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BARREDO V. GARCIA
FACTS:
On May 3, 1936, there was a head-on collision between
a taxi of the Malate Taxicab driven by Fontanilla and a
carretela guided by Dimapilis. The carretela was overturned,
and a passenger a 16 year old boy, Garcia, suffered injuries
from which he died. A criminal action was filed against
Fontanilla, and he was convicted. The Court in the criminal
case granted the petition to reserve the civil action. Garcia
and Almario, parents of the deceased, on March 7, 1939, filed
a civil action against Barredo, the proprietor of the Malate
taxicab and employer of Fontanilla, making him primarily and
directly responsible under culpa aquiliana of Article 2180 of
the Civil Code. It was undisputed that Fontanilla’s negligence
was the cause of the accident, as he was driving on the wrong
side of the road at high speed, and there was no showing that
Barredo exercised the diligence of a good father of a family, a
defense to article 2180 of the Code. Barredo’s theory of
defense is that Fontanilla’s negligence being punishable by
the Revised Penal Code, his liability as employer is only
subsidiary; but Fontanilla was not sued for civil liability,
hence, Barredo claims that he cannot be held liable.
ISSUE:
Whether the plaintiffs may bring a separate civil action
against Fausto Barredo, thus making him primarily and
directly responsible under Article 1903 of the Civil Code as
employer of Pedro Fontanilla.
HELD:
Yes. A separate civil action lies, the employer being primarily
and directly responsible in damages under articles 1902 and
1903 of the civil Code.
Quasi-delict or culpa aquiliana is a separate legal
institution under the civil code and is entirely distinct and
independent from a delict or crime under the Revised Penal
Code. In this jurisdiction, the same negligent act causing
damage may produce civil liability (subsidiary) arising from a
crime under Article 103 of the Revised Penal Code; or create
an action for quasi-delito or culpa aquiliana (primary) under
Articles 2179 and 2180 of the Civil Code, and the parties are
free to choose which course to take. And, in the instant case,
the negligent act of Fontanilla produces 2 liabilities of
Barredo: First, subsidiary one because of the civil liability of
Fontanilla arising from the latter’s criminal negligence under
Article 103 of the revised Penal Code; and second, Barredo’s
employer under article 2180 of the Civil Code. Since the
plaintiffs are free to choose which remedy to take, they
preferred the second, which is within their rights. This is a
more expeditious and effective method of relief because
Fontanilla was either in prison or had just been released or
had no property.
–Yan Yu
MENDOZA V. ARRIETA
MELENCIO–HERRERA, J. / 1979
NATURE: Petition for Certiorari
FACTS:
• A 3-way vehicular accident happened along Mac-Arthur
Highway, Bulacan involving a Mercedes Benz
(Mendoza’s ), a private jeep (Salazar’s), and a truck
(driven by Montoya, owned by Timbol). Two separate
Informations for Reckless Imprudence Causing Damage
to Property were filed against (1) Rodolfo Salazar by
Mendoza and (2) Freddie Montoya by Salazar.
• The 1st case was against the jeep for colliding with the
Mercedes Benz. The 2nd was against the truck that hit
the rear part of the jeep.
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• Mendoza testified, and adopted by truck-driver requires an express reservaqtion of the civil action to
Montoya, that jeep-owner Salazar overtook the truck be made in the criminal action, otherwise, the same
driven by Montoya, swerved left going towards the would be barred”.
poblacion of Marilao, and hit his car which was bound
• The case was then raised to this Court.
for Manila. Petitioner (Mendoza) further testified that
before the impact, Salazar had jumped from the jeep
and that he was not aware that Salazar’s jeep was
ISSUES:
bumped from behind by the Montoya’s truck.
(1) WoN truck-owner Timbol’s civil case is barred by the fact
• Salazar, on the other hand, stated that, after
that Mendoza failed to reserve, in the criminal action, his right
overtaking the truck, he flashed a signal indicating his
to file an individual civil action based on quasi-delict.
intention to turn left towards the poblacion of Marilao
but was stopped at the intersection by a policeman (2) WoN jeep-owner-driver Salazar is civilly liable for the
who was directing traffic; that while he was at a stop offense even when he was already acquitted.
position, his jeep was bumped at the rear by Montoya’s
truck causing him to be thrown out, which then
swerved to the left and hit petitioner’s car, which was HELD:
coming from the opposite direction.
(1) No.
• CFI acquitted Salazar from the criminal offense (2) No.
charged whereas truck-driver Montoya was found
guilty and civilly liable, ordered to indemnify Salazar.
However, no indemnification was awarded to Mendoza
RATIO:
since he was not a complainant against the truck-
driver but only against Salazar. (1) Against Timbol

• Later, Mendoza filed a civil case against Salazar and,
this time, Timbol, the owner of the truck. Both Salazar
and Timbol were joined as defendants, either in the
alternative or in solidum, allegedly for the reason that
petitioner was uncertain as to whether he was entitled
to relief against both or only one of them.
• Timbol motioned to dismiss the case on the ground
that the Complaint is barred by a prior judgment in the
criminal cases and that it fails to state a cause of
action. Respondent judge dismissed the case as well as
its review stating that “while it is true that an
independent civil action for liability under Article 2177
CC could be prosecuted independently of the criminal
action for the offense from which it arose, the New RoC
The rule that for a prior judgment to constitute a bar to a
subsequent case is when the following requisites concur: (a)
final judgment; (b) must be rendered by a Court having
jurisdiction over the matter and the parties; (c) must be a
judgment on the merits; and (d) in the 1st and 2nd actions,
there must be identity of parties, of subject matter, and of
cause of action. Only the 1st three requisites are met. But as
to the last, it is quite different. For one thing, petitioner wasn’t
even a complainant against Timbol. For the other, the cause
of action for the criminal cases was the enforcement of the
civil liability arising from criminal negligence whereas this
present civil case is based on quasi-delict. Therefore, such
petition is not barred.
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Also, as to the ground that petitioner did not present a cause
of action, the two factors consisting of a cause of action, that
of (1) plaintiff’s summary right being the owner of the
Mercedes Benz and (2) the defendant’s wrongful act or
omission which violated plaintiff’s primary right (negligence in
driving of either defendant), were alleged in the Complaint.
(2) Against Salazar
As in the above ratio, petitioner can opt to go for enforcement
of civil liability based on culpa criminal or just an action of
recovery based on culpa aquiliana. Based on petitioner’s
previous criminal case (initial case against Salazar), he based
his action on culpa criminal also as evidenced by his active
participation and intervention in the prosecution of the
criminal suit against said Salazar. Since Salazar’s civil liability
continued throughout the criminal case, there was no need for
petitioner to file a separate civil action, it being deemed
impliedly instituted in said criminal case. Under the facts, the
Trial Court’s pronouncement was that Salazar cannot be held
liable for the damages. Hence, no civil liability attaches to
Salazar.
DECISION: Dismissal of civil case against Timbol is set
aside and ordered to continue whereas that of
dismissing the civil case against Salazar is upheld.
–Kaye Tamayao
PSBA V. COURT OF APPEALS
PADILLA, J. / FEBRUARY 4, 1992;
FACTS:
 Carlitos Bautista, a 3rd year Commerce student from
the Philippine School of Business Administration, was
stabbed inside the school premises by outsiders.
Hence, his parents filed suit against the school’s
corporate officers. They allege negligence,
recklessness, and lack of security precautions, means,
and methods, before, during, and after the attack on
their son.
 During the proceedings, Lt. Soriano (Assistant Chief of
Security) resigned from his post.
 The defendants prayed for the dismissal of the case
claiming that since they were presumably being sued
under Art. 2180 of the Civil Code, jurisprudence
therefor dictates that academic institutions are outside
the ambit of the aforesaid article.
ISSUE: WON is liable for civil damages through quasi-delict
due to negligence.
HELD: No, for the rule of in loco parentis under Art. 2180 to
apply, the wrongdoing should have been caused by pupils or
students of the educational institution sought to held liable for
having custody over them.
RATIO DECIDENDI:
 When an academic institution accepts a student for
enrollment, an obligation is created between the two
parties. The school provides the milieu for the
education and the development of the skills of the
student but at the same time providing for his security
within the premises. On the other hand, the student
has to complete his academic requirements and
comply with school rules and regulations.
 However, the rules on quasi-delicts do not govern in
this case due to the presence of an existing
contractual relation between the deceased and PSBA.
 The school cannot be held liable because the
assailants were neither students nor employees of
PSBA.
 There was neither sufficient proof nor finding that the
school was negligent in providing proper security
measures. Supposing that there had been a finding of
negligence, this could only give rise to a breach of
 A’11 OBLICON CASE DIGESTS
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contractual obligation insofar as providing security
within the premises.
 The court took into account that a school cannot be an
infallible insurer of its students against all risks, i.e.,
Murphy’s Law. Likewise, it would be unreasonable to
expect schools to anticipate all types of violent
trespass upon their premises. Should that be the case,
it may still avoid liability by proving that the breach of
its contractual obligation to the students was not due
to its negligence.
Decision: Petition is denied, but the Court of origin
(RTC, Manila, Br. 47) was ordered to continue
proceedings due to the paucity of material facts.
–Pat Sadeghi-Tajar
AMADORA V. CA
CRUZ, J. / APRIL 15, 1988
PARTIES: Jose S. Amadora, et. al ,Petitioners Vs.Honorable
Court Of Appeals, Colegio De San Jose-Recoletos, Victor Lluch
Sergio P. Dlmaso Jr., Celestino Dicon, Aniano Abellana, Pablito
Daffon thru his parents and natural guardians, Mr. And Mrs.
Nicanor Gumban, And Rolando Valencia, thru his guardian, A.
Francisco Alonso, Respondents.
FACTS:
 Pablito Damon, fired a gun that killed the 17yo Alfredo
Amadora while the latter was in the auditorium of their
school Colegio de San Jose-Recoletos to deliver his
physics project.
 it was already sembreak ; the teacher-in-charge wasn’t
in school
 Daffon was convicted of homicide thru reckless
imprudence
 alfredo’s parents filed a civil action for damages under
Article 2180 of the Civil Code against the school and its
officials like the rector, the high school principal, the
dean of boys, and the physics teacher, together with
Daffon.
Art 2180 “Lastly, teachers or heads of establishments of
arts and trades shall be liable for damages caused by their
pupils and students or apprentices so long as they remain
in their custody”.
• The CFI of Cebu held the defendants civilly liable.
• On appeal, CA absolved the defendants of the liability
because:
o Article 2180 was not applicable as the Colegio
de San Jose-Recoletos was not a school of arts
and trades but an academic institution of
learning.
o the students were not in the custody of the
school at the time of the incident as the
semester had already ended
o fatal gun not clearly identified
o respondents exercised due diligence
ISSUES:
1. School should not be held liable because it is an
academic institution NO DIFF. BETWEEN ACADEMIC
SCHOOL AND SCHOOL OF ARTS AND TRADE
2. School still responsible even though end of school
term? YES
3. Teacher in charge has been negligent/ no proof of
this
4. ho should be liable for the tort? School? Dean of boys?
Principal? Rector? The dean of boys of boys has
been negligent but none of those mentioned
above is liable
REASON:
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1. no difference between the academic and the non-
academic schools. The same vigilance is expected
from the teacher over the students under his control
and supervision, whatever the nature of the school
where he is teaching.
2. It doesn’t matter whether Alfredo was in the school
auditorium to finish his physics experiment or merely
to submit his physics report-what is important is that
he was there for a legitimate purpose. even the mere
savoring of the company of his friends in the premises
of the school is a legitimate purpose that would have
also brought him in the custody of the school
authorities.
the teacher-in-charge must answer for his students'
torts
3. At any rate, assuming that he was the teacher-in-
charge, no proof that Dicon was negligent in enforcing
discipline upon Daffon. He was not required to report
to school on that day
4.
a.) The rector, the high school principal and the
dean of boys= cannot be held liable because:
 They are not the teacher-in-charge as previously
defined.
 They’re only exercising general authority over the
student body, not direct control and influence
b.) dean of boys= since there is no teacher-in-charge, it
is probably the dean of boys who should be held liable
bec. He was negligent in not taking disciplinary action
over the boy who owns the unlicensed gun which he
had earlier confiscated; he returned it to the boy
afterwards. He didn’t even report it to the authorities
But it does not link him to the shooting because there is
no proof that the confiscated and returned pistol was the
gun that killed Alfredo
c.) the Colegio de San Jose-Recoletos = is not directly
liable under the article because the rector, the high
school principal and the dean of boys didnt have
custody of the offending student during the shooting or
remiss in the discharge of their duties. school cant be
made to answer for them
Decision: the petition is DENIED.
–Fredda Rosete
SONG FO & COMPANY V. HAWAIIAN PHILIPPINE CO.
MALCOLM, J. / SEPTEMBER 16, 1925
FACTS:
• Song Fo & Company filed a case against Hawaiian
Philippine Co. for breach of contract asking for
P70,369.50, with legal interest, and costs.
• Hawaiian Philippine Co. set up the defense that since
the plaintiff had defaulted in the payment for the
molasses delivered to it they were compelled to cancel
and rescind the said contract
• A letter addressed by the administrator of the
Hawaiian-Philippine Co. to Song Fo & Company on
December 13, 1922 contains their contract in writing.
It states the ff:
o Mr. Song Fo agreed to the delivery of 300,000
gallons of molasses
o Mr. Song Fo also asked if we could supply him
with another 100,000 gallons of molasses, and
we stated we believe that this is possible and
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will do our best to let you have these extra
100,000 gallons during the next year
o Regarding the payment for our molasses, Mr.
Song Fo gave us to understand that you would
pay us at the end of each month for molasses
delivered to you
ISSUES:
• WoN the agreement was for Hawaiian Philippine Co. to
supply 300,000 or 400,000 gallons of molasses
• WoN Hawaiian-Philippine Co. had the right to rescind
the contract of sale made with Song Fo & Company
because the latter failed to pay for the molasses w/in
the time agreed upon.
• What is the measure for damages?
HELD:
• The agreement was for Hawaiian Philippine Co. to
supply 300,000 gallons of molasses
• Hawaiian Philippine Co. had no legal right to rescind
the contract of sale because of the failure of Song Fo &
Company to pay for the molasses within the time
agreed upon by the parties
• Plaintiff is entitled to recover damages from the
defendant for breach of contract in the amount of
P3,000
RATIO:
• From the language of the letter, it was inferred that
the Hawaiian-Philippine Co. agreed to deliver to Song
Fo & Company 300,000 gallons of molasses. The
Hawaiian-Philippine Co. also believed it possible to
accommodate Song Fo & Company by supplying the
latter company with an extra 100,000 gallons. But the
language used with reference to the additional
100,000 gallons was not a definite promise and did not
constitute an obligation.
• The letters indicate that the agreement was for Song
Fo & Company to pay the Hawaiian-Philippine Co. upon
presentation of accounts at the end of each month.
Song Fo & Company should have paid for the molasses
delivered in December, 1922, and for which accounts
were received by it on January 5, 1923, not later than
January 31 of that year. Instead, payment was not
made until February 20, 1923. However, it is a general
rule that rescission will not be permitted for a slight or
casual breach of the contract, but only for such
breaches as are so substantial and fundamental as to
defeat the object of the parties in making the
agreement. A delay in payment for a small quantity of
molasses for some twenty days is not such a violation
of an essential condition of the contract was warrants
rescission for non-performance. In addition to this,
Hawaiian-Philippine Co. waived this condition when it
arose by accepting payment of the overdue accounts
and continuing with the contract. There is no
outstanding fact which would legally sanction the
rescission of the contract by the Hawaiian-Philippine
Co.
• The first cause of action of the plaintiff is based on the
greater expense to which it was put in being compelled
to secure molasses from other sources. Three hundred
thousand gallons of molasses was the total of the
agreement. 55,006 gallons of molasses were delivered
by the defendant to the plaintiff before the breach.
244,994 gallons of molasses undelivered which the
plaintiff had to purchase in the open market. 100,000
gallons of molasses were secured from the Central
North Negros Sugar Co., Inc., at two centavos a gallon.
As this is the same price specified in the contract
between the plaintiff and the defendant, the plaintiff
suffered no material loss in having to make this
purchase. This leaves as a result 144,994 gallons
which the plaintiff admits that it could have secured
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from the Central Victorias Milling Company, at three
and one-half centavos per gallon. The plaintiff had to
pay the Central Victorias Milling company one and one-
half centavos a gallon more for the molasses than it
would have had to pay the Hawaiian-Philippine Co.
Translated into pesos and centavos, this meant a loss
to the plaintiff of approximately P2,174.91. The
plaintiff may have been put to greater cost in making
the purchase of the molasses in the open market, we
would concede under the first cause of action in round
figures P3,000.
• The second cause of action relates to lost profits on
account of the breach of the contract. The only
evidence in the record on this question is the
stipulation of counsel to the effect that had Mr. Song
Heng, the manager of Song Fo & Company, been
called as a witness, he would have testified that the
plaintiff would have realized a profit of P14,948.43, if
the contract of December 13, 1922, had been fulfilled
by the defendant. Indisputably, this statement falls far
short of presenting proof on which to make a finding as
to damages. The testimony of the witness Song Heng,
it we may dignify it as such, is a mere conclusion, not a
proven fact. As to what items up the more than
P14,000 of alleged lost profits, whether loss of sales or
loss of customers, or what not, we have no means of
knowing
–Sam Rosales
VELARDE V. CA
PANGANIBAN, J. / 11 JULY 2007
PARTIES:
Petitioners: Spouses Mariano and Avelina Velarde
Respondents: CA, David Raymundo and George Raymundo
FACTS:
• David owes the land and house in question. His father
George negotiated with plaintiffs the sale of the said
property. A Deed of Sale with Assumption of Mortgage
was executed by David with the following terms:
o That David sells the land and house with
improvements to the Velardes in consideration
of Php800,000.00
o That the parcel of land was mortgaged by David
to BPI to secure the payment of a loan of
Php1,800,000.00
o That the Velardes hereby assume to pay the
mortgage obligations of P1,800,000.00 in favor
of BPI.
• Avelina executed an Undertaking which stipulated
that:
o She paid David the sum of Php800,000.00 and
assumed the mortgage obligations with BPI as
per the Deed of Sale with Assumption of
Mortgage
o While her application for the assumption of the
mortgage obligations is pending with the bank,
she would pay the mortgage obligation in the
name of David until such time when her
application is approved
o In the event she violated the terms, the
downpayment of Php800,000.00 plus all
payments made on the mortgage loan shall be
forfeited in favor of David.
• After the execution of the sale, the Velardes paid the
mortgage obligation with the bank for three months
until they were advised that their application was not
approved. Thereafter, they did not make any further
payment.
• Defendatns wrote plaintiff that their non-payment of
the mortgage obligations constituted non-performance
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of their obligation. Plaintiffs replied, indicating that
they are willing to pay the remaining balance in cash
provided 3 new conditions:
o That the house be delivered immediately
delivered for occupancy
o That the defendants should cause the release of
title and mortgage from the BPI and make the
title available and free from any liens or
encumbrances
o That the defendants execute an absolute deed
of sale in favor free from any liens or
encumbrances not later than January 21, 1987
• Defendants sent plaintiffs a notarial notice of
cancellation/rescission of the intended sale of the
subject property dur tot heir non-compliance with the
terms and obligations of the Deed of Sale with
Assumption of Mortgage and the Undertaking. The
Velardes filed a Complaint against the defendants for
specific performance, nullity of cancellation, writ of
possession and damages.
ISSUES:
• Whether or not the non-payment of the mortgage
obligation of the Velardes resulted in a breach of
contract
• Whether or not the rescission of the contract by the
Raymundos was justified
HELD:
• Yes, the Velardes committed a breach of contract.
• The rescission of the contract was justified.
RATIO DECIDENDI:
• Petitioners contend that their nonpayment of the
mortgage obligation did not constitute a breach of
contract considering their request was disapproved by
the bank. This is no reason to stop paying altogether
the mortgae obligation. When they received the notice
of disapproval, they should have paid the balance of
the P1.8 million loan. Instead, they sent a letter to
respondents offering to make a payment only upon the
fulfillment of certain conditions not originally agreed
upon in the contract of sale. Such condotiional offer to
pay cannopt
–Raina Quibral
GERALDEZ V. COURT OF APPEALS
REGALADO J. / FEB. 23, 1994
Petition for review of decision of the Court of Appeals
PARTIES:
Petitioner: Lydia L. Geraldez
Respondents: Court of Appeals and Kenstar Travel
Corporation
FACTS:
 Petitioner Geraldez filed an action for damages by reason
of contractual breach against respondent Kenstar Travel
Corp.
 Petitioner booked the Volare 3 tour with Kenstar.
 The tour covered a 22-day tour of Europe for $2,990.00
which petitioner paid for her and her sister
 At the tour, petitioner claimed that what was alleged in
the brochure was not what they experienced.
 There was no European tour manager as stated in
the brochure
 The hotels where they stayed in which were
billeted as first class were not
 The UGC leather factory which was specifically
included as a highlight of the tour was not visited
 The Filipino tour guide provided by Kenstar was a
first timer
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 The Quezon City RTC rendered a decision ordering
respondent Kenstar to pay moral, nominal, and exemplary
damages totaling P1M and P50,000 attorney’s fees
 On appeal, respondent Court of Appeals deleted the award
for moral and exemplary damages and reduced the
nominal damages and attorney’s fees to P30,000 and
P10,000 respectively.
ISSUES:
 Did private respondent Kenstar act in bad faith or with
gross negligence in discharging its obligations in the
contract?
 Are moral, exemplary and nominal damages warranted?
HELD:
 Yes, Kenstar acted in bad faith and with gross negligence
in discharging its obligation
 Yes, the CA erred in removing the moral and exemplary
damages
RATIO:
 Private respondent committed fraudulent
misrepresentation amounting to bad faith, to the prejudice
of petitioner and the members of the group
 Kenstar’s choice of the tour guide is a manifest
disregard of its specific assurances to the tour group,
and which deliberate omission is contrary to the
elementary rules of good faith and fair play
 By providing the Volare 3 group with an
inexperienced first timer as a tour guide, Kenstar
manifested indifference to the satisfaction,
convenience and peace of mind to its clients
 Selection of the tour guide was a deliberate and
conscious choice on the part of Kenstar in order to
afford her on-the job-training making the tour
group her unknowing guinea pigs.
 The inexperienced tour guide will not know how to
anticipate the possible problems and needs of its
group, therefore not being able to provide the tour
group with the necessary accommodations and
personal necessities promised.
 Furthermore the inability to visit the UGC leather
factory is reflective of the ineptness and neglect of
the tour guide.
• The UGC was one of the highlights and Kenstar
should have ensured that it would be visited
 The shortcomings of the tour guide can be traced
to the lack of due diligence on the part of Kenstar
in the selection of its employees
 Although Kenstar argues that the tour guide made
daily calls to show diligence does not hold
• The reason she had to call was so that Kenstar
could monitor her progress and training and
provide instructions for her
 The failure of Kenstar to provide a European Tour
Manager although it specifically advertised and
promised to do so is also a contractual breach
 Kenstar expressly stated in its advertisement that a
European Tour Manager would be present
 Kenstar’s contention that the European Tour
Manager does not refer to a natural person but a
juridical personality does not hold
• Cursory reading of the advertisement reveals
the express representation that the tour
manager would be a natural person
• Corporate entity could not possibly accompany
the tour group
 Kenstar’s contention that the word “he” used in the
advertisement also includes the word “it” to
include females and corporations does not hold as
well
• Hard to believe that the word “he” was used to
denote an artificial or corporate being
• From its advertisement, it is beyond cavil that
the import of the word “he” is a natural and not
a juridical person
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 Kenstar’s contention that it explained the concept
of the European manager to its client at the pre-
departure briefing also does not hold
• Respondent failed to present even one member
of the tour group to substantiate its claim
 If it was really its intention to provide a juridical
entity it wouldn’t have repeatedly promised the
arrival of a natural tour manager
 The contract of adhesion as printed on the face of the
brochure does not delimit the responsibility of Kenstar
from providing its clients with what it promised
 The contract stated:
“Kenstar, its employees...assume no
responsibility or liability arising out of or in
connection with the services or lack of
services…neither will they be responsible for
any act, error or omission or of any damages,
injury, loss, accident or delay or irregularity
which may be occasioned by reason (of) or any
defect in…lodging place or any facilities”
 The contract of adhesion, wherein only one party
creates the contract and the other party either
takes it or leaves it is not necessarily void but it
must nevertheless be construed strictly against the
one who drafted it.
 This is especially true when the stipulations are
printed in fine letters and are hardly legible, as is
the case of the tour contract
 Even assuming arguendo that the contractual limit
is enforceable, Kenstar still cannot be exculpated
for the reason that responsibility arising from
fraudulent acts cannot be stipulated against by
reason of public policy
 Kenstar committed grave misrepresentation when it
assured in its tour package that the hotels provided
would provide complete amenities and would be
conveniently located along the way for the daily
itineraries
 Testimonies by petitioner and private respondent
show that the hotels were unsanitary and
sometimes did not even provide towels and soap
 Further testimonies claim that the hotels were also
located in locations far from the city making it
difficult to go to
 Respondent’s contention that the hotels were listed
in the “Official Hotel and resort Guide” and
“Worldwide Hotel Guide” do not hold
• Kuoni Traveler, the tour operator of Kenstar
which prepared the listing could have easily
verified the same
• Nor can it be logically claimed that first-class
hotels in Europe are different from first-class
hotels in the Philippines
♦ Reasonable that petitioner would assume
that the meaning of first-class would be the
same
• Even assuming that there is a difference in
quality, it can’t be said that a first-class hotel in
Europe does not provide the basic necessities
and sanitary accommodations
 The fact that Kenstar could only book them in such
hotels because of budget constraints is not the fault of
the tour group
 Kenstar contends that it could only book them in
such hotels because what they paid will only allow
them to pay for such accommodations does not
hold
 Kenstar should not have promised such
accommodations if they couldn’t afford it. Kenstar
should have increased the price to ensure that the
accommodations.
 Fact that the tourists were to pay a supposedly
lower amount, such that respondent allegedly
retained hardly enough as reasonable profit, does
not justify a substandard form of service
 A’11 OBLICON CASE DIGESTS
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 Respondent Court erred in deleting the award for moral
and exemplary damages.
 Moral damages may be awarded in breaches of
contract where the obligor acted fraudulently or in bad
faith
 Kenstar can be faulted with fraud in the
inducement which is employed by a party in
securing the consent of the other
 This fraud or dolo which is present or employed at
the time of birth or perfection of the contract may
either be dolo causante or dolo incidente
• Dolo Causante or Causal Fraud
♦ Referred to in Art 1338, are those
deceptions or misrepresentations of a
serious character employed by one party
and without which the other party would not
have entered into the contract
♦ Dolo causante determines or is the essential
cause of the consent
♦ Effect: nullity of the contract and the
indemnification of damages
• Dolo Incidente or Incidental Fraud
♦ Referred to in Art. 1344, are those which are
not serious in character and without which
the other party still would have entered into
the contract
♦ Dolo incidente refers only to some particular
or accident of the obligation
♦ Effect: obliges person employing it to pay
damages
 In either case, whether Kenstar has committed dolo
causante or dolo incidente, it is indubitably liable
for damages both moral and exemplary
–Jecky Pelaez
GUTIERREZ V. GUTIERREZ
MALCOLM, J. / SEPT. 23, 1931
FACTS:
 Feb. 2, 1930 – a passenger truck and a private vehicle
collided while attempting to pass each other on the
Talon bridge
 Truck – driven by Abelardo Velasco, owned by
Saturnino Cortez
 Private Vehicle – driven by Bonifactio Gutierrez, owned
by Mr. and Mrs. Manuel Gutierrez, Bonifacio’s parents
 The collision between the bus and the automobile
resulted in Narciso Gutierrez, a passenger in the bus,
suffering a fractured right leg which needed medical
assistance
 Narciso filed a case to recover damages for his
physical injuries suffered as a result of the accident
ISSUE:
 What are the respective legal obligations of the
defendants
HELD:
 Bonifacio Gutierrez’s obligation arises from culpa
aquiliana while Saturnino Cortez and his chauffeur
Abelardo Velasco’s obligation arise from culpa
contractual
RATIO:
 It is undisputed that the accident was caused by
negligence between both the passenger truck and the
automobile
 The case is one of 2 drivers approaching a narrow
bridge from opposite directions with neither being
willing to slow up and give the right of way to the
other
 With regards to the automobile:
 A’11 OBLICON CASE DIGESTS
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o The youth Bonifacio was an incompetent
chauffeur as he was driving at an excessive
rate of speed and on approaching the bridge
and the truck, he lost his head and so
contributed to the negligence
o His father is also responsible because he has
given guaranty at the time the son was granted
the license to operate motor vehicles and as
such, he alone is liable for the damage caused
by the minor
 With regards to the passenger truck:
o The liability rests on that of contract, namely a
contract of carriage
–Ramon Parel
VAZQUEZ V DE BORJA
OZAETA; FEBRUARY 23, 1944
NATURE: PETITION to review on certiorari a decision of te
Court of Appeals
FACTS:
• De Borja entered into a contract with Natividad-
Vazquez Sabani Development to purchased 4,000 sack
of palay at P2.10 per sack for a total consideration of P
8,400 which was paid by de Borja. Vazquez and
Busuego represented the Company in the transaction
as acting manager and treasurer, respectively. In
addition, de Borja delivered to the defendants a total
of 4,000 empty sacks which presumealy were to be
used in the delivery of the palay.
• Defendants only deliverd to de Borja a total of 2,488
cavans of palay with a value of P5,224.80 and have
since refused to deliver the balance.
• Action was commenced by Francisco de Borja in the
Court of First Instance of Manila against Antonio
Vazquez and Fernando Busuego to recover from them
jointly and severally the total amount of P4,702.70
arising out of the non delivery of 1,512 cavans of rice
and 1,510 empty sacks.
• Vazquez denied entering into the contract in his
individual and personal capacity. The contract was
between plaintiff and Natividad-Vazquez Sabani
Development Co., Inc., a corporation which the
defendant Vazquez represented as its acting manager.
Vazquez filed a counterclaim for P1,000 as damages.
• Trial court found in favor of the plaintiff and ordered
Vazquez to pay the total sum of P3,552.70. It also
absolved Busuego from the complaint.
• Vazquez appealed to the CA and it modified the
judgement by reducing the amount to P 3,314.78 plus
interest and costs. On motion for reconsideration, the
CA set aside its judgment and ordered the case
remanded to the court of origin for further
proceedings.
• Hence the two petitions from both plaintiff and
defendant to the Supreme court for certiorari.
ISSUES:
1. WON de Borja entered into the contract with Vazquez in his
personal capacity or as manager of the Natividad-Vazquez
Sabani Development
2. WON Vazquez is entitled to counter damages arising out of
the erroneous suit
HELD:
Ratio
• The Action being on a contract, and it appearing from
the preponderance of the evidence that the party
liable is Natividad-Vazquez, which is not a party to the
suit, the complaint should have been dismissed.
• No award is given to Vazquez as the SC believes that
he was morally responsible to the party with whom he
contracted to see to it that the corporation
represented by him fulfilled the contract by delivering
 A’11 OBLICON CASE DIGESTS
PAGE 13 OF 25
that palay it had sold particularly since the same had
already been made.
Reasoning
• Corporations are artificial beings invested by law with
a personality of is own, separate and distinct from that
of the shareholders and from that of its officers who
manage and run its affairs. The mere fact that its
personality is owing to a legal fiction and that it
necessarily has to act thru its agents does not make
such agents personally liable on a contract duly
entered into by them for and in behalf of said
corporation. This legal fiction may however be
disregarded only when an attempt is made to use its
as a cloak to hide an unlawful or fraudulent purpose.
As there seems to be no showing that Vazquez
personally benefited from the transaction, he is within
his rights to invoke the legal fiction to avoid personal
liability.
• The trial court in finding Vazquez guilty of negligence
in the performance of the contract and in holding him
personally liable manifestly failed to distinguish a
contractual from an extra-contractual obligation, or an
obligation arising from contract from an obligation
arising from culpa aquiliana. In the contractual
obligation, it is the obligor to fulfill said contract and
not its agents. Hence, the obligor is the party guilty of
negligence in the fulfillment of said contract. On the
other hand, if independently from the contract,
Vazquez by his fault or negligence cased damage to
the plaintiff, then he would be personally liable for
such damage. But since the suit is based on the
contract, then the court has no jurisdiction over the
issue and could not adjudicate upon it.
DISPOSITION: The judgment of the CA is reversed and
the complaint is dismissed, without finding as to cost.
SEPARATE OPINION
PARAS, Dissenting:
• From the facts, it appears that Vasquez prior to
entering into contract with de Borja knew that his
company was already insolvent. Knowing full well that
the contract could not be fulfilled, he nonetheless
consummated the transaction and received the full
payment. Hence the CFI and Ca are both correct in
holding the failure to deliver was the result of
Vazquez’s fault or negligence.
• While it is true that the contract is between de Borja
and the company, it was proven during the trial that it
was Vazquez who prevented the performance of the
contract and also of negligence bordering on fraud
which caused damage to de Borja. Hence the
technicality of a procedural error should not be
hindrance to the rendition.
• The suit be considered as based on fault and
negligence of Vazquez and to sentence defendant
accordingly.
–Ryan Oliva
DE GUIA V. MANILA ELECTRIC RAILROAD AND LIGHT
COMPANY
PARTIES: MANUEL DE GUIA, plaintiff and appellant, vs. THE
MANILA ELECTRIC RAILROAD AND LIGHT COMPANY, defendant
and appellant
FACTS:
• Manuel de Guia rode a train owned by MERALCO. 30
meters from the point of origin, the small wheels of the
rear truck left the track. The train was derailed and struck
a concrete post. De Guia was thrown against the door with
some violence receiving injuries.
 A’11 OBLICON CASE DIGESTS
PAGE 14 OF 25
• CFI’s Ruling: Motorman of the derailed car was negligent
having maintained too rapid a speed. De Guia awarded
P6,100 with interests and costs for damages and injuries.
• Both De Guia and MERALCO appealed.
ISSUE:
• WON MERALCO is liable for the damages incurred by De
Guia and to hat extent.
HOLDING AND RATIONALE:
• MERALCO is liable.
o There was negligence on the part of the motorman
and MERALCO is liable for the consequence of that
negligence.
o There existed a contractual relationship between
De Guia and MERALCO. The duty of MERALCO was
to convey and deliver De Guia safely and securely
with reference to the degree of care which, under
the circumstances, is required by law and custom
applicable to the case (Art. 1258 CC). Upon failure
to comply with that obligation, MERALCO incurred
liability defined in Art 1108-1107 CC.
o MERALCO cannot avail itself of the diligent father
defense under Art 1903 CC, because article does
not include contractual relationships. However, an
employer who exercised due diligence in choosing
and instructing his employees is entitled to be
considered a debtor in good faith under Art 1107
CC.
• MERALCO’s liability is therefore limited to such damages
as might, at the time of the accident, have been
reasonably foreseen as a probable consequence of the
physical injuries inflicted upon De Guia and which was a
necessary result of those injuries.
o CFI awarded De Guia P900 for his loss of
professional earnings due to his injuries and P3,900
for his loss due to his inability to accept a position
as district health officer. The P3,900 awarded by
the CFI is not a proper grounds for recovery of
damages because damage of this character could
not, at the time of the accident, have been
foreseen by MERALCO as a probable consequence
of the injury inflicted.
o In addition, De Guia presented amounts incurred by
him through hiring three physicians who
supposedly treated his injuries. The SC however
believes that these medical expenses were
sufficiently proven and that De Guia’s injuries were
as extensive as he made them out to be.
JUDGMENT: Judgment is modified reducing the amount
of recovery to P1,100.
–Giselle Muńoz
UNITED STATES V. BARIAS
CARSON, J.; NOVEMBER 12, 1912
FACTS:
• Segundo Barias was a motorman for the Manila Electric
Railroad and Light Company. On the morning of
November 2, 1911, he was driving his car along Rizal
Avenue and stopped it near the intersection to take on
some passengers.
• When the car stopped, Barias looked backward to note
whether all the passengers were aboard then started
the car.
• It was at that moment that Fermina Jose, a 3-year old
child ran in front of the car. As a result, she was
knocked down and dragged some distance underneath
the car and was left dead upon the track.
• Barias knew nothing of the incident until his return to
the place, when he was informed of what happened.
ISSUE:
 A’11 OBLICON CASE DIGESTS
PAGE 15 OF 25
• Whether or not Barias showed carelessness or want of
ordinary care so as to amount to reckless negligence
HELD:
• Barias is liable for reckless negligence.
RATIO:
• Evidence shows that the road on which the incident
occurred was a public street in a densely populated
section of the city and the hour was 6 in the morning
or about the time when residents of such streets begin
to move about.
• Under such conditions, a motorman of an electric
street car was clearly charged with a high degree of
diligence in the performance of his duties for he was
bound to know and to recognize that any negligence
on his part in observing the track over which he was
running his car might result to fatal accidents.
• Barias, before setting his car again in motion, had the
duty to satisfy himself that the track was clear, and for
that purpose, he should have looked and see the track
just in front of his car. This the defendant did not do,
and the result of his negligence was the death of the
child.
• Had the motorman seen the child, he could have
avoided the accident; the accident was not therefore,
unavoidable, and it appearing that the motorman, by
the exercise of ordinary diligence, might have seen the
child before he set the car in motion, his failure to
satisfy himself that the track was clear before doing so
was reckless negligence.
• Barias was negligent in that he failed to exercise the
degree of diligence required of him – he failed in taking
precautions or advance measures as common
prudence would suggest when he put his car in motion
without looking at the road in front of his car.
Others:
• As to the contention that the accident would still have
happened even if utmost care was exercised, (because
of photographs showing that while the motorman was
standing in his proper place on the front platform of his
car, a child walking immediately in front of the car
would not have come within the line of his vision) the
court said that by inclining the head and shoulders
forward very slightly, the motorman could not fail to
notice a child on the track immediately in front of his
car. And according to the court, it is the manifest duty
of a motorman, who is about to start his car in public
thoroughfare in a thickly-settled district, to satisfy
himself that the track is clear immediately in front of
his car, and to incline his body slightly forward, if that
be necessary, in order to bring the whole track within
his line of vision.
Negligence defined (pinili lang):
• The failure to observe, for the protection of the
interests of another person, that degree of care,
precaution and vigilance which the circumstances
justly demand, whereby such other person suffers
injury (J. Cooley in his work in Torts)
• Reckless negligence consists of the failure to take such
precautions or advance measure in the performance of
an act as the most common prudence would suggest
whereby injury is caused to persons or to property
(U.S. v. Nava)
• Negligence is want of the care required by the
circumstances. It is relative or comparative, not an
absolute, term and its application depends upon the
situation of the parties and the degree of care and
vigilance which the circumstances reasonably require.
Where the danger is great, a high degree of care is
necessary, and the failure to observe it is a want of
ordinary care under the circumstances (Ahern v.
Oregon Telephone Co.)
–Joy Montes
 A’11 OBLICON CASE DIGESTS
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CRISOSTOMO V. CA
YNARES-SANTIAGO, J. / AUGUST 25, 2003
NATURE: Petition for review on certiorari of a decision of the
Court of Appeals
FACTS:
• Atty. Crisostomo contracted the services of Caravan Travel
and Tours Int’l to arrange and facilitate her booking,
ticketing, and accommodation in a tour dubbed Jewels of
Europe at a total cost of P74k; Crisostomo was given
discount for her niece, Menor was the company’s ticketing
manager
• Pursuant to the contract, Menor went to her aunt’s house
on June 12, 1991 (Wednesday) to deliver the travel
documents and plane tickets. Crisostomo gave Menor the
full payment. Menor told her to be at the airport on
Saturday two hours before her flight
• Without checking her travel documents, Crisostomo went
to NAIA on Saturday. She discovered that the flight she
was supposed to take had already departed the previous
day.
• Crisostomo called up Menor to complain. Menor prevailed
upon her aunt to take another tour – the British Pageant.
She was asked anew to pay P21k as partial payment and
commenced the trip in July
• Upon Crisostomo’s return, she demanded the difference
between the sum she paid for Jewels of Europe and the
amount she owed respondent for British Pageant
• Caravan Travel refused to reimburse her saying it was
non-refundable
• Trial Court held that the Caravan Travel was negligent in
erroneously advising Crisostomo of her departure date
through it employee, Menor who was not presented as a
witness. However, Crisostomo was guilty of contributory
negligence for not verifying the exact date of her
departure. Accordingly, 10% of the amount was deducted
from the amount being claimed as refund
• Court of Appeals also found both parties at fault but held
that Crisostomo is more negligent because as a lawyer
and a well-traveled person, she should have known better.
She was ordered to pay the Caravan Travel the balance of
British Pageant plus interest
ISSUE: WON a travel agency is bound under the law to
observe extraordinary diligence in the performance of its
obligation
HELD:
NO. For reasons of public policy, a common carrier in a
contract of carriage is bound by law to carry passengers as far
as human care and foresight can provide using the utmost
diligence of a very cautious person and with due regard for all
circumstances.
However, a travel agency is not a carrier that it is not an
entity engaged in the business of transporting either
passengers or goods. Respondent’s services as a travel
agency include procuring tickets and facilitating travel
permits or visas and booking customers for tours. It is thus
not bound under the law to observe extraordinary diligence in
the performance of its obligation .
–Felman Magcalas
SANTOS VENTURA V. SANTOS
QUISUMBING, J. / NOVEMBER 5, 2004
PARTIES: SANTOS VENTURA HOCORMA FOUNDATION, INC.,
petitioner, vs. ERNESTO V. SANTOS and RIVERLAND, INC.,
respondents
Art. 1169 CC. Those obliged to deliver or to do something
incur in delay from the time the oblige judicially or
 A’11 OBLICON CASE DIGESTS
PAGE 17 OF 25
extrajudicially demands from them the fulfillment of their
obligation.
NATURE: Review on certiorari of the decision and resolution
of the Court of Appeals
FACTS:
Santos had filed several civil cases against Santos Ventura
Hocorma Foundation, Inc. (SVHFI). On October 26, 1990, they
executed a Compromise Agreement which amicably ended all
their pending litigations subject to the following:
• that SVHFI shall pay Santos Php14.5 M with Php1.5 M
immediately upon the execution of the agreement and
the balance of Php13 M whether in lump sum or in
installments within a period of not more than 2 years
from the execution of the agreement; provided that in
the event that SVHFI does not pay the whole or any
part of the balance, it shall be paid with the land or
real properties of SVHFI which were previously covered
by lis pendens but in no case shall the payment of
such balance be later than 2 years from the date of the
agreement.
• that immediately upon the execution of the agreement
and the receipt of the Php1.5 M, Santos shall cause the
dismissal of Civil Cases and voluntarily withdraw the
appeals from the other civil cases; provided that in the
event that SVHFI shall sell or dispose any lands
previously subject of lis pendens, the proceeds of such
sale may be required and shall be partially devoted to
the payment of the SVHFI’s foundations.
• that if there is failure of compliance, the aggrieved
party shall be entitled to a write of execution for the
enforcement of the agreement.
Santos moved for the dismissal of the civil cases and the
lifting of the notices of lis pendens on the real properties
involved. SVHFI also paid the Php1.5M. Subsequently, SVHFI
sold two real properties which were previously subjects of lis
pendens. Upon discovery of this, Santos sent a letter to
SVHFI demanding the payment of the Php13 M which was
ignored by SVHFI.
Meanwhile, on September 20, 1991, the Compromise
Agreement was judicially approved.
Santos applied for the issuance of a writ of execution
of the Compromise agreement which was granted. The sheriff
levied on the real properties of the petitioner which were
auctioned and awarded to Riverland Inc. Santos and
Riverland Inc. filed a Complaint for Declaratory Relief and
Damages alleging delay on the part of SVHFI in paying the
balance and that under the Compromise Agreement, the
obligation became due on October 26, 1992 but the payment
of Php12 M was effected only on November 22, 1994. The
suit covered claims for legal interest on the obligation,
penalty, attorney’s fees, costs of litigation and that the sales
to Riverland Inc be declared final and not subject to
redemption.
RTC: decision for SVFHI
CA: decision for Santos and Riverland Inc.
Arguments of SVHFI: The compromise agreement does not
provide for the payment of interest, thus the legal interest by
way of penalty on account of fault or delay shall not be due
and payable. Also, the said agreement did not provide for a
period within which the obligation will become due and
demandable, thus it is incumbent upon respondent to ask for
judicial intervention to fix the period. It is only when a fixed
period exists that the legal interests can be computed.
Argument of Santos and Riverland Inc: Their right to
damages is based on delay in the payment of the obligation
provided in the compromise agreement which as stated is 2
years from its execution. This was approved by the trial court
and became the law governing their contract. Thus, SVHFI’s
failure to comply entitles them to damages, by way of
interest.
 A’11 OBLICON CASE DIGESTS
PAGE 18 OF 25
ISSUE: WON there was delay on the part of SVHFI so as to
entitle Santos and Riverland Inc to legal interest
DECISION: Yes. Petition is Denied.
REASONING: In order for the debtor to be in delay or default
(otherwise knows as mora which means the delay in the
fulfillment of obligations), the following requisites are to be
present:
1.that the obligation be demandable and already liquidated:
In the case, the obligation was already due and
demandable after the lapse of the 2 year period from the
execution of the contract (October 26, 1990) and not from the
judicial approval of the compromise agreement (September
20, 1991). The 2 year period ended on October 26, 1992.
When the respondents gave a demand letter on October 28,
1992, the obligation was already due and demandable and
the obligation is liquidated because SVFHI knows how must he
is to pay and when he is to pay.
2.that the debtor delays performance:
In the case, SVHFI delayed in the performance. It was
only able to settle the entire balance on February 8, 1995,
more than 2 years after the extrajudicial demand. It also filed
several motions to delay the fulfillment of its obligation.
3.that the creditor requires the performance judicially or extra
judicially:
In the case, the demand letter was sent to SVHFI on
October 28, 1992 which was in accordance with an
extrajudicial demand contemplated by law.
Aside: When the debtor knows the amount and period when
he is to pay, interest as damages is allowed as a matter of
right. The complaining party has been deprived of funds to
which he is entitled by virtue of their compromise agreement.
The goal of compensation requires that the complainant be
compensated for the loss of use of those funds. This
compensation is in the form of interest. In the absence of
agreement, the legal interest shall prevail which is 12% per
annum to be computed from the extrajudicial demand.
–Tim Guanzon
ABELLA V. FRANCISCO
FACTS:
• Francisco had obligations due on December 1928
• To generate funds he sold lots 937 to 945 of Tala
Estate to Abella
• On Oct. 31 Francisco and Abella signed the following
document:
o Received payment of P500 from Julio Abella as
payment on account for the said lots; due on
or before Dec. 15, 1928, extendible 15
days thereafter
o Total debt was around P21,600
• As of Nov. 1928 Abella had paid P915.34
• Francisco executed a power of attorney in favor of
Mabanta because he was in Cebu on December 27;
Francisco’s instructions to Mabanta were to inform
Abella that the option would be considered cancelled if
he failed to make full payment and to return to him
what he has paid thus far; if Abella were to pay the full
amount Mabanta was instructed to sign all the
documents required by the Bureau of Lands for the
transfer of ownership of the said lots
• Mabanta informed Abella of these instructions; Abella
asked for an extension of the period of payment to
which Mabanta agreed, giving him until Jan. 5 1929
• Abella did not offer payment until Jan. 9; Mabanta
refused to accept Abella’s payment and returned to
the latter by check the sum of P915.34 which he paid
previously
 A’11 OBLICON CASE DIGESTS
PAGE 19 OF 25
• Abella brought an action to compel the execution of
the sale in his favor, which was denied by the court;
hence this appeal
ISSUE: WON time is an essential element of this contract for
which the failure to pay on time justifies its rescission
HELD:
• Yes, time was an essential element in this contract
• Lower court held that since this contract was an
option to sell, the period was an essential
consideration; this court’s opinion is divided as to
whether this contract is an option or a sale, but it
agrees that time is essential
• It should be noted that Francisco had obligations due
on December 1928 for which he expected to use the
payment on the said lots
–Mico Cruz
VDA. DE VILLARUEL v. MANILA MOTOR CO. INC. AND
COLMENARES
REYES, J. / DECEMBER 13, 1958
NATURE: Appeal from a judgment of the CFI of Negros
Occidental
FACTS
• This case is a petition of the judgment that ordered Manila
Motor Co., Inc. to pay Villaruel for the lease of their
building from June 1, 1942 to March 29, 1945 as well as for
them to pay for the destruction of the property.
• Manila Motor Co., Inc. leased the building from Villaruel
and entered a contract, the contract lasts for 5 years and
that the amount of Php350 a month should be paid. It is to
be placed on Manila Motor Co., Inc. possession on the 31 st
day of October 1940. The leasing continued until the
invasion in 1941. At this time no payment of rental was
done during the said period.
• When the Americans liberated the country they took
possession of the said property and paid for the same
amount to Villaruel. Manila Motor Co., Inc. wanted to
resume the contract given that the contract gives them
the option to continue such lease. Villaruel however would
want the contract rescinded and for Manila Motor Co., Inc.
to pay for the rentals during from June 1, 1942 until March
29, 1945.
• While the trial was ongoing, the property got burned.
Villaruel then sought for a supplemental complaint
demanding reimbursement. CFI granted the petition of
Villaruel giving rise for this appeal.
ISSUE: WON Manila Motor Co., Inc. is liable to pay for the
rental fees at the time of the Japanese Occupation and the
destruction of property = NO.
HELD/RATIO:
• The occupation is not a pertubacion de hecho (mere
act of trespass) but a pertubacion de derecho
(trespassing under color of title), for which the lessors
VIllaruel were liable. This is because the Japanese
Occupation was legitimate following both international and
domestic law’s recognition of the use of private properties
at the time of war. Applying Art. 1560 of the Civil Code of
Spain of 1889 (“The lessor shall not be liable for any act of
mere disturbance of a third person of the use of the leased
property; but the lessee shall have a direct action against
the trespasser.”), the lessors are liable for it and that such
occurrence resulted to the deprivation of the lessee from
the peaceful use and enjoyment of the property leased.
The obligation ceased during such deprivation.
 A’11 OBLICON CASE DIGESTS
PAGE 20 OF 25
• Also, although “mere disturbance” entails that the
lessee shall have a direct action against the trespasser,
the military occupation was not what the drafters had in
mind, for such occupation is not preventable. Furthermore,
the fact that the military seizure was considered a
fortuitous event means that the failure of one party to
fulfill its commitment entails that the other party is
excused to do his correlative performance, since the causa
of the lease must exist throughout the term of the
contract.
• Lastly, the lessors, through Dr. Javier Villaruel, agreed
after liberation to a renewal of the contract of lease for
another five years (from June 1, 1946 to May 31 of 1951)
without making any reservation regarding the alleged
liability of the lessee company for the rentals
corresponding to the period of occupancv of the premises
by the Japanese army, and without insisting that the non-
payment of such rental was a breach of the contract of
lease. This passivity of the lessors strongly supports the
claim of the lessees that the rentals in question were
verbally waived. Moreover, the lessors accepted payment
of current rentals from October 1945 to June 1946. It was
only in July 1946 that they insisted upon collecting also the
1942-1945 rents, and refused to accept further payments
tendered by the lessee unless their right to collect the
occupation rental was recognized or reserved. The refusal
to accept placed the lessors in default (mora creditoris or
accipiendi) to bear supervening risks of accidental injury
or destruction. Failure to consign does not eradicate the
default of the lessors nor the risk of loss that lay upon
them.
JUDGMENT: Manila Motor Co., Inc. is asked to pay only Php.
1750 from July to November 1946 and not for the petitioned
amount.
–Jahzeel Cruz
TENGCO V. CA
PADILLA, J. / 1989
Review on certiorari
FACTS:
 1942, Tengco entered into a verbal lease agreement
with Lutgarda Cifra over a house in Navotas which
belonged to the latter. Aside from the amount of
rentals, no other condition or term was agreed upon.
The rentals were collected from Tengco by Lutgarda’s
collector from time to time, with no fixed frequency.
 1976, Cifra, Jr., claimed to be the owner the house in
Navotas which was leased to Emilia Tengco. He filed an
action to evict Tengco, from the said premises for her
alleged failure to comply with the terms and conditions
of the lease contract by failing and refusing to pay the
stipulated rentals despite repeated demands.
Judgment was rendered against Tengco. She has
appealed, and raises the following issues:
ISSUES:
1. Is Cifra Jr. the real owner of the said property?
2. Did Cifra Jr. actually delay acceptance of the rentals,
therefore being guilty of mora accipiendi?
3. Does the principle of laches (see Notes) bar Cifra Jr.’s
action?
4. Does Cifra Jr. have a cause of action?
HELD and RATIO:
1. YES. Such was the finding of the lower court, and the
Supreme Court will not dispute the findings, barring
errors of the lower court regarding facts. Such being
the case, Tengco has not given sufficient proof that the
lot she has leased is NOT the lot that Cifra Jr. claims to
own. Further, she herself acknowledged his ownership
by paying him the rentals for the month of January.
 A’11 OBLICON CASE DIGESTS
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2. NO. The non-acceptance of the rentals is justified
because they were tendered to someone who had no
authority to accept them in the first place due to a
change in ownership. Tengco could have released
herself from responsibility by judicial deposit of the
rentals, or actually paying them to Cifra Jr.
3. NO. For laches to apply, there should have been a
failure on Tengco’s part to pay the rent AFTER Cifra Jr.
demanded it, because it would only be at that point
that Cifra Jr. would have a cause of action. Cifra Jr.
demanded the rent only on August 23, 1976, then filed
the current case 3 weeks later, September 16,1976,
after a reasonable amount of time.
4. YES, as we see from the foregoing.
NOTES:
MORA ACCIPIENDI – unreasonable and unexplained delaying
or defaulting on acceptance of a prestation out of negligence
of the enforcement of one’s right/s
LACHES - unreasonable and unexplained delay in bringing a
cause of action before the courts.
–Judith Cortez
CENTRAL BANK V. COURT OF APPEALS
MAKASIAR, C. J. / OCTOBER 3, 1985
FACTS:
o On April 28, 1965, Island Savings Bank approved the
loan application for P80,000.00 of Sulpicio Tolentino,
who, as a security for the loan, executed a real-estate
mortgage over his 100 hectare land.
o On May 22, 1965, a mere P17,000.00 partial release of
the loan was given to Tolentino. He and his wife signed
a promissory note for P17,000.00 at 12% annual
interest payable within 3 years from the date of the
execution of the contract at semi-annual installments.
However, the remaining P63,000.00 was not released.
o On August 13, 1965, the Monetary Board of the Central
Bank issued Resolution 1409 prohibiting Island Savings
Bank from making new loans and investments after
finding out that the bank is suffering from liquidity
problems.
o On August 1, 1968, Island Savings Bank, in view of the
non-payment of the P17,000.00 covered by the
promissory note, filed for the extrajudicial foreclosure of
the real estate mortgage.
o On January 1969, Tolentino filed for specific
performance or rescission and damages, alleging that
the bank failed to deliver the remaining P63,000 and
that he is entitled to the delivery of the P63,000 or if
the balance can’t be delivered, the real estate
mortgage be rescinded.
o The trial court ordered that the bank be enjoined from
continuing the foreclosure of the mortgage. However, it
rules for the dismissal of Tolentino’s petition, ordering
him to pay the P17,000 plus legal charges and interest,
and allowed for the foreclosure of the property.
o Upon the appeal of Tolentino, the CA affirmed the trial
court decision of dismissal of Tolentino’s petition.
However, it ruled that the bank may neither foreclose
the mortgage nor collect the P17,000.00
ISSUE:
1. Can the petition of Tolentino for specific performance
prosper?
2. Is Tolentino liable for the P17,000.00 debt covered by
the promissory note?
3. Can his real estate be foreclosed to satisfy the amount,
if he is to pay?
HELD:
1. No. When Island Savings Bank and Tolentino
entered into the P80,000.00 loan agreement, they
 A’11 OBLICON CASE DIGESTS
PAGE 22 OF 25

undertook reciprocal obligations. In reciprocal such extent. P63,000.00 is 78.75% of P80,000.00,

obligations, the obligation or promise of each party hence the real estate mortgage covering 100
is the consideration for that of the other; and when hectares is unenforceable to the extent of 78.75
one party has performed or is ready and willing to hectares. The mortgage covering the remainder of
perform his part of the contract, the other party 21.25 hectares subsists as a security for the
who has not performed or is not ready and willing P17,000.00 debt. 21.25 hectares is more than
to perform incurs in delay (Art. 1169 of the Civil sufficient to secure a P17,000.00 debt.
Code). Since Island Savings Bank was in default in
fulfilling its reciprocal obligation under their loan –May Calsiyao
agreement, Tolentino, under Article 1191 of the
Civil Code, may choose between specific
performance or rescission with damages in either TELEFAST COMMUNICATIONS/PHILIPPINE WIRELESS,
case. But since Island Savings Bank is now INC. V CASTRO, SR.
prohibited from doing further business by Monetary
Board Resolution No. 967, specific performance in
favor of Tolentino can’t be granted. Rescission is FACTS:
the only alternative remedy left. However, When Sofia was vacationing in the Philippines, her
rescission is only for the P63,000.00 balance of the mother died. She decided to send a telegram to their family
P80,000.00 loan, because the bank is in default residing in the US through the Telefast Communications to
only insofar as such amount is concerned, as there inform them about it. She paid the necessary fees and then
is no doubt that the bank failed to give the left the rest to the company. Later on, the mother was
P63,000.00. interred with only Sofia in attendance. She eventually came
2. Yes. As for the P17,000.00 covered by the back to the US and was surprised to find out that her telegram
never reached her father and siblings. She instituted this
promissory note, the bank has already complied
case against the company. The company’s only defense is
with the obligation to give it. Since Tolentino has
that they were unable to transmit the wire due to some
not complied with his obligation to pay the amount
technical and atmospheric factors which were beyond the
when it was due, the right to rescind belongs to the
control of the company.
bank. Since both parties were in default in the
performance of their respective reciprocal
ISSUE: WON Telefast Communications breached its contract
obligations, they are both liable for damages, which
with Sofia.
offset each other. But the liability of Tolentino to
pay the P17,000.00 is not included in offsetting the
HELD: Yes. Sofia had already paid the necessary fees and
liabilities of both parties, hence he is to pay the
has thus performed her end of the obligation. There was a
amount with interest.
contravention of the tenor when the company neglected to
3. No, Tolentino’s real estate cannot be foreclosed to
send the wire without evidence of exerting sufficient effort to
satisfy the amount. Since Island Savings Bank
overcome the said difficulties.
failed to furnish the P63,000.00 balance of the
P80,000.00 loan, the real estate mortgage of
Damages:
Sulpicio M. Tolentino became unenforceable to
 A’11 OBLICON CASE DIGESTS
PAGE 23 OF 25
Moral – because the shock suffered by the family who only
learned of the death of the mother when she was already
interred was proximately caused by the acts, or lack thereof,
of the company. They were not given the opportunity to
choose to attend her funeral in the Philippines because they
were not informed of its occurrence.
Exemplary – as a warning to other telegram companies to
perform their jobs better and to observe due diligence in
transmitting the messages of their customers to avoid
incurring these unnecessary expenses.
Compensatory (for Sofia) – because she had to go to the
Philippines to file this suit which would not have been
necessary had the company performed its job.
*guys, I don’t know what contravention of tenor means yet so
this might not be very helpful to us. But just the same… 
–Anna Basman
MAGAT V. MEDIALDEA
ESCOLIN, J. ; APRIL 20, 1983
NATURE:
Petition for review on certiorari to determine the sufficiency of
the averments contained in the complaint for alleged breach
of contract filed by petitioner Victorino D. Magat against
respondent Santiago A. Guerrero of the CFI of Rizal, presided
by respondent Judge Leo D. Medialdea, now Deputy Judicial
Administrator, which complaint was dismissed for failure to
state a cause of action.
FACTS:
 Defendant entered into a contract with the U.S. Navy
Exchange, Subic Bay, Philippines, for the operation of a
fleet of taxicabs, each taxicab to be provided with the
necessary taximeter and a radio transceiver for
receiving and sending of massage from mobile taxicab
to fixed base stations within the Naval Base
 Because of the experience of the plaintiff in connection
with his various contracts with the U.S. Navy and his
goodwill already established with the Naval personnel,
Isidro Q. Aligada, acting as agent of the defendant
approached the plaintiff and proposed to import from
Japan thru the plaintiff or thru plaintiff's Japanese
business associates, all taximeters and radio
transceivers needed by the defendant
 Defendant and his agent were able to import from
Japan with the assistance of the plaintiff and his
Japanese business associates the necessary taximeters
for defendant's taxicabs in partial fulfillment of
defendant's commitments with the U.S. Navy
Exchange, the plaintiff's assistance in this matter
having been given to the defendant gratis et amore
 Isidro Q. Aligada, acting as agent of the defendant,
made representations with the plaintiff that defendant
desired to procure from Japan thru the plaintiff the
needed radio transceivers and to this end, Isidro Q.
Aligada secured a firm offer in writing dated
September 25, 1972, wherein the plaintiff quoted in his
offer a total price of $77,620.59 FOB Yokohama, the
goods or articles offered for sale by the plaintiff to the
defendant to be delivered sixty to ninety days after
receipt of advice from the defendant of the radio
frequency assigned to the defendant by the proper
authorities
 Plaintiff received notice of the fact that the defendant
accepted plaintiff's offer to sell to the defendant the
items as well as the terms and conditions of said offer,
as shown by the signed conformity of the defendant
which was duly delivered by the defendant's agent to
the plaintiff, whereupon all that the plaintiff had to do
was to await advice from the defendant as, to the radio
frequency to be assigned by the proper authorities to
the defendant
 A’11 OBLICON CASE DIGESTS
PAGE 24 OF 25
 In his letter dated October 6, 1972, the defendant
advised his agent that the U.S. Navy provided him with
the radio frequency of 34.2 MHZ [Megaherzt] and
requested his said agent to proceed with his order
placed with the plaintiff, which fact was duly
communicated to the plaintiff
 By his letter dated October 7, 1972 addressed to the
plaintiff by the defendant's agent, defendant's agent
qualified defendant's instructions that plaintiff should
proceed to fulfill defendant's order only upon receipt
by the plaintiff of the defendant's letter of credit
 Plaintiff awaited the opening of such a letter of credit
by the defendant
 Defendant and his agent have repeatedly assured
plaintiff of the defendant's financial capabilities to pay
for the goods and in fact he accomplished the
necessary application for a letter of credit with his
banker, but he subsequently instructed his banker not
to give due course to his application for a letter of
credit and that for reasons only known to the
defendant, he fails and refuses to open the necessary
letter of credit to cover payment of the goods
 It came to the knowledge of the plaintiff that the
defendant has been operating his taxicabs without the
required radio transceivers and when the U.S. Navy
Authorities of Subic Bay, Philippines, were pressing
defendant for compliance with his commitments with
respect to the installations of radio transceivers on his
taxicabs he impliedly laid the blame for the delay upon
the plaintiff thus destroying the reputation of the
plaintiff with the mid Naval Authorities with whom
plaintiff transacts business
 On March 27, 1973, plaintiff wrote a letter thru his
counsel to ascertain from the defendant as to whether
it is his intention to fulfill his pan of the agreement with
the plaintiff or whether he desired to have the contract
between them definitely cancelled, but defendant did
not even have the courtesy to answer plaintiff's
demand
Petitioner’s Claims The defendant entered into a contract
with the plaintiff without the least intention of faithfully
complying with his obligations, but he did so only in order to
obtain the concession from the U.S. Navy Exchange. of
operating a fleet of taxicabs inside the U.S. Naval Base to his
financial benefit and at the expense and prejudice of third
parties such as the plaintiff. That in view of the defendant's
failure to fulfill his contractual obligations with the plaintiff,
the plaintiff will suffer several damages
Respondent’s Arguments Respondent Guerrero filed a
motion to dismiss complaint for lack of cause of action. He
alleged that plaintiff was merely anticipating his loss or
damage, which might result from the alleged failure of
defendant to comply with the terms of the alleged contract.
Plaintiff's right of recovery under his cause of action is
premised not on any loss or damage actually suffered by him
but on a non-existing loss or damage which he is expecting to
incur in the near future. Plaintiff's right therefore under his
cause of action is not yet fixed or vested.
 The respondent judge, over petitioner's opposition,
issued a minute order dismissing the complaint
ISSUE: WON there is sufficient cause of action
HELD: YES.
Ratio The essential elements of a cause of action are: [1] the
existence of a legal right of the plaintiff; [2] a correlative duty
of the defendant and [3] an act or omission of the defendant
in violation of the plaintiff's right, with consequent injury or
damage to the latter for which he may maintain an action for
recovery of damages or other appropriate relief.
 Article 1170 Of the Civil Code provides:
"Those who in the performance of their obligation are guilty of
fraud. negligence, or delay, and those who in any manner
contravene the tenor thereof are liable for damages."
The phrase "in any manner contravene the tenor" of the
obligation includes any illicit act or omission which impairs the
 A’11 OBLICON CASE DIGESTS
PAGE 25 OF 25

strict and faithful fulfillment of the obligation and every kind

of defective performance. Disposition The questioned order of dismissal was set aside
and the case was ordered remanded to the court of origin for
 The damages which the obligor is liable for includes further proceedings. No costs.
not only the value of the loss suffered by the obligee
[daño emergense] but also the profits which the latter –Noel Baga
failed to obtain [lucro cesante]. If the obligor acted in
good faith, he shall be liable for those damages that
are the natural and probable consequences of the
breach of the obligation and which the parties have
foreseen or could have reasonably foreseen at the
time the obligation was constituted; and in case of
fraud, bad faith, malice or wanton attitude, he shall be
liable for all damages which may be reasonably
attributed to the nonperformance of the obligation.
The same is true with respect to moral and exemplary
damages. The applicable legal provisions on the
matter, Articles 2220 and 2232 of the Civil Code, allow
the award of such damages in breaches of contract
where the defendant acted in bad faith.

Reasoning The complaint recites the circumstances that led

to the perfection of the contract entered into by the parties. It
further avers that while petitioner had fulfilled his part of the
bargain, private respondent failed to comply with his
correlative obligation by refusing to open a letter of credit to
cover payment of the goods ordered by him, and that
consequently, petitioner suffered not only loss of his expected
profits, but moral and exemplary damages as well. From
these allegations, the essential elements of a cause of action
are present.
 Indisputably, the parties, both businessmen, entered
into the aforesaid contract with the evident intention of
deriving some profits therefrom. Upon breach of the
contract by either of them, the other would necessarily
suffer loss of his expected profits. Since the loss comes
into being at the very moment of breach, such loss is
real, "fixed and vested" and, therefore, recoverable
under the law. The complaint sufficiently alleges bad
faith on the part of the defendant.