LEUNG BEN v.

OBRIEN
G.R. No. L-13602

Facts:

Leung Ben, the petitioner, requests a writ of certiorari in order to overturn an

attachment ordered by the Court of First Instance.

P.J. filed a lawsuit in the Court of First Instance of Manila on December 12,
1917. O'Brien was able to collect P15,000 from Leung Ben, which he said had been lost
by the plaintiff to the defendant in a number of wagering, banking, and percentage
games played over the two to three months prior to the filing of the lawsuit.

As recourse and on the ground that the defendant was about to leave the
Philippines with the goal to cheat his creditors, the plaintiff requested an attachment
against the defendant's property, hence an attachment was issued.

The legal provision under which this attachment was issued mandates that there
must be an express or inferred contract as the basis of the claim.

The petitioner claims that the statutory action to recover money lost at gaming is
not the kind of action that is intended by this section, and he emphasizes that the
original complaint clearly demonstrates that the remedy of attachment is unavailable in
support of it.

The petitioner claims that the statutory action to recover money lost at gaming is
not the kind of action that is intended by this section, and he emphasizes that the
original complaint clearly demonstrates that the remedy of attachment is unavailable in
support of it.

That the petitioner has no plain, speedy, and adequate remedy by appeal or
otherwise; and that consequently the writ of certiorari supplies the appropriate remedy
for this relief.

Issue/s:

1. Is the statutory obligation to restore money won at gaming an obligation arising

from contract, express or implied?

Ruling:

1. In permitting the recovery of money lost at play, Act No. 1757 has introduced
modifications in the application of Articles 1798, 1801, and 1305 of the Civil Code.
The first two of these articles relate to gambling contracts, while article 1305 treats
the nullity of contracts proceeding from a vicious or illicit consideration. Taking all
these provisions together, it must be apparent that the obligation to return money
lost at play has a decided affinity to contractual obligation; and the Court believes
 that it could, without violence to the doctrines of the civil law, be held that such
obligations is an innominate quasi-contract.

2. It is, however, unnecessary to place the decision on this ground. In the opinion
of the Court, the cause of action stated in the complaint in the court below is based
on a contract, express or implied, and is therefore of such nature that the court had
authority to issue the writ of attachment. Hence, the application for the writ of
certiorari must therefore be denied and the proceedings dismissed.
 PELAYO V. LAURON
12 Phil 453

Facts:
The defendants' daughter-in-law delivered her kid, and petitioner Pelayo, a
doctor, provided medical help. The defendants refused to pay the just and equitable
value of the services he provided, which was P500.00, without providing any
justification. The plaintiff then sought for the entry of a judgment in his favor as against
the defendants for the sum of P500.00 plus expenses.
The defendants claimed that their daughter-in-law had passed away as a result
of giving birth, that when she was alive, she lived separately with her husband in a
different home, that on the day she gave birth, she was in the defendants' home, and
that her presence there was unintentional and due to fortuitous event.
Issue/s:
1. Whether or not the defendants are obliged to pay the petitioner for the medical
assistance rendered to their daughter-in-law.
Ruling:
1. According to Article 1089 of the Old Civil Code (now 1157), obligations are
created by law, by contracts, by quasi-contracts, by illicit acts and omissions or by
those in which any kind of fault or negligence occurs. Obligations arising from law
are not presumed. Those expressly determined in the Code or in special law, etc.,
are the only demandable ones.
2. The rendering of medical assistance in case of illness is comprised among the
mutual obligations to which the spouses are bound by way of mutual support as
provided by the law or the Code. Consequently, the obligation to pay the plaintiff for
the medical assistance rendered to the defendant’s daughter-in-law must be
couched on the husband.
3. In the case at bar, the obligation of the husband to furnish his wife in the
indispensable services of a physician at such critical moments is especially
established by the law and the compliance therewith is unavoidable.
 BAUTISTA v BORROMEO
35 SCRA 119

Facts:

The Volkswagen delivery panel truck owned by respondent Federico O.

Borromeo, Inc. (hence termed Borromeo) and the Ford truck driven by the other
petitioner, Roberto Tan Ting, were both involved in a traffic collision on September 15,
1964, along Epifanio de los Santos Avenue. Quintin Delgado, a helper in Borromeo's
delivery panel truck, was hurt in the aforementioned collision and died instantly as a
result of his injuries. The amount of P4,444 owed to Delgado's widow by Borromeo
represents the compensation (death benefit) and burial costs that Delgado is entitled to
under the Workmen's Compensation Act.

On June 17, 1965, Borromeo filed a lawsuit at the Municipal Court of

Mandaluyong, Rizal to recover from petitioners the compensation and burial costs it had
paid to Quintin Delgado's widow on the grounds that the aforementioned vehicular
accident was the result of petitioners' negligence.

At the scheduled hearing of the case on July 23, 1965, neither petitioners nor
their counsel appeared. On the same day, July 23, 1965, the municipal court rendered
judgment in favor of Borromeo and against the petitioners in the principal sum of
P4,444, and P500 attorney's fees, and costs. Neither the petitioners nor their attorney
showed up for the case hearing that was scheduled for July 23, 1965. The municipal
court rendered judgment on July 23, 1965, the same day, in favor of Borromeo and
against the petitioners for the principal sum of P4,444, as well as P500 in attorney's fees
and expenses.

On October 26, 1965, the petitioner filed a petition with the Court of First
Instance of Rizal asking for relief from the ruling of the inferior court. They stated that
they had a strong and convincing defense because "there was no contractual
relationship between the parties, whether express or implicit," and claimed that the
absence of petitioners' counsel to arrive at the municipal court hearing on July 23, 1965,
was due to excused negligence. They sought preliminary injunction, prayed for trial de
novo on the merits. A restraining order was at first issued by the court; but the prayer
for preliminary injunction was eventually denied.

On January 6, 1966, the Court of First Instance of Rizal granted petitioners-

appellees' petition for relief from judgment, setting aside the July 23, 1965 decision of
the Municipal Court of Mandaluyong, Rizal, in Civil Case 1365 and ordering a new trial.

Issue:

1. Whether the petitioners defense that “there was no contractual relationship

between the parties is valid.
Ruling:

1. Borromeo paid the widow of its employee, Quintin Delgado, compensation

(death benefit) and funeral expenses for the latter's death while in the course of
employment. This obligation arises from law — Section 2 of the Workmen's
Compensation Act.7. The same law in its Section 6 also provides that "[i]n case an
employee suffers an injury for which compensation is due under this Act by any
other person besides his employer, it shall be optional with such injured employee
either to claim compensation from his employer, under this Act, or sue such other
person for damages, in accordance with law; and in case compensation is claimed
and allowed in accordance with this Act, the employer who paid such compensation
or was found liable to pay the same, shall succeed the injured employee to the right
of recovering from such person what he paid. It is evident from the foregoing that "if
compensation is claimed and awarded, and the employer pays it, the employer
becomes subrogated to and acquires, by operation of law, the worker's rights
against the tortfeasor."

2. No need then there is to establish any contractual relationship between Quintin

Delgado and herein petitioners. Indeed, there is none. The cause of action of the
respondent corporation is one which does not spring from a creditor-debtor
relationship. It arises by virtue of its subrogation to the right of Quintin Delgado to
sue the guilty party. Such subrogation is sanctioned by the Workmen's
Compensation Law aforesaid. It is as a subrogee to the rights of its deceased
employee, Quintin Delgado, that Borromeo filed a suit against petitioners in the
Municipal Court of Mandaluyong, Rizal.
 Royal Lines, Inc. vs. Court of Appeals
143 SCRA 608

Facts:

A written agreement was made between the petitioner and the National
Shipyards and Steel Corporation (NASSCO) for the conversion of the petitioner's yacht,
the M/V Sea Belle, into a passenger and cargo ship for the agreed-upon sum of
P121,980.00. The amount of P196,245.37, or the difference between the amount
already paid by the petitioner and the contract price, was demanded by NASSCO for
more work on the ship. The demand was rejected by the petitioner because, according
to Article 1724 of the Civil Code, no written authorization for the additional work had
been provided. The petitioner filed an appeal after the trial court upheld NASSCO.

By a vote of 3 to 2, the Court of Appeals upheld the ruling of the lower court,
ruling that the cited item did not apply to the current dispute because it only applied to
land-based structures and excluded watercraft. The petitioner has petitioned us on
certiorari to contest this ruling.

The petitioner argues that because it did not provide any formal authorization for
the additional work, it cannot be held accountable for it (which it admits). The additional
cost to be paid had not "been determined in writing by the parties," nor had the
modification "been authorized in writing."

Issue/s:

1. Whether the petitioner is liable to pay for the modification, change, and/or extra
work done to the vessel?

Ruling:

1. Yes. A contract is a meeting of minds between the parties and is perfected by

mere consent except in the case of certain agreements like deposit, pledge and
commodatum. It may be entered into in whatever form save where the law requires
a document or other special form as in the contracts enumerated in Article 1388 of
the Civil Code. As a general rule, therefore, the contract may be oral or written.

2. In the case at bar, the original contract of services was in writing. It does not
follow, however, that all supplements of that written contract should also be written.
In Article IV of the written contract of services it was provided that: "During the
performance of the work required on the vessel at the Bataan National Shipyard at
Mariveles, Bataan, the OWNER, at his option may send an authorized representative
to be present while the work is being performed. In the event that the OWNER
requests for any modification, change, and/or extra work to be performed on the
vessel, which are not otherwise specified herein and which have not been included
in the Specifications submitted by the BUILDER to the OWNER, the same shall be
subject of another contract between the parties hereto."
3. We are satisfied with the finding of the Court of Appeals that Victorino Estrella
and Steve Pierre were sent by petitioner to the NASSCO shipyard in Mariveles while
the M/V Sea Belle was being repaired and that they represented said petitioner when
they requested the extra work that was subsequently done on the vessel. This
second contract was not reduced to writing, but it was nonetheless as binding
between the parties as the first written contract.

4. We deplore the efforts of petitioner to evade a legitimate obligation for benefits

it has admittedly received from the additional work done by NASSCO. Strict legal
considerations apart, what we see here is a shabby attempt to enrich oneself at the
expense of another by a clever disowning of benefits while at the same time
enjoying them. This is hardly sporting, to say the least; at worst, it is downright
dishonest.

5. The study of the law is not an exact science with definite fields of black and
white and unbending rules and rigid dogmas. The beauty of this discipline is the
"penumbra shading gradually from one extreme to another," in the words of Justice
Holmes, that gives rise to those honest differences of opinion among the
brotherhood as to its correct interpretation. Honest differences are allowed and,
indeed, inevitable, but we certainly must frown on stilted readings to suit one's
motives, especially if they are less than noble. The law does not permit this, and
much less, for that matter, does equity.
 Perez vs Pomar
2 Phil. 682

Facts:
Perez filed a case with the Court of First Instance of Laguna, requesting that the
Court establish the amount due him for his services as Pomar's translator and provide
him a favorable ruling.
Pomar, for his part, insisted that he had not requested Perez's services and that
because Perez was a friend, he had no choice but to accept them because they had
been given voluntarily and opportunistically.
Issue/s:
1. Whether or not consent has been given by the other party.
Ruling:
1. Yes. It does not appear that any written contract was entered into between the
parties for the employment of the plaintiff as interpreter, or that any other
innominate contract was entered into, but whether the plaintiff’s services were
solicited or whether they were offered to the defendant for his assistance, inasmuch
as these services were accepted and made use of by the latter, there was a tacit and
mutual consent as to the rendition of services. This gives rise to the delegation upon
the person benefited by the services to make compensation thereof, since the
bilateral obligation to render services as interpreter, on the one hand, and on the
other to pay for the services rendered is thereby incurred.

2. As was held in the Supreme Court of Spain in its decision of February 12, 1889, it
stated that “not only is there an express and tacit consent which produces real
contract but there is also a presumptive consent which is the basis of quasi-contracts
this giving rise to the multiple judicial relations which result in obligations for the
delivery of a thing or the rendition of a service.
 San Pedro Bus Line vs. Navarro
94 Phil. 840

Facts:

Nicolas Navarro filed a complaint against the San Pedro Bus Line, Paulino de la
Cruz, and Teodulo Lacdan, who are conducting business as the San Pedro Bus Line,
saying that the plaintiff was a passenger on bus No. 1 headed for Manila. TPU-7654,
which the defendants own and operate, collided with another vehicle on the way,
inflicting serious physical injuries on the plaintiff and leading to post-traumatic psychosis
that could render him permanently disabled.

As a result, the plaintiff suffered damages for actual medical and hospital costs
as well as loss of earning capacity totaling P4,500, which the plaintiff sought to recover
from the defendants.

After trial, the court of First Instance of Rizal dismissed the complaint but was
reversed by the CA and damages awarded was increased to P9,500

Issues:

1. Whether a civil action ex-contractu can be instituted if the related criminal action was
dismissed.

2. Whether a judgment may include relief other than what was demanded.

Ruling:

1. It is enough to advert to the conclusion of the Court of Appeals — which is

correct — that the action was not based on tort or quasi delict, but was one for
breach of a carrier's contract, there being a clear distinction between culpa as a
source and creator of obligations (aquiliana) and culpa in the performance of an
already existing obligation (contractual).

2. The complaint prayed for "such further relief as may be deemed just and
equitable," and this of course warranted the granting in the complaint. Indeed,
under section 9, Rule 35, of the Rules of Court, "the judgment shall grant the relief
to which the party in whose favor it is rendered is entitled, even if the party has not
demanded such relief in his pleadings."
 Bernaldes vs. Bohol Land Trans. Co.,
7 SCRA 276

Facts:

Jovito Bernaldes and his brother Nicasio, the plaintiff-appellants, travelled to

Tagbilaran by boarding an appellee's passenger truck (B.L.T. Co. No. 322, with plate No.
1470), in the Bohol town of Guindulman. However, the bus overturned and plunged off
a steep cliff in the neighborhood of Balitbiton in the municipality of Garcia-Hernandez,
killing Nicasio and seriously hurting Jovito. Consequently, a claim for damages was made
against the appellee, Bohol Land Transportation Co.

The defendant, on the other hand, asked for the complaint to be dismissed on
the grounds that it lacked a cause of action and that the cause of action described
therein was barred by an earlier ruling.

The driver of the bus involved in the accident was charged with double homicide
via reckless imprudence but was found not guilty on the grounds that his guilt had not
been proven beyond a reasonable doubt in Criminal Case No. 2775 of the same court at
the hearing on the application to dismiss. Additionally, appellees intervened in the
litigation of said matter through their counsel and waived their right to bring a separate
claim for damages.

The motion on the ground of bar by prior judgement and dismissal of the case
were sustained by the lower court. The offended party appeals.

Issue/s:

1. Whether or not a civil action for damages against the owner of a public vehicle,
based on breach of contract of carriage, may be filed after the criminal action
instituted against the driver has been disposed of, if the aggrieved party did not
reserve his right to enforce civil liability in a separate action.

Ruling:

1. Yes. The Court found the appeal interposed by appellants to be meritorious as

pursuant to Article 31 of the Civil Code which provides that “when the civil action is
based upon an obligation not arising from the act or omission complained of as a
felony, such civil action may proceed independently of the criminal proceedings and
regardless of the result of the latter.

2. Thus, the Court held the following grounds for finding the appeal meritorious.
The civil action instituted against appellee in this case is based on alleged culpa
contractual incurred by it due to its failure to carry safely the late Nicasio Bernaldes
and his brother Jovito to their place of destination, whereas the criminal action
instituted against appellee's driver involved exclusively the criminal and civil liability
of the latter arising from his criminal negligence. In other words, appellant's action
 concerned the civil liability of appellee as a common carrier, regardless of the
liabilities of its driver who was charged in the criminal case

3. True, appellants, through private prosecutors, were allowed to intervene —

whether properly or improperly we do not here decide — in the criminal action
against appellee's driver, but if that amounted inferentially to submitting in said case
their claim for civil indemnity, the claim could have been only against the driver but
not against appellee who was not a party therein.

4. The failure of the court to make any pronouncement in its decision concerning the
civil liability of the driver and/or of his employer must therefore be due to the fact
that the criminal action did not involve at all any claim for civil indemnity appellee's
driver was acquitted only on reasonable doubt, a civil action for damages against
him may be instituted for the same act or omission.
 FAUSTO BARREDO vs. SEVERINO GARCIA and TIMOTEA ALMARIO
G.R. No. L-48006

Facts:

Barredo's taxicab was involved in a head-on accident with a carretela. A 16-year-

old passenger, who was the son of Garcia and Almario, died as a result of his injuries
after the carretela flipped.

An employee of Barredo who was the taxi driver was charged with the offense
and found guilty. Garcia and Almario reserved their right to file a separate civil lawsuit
for damages when the criminal prosecution was started. Garcia and Almario then filed a
civil lawsuit for damages against Barredo, the taxi driver's employer.

Issue/s:

1. Whether or not they can file a separate civil action against Fausto Barredo
making him primarily and directly responsible.

Ruling:

1. The Barredo case was decided by the Supreme Court prior to the present Civil
Code. However, the principle enunciated in said case, that responsibility for fault or
negligence as quasi-delict is distinct and separate from negligence penalized under
the Revised Penal Code, is now specifically embodied in Art. 2177 of the Civil
Code.)The defendant maintains that Fontanilla’s negligence being punishable by the
Penal Code, his (defendant’s) liability as an employer is only subsidiary, according to
said Penal Code, but Fontanilla has not been sued in a civil action and his property
has not been exhausted. To decide the main issue, we must cut thru the tangle that
has, in the minds of many, confused and jumbled together delitos and cuasi delitos,
or crimes under the Penal Code and fault or negligence under Articles 1902-1910 of
the Civil Code.

2. According to the Supreme Tribunal of Spain, “Authorities support the proposition

that a quasi-delict or ‘culpa aquiliana’ is a separate legal institution under the Civil
Code, with a substantivity all its own, and individuality that is entirely apart and
independent from a delict or crime. Upon this principle, and on the wording and
spirit of Article 1903 of the Civil Code, the primary and direct responsibility of
employers may be safely anchored.

3. “It will thus be seen that while the terms of Article 1902 of the Civil Code seem
to be broad enough to cover the driver’s negligence in the instant case, nevertheless
Article 1903 limits cuasi-delitos TO ACTS OR OMISSIONS ‘NOT PUNISHABLE BY
LAW.’ But inasmuch as Article 365 of the Revised Penal Code punishes not only
reckless but even simple imprudence or negligence, the fault or negligence under
Article 1902 of the Civil Code has apparently been crowded out. It is this overlapping
that makes the confusion worse, confounded.’ However, a closer study shows that
such a concurrence of scope in regard to negligent acts does not destroy the
 distinction between the civil liability arising from a crime and the responsibility for
cuasi-delitos or culpa extra-contractual. The same negligent act causing damages
may produce civil liability arising from a crime under Article 100 of the Revised Penal
Code; or create an action for cuasi-delito or culpa extra-contractual under Articles
1902-1910 of the Civil Code.

4. “The foregoing authorities clearly demonstrate the separate individuality of cuasi-

delitos or culpa aquiliana under the Civil Code. Specifically, they show that there is a
distinction between civil liability arising from criminal negligence (governed by the
Penal Code) and responsibility for fault or negligence under Articles 1902 to 1910 of
the Civil Code, and that the same negligent act may produce either a civil liability
arising from a crime under the Penal Code, or a separate responsibility for fault or
negligence under Articles 1902 to 1910 of the Civil Code. Still more concretely the
authorities above cited render it inescapable to conclude that the employer – in this
case the defendant-petitioner – is primarily and directly liable under Article 1903 of
the Civil Code.”
 Dyogi vs. Yatco
100 Phil. 1095

Facts:

Teresita Dyogi was run over and mortally injured by an automobile driven by one
Ligayu. An information for homicide was filed against the driver. Subsequently, the
husband and children of the deceased brought a civil action for damages against the
owner of the car and the driver, for negligence.

Upon objection of the defendants, the civil action was dismissed on the ground
that the cause of action arose out of a criminal case, which was still pending and which
was not among those provided for under Article 33 of the New Civil Code. Hence, the
petitioners filed a petition for mandamus before the Supreme Court. 

Issue/s:

1. Whether Civil Action for Damages Separate and Distinct Shall Proceed
Independently; 

Ruling:

1. After a criminal action has been commenced, a civil action arising from the same
offense shall be suspended until final judgment in the criminal proceeding has been
rendered. This rule, however, has been impliedly modified and in fact liberalized by
certain provisions of the Civil Code. 

2. In certain cases, a civil action for damages is separate and distinct from the
criminal action may be brought by the injured party and shall proceed independently
of the criminal prosecution. The former ruling that it was not deemed feasible to
maintain an independent civil action (in all cases) has been overruled. Thus, the Civil
Code allows a person, upon whose limb injuries had been inflicted by the tortious
conduct of another to maintain a separate civil action for damages.

3. This rule (Rule 107, sec 1 par. C), has been partially amended by Article 33 of
the New Civil Code, providing that a civil action for damages brought by the injured
party in cases of defamation, fraud and physical injuries shall proceed independently
of the criminal prosecution. 

4. Under Article 2177, acquittal from an accusation of criminal negligence, whether

on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for
civil liability arising from criminal negligence, but for damages due to a quasi-delict
or culpa-aquiliana. 
Calo vs. Peggy
103 Phil. 1112
 Stanvac vs. Tan
107 Phil. 109

Facts:

On May 3, 1949, Julito Sto. At the Rural Transit Co.'s garage on Rizal Avenue
Extension in the City of Manila, STANVAC employees Domingo and Igmidio Rico were
delivering fuel from a tank trailer when they were killed. The discharge hose for the
gasoline unexpectedly caught fire while it was being discharged to an underground tank.

Sto. Domingo backed the truck out of the gas station's parking lot and toward
the extension of Rizal Avenue. But when he got to the street, he left the truck there
without using the parking brake. Consequently, the vehicle continued moving to the
opposite side of the street causing three houses on that side — one of them belonging
to Anita Tan — to be burned and destroyed.

John Sto. After being accused of committing arson via reckless imprudence,
Domingo and Igmidio Rico were cleared of all charges because it was determined that
the fire was "an unfortunate accident" rather than the result of their negligence.

Anita Tan filed a claim against STANVAC, Julito Sto, seeking actual and moral
damages. Domingo and Igmidio Rico are attempting to recoup the P12,000.00 that was
spent on the building and upkeep of her home.

Court of First Instance Decision: Decided in respondent Anita Tan's favor and
commanded plaintiff to cover costs. CA Ruling: affirmed the appealed judgment with
respect to STANVAC.

Issue/s:

1. Whether the CA erred in holding petitioner liable for damages since its
employees had been found by competent court to be not negligent.

Ruling:

1. The contention, in our opinion, cannot be sustained. It is admitted that

respondent Anita Tan sought to hold STANVAC liable under Articles 1902 and 1903
of the old Civil Code, the law in force at the time the fire in question occurred. Under
those articles, the liability of the employer is primary and direct, based upon his own
negligence (culpa aquiliana) and not on that of his employees or servants. (Cangco
v. Manila Railroad Co., 38 Phil., 768.) The present proceeding, therefore, is entirely
unrelated to the judgment in the criminal case where petitioner’s two employees
were acquitted because their criminal negligence was not proved and the cause of
the fire could not be determined. Parenthetically, after the trial court had ordered
the dismissal of respondent Anita Tan’s complaint, this Court on appeal reversed that
order as to STANVAC and authorized the proceedings against said company, which
was sued "not precisely because of the negligent acts of its two employees but
because of acts of its own which might have contributed to the fire that destroyed
the house of plaintiff (herein respondent Anita Tan)."
2. Taking great pains in minutely scrutinizing the allegations in the complaint,
counsel for petitioner avers that STANVAC was merely referred to therein as the
employer and was not at all charged with negligence. Be that as it may, it is
undisputed that no objection was made to the presentation of evidence as to the
negligent acts of STANVAC during the trial of the case. As a matter of fact, it even
tried to overcome that evidence by introducing evidence of its own tending to show
that it had employed the diligence of a good father of a family to prevent the
damage. The issue, therefore, regarding the negligence of petitioner STANVAC -
even assuming that the complaint does not really contain allegations of negligent
acts properly attributable to it - must be considered as if it had been raised in the
pleadings.

3. In view of the foregoing, the decision sought to be reviewed is hereby affirmed,

with costs against petitioner.
 Garcia vs. Florido
52 SCRA 420

Facts:
German C. Garcia, Chief of the Misamis Occidental Hospital, his wife, Luminosa
L.Garcia, and Ester Francisco hired and boarded a PU car owned and operated by
Marcelino Inesin, and driven by respondent, Ricardo Vayson,for a round-trip from
Oroquieta City to Zamboanga City for the purpose of attending a conference. While the
PU car was negotiating a slight curve on the national highway at 21km, it collided with
an oncoming passenger bus owned and operated by the Mactan Transit Co., Inc. and
driven by Pedro Tumala.
Garcia and others suffered a variety of bodily wounds that required medical
attention and hospitalization. Garcia et al. filed a lawsuit seeking damages from both
drivers and their owners for operating their vehicles carelessly, grossly negligently,
imprudently, in flagrant violation of traffic laws, and without taking into account the
safety of the people inside the PU car.
RTC dismissed petitioners' action for damages "without prejudice to refiling the
said civil action after conviction of the defendants in the criminal case filed by the Chief
of Police of Sindangan Zamboanga del Norte".
Issue/s:
1. Whether or not Garcia et al. can still file a civil action for quasi-delict despite
having a criminal action.
Ruling:
1. YES. The essential averments for a quasi-delictual action under Articles 2176-
2194 of the New Civil Code are present in the complaint (elements of Quasi-Delicts),
a) act or omission of the private respondents; b) presence of fault or negligence or
the lack of due care in the operation of the passenger bus No. 25 by Pedro Tumala
resulting in the collision of the bus with the passenger car; c) physical injuries and
other damages sustained by as a result of the collision; d) existence of direct causal
connection between the damage or prejudice and the fault or negligence of private
respondents; e) the absence of pre-existing contractual relations between the
parties.

2. The petitioners never intervened in the criminal action instituted by the Chief of
Police against respondent Pedro Tumala, much less has the said criminal action been
terminated either by conviction or acquittal of said accused. It is, therefore, evident
that by the institution of the present civil action for damages, petitioners have in
effect abandoned their right to press recovery for damages in the criminal case, and
have opted instead to recover them in the present civil case. Reservation to file the
civil action need not be made, for the reason that the law itself (Article 33 of the
Civil Code) already makes the reservation.
3. DOCTRINE: Art. 33. In cases of defamation, fraud, and physical injuries a civil
action for damages, entirely separate and distinct from the criminal action, may be
brought by the injured party. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of evidence.
 Mendoza vs. Arrieta
91 SCRA 113

Facts:

A three-way vehicular accident happened in Mac-Arthur Highway, Marilao,

Bulacan, involving a Mercedes Benz owned by Mendoza, a private jeep owned and
driven by Salazar, and a truck owned by Timbol but driven by Montoya.

Salazar filed a case against truck-driver Montoya, for Reckless Imprudence

Causing Damage to Property in the CFI OF Bulacan while Mendoza filed a criminal case
against Salazar, for causing damage to his Mercedes Benz amounting to 8,890 pesos.

At the trial, petitioner testified that Salazar overtook the truck, swerved to the
left and hit his car. He further testified that before impact, Salazar jumped from the jeep
not knowing that Salazar was hit by the truck of Montoya. Montoya affirmed this. The
statement was corroborated by Montoya.

On the other hand, Salazar tried to show that after overtaking the truck, he
flashed a signal showing his intention to turn left but was stopped at by a policeman
directing traffic at the intersection which he contends to be the time he was hit by the
truck driven by Montaya, causing his jeep to hit petitioner’s car.

RTC acquitted Salazar of any liability, civil and criminal, in view of its findings
that the collision between Salazar's jeep and petitioner's car was the result of the former
having been bumped from behind by the truck driven by Montoya. Neither was
petitioner awarded damages as Mendoza was not awarded damages since he was not a
complainant against truck-driver Montoya but only against jeep-owner-driver Salazar.
Mendoza filed civil cases against Salazar and Timbol (owner of truck driven by Montoya)
for damages sustained by his car as a result of the collision.

Respondent Judge dismissed complaint against Timbol on the grounds that it

was barred by a prior judgement in the criminal cases, wherein no reservation to file a
separate civil case was made and that it failed to state a cause of action. He also
dismissed complaint against Salazar because of non-compliance with the Rules of Court
with regard to reservation in filing a separate civil action. Hence this petition.

Issue/s:

1. Whether Timbol can still be sued for damages by Mendoza after termination of
the criminal cases.
2. Whether the Civil Case against jeepney driver Salazar be dismissed.

Ruling:

1. YES. In so far as Timbol is concerned, the civil case is not barred by the fact that
petitioner failed to reserve, in the criminal action, his right to file an independent civil
action based on quasi-delict.
2. Respondent judge committed an error when he dismissed the civil suit against
Timbol as the said case may proceed independently of the criminal proceedings
regardless of the result of the latter. “The same negligent act causing damages may
produce a civil liability arising from crime or create an action for quasi-delict or culpa
extra-contractual. The former is a violation of the criminal law, while the latter is a
distinct and independent negligence having its own foundation and individuality.”

3. As observed, Petitioner had opted to base his cause of action against jeep-owner
driver Salazar on culpa criminal and not on culpa aquiliana. The latter's civil liability
continued to be involved in the criminal action until its termination. Such being the
case, there was no need for the petitioner to have reserved his right to file a
separate civil action as his action for civil liability was deemed impliedly instituted in
Criminal Case No. SM 228.

4. Moreover, considering that the collision between the jeep and the car owned and
driven by Mendoza was the result of the hitting on the rear of the jeep by the truck
driven by Montoya, the Court pronounced that accused Salazar cannot be held able
for the damages sustained by Edgardo Mendoza's car. And even if petitioner's cause
of action as against Salazar were not ex-delictu, the end result would be the same, it
being clear from the judgment in the criminal case that Salazar's acquittal was not
based upon reasonable doubt, consequently, a civil action for damages can no
longer be instituted.

5. This is explicitly provided for in Article 29 of the Civil Code which provides that when
the accused in a criminal prosecution is acquitted on the ground that his guilt has
not been proved beyond reasonable doubt, a civil action for damages for the same
act or omission may be instituted. If in a criminal case the judgment of acquittal is
based upon reasonable doubt, the court shall so declare. In the absence of any
declaration to that effect, it may be inferred from the text of the decision whether or
not the acquittal is due to that ground.
 Abellana vs. Marave
57 SCRA 106

Facts:

Abellana while driving his cargo truck hitting a motorized pedicab resulting in
injuries to its passengers, private respondents, Lamason, Gurrea, Flores, Nemeno
resulting in the crime of physical injuries thru reckless imprudence.

RTC of Ozamis found Abellan guilty of the said crime in the criminal case,
damages were in favor awarded to the offended parties. Abellana appealed this
decision. Likewise, the offended parties filed a separate and independent civil action for
damages allegedly suffered by them for reckless driving of Abellana. Crispin Abellana, as
employer of Francisco, was included as defendants in the complaint.

Both Crispin and Francisco sought the dismissal of such action principally on the
ground that there was no reservation for the filing thereof in the City Court of Ozamis.
They argued it was not allowable at the stage where the criminal case was already on
appeal.

Issue/s:

1. Whether the defendants fail to reserve their right to institute the civil action
separately, when the criminal case for physical injuries thru reckless imprudence was
commenced.

Ruling:

1. Petition for Certiorari is Dismissed. Their motion to dismiss and MR was rejected
by the court, stating that, petitioners stand was anchored on the thought that, “the civil
action for recovery of civil liability from the offense charge is impliedly instituted with the
criminal action, unless the offended party reserves his right to institute it separately”.
The legal proposition – that a separate civil action can be legally filed and allowed by the
court only at the institution, or the right to file such separate civil action reserved or
waived, at such institution of the criminal action, and never on appeal to the next higher
court. This was the stand of the petitioners. Such interpretation, as noted, ignores the
de novo aspect of appealed cases from city courts. On appeal to this court, the
judgment of the city court was vacated and a trial de novo will have to be conducted.

2. Section 7 of Rule 123 of RC, “an appealed case shall be tried in all respects anew
in the CFI as if it had been originally instituted in that court”. Respondent judge was
duly mindful of such norm.

3. Art 33 of the Civil code states that, in cases of physical injuries, a civil action for
damages, entirely separate and distinct from the criminal action, may be brought by the
injured party. Such civil action shall proceed independently of the criminal prosecution
and shall require only preponderance of evidence.
 Elcano and Elcano vs. Hill and Hill
77 SCRA 98

Facts:

Reginald Hill was accused of killing Agapito Elcano. Hill was later exonerated on
the grounds that his actions were not illegal due of his "lack of murderous purpose
coupled with mistake.

Instead, Pedro Elcano, the victim Agapito's father, filed a claim for damages
against Reginald and his father Marvin Hill before Quezon City's Court of First Instance.

The Hills submitted a motion to dismiss, claiming, among other things, that the
case is preempted by a prior ruling that is now final and/or in res-adjudicata. The CFI
approved the motion. Thus, the current petition.

Issue/s:

1. Whether the action for recovery of damages by the Elcanos is barred by the acquittal of
Reginald Hill in the criminal case filed against him?

Ruling:

1. NO. The acquittal of Reginald Hill does not extinguish his liability for quasi-delict, and
the acquittal is not a bar for civil action for damages. Under Art 2177, acquittal from an
accusation of criminal negligence, shall not be a bar to a subsequent civil action, nor for
civil liability arising from criminal negligence, but for damages due to a quasi-delict or
culpa aquiliana.

2. Art 2177 means that a separate civil action lies against the offender in a criminal act,
whether or not he is criminally prosecuted and found guilty or acquitted, provided that
the offended party is not allowed, if he is actually charged also criminally, to recover
damages on both scores, and would be entitled in such eventuality only to the bigger
award of the two, assuming the awards made in the two cases vary. Culpa acquiliana
includes voluntary and negligent acts which may or may not be punished by law.

3. In the case of Barredo vs. Garcia, the Supreme Court held that negligent act can result
in civil liability under the Penal Code and the Civil Code. In that case the Court said that
an act of negligence may be a proper subject matter either of a criminal action with its
consequent civil liability arising from a crime or of an entirely separate and independent
civil action for fault or negligence under the Civil Code (1902).
 Taylor vs. Manila Electric Co.
16 Phil. 8

FACTS:

David Taylor was a 15-year-old lad who had worked as a cabin boy at sea,
learned basic mechanical engineering fundamentals from his dad's office (who was a
mechanical engineer), and worked as a mechanical draftsman for P2.50 per day. All
things considered; Taylor was mature beyond his years.

He and another child entered the Manila Electric power plant's grounds one day
in 1905, when they discovered 20–30 blasting caps that they stole with them. In an
effort to explode the said caps, Taylor experimented until he succeeded in opening the
caps and then he lighted it using a match which resulted in the explosion of the caps
causing severe injuries to his companion and in Taylor losing one eye.

Taylor sued Manila Electric alleging that because the company negligently left
the caps exposed to children, they are liable for damages.

Issue:

1. Whether or not Manila Electric is liable for damages.

Ruling

1. No. The SC reiterated the elements of quasi delict as follows: (1) Damages to the
plaintiff, (2) Negligence by act or omission of which defendant personally, or some
person for whose acts it must respond, was guilty, (3) The connection of cause and
effect between the negligence and the damage.

2. In the case at bar, it is true that Manila Electric has been negligent in disposing
off the caps which they used for the power plant, and that said caps caused
damages to Taylor. However, the causal connection between the company’s
negligence and the injuries sustained by Taylor is absent. It is in fact the direct acts
of Taylor which led to the explosion of the caps as he even, in various experiments
and in multiple attempts, tried to explode the caps. It is from said acts that led to
the explosion and hence the injuries.

3. Taylor at the time of the accident was a well-grown youth of 15, more mature
both mentally and physically than the average boy of his age; he had been to sea as
a cabin boy; was able to earn P2.50 a day as a mechanical draftsman thirty days
after the injury was incurred; and the record discloses throughout that he was
exceptionally well qualified to take care. The evidence of record leaves no room for
doubt that he knew well the explosive character of the cap with which he was
amusing himself.
4. The series of experiments made by him in his attempt to produce an explosion
admit of no other explanation. His attempt to discharge the cap by the use of
electricity, followed by his efforts to explode it with a stone or a hammer, and the
final success of his endeavors brought about by the applications of a match to the
contents of the cap, show clearly that he knew what he was about. Nor can there be
any reasonable doubt that he had reason to anticipate that the explosion might be
dangerous. “The just thing is that a man should suffer the damage which comes to
him through his own fault, and that he cannot demand reparation therefore from
another.”
 Padua vs. Robles
66 SCRA 485

Facts:

In the early morning of New Year's Day of 1969, a taxicab (bearing 1968 plate
no. TX-9395 and driven by Romeo N. Punzalan but operated by the Bay Taxi Cab owned
by Gregorio N. Robles struck ten-year old Normandy Padua on the national road in
barrio Barretto, Olongapo City. The impact hurled Normandy about forty meters away
from the point where the taxicab struck him, as a result of which he died.

Subsequently, Normandy's parents (Paulino and Lucena Bebin Padua), by

complaint filed with the Court of First Instance of Zambales (civil case 427-O), sought
damages from Punzalan and the Bay Taxi Cab; likewise, the city Fiscal of Olongapo, by
information filed with the same court (criminal case 1158-O), charged Punzalan with
homicide through reckless imprudence.

On October 27, 1969 the court a quo, in civil case 427-O, adjudged for the
Paduas as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant Romeo

Punzalan to pay the plaintiffs the sums of P12,000.00 as actual damages, P5,000.00 as
moral and exemplary damages, and P10,000.00 as attorney's fees; and dismissing the
complaint insofar as the Bay Taxicab Company is concerned. With costs against the
defendant Romeo Punzalan. (Emphasis supplied).

Unable to collect the amount of P27,000 awarded in their favor, the Paduas
instituted action in the same court against Gregorio N. Robles to enforce the latter's
subsidiary responsibility under the provisions of article 103 of the Revised Penal Code.
Robles filed a motion to dismiss based on (1) bar of the cause of action by a prior
judgment and (2) failure of the complaint to state a cause of action and was eventually
granted.

Issue:

1. Whether the appellants’ institution of claims against Robles is a valid cause of

action.

Ruling:
1. Civil liability coexists with criminal responsibility. In negligence cases the
offended party (or his heirs) has the option between an action for enforcement of
civil liability based on culpa criminal under article 100 of the Revised Penal Code and
an action for recovery of damages based on culpa aquiliana under article 2177 of the
Civil Code. The action for enforcement of civil liability based on culpa criminal section
1 of Rule 111 of the Rules of Court deems simultaneously instituted with the criminal
action, unless expressly waived or reserved for a separate application by the
 offended party. Article 2177 of the Civil Code, however, precludes recovery of
damages twice for the same negligent act or omission.
2. In the case at bar, the Court finds it immaterial that the Paduas chose, in the
first instance, an action for recovery of damages based on culpa aquiliana under
articles 2176, 2177, and 2180 of the Civil Code, which action proved ineffectual. The
Court also takes note of the absence of any inconsistency between the
aforementioned action priorly availed of by the Paduas and their subsequent
application for enforcement of civil liability arising from the offense committed by
Punzalan and consequently, for exaction of Robles' subsidiary responsibility.
Allowance of the latter application involves no violation of the proscription against
double recovery of damages for the same negligent act or omission. For, as
hereinbefore stated, the corresponding officer of the court a quo returned
unsatisfied the writ of execution issued against Punzalan to satisfy the amount of
indemnity awarded to the Paduas in civil case 427-O.
 Cruzado vs. Bustos and Escaler
34 Phil. 17

Facts:

The plaintiff's attorney, Santiago Cruzado, filed a written complaint on October 8,

1910, which was later amended on September 25, 1913. In the complaint, he claimed
that the plaintiff was the owner of a rural property with a 65-balita area in the barrio of
Dolores, formerly San Isidro, of the municipality of Bacoor, Pampanga; that Estafania
Bustos, who was the administrator of the plaintiff's estate, and had refused to deliver
the possession thereof to plaintiff and to recognize his ownership of the same,
notwithstanding the repeated demands made upon them; that by such detention, the
plaintiff had suffered losses and damages to the amount of P3,500. Therefore, he
requested that the court rule that the plaintiff is the rightful owner of the disputed
parcel of land and that defendants give it back to the plaintiff along with P3,500 in
expenses and compensation for losses and damages.

The demurrer filed by the defendant Bustos having been overruled, in her
answer she made a general denial of each and all of the allegations of the complaint,
and of each and all of the paragraphs thereof, and, as a special defense, alleged that
the title to the said land, produced by the plaintiff, was not a lawful one, for the reason
that only a simulated sale of the land was made by the between herself and the
deceased Agapito Geronimo Cruzado, plaintiff's father, and that for more than thirty
years preceding the present time she had been the sole, exclusive, and lawful owner of
the said parcel of land in question; that she had been holding it quietly, peaceably,
publicly and in good faith.

The other defendant, Manuel Escaler, in an amended answer to the

aforementioned complaint, denied each and all of the allegations therein contained and
each and all of its clauses, and, as a special defense, alleged that plaintiff's title to the
said land was illegal as only a simulated sale was made by and between Agapito
Geronimo Cruzado, plaintiff's predecessor in interest, and Bernardino Dizon; that
defendants had been in possession of the said parcel of land for more than thirty years;
that the defendant Escaler in good faith purchased the land in question from Estefania
Bustos, widow of Dizon, without ever having had any notice of any defect in the
vendor's title; that plaintiff had knowledge of the contract of sale of the land in question
yet did nothing to oppose its purchase by the defendant Escaler, wherefore the latter, in
acquiring the property, did so under the belief that the plaintiff Santiago Cruzado had no
right or interest therein. He therefore prayed that the complaint be dismissed, with the
costs against plaintiff, and that an injunction issue to restrain the latter from interfering
with the defendant Escaler in the enjoyment of his property and rights and from
performing any act prejudicial to his interests.

Counsel for defendants, in a cross-complaint set forth: that as shown by the

evidence, the defendant Escaler acquired in good faith from Estefania Bustos the land in
question at a time when there was no record whatever in the property registry to show
that this land belonged to a third person or any other than the vendor;
 In response to the aforementioned cross-complaint, the attorney for the latter
specifically denied each and every allegation made therein. Additionally, in a special
defense, the attorney for the latter reproduced the plaintiff's amended complaint in its
entirety and claimed that the facts set forth therein did not give rise to a cause of
action. As a result, he pleaded that the plaintiff be released from the cross-complaint
and that judgment be entered against the defendants in line with his complaint's prayer.

Issue/s:

1. Has the right of ownership prescribed which Manuel Escaler is and has been
enjoying in the land which Estefania Bustos had sold to him and which includes the
parcel of 65 balitas claimed by plaintiff, Santiago Cruzado, or has the right of any
real or personal action he might exercise by reason of the sale to Cruzado prescribed
on account of the lapse of the respective periods fixed by law, between the 7th of
September, 1875, the date of said sale, and the 8th of October, 1910, that of the
filing of the complaint?

Ruling:

1. The plaintiff, Santiago Cruzado, a son of the vendee, claiming that the said land
was being detained by the vendor, or by the administrator of the latter's estate or
her death after the commencement of these proceedings, and by the other
defendant Manuel Escaler, prayed the court to declare him to be the owner thereof,
to order the defendants to return it to him and to pay him for losses and damages,
and the costs.
The action brought by the plaintiff is evidently one for recovery of possession,
founded on the right transmitted to him by his father at his death, — a right arising
from the said simulated deed of sale of the land in question. This action is of course
improper, not only because the sale was simulated, but also because it was not
consummated. The price of the land was not paid nor did the vendee take
possession of the property from the 7th of September, 1875, when the said sale was
feigned, until the time of his death; nor did any of his successors, nor the plaintiff
himself until the date of his claim, enter into possession of the land.
It is indeed true that it is not necessary that the thing sold or its price should
have been delivered in order that the contract of purchase and sale be deemed
perfect on account of its being consensual, and from it reciprocal obligations arise
mutually to compel the parties to effect its fulfillment; but there is no transmission of
ownership until the thing, as in the case at bar, the land, has been delivered, and
the moment such delivery is made the contract of purchase and sale is regarded as
consummated. Article 1450 of the Civil Code, relied upon in this connection by the
appellant, refers solely to the perfection of the contract and not to its
consummation.

2. The purchaser is also a creditor with respect to the products of the thing sold,
and article 1095 of the Civil Code prescribes as follows; A creditor has a right to the
fruits of a thing from the time the obligation to deliver it arises. However, he shall
not acquire a property right thereto until it has been delivered to him.
The provisions of this article are in agreement with that of the second paragraph
of article 609 of the same Code, which is of the following tenor:
3. Ownership is acquired by retention. Ownership and other property rights are
required and transmitted by law, by gift, by testate or intestate succession, and, in
consequence of certain contracts, by tradition.

4. They can also be acquired by prescription. The provisions of the said article 1095 are
also in accord with those of article 1462 which reads: A thing sold shall be
considered as delivered, when it is placed in the hands and possession of the
vendee.

5. When the sale should be made by means of a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if in said instrument the contrary does not appear or may be clearly
inferred.

6. The record discloses that Cruzado during his lifetime was, before he became a
procurador, an official escribiente or clerk charged with the duty of coursing records
and proceedings; that his salary was hardly sufficient to maintain him and his family;
that on account of the insufficiency of his monthly stipend, he was frequently obliged
to borrow money from his friends, notwithstanding that he with his family lodged in
the house of Bernardino Dizon, the husband of the vendor Bustos, with whom
Cruzado maintained intimate relations of friendship, and on this account the said
couple were content to live in a country house they owned on one of their rice fields.
Such was the testimony of several witnesses who lived in that municipality, and who
knew and had considerable dealings with the plaintiff's father for many years. It was
the opinion of these witnesses that the deceased Agapito G. Cruzado was a poor
man, for the reason that his monthly salary scarcely provided for the needs of
himself and his family, and they therefore believed that he could not have furnished
the sum of P2,200 to purchase the land in question,

7. Aside from the fact that the spouses Estafania Bustos and Bernardino Dizon had
no need to sell the said 65 balitas of land, or of fencing or separating this parcel
from the large tract of land that belonged to them and of which it formed a part, for
the reason that they were rich and at that time were not in need of money to
cultivate their extensive landholdings, it is also to be noted that the portion of land
sold was worth very much more than the P2,200 which, in the said instrument,
purported to be its price.
The clerk and notary who certified that instrument did not attest therein that in
his presence the vendee Cruzado paid over the sum of P2,200, the price of the land
sold, and as the vendor denied having received this sum, the obligation devolved
upon plaintiff to prove that his deceased father had paid the price stated in that
instrument. By this not having done so, his omission constitutes additional proof that
the sale of the land, the recovery of possession of which plaintiff now seeks, was
really simulated.
The courts are allowed full latitude to accept the presumption that the purchase
price has not been paid when the notary before whom the instrument was executed
does not attest the delivery of the money, and when, such delivery being denied by
one of the contracting parties, the other does not adduce proof of its payment,
especially when such presumption is corroborated by other circumstantial evidence
which, all together, undoubtedly prove that the sale was feigned and simulated for
certain purposes sought to be attained by the parties, though, as in the case at bar,
the simulation was not effected in fraud of creditors.
On the sale of the land to the defendant Escaler, neither he nor the plaintiff had
had it entered in the property registry, but the said new owner, Escaler, took
possession of the land on the date of its acquisition, September 10,1891, and has
retained possession thereof up to the present time. So that when plaintiff registered
the land, he was not in possession thereof and no longer had any right whatever
therein, because it already belonged to the defendant Escaler, its lawful owner.
For all the foregoing reasons, whereby the errors assigned to the judgment
appealed from have been duly refuted, the said judgment should be, as it is hereby,
affirmed, with the costs against the appellant. So, ordered.
 Gutierrez Repide vs. Afzelius
39 Phil. 190

Facts:

Repide owns a certain parcel of land consisting of 2,695.24 square meters and
Afzelius made a proposition for the purchase of the property. The negotiation terms are
a payment of 2,000 at the signing of the deed and a monthly installment of 150 pesos
until the accumulation of a total 8,000 pesos. Repide made a survey to prepare the land
and incur 83.93 pesos. The defendants failed to sign the deed as they were notified to
appear and instead wrote a letter containing that they absolutely cannot comply with
the purchase, for their business had failed which had also loss the gain from
investments and savings. They asked to pardon them by any troubles they had caused
to the plaintiff and claim that it was impossible to effect the purchase for the 2,000
pesos were not paid.

The plaintiff is still willing to execute the deed and asked judgment against defendants
demanding them to sign the deed and pay the price as stipulated. The defendants deny
the claim and alleged that the plaintiff did not sustain any damages, therefore pray the
dismissal of the case. The judgement was in favor of the defendants, hence the
presentation of appeal of the plaintiff.

Issue/s:

1. Whether or not the plaintiff has the right to condemn the defendants to sign the
deed with the same terms and the collection of the costs as said in the stipulation.

Ruling:

1. Yes. The court ordered to condemn the defendants of signing the deed and
mortgage to the land in question and to pay as stipulated. The appellant shall
recover the costs of both instances. The excuse of the defendants which is the
impossibility of compliance did not discharge them of the obligation of the contract.
Articles 1451, 1096, 1098 and 1124 called attention as the bases of this

2. The rule of equity jurisprudence in such a case is that mere pecuniary inability to
fulfill an engagement does not discharge the obligation of the contract, nor does it
constitute any defense to a decree for specific performance. The stability of
commercial transactions requires that the right of the seller be protected just as
effectively as the rights of the creditor.
 Bishop of Jaro vs. De la Peña
26 Phil. 144

Facts:
In 1898 Fr. De la Peña assigned as trustee of the sum of P6,641, collected by
him for the charitable purposes he deposited in his personal account P19,000 in the
Hongkong and Shanghai Bank at Iloilo. During the war of the revolution, Father De la
Peña was arrested by the military authorities as a political prisoner. The arrest of Father
De la Peña and the confiscation of the funds in the bank were the result of the claim of
the military authorities that he was an insurgent and that the funds deposited had been
collected by him is for revolutionary purposes. The money was taken from the bank by
the military authorities by virtue of such order, was confiscated and turned over to the
Government.
Issue:
1. Whether or not Father De la Peña is liable for the loss of the funds?
Ruling:
1. No, he is not liable because there is no negligent act on the part of Fr. De la
Peña. It so happened that during that time the money was taken from him by the
U.S. military forces which is an unforeseen event.

2. The Civil Code states that “a person obliged to give something is also bound to
preserve it with the diligence pertaining to a good father of a family”, it also
provides, following the principle of the Roman law that “no one shall be liable for
events which could not be foreseen, or which having been foreseen were inevitable,
with the exception of the cases expressly mentioned in the law or those in which the
obligation so declares.”
 Pormellosa vs. Land Tenure Administration
1 SCRA 375

Facts:
The lot in controversy is a part of the Santa Clara Estate on which many families
have settled through the consent of its owner, each paying a rental. In May 1941, the
said Estate was acquired by the Government & was entrusted to an office known as the
Rural Progress Admin., which was later abolished & its functions was transferred to the
Bureau of Lands. Recently, such duties were given to the Land Tenure Administration.
The plaintiff acquired by purchase the right of occupation of the lot in question
from Vicente San Jose, predecessor-in-interest. After the purchase of the Santa Clara
Estate by the Government, the plaintiffs were allowed to make payments on account of
the purchase price of the lot, as fenced, included two hundred (200) sq.m. Thereafter,
the plaintiffs found out that the lot had been subdivided into two (2) smaller lots, No. 44
and 78. Lot No. 44 had been sold to Hermino Guzman. The plaintiffs then filed a
complaint to compel the Director of Lands to execute a Deed of Sale in their favor &
declare null and void the Deed of Sale of Lot No. 44, executed in favor of respondent
Hemino. The trial court rendered judgment in favor of plaintiff, but was reversed by the
Court of Appeals, dismissing the petitioner’s complaint. Hence, this petition.
Issue:
1. Whether or not the plaintiffs are entitled to purchase from the Government the
lot, allegedly includes 200 sq.m.
Ruling:
1. The judgement under review was affirmed.

2. The lot on which San Jose’s house stood had not been specified, nor had the
boundaries thereof been mentioned. Significantly, the plaintiff cannot show a
contract whereby the Rural Progress Admin., has sold or promised to sell them a lot
of 200 sq.m. A party claiming a right granted or created by law must prove his claim
by competent evidence. He must rely on the strength of his evidence and not on the
weakness of that of his opponent.

3. Moreover, the Deed of Sale allegedly executed by Vicente San Jose in favor of
Pornellosa is a mere private document and does not conclusively establish their right
to the parcel of land. Acts and contracts which have for their subject the creation,
transmission, modification or extinguishment of real rights over immovable property
must appear in a public document.
 Philippine Long-Distance Co. vs. Jeturian
97 Phil. 78

Facts:

In 1923, PLDT adopted a Plan for Employees Pension. The condition of pension
is that they should reach the age of 50 and serve for 20 years. In 1945, the Board of
Directors adopted a resolution discontinuing the pension plan but some retirees did not
get the pension plan because they did not satisfy the conditions. PLDT then argued that
employees cannot compel them to continue the program when it was based on
expectancy. Hence, the petition of the respondents.

Issue/s:

1. Whether or not the pre-war employees are entitled to pension.

Ruling:

1. Yes. But with the exception of those who died or left before the outbreak of the
war. The pension plan was not a gratuity but an inducement for employees to
continue indefinitely in service. The plan ripened into a binding contract upon its
implied acceptance of the employees.The assailed award grants an indemnity to the
employees for PLDT's repudiation of a contract upon which the employees had a
right to rely.

2. Similarly, excuse that its war losses extinguished the Company's obligation to
proceed with the pension plan is not meritorious. Its obligation was a generic one
(to pay money) and such obligations are not extinguished by loss or inability to raise
funds (new Civil Code, Art, 1263; Reyes vs. Caltex (Philippines) Inc., 47 Off. Gaz. pp.
1193, 1200-1201).

3. PLDT argues that it can only be held liable under the conditions expressly set in
the pension plan. But the Court held that the Company that violated the contract
with its employees, by discontinuing the plan without their consent, is not in the
position to insist upon the terms of the very contract they have breached.
 Woodhouse vs. Halili
93 Phil. 526

Facts:

On November 29, 1947, plaintiff Woodhouse entered into a written agreement

with defendant Halili stating among others that: 1) that they shall organize a partnership
for the bottling and distribution of Missionsoft drinks, plaintiff to act as industrial partner
or manager, and the defendant as a capitalist, furnishing the capital necessary
therefore; 2) that plaintiff was to secure the Mission Soft Drinks franchise for and in
behalf of the proposed partnership and 3) that the plaintiff was to receive 30 per cent of
the net profits of the business.

Prior to entering into this agreement, plaintiff had informed the Mission Dry
Corporation of Los Angeles, California, that he had interested a prominent financier
(defendant herein) in the business, who was willing to invest half a milliondollars in the
bottling and distribution of the said beverages, and requested, in order that he may
close the deal with him, that the right to bottle and distribute be granted him for a
limited time under the condition that it will finally be transferred to the corporation.
Pursuant to this request, plaintiff was given “a thirty days’ option on exclusive bottling
and distribution rights for the Philippines”. The contract was finally signed by plaintiff on
December 3, 1947.

When the bottling plant was already in operation, plaintiff demanded of

defendant that the partnership papers be executed. Defendant Halili gave excuses and
would not execute said agreement, thus the complaint by the plaintiff.

Plaintiff prays for the : 1.execution of the contract of partnership; 2) accounting

of profits and 3)share thereof of 30 percent with 4) damages in the amount of
P200,000. The Defendant on the other hand claims that: 1) the defendant’s consent to
the agreement, was secured by the representation of plaintiff that he was the owner, or
was about to become owner of an exclusive bottling franchise, which representation was
false, and that plaintiff did not secure the franchise but was given to defendant himself
2) that defendant did not fail to carry out his undertakings, but that it was plaintiff who
failed and 3)that plaintiff agreed to contribute to the exclusive franchise to the
partnership, but plaintiff failed to do so with a 4) counterclaim for P200,00 as damages.

The CFI ruling: 1) accounting of profits and to pay plaintiff 15 % of the profits
and that the 2) execution of contract cannot be enforced upon parties. Lastly, the 3)
fraud wasn’t proved

Issues:

1. Whether the plaintiff falsely represented that he had an exclusive franchise to bottle
Mission beverages
2. Whether false representation, if it existed, annuls the agreement to form the
partnership
Ruling:

1. Yes. Plaintiff did make false representations and this can be seen through his
letters to Mission Dry Corporation asking for the latter to grant him temporary
franchise so that he could settle the agreement with defendant. The trial court
reasoned, and the plaintiff on this appeal argues, that plaintiff only undertook in the
agreement “to secure the Mission Dry franchise for and in behalf of the proposed
partnership.” The existence of this provision in the final agreement does not militate
against plaintiff having represented that he had the exclusive franchise; it rather
strengthens belief that he did actually make the representation. The defendant
believed, or was made to believe, that plaintiff was the grantee of an exclusive
franchise. Thus, it is that it was also agreed upon that the franchise was to be
transferred to the name of the partnership, and that, upon its dissolution or
termination, the same shall be reassigned to the plaintiff.

Again, the immediate reaction of defendant, when in California he learned that

plaintiff did not have the exclusive franchise, was to reduce, as he himself testified,
plaintiff’s participation in the net profits to one half of that agreed upon. He could
not have had such a feeling had not plaintiff actually made him believe that
he(plaintiff) was the exclusive grantee of the franchise.

2. No. In consequence, article 1270 of the Spanish Civil Code distinguishes two
kinds of (civil) fraud, the causal fraud, which may be ground for the annulment of a
contract, and the incidental deceit, which only renders the party who employs it
liable for damages only. The Supreme Court has held that in order that fraud may
vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo
incidente) inducement to the making of the contract.

3. The record abounds with circumstances indicative of the fact that the principal
consideration, the main cause that induced defendant to enter into the partnership
agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to
bottle and distribute for the defendant or for the partnership. The original draft
prepared by defendant’s counsel was to the effect that plaintiff obligated himself to
secure a franchise for the defendant. But if plaintiff was guilty of a false
representation, this was not the causal consideration, or the principal inducement,
that led plaintiff to enter into the partnership agreement.

On the other hand, this supposed ownership of an exclusive franchise was

actually the consideration or price plaintiff gave in exchange for the share of 30 per
cent granted him in the net profits of the partnership business. Defendant agreed to
give plaintiff 30 per cent share in the net profits because he was transferring his
exclusive franchise to the partnership. Having arrived at the conclusion that the
contract cannot be declared null and void, may the agreement be carried out or
executed? The SC finds no merit in the claim of plaintiff that the partnership was
already a fait accompli from the time of the operation of the plant, as it is evident
from the very language of the agreement that the parties intended that the
execution of the agreement to form a partnership was to be carried out at a later
date.
The defendant may not be compelled against his will to carry out the agreement
nor execute the partnership papers. The law recognizes the individual’s freedom or
liberty to do an act he has promised to do, or not to do it, as he pleases.
 TANGUILIG VS COURT OF APPEALS
266 SCRA 787

Facts:
On April 1987, Vicente Herce Jr. rendered the services of Jacinto Tanguilig to
construct a windmill system for him for P60,000 with a one-year guaranty from the date
of completion. Pursuant to the agreement Herce paid a down payment of P30,000 and
an installment payment of P15,000 leaving a balance of P15,000.00. On 14 March 1988,
due to the refusal and failure of Herce to pay the balance, Tanguilig filed a complaint to
collect the amount.
Herce denied the claim saying that he had already paid this amount to the San
Pedro General Merchandising Inc. (SPGMI) which constructed the deep well to which the
windmill system was to be connected. According to Herce, since the deep well formed
part of the system the payment he tendered to SPGMI should be credited to his account
by Tanguilig. Moreover, assuming that he owed a balance, this should be offset by the
defects in the windmill system which caused the structure to collapse after a strong
wind hit their place. Tanguilig denied that the construction of a deep well was included
in the agreement to build the windmill system. The trial court held that the construction
of the deep well was not part of the windmill project as evidenced clearly by the letter
proposals submitted by Tanguilig to Herce.
It noted that if the intention of the parties is to include the construction of the
deep well in the project, the same should be stated in the proposals. With respect to the
repair of the windmill, the trial court found that "there is no clear and convincing proof
that the windmill system fell down due to the defect of the construction.” The Court of
Appeals reversed the trial court. It ruled that the construction of the deep well was
included in the agreement of the parties because the term "deep well" was mentioned in
both proposals

Issues:
1. Whether or not the installation of the deep well was part of the contract and

2. Whether or not the windmill collapsed solely due to a fortuitous event?

Ruling:

1. Nowhere in either proposal is the installation of a deep well mentioned, even

remotely. Court has consistently held that in order for a party to claim exemption
from liability by reason of fortuitous event under Art. 1174 of the Civil Code, the
event should be the sole and proximate cause of the loss or destruction of the object
of the contract. Tanguilig failed to show that the collapse of the windmill was due
solely to a fortuitous event. Tanguilig's argument that private Herce was already in
default in the payment of his outstanding balance of P15,000.00 and hence should
bear his own loss, is untenable. In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not ready to comply in a proper manner with
what is incumbent upon him. Herce is directed to pay Tanguilig the balance of
P15,000 with interest at the legal rate from the date of the filing of the complaint. In
return, Tanguilig is ordered to "reconstruct subject defective windmill system, in
accordance with the one-year guaranty and to complete the same within three (3)
months from the finality of this decision.
Facts:

June 27, 1986 - Aerospace Chemical Industries (Aerospace) purchased 500

metric tons of sulfuric acid from Philippine Phosphate Fertilizer (Philphos) to be paid at
least 5 days prior to shipment date. Aerospace would also provide the means of
transport to pick-up the purchases from the loadports.

August 6, 1986 – Private respondent advised Aerospace to withdraw the sulfuric

acid from the Basay port because Philphos has been incurring incremental expense for
each day of delay of shipment.

October 3 - Petitioner paid P553,280 for 500 MT of sulfuric acid and then
chartered M/T Sultan Kayumanggi on November 19 to pick it up but it only withdrew
70.009 MT as the vessel was not in mint condition.

December 12 – Philphos asked Aerospace to retrieve remaining sulfuric acid so

the tanks could be emptied by December 15 and will charge them if they fail to comply.
December 18, M/T Sultan Kayumanggi docked at Sangi, Cebu but withdrew only 157.51
mt. Kayumanggi eventually sank with a total of 227.51 mt sulfuric acid on board.

Aerospace chartered another vessel, M/T Don Victor, with a capacity of

approximately 500 MT. Petitioner then asked Philphos for additional orders of sulfuric
acid to replace its sunken purchases. Respondent instructed Aerospace to lift the
remaining 30 mt from the Basay port or pay maintenance and storage expenses starting
August 1, 1986. In other words, aerospace failed to pick-up all its purchases. This
Constituted to breach of contract. Picking up purchases was part of the Contract.

On July 1988, petitioner insisted on picking up their purchase + additional order

as they have already paid the chartered vessel for the full 500 mt capacity. Otherwise,
they would commence legal action. Finally, on 1989, petitioner filed a complaint for
specific performance and/or damages. Private respondent filed a counterclaim stating
that it was petitioner who was remiss in the performance of its obligation in arranging
the shipment requirements and as a consequence, should pay the damages.

RTC ruled in petitioner’s favor. The Court of Appeals reversed the lower court’s
decision.

Issue:

1. Whether there was a breach of contract on the part of the petitioner.

Ruling:
1. Where there has been a breach of contract by the buyer, the seller has a right of
action for damages. A cause of action of the seller for damages may arise where the
buyer refuses to remove the goods, such that buyer has to remove them.

2. Article 1170 of the Civil Code provides: "Those who in the performance of their
obligations are guilty of fraud, negligence, or delay and those who in any manner
contravene the tenor thereof, are liable for damages."
3. Further, Art. 1169 states: Those obliged to deliver or to do something incur in
delay from the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation. This article provides that the following requisites must
be present: (1) that the obligation be demandable and already liquidated; (2) that
the debtor delays performance; and (3) that the creditor requires the performance
judicially or extrajudicially.

4. Private respondent required petitioner to ship out or lift the sulfuric acid as
agreed, otherwise petitioner would be charged for the consequential damages owing
to any delay. As stated in private respondent’s letter to petitioner, dated December
12, 1986. The delay started on December 15, 1986 until August 31, 1987, during the
period of the extended lease solely for petitioner’s sulfuric acid. Certainly, the
petitioner was guilty of negligence and delay in the performance of its obligation to
lift the sulfuric acid on August 15, 1986 and had contravened the tenor of its letter-
contract with the defendant."

5. As pointed out earlier, petitioner is guilty of delay, after private respondent made
the necessary extrajudicial demand by requiring petitioner to lift the cargo at its
designated loadports. When petitioner failed to comply with its obligations under the
contract it became liable for its shortcomings. Petitioner is indubitably liable for
proven damages.
 Compania General de Tabacos vs. Araza
7 Phil. 55

Facts:

Plaintiff filed this case for the foreclosure of mortgage amounting to P8,000 upon
certain land in the Province of Leyte.

On June 11, 1901, plaintiff and defendant executed a contract by terms that the
defendant promised to pay the plaintiff 8,000 pesos as follows: 500 pesos on the 30th of
June, 1901, and the remainder at the rate of 100 pesos a month, payable every 30th of
the month until the entire 8,000 pesos was paid. The defendant paid 400 pesos and no
more.

VICENTE ARAZA, the defendant, alleged that the document (basis of the
plaintiff's claim) was executed through error on his part and through fraud on the part
of the plaintiff.

The lower court ruled in favor of the plaintiff and gave no credit for the payment
of 400 pesos. Defendant moved for reconsideration; DENIED.

Issues:

1. Whether the creditor can recover the said installment and the entire
indebtedness.

2. Whether the P400 admitted by the plaintiff to have been received is allowed
interest upon the entire debt

Ruling:

1. NO, there was no provision in the contract by which, upon failure to pay one
installment of the debt, the whole debt should thereupon become at once payable.
We are of the opinion that the obligation can be enforced in this action for only the
amount due and payable on the 12th day of June, 1903.

2. NO, the contract does not provide for the payment of any interest. There is no
provision in it declaring expressly that the failure to pay when due should put the
debtor in default. There was therefore no default which would make him liable for
interest until a demand was made. There was no evidence of any demand prior to
the presentation of the complaint. The plaintiff is therefore entitled to interest only
from the commencement of the action.
 MARIANO VELOSO, ET AL. VS. ANICETA FONTANOSA
13 Phil. 79

Facts:
Plaintiffs Mariano, Damiana, and Melchor Veloso are the sole lawful heirs of
Gavino Veloso and Buenaventura Veloso, their father and brother, respectively;
Defendants are Aniceta Fontanosa, as widow of Roberto Ancajas, and Florentina,
Leona, Maria, Juan, Romualdo, Vicenta, and Felix, all of the surname of Ancajas, the
lawful children of the deceased Roberto, and Estefania Fontanosa, mother and legal
guardian of the minor Jose Ancajas.
That at the death of Gavino Veloso, Roberto Ancajas owed him the sum of 5,065
pesos which he had borrowed prior to the year 1881; in the apportionment of the
estate, this debt of 5,065 pesos went to Buenaventura Veloso as his portion; that in the
year 1882, Roberto Ancajas, after having acknowledged the transfer of his indebtedness
by inheritance to Buenaventura Veloso, continued to receive sums of money from the
latter of the same conditions, that is, as loans, and bound himself to make annual
payments in sugar.
On the 11th of October, 1883, the debt of Roberto Ancajas amounted to
10,449.18 pesos which rose to 14,439.40 pesos, which sum, however, was reduced to
12,365.20 pesos by the payment of 2,074.20 pesos on account. Up to the year 1893 the
Defendants made payments amounting to 642.27 pesos which reduced the amount
owing to 11,722.43 pesos.
On the death of Buenaventura Veloso, the Defendants, as his sole and lawful
heirs, inherited, and that same year divided between them all his property with the
exception of the above-mentioned credit, which is at present held pro indiviso between
them, and they, as the lawful heirs of Buenaventura Veloso, the creditor, have
repeatedly called upon the Defendants to pay the said credit, heirs deny being liable for
debt since only one heir continued to pay after death of decedent, thus giving rise to the
filing of the complaint.
RTC: It being proven the Buenaventura Veloso, the Plaintiffs’ principal, had
brought suit against the Defendants in the year 1896 for the payment of said debt, it
must be concluded that the prescription of the action for recovery has been legally
interrupted, in conformity with the provisions of article 1973 of the Civil Code; that the
debt of P11,722. 43 is a credit which originated from a mercantile contract, and as the
interest due the Plaintiffs cannot be determined, they are entitled to recover the legal
interest on said amount from the Defendants at the rate of 6 percent per annum from
the month of September, 1893, until the full payment thereof.

Issue:
1. Whether the RTC correctly ruled that the legal interest be computed from the
time the defendants ceased to make payments.

Ruling:
1. It is proper to sentence the Defendants to pay the legal interest of 6 per cent per
annum by reason of the default incurred by the heirs of Ancajas (art. 1108, Civil
Code), but such default cannot date back to September 1893, the time of the last
payment was made by the defendants. Article 1100 of the Civil Code reads: “Persons
 obliged . . . are in default from the moment when the creditor demands the
fulfillment of their obligation, judicially or extra-judicially,” And the judicial demand
for the fulfillment of said obligation was only made in 1896; hence, as the date of
the complaint interposed in that year has not been fixed, the net amount claimed
therein should only commence to bear legal interest from the latter part of 1896, or
rather from the beginning of 1897.

2. In a decision of December 3, 1902, the supreme court of Spain held: “That it is a

principle of law, acknowledge and sanctioned by article 1100, in relation to article
1108 of the Civil Code, that interest upon default only becomes due from the time of
the judicial or extrajudicial notice by the creditor to the debtor, unless otherwise
expressly provided by law, or by virtue of a contract, or on account of special
circumstances depending upon the nature of the obligation.” Thus, the legal interest
at the rate of 6 per cent per annum should be reckoned from the time the judicial
demand for the fulfillment of such obligation was made on 1896 and not on 1893,
the time the defendants ceased to make payment.
 AYLA v. SILANG TRAFFIC CO.
73 Phil 557, May 1, 1942

Facts:
This is a petition and cross-petition for certiorari filed by both parties to the
Supreme Court
The case is about recovery by petitioners of a certain sum of money which they
had paid severally to respondent corporations on account of shares of stock they
individually agreed to take and pay for a certain specified terms and conditions.
Respondent, Silang Traffic Co., Inc., entered into an agreement for the sale on
installment of its shares of stock with various individuals, including the petitioners Sofrio
Bayla. After the latter had paid several installments for the purchase price of said shares
of stock, the petitioners defaulted in the payment of the subsequent installments.
Thus, the board of directors passed a resolution authorizing for the refund of the
amounts paid and the reversion of the shares of stock to the corporation. Despite the
said board resolution, the amounts paid by petitioners were not returned to them since
the board resolution was revoked and cancelled by a subsequent resolution.
Thus, petitioners instituted an action in the Court of First Instance of Cavite to
recover the sums of money paid. The respondent contends that the resolution does not
apply to petitioners as at the time the resolution was passed, the shares had already
automatically been reverted back to the corporation and that the resolution was no
longer effective as it was cancelled by a subsequent resolution passed by the Board.
The Court of First Instance declared that the shares of stock had already been
forfeited and absolved the respondent from the complaint.

Issues:
1. Whether the failure to pay any installment of the purchase price of the shares of
stock would result in its automatic forfeiture in favor of the corporation.

Ruling:
1. No. The failure of the purchaser to pay any of the quarterly installments on the
purchase price did not automatically give rise to the forfeiture of the amount already
paid.

2. Under article 1100 of the Civil Code persons obliged to deliver or do something
are not in default until the moment the creditor demands of them, judicially or extra-
judicially the fulfillment of their obligation, unless (1) the obligation or the law
expressly provides that demand shall not be necessary in order that default may
arise, or (2) by reason of the nature and circumstances of the obligation it shall
 appear that the designation of the time at which the thing was to be delivered or the
service rendered was the principal inducement to the creation of the obligation.

3. The contract here involved provides that if the purchaser fails to pay any of the
installments when due, the shares of stock which are the object of the sale are to
revert to the seller and the payments already made are to be forfeited in favor of
said seller. The seller, through its board of directors, annulled a previous resolution
rescinding the sale and declared the forfeiture of the payments already made and
the reversion of the shares of stock to the corporation. Such forfeiture was
ineffective. The contract did not expressly provide that the failure of the purchaser
to pay any installment would give rise to forfeiture and cancellation without the
necessity of any demand from the seller.

4. Hence, such failure to pay any of the quarterly installments did not automatically
give rise to forfeiture and cancellation of shares in favor of the corporation.
 Soler vs. Chesley
43 Phil. 529

Facts
Anderson agrees to deliver to Soler coconut oil machinery (See exhibit A for a
more detailed description of the machineries). In case Soler is unable to comply with
this agreement, Anderson may terminate the contract and payments already made by
Soler will be forfeited in favor of Anderson
Ownership of machinery shall remain with Anderson until full payment is made
by Soler. Chelsey will pay Soler the difference in the amount stated in invoices of the
machinery and the sum of one hundred thousand pesos (since in the 2nd COS, the
agreed price is only 100k. So, if the amount that Anderson would bill is higher than
100k, then Chesley will pay for the excess as well)
When Chesley received the goods, he paid under protest arguing that goods
were not delivered within the period stipulated in the contract; Chesley sought
rescission.
On the date of the execution of the contract between Soler and Chesley (Nov.
16, 1918), Soler asserted that the goods were already in Manila or on its way to Manila.
But in truth, they were only shipped days after the execution of the contract
Soler now commences this action, praying that he be paid the difference
between the invoice price and 100k, Soler prays that Chesley be sentenced to pay him
Php30,546.03 representing the invoice price and Php100,000
Chesley files counter claim, asking for rescission of the contract on the ground
that soler falsely asserted that the goods were already in or otw to manila when they’re
not
He consented to the contract only because Soler asserted/represented to him
that the goods were already either in Manila or on its way to Manila at the time of the
perfection of the contract - Good arrived long after the perfection of the contract
Issue:
1. Whether Chesley may be held to pay Soler 30,546 pesos, which is the difference.
Ruling:
1. The arrival of the goods within a reasonably short time was one of the
determining elements of Chesley’s consent (Chesley consented to the contract
precisely because he expected the goods to be delivered within a reasonably short
period of time) - Instances that prove this: The act of Chesley in insisting that this
guaranty as to the arrival of the machinery be stated in the contract Chesley’s
repeated complaints and protests when he afterwards made payments as the parts
arrive, Soler presented to Chesley letters from Anderson, wherein Anderson said that
the goods had already been sent out by the manufacturers.
2. The fact that soler was in good faith and had no control of the prompt
transportation/shipment of the goods will not relieve him from his guaranty that the
goods are in manila/on its way to Manila.

3. Soler bound himself to Chesley to guaranty that the goods are either in manila or
will arrive within a short period of time, even though no such guaranty to the date of
delivery nor price was given to Soler by Anderson. Soler bound himself in favor of
the defendant for more than what Anderson had bound themselves for in his favor
Hausserman and Beam
40 Phil. 795
 Malayan Insurance Co., Inc. vs. IAC
146 SCRA 45

FACTS:

The union is the exclusive bargaining agent of the rank-and-file employees of the
company.A provision in the unions collective bargaining agreement (CBA) with the
company allows union officials to avail of union leaves with pay for a total of ninety-man
days per year for the purpose of attending grievance meetings, Labor-Management
Committee meetings, annual National Labor Management Conferences, labor education
programs and seminars, and other union activities.

The company issued a rule in November 2002 requiring not only the prior notice
that the CBA expressly requires, but prior approval by the department head before the
union and its members can avail of union leaves.The rule was placed into effect in
November 2002 without any objection from the union until a union officer, Mangalino,
filedunion leave applications in January and February, 2004. His department head
disapproved the applications because the department was undermanned at that time.

Despite the disapproval, Mangalino proceeded to take the union leave. He said
he believed in good faith that he had complied with the existing company practice and
with the procedure set forth in the CBA. The company responded by suspending him for
one week and, thereafter, for a month, for his second offense in February 2004.

The union raised the suspensions as a grievance issue and went through all the
grievance processes, including the referral of the matter to the company president,
Yvonne Yuchengco. After all internal remedies failed, the union went to the National
Conciliation and Mediation Board for preventive mediation. When this recourse also
failed, the parties submitted the dispute to voluntary arbitration. It was declared that
the leave was invalid.

Notably, the decision was not unanimous. Voluntary Arbitrator dela Fuente submitted
the following dissent:

The act of any employee that can only be interpreted to be an open and utter
display of arrogance and unconcern for the welfare of his Company thru the use of what
he pretends to believe to be an unbridled political right cannot be allowed to pass
without sanction lest the employer desires anarchy and chaos to reign in its midst.

Hence, having failed to comply with the requirements for availment of union
leaves and for going on such leave despite the express disapproval of his superior, Mr.
Mangalinos two suspensions are valid and he is not entitled to any backwages for the
duration of his suspensions.

The company appealed the decision to the CA on May 12, 2005 through a
petition for review under Rule 43 of the Rules of Court (Rules).In a decision
promulgated on June 26, 2007, the CA granted the company's petition and upheld the
validity of Mangalino's suspension on the basis of the company's prerogative to prescribe
reasonable rules to regulate the use of union leaves.
 The union moved for the reconsideration of the CA decision and received the
CA's denial (through its resolution of November 29, 2007) on December 8, 2007.

The union seeks relief from this Court against the CA decision through its Rule 65
petition for certiorari filed on February 6, 2008. It alleged that the CA committed grave
abuse of discretion when, despite the clear terms of the CBA grant of union leaves, it
disregarded the evidence on record and recognized that the company's use of its
management prerogative as justification was proper.

In its comment, the company raised both procedural and substantive objections.

Issue:

1. Should the union have filed an appeal under Rule 45 of the Rules and not a
petition for certiorari?

Ruling:

1. The company position that the union should have filed an appeal under Rule 45
of the Rules and not a petition for certiorari is correct.Section 1, Rule 45 of the Rules
states that:

SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by

certiorari from a judgment or final order or resolution of the Court of Appeals,the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law,may file with the Supreme Court a verified petition for review oncertiorari.The
petition shall raise only questions of law which must be distinctly set forth.

Complementing this Rule is Section 1, Rule 65 which provides that aspecial civil
action forcertiorariunder Rule 65 lies only when "there is no appeal, nor plain,
speedy and adequate remedy in the ordinary course of law."From this Rule proceeds
the established jurisprudential ruling that a petition forcertioraricannot be allowed
when a party fails to appeal a judgment despite the availability of that remedy,
ascertiorariis not a substitute for a lost appeal.

In our Resolution ofMarch 5, 2008, we opted to liberally apply the rules and to
treat the petition as a petition for review on certiorariunder Rule 45 in order to have
a total view of the merits of the petition in light of the importance of a ruling on the
presented issues.The union which did not present any justification at the outset for
the petitions deficiencies, particularly for the late filing had this to say:

2. In a resolution dated 05 March 2008, this Honorable Court resolved to treat the
petition in the above-captioned case as a petition for review on certiorari under Rule
45 of the Rules of Civil Procedure.All along the petitioner thought that the filing of
the petition for certiorari under Rule 65 is appropriate considering that the ground
raised is grave abuse of discretion by the Honorable Court of Appeals for reversing
 the decision of the majority decision of the Panel of Voluntary Arbitration in arbitrary
and whimsical manner.

For having treated this petition under Rule 45 of the Rules of Civil Procedure,
petitioner humbly admits that delay was incurred in the filing thereof, such delay
was caused by several factors beyond control such as the transfer of handling legal
assistant to another office and the undersigned had to reassign the case for the
preparation of the petition.Furthermore, the undersigned counsel, other than being
the Chief of FFW LEGAL CENTER is also the Vice President of the Federation of Free
Workers (FFW), who has to attend similar and urgent pressing problems of local
affiliates arising from the effects of contracting out and closure of companies.

Considering the issue to be resolved requires only two CBA provisions (1) the
recognition of management prerogative (Section 1, Article III of the CBA), and union
leave (Section 3, Article XV of the CBA) to guide the Honorable Court reached a
decision, petitioner honestly thought that the other pleadings referred to by
respondent are not relevant.

With this kind and tenor of justification, we appear to have acted with extreme
liberality in recognizing the petition as a Rule 45 petition and in giving it due
course.We cannot extend the same liberality, however, with respect to the unions
violation of the established rules on timelines in the filing of petitions, which
violations the company has kept alive by its continuing objection. While we can be
liberal in considering the mode of review of lower court decisions (and even in the
contents of the petition which the company insists are deficient), we cannot do the
same with respect to the time requirements that govern the finality of these
decisions. A final judgment can no longer be disturbed under the combined
application of the principles of immutability of final judgments and res judicata,
subject only to very exceptional circumstances not at all present in this case.

3. Under Rule 45, a petition for review oncertiorari should be filed within 15 days
from notice of judgment, extendible in meritorious cases for a total of another 30
days.Given that a Rule 45 petition is appropriate in the present case, the period of
60 days after notice of judgment is way past the deadline allowed, so that the CA
decision had lapsed to finality by the time the petition with us was filed.This reason
alone even without considering the companys other technical objection based on the
unions failure to attach relevant documents in support of the petition amply supports
the denial of the petition.

The lack of merit of the petition likewise precludes us from resolving it in the
unions favor. In short, we see no reversible error in the CAs ruling.

While it is true that the union and its members have been granted union leave
privileges under the CBA, the grant cannot be considered separately from the other
provisions of the CBA, particularly the provision on management prerogatives where
the CBA reserved for the company the full and complete authority in managing and
running its business. We see nothing in the wordings of the union leave provision
that removes from the company the right to prescribe reasonable rules and
regulations to govern the manner of availing of union leaves, particularly the
prerogative to require prior approval.Precisely, prior notice is expressly required
under the CBA so that the company can appropriately respond to the request for
leave.In this sense, the rule requiring prior approval only made express what is
implied in the terms of the CBA.

In any event, any doubt in resolving any interpretative conflict is settled by

subsequent developments in the course of the parties implementation of the CBA,
specifically, by the establishment of the company regulation in November 2002
requiring prior approval before the union leave can be used. The union accepted this
regulation without objection since its promulgation (or more than a year before the
present dispute arose), and the rule on its face is not unreasonable, oppressive, nor
violative of CBA terms.Ample evidence exists in the records indicating the unions
acquiescence to the rule. Notably,no letter from the union complaining about the
unilateral change in policy or any request for a meeting to discuss this policy appears
on record.The union and its members have willingly applied for approval as the rule
requires. Even Mangalino himself, in the past, had filed applications for union leave
with his department manager, and willingly complied with the disapproval without
protest of any kind. Thus, when Mangalino asserted his right to take a leave without
prior approval, the requirement for prior approval was already in place and
established, and could no longer be removed except with the companys consent or
by negotiation and express agreement in future CBAs.

The prior approval policy fully supported the validity of the suspensions the
company imposed on Mangalino. We point out additionally that as an employee,
Mangalino had the clear obligation to comply with the management disapproval of
his requested leave while at the same time registering his objection to the company
regulation and action. That he still went on leave, in open disregard of his superiors’
orders, rendered Mangalino open to the charge of insubordination, separately from
hisabsence without official leave. This charge, of course, can no longer prosper even
if laid today, given the lapse of time that has since transpired.

In light of the petitions procedural infirmities, particularly its late filing that
rendered the CA decision final, and the petitions lack of substantive merit, denial of
the petition necessarily follows. DENIED.
 Llorente, Jr. vs. Sandiganbayan
287 SCRA 382

Facts:

The Philippine Coconut Authority (PCA) was reorganized in 1981, causing

resignation of hundreds of its employees, including Mr. Curio, Mrs. Perez, Mr. Azucena
and Mrs. Javier. To acquire their gratituity benefits, they should apply and secure a
clearance from PCA. Their clearance would be approved only if they have no pending
accountability. The officer from who they should get the first approval from is Atty.
Llorente or by Col. Duefias, and then by Atty. Rodriguez, the corporate auditor. Despite
unsettled obligations from different sources (which were deducted from their gratituity
benefits), the clearances of Mr. Perez, Mrs. Javier and Mr. Azucena were approved.
Under Mrs. Javier’s pending accountabilities was the amount of P92,000, which was
handwritten. This was the disallowered portion of the cash advances of Mr. Curio in
connection with his duties as “super cargo” in the distribution of seed nuts throughout
the country. He received them through and in the name of Mrs. Javier, the latter being
primarily liable for the disallowances. Other documents were submitted during the
deductions, with an affidavit by Mr. Curio. However, Mr. Curio’s application for a
clearance was not approved by Atty. Llorente in his capacity as Deputy Administrator,
due to the grounds of the affidavit that Mr. Curio executed. He further justified his
action as following the condition of the clearance (pending accountabilities). This made
Mr. Curio bring the matter to the legal affairs department, which was also under Atty.
Llorente as Deputy Administrator. But the same was not approved. In 1986 or 5 years
later, his pending request for clearance was approved. However, in the course of 5
years he was not able acquire gainful employment because of his failure to present his
clearance from PCA. Thus, he filed a case against the petitioner for failure to act in his
duty.

Issue:

1. Whether or not petitioner exercised an abuse of right and he is liable for

damages against Mr. Curio.

Ruling:

1. Yes. Although petitioner Llorente he did not act with evident bad faith as he was
following the procedures in securing a clearance as one of the public officers tasked
for it, the fact that he was able to approve clearances to other 3 employees despite
their pending accountabilities somehow show that he unjustly discriminated Mr.
Curio. Thus, he is liable for damages under Article 19 of the Civil Code.
 Martinez vs. Cavives
25 Phil. 581

Facts:

Rodriguez spouses issued a promissory note to Magdalena Estate, Inc. in view of

an unpaid balance of P5,000.00 on account of the purchase price of the lot with interest
at the rate of 9% per annum, within sixty (60) days from January 7, 1957. The sum of
P5,000.00 represents the balance of the purchase price of the parcel of land known as
Lot 7-K-2-G, Psd. 26193, containing an area of 2,191 square meters, Quezon City.

On the same date, the appellants and the Luzon Surety Co., Inc. executed a
bond in favor of the appellee to comply with the obligation to pay the amount of
P5,000.00 representing balance of the purchase price of a parcel of land known as Lot
7-K-2-G, Psd-26193. When the obligation became due and demandable, the surety paid
the company the amount of P5,000.00. Subsequently, the appellee demanded from the
appellants the payment of P655.89 corresponding to the alleged accumulated interests
on the principal of P5,000.00. Due to the refusal of the appellants to pay the said
interest, the appellee started this suit in the Municipal Court of Manila to enforce the
collection thereof.

The court ruled that the surety shall be jointly and severally liable the sum of
P655.89 with interest thereon at the legal rate from November 10, 1958, the date of the
filing of the complaint, until the whole amount is fully paid.

Issue:

1. Whether the surety is jointly and severally liable for the interest and its legal
interest

Held:

1. The rule is settled that novation by presumption has never been favored. The
mere fact that the creditor receives a guaranty or accepts payments from a third
person who has agreed to assume the obligation, when there is no agreement that
the first debtor shall be released from responsibility does not constitute a novation,
and the creditor can still enforce the obligation against the original debtor. In the
instant case, the surety bond is not a new and separate contract but an accessory of
the promissory note. They cannot be made applicable to a person whose obligation
as a mere surety is both contingent and singular; his liability is confined to such
obligation, and he is entitled to have all payments made applied exclusively to said
application and to no other.
 Causing vs. Bencer
37 Phil, 417

Facts:

In an action for Recovery of Damages for injury to Person and Loss of Property,
judgment was rendered by the CFI of Cebu ordering defendants Shell and Michael to
pay jointly and severally Pacita F. Reformina and Francisco Reformina for the losses and
damages suffered by them with legal interest.

Upon execution, the Reforminas claim that the "legal interest" should be at the
rate of twelve (12%) percent per annum, invoking in support of their aforesaid
submission, Central Bank of the Philippines Circular No. 41623. (Central Bank Circular
No. 416 includes the judgment sought to be executed in this case, because it is covered
by the second phrase “the rate allowed in judgments in the absence of express contract
as to such rate of interest ... ")

Shell and Michael insist that said legal interest should be at the rate of six (6%)
percent per annum only, pursuant to and by authority of Article 2209 of the New Civil
Code in relation to Articles 2210 and 2211 thereof.

Issue:

1. Whether by way of legal interest, a judgment debtor should pay a judgment

creditor twelve (12%) percent per annum.

Ruling:

1. No. By way of legal interest, a judgment debtor should pay a judgment creditor only
six (6%) percent per annum.

Central Bank Circular No. 416 was issued and promulgated by the Monetary
Board pursuant to the authority granted to the Central Bank by P.D. No. 116, which
amended Act No. 2655, otherwise known as the Usury Law.

Acting pursuant to this grant of authority, the Monetary Board increased the rate
of legal interest from that of six (6%) percent per annum originally allowed under
Section I of Act No. 2655 to twelve (12%) percent per annum. It will be noted that
Act No. 2655 deals with interest on (1) loans; (2) forbearances of any money,
goods, or credits; and (3) rate allowed in judgments.

2. (WHAT KIND OF JUDGMENT IS REFERRED TO UNDER THE SAID LAW?

The judgments spoken of and referred to are Judgments in litigations involving

loans or forbearance of any 'money, goods or credits. Any other kind of monetary
judgment which has nothing to do with, nor involving loans or forbearance of any
money, goods or credits does not fall within the coverage of the said law for it is not
within the ambit of the authority granted to the Central Bank.
 A word or phrase in a statute is always used in association with other words or
phrases and its meaning may thus be modified or restricted by the latter.

Another formidable argument against the tenability of the Reforminas' stand are
the whereases of PD No. 11624 which brought about the grant of authority to the
Central Bank. The decision herein sought to be executed is one rendered in an
Action for Damages for injury to persons and loss of property and does not involve
any loan, much less forbearances of any money, goods or credits).
Guzman vs. Behn, Meyer & Co.
9 Phil. 112
 O’leary vs Macondray & Co.
45 Phil. 812

Facts:

H. O’leary entered in an agreement with Macondryay and Co. Inc. for the
construction of a building for the firm of Macondray and Co. Inc. for the amount of
actual cost plus twelve per cent and one-half per cent with payments to be made
monthly. H. O’leary commenced the construction of the building under the supervision
of an architect, and continued the work thereon until near its completion, and kept and
performed all the terms and provisions of the contract. No payment was made to H.
O’leary for the cost plus 12 1⁄2%, so he filed a complaint.

On his first response, Macondray and Co. Inc., admitted the making of the
contract and the formal allegations of the complaint. However, on his amended answer
he denies all other material allegations, and, as a special defense, alleges that, through
plaintiff's negligence in the construction of the building and the purchase of materials,
the company incurred damages.

The trial court rendered judgment in favor of H. O’leary, hence this petition.

Issue:

1. Whether H.O’leary shall be held liable for breach of contract on the mistakes and
errors of judgment made in good faith? (NO)

Ruling:

1. No. The court held that the contract was very loosely drawn. No date is specified
in which the building is to be completed, and time is not made the essence of the
contract. The counterclaim of the defendant that the labor was not furnished and
that the materials were not purchased is untenable. Assuming that there were
mistakes and errors of judgment only, the plaintiff would not be liable for them
under the contract. The fact that the price of lumber or of labor went up or down, or
was cheaper at a certain time, would not make the plaintiff liable for a breach of
contract, so long as he was exercising his best judgment and acting in good faith.

Further, under the terms of the contract, the employment of labor, the purchase
of materials and the completion and construction of the building were all matters
which were largely left to the discretion of the plaintiff, for which he would not be
liable for honest mistakes or errors of judgement.

The judgment of the lower court is affirmed, with modifications as to the

computation of interest.