Oblicon Case Digest

SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER vs. COURT OF APPEALS (Thirteenth Division) and PIONEER INSURANCE and SURETY CORPORATION G.R. No.119771. 24 Apr 1998. FACTS: At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van being driven by its owner Annie U. Jao and a passenger bus of herein petitioner San Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular mishap at the intersection of Julia Vargas Avenue and Rodriguez Lanuza Avenue in Pasig, Metro Manila, totally wrecking the Toyota van and injuring Ms. Jao and her two (2) passengers in the process. A criminal case was thereafter filed with the Regional Trial Court of Pasig on September 18, 1991 charging the driver of the bus, herein petitioner Eduardo Javier, with reckless imprudence resulting in damage to property with multiple physical injuries. About four (4) months later, or on January 13, 1992, herein private respondent Pioneer Insurance and Surety Corporation (PISC), as insurer of the van and subrogee, filed a case for damages against petitioner SILI with the Regional Trial Court of Manila, seeking to recover the sums it paid the assured under a motor vehicle insurance policy as well as other damages, totaling P564,500.00 (P454,000.00 as actual/compensatory damages; P50,000.00 as exemplary damages; P50,000.00 as attorney's fees; P10,000.00 as litigation expenses; and P500.00 as appearance fees.) ISSUEs: 1) If a criminal case was filed, can an independent civil action based on quasi-delict under Article 2176 of the Civil Code be filed if no reservation was made in the said criminal case? 2) Can a subrogee of an offended party maintain an independent civil action during the pendency of a criminal action when no reservation of the right to file an independent civil action was made in the criminal action and despite the fact that the private complainant is actively participating through a private prosecutor in the aforementioned criminal case? RULING: WHEREFORE, premises considered, the assailed decision of the Court of Appeals dated February 24, 1995 and the Resolution dated April 3, 1995 denying the motion for reconsideration thereof are hereby REVERSED and SET ASIDE. The "MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS" filed by petitioners is GRANTED. RATIO: Now that the necessity of a prior reservation is the standing rule that shall govern the institution of the independent civil actions referred to in Rule 111 of the Rules of Court, past pronouncements that view the reservation requirement as an "unauthorized amendment" to substantive law - i.e., the Civil Code, should no longer be controlling. There must be a renewed adherence to the time-honored dictum that procedural rules are designed, not to defeat, but to safeguard the ends of substantial justice. And for this noble reason, no less than the Constitution itself has mandated this Court to promulgate rules concerning the enforcement of rights with the end in view of providing a simplified and inexpensive procedure for the speedy disposition of cases which should not diminish, increase or modify substantive rights. Far from

altering substantive rights, the primary purpose of the reservation is, to borrow the words of the Court in "Caños v. Peralta" Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil Code, is not exempt from the reservation requirement with respect to its damages suit based on quasi-delict arising from the same act or omission of petitioner Javier complained of in the criminal case. As private respondent PISC merely stepped into the shoes of Ms. Jao (as owner of the insured Toyota van), then it is bound to observe the procedural requirements which Ms. Jao ought to follow had she herself instituted the civil case. RAFAEL REYES VS. PEOPLE, 329 SCRA 600 Facts: In the early morning of June 20, 1989, the White Truck driven by Dunca left Tuguegarao, Cagayan bound to San Fernando, Pampanga loaded with 2,000 cases of empty beer “Grande” bottles. Seated at the front right seat beside him was Ferdinand Domingo, his truck helper. At around 4:00 o’clock that same morning while the truck was descending at a slight downgrade along the national road at Tagaran, Cauayan, Isabela, it approached a damaged portion of the road covering the full width of the truck’s right lane going south and about six meters in length. These made the surface of the road uneven because the potholes were about five to six inches deep. The left lane parallel to this damaged portion is smooth. As narrated by Ferdinand Domingo, before approaching the potholes, he and Dunca saw the Nissan with its headlights on coming from the opposite direction. They used to evade this damaged road by taking the left lance but at that particular moment, because of the incoming vehicle, they had to run over it. This caused the truck to bounce wildly. Dunca lost control of the wheels and the truck swerved to the left invading the lane of the Nissan. As a result, Dunca’s vehicle rammed the incoming Nissan dragging it to the left shoulder of the road and climbed a ridge above said shoulder where it finally stopped. The Nissan was severely damaged and its two passengers, namely, Feliciano Balcita and Francisco Dy, Jr. died instantly. On October 10, 1989, Provincial Prosecutor Durian filed with the RTC an amended information charging Dunca with reckless imprudence resulting in double homicide and damage to property. On November 29, 1989, the offended parties filed with the RTC a complaint against petitioner Rafael Reyes Trucking Corporation, as employer of driver Dunca, based on quasi delict. Respondents opted to pursue the criminal action but did not withdraw the civil case quasi ex delicto they filed against petitioner. On December 15, 1989, respondents withdrew the reservation to file a separate civil action against the accused and manifested that they would prosecute the civil aspect ex delicto in the criminal action. However, they did not withdraw the separate civil action based on quasi delict against petitioner as employer arising from the same act or omission of the accused driver. The RTC held that the driver was guilty. Respondents moved for amendment of the dispositive portion of the joint decision so as to hold petitioner subsidiarily liable for the damages awarded to the private respondents in the event of insolvency of the accused, which the lower court granted. Issues: (1) Whether or not petitioner as owner of the truck involved in the accident may be held subsidiarily liable for the damages awarded to the offended parties in the criminal action against the truck driver despite the filing of a separate civil action by the offended parties against the employer of the truck driver; and

(2) Whether or not the Court may award damages to the offended parties in the criminal case despite the filing of a civil action against the employer of the truck driver. Held: (1) No. In negligence cases, the aggrieved party has the choice between (1) an action to enforce civil liability arising from crime under Article 100 of the Revised Penal Code; and (2) a separate action for quasi delict under Article 2176 of the Civil Code of the Philippines. Once the choice is made, the injured party can not avail himself of any other remedy because he may not recover damages twice for the same negligent act or omission of the accused. This is the rule against double recovery.In other words, “the same act or omission can create two kinds of liability on the part of the offender, that is, civil liability ex delicto, and civil liability quasi delicto” either of which “may be enforced against the culprit, subject to the caveat under Article 2177 of the Civil Code that the offended party can not recover damages under both types of liability.” In the instant case, the offended parties elected to file a separate civil action for damages against petitioner as employer of the accused, based on quasi delict, under Article 2176 of the Civil Code of the Philippines. Petitioner, as employer of the accused who has been adjudged guilty in the criminal case for reckless imprudence, cannot be held subsidiarily liable because of the filing of the separate civil action based on quasi delict against it. In view of the reservation to file, and the subsequent filing of the civil action for recovery of civil liability, the same was not instituted with the criminal action. Such separate civil action was for recovery of damages under Article 2176 of the Civil Code, arising from the same act or omission of the accused. (2) No. The award of damages in the criminal case was improper because the civil action for the recovery of civil liability was waived in the criminal action by the filing of a separate civil action against the employer. The only issue brought before the trial court in the criminal action is whether accused Dunca is guilty of reckless imprudence resulting in homicide and damage to property. The action for recovery of civil liability is not included therein, but is covered by the separate civil action filed against the petitioner as employer of the accused truck-driver. The policy against double recovery requires that only one action be maintained for the same act or omission whether the action is brought against the employee or against his employer. The injured party must choose which of the available causes of action for damages he will bring. RAFAEL REYES TRUCKING CORPORATION, Petitioner, vs. PEOPLE OF THE PHILIPPINES and ROSARIO P. DY (for herself and on behalf of the minors Maria Luisa, Francis Edward, Francis Mark and Francis Rafael, all surnamed Dy), Respondents. FACTS: The defendant Rafael Reyes Trucking Corporation is a domestic corporation engaged in the business of transporting beer products for the San Miguel Corporation (SMC for short) from the latters San Fernando, Pampanga plant to its various sales outlets in Luzon. Among its fleets of vehicles for hire is the white truck trailer driven by Romeo Dunca y Tumol, a duly licensed driver. Aside from the Corporations memorandum to all its drivers and helpers to physically inspect their vehicles before each trip, the SMCs Traffic Investigator-Inspector certified the roadworthiness of this White Truck trailer. In addition to a professional drivers license, it also conducts a rigid examination of all driver applicants before they are hired.

In the early morning of June 20, 1989, the White Truck driven by Dunca left Tuguegarao, Cagayan bound to San Fernando, Pampanga loaded with 2,000 cases of empty beer "Grande" bottles. Seated at the front right seat beside him was Ferdinand Domingo, his truck helper ("pahinante" in Pilipino). At around 4:00 oclock that same morning while the truck was descending at a slight downgrade along the national road at Tagaran, Cauayan, Isabela, it approached a damaged portion of the road covering the full width of the trucks right lane going south and about six meters in length. These made the surface of the road uneven because the potholes were about five to six inches deep. The left lane parallel to this damaged portion is smooth. As narrated by Ferdinand Domingo, before approaching the potholes, he and Dunca saw the Nissan with its headlights on coming from the opposite direction. They used to evade this damaged road by taking the left lance but at that particular moment, because of the incoming vehicle, they had to run over it. This caused the truck to bounce wildly. Dunca lost control of the wheels and the truck swerved to the left invading the lane of the Nissan. As a result, Duncas vehicle rammed the incoming Nissan dragging it to the left shoulder of the road and climbed a ridge above said shoulder where it finally stopped. The Nissan was severely damaged and its two passengers, namely: Feliciano Balcita and Francisco Dy, Jr. died instantly from external and internal hemorrhage and multiple fractures. For the funeral expenses of Francisco Dy, Jr. her widow spent P651,360.00. At the time of his death he was 45 years old. He was the President and Chairman of the Board of the Dynamic Wood Products and Development Corporation (DWPC), a wood processing establishment, from which he was receiving an income of P10,000.00 a month. In the Articles of Incorporation of the DWPC, the spouses Francisco Dy, Jr. and Rosario Perez Dy appear to be stockholders of 10,000 shares each with par value of P100.00 per share out of its outstanding and subscribed capital stock of 60,000 shares valued at P6,000,000.00. Under its 1988 Income Tax Returns the DWPC had a taxable net income of P78,499.30. Francisco Dy, Jr. was a La Salle University graduate in Business Administration, past president of the Pasay Jaycees, National Treasurer and President of the Philippine Jaycees in 1971 and 1976, respectively, and World Vice-President of Jaycees International in 1979. He was also the recipient of numerous awards as a civic leader. His children were all studying in prestigious schools and spent about P180,000.00 for their education in 1988 alone. The trial court rendered a joint decision finding the accused Romeo Dunca y de Tumol guilty beyond reasonable doubt of the crime of Double Homicide through Reckless Imprudence with violation of the Motor Vehicle Law (Rep. Act No. 4136), and appreciating in his favor the mitigating circumstance of voluntary surrender without any aggravating circumstance to offset the same, the Court sentences him to suffer two (2) indeterminate penalties of four months and one day of arresto mayor as minimum to three years, six months and twenty days as maximum; to indemnify the Heirs of Francisco Dy. Jr. in the amount of P3,000,000.00 as compensatory damages, P1,000,000.00 as moral damages, and P1,030,000.00 as funeral expenses; Ordering the plaintiff in Civil Case No. Br. 19-424 to pay the defendant therein actual damages in the amount of P84,000.00; and Ordering the dismissal of the complaint in Civil Case No. Br. 19-424. Petitioner and the accused filed a notice of appeal from the joint decision.On the other hand, private respondents moved for amendment of the dispositive portion of the joint

decision so as to hold petitioner subsidiarily liable for the damages awarded to the private respondents in the event of insolvency of the accused. The trial court rendered a supplemental decision ordering the defendant Reyes Trucking Corporation subsidiarily liable for all the damages awarded to the heirs of Francisco Dy, Jr., in the event of insolvency of the accused but deducting therefrom the damages of P84,000.00 awarded to said defendant. Petitioner filed with the trial court a supplemental notice of appeal from the supplemental decision. During the pendency of the appeal, the accused jumped bail and fled to a foreign country. The Court of Appeals dismissed the appeal of the accused in the criminal case and rendered an amended decision affirming that of the trial court. Petitioner filed a motion for reconsideration of the amended decision. The Court of Appeals denied petitioners motion for reconsideration for lack of merit. Hence, this petition for review. ISSUES: 1. May petitioner as owner of the truck involved in the accident be held subsidiarily liable for the damages awarded to the offended parties in the criminal action against the truck driver despite the filing of a separate civil action by the offended parties against the employer of the truck driver? 2. May the Court award damages to the offended parties in the criminal case despite the filing of a civil action against the employer of the truck driver; and in amounts exceeding that alleged in the information for reckless imprudence resulting in homicide and damage to property? RULING: 1. Rafael Reyes Trucking Corporation, as employer of the accused who has been adjudged guilty in the criminal case for reckless imprudence, can not be held subsidiarily liable because of the filing of the separate civil action based on quasi delict against it. In view of the reservation to file, and the subsequent filing of the civil action for recovery of civil liability, the same was not instituted with the criminal action. Such separate civil action was for recovery of damages under Article 2176 of the Civil Code, arising from the same act or omission of the accused. In negligence cases, the aggrieved party has the choice between (1) an action to enforce civil liability arising from crime under Article 100 of the Revised Penal Code; and (2) a separate action for quasi delict under Article 2176 of the Civil Code of the Philippines. Once the choice is made, the injured party can not avail himself of any other remedy because he may not recover damages twice for the same negligent act or omission of the accused. This is the rule against double recovery.In other words, "the same act or omission can create two kinds of liability on the part of the offender, that is, civil liability ex delicto, and civil liability quasi delicto" either of which "may be enforced against the culprit, subject to the caveat under Article 2177 of the Civil Code that the offended party can not recover damages under both types of liability." In the instant case, the offended parties elected to file a separate civil action for damages against petitioner as employer of the accused, based on quasi delict, under Article 2176 of the Civil Code of the Philippines. Private respondents sued petitioner Rafael Reyes Trucking Corporation, as the employer of the accused, to be vicariously liable for the fault or negligence of the latter. Under the law, this vicarious liability of the employer is founded on at least two specific provisions of law.The first is expressed in Article 2176 in relation to Article 2180 of the Civil Code, which would allow an action predicated on quasi-delict to be instituted by the injured party against the employer for an act or

omission of the employee and would necessitate only a preponderance of evidence to prevail. Here, the liability of the employer for the negligent conduct of the subordinate is direct and primary, subject to the defense of due diligence in the selection and supervision of the employee. The enforcement of the judgment against the employer in an action based on Article 2176 does not require the employee to be insolvent since the nature of the liability of the employer with that of the employee, the two being statutorily considered joint tortfeasors, is solidary. The second, predicated on Article 103 of the Revised Penal Code, provides that an employer may be held subsidiarily civilly liable for a felony committed by his employee in the discharge of his duty. This liability attaches when the employee is convicted of a crime done in the performance of his work and is found to be insolvent that renders him unable to properly respond to the civil liability adjudged. Pursuant to the provision of Rule 111, Section 1, paragraph 3 of the 1985 Rules of Criminal Procedure, when private respondents, as complainants in the criminal action, reserved the right to file the separate civil action, they waived other available civil actions predicated on the same act or omission of the accused-driver. Such civil action includes the recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, and 34 of the Civil Code of the Philippines arising from the same act or omission of the accused. The intention of private respondents to proceed primarily and directly against petitioner as employer of accused truck driver became clearer when they did not ask for the dismissal of the civil action against the latter based on quasi delict.Consequently, the Court of Appeals and the trial court erred in holding the accused civilly liable, and petitioner-employer of the accused subsidiarily liable for damages arising from crime (ex delicto) in the criminal action as the offended parties in fact filed a separate civil action against the employer based on quasi delict resulting in the waiver of the civil action ex delicto.It might be argued that private respondents as complainants in the criminal case withdrew the reservation to file a civil action against the driver (accused) and manifested that they would pursue the civil liability of the driver in the criminal action. However, the withdrawal is ineffective to reverse the effect of the reservation earlier made because private respondents did not withdraw the civil action against petitioner based on quasi delict. In such a case, the provision of Rule 111, Section 1, paragraph 3 of the 1985 Rules on Criminal Procedure is clear that the reservation to file or the filing of a separate civil action results in a waiver of other available civil actions arising from the same act or omission of the accused. Rule 111, Section 1, paragraph 2 enumerated what are the civil actions deemed waived upon such reservation or filing, and one of which is the civil indemnity under the Revised Penal Code. Rule 111, Section 1, paragraph 3 of the 1985 Rules on Criminal Procedure specifically provides: "A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of the right to file, any of said civil actions separately waives the others."The rationale behind this rule is the avoidance of multiple suits between the same litigants arising out of the same act or omission of the offender. The restrictive phraseology of the section under consideration is meant to cover all kinds of civil actions, regardless of their source in law, provided that the action has for its basis the same act or omission of the offender. However, petitioner as defendant in the separate civil action for damages filed against it, based on quasi delict, may be held liable thereon. Thus, the trial court grievously erred in dismissing plaintiffs civil complaint. And the Court of Appeals erred in affirming the trial courts decision. Unfortunately private respondents did not appeal from such dismissal and could not be granted affirmative relief.The Court, however, in exceptional cases has relaxed the rules "in order to promote their objectives and assist the parties in obtaining just, speedy, and inexpensive determination of every action or proceeding" or exempted "a particular case from the operation of the rules."

Invoking this principle, we rule that the trial court erred in awarding civil damages in the criminal case and in dismissing the civil action. Apparently satisfied with such award, private respondent did not appeal from the dismissal of the civil case. However, petitioner did appeal. Hence, this case should be remanded to the trial court so that it may render decision in the civil case awarding damages as may be warranted by the evidence. 2. The award of damages in the criminal case was improper because the civil action for the recovery of civil liability was waived in the criminal action by the filing of a separate civil action against the employer. As enunciated in Ramos vs. Gonong, "civil indemnity is not part of the penalty for the crime committed." The only issue brought before the trial court in the criminal action is whether accused Romeo Dunca y de Tumol is guilty of reckless imprudence resulting in homicide and damage to property. The action for recovery of civil liability is not included therein, but is covered by the separate civil action filed against the petitioner as employer of the accused truckdriver. In this case, accused-driver jumped bail pending his appeal from his conviction. Thus, the judgment convicting the accused became final and executory, but only insofar as the penalty in the criminal action is concerned. The damages awarded in the criminal action was invalid because of its effective waiver. The pronouncement was void because the action for recovery of the civil liability arising from the crime has been waived in said criminal action. With respect to the issue that the award of damages in the criminal action exceeded the amount of damages alleged in the amended information, the issue is de minimis. At any rate, the trial court erred in awarding damages in the criminal case because by virtue of the reservation of the right to bring a separate civil action or the filing thereof, "there would be no possibility that the employer would be held liable because in such a case there would be no pronouncement as to the civil liability of the accused. As a final note, the Court reiterate that "the policy against double recovery requires that only one action be maintained for the same act or omission whether the action is brought against the employee or against his employer. The injured party must choose which of the available causes of action for damages he will bring. LRT vs. NAVIDAD G.R. No. 145804. February 6, 2003 FACTS: Navidad was drunk when he entered the boarding platform of the LRT. He got into an altercation with the SG Escartin. They had a fistfight and Navidad fell onto the tracks and was killed when a train came and ran over him. The Heirs of Navidad filed a complaint for damages against Escartin, the train driver, (Roman) the LRTA, the Metro Transit Organization and Prudent Security Agency (Prudent). The trial court found Prudent and Escartin jointly and severally liable for damages to the heirs. The CA exonerated Prudent and instead held the LRTA and the train driver Romero jointly and severally liable as well as removing the award for compensatory damages and replacing it with nominal damages. The reasoning of the CA was that a contract of carriage already existed between Navidad and LRTA (by virtue of his havA ing purchased train tickets and the liability was caused by the mere fact of Navidad's death after being hit by the train being managed by the LRTA and operated by Roman. The CA also blamed LRTA for not

having presented expert evidence showing that the emergency brakes could not have stopped the train on time. ISSUES: (1) Whether or not LRTA and/or Roman is liable for the death. (2) Whether or not Escartin and/or Prudent are liable. (3) Whether or not nominal damages may coexist with compensatory damages. HELD: (1) Yes. The foundation of LRTA's liability is the contract of carriage and its obligation to indemnify the victim arising from the breach of that contract by reason of its failure to exercise the high diligence required of a common carrier. (2) Fault was not established. Liability will be based on Tort under Art. 2176 of the New Civil Code. (3) No. It is an established rule that nominal damages cannot co-exist with compensatory damages. RATIO: Liability of LRTA – Read Arts. 1755,1756, 1759 and 1763 of the New Civil Code A common carrier is required by these above statutory provisions to use utmost diligence in carrying passengers with due regard for all circumstances. This obligation exists not only during the course of the trip but for so long as the passengers are within its premises where they ought to be in pursuance to then contract of carriage. Art. 1763 renders a common carrier liable for death of or injury to passengers (a) through the negligence or wilful acts of its employees or (b) on account of willful acts or negligence of other passengers or of strangers if the common carrier’s employees through theexercise of due diligence could have prevented or stopped the act or omission. In case of such death or injury, a carrier is presumed to have been at fault or been negligent, and by simple proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure. Liability of Security Agency – If Prudent is to be held liable, it would be for a tort under Art. 2176 in conjunction with Art. 2180. Once the fault of the employee Escartin is established, the employer, Prudent, would be held liable on the presumption that it did not exercise the diligence of a good father of the family in the selection and supervision of its employees. Relationship between contractual and non-contractual breach – How then must the liability of the common carrier, on the one hand, and an independent contractor, on the other hand, be described? It would be solidary. A contractual obligation can be breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract. Stated differently, when an act which constitutes a breach of ontract would have itself constituted the source of a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been

breached

by

tort,

thereby

allowing

the

rules

on

tort

to

apply.

Nominal Damages - The award of nominal damages in addition to actual damages is untenable. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. It is an established rule that nominal damages cannot co-exist with compensatory damages. The award was deleted/\. LRT vs. NAVIDAD G.R. No. 145804 February 6, 2003 Lessons Applicable: Actionable Document (transportation) Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763 FACTS:  October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor) entered the EDSA LRT station after purchasing a “token”.  While Nicanor was standing at the platform near the LRT tracks, the guard Junelito Escartin approached him.  Due to misunderstanding, they had a fist fight  Nicanor fell on the tracks and killed instantaneously upon being hit by a moving train operated by Rodolfo Roman  December 8, 1994: The widow of Nicanor, along with her children, filed a complaint for damages against Escartin, Roman, LRTA, Metro Transit Org. Inc. and Prudent (agency of security guards) for the death of her husband.  LRTA and Roman filed a counter-claim against Nicanor and a cross-claim against Escartin and Prudent  Prudent: denied liability – averred that it had exercised due diligence in the selection and surpervision of its security guards  LRTA and Roman: presented evidence  Prudent and Escartin: demurrer contending that Navidad had failed to prove that Escartin was negligent in his assigned task  RTC: In favour of widow and against Prudent and Escartin, complaint against LRT and Roman were dismissed for lack of merit  CA: reversed by exonerating Prudent and held LRTA and Roman liable

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they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755 Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers This liability of the common carriers does NOT cease upon proof that they Exercised all the diligence of a good father of a family in the selection and supervision of their employees

o

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ISSUE: W/N LRTA and Roman should be liable according to the contract of carriage

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HELD: NO. Affirmed with Modification: (a) nominal damages is DELETED (CANNOT co-exist w/ compensatory damages) (b) Roman is absolved.  Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of public policy, is burdened with the duty off exercising utmost diligence in ensuring the safety of passengers  Civil Code:  Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances  Art. 1756. In case of death or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless

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Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Carriers presumed to be at fault or been negligent and by simple proof of injury, the passenger is relieaved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure Where it hires its own employees or avail itself of the services of an outsider or an independent firm to undertake the task, the common carrier is NOT relieved of its responsibilities under the contract of carriage GR: Prudent can be liable only for tort under Art. 2176 and related provisions in conjunction with Art. 2180 of the Civil Code. (Tort may arise even under a contract, where tort [quasi-delict liability] is that which breaches the contract) EX: if employer’s liability is negligence or fault on the part of the employee, employer can be made liable on the basis of the presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees. EX to the EX: Upon showing due diligence in the selection and supervision of the employee Factual finding of the CA: NO link bet. Prudent and the death of Nicanor for the reason that the negligence of Escartin was NOT proven NO showing that Roman himself is guilty of any culpable act or omission, he must also be absolved from liability Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation bet. Nicanor and Roman Roman can be liable only for his own fault or negligence

LIGA vs. ALLEGRO RESOURCES 575 SCRA 310 (Art. 1159) Facts: · Ortigas & Company, Limited Partnership entered into a lease agreement with La Paz Investment & Realty Corporation wherein the former leased to the latter its parcel of land located in San Juan. La Paz constructed the Greenhills Shopping Arcade and divided it into several stalls and subleased them to other people. One of the sublessees was Edsel Liga (Liga), who obtained the leasehold right to Unit No. 26, Level A of the GSA.

· As the lease expired, the stallholders made several attempts to have their leasehold rights extended. · Allegro Resources became the new lessee. As the new lessee, Allegro offered to sublease Unit No. 26, Level A to Liga. They entered into a lease agreement dubbed Rental Information in which Liga agreed to pay rental of P40K monthly. She also agreed to pay the back rentals due Ortigas. Liga also gave P40K as one month advance rental and another P40K as one month security deposit as provided in the agreement. · Liga failed to pay the subsequent due rent. Despite repeated demands from Allegro, Liga had failed to pay her rentals for the subleased property, as well as the back rentals from January to August 2001 due Ortigas. Issues: 1. WON Liga should pay to Ortigas back rentals covering the period 1 January 2001 to 31 August 2001? NO 2. WON Liga should pay to Allegro back rentals in the amount of P40K a month starting from 1 September 2001 until such time as she vacates the leased property? YES 3. WON Liga should pay to Allegro the amount of P20K as attorney's fees and the costs of suit? YES Held: 1. (1) Ortigas is not a party to this case, whether as plaintiff or otherwise. It is basic that no relief can be extended in a judgment to a stranger or one who is not a party to a case. (2) Allegro cannot justify the award as a legal representative by virtue of a provision in its lease agreement with Ortigas. Allegro did not aver in its complaint that it was acting as Ortigas's legal representative and seeking the back rentals due Ortigas. (3) There is no allegation or prayer in the complaint that Allegro was seeking the collection of the back rentals due Ortigas. 2. The Court cannot countenance the obstinate refusal of Liga to pay P40K a month to Allegro since she had already acquiesced to pay such rental rate when she signed the Rental Information. It is fundamental that a contract is the law between the parties. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. It is a general principle of law that no one may be permitted to change his mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the other party. Likewise, it is settled that if the terms of the contract clearly express the intention of the contracting parties, the literal meaning of the stipulations would be controlling. 3. Law and jurisprudence support the award of attorney's fees and costs of suit in favor of Allegro. Attorney's fees and costs of litigation are awarded in instances where "the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim." Having delivered possession over the

leased property to Liga, Allegro had already performed its obligation under the lease agreement. Liga should have exercised fairness and good judgment in dealing with Allegro by religiously paying the agreed monthly rental of P40,000.00. LIGA vs. ALLEGRO RESOURCES 575 SCRA 310 (Art. 1159) Facts: Ortigas & Company, Limited Partnership entered into a lease agreement with La Paz Investment & Realty Corporation wherein the former leased to the latter its parcel of land located in San Juan. La Paz constructed the Greenhills Shopping Arcade and divided it into several stalls and subleased them to other people. One of the sub-lessees was Edsel Liga (Liga), who obtained the leasehold right to Unit No. 26, Level A of the GSA. As the lease expired, the stallholders made several attempts to have their leasehold rights extended. Allegro Resources became the new lessee. As the new lessee, Allegro offered to sublease Unit No. 26, Level A to Liga. They entered into a lease agreement dubbed Rental Information in which Liga agreed to pay rental of P40K monthly. She also agreed to pay the back rentals due Ortigas. Liga also gave P40K as one month advance rental and another P40K as one month security deposit as provided in the agreement. Liga failed to pay the subsequent due rent. Despite repeated demands from Allegro, Liga had failed to pay her rentals for the subleased property, as well as the back rentals from January to August 2001 due Ortigas. Issues: WON Liga should pay to Ortigas back rentals covering the period 1 January 2001 to 31 August 2001? NO WON Liga should pay to Allegro back rentals in the amount of P40K a month starting from 1 September 2001 until such time as she vacates the leased property? YES WON Liga should pay to Allegro the amount of P20K as attorney’s fees and the costs of suit? YES Held: (1) Ortigas is not a party to this case, whether as plaintiff or otherwise. It is basic that no relief can be extended in a judgment to a stranger or one who is not a party to a case. (2) Allegro cannot justify the award as a legal representative by virtue of a provision in its lease agreement with Ortigas. Allegro did not aver in its complaint that it was acting as Ortigas’s legal representative and seeking the back rentals due Ortigas. (3) There is no allegation or prayer in the complaint that Allegro was seeking the collection of the back rentals due Ortigas.

The Court cannot countenance the obstinate refusal of Liga to pay P40K a month to Allegro since she had already acquiesced to pay such rental rate when she signed the Rental Information. It is fundamental that a contract is the law between the parties. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. It is a general principle of law that no one may be permitted to change his mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the other party. Likewise, it is settled that if the terms of the contract clearly express the intention of the contracting parties, the literal meaning of the stipulations would be controlling. Law and jurisprudence support the award of attorney’s fees and costs of suit in favor of Allegro. Attorney’s fees and costs of litigation are awarded in instances where “the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim.” Having delivered possession over the leased property to Liga, Allegro had already performed its obligation under the lease agreement. Liga should have exercised fairness and good judgment in dealing with Allegro by religiously paying the agreed monthly rental of P40,000.00. MAKATI STOCK EXCHANGE, INC., vs. MIGUEL V. CAMPOS G.R. No. 138814 , April 16, 2009 FACTS: Respondent Miguel V. Campos filed a petition with the Securities, Investigation and Clearing Department (SICD) of the Securities and Exchange Commission (SEC) against the petitioners Makati Stock Exchange, Inc. (MKSE) The petition sought: (1) to nullify the Resolution dated 3 June 1993 of the MKSE Board of Directors, which allegedly deprived him of his right to participate equally in the allocation of Initial Public Offerings (IPO) of corporations registered with MKSE; (2) the delivery of the IPO shares he was allegedly deprived of, for which he would pay IPO prices;. SICD granted the issuance of a Temporary Restraining Order to enjoin petitioners from implementing or enforcing the resolution of the MKSE. they also issued a writ of preliminary injunction for the implementation or enforcement of the MKSE Board Resolution in question.

HELD: The petition filed by respondent Miguel Campos should be dismissed for failure to state a cause of action. A cause of action is the act or omission by which a party violates a right of another. It contains three essential elements: 1) the legal right of the plaintiff 2) the correlative obligation of the defendant and 3) the act or omission of the defendant in violation of said legal right. If these elements are absent, the complaint will be dismissed on the ground of failure to state a cause of action. Furthermore, the petition filed by respondent failed to lay down the source or basis of respondent’s right and/or petitioner’s obligation. Article 1157 of the Civil Code, provides that Obligations arise from: law, Contracts, Quasi Contracts, Acts or omissions punished by law and quasi delicts. Therefore an obligation imposed on a person and the corresponding right granted to another, must be rooted in at least one of these five sources. The mere assertion of a right and claim of an obligation in an initiatory pleading, whether a Complaint or Petition, without identifying the basis or source thereof, is merely a conclusion of fact and law. A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions of fact or conclusions of law. The Respondent merely quoted in his Petition the MKSE Board Resolution, passed sometime in 1989, granting him the position of Chairman Emeritus of MKSE for life. However, there is nothing in the said Petition from which the Court can deduce that respondent, by virtue of his position as Chairman Emeritus of MKSE, was granted by law, contract, or any other legal source, the right to subscribe to the IPOs of corporations listed in the stock market at their offering prices. CHAVEZ VS. GONZALES

I. Nature and effect of obligations - Article 1167 II. Where obligation does not fix a period - Article 1197 cannot be invoked in this case

On March 11,1994, petitioners filed a motion to dismiss on the following grounds: (1) Petition became moot due to the cancellation of the license of the MKSE (2) The SICD had no jurisdiction over the petition and (3) the petition failed to state a cause of action. However, the SICD denied petitioner’s motion to dismiss.

DIESEL CONSTRUCTION CO., INC V. UPSI PROPERTY HOLDINGS, INC. G.R. No. 154885, March 24, 2008

ISSUE: Whether or not the petition failed to state a cause of action.

Facts: On August 26, 1995, Diesel, as contractor, and UPSI, as Owner, entered into a Construction Agreement for the interior architectural construction works for the 14 th to the 16th floors of the UPSI Building 3 Meditel/Condotel Project located on Gen. Luna

UPSI PROPERTY HOLDINGS, INC., V. DIESEL CONSTRUCTION CO., INC. AND FGU INSURANCE CORP., G.R. No. 154937, March 24, 2008

St., Ermita, Manila. Under the Agreement, as amended, Diesel, for PHP 12,739,099, agreed to undertake the Project, payable by progress billing. As stipulated, Diesel posted, through FGU Insurance corp. (FGU), a performance bond in favor of UPSI. The Agreement contained provisions and contract provisions on contract works and Project completing, extensions of contract period, change/extra work orders, delays and damages for negative slippage. Under the Agreement, the Project Prosecution proper was to run for a period of 90 days from August 2, 1999 to November 8, 1999. They later agreed to move the commencement date to August 21, 1999 and the completion was moved to November 20, 1999. Also this includes the section obliging the contractor, in case of unjustifiable delay, to pay the owner liquidated damages in the amount equivalent to one-fifth (1/5) of one (1) percent of the total Project cost for each calendar day of delay. During the course of Project implantation, change orders were effective and extensive sought. Diesel requested for extension owing to the following causes or delaying factors: (1) manual hauling of materials from the 14 th to 16th floors; (2) delayed supply of marble; (3) various change orders; and (4) delayed in the installation of shower assembly. UPSI disapproved the desired extensions on the basis of the foregoing causes, thus putting Diesel in default for a given contract of work. Furthermore, for every default situation, UPSI assessed Diesel for liquidated damages in the form of deductions from Diesel’s progress payments, as stipulated in the Agreement. On March 16, 2000, Diesel sent a letter notice to UPSI stating that the Project has been completed as of the date. UPSI, however, disregarded the notice, and refused to accept delivery of the contracted premises, claiming that Diesel abandoned the Project unfinished Diesel then filed a complaint compelling to pay the unpaid balance of UPSI of the contract price, plus damages and attorney’s fees. UPSI denied liability. ISSUE: Whether or not Diesel can be entitled to full payment of the contract amount. HELD: As evidenced, by UPSI’s Progress Report No. 19 for the period ending March 22, 2000, Diesel’s scope of work , as of that date, was already 97.56% complete. Such level of work accomplishment would, by any natural norm, be considered as substantial to warrant full payment of the contract amount, less actual damages suffered by UPSI. Article 1234 of the Civil Code says as much, “If the obligation had substantially performed in good faith, the obligor may recover as though there had been and complete fulfillment, less damages suffered by the obligee. PANTALEON VS AMERICAN EXPRESS INTERNATIONAL G.R. No. 174269 May 8, 2009 Facts: Polo Pantaleon (Petitioner) and his family joined an escorted tour of Western Europe. In a guided city tour in Amsterdam, Mrs. Pantaleon while she was in Coster she purchased a diamond, pendant and a chain which totalled U.S. 13,826.00. To pay for these purchases Petitioner presented an American Express card together with his passport. The sales clerk took the card’s imprint, and asked Pantaleon to sign the charge slip. Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not yet been approved. His son, who had already boarded the tour bus, soon returned to Coster and informed the other members of the Pantaleon family that the entire tour group was waiting for them. Pantaleon asked the store clerk to cancel the sale. The store manager though asked plaintiff to wait a few more minutes. After 15 minutes, the store manager

informed Pantaleon that respondent had demanded bank references. Pantaleon supplied the names of his depositary banks, then instructed his daughter to return to the bus and apologize to the tour group for the delay. The Pantaleon family then went United States before returning to. While in the United States, Pantaleon continued to use his Amex card, several times without hassle or delay, but with two other incidents similar to the Amsterdam brouhaha. On 30 October 1991, Pantaleon purchased golf equipment amounting to US $1,475.00 using his AmEx card, but he cancelled his credit card purchase and borrowed money instead from a friend, after more than 30 minutes had transpired without the purchase having been approved. Pantaleon used the card to purchase children’s shoes worth $87.00 at a store in Boston, and it took 20 minutes before this transaction was approved by respondent. In Manila, Pantaleon sent a letter through counsel to American Express (Respondent), demanding an apology for the "inconvenience, humiliation and embarrassment he and his family thereby suffered" for respondent’s refusal to provide credit authorization for the aforementioned purchases. Respondent did give the apology requested. Pantaleon then instituted an action for damages with the Regional Trial Court (RTC) of Makati City, Branch 145. Pantaleon prayed that he be awarded P2,000,000.00, as moral damages; P500,000.00, as exemplary damages; P100,000.00, as attorney’s fees; and P50,000.00 as litigation expense Issues: Whether or Not American Express committed mora solvendi in its obligations to Pantaleon Held: The accepted relationship between a credit card provider and its card holders is that of creditor-debtor, with the card company as the creditor extending loans and credit to the card holder, who as debtor is obliged to repay the creditor. This relationship already takes exception to the general rule that as between a bank and its depositors, the bank is deemed as the debtor while the depositor is considered as the creditor. we shift perspectives see the credit card company as the debtor/obligor, insofar as it has the obligation to the customer as creditor/obligee to act promptly on its purchases on credit. There was delay on the part of respondent in its normal role as creditor to the cardholder, such delay would not have been in the acceptance of the performance of the debtor’s obligation (i.e., the repayment of the debt), but it would be delay in the extension of the credit in the first place. Such delay would not fall under mora accipiendi, which contemplates that the obligation of the debtor, such as the actual purchases on credit, has already been constituted. Herein, the establishment of the debt itself (purchases on credit of the jewelry) had not yet been perfected, as it remained pending the approval or consent of the respondent credit card company. There was an obligation on the part of respondent to act on Pantaleons’ purchases with "timely dispatch," or within a period significantly less than the one hour it apparently took before the purchase at Coster was finally approved. PANTALEON VS AMERICAN EXPRESS INTERNATIONAL G.R. No. 174269, May 8 2009 [Credit Transaction] FACTS: After the Amsterdam incident that happened involving the delay of American Express Card to approve his credit card purchases worth US$13,826.00 at the Coster store,

Pantaleon commenced a complaint for moral and exemplary damages before the RTC against American Express. He said that he and his family experienced inconvenience and humiliation due to the delays in credit authorization. RTC rendered a decision in favor of Pantaleon. CA reversed the award of damages in favor of Pantaleon, holding that AmEx had not breached its obligations to Pantaleon, as the purchase at Coster deviated from Pantaleon's established charge purchase pattern.

-The petitioner, lawyer Polo Pantaleon, his wife, daughter and son joined an escorted tour of Western Europe organized by Trafalgar Tours of Europe, Ltd., in October of 1991.

ISSUE: 1. Whether or not AmEx had committed a breach of its obligations to Pantaleon. 2. Whether or not AmEx is liable for damages.

-The tour group arrived in Amsterdam in the afternoon of 25 October 1991, the second to the last day of the tour. As the group had arrived late in the city, they failed to engage in any sight-seeing so they agreed that they would start early the next day to see the entire city before ending the tour.

RULING: 1. Yes. The popular notion that credit card purchases are approved “within seconds,” there really is no strict, legally determinative point of demarcation on how long must it take for a credit card company to approve or disapprove a customer’s purchase, much less one specifically contracted upon by the parties. One hour appears to be patently unreasonable length of time to approve or disapprove a credit card purchase.

-The following day, the last day of the tour, the group arrived at the Coster Diamond House. The group had agreed that the visit to Coster should end by 9:30 a.m. to allow enough time to take in a guided city tour of Amsterdam.

The culpable failure of AmEx herein is not the failure to timely approve petitioner’s purchase, but the more elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming that AmEx’s credit authorizers did not have sufficient basis on hand to make a judgment, we see no reason why it could not have promptly informed Pantaleon the reason for the delay, and duly advised him that resolving the same could take some time.

- While in the diamond house, led to the store’s showroom to allow them to select items for purchase. Mrs. Pantaleon decided to buy a 2.5 karat diamond brilliant cut, and she found a diamond close enough in approximation. Mrs. Pantaleon also selected for purchase a pendant and a chain, all of which totaled U.S. $13,826.00.

2. Yes. The reason why Pantaleon is entitled to damages is not simply because AmEx incurred delay, but because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages are remunerative. The somewhat unusual attending circumstances to the purchase at Coster – that there was a deadline for the completion of that purchase by petitioner before any delay would redound to the injury of his several traveling companions – gave rise to the moral shock, mental anguish, serious anxiety, wounded feelings and social humiliation sustained by Pantaleon, as concluded by the RTC.

-Pantaleon presented his American Express credit card together with his passport to the Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before the tour group was slated to depart from the store. The sales clerk took the card’s imprint, and asked Pantaleon to sign the charge slip. The charge purchase was then referred electronically to respondent’s Amsterdam office at 9:20 a.m.

PANTALEON v AMERICAN EXPRESS INTERNATIONAL, INC RATIO DECIDENDI: Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad faith. QUICK FACTS: Petitioner purchased items when he was in the States using his AmEx credit card. During three particular instances, clearance of his purchase took too long and under those circumstances caused him moral shock, mental anguish, serious anxiety, wounded feelings and social humiliation. FACTS: Name of Offended party (petitioner): Polo S. Pantaleon Name of respondent: American Express International, Inc.

-clearance took too long. At 9:40am, Pantaleon asked the store clerk to cancel the sale to avoid further delaying and inconveniencing the tour group. At around 10:00 a.m, 30 minutes after the tour group was supposed to have left the store, Coster decided to release the items even without respondent’s approval of the purchase.

-due to the delay, the city tour of Amsterdam was to be canceled due to lack of remaining time. The spouses Pantaleon allegedly offered their apologies but were met by their tourmates with stony silence and visible irritation. Mrs. Pantaleon ended up weeping, while her husband had to take a tranquilizer to calm his nerves.

-two instances similar to the Castor incident happened. 

purchased golf equipment amounting to US $1,475.00 using his AmEx card, but he cancelled his credit card purchase and borrowed money instead from a friend, after more than 30 minutes had transpired without the purchase having been approved.



used the card to purchase children’s shoes worth $87.00 at a store in Boston, and it took 20 minutes before this transaction was approved by respondent.



respondent "had exercised diligent efforts to effect the approval" of the purchases, which were "not in accordance with the charge pattern" petitioner had established for himself

ISSUE:

Petitioners: after coming back to Manila, sent a letter demanding an apology for the "inconvenience, humiliation and embarrassment he and his family thereby suffered" for respondent’s refusal to provide credit authorization for the aforementioned purchases.

Respondent: refused to give an apology, sent a letter stating among others that the delay in authorizing the purchase from Coster was attributable to the circumstance that the charged purchase of US $13,826.00 "was out of the usual charge purchase pattern established."

RTC: petitioner instituted an action for damages. Petitioner won. 

Court awarded P500,000.00 as moral damages, P300,000.00 as exemplary damages, P100,000.00 as attorney’s fees, and P85,233.01 as expenses of litigation.



normal approval time for purchases was "a matter of seconds." Based on that standard, respondent had been in clear delay with respect to the three subject transactions.

CA: reversed the award of damages in favor of Pantaleon, holding that respondent had not breached its obligations to petitioner. 

1)

WON has committed a breach of its obligations.

2)

WON respondent is liable for damages.

DECISION: Petition granted. CA decision set aside. HELD: 1) There was a breach. -Notwithstanding the popular notion that credit card purchases are approved "within seconds," there really is no strict, legally determinative point of demarcation on how long must it take for a credit card company to approve or disapprove a customer’s purchase, much less one specifically contracted upon by the parties. Yet this is one of those instances when "you’d know it when you’d see it," and one hour appears to be an awfully long, patently unreasonable length of time to approve or disapprove a credit card purchase. -the respondent has the right, if not the obligation, to verify whether the credit it is extending upon on a particular purchase was indeed contracted by the cardholder, and that the cardholder is within his means to make such transaction. The culpable failure of respondent herein is not the failure to timely approve petitioner’s purchase, but the more elemental failure to timely act on the same, whether favorably or unfavorably. 

Respondent should have promptly informed petitioner the reason for the delay, and duly advised him that resolving the same could take some time so that petitioners will know WON to continue with the purchases

2)

YES.

-Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad faith, and the court should find that under the circumstances, such damages are due.

delay was not attended by bad faith, malice, or gross negligence. -in this case, there was bad faith and unjustified neglect of respondent, attributable in particular to the "dilly-dallying" of respondent’s Manila credit authorizer, Edgardo Jaurique. This, to the Court’s mind, amounts to a wanton and deliberate refusal to

comply with its contractual obligations, or at least abuse of its rights, under the contract.

instalments corresponding to the month of August, 1966 for more than 5 months, thereby constraining the defendants to cancel the said contract.

-The delay committed by defendant was clearly attended by unjustified neglect and bad faith, since it alleges to have consumed more than one hour to simply go over plaintiff’s past credit history with defendant, his payment record and his credit and bank references, when all such data are already stored and readily available from its computer and the fact that there were no delinquencies in the plaintiff’s account

The Court of First Instance rendered judgment in favour of the plaintiffs, hence this appeal.

-It should be emphasized that the reason why petitioner is entitled to damages is not simply because respondent incurred delay, but because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages are remunerative. In this case, it was sufficiently shown that the incident gave rise to the moral shock, mental anguish, serious anxiety, wounded feelings and social humiliation to the petitioner. 

Amount should be commensurate to the loss or injury suffered. Petitioner’s original prayer for P5,000,000.00 for moral damages is excessive under the circumstances, and the amount awarded by the trial court of P500,000.00 in moral damages more seemly.1avvphi1

-Likewise, we deem exemplary damages available under the circumstances, and the amount of P300,000.00 appropriate. There is similarly no cause though to disturb the determined award of P100,000.00 as attorney’s fees, and P85,233.01 as expenses of litigation. ANGELES VS. CALASANZ 135 SCRA 323 FACTS: On December 19, 1957, defendants-appellants Ursula Torres Calasanz and plaintiffs-appellees Buenaventura Angeles and Teofila Juani entered into a contract to sell a piece of land located in Cainta, Rizal for the amount of P3,920.00 plus 7% interest per annum. The plaintiffs-appellees made a down payment of P392.00 upon the execution of the contract. They promised to pay the balance in monthly instalments of P41.20 until fully paid, the instalment being due and payable on the 19th day of each month. The plaintiffs-appellees paid the monthly instalments until July 1966, when their aggregate payment already amounted to P4,533.38. On December 7, 1966, the defendants-appellants wrote the plaintiffs-appellees a letter requesting the remittance of past due accounts. On January 28, 1967, the defendants-appellants cancelled the said contract because the plaintiffs failed to meet subsequent payments. The plaintiffs’ letter with their plea for reconsideration of the said cancellation was denied by the defendants. The plaintiffs-appellees filed a case before the Court of First Instance to compel the defendant to execute in their favour the final deed of sale alleging inter alia that after computing all subsequent payments for the land in question, they found out that they have already paid the total amount including interests, realty taxes and incidental expenses. The defendants alleged in their answer that the plaintiffs violated par. 6 of the contract to sell when they failed and refused to pay and/or offer to pay monthly

ISSUE: Has the Contract to Sell been automatically and validly cancelled by the defendants-appellants? RULING: No. While it is true that par.2 of the contract obligated the plaintiffs-appellees to pay the defendants the sum of P3,920 plus 7% interest per annum, it is likewise true that under par 12 the seller is obligated to transfer the title to the buyer upon payment of the said price. The contract to sell, being a contract of adhesion, must be construed against the party causing it. The Supreme Court agree with the observation of the plaintiffsappellees to the effect that the terms of a contract must be interpreted against the party who drafted the same, especially where such interpretation will help effect justice to buyers who, after having invested a big amount of money, are now sought to be deprived of the same thru the prayed application of a contract clever in its phraseology, condemnable in its lopsidedness and injurious in its effect which, in essence, and its entirety is most unfair to the buyers. Thus, since the principal obligation under the contract is only P3,920.00 and the plaintiffs-appellees have already paid an aggregate amount of P4,533.38, the courts should only order the payment of the few remaining instalments but not uphold the cancellation of the contract. Upon payment of the balance of P671.67 without any interest thereon, the defendant must immediately execute the final deed of sale in favour of the plaintiffs and execute the necessary transfer of documents, as provided in par.12 of the contract. ANGELES vs CALASANZ Nature: Appeal form the decision that the contract to sell was not validly cancelled and ordering the defendants to execute the final deed of sale. Facts -

-

-

Dec 1957- Calasanz spouses and Angeles and Juani entered into contract of sale on a parcel of land for Php3920.00 with 7% interest per annum. Angeles and Juani made downpayment of Php392.00 and promised to pay the remaining amount at Php41.20 a month until the full amount is paid for. Calasanz spouses accepted several delayed payments. They paid until July 1966 when their aggregate payment already reached Php4533.38. Dec 1966- Calasanz requested the past due accounts, particularly for the Aug 1966 payment. And because Angeles and Juani failed to pay, Calasanz cancelled the contract. When the plaintiffs brought this to court, the RTC ruled in their favor. Calasanz claims that they had the right to rescission under Art 1191 and the stipulation in their contract, Paragraph 6 saying they may cancel the contract

in case the second party fails to satisfy the monthly installments. They continue to invoke that Paragraph 9 of their contract states that they do not lose this right though they concede some delayed payments. Issue Was the contract automatically and validly cancelled? Held NO. Though ART 1191 NCC states that the law does not prohibit the injured party form cancelling a contract due to non-compliance of the other party, the case does not apply that. This is because it is stated in jurisprudence Universal Food Corp vs CA that rescission is not permitted where the breach is only slight and casual. Here, the breach is considered to be just that because though they did not pay the Aug 1966 due, they did not have to because they already reached full payment even before that. This is already unjust enrichment on their part. As well, the defendant spouses are estopped from invoking the right of rescission when they continued to receive delayed payment of installments from the spouses Angeles and Juani. ANGELES VS. CALASANZ G.R. No. L-42283, 18 March 1985. The contract of adhesion, must be construed against the party causing it. The terms of a contract must be interpreted against the party who drafted the same, especially where such interpretation will help effect justice to persons who would be deprived of their rights thru the application of a contract clever in its phraseology, condemnable in its lopsidedness and injurious in its effect which, in essence, and in its entirety is most unfair to the other party. FACTS: Plaintiffs-appellees and defendants- appellants entered into a contract to sell apiece of land located in Rizal for the amountof P3, 920 plus 7% interest per annum. Theplaintiffs-appellees paid in monthlyinstalments and defendants-appellants told plaintiffs-appellants to remit past dueaccounts. On January 28, 1967, defendantsappellants Calasanz cancelled the contracton the basis of failure of Angeles to secure payment. Plaintiff-appellant Angeles filed acase with the CFI of Rizal on the basis that they had discovered they already paid P4,533.38, including all surcharges and expenses. The lower court ruled in favour ofplaintiffs. The CA then brought the case fordecision before the SC. ISSUE: WON the contract was validly cancelled by the defendant-appellants Calasanz? NO RATIO: Defendant appellant received the delayed payment of plaintiffs-appellees onseveral occasions. They have then waived and are now estopped from exercising theiralleged right to rescind the contract. Article 1234 of the Civil Code also says that if anobligation has been substantially performed ingood faith, the obligor may recover as thoughthere had been a strict and complete compliance and fulfillment ROQUE VS. LAPUS 96 SCRA 741 FACTS:

Sometime in 1964, plaintiff and defendant entered into an agreement of sale covering Lots 1, 2 and 9, Block 1, of said property, payable in 120 equal monthly installments at the rate of P16.00, P15.00 per square meter, respectively. In accordance with said agreement, defendant paid to plaintiff the sum of P150.00 as deposit and the further sum of P740.56 to complete the payment of four monthly installments covering the months of July, August, September, and October, 1954. On January 24, 1955, defendant requested plaintiff that he be allowed to abandon and substitute Lots 1, 2 and 9, the subject with Lots 4 and 12, Block 2 of the Rockville Subdivision, which are corner lots, to which request plaintiff graciously acceded. The evidence discloses that defendant proposed to plaintiff modification of their previous contract to sell because he found it quite difficult to pay the monthly installments on the three lots, and besides the two lots he had chosen were better lots, being corner lots. In addition, it was agreed that the purchase price of these two lots would be at the uniform rate of P17.00 per square meter payable in 120 equal monthly installments, with interest at 8% annually on the balance unpaid. Pursuant to this new agreement, defendant occupied and possessed Lots 4 and 12, and enclosed them, including the portion where his house now stands, with barbed wires and adobe walls. However, aside from the deposit of P150.00 and the amount of P740.56, which were paid under their previous agreement, defendant failed to make any further payment on account of the agreed monthly installments for the two lots in dispute, under the new contract to sell. Plaintiff demanded upon defendant not only to pay the stipulated monthly installments in arrears, but also to make up-to-date his payments, but defendant refused to comply with plaintiff's demands. On or about November 3, 1957, plaintiff demanded upon defendant to vacate the lots in question and to pay the reasonable rentals thereon at the rate of P60.00 per month from August, 1955. On January 22, 1960, petitioner Felipe C, Roque filed the complaint against defendant Nicanor Lapuz for rescission and cancellation of the agreement of sale between them involving the two lots in question and prayed that judgment be rendered ordering the rescission and cancellation of the agreement of sale, the defendant to vacate the two parcels of land and remove his house therefrom and to pay to the plaintiff the reasonable rental thereof at the rate of P60.00 a month from August 1955 until such time as he shall have vacated the premises, and to pay the sum of P2,000.00 as attorney's fees, costs of the suit and award such other relief or remedy as may be deemed just and equitable in the premises. The Court of Appeals rendered its decision that the defendant Nicanor Lapuz is granted a period of ninety (90) days from entry hereof within which to pay the balance. Hence, this appeal. ISSUE: Can private respondent be entitled to the Benefits of the third paragraph of Article 1191, New Civil Code, for the fixing of period RULING: No. Respondent as obligor is not entitled to the benefits of paragraph 3 of Art. 1191, NCC Having been in default and acted in bad faith, he is not entitled to the new period of 90 days from entry of judgment within which to pay petitioner the balance of P11,434.44 with interest due on the purchase price of P12,325.00 for the two lots. To allow and grant respondent an additional period for him to pay the balance of the

purchase price, which balance is about 92% of the agreed price, would be tantamount to excusing his bad faith and sanctioning the deliberate infringement of a contractual obligation that is repugnant and contrary to the stability, security and obligatory force of contracts. Moreover, respondent's failure to pay the succeeding 116 monthly installments after paying only 4 monthly installments is a substantial and material breach on his part, not merely casual, which takes the case out of the application of the benefits of pa paragraph 3, Art. 1191, N.C.C. Pursuant to Art. 1191, New Civil Code, petitioner is entitled to rescission with payment of damages which the trial court and the appellate court, in the latter's original decision, granted in the form of rental at the rate of P60.00 per month from August, 1955 until respondent shall have actually vacated the premises, plus P2,000.00 as attorney's fees. The Court affirmed the same to be fair and reasonable. The Court also sustained the right of the petitioner to the possession of the land, ordering thereby respondent to vacate the same and remove his house therefrom. AYSON-SIMON VS. ADAMOS 131 SCRA 439 FACTS: On December 13, 1943, Nicolas Adamos and Vicente Feria defendantsappellants herein purchased two lots from Juan Porciuncula. Porciuncula’s successor in interest sought for the annulment and cancellation of the sale which the court a quo favorably ruled.In the meantime during the pendency of the above mentioned case, defendants-appellants sold to Generosa Ayson Simon the lots in question. Due to the failure of defendants appellants to comply with their commitment to have the subdivision plan of the lots approved and to deliver to deliver the titles and possession to Generosa, the latter filed suit for specific performance. As a result of the sale of the lot to said defendants sppellants being null and void, there is impossibity that they can comply with their commitment to Generosa, the latter then seek the rescission of the contract plus damages.The defendants-appellants contend that Generosa’s action had prescribed, considering that she had only four years from May 29, 1946 to rescind the transaction. ISSUE: Whether or not the action to rescind the obligation has prescribed. HELD: Article 1191 of the Civil Code provides that an injured party may also seek rescission if the fulfillment should have become impossible. The cause of action to claim rescission arises when the fulfillment of the obligation became imppossible when the court declared that the sale was null and void. The Generosa cannot be assailed on the ground that she slept on her rights.

part of the Piedad Estate in Quezon City, from Juan Porciuncula. Thereafter, the successors-in-interest of the latter filed Civil Case No. 174 for annulment of the sale and the cancellation of TCT No. 69475, which had been issued to defendantsappellants by virtue of the disputed sale. The Court rendered a Decision annulling the saleThe said judgment was affirmed by the Appellate Court and had attained finality. Meanwhile, during the pendency of the case above, defendants sold the said two lots to Petitioner Generosa Ayson-Simon for Php3,800.00 plus Php800.00 for facilitating the issuance of the new titles in favor of petitioner. Due to the failure of the defendants to deliver the said lots, petitioner filed a civil case for specific performance. The trial court rendered judgment to petitioner’s favor. However, defendants could not deliver the said lots because the CA had already annulled the sale of the two lots in Civil Case No. 174. Thus, petitioner filed another civil case for the rescission of the contract. Defendants were contending that petitioner cannot choose to rescind the contract since petitioner chose for specific performance of the obligation. Also, even though petitioner can choose to rescind the contract, it would not be possible, because it has already prescribed. ISSUES: 1. Can petitioner choose to rescind the contract even after choosing for the specific performance of the obligation? 2. Had the option to rescind the contract prescribed? RULING: 1. Yes. The rule that the injured party can only choose between fulfillment and rescission of the obligation, and cannot have both, applies when the obligation is possible of fulfillment. If, as in this case, the fulfillment has become impossible, Article 1191 allows the injured party to seek rescission even after he has chosen fulfillment. 2. No. Article 1191 of the Civil Code provides that the injured party may also seek rescission, if the fulfillment should become impossible. The cause of action to claim rescission arises when the fulfillment of the obligation became impossible when the Court of First Instance of Quezon City in Civil Case No. 174 declared the sale of the land to defendants by Juan Porciuncula a complete nullity and ordered the cancellation of Transfer Certificate of Title No. 69475 issued to them. Since the two lots sold to plaintiff by defendants form part of the land involved in Civil Case No. 174, it became impossible for defendants to secure and deliver the titles to and the possession of the lots to plaintiff. But plaintiff had to wait for the finality of the decision in Civil Case No. 174, According to the certification of the clerk of the Court of First Instance of Quezon City (Exhibit "E-2"), the decision in Civil Case No. 174 became final and executory "as per entry of Judgment dated May 3, 1967 of the Court of Appeals." The action for rescission must be commenced within four years from that date, May 3, 1967. Since the complaint for rescission was filed on August 16, 1968, the four year period within which the action must be commenced had not expired.

AYSON-SIMON VS. ADAMOS AND FERIA G.R. NO. L-39378 AUGUST 28, 1984 FACTS: Defendants, Nicolas Adamos and Vicente Feria, purchased two lots forming