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BARREDO V. GARCIA
FACTS:
On May 3, 1936, there was a head-on collision between a taxi of the Malate
Taxicab driven by Fontanilla and a carretela guided by Dimapilis. The carretela was
overturned, and a passenger a 16 year old boy, Garcia, suffered injuries from which he
died. A criminal action was filed against Fontanilla, and he was convicted. The Court in
the criminal case granted the petition to reserve the civil action. Garcia and Almario,
parents of the deceased, on March 7, 1939, filed a civil action against Barredo, the
proprietor of the Malate taxicab and employer of Fontanilla, making him primarily and
directly responsible under culpa aquiliana of Article 2180 of the Civil Code. It was
undisputed that Fontanilla’s negligence was the cause of the accident, as he was driving
on the wrong side of the road at high speed, and there was no showing that Barredo
exercised the diligence of a good father of a family, a defense to article 2180 of the Code.
Barredo’s theory of defense is that Fontanilla’s negligence being punishable by the
Revised Penal Code, his liability as employer is only subsidiary; but Fontanilla was not
sued for civil liability, hence, Barredo claims that he cannot be held liable.
ISSUE:
Whether the plaintiffs may bring a separate civil action against Fausto
Barredo, thus making him primarily and directly responsible under Article 1903 of the Civil
Code as employer of Pedro Fontanilla.
HELD:
Yes. A separate civil action lies, the employer being primarily and directly responsible in
damages under articles 1902 and 1903 of the civil Code.
Quasi-delict or culpa aquiliana is a separate legal institution under the civil
code and is entirely distinct and independent from a delict or crime under the Revised
Penal Code. In this jurisdiction, the same negligent act causing damage may produce civil
liability (subsidiary) arising from a crime under Article 103 of the Revised Penal Code; or
create an action for quasi-delito or culpa aquiliana (primary) under Articles 2179 and 2180
of the Civil Code, and the parties are free to choose which course to take. And, in the
instant case, the negligent act of Fontanilla produces 2 liabilities of Barredo: First,
subsidiary one because of the civil liability of Fontanilla arising from the latter’s criminal
negligence under Article 103 of the revised Penal Code; and second, Barredo’s employer
under article 2180 of the Civil Code. Since the plaintiffs are free to choose which remedy
to take, they preferred the second, which is within their rights. This is a more expeditious
and effective method of relief because Fontanilla was either in prison or had just been
released or had no property.
MENDOZA V. ARRIETA
MELENCIO–HERRERA, J. / 1979
NATURE: Petition for Certiorari
FACTS:
 A 3-way vehicular accident happened along Mac-Arthur Highway, Bulacan
involving a Mercedes Benz (Mendoza’s ), a private jeep (Salazar’s), and a
truck (driven by Montoya, owned by Timbol). Two separate Informations for
Reckless Imprudence Causing Damage to Property were filed against (1)
Rodolfo Salazar by Mendoza and (2) Freddie Montoya by Salazar.
 The 1st case was against the jeep for colliding with the Mercedes Benz. The
2nd was against the truck that hit the rear part of the jeep.
 Mendoza testified, and adopted by truck-driver Montoya, that jeep-owner
Salazar overtook the truck driven by Montoya, swerved left going towards the
poblacion of Marilao, and hit his car which was bound for Manila. Petitioner
(Mendoza) further testified that before the impact, Salazar had jumped from
the jeep and that he was not aware that Salazar’s jeep was bumped from
behind by the Montoya’s truck.
 Salazar, on the other hand, stated that, after overtaking the truck, he flashed
a signal indicating his intention to turn left towards the poblacion of Marilao
but was stopped at the intersection by a policeman who was directing traffic;
that while he was at a stop position, his jeep was bumped at the rear by
Montoya’s truck causing him to be thrown out, which then swerved to the left
and hit petitioner’s car, which was coming from the opposite direction.
 CFI acquitted Salazar from the criminal offense charged whereas truck-driver
Montoya was found guilty and civilly liable, ordered to indemnify Salazar.
However, no indemnification was awarded to Mendoza since he was not a
complainant against the truck-driver but only against Salazar.
 Later, Mendoza filed a civil case against Salazar and, this time, Timbol, the
owner of the truck. Both Salazar and Timbol were joined as defendants,
either in the alternative or in solidum, allegedly for the reason that petitioner
was uncertain as to whether he was entitled to relief against both or only one
of them.
 Timbol motioned to dismiss the case on the ground that the Complaint is
barred by a prior judgment in the criminal cases and that it fails to state a
cause of action. Respondent judge dismissed the case as well as its review
stating that “while it is true that an independent civil action for liability under
Article 2177 CC could be prosecuted independently of the criminal action for
the offense from which it arose, the New RoC requires an express
reservaqtion of the civil action to be made in the criminal action, otherwise,
the same would be barred”.
 The case was then raised to this Court.
ISSUES:
(1) WoN truck-owner Timbol’s civil case is barred by the fact that Mendoza failed to
reserve, in the criminal action, his right to file an individual civil action based on quasi-
delict.
(2) WoN jeep-owner-driver Salazar is civilly liable for the offense even when he was
already acquitted.
HELD:
(1) No.
(2) No.
RATIO:
(1) Against Timbol
The rule that for a prior judgment to constitute a bar to a subsequent case is when the
following requisites concur: (a) final judgment; (b) must be rendered by a Court having
jurisdiction over the matter and the parties; (c) must be a judgment on the merits; and (d)
in the 1st and 2nd actions, there must be identity of parties, of subject matter, and of
cause of action. Only the 1st three requisites are met. But as to the last, it is quite
different. For one thing, petitioner wasn’t even a complainant against Timbol. For the
other, the cause of action for the criminal cases was the enforcement of the civil liability
arising from criminal negligence whereas this present civil case is based on quasi-delict.
Therefore, such petition is not barred.
Also, as to the ground that petitioner did not present a cause of action, the two factors
consisting of a cause of action, that of (1) plaintiff’s summary right being the owner of the
Mercedes Benz and (2) the defendant’s wrongful act or omission which violated plaintiff’s
primary right (negligence in driving of either defendant), were alleged in the Complaint.
(2) Against Salazar
As in the above ratio, petitioner can opt to go for enforcement of civil liability based on
culpa criminal or just an action of recovery based on culpa aquiliana. Based on
petitioner’s previous criminal case (initial case against Salazar), he based his action on
culpa criminal also as evidenced by his active participation and intervention in the
prosecution of the criminal suit against said Salazar. Since Salazar’s civil liability
continued throughout the criminal case, there was no need for petitioner to file a separate
civil action, it being deemed impliedly instituted in said criminal case. Under the facts, the
Trial Court’s pronouncement was that Salazar cannot be held liable for the damages.
Hence, no civil liability attaches to Salazar.
DECISION: Dismissal of civil case against Timbol is set aside and ordered to
continue whereas that of dismissing the civil case against Salazar is upheld.
PSBA V. COURT OF APPEALS
PADILLA, J. / FEBRUARY 4, 1992;
FACTS:
 Carlitos Bautista, a 3rd year Commerce student from the Philippine School of
Business Administration, was stabbed inside the school premises by
outsiders. Hence, his parents filed suit against the school’s corporate officers.
They allege negligence, recklessness, and lack of security precautions,
means, and methods, before, during, and after the attack on their son.
 During the proceedings, Lt. Soriano (Assistant Chief of Security) resigned
from his post.
 The defendants prayed for the dismissal of the case claiming that since they
were presumably being sued under Art. 2180 of the Civil Code, jurisprudence
therefor dictates that academic institutions are outside the ambit of the
aforesaid article.
ISSUE: WON is liable for civil damages through quasi-delict due to negligence.
HELD: No, for the rule of in loco parentis under Art. 2180 to apply, the wrongdoing should
have been caused by pupils or students of the educational institution sought to held liable
for having custody over them.
RATIO DECIDENDI:
 When an academic institution accepts a student for enrollment, an obligation
is created between the two parties. The school provides the milieu for the
education and the development of the skills of the student but at the same
time providing for his security within the premises. On the other hand, the
student has to complete his academic requirements and comply with school
rules and regulations.
 However, the rules on quasi-delicts do not govern in this case due to the
presence of an existing contractual relation between the deceased and
PSBA.
 The school cannot be held liable because the assailants were neither
students nor employees of PSBA.
 There was neither sufficient proof nor finding that the school was negligent in
providing proper security measures. Supposing that there had been a finding
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of negligence, this could only give rise to a breach of contractual obligation
insofar as providing security within the premises.
 The court took into account that a school cannot be an infallible insurer of its
students against all risks, i.e., Murphy’s Law. Likewise, it would be
unreasonable to expect schools to anticipate all types of violent trespass
upon their premises. Should that be the case, it may still avoid liability by
proving that the breach of its contractual obligation to the students was not
due to its negligence.
Decision: Petition is denied, but the Court of origin (RTC, Manila, Br. 47) was
ordered to continue proceedings due to the paucity of material facts.
AMADORA V. CA
CRUZ, J. / APRIL 15, 1988
PARTIES: Jose S. Amadora, et. al ,Petitioners Vs.Honorable Court Of Appeals, Colegio
De San Jose-Recoletos, Victor Lluch Sergio P. Dlmaso Jr., Celestino Dicon, Aniano
Abellana, Pablito Daffon thru his parents and natural guardians, Mr. And Mrs. Nicanor
Gumban, And Rolando Valencia, thru his guardian, A. Francisco Alonso, Respondents.
FACTS:
 Pablito Damon, fired a gun that killed the 17yo Alfredo Amadora while the
latter was in the auditorium of their school Colegio de San Jose-Recoletos to
deliver his physics project.
 it was already sembreak ; the teacher-in-charge wasn’t in school
 Daffon was convicted of homicide thru reckless imprudence
 alfredo’s parents filed a civil action for damages under Article 2180 of the
Civil Code against the school and its officials like the rector, the high school
principal, the dean of boys, and the physics teacher, together with Daffon.
Art 2180 “Lastly, teachers or heads of establishments of arts and trades shall be
liable for damages caused by their pupils and students or apprentices so long as
they remain in their custody”.
 The CFI of Cebu held the defendants civilly liable.
 On appeal, CA absolved the defendants of the liability because:
o Article 2180 was not applicable as the Colegio de San Jose-
Recoletos was not a school of arts and trades but an academic
institution of learning.
o the students were not in the custody of the school at the time of
the incident as the semester had already ended
o fatal gun not clearly identified
o respondents exercised due diligence
ISSUES:
1. School should not be held liable because it is an academic institution NO
DIFF. BETWEEN ACADEMIC SCHOOL AND SCHOOL OF ARTS AND
TRADE
2. School still responsible even though end of school term? YES
3. Teacher in charge has been negligent/ no proof of this
4. ho should be liable for the tort? School? Dean of boys? Principal? Rector?
The dean of boys of boys has been negligent but none of those
mentioned above is liable
REASON:
1. no difference between the academic and the non-academic schools. The
same vigilance is expected from the teacher over the students under his
control and supervision, whatever the nature of the school where he is
teaching.
2. It doesn’t matter whether Alfredo was in the school auditorium to finish his
physics experiment or merely to submit his physics report-what is important
is that he was there for a legitimate purpose. even the mere savoring of the
company of his friends in the premises of the school is a legitimate purpose
that would have also brought him in the custody of the school authorities.
the teacher-in-charge must answer for his students' torts
3. At any rate, assuming that he was the teacher-in-charge, no proof that Dicon
was negligent in enforcing discipline upon Daffon. He was not required to
report to school on that day
4.
a.) The rector, the high school principal and the dean of boys = cannot be
held liable because:
 They are not the teacher-in-charge as previously defined.
 They’re only exercising general authority over the student body, not direct
control and influence
b.) dean of boys= since there is no teacher-in-charge, it is probably the dean of
boys who should be held liable bec. He was negligent in not taking
disciplinary action over the boy who owns the unlicensed gun which he had
earlier confiscated; he returned it to the boy afterwards. He didn’t even report
it to the authorities
But it does not link him to the shooting because there is no proof that the
confiscated and returned pistol was the gun that killed Alfredo
c.) the Colegio de San Jose-Recoletos = is not directly liable under the
article because the rector, the high school principal and the dean of boys
didnt have custody of the offending student during the shooting or remiss in
the discharge of their duties. school cant be made to answer for them
Decision: the petition is DENIED.
Air France v Carrascoso
SANCHEZ, J. / September 28, 1966
FACTS:
Air France issued to Carrascoso, a civil engineer, a 1st class round trip
ticket from Manila - Rome. During the stopover at Bangkok, the Manager
of Air France forced plaintiff to vacate the 1st class seat because there
was a "white man" who had better right to the seat.
As a result, he filed a suit against Air France where the CFI Manila
granted him moral and exemplary damages.
ISSUE:
Whether or not Carrascoso was entitled to the 1st class seat and
consequently, whether or not he was entitled to the damages awarded.
HELD:
Yes to both.
To achieve stability in the relation between passenger and air carrier,
adherence to the ticket issued is desirable. Quoting the court, "We cannot
understand how a reputable firm like Air France could have the
indiscretion to give out tickets it never meant to honor at all. It received
the corresponding amount in payment of the tickets and yet it allowed the
passenger to be at the mercy of its employees. It is more in keeping with
the ordinary course of business that the company should know whether
or not the tickets it issues are to be honored or not."
Evidence of bad faith was presented without objection on the part of the
Carrascoso. In the case, it could have been easy for Air France to
present its manager to testify at the trial or secure his deposition but
defendant did neither. There is also no evidence as to whether or not a
prior reservation was made by the white man.
The manager not only prevented Carrascoso from enjoying his right to a
1st class seat, worse he imposed his arbitrary will. He forcibly ejected him
from his seat, made him suffer the humiliation of having to go to tourist
class just to give way to another passenger whose right was not
established. Certainly, this is bad faith.
Passengers do not contract merely for transportation. They have a right
to be treated by the carrier's employees with kindness, respect, courtesy
and due consideration. They are entitled to be protected against personal
is conduct, injurious language, indignities and abuse from such
employees. Any discourteous conduct on the part of employees towards
a passenger gives the latter an action for damages against the carrier.
Exemplary damages were also awarded. The manner of ejectment fits
into the condition for exemplary damages that defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.
*Bad Faith - state of mind affirmatively operating with furtive design or
with some motive of self-interest or ill will or for ulterior purpose
SONG FO & COMPANY V. HAWAIIAN PHILIPPINE CO.
MALCOLM, J. / SEPTEMBER 16, 1925
FACTS:
 Song Fo & Company filed a case against Hawaiian Philippine Co. for breach
of contract asking for P70,369.50, with legal interest, and costs.
 Hawaiian Philippine Co. set up the defense that since the plaintiff had
defaulted in the payment for the molasses delivered to it they were compelled
to cancel and rescind the said contract
 A letter addressed by the administrator of the Hawaiian-Philippine Co. to
Song Fo & Company on December 13, 1922 contains their contract in
writing. It states the ff:
o Mr. Song Fo agreed to the delivery of 300,000 gallons of
molasses
o Mr. Song Fo also asked if we could supply him with another
100,000 gallons of molasses, and we stated we believe that this
is possible and will do our best to let you have these extra
100,000 gallons during the next year
o Regarding the payment for our molasses, Mr. Song Fo gave us
to understand that you would pay us at the end of each month
for molasses delivered to you
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ISSUES:
 WoN the agreement was for Hawaiian Philippine Co. to supply 300,000 or
400,000 gallons of molasses
 WoN Hawaiian-Philippine Co. had the right to rescind the contract of sale
made with Song Fo & Company because the latter failed to pay for the
molasses w/in the time agreed upon.
 What is the measure for damages?
HELD:
 The agreement was for Hawaiian Philippine Co. to supply 300,000 gallons of
molasses
 Hawaiian Philippine Co. had no legal right to rescind the contract of sale
because of the failure of Song Fo & Company to pay for the molasses within
the time agreed upon by the parties
 Plaintiff is entitled to recover damages from the defendant for breach of
contract in the amount of P3,000
RATIO:
 From the language of the letter, it was inferred that the Hawaiian-Philippine
Co. agreed to deliver to Song Fo & Company 300,000 gallons of molasses.
The Hawaiian-Philippine Co. also believed it possible to accommodate Song
Fo & Company by supplying the latter company with an extra 100,000
gallons. But the language used with reference to the additional 100,000
gallons was not a definite promise and did not constitute an obligation.
 The letters indicate that the agreement was for Song Fo & Company to pay
the Hawaiian-Philippine Co. upon presentation of accounts at the end of each
month. Song Fo & Company should have paid for the molasses delivered in
December, 1922, and for which accounts were received by it on January 5,
1923, not later than January 31 of that year. Instead, payment was not made
until February 20, 1923. However, it is a general rule that rescission will not
be permitted for a slight or casual breach of the contract, but only for such
breaches as are so substantial and fundamental as to defeat the object of the
parties in making the agreement. A delay in payment for a small quantity of
molasses for some twenty days is not such a violation of an essential
condition of the contract was warrants rescission for non-performance. In
addition to this, Hawaiian-Philippine Co. waived this condition when it arose
by accepting payment of the overdue accounts and continuing with the
contract. There is no outstanding fact which would legally sanction the
rescission of the contract by the Hawaiian-Philippine Co.
 The first cause of action of the plaintiff is based on the greater expense to
which it was put in being compelled to secure molasses from other sources.
Three hundred thousand gallons of molasses was the total of the agreement.
55,006 gallons of molasses were delivered by the defendant to the plaintiff
before the breach. 244,994 gallons of molasses undelivered which the
plaintiff had to purchase in the open market. 100,000 gallons of molasses
were secured from the Central North Negros Sugar Co., Inc., at two centavos
a gallon. As this is the same price specified in the contract between the
plaintiff and the defendant, the plaintiff suffered no material loss in having to
make this purchase. This leaves as a result 144,994 gallons which the
plaintiff admits that it could have secured from the Central Victorias Milling
Company, at three and one-half centavos per gallon. The plaintiff had to pay
the Central Victorias Milling company one and one-half centavos a gallon
more for the molasses than it would have had to pay the Hawaiian-Philippine
Co. Translated into pesos and centavos, this meant a loss to the plaintiff of
approximately P2,174.91. The plaintiff may have been put to greater cost in
making the purchase of the molasses in the open market, we would concede
under the first cause of action in round figures P3,000.
 The second cause of action relates to lost profits on account of the breach of
the contract. The only evidence in the record on this question is the
stipulation of counsel to the effect that had Mr. Song Heng, the manager of
Song Fo & Company, been called as a witness, he would have testified that
the plaintiff would have realized a profit of P14,948.43, if the contract of
December 13, 1922, had been fulfilled by the defendant. Indisputably, this
statement falls far short of presenting proof on which to make a finding as to
damages. The testimony of the witness Song Heng, it we may dignify it as
such, is a mere conclusion, not a proven fact. As to what items up the more
than P14,000 of alleged lost profits, whether loss of sales or loss of
customers, or what not, we have no means of knowing
VELARDE V. CA
PANGANIBAN, J. / 11 JULY 2007
PARTIES:
Petitioners: Spouses Mariano and Avelina Velarde
Respondents: CA, David Raymundo and George Raymundo
FACTS:
 David owes the land and house in question. His father George negotiated
with plaintiffs the sale of the said property. A Deed of Sale with Assumption of
Mortgage was executed by David with the following terms:
o That David sells the land and house with improvements to the
Velardes in consideration of Php800,000.00
o That the parcel of land was mortgaged by David to BPI to secure
the payment of a loan of Php1,800,000.00
o That the Velardes hereby assume to pay the mortgage
obligations of P1,800,000.00 in favor of BPI.
 Avelina executed an Undertaking which stipulated that:
o She paid David the sum of Php800,000.00 and assumed the
mortgage obligations with BPI as per the Deed of Sale with
Assumption of Mortgage
o While her application for the assumption of the mortgage
obligations is pending with the bank, she would pay the
mortgage obligation in the name of David until such time when
her application is approved
o In the event she violated the terms, the downpayment of
Php800,000.00 plus all payments made on the mortgage loan
shall be forfeited in favor of David.
 After the execution of the sale, the Velardes paid the mortgage obligation
with the bank for three months until they were advised that their application
was not approved. Thereafter, they did not make any further payment.
 Defendatns wrote plaintiff that their non-payment of the mortgage obligations
constituted non-performance of their obligation. Plaintiffs replied, indicating
that they are willing to pay the remaining balance in cash provided 3 new
conditions:
o That the house be delivered immediately delivered for
occupancy
o That the defendants should cause the release of title and
mortgage from the BPI and make the title available and free from
any liens or encumbrances
o That the defendants execute an absolute deed of sale in favor
free from any liens or encumbrances not later than January 21,
1987
 Defendants sent plaintiffs a notarial notice of cancellation/rescission of the
intended sale of the subject property dur tot heir non-compliance with the
terms and obligations of the Deed of Sale with Assumption of Mortgage and
the Undertaking. The Velardes filed a Complaint against the defendants for
specific performance, nullity of cancellation, writ of possession and damages.
ISSUES:
 Whether or not the non-payment of the mortgage obligation of the Velardes
resulted in a breach of contract
 Whether or not the rescission of the contract by the Raymundos was justified
HELD:
 Yes, the Velardes committed a breach of contract.
 The rescission of the contract was justified.
RATIO DECIDENDI:
 Petitioners contend that their nonpayment of the mortgage obligation did not
constitute a breach of contract considering their request was disapproved by
the bank. This is no reason to stop paying altogether the mortgae obligation.
When they received the notice of disapproval, they should have paid the
balance of the P1.8 million loan. Instead, they sent a letter to respondents
offering to make a payment only upon the fulfillment of certain conditions not
originally agreed upon in the contract of sale. Such condotiional offer to pay
cannopt
GERALDEZ V. COURT OF APPEALS
REGALADO J. / FEB. 23, 1994
Petition for review of decision of the Court of Appeals
PARTIES:
Petitioner: Lydia L. Geraldez
Respondents: Court of Appeals and Kenstar Travel Corporation
FACTS:
 Petitioner Geraldez filed an action for damages by reason of contractual breach
against respondent Kenstar Travel Corp.
 Petitioner booked the Volare 3 tour with Kenstar.
 The tour covered a 22-day tour of Europe for $2,990.00 which petitioner paid
for her and her sister
 At the tour, petitioner claimed that what was alleged in the brochure was not
what they experienced.
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 There was no European tour manager as stated in the brochure
 The hotels where they stayed in which were billeted as first class were
not
 The UGC leather factory which was specifically included as a highlight
of the tour was not visited
 The Filipino tour guide provided by Kenstar was a first timer
 The Quezon City RTC rendered a decision ordering respondent Kenstar to pay
moral, nominal, and exemplary damages totaling P1M and P50,000 attorney’s fees
 On appeal, respondent Court of Appeals deleted the award for moral and
exemplary damages and reduced the nominal damages and attorney’s fees to
P30,000 and P10,000 respectively.
ISSUES:
 Did private respondent Kenstar act in bad faith or with gross negligence in
discharging its obligations in the contract?
 Are moral, exemplary and nominal damages warranted?
HELD:
 Yes, Kenstar acted in bad faith and with gross negligence in discharging its
obligation
 Yes, the CA erred in removing the moral and exemplary damages
RATIO:
 Private respondent committed fraudulent misrepresentation amounting to bad faith,
to the prejudice of petitioner and the members of the group
 Kenstar’s choice of the tour guide is a manifest disregard of its specific
assurances to the tour group, and which deliberate omission is contrary to
the elementary rules of good faith and fair play
 By providing the Volare 3 group with an inexperienced first timer as a
tour guide, Kenstar manifested indifference to the satisfaction,
convenience and peace of mind to its clients
 Selection of the tour guide was a deliberate and conscious choice on
the part of Kenstar in order to afford her on-the job-training making the
tour group her unknowing guinea pigs.
 The inexperienced tour guide will not know how to anticipate the
possible problems and needs of its group, therefore not being able to
provide the tour group with the necessary accommodations and
personal necessities promised.
 Furthermore the inability to visit the UGC leather factory is reflective of
the ineptness and neglect of the tour guide.
 The UGC was one of the highlights and Kenstar should have
ensured that it would be visited
 The shortcomings of the tour guide can be traced to the lack of due
diligence on the part of Kenstar in the selection of its employees
 Although Kenstar argues that the tour guide made daily calls to show
diligence does not hold
 The reason she had to call was so that Kenstar could monitor
her progress and training and provide instructions for her
 The failure of Kenstar to provide a European Tour Manager although it
specifically advertised and promised to do so is also a contractual breach
 Kenstar expressly stated in its advertisement that a European Tour
Manager would be present
 Kenstar’s contention that the European Tour Manager does not refer to
a natural person but a juridical personality does not hold
 Cursory reading of the advertisement reveals the express
representation that the tour manager would be a natural person
 Corporate entity could not possibly accompany the tour group
 Kenstar’s contention that the word “he” used in the advertisement also
includes the word “it” to include females and corporations does not
hold as well
 Hard to believe that the word “he” was used to denote an
artificial or corporate being
 From its advertisement, it is beyond cavil that the import of the
word “he” is a natural and not a juridical person
 Kenstar’s contention that it explained the concept of the European
manager to its client at the pre-departure briefing also does not hold
 Respondent failed to present even one member of the tour group
to substantiate its claim
 If it was really its intention to provide a juridical entity it wouldn’t have
repeatedly promised the arrival of a natural tour manager
 The contract of adhesion as printed on the face of the brochure does not
delimit the responsibility of Kenstar from providing its clients with what it
promised
 The contract stated:
“Kenstar, its employees...assume no responsibility or liability
arising out of or in connection with the services or lack of
services…neither will they be responsible for any act, error or
omission or of any damages, injury, loss, accident or delay or
irregularity which may be occasioned by reason (of) or any
defect in…lodging place or any facilities”
 The contract of adhesion, wherein only one party creates the contract
and the other party either takes it or leaves it is not necessarily void but
it must nevertheless be construed strictly against the one who drafted
it.
 This is especially true when the stipulations are printed in fine letters
and are hardly legible, as is the case of the tour contract
 Even assuming arguendo that the contractual limit is enforceable,
Kenstar still cannot be exculpated for the reason that responsibility
arising from fraudulent acts cannot be stipulated against by reason of
public policy
 Kenstar committed grave misrepresentation when it assured in its tour
package that the hotels provided would provide complete amenities and
would be conveniently located along the way for the daily itineraries
 Testimonies by petitioner and private respondent show that the hotels
were unsanitary and sometimes did not even provide towels and soap
 Further testimonies claim that the hotels were also located in locations
far from the city making it difficult to go to
 Respondent’s contention that the hotels were listed in the “Official
Hotel and resort Guide” and “Worldwide Hotel Guide” do not hold
 Kuoni Traveler, the tour operator of Kenstar which prepared the
listing could have easily verified the same
 Nor can it be logically claimed that first-class hotels in Europe
are different from first-class hotels in the Philippines
 Reasonable that petitioner would assume that the
meaning of first-class would be the same
 Even assuming that there is a difference in quality, it can’t be
said that a first-class hotel in Europe does not provide the basic
necessities and sanitary accommodations
 The fact that Kenstar could only book them in such hotels because of budget
constraints is not the fault of the tour group
 Kenstar contends that it could only book them in such hotels because
what they paid will only allow them to pay for such accommodations
does not hold
 Kenstar should not have promised such accommodations if they
couldn’t afford it. Kenstar should have increased the price to ensure
that the accommodations.
 Fact that the tourists were to pay a supposedly lower amount, such
that respondent allegedly retained hardly enough as reasonable profit,
does not justify a substandard form of service
 Respondent Court erred in deleting the award for moral and exemplary damages.
 Moral damages may be awarded in breaches of contract where the obligor
acted fraudulently or in bad faith
 Kenstar can be faulted with fraud in the inducement which is employed
by a party in securing the consent of the other
 This fraud or dolo which is present or employed at the time of birth or
perfection of the contract may either be dolo causante or dolo
incidente
 Dolo Causante or Causal Fraud
 Referred to in Art 1338, are those deceptions or
misrepresentations of a serious character employed by
one party and without which the other party would not
have entered into the contract
 Dolo causante determines or is the essential cause of the
consent
 Effect: nullity of the contract and the indemnification of
damages
 Dolo Incidente or Incidental Fraud
 Referred to in Art. 1344, are those which are not serious in
character and without which the other party still would
have entered into the contract
 Dolo incidente refers only to some particular or accident of
the obligation
 Effect: obliges person employing it to pay damages
 In either case, whether Kenstar has committed dolo causante or dolo
incidente, it is indubitably liable for damages both moral and exemplary
GUTIERREZ V. GUTIERREZ
MALCOLM, J. / SEPT. 23, 1931
FACTS:
 Feb. 2, 1930 – a passenger truck and a private vehicle collided while
attempting to pass each other on the Talon bridge
 Truck – driven by Abelardo Velasco, owned by Saturnino Cortez
 Private Vehicle – driven by Bonifactio Gutierrez, owned by Mr. and Mrs.
Manuel Gutierrez, Bonifacio’s parents
 A’11 OBLICON CASE DIGESTS
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 The collision between the bus and the automobile resulted in Narciso
Gutierrez, a passenger in the bus, suffering a fractured right leg which
needed medical assistance
 Narciso filed a case to recover damages for his physical injuries suffered as a
result of the accident
ISSUE:
 What are the respective legal obligations of the defendants
HELD:
 Bonifacio Gutierrez’s obligation arises from culpa aquiliana while Saturnino
Cortez and his chauffeur Abelardo Velasco’s obligation arise from culpa
contractual
RATIO:
 It is undisputed that the accident was caused by negligence between both
the passenger truck and the automobile
 The case is one of 2 drivers approaching a narrow bridge from opposite
directions with neither being willing to slow up and give the right of way to
the other
 With regards to the automobile:
o The youth Bonifacio was an incompetent chauffeur as he was
driving at an excessive rate of speed and on approaching the
bridge and the truck, he lost his head and so contributed to the
negligence
o His father is also responsible because he has given guaranty at
the time the son was granted the license to operate motor
vehicles and as such, he alone is liable for the damage caused
by the minor
 With regards to the passenger truck:
o The liability rests on that of contract, namely a contract of
carriage
VAZQUEZ V DE BORJA
OZAETA; FEBRUARY 23, 1944
NATURE: PETITION to review on certiorari a decision of te Court of Appeals
FACTS:
 De Borja entered into a contract with Natividad-Vazquez Sabani
Development to purchased 4,000 sack of palay at P2.10 per sack for a total
consideration of P 8,400 which was paid by de Borja. Vazquez and Busuego
represented the Company in the transaction as acting manager and
treasurer, respectively. In addition, de Borja delivered to the defendants a
total of 4,000 empty sacks which presumealy were to be used in the delivery
of the palay.
 Defendants only deliverd to de Borja a total of 2,488 cavans of palay with a
value of P5,224.80 and have since refused to deliver the balance.
 Action was commenced by Francisco de Borja in the Court of First Instance
of Manila against Antonio Vazquez and Fernando Busuego to recover from
them jointly and severally the total amount of P4,702.70 arising out of the non
delivery of 1,512 cavans of rice and 1,510 empty sacks.
 Vazquez denied entering into the contract in his individual and personal
capacity. The contract was between plaintiff and Natividad-Vazquez Sabani
Development Co., Inc., a corporation which the defendant Vazquez
represented as its acting manager. Vazquez filed a counterclaim for P1,000
as damages.
 Trial court found in favor of the plaintiff and ordered Vazquez to pay the total
sum of P3,552.70. It also absolved Busuego from the complaint.
 Vazquez appealed to the CA and it modified the judgement by reducing the
amount to P 3,314.78 plus interest and costs. On motion for reconsideration,
the CA set aside its judgment and ordered the case remanded to the court of
origin for further proceedings.
 Hence the two petitions from both plaintiff and defendant to the Supreme
court for certiorari.
ISSUES:
1. WON de Borja entered into the contract with Vazquez in his personal capacity or as
manager of the Natividad-Vazquez Sabani Development
2. WON Vazquez is entitled to counter damages arising out of the erroneous suit
HELD:
Ratio
 The Action being on a contract, and it appearing from the preponderance of
the evidence that the party liable is Natividad-Vazquez, which is not a party to
the suit, the complaint should have been dismissed.
 No award is given to Vazquez as the SC believes that he was morally
responsible to the party with whom he contracted to see to it that the
corporation represented by him fulfilled the contract by delivering that palay it
had sold particularly since the same had already been made.
Reasoning
 Corporations are artificial beings invested by law with a personality of is own,
separate and distinct from that of the shareholders and from that of its
officers who manage and run its affairs. The mere fact that its personality is
owing to a legal fiction and that it necessarily has to act thru its agents does
not make such agents personally liable on a contract duly entered into by
them for and in behalf of said corporation. This legal fiction may however be
disregarded only when an attempt is made to use its as a cloak to hide an
unlawful or fraudulent purpose. As there seems to be no showing that
Vazquez personally benefited from the transaction, he is within his rights to
invoke the legal fiction to avoid personal liability.
 The trial court in finding Vazquez guilty of negligence in the performance of
the contract and in holding him personally liable manifestly failed to
distinguish a contractual from an extra-contractual obligation, or an obligation
arising from contract from an obligation arising from culpa aquiliana. In the
contractual obligation, it is the obligor to fulfill said contract and not its agents.
Hence, the obligor is the party guilty of negligence in the fulfillment of said
contract. On the other hand, if independently from the contract, Vazquez by
his fault or negligence cased damage to the plaintiff, then he would be
personally liable for such damage. But since the suit is based on the contract,
then the court has no jurisdiction over the issue and could not adjudicate
upon it.
DISPOSITION: The judgment of the CA is reversed and the complaint is
dismissed, without finding as to cost.
SEPARATE OPINION
PARAS, Dissenting:
 From the facts, it appears that Vasquez prior to entering into contract with de
Borja knew that his company was already insolvent. Knowing full well that the
contract could not be fulfilled, he nonetheless consummated the transaction
and received the full payment. Hence the CFI and Ca are both correct in
holding the failure to deliver was the result of Vazquez’s fault or negligence.
 While it is true that the contract is between de Borja and the company, it was
proven during the trial that it was Vazquez who prevented the performance of
the contract and also of negligence bordering on fraud which caused damage
to de Borja. Hence the technicality of a procedural error should not be
hindrance to the rendition.
 The suit be considered as based on fault and negligence of Vazquez and to
sentence defendant accordingly.
DE GUIA V. MANILA ELECTRIC RAILROAD AND LIGHT COMPANY
PARTIES: MANUEL DE GUIA, plaintiff and appellant, vs. THE MANILA ELECTRIC
RAILROAD AND LIGHT COMPANY, defendant and appellant
FACTS:
 Manuel de Guia rode a train owned by MERALCO. 30 meters from the point of
origin, the small wheels of the rear truck left the track. The train was derailed and
struck a concrete post. De Guia was thrown against the door with some violence
receiving injuries.
 CFI’s Ruling: Motorman of the derailed car was negligent having maintained too
rapid a speed. De Guia awarded P6,100 with interests and costs for damages and
injuries.
 Both De Guia and MERALCO appealed.
ISSUE:
 WON MERALCO is liable for the damages incurred by De Guia and to hat extent.
HOLDING AND RATIONALE:
 MERALCO is liable.
o There was negligence on the part of the motorman and MERALCO is
liable for the consequence of that negligence.
o There existed a contractual relationship between De Guia and
MERALCO. The duty of MERALCO was to convey and deliver De Guia
safely and securely with reference to the degree of care which, under
the circumstances, is required by law and custom applicable to the
case (Art. 1258 CC). Upon failure to comply with that obligation,
MERALCO incurred liability defined in Art 1108-1107 CC.
o MERALCO cannot avail itself of the diligent father defense under Art
1903 CC, because article does not include contractual relationships.
However, an employer who exercised due diligence in choosing and
instructing his employees is entitled to be considered a debtor in good
faith under Art 1107 CC.
 A’11 OBLICON CASE DIGESTS
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 MERALCO’s liability is therefore limited to such damages as might, at the time of
the accident, have been reasonably foreseen as a probable consequence of the
physical injuries inflicted upon De Guia and which was a necessary result of those
injuries.
o CFI awarded De Guia P900 for his loss of professional earnings due to
his injuries and P3,900 for his loss due to his inability to accept a
position as district health officer. The P3,900 awarded by the CFI is not
a proper grounds for recovery of damages because damage of this
character could not, at the time of the accident, have been foreseen by
MERALCO as a probable consequence of the injury inflicted.
o In addition, De Guia presented amounts incurred by him through hiring
three physicians who supposedly treated his injuries. The SC however
believes that these medical expenses were sufficiently proven and that
De Guia’s injuries were as extensive as he made them out to be.
JUDGMENT: Judgment is modified reducing the amount of recovery to P1,100.
UNITED STATES V. BARIAS
CARSON, J.; NOVEMBER 12, 1912
FACTS:
 Segundo Barias was a motorman for the Manila Electric Railroad and Light
Company. On the morning of November 2, 1911, he was driving his car along
Rizal Avenue and stopped it near the intersection to take on some
passengers.
 When the car stopped, Barias looked backward to note whether all the
passengers were aboard then started the car.
 It was at that moment that Fermina Jose, a 3-year old child ran in front of the
car. As a result, she was knocked down and dragged some distance
underneath the car and was left dead upon the track.
 Barias knew nothing of the incident until his return to the place, when he was
informed of what happened.
ISSUE:
 Whether or not Barias showed carelessness or want of ordinary care so as to
amount to reckless negligence
HELD:
 Barias is liable for reckless negligence.
RATIO:
 Evidence shows that the road on which the incident occurred was a public
street in a densely populated section of the city and the hour was 6 in the
morning or about the time when residents of such streets begin to move
about.
 Under such conditions, a motorman of an electric street car was clearly
charged with a high degree of diligence in the performance of his duties for
he was bound to know and to recognize that any negligence on his part in
observing the track over which he was running his car might result to fatal
accidents.
 Barias, before setting his car again in motion, had the duty to satisfy himself
that the track was clear, and for that purpose, he should have looked and see
the track just in front of his car. This the defendant did not do, and the result
of his negligence was the death of the child.
 Had the motorman seen the child, he could have avoided the accident; the
accident was not therefore, unavoidable, and it appearing that the motorman,
by the exercise of ordinary diligence, might have seen the child before he set
the car in motion, his failure to satisfy himself that the track was clear before
doing so was reckless negligence.
 Barias was negligent in that he failed to exercise the degree of diligence
required of him – he failed in taking precautions or advance measures as
common prudence would suggest when he put his car in motion without
looking at the road in front of his car.
Others:
 As to the contention that the accident would still have happened even if
utmost care was exercised, (because of photographs showing that while the
motorman was standing in his proper place on the front platform of his car, a
child walking immediately in front of the car would not have come within the
line of his vision) the court said that by inclining the head and shoulders
forward very slightly, the motorman could not fail to notice a child on the track
immediately in front of his car. And according to the court, it is the manifest
duty of a motorman, who is about to start his car in public thoroughfare in a
thickly-settled district, to satisfy himself that the track is clear immediately in
front of his car, and to incline his body slightly forward, if that be necessary,
in order to bring the whole track within his line of vision.
Negligence defined (pinili lang):
 The failure to observe, for the protection of the interests of another person,
that degree of care, precaution and vigilance which the circumstances justly
demand, whereby such other person suffers injury (J. Cooley in his work in
Torts)
 Reckless negligence consists of the failure to take such precautions or
advance measure in the performance of an act as the most common
prudence would suggest whereby injury is caused to persons or to property
(U.S. v. Nava)
 Negligence is want of the care required by the circumstances. It is relative or
comparative, not an absolute, term and its application depends upon the
situation of the parties and the degree of care and vigilance which the
circumstances reasonably require. Where the danger is great, a high degree
of care is necessary, and the failure to observe it is a want of ordinary care
under the circumstances (Ahern v. Oregon Telephone Co.)
CRISOSTOMO V. CA
YNARES-SANTIAGO, J. / AUGUST 25, 2003
NATURE: Petition for review on certiorari of a decision of the Court of Appeals
FACTS:
 Atty. Crisostomo contracted the services of Caravan Travel and Tours Int’l to
arrange and facilitate her booking, ticketing, and accommodation in a tour dubbed
Jewels of Europe at a total cost of P74k; Crisostomo was given discount for her
niece, Menor was the company’s ticketing manager
 Pursuant to the contract, Menor went to her aunt’s house on June 12, 1991
(Wednesday) to deliver the travel documents and plane tickets. Crisostomo gave
Menor the full payment. Menor told her to be at the airport on Saturday two hours
before her flight
 Without checking her travel documents, Crisostomo went to NAIA on Saturday.
She discovered that the flight she was supposed to take had already departed the
previous day.
 Crisostomo called up Menor to complain. Menor prevailed upon her aunt to take
another tour – the British Pageant. She was asked anew to pay P21k as partial
payment and commenced the trip in July
 Upon Crisostomo’s return, she demanded the difference between the sum she paid
for Jewels of Europe and the amount she owed respondent for British Pageant
 Caravan Travel refused to reimburse her saying it was non-refundable
 Trial Court held that the Caravan Travel was negligent in erroneously advising
Crisostomo of her departure date through it employee, Menor who was not
presented as a witness. However, Crisostomo was guilty of contributory negligence
for not verifying the exact date of her departure. Accordingly, 10% of the amount
was deducted from the amount being claimed as refund
 Court of Appeals also found both parties at fault but held that Crisostomo is more
negligent because as a lawyer and a well-traveled person, she should have known
better. She was ordered to pay the Caravan Travel the balance of British Pageant
plus interest
ISSUE: WON a travel agency is bound under the law to observe extraordinary diligence
in the performance of its obligation
HELD:
NO. For reasons of public policy, a common carrier in a contract of carriage is bound by
law to carry passengers as far as human care and foresight can provide using the utmost
diligence of a very cautious person and with due regard for all circumstances.
However, a travel agency is not a carrier that it is not an entity engaged in the business of
transporting either passengers or goods. Respondent’s services as a travel agency
include procuring tickets and facilitating travel permits or visas and booking customers for
tours. It is thus not bound under the law to observe extraordinary diligence in the
performance of its obligation .
SANTOS VENTURA V. SANTOS
QUISUMBING, J. / NOVEMBER 5, 2004
PARTIES: SANTOS VENTURA HOCORMA FOUNDATION, INC., petitioner, vs.
ERNESTO V. SANTOS and RIVERLAND, INC., respondents
Art. 1169 CC. Those obliged to deliver or to do something incur in delay from the time the
oblige judicially or extrajudicially demands from them the fulfillment of their obligation.
NATURE: Review on certiorari of the decision and resolution of the Court of Appeals
FACTS:
Santos had filed several civil cases against Santos Ventura Hocorma Foundation,
Inc. (SVHFI). On October 26, 1990, they executed a Compromise Agreement which
amicably ended all their pending litigations subject to the following:
 that SVHFI shall pay Santos Php14.5 M with Php1.5 M immediately upon the
execution of the agreement and the balance of Php13 M whether in lump
sum or in installments within a period of not more than 2 years from the
execution of the agreement; provided that in the event that SVHFI does not
pay the whole or any part of the balance, it shall be paid with the land or real
 A’11 OBLICON CASE DIGESTS
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properties of SVHFI which were previously covered by lis pendens but in no
case shall the payment of such balance be later than 2 years from the date of
the agreement.
 that immediately upon the execution of the agreement and the receipt of the
Php1.5 M, Santos shall cause the dismissal of Civil Cases and voluntarily
withdraw the appeals from the other civil cases; provided that in the event
that SVHFI shall sell or dispose any lands previously subject of lis pendens,
the proceeds of such sale may be required and shall be partially devoted to
the payment of the SVHFI’s foundations.
 that if there is failure of compliance, the aggrieved party shall be entitled to a
write of execution for the enforcement of the agreement.
Santos moved for the dismissal of the civil cases and the lifting of the notices of lis
pendens on the real properties involved. SVHFI also paid the Php1.5M. Subsequently,
SVHFI sold two real properties which were previously subjects of lis pendens. Upon
discovery of this, Santos sent a letter to SVHFI demanding the payment of the Php13 M
which was ignored by SVHFI.
Meanwhile, on September 20, 1991, the Compromise Agreement was
judicially approved.
Santos applied for the issuance of a writ of execution of the Compromise
agreement which was granted. The sheriff levied on the real properties of the petitioner
which were auctioned and awarded to Riverland Inc. Santos and Riverland Inc. filed a
Complaint for Declaratory Relief and Damages alleging delay on the part of SVHFI in
paying the balance and that under the Compromise Agreement, the obligation became
due on October 26, 1992 but the payment of Php12 M was effected only on November
22, 1994. The suit covered claims for legal interest on the obligation, penalty, attorney’s
fees, costs of litigation and that the sales to Riverland Inc be declared final and not
subject to redemption.
RTC: decision for SVFHI
CA: decision for Santos and Riverland Inc.
Arguments of SVHFI: The compromise agreement does not provide for the payment of
interest, thus the legal interest by way of penalty on account of fault or delay shall not be
due and payable. Also, the said agreement did not provide for a period within which the
obligation will become due and demandable, thus it is incumbent upon respondent to ask
for judicial intervention to fix the period. It is only when a fixed period exists that the legal
interests can be computed.
Argument of Santos and Riverland Inc: Their right to damages is based on delay in the
payment of the obligation provided in the compromise agreement which as stated is 2
years from its execution. This was approved by the trial court and became the law
governing their contract. Thus, SVHFI’s failure to comply entitles them to damages, by
way of interest.
ISSUE: WON there was delay on the part of SVHFI so as to entitle Santos and
Riverland Inc to legal interest
DECISION: Yes. Petition is Denied.
REASONING: In order for the debtor to be in delay or default (otherwise knows as mora
which means the delay in the fulfillment of obligations), the following requisites are to be
present:
1.that the obligation be demandable and already liquidated:
In the case, the obligation was already due and demandable after the lapse
of the 2 year period from the execution of the contract (October 26, 1990) and not from
the judicial approval of the compromise agreement (September 20, 1991). The 2 year
period ended on October 26, 1992. When the respondents gave a demand letter on
October 28, 1992, the obligation was already due and demandable and the obligation is
liquidated because SVFHI knows how must he is to pay and when he is to pay.
2.that the debtor delays performance:
In the case, SVHFI delayed in the performance. It was only able to settle the
entire balance on February 8, 1995, more than 2 years after the extrajudicial demand. It
also filed several motions to delay the fulfillment of its obligation.
3.that the creditor requires the performance judicially or extra judicially:
In the case, the demand letter was sent to SVHFI on October 28, 1992 which
was in accordance with an extrajudicial demand contemplated by law.
Aside: When the debtor knows the amount and period when he is to pay, interest as
damages is allowed as a matter of right. The complaining party has been deprived of
funds to which he is entitled by virtue of their compromise agreement. The goal of
compensation requires that the complainant be compensated for the loss of use of those
funds. This compensation is in the form of interest. In the absence of agreement, the
legal interest shall prevail which is 12% per annum to be computed from the extrajudicial
demand.
ABELLA V. FRANCISCO
FACTS:
 Francisco had obligations due on December 1928
 To generate funds he sold lots 937 to 945 of Tala Estate to Abella
 On Oct. 31 Francisco and Abella signed the following document:
o Received payment of P500 from Julio Abella as payment on
account for the said lots; due on or before Dec. 15, 1928,
extendible 15 days thereafter
o Total debt was around P21,600
 As of Nov. 1928 Abella had paid P915.34
 Francisco executed a power of attorney in favor of Mabanta because he was
in Cebu on December 27; Francisco’s instructions to Mabanta were to inform
Abella that the option would be considered cancelled if he failed to make full
payment and to return to him what he has paid thus far; if Abella were to pay
the full amount Mabanta was instructed to sign all the documents required by
the Bureau of Lands for the transfer of ownership of the said lots
 Mabanta informed Abella of these instructions; Abella asked for an extension
of the period of payment to which Mabanta agreed, giving him until Jan. 5
1929
 Abella did not offer payment until Jan. 9; Mabanta refused to accept Abella’s
payment and returned to the latter by check the sum of P915.34 which he
paid previously
 Abella brought an action to compel the execution of the sale in his favor,
which was denied by the court; hence this appeal
ISSUE: WON time is an essential element of this contract for which the failure to pay on
time justifies its rescission
HELD:
 Yes, time was an essential element in this contract
 Lower court held that since this contract was an option to sell, the period
was an essential consideration; this court’s opinion is divided as to whether
this contract is an option or a sale, but it agrees that time is essential
 It should be noted that Francisco had obligations due on December 1928 for
which he expected to use the payment on the said lots
VDA. DE VILLARUEL v. MANILA MOTOR CO. INC. AND COLMENARES
REYES, J. / DECEMBER 13, 1958
NATURE: Appeal from a judgment of the CFI of Negros Occidental
FACTS
 This case is a petition of the judgment that ordered Manila Motor Co., Inc. to pay
Villaruel for the lease of their building from June 1, 1942 to March 29, 1945 as well
as for them to pay for the destruction of the property.
 Manila Motor Co., Inc. leased the building from Villaruel and entered a contract, the
contract lasts for 5 years and that the amount of Php350 a month should be paid. It
is to be placed on Manila Motor Co., Inc. possession on the 31 st day of October
1940. The leasing continued until the invasion in 1941. At this time no payment of
rental was done during the said period.
 When the Americans liberated the country they took possession of the said property
and paid for the same amount to Villaruel. Manila Motor Co., Inc. wanted to resume
the contract given that the contract gives them the option to continue such lease.
Villaruel however would want the contract rescinded and for Manila Motor Co., Inc.
to pay for the rentals during from June 1, 1942 until March 29, 1945.
 While the trial was ongoing, the property got burned. Villaruel then sought for a
supplemental complaint demanding reimbursement. CFI granted the petition of
Villaruel giving rise for this appeal.
ISSUE: WON Manila Motor Co., Inc. is liable to pay for the rental fees at the time of the
Japanese Occupation and the destruction of property = NO.
HELD/RATIO:
 The occupation is not a pertubacion de hecho (mere act of trespass) but a
pertubacion de derecho (trespassing under color of title), for which the lessors
VIllaruel were liable. This is because the Japanese Occupation was legitimate
following both international and domestic law’s recognition of the use of private
properties at the time of war. Applying Art. 1560 of the Civil Code of Spain of 1889
(“The lessor shall not be liable for any act of mere disturbance of a third person of
the use of the leased property; but the lessee shall have a direct action against the
trespasser.”), the lessors are liable for it and that such occurrence resulted to the
deprivation of the lessee from the peaceful use and enjoyment of the property
leased. The obligation ceased during such deprivation.
 Also, although “mere disturbance” entails that the lessee shall have a direct action
against the trespasser, the military occupation was not what the drafters had in
mind, for such occupation is not preventable. Furthermore, the fact that the military
seizure was considered a fortuitous event means that the failure of one party to
fulfill its commitment entails that the other party is excused to do his correlative
performance, since the causa of the lease must exist throughout the term of the
contract.
 Lastly, the lessors, through Dr. Javier Villaruel, agreed after liberation to a renewal
of the contract of lease for another five years (from June 1, 1946 to May 31 of
 A’11 OBLICON CASE DIGESTS
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1951) without making any reservation regarding the alleged liability of the lessee
company for the rentals corresponding to the period of occupancv of the premises
by the Japanese army, and without insisting that the non-payment of such rental
was a breach of the contract of lease. This passivity of the lessors strongly supports
the claim of the lessees that the rentals in question were verbally waived. Moreover,
the lessors accepted payment of current rentals from October 1945 to June 1946. It
was only in July 1946 that they insisted upon collecting also the 1942-1945 rents,
and refused to accept further payments tendered by the lessee unless their right to
collect the occupation rental was recognized or reserved. The refusal to accept
placed the lessors in default (mora creditoris or accipiendi) to bear supervening
risks of accidental injury or destruction. Failure to consign does not eradicate the
default of the lessors nor the risk of loss that lay upon them.
JUDGMENT: Manila Motor Co., Inc. is asked to pay only Php. 1750 from July to
November 1946 and not for the petitioned amount.
TENGCO V. CA
PADILLA, J. / 1989
Review on certiorari
FACTS:
 1942, Tengco entered into a verbal lease agreement with Lutgarda Cifra over
a house in Navotas which belonged to the latter. Aside from the amount of
rentals, no other condition or term was agreed upon. The rentals were
collected from Tengco by Lutgarda’s collector from time to time, with no fixed
frequency.
 1976, Cifra, Jr., claimed to be the owner the house in Navotas which was
leased to Emilia Tengco. He filed an action to evict Tengco, from the said
premises for her alleged failure to comply with the terms and conditions of
the lease contract by failing and refusing to pay the stipulated rentals despite
repeated demands. Judgment was rendered against Tengco. She has
appealed, and raises the following issues:
ISSUES:
1. Is Cifra Jr. the real owner of the said property?
2. Did Cifra Jr. actually delay acceptance of the rentals, therefore being guilty of
mora accipiendi?
3. Does the principle of laches (see Notes) bar Cifra Jr.’s action?
4. Does Cifra Jr. have a cause of action?
HELD and RATIO:
1. YES. Such was the finding of the lower court, and the Supreme Court will not
dispute the findings, barring errors of the lower court regarding facts. Such
being the case, Tengco has not given sufficient proof that the lot she has
leased is NOT the lot that Cifra Jr. claims to own. Further, she herself
acknowledged his ownership by paying him the rentals for the month of
January.
2. NO. The non-acceptance of the rentals is justified because they were
tendered to someone who had no authority to accept them in the first place
due to a change in ownership. Tengco could have released herself from
responsibility by judicial deposit of the rentals, or actually paying them to
Cifra Jr.
3. NO. For laches to apply, there should have been a failure on Tengco’s part to
pay the rent AFTER Cifra Jr. demanded it, because it would only be at that
point that Cifra Jr. would have a cause of action. Cifra Jr. demanded the rent
only on August 23, 1976, then filed the current case 3 weeks later,
September 16,1976, after a reasonable amount of time.
4. YES, as we see from the foregoing.
NOTES:
MORA ACCIPIENDI – unreasonable and unexplained delaying or defaulting on
acceptance of a prestation out of negligence of the enforcement of one’s right/s
LACHES - unreasonable and unexplained delay in bringing a cause of action before the
courts.
CENTRAL BANK V. COURT OF APPEALS
MAKASIAR, C. J. / OCTOBER 3, 1985
FACTS:
o On April 28, 1965, Island Savings Bank approved the loan application for
P80,000.00 of Sulpicio Tolentino, who, as a security for the loan, executed a
real-estate mortgage over his 100 hectare land.
o On May 22, 1965, a mere P17,000.00 partial release of the loan was given to
Tolentino. He and his wife signed a promissory note for P17,000.00 at 12%
annual interest payable within 3 years from the date of the execution of the
contract at semi-annual installments. However, the remaining P63,000.00
was not released.
o On August 13, 1965, the Monetary Board of the Central Bank issued
Resolution 1409 prohibiting Island Savings Bank from making new loans and
investments after finding out that the bank is suffering from liquidity problems.
o On August 1, 1968, Island Savings Bank, in view of the non-payment of the
P17,000.00 covered by the promissory note, filed for the extrajudicial
foreclosure of the real estate mortgage.
o On January 1969, Tolentino filed for specific performance or rescission and
damages, alleging that the bank failed to deliver the remaining P63,000 and
that he is entitled to the delivery of the P63,000 or if the balance can’t be
delivered, the real estate mortgage be rescinded.
o The trial court ordered that the bank be enjoined from continuing the
foreclosure of the mortgage. However, it rules for the dismissal of Tolentino’s
petition, ordering him to pay the P17,000 plus legal charges and interest, and
allowed for the foreclosure of the property.
o Upon the appeal of Tolentino, the CA affirmed the trial court decision of
dismissal of Tolentino’s petition. However, it ruled that the bank may neither
foreclose the mortgage nor collect the P17,000.00
ISSUE:
1. Can the petition of Tolentino for specific performance prosper?
2. Is Tolentino liable for the P17,000.00 debt covered by the promissory note?
3. Can his real estate be foreclosed to satisfy the amount, if he is to pay?
HELD:
1. No. When Island Savings Bank and Tolentino entered into the P80,000.00
loan agreement, they undertook reciprocal obligations. In reciprocal
obligations, the obligation or promise of each party is the consideration for
that of the other; and when one party has performed or is ready and willing to
perform his part of the contract, the other party who has not performed or is
not ready and willing to perform incurs in delay (Art. 1169 of the Civil Code).
Since Island Savings Bank was in default in fulfilling its reciprocal obligation
under their loan agreement, Tolentino, under Article 1191 of the Civil Code,
may choose between specific performance or rescission with damages in
either case. But since Island Savings Bank is now prohibited from doing
further business by Monetary Board Resolution No. 967, specific
performance in favor of Tolentino can’t be granted. Rescission is the only
alternative remedy left. However, rescission is only for the P63,000.00
balance of the P80,000.00 loan, because the bank is in default only insofar
as such amount is concerned, as there is no doubt that the bank failed to
give the P63,000.00.
2. Yes. As for the P17,000.00 covered by the promissory note, the bank has
already complied with the obligation to give it. Since Tolentino has not
complied with his obligation to pay the amount when it was due, the right to
rescind belongs to the bank. Since both parties were in default in the
performance of their respective reciprocal obligations, they are both liable for
damages, which offset each other. But the liability of Tolentino to pay the
P17,000.00 is not included in offsetting the liabilities of both parties, hence he
is to pay the amount with interest.
3. No, Tolentino’s real estate cannot be foreclosed to satisfy the amount. Since
Island Savings Bank failed to furnish the P63,000.00 balance of the
P80,000.00 loan, the real estate mortgage of Sulpicio M. Tolentino became
unenforceable to such extent. P63,000.00 is 78.75% of P80,000.00, hence
the real estate mortgage covering 100 hectares is unenforceable to the
extent of 78.75 hectares. The mortgage covering the remainder of 21.25
hectares subsists as a security for the P17,000.00 debt. 21.25 hectares is
more than sufficient to secure a P17,000.00 debt.
TELEFAST COMMUNICATIONS/PHILIPPINE WIRELESS, INC. V CASTRO, SR.
FACTS:
When Sofia was vacationing in the Philippines, her mother died. She
decided to send a telegram to their family residing in the US through the Telefast
Communications to inform them about it. She paid the necessary fees and then left the
rest to the company. Later on, the mother was interred with only Sofia in attendance.
She eventually came back to the US and was surprised to find out that her telegram
never reached her father and siblings. She instituted this case against the company. The
company’s only defense is that they were unable to transmit the wire due to some
technical and atmospheric factors which were beyond the control of the company.
ISSUE: WON Telefast Communications breached its contract with Sofia.
HELD: Yes. Sofia had already paid the necessary fees and has thus performed her end
of the obligation. There was a contravention of the tenor when the company neglected to
send the wire without evidence of exerting sufficient effort to overcome the said
difficulties.
Damages:
Moral – because the shock suffered by the family who only learned of the death of the
mother when she was already interred was proximately caused by the acts, or lack
 A’11 OBLICON CASE DIGESTS
PAGE 9 OF 9
thereof, of the company. They were not given the opportunity to choose to attend her
funeral in the Philippines because they were not informed of its occurrence.
Exemplary – as a warning to other telegram companies to perform their jobs better and to
observe due diligence in transmitting the messages of their customers to avoid incurring
these unnecessary expenses.
Compensatory (for Sofia) – because she had to go to the Philippines to file this suit which
would not have been necessary had the company performed its job.
*guys, I don’t know what contravention of tenor means yet so this might not be very
helpful to us. But just the same… 
MAGAT V. MEDIALDEA
ESCOLIN, J. ; APRIL 20, 1983
NATURE:
Petition for review on certiorari to determine the sufficiency of the averments contained in
the complaint for alleged breach of contract filed by petitioner Victorino D. Magat against
respondent Santiago A. Guerrero of the CFI of Rizal, presided by respondent Judge Leo
D. Medialdea, now Deputy Judicial Administrator, which complaint was dismissed for
failure to state a cause of action.
FACTS:
 Defendant entered into a contract with the U.S. Navy Exchange, Subic Bay,
Philippines, for the operation of a fleet of taxicabs, each taxicab to be
provided with the necessary taximeter and a radio transceiver for receiving
and sending of massage from mobile taxicab to fixed base stations within the
Naval Base
 Because of the experience of the plaintiff in connection with his various
contracts with the U.S. Navy and his goodwill already established with the
Naval personnel, Isidro Q. Aligada, acting as agent of the defendant
approached the plaintiff and proposed to import from Japan thru the plaintiff
or thru plaintiff's Japanese business associates, all taximeters and radio
transceivers needed by the defendant
 Defendant and his agent were able to import from Japan with the assistance
of the plaintiff and his Japanese business associates the necessary
taximeters for defendant's taxicabs in partial fulfillment of defendant's
commitments with the U.S. Navy Exchange, the plaintiff's assistance in this
matter having been given to the defendant gratis et amore
 Isidro Q. Aligada, acting as agent of the defendant, made representations
with the plaintiff that defendant desired to procure from Japan thru the plaintiff
the needed radio transceivers and to this end, Isidro Q. Aligada secured a
firm offer in writing dated September 25, 1972, wherein the plaintiff quoted in
his offer a total price of $77,620.59 FOB Yokohama, the goods or articles
offered for sale by the plaintiff to the defendant to be delivered sixty to ninety
days after receipt of advice from the defendant of the radio frequency
assigned to the defendant by the proper authorities
 Plaintiff received notice of the fact that the defendant accepted plaintiff's offer
to sell to the defendant the items as well as the terms and conditions of said
offer, as shown by the signed conformity of the defendant which was duly
delivered by the defendant's agent to the plaintiff, whereupon all that the
plaintiff had to do was to await advice from the defendant as, to the radio
frequency to be assigned by the proper authorities to the defendant
 In his letter dated October 6, 1972, the defendant advised his agent that the
U.S. Navy provided him with the radio frequency of 34.2 MHZ [Megaherzt]
and requested his said agent to proceed with his order placed with the
plaintiff, which fact was duly communicated to the plaintiff
 By his letter dated October 7, 1972 addressed to the plaintiff by the
defendant's agent, defendant's agent qualified defendant's instructions that
plaintiff should proceed to fulfill defendant's order only upon receipt by the
plaintiff of the defendant's letter of credit
 Plaintiff awaited the opening of such a letter of credit by the defendant
 Defendant and his agent have repeatedly assured plaintiff of the defendant's
financial capabilities to pay for the goods and in fact he accomplished the
necessary application for a letter of credit with his banker, but he
subsequently instructed his banker not to give due course to his application
for a letter of credit and that for reasons only known to the defendant, he fails
and refuses to open the necessary letter of credit to cover payment of the
goods
 It came to the knowledge of the plaintiff that the defendant has been
operating his taxicabs without the required radio transceivers and when the
U.S. Navy Authorities of Subic Bay, Philippines, were pressing defendant for
compliance with his commitments with respect to the installations of radio
transceivers on his taxicabs he impliedly laid the blame for the delay upon
the plaintiff thus destroying the reputation of the plaintiff with the mid Naval
Authorities with whom plaintiff transacts business
 On March 27, 1973, plaintiff wrote a letter thru his counsel to ascertain from
the defendant as to whether it is his intention to fulfill his pan of the
agreement with the plaintiff or whether he desired to have the contract
between them definitely cancelled, but defendant did not even have the
courtesy to answer plaintiff's demand
Petitioner’s Claims The defendant entered into a contract with the plaintiff without the
least intention of faithfully complying with his obligations, but he did so only in order to
obtain the concession from the U.S. Navy Exchange. of operating a fleet of taxicabs
inside the U.S. Naval Base to his financial benefit and at the expense and prejudice of
third parties such as the plaintiff. That in view of the defendant's failure to fulfill his
contractual obligations with the plaintiff, the plaintiff will suffer several damages
Respondent’s Arguments Respondent Guerrero filed a motion to dismiss complaint for
lack of cause of action. He alleged that plaintiff was merely anticipating his loss or
damage, which might result from the alleged failure of defendant to comply with the terms
of the alleged contract. Plaintiff's right of recovery under his cause of action is premised
not on any loss or damage actually suffered by him but on a non-existing loss or damage
which he is expecting to incur in the near future. Plaintiff's right therefore under his cause
of action is not yet fixed or vested.
 The respondent judge, over petitioner's opposition, issued a minute order
dismissing the complaint
ISSUE: WON there is sufficient cause of action
HELD: YES.
Ratio The essential elements of a cause of action are: [1] the existence of a legal right of
the plaintiff; [2] a correlative duty of the defendant and [3] an act or omission of the
defendant in violation of the plaintiff's right, with consequent injury or damage to the latter
for which he may maintain an action for recovery of damages or other appropriate relief.
 Article 1170 Of the Civil Code provides:
"Those who in the performance of their obligation are guilty of fraud. negligence, or delay,
and those who in any manner contravene the tenor thereof are liable for damages."
The phrase "in any manner contravene the tenor" of the obligation includes any illicit act
or omission which impairs the strict and faithful fulfillment of the obligation and every kind
of defective performance.
 The damages which the obligor is liable for includes not only the value of the
loss suffered by the obligee [daño emergense] but also the profits which the
latter failed to obtain [lucro cesante]. If the obligor acted in good faith, he
shall be liable for those damages that are the natural and probable
consequences of the breach of the obligation and which the parties have
foreseen or could have reasonably foreseen at the time the obligation was
constituted; and in case of fraud, bad faith, malice or wanton attitude, he shall
be liable for all damages which may be reasonably attributed to the
nonperformance of the obligation. The same is true with respect to moral and
exemplary damages. The applicable legal provisions on the matter, Articles
2220 and 2232 of the Civil Code, allow the award of such damages in
breaches of contract where the defendant acted in bad faith.
Reasoning The complaint recites the circumstances that led to the perfection of the
contract entered into by the parties. It further avers that while petitioner had fulfilled his
part of the bargain, private respondent failed to comply with his correlative obligation by
refusing to open a letter of credit to cover payment of the goods ordered by him, and that
consequently, petitioner suffered not only loss of his expected profits, but moral and
exemplary damages as well. From these allegations, the essential elements of a cause of
action are present.
 Indisputably, the parties, both businessmen, entered into the aforesaid
contract with the evident intention of deriving some profits therefrom. Upon
breach of the contract by either of them, the other would necessarily suffer
loss of his expected profits. Since the loss comes into being at the very
moment of breach, such loss is real, "fixed and vested" and, therefore,
recoverable under the law. The complaint sufficiently alleges bad faith on the
part of the defendant.
Disposition The questioned order of dismissal was set aside and the case was ordered
remanded to the court of origin for further proceedings. No costs.