but also to those which are foreseeable, but
inevitable:
A fortuitous event under Article 1174 may either be an "act of
God," or natural occurrences such as floods or typhoons,24 or an
"act of man," such as riots, strikes or wars.
Philcomsat and Globe agreed in Section 8 of the Agreement that
the following events shall be deemed events constituting force
majeure:
1. Any law, order, regulation, direction or request of the Philippine
Government;
2. Strikes or other labor difficulties;
3. Insurrection;
4. Riots;
5. National emergencies;
6. War;
7. Acts of public enemies;
8. Fire, floods, typhoons or other catastrophes or acts of God;
9. Other circumstances beyond the control of the parties.

Decision on Issue No. 1: Fortuitous Event under Article 1174

The appellate court ruled that the non-ratification by the Senate of
the Treaty of Friendship, Cooperation and Security, and its
Supplementary Agreements, and the termination by the Philippine
Government of the RP-US Military Bases Agreement effective 31
December 1991 as stated in the Philippine Governments Note
Verbale to the US Government, are acts, directions, or requests of
the Government of the Philippines which constitute force majeure.
However, the Court of Appeals ruled that although Globe sought to
terminate Philcomsats services by 08 November 1992, it is still
liable to pay rentals for the December 1992, amounting to
US$92,238.00 plus interest, considering that the US military forces
and personnel completely withdrew from Cubi Point only on 31
December 1992.
No reversible error was committed by the Court of Appeals in
issuing the assailed Decision; hence the petitions are denied.

Clearly, the foregoing are either unforeseeable, or foreseeable but

beyond the control of the parties. There is nothing in the
enumeration that runs contrary to, or expands, the concept of a
fortuitous event under Article 1174.
The Supreme Court agrees with the Court of Appeals and the trial
court that the abovementioned requisites are present in the instant
case. Philcomsat and Globe had no control over the non-renewal of
the term of the RP-US Military Bases Agreement when the same
expired in 1991, because the prerogative to ratify the treaty
extending the life thereof belonged to the Senate. Neither did the
parties have control over the subsequent withdrawal of the US
military forces and personnel from Cubi Point in December 1992.
Decision on Issue No. 2: Exemption of Globe from Paying Rentals
for the Facility
The Supreme Court finds that the defendant is exempted from
paying the rentals for the facility for the remaining term of the
contract. As a consequence of the termination of the RP-US Military

Bases Agreement (as amended) the continued stay of all US

Military forces and personnel from Subic Naval Base would no
longer be allowed, hence, plaintiff would no longer be in any
position to render the service it was obligated under the
Agreement.
The Court of Appeals was correct in ruling that the happening of
such fortuitous events rendered Globe exempt from payment of
rentals for the remainder of the term of the Agreement.
Decision on Issue No 3: No Exemplary Damages
Exemplary damages may be awarded in cases involving contracts
or quasi-contracts, if the erring party acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.

Saludaga thereafter filed with RTC Manila a complaint for damages

against respondents on the ground that they breached their
obligation to provide students with a safe and secure environment
and an atmosphere conducive to learning.
Respondents, in turn, filed a Third-Party Complaint against Galaxy
Dvpt and Mgt Corp. (Galaxy), the agency contracted by FEU to
provide security services within its premises and Mariano D.
Imperial (Imperial), Galaxy's President, to indemnify them for
whatever would be adjudged in favor of petitioner, if any; and to
pay attorney's fees and cost of the suit. On the other hand, Galaxy
and Imperial filed a Fourth-Party Complaint against AFP General
Insurance.

YNARES-SANTIAGO, J.:

On Nov.10, 2004, the trial court ruled in favor of Saludaga, the

dispositive portion of which reads:
WHEREFORE, from the foregoing, judgment is hereby rendered
ordering:
1. FEU and Edilberto de Jesus, in his capacity as president of FEU to
pay jointly and severally Joseph Saludaga the amount of
P35,298.25 for actual damages with 12% interest per annum from
the filing of the complaint until fully paid; moral damages xxx,
exemplary damages xx, attorney's fees xx and cost of the suit;
2. Galaxy Corp. and its president, Col. Mariano Imperial to
indemnify jointly and severally 3rd party plaintiffs (FEU and
Edilberto de Jesus in his capacity as President of FEU) for the
above-mentioned amounts;
3. And the 4th party complaint is dismissed for lack of cause of
action. No pronouncement as to costs.
Respondents appealed to the CA which ruled in its favor, reversing
the RTC decision, dismissing the complaint, and also denying
Saludagas subsequent MR. Hence, the instant petition based on
the following grounds:

FACTS:
Petitioner Joseph Saludaga was a sophomore law student of (FEU)
when he was shot by Alejandro Rosete, one of the security guards
on duty at the school premises on August 18, 1996. Petitioner was
rushed to FEU Hospital due to the wound he sustained. Meanwhile,
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.

THE CA SERIOUSLY ERRED....IN RULING THAT:

5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;
5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE
INJURY RESULTING FROM A GUNSHOT WOUND SUFFERED BY THE
PETITIONER.....IN
VIOLATION
OF
THEIR....CONTRACTUAL
OBLIGATION TO PETITIONER.......TO PROVIDE HIM WITH A SAFE
AND SECURE EDUCATIONAL ENVIRONMENT;
5.3. ALEJANDRO ROSETE....IS NOT FEUS EMPLOYEE.....; and

In the present case, it was not shown that Globe acted wantonly or
oppressively in not heeding Philcomsats demands for payment of
rentals. It was established during the trial of the case before the
trial court that Globe had valid grounds for refusing to comply with
its contractual obligations after 1992.
Ruling:
WHEREFORE, the Petitions are DENIED for lack of merit. The
assailed Decision of the Court of Appeals in CA-G.R. CV No. 63619
is AFFIRMED.
SO ORDERED.
JOSEPH SALUDAGA vs. FEU and EDILBERTO C. DE JESUS
(President of FEU)

5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING

GALAXY AS THE AGENCY WHICH WOULD PROVIDE SECURITY
SERVICES WITHIN THE PREMISES OF RESPONDENT FEU.

obligation to ensure a safe learning environment for their students

by having exercised due diligence in selecting the security services
of Galaxy.

ISSUES:
WON Saludaga may claim damages from FEU for breach of
student-school contract for a safe learning environment
Whether FEUs liability is based on quasi-delict or on contract
From what source of obligation did the other claims arose?

After a thorough review of the records, the SC found that FEU failed
to discharge the burden of proving that they exercised due
diligence in providing a safe learning environment for their
students. They failed to prove that they ensured that the guards
assigned in the campus met the requirements stipulated in the
Security Service Agreement. Certain documents about Galaxy were
presented during trial; however, no evidence as to the
qualifications of Rosete as a security guard for the university was
offered. FEU also 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.

HELD:
1) Yes.
2) FEUs liability is based on contract, not quasi-delict.
3) Quasi-delict vicarious liability between Galaxy Agency and
security guard Rosete
Quasi-delict but SC held that there is no vicarious liability
between FEU and Rosete
Quasi-delict damage to FEU due to the negligence of Galaxy
Agency in supplying FEU with an unqualified guard (Imperial, the
president of Galaxy is solidarily liable with the agency)
It is undisputed that Saludaga was enrolled as a sophomore law
student in FEU. As such, there was created a contractual obligation
between the two parties. On Saludaga's part, he was obliged to
comply with the rules and regulations of the school. On the other
hand, FEU, as a learning institution is mandated to impart
knowledge and equip its students with the necessary skills to
pursue higher education or a profession. At the same time, it is
obliged to ensure and take adequate steps to maintain peace and
order within the campus.
It is settled that in culpa contractual, the mere proof of the
existence of the contract and the failure of its compliance justify,
prima facie, a corresponding right of relief. In the instant case
when Saludaga was shot inside the campus by no less the security
guard who was hired to maintain peace and secure the premises,
there is a prima facie showing that FEU failed to comply with its
obligation to provide a safe and secure environment to its
students.
In order to avoid liability, however, FEU alleged that the shooting
incident was a fortuitous event because they could not have
reasonably foreseen nor avoided the accident caused by Rosete as
he was not their employee; and that they complied with their

Consequently, FEU's defense of force majeure must fail. In order

for force majeure to be considered, FEU must show that no
negligence or misconduct was committed that may have
occasioned the loss. An act of God cannot be invoked to protect a
person who has failed to take steps to forestall the possible
adverse consequences of such a loss. When the effect is found to
be partly the result of a person's participation - whether by active
intervention, neglect or failure to act - the whole occurrence is
humanized and removed from the rules applicable to acts of God.
Article 1170 of the Civil Code provides that those who are
negligent in the performance of their obligations are liable for
damages. Accordingly, for breach of contract due to negligence in
providing a safe learning environment, respondent FEU is liable to
petitioner for damages.
We note that the trial court held respondent De Jesus solidarily
liable with respondent FEU. In Powton Conglomerate, Inc. v.
Agcolicol, we held that:
... Personal liability of a corporate director, trustee or officer along
(although not necessarily) with the corporation may so validly
attach, as a rule, only when - (1) he assents to a patently unlawful
act of the corporation, or when he is guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or
other persons; (2) he consents to the issuance of watered down
stocks or who, having knowledge thereof, does not forthwith file

with the corporate secretary his written objection thereto; (3) he

agrees to hold himself personally and solidarily liable with the
corporation; or (4) he is made by a specific provision of law
personally answerable for his corporate action.
None of the foregoing exceptions was established in the instant
case; hence, respondent De Jesus should not be held solidarily
liable with respondent FEU.
Incidentally, although the main cause of action in the instant case
is the breach of the school-student contract, petitioner, in the
alternative, also holds respondents vicariously liable under Article
2180 of the Civil Code. However, respondents 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.
As to the Third Party Claim against Galaxy, evidence duly supports
that Galaxy is negligent not only in the selection of its employees
but also in their supervision. Indeed, no administrative sanction
was imposed against Rosete despite the shooting incident;
moreover, he was even allowed to go on leave of absence which
led eventually to his disappearance. Galaxy also failed to monitor
petitioner's condition or extend the necessary assistance. For these
acts of negligence and for having supplied respondent FEU with an
unqualified security guard, which resulted to the latter's breach of
obligation to petitioner, it is proper to hold Galaxy liable to
respondent FEU for such damages equivalent to the abovementioned 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. It was Imperial who assured petitioner that
his medical expenses will be shouldered by Galaxy but said
representations were not fulfilled.
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.

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.

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.

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.

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:

**
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.

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.
SOUTHEASTERN COLLEGE, INC., petitioner, vs. COURT OF
APPEALS, JUANITA DE JESUS VDA. DE DIMAANO, EMERITA
DIMAANO, REMEDIOS DIMAANO, CONSOLACION DIMAANO
and MILAGROS DIMAANO, respondents; PURISIMA, J.:
FACTS:
Private respondents are owners of a house at 326 College Road,
Pasay while petitioner owns a four-storey school building along the
same College Road. That on October 11, 1989, a powerful typhoon
hit Metro Manila. Buffeted by very strong winds, the roof of the
petitioners building was partly ripped off and blown away, landing
on and destroying portions of the roofing of private respondents
house. When the typhoon had passed, an ocular inspection of the
destroyed building was conducted by a team of engineers headed
by the city building official.
In their report, they imputed negligence to the petitioner for the
structural defect of the building and improper anchorage of trusses
to the roof beams to cause for the roof be ripped off the building,
thereby causing damage to the property of respondent.
Respondents filed an action before the RTC for recovery of
damages based on culpa aquiliana. Petitioner interposed denial of
negligence and claimed that the typhoon as an Act of God is the
sole cause of the damage. RTC ruled in their favor relying on the
testimony of the City Engineer and the report made after the
ocular inspection. Petitioners appeal before the CA which affirmed
the decision of the RTC.
Hence this present appeal.

ISSUES:
(1)
Whether the damage on the roof of the building of private
respondents resulting from the impact of the falling portions of the
school buildings roof ripped off by the strong winds of typhoon
Saling, was, within legal contemplation, due to fortuitous event?
(2)
Whether or not an ocular inspection is sufficient evidence
to prove negligence?
HELD:
1. Yes, petitioner should be exonerated from liability arising from
the damage caused by the typhoon. Under Article 1174 of the Civil
Code, 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.
In order that a fortuitous event may exempt a person from liability,
it is necessary that he be free from any previous negligence or
misconduct by reason of which the loss may have been
occasioned. 12 An act of God cannot be invoked for the protection
of a person who has been guilty of gross negligence in not trying to
forestall its possible adverse consequences. When a persons
negligence concurs with an act of God in producing damage or
injury to another, such person is not exempt from liability by
showing that the immediate or proximate cause of the damages or
injury was a fortuitous event. When the effect is found to be partly
the result of the participation of man whether it be from active
intervention, or neglect, or failure to act the whole occurrence is
hereby humanized, and removed from the rules applicable to acts
of God.
In the case at bar, the lower court accorded full credence to the
finding of the investigating team that subject school buildings
roofing had no sufficient anchorage to hold it in position especially

when battered by strong winds. Based on such finding, the trial

court imputed negligence to petitioner and adjudged it liable for
damages to private respondents.
There is no question that a typhoon or storm is a fortuitous event,
a natural occurrence which may be foreseen but is unavoidable
despite any amount of foresight, diligence or care. In order to be
exempt from liability arising from any adverse consequence
engendered thereby, there should have been no human
participation amounting to a negligent act. In other words; the
person seeking exoneration from liability must not be guilty of
negligence. Negligence, as commonly understood, is conduct
which naturally or reasonably creates undue risk or harm to others.
It may be the failure to observe that degree of care, precaution,
and vigilance which the circumstances justify demand, or the
omission to do something which a prudent and reasonable man,
guided by considerations which ordinarily regulate the conduct of
human affairs, would do.
2. It bears emphasizing that a person claiming damages for the
negligence of another has the burden of proving the existence of
fault or negligence causative of his injury or loss. The facts
constitutive of negligence must be affirmatively established by
competent evidence, 19 not merely by presumptions and
conclusions without basis in fact. Private respondents, in
establishing the culpability of petitioner, merely relied on the
aforementioned report submitted by a team which made an ocular
inspection of petitioners school building after the typhoon. As the
term imparts, an ocular inspection is one by means of actual sight
or viewing. What is visual to the eye through, is not always
reflective of the real cause behind.
In the present case, other than the said ocular inspection, no
investigation was conducted to determine the real cause of the
partial unroofing of petitioners school building.