E.

Breach of Obligations



SICAM vs. JORGE
G.R. No. 159617 August 8, 2007

Facts:

Lulu Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam to secure a loan.

On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry were found inside the
pawnshop vault.

Sicam sent respondent Lulu a letter informing her of the loss of her jewelry due to the robbery incident in the pawnshop.
Respondent Lulu expressed disbelief stating that when the robbery happened, all jewelry pawned were deposited with Far East Bank near
the pawnshop since it had been the practice that before they could withdraw, advance notice must be given to the pawnshop so it could
withdraw the jewelry from the bank. Respondent Lulu then requested petitioner Sicam to prepare the pawned jewelry for withdrawal on but
petitioner Sicam failed to return the jewelry.

Respondent Lulu is seeking indemnification for the loss of pawned jewelry and payment of damages. Petitioner is interposing the
defense of caso fortuito on the robber committed against the pawnshop.

Issue:

WON Sicam is liable for the loss of the pawned articles in their possession? YES

Held:

Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere
difficulty to foresee the happening is not impossibility to foresee the same.

Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of negligence on the part of
herein petitioners.

A review of the records clearly shows that petitioners failed to exercise reasonable care and caution that an ordinarily prudent
person would have used in the same situation. Petitioners were guilty of negligence in the operation of their pawnshop business. No
sufficient precaution and vigilance were adopted by petitioners to protect the pawnshop from unlawful intrusion. There was no clear
showing that there was any security guard at all.

Sicams admission that the vault was open at the time of robbery is clearly a proof of petitioners failure to observe the care,
precaution and vigilance that the circumstances justly demanded. Petitioner Sicam testified that once the pawnshop was open, the
combination was already off. Instead of taking the precaution to protect them, they let open the vault, providing no difficulty for the robbers
to cart away the pawned articles.

In contrast, the robbery in this case took place in 1987 when robbery was already prevalent and petitioners in fact had already
foreseen it as they wanted to deposit the pawn with a nearby bank for safekeeping. Moreover, unlike in Austria, where no negligence was
committed, we found petitioners negligent in securing their pawnshop as earlier discussed.


Sicam vs. Jorge

Provisions and Legal Concepts: (1173 and 1174 NCC, Robbery not an FE per se, duty of a pawnshop owner, liability for contributory
negligence)

Facts:
On different dates from September to October 1987, Lulu V. Jorge (respondent Lulu) pawned several pieces of jewelry with
Agencia de R. C. Sicam located at No.17 Aguirre Ave., BF Homes Paraaque, Metro Manila, to secure a loan in the total amount of
P59,500.00.On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry were found inside the
pawnshop vault. The incident was entered in the police blotter of the Southern Police District, Paraaque Police Station as follows:
Investigation shows that at above TDPO, while victims were inside the office, two (2) male unidentified persons entered into the said office
with guns drawn. Suspects: went straight inside and poked his gun toward Romeo Sicam and thereby tied him with an electric wire while
suspects poked his gun toward Divina Mata and Isabelita Rodriguez and ordered them to lay (sic) face flat on the floor. Suspects asked
forcibly the case and assorted pawned jewelries items mentioned above.
Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987 informing her of the loss of her jewelry due to the robbery
incident in the pawnshop.
Petitioner Lulu disbelieved the claim. Respondent Lulu then requested petitioner Sicam to prepare the pawned jewelry for
withdrawal on November 6, 1987 but petitioner Sicam failed to return the jewelry.
On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, filed a complaint against petitioner Sicam with the
Regional Trial Court of Makati seeking indemnification for the loss of pawned jewelry and payment of actual, moral and exemplary
damages as well as attorney's fees.
Petitioner Sicam filed his Answer contending that he is not the real party-in-interest as the pawnshop was incorporated on April
20, 1987 and known as Agencia de R.C. Sicam, Inc; that petitioner corporation had exercised due care and diligence in the safekeeping of
the articles pledged with it and could not be made liable for an event that is fortuitous.
Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he is concerned considering that he is not the real party-in-
interest. Respondents opposed the same.
The RTC denied the motion in an Order dated November 8, 1989.
The RTC ruled that petitioner corporation could not be held liable for the loss of the pawned jewelry since it had not been
rebutted by respondents that the loss of the pledged pieces of jewelry in the possession of the corporation was occasioned by armed robbery;
that robbery is a fortuitous event which exempts the victim from liability for the loss, citing the case of Austria v. Court of Appeals; and that
the parties transaction was that of a pledgor and pledgee and under Art. 1174 of the Civil Code, the pawnshop as a pledgee i s not
responsible for those events which could not be foreseen.
Respondents appealed the RTC Decision to the CA. In a Decision dated March 31, 2003, the CA reversed the RTC, the
dispositive portion of which reads as follows:
The CA held that the corresponding diligence required of a pawnshop is that it should take steps to secure and protect the
pledged items and should take steps to insure itself against the loss of articles which are entrusted to its custody as it derives earnings from
the pawnshop trade which petitioners failed to do; that Austria is not applicable to this case since the robbery incident happened in 1961
when the criminality had not as yet reached the levels attained in the present day; that they are at least guilty of contributory negligence and
should be held liable for the loss of jewelries; and that robberies and hold-ups are foreseeable risks in that those engaged in the pawnshop
business are expected to foresee.
The CA concluded that both petitioners should be jointly and severally held liable to respondents for the loss of the pawned
jewelry. Hence, the instant petition for review with the following assignment of errors:

Issues:
W/N CA was right to hold petitioners liable for the loss of the pawned articles in their possession.
Held:
Petitioners insist that they are not liable since robbery is a fortuitous event and they are not negligent at all. We are not
persuaded. Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere
difficulty to foresee the happening is not impossibility to foresee the same. The burden of proving that the loss was due to a fortuitous event
rests on him who invokes it. And, in order for a fortuitous event to exempt one from liability, it is necessary that one has committed no
negligence or misconduct that may have occasioned the loss.
It has been held that an act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible
adverse consequences of such a loss. One's negligence may have concurred with an act of God in producing damage and injury to another;
nonetheless, showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from
liability. When the effect is found to be partly the result of a person's participation -- whether by active intervention, neglect or failure to act
-- the whole occurrence is humanized and removed from the rules applicable to acts of God. Petitioner Sicam had testified that there was a
security guard in their pawnshop at the time of the robbery.
He likewise testified that when he started the pawnshop business in 1983, he thought of opening a vault with the nearby bank for
the purpose of safekeeping the valuables but was discouraged by the Central Bank since pawned articles should only be stored in a vault
inside the pawnshop. The very measures which petitioners had allegedly adopted show that to them the possibility of robbery was not only
foreseeable, but actually foreseen and anticipated. Petitioner Sicams testimony, in effect, contradicts petitioners defense of fortuitous
event. Moreover, petitioners failed to show that they were free from any negligence by which the loss of the pawned jewelry may have been
occasioned.
Robbery per se, just like carnapping, is not a fortuitous event .It does not foreclose the possibility of negligence on the part of
herein petitioners . On the contrary, by the very evidence of petitioners, the CA did not err in finding that petitioners are guilty of concurrent
or contributory negligence as provided in Article 1170 of the Civil Code, to wit: Art. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for
damages.29Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments which are engaged in making
loans secured by pledges, the special laws and regulations concerning them shall be observed, and subsidiarily, the provisions on pledge,
mortgage and antichresis. The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall take care of
the thing pledged with the diligence of a good father of a family. This means that petitioners must take care of the pawns the way a prudent
person would as to his own property. In this connection, Article 1173 of the Civil Code further provides: Art. 1173. The fault or negligence
of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201,
paragraph 2 shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected
of a good father of a family shall be required. Unlike in the Cruz case, the robbery in this case happened in petitioners' pawnshop and they
were negligent in not exercising the precautions justly demanded of a pawnshop.


Petition denied. CA affirmed.



SICAM vs. JORGE G.R. No. 159617 August 8, 2007

Facts:
Lulu Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam to secure a loan. On October 19, 1987, two armed men
entered the pawnshop and took away whatever cash and jewelry were found inside the pawnshop vault. Sicam sent respondent Lulu a letter
informing her of the loss of her jewelry due to the robbery incident in the pawnshop. RespondentLulu expressed disbelief stating that when
the robbery happened, all jewelry pawned were deposited with Far East Bank near thepawnshop since it had been the practice that before
they could withdraw, advance notice must be given to the pawnshop so it couldwithdraw the jewelry from the bank. Respondent Lulu then
requested petitioner Sicam to prepare the pawned jewelry for withdrawal onbut petitioner Sicam failed to return the jewelry.Respondent
Lulu is seeking indemnification for the loss of pawned jewelry and payment of damages. Petitioner is interposing the defense of caso
fortuito on the robber committed against the pawnshop.

Issue:
WON Sicam is liable for the loss of the pawned articles in their possession? YES

Held:
Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere
difficulty to foresee the happening is not impossibility to foresee the same. Robbery per se, just like carnapping, is not a fortuitous event. It
does not foreclose the possibility of negligence on the part of herein petitioners. A review of the records clearly shows that petitioners failed
to exercise reasonable care and caution that an ordinarily prudent person would have used in the same situation. Petitioners were guilty of
negligence in the operation of their pawnshop business. No sufficient precaution and vigilance were adopted by petitioners to protect the
pawnshop from unlawful intrusion. There was no clear showing that there was any security guard at all.
Sicams admission that the vault was open at the time of robbery is clearly a proof of petitioners failure t
o observe the care, precaution and vigilance that the circumstances justly demanded. Petitioner Sicam testified that once the pawnshop was
open, the combination was already off. Instead of taking the precaution to protect them, they let open the vault, providing no difficulty for
the robbers to cart away the pawned articles. In contrast, the robbery in this case took place in 1987 when robbery was already prevalent and
petitioners in fact had already foreseen it as they wanted to deposit the pawn with a nearby bank for safekeeping. Moreover, unlike in
Austria, where no negligence was committed, we found petitioners negligent in securing their pawnshop as earlier discussed. In Sicam, et al.
v. Jorge, et al., G.R. No. 159617, August 8, 2007, Lulu Jorge pawned several pieces of jewelry with Agencia de R.C. Sicam to secure a loan
in the amount of P59,500.00. It was alleged that two armed men entered the pawnshop and took away whatever cash and jewelry found
inside the pawnshop vault. It was reported to the police. She sued for damages but Sicam interposed the defense of fortuitous event, alleging
that there was robbery.
The SC brushed aside the contention and said: Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose
the possibility of negligence on his part In a case similarly situated, it was ruled that: It is not a defense for a repaid shop of motor vehicles
to escape liability simply because the damage or loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se
cannot be considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from anothers rightful possession, as in
cases of carnapping, does not automatically give rise to a fortuitous event. To be considered as such, carnapping entails more than the mere
forceful taking of anothers property. It must be proved and established that the event was an act of God or was done solely by third parties
and that neither the claimant nor the person alleged to be negligent has any participation.
In accordance with the Rules of Evidence, the burden of proving that the loss was due to a fortuitous event rests on him who
invokes it which in this case is the private respondent. However, other than the police report of the alleged carnapping incident, no other
evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to
which only private respondent is privy, does not suffice to establish the carnapping. Neither does it prove that there was no fault on the party
of private respondent notwithstanding the parties agreement atthe pre-trial that the car was carnapped. Carnapping does not foreclose the
possibility of fault or negligence on the part of private respondent. (Co. v. CA, 353 Phil. 305 (1998); Sicam, et al. v. Jorge, et al., G.R. No.
159617, August 8, 2007).In another case, it was held that to be relieved from civil liability of returning the pendant under Article 1174 of the
Civil Code, it would only be sufficient that the unforeseen event, the robbery, took place without any concurrent fault on the debtors part,
and
this can be done by preponderance of evidence; that o be free from liability for reason of fortuitous event, the debtor must, in addition to the
case itself, be free from any concurrent or contributory fault or negligence. (Sicam, et al. v. Jorge, et al., supra.)


OBLI GATI ONS AND CONTRACTS- FORTUI TOUS EVENT, Robbery

Robbery per se is not a fortuitous event.

In Sicam, et al. v. Jorge, et al., G.R. No. 159617, August 8, 2007, Lulu Jorge pawned several pieces of jewelry with Agencia de
R.C. Sicam to secure a loan in the amount of P59,500.00. It was alleged that two armed men entered the pawnshop and took away whatever
cash and jewelry found inside the pawnshop vault. It was reported to the police. She sued for damages but Sicam interposed the defense of
fortuitous event, alleging that there was robbery. The SC brushed aside the contention and said: Robbery per se, just like carnapping, is not a
fortuitous event. It does not foreclose the possibility of negligence on his part. In a case similarly situated, it was ruled that: It is not a
defense for a repaid shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its possession
was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was unlawfully andforcefully
taken from anothers rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be considered
as such, carnapping entails more than the mere forceful taking of anothers property. It must be proved and established that the event was an
act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negligent has any participation. In
accordance with the Rules of Evidence, the burden of proving that the loss was due to a fortuitous event rests on him who invokes it which
in this case is the private respondent. However, other than the police report of the alleged carnapping incident, no other evidence was
presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to which only
private respondent is privy, does not suffice to establish the carnapping. Neither does it prove that there was no fault on the party of private
respondent notwithstanding the parties agreement at the pre-trial that the car was carnapped. Carnapping does not foreclose the possibility
of fault or negligence on the part of private respondent. (Co. v. CA, 353 Phil. 305(1998); Sicam, et al. v. Jorge, et al., G.R. No. 159617,
August 8, 2007).In another case, it was held that to be relieved from civil liability of returning the pendant under Article 1174 of the Civil
Code, it would only be sufficient that the unforeseen event, the robbery, took place without any concurrent fault on the debtors part, and
this can be done by preponderance of evidence; that o be free from liability for reason of fortuitous event, thedebtor must, in addition to the
case itself, be free from any concurrent or contributory fault or negligence. (Sicam, et al. v. Jorge, et al., supra.).



MANILA ELECTRIC COMPANY vs. RAMOY
G.R. No. 158911 : March 4, 2008


FACTS:
In the year 1987, the National Power Corporation (NPC) filed with the MTC Quezon City a case for ejectment against several
persons allegedly illegally occupying its properties in Baesa, Quezon City. among the defendants in the ejectment case was Leoncio Ramoy,
one of the plaintiffs in the case at bar. On April 28, 1989 the MTC rendered judgment for MERALCO to demolish or remove the building
and structure they built on the land of the plaintiff and to vacate the premises. On June 20, 1999 NPC wrote to MERALCO requesting the
immediate disconnection of electric power supply to all residential and commercial establishments beneath the NPC transmission lines along
Baesa, Quezon City.In a letter dated August 17, 1990 MERALCO requested NPC for a joint survey to determine all the establishments
which are considered under NPC property. In due time, the electric service connection of the plaintiffs was disconnected. During the ocular
inspection ordered by the Court, it was found out that the residence of the plaintiffs-spouses was indeed outside the NPC property.

ISSUES:

(1) WON the Court of Appeals gravely erred when it found MERALCO negligent when it disconnected the subject electric
service of respondents.
(2) WON the Court of Appeals gravely erred when it awarded moral and exemplary damages and attorneys fees against
MERALCO under the circumstances that the latter acted in good faith in the disconnection of the electric services of the respondents.


RULING:

(1) No. The Court agrees with the CA that under the factual milieu of the present case, MERALCO failed to exercise the utmost
degree of care and diligence required of it, pursuant to Articles 1170 & 1173 of the Civil Code. It was not enough for MERALCO to merely
rely on the Decision of the MTC without ascertaining whether it had become final and executory. Verily, only upon finality of the said
Decision can it be said with conclusiveness that respondents have no right or proper interest over the subject property, thus, are not entitled
to the services of MERALCO.
(2) No. MERALCO willfully caused injury to Leoncio Ramoy by withholding from him and his tenants the supply of electricity
to which they were entitled under the Service Contract. This is contrary to public policy because, MERALCO, being a vital public utility, is
expected to exercise utmost care and diligence In the performance of its obligation. Thus, MERALCOs failure to exercise utmost care and
diligence in the performance of its obligation to Leoncio Ramoy is tantamount to bad faith. Leoncio Ramoy testified that he suffered
wounded feelings because of MERALCOs actions.
Furthermore, due to the lack of power supply, the lessees of his four apartments on subject lot left the premises. Clearly,
therefore Leoncio Ramoy is entitled to moral damages in the amount awarded by the CA. Nevertheless, Leoncio is the sole person entitled
to moral damages as he is the only who testified on the witness stand of his wounded feelings. Pursuant to Article 2232 of the Civil Code,
exemplary damages cannot be awarded as MERALCOs acts cannot be considered wanton, fraudulent, reckless, oppressive or malevolent.
Since the Court does not deem it proper to award exemplary damages in this case then the CAs award of attorneys fees should likewise be
deleted, as pursuant to Article 2208 of the Civil Code of which the grounds were not present.




Solar Harvest, Inc. Vs. Davao Corrugated Carton Corporation
Contracts; rescission; reciprocal obligations.
The right to rescind a contract arises once the other party defaults in the performance of his obligation.
In determining when default occurs, Article 1191 should be taken in conjunction with Article 1169 of the same law.

In reciprocal obligations, as in a contract of sale, the general rule is that the fulfillment of the parties respective obligations should be
simultaneous.
Hence, no demand is generally necessary because, once a party fulfills his obligation and the other party does not fulfill his, the latter
automatically incurs in delay.
But when different dates for performance of the obligations are fixed, the default for each obligation must be determined by the rules given
in the first paragraph of Article 1169, that is, the other party would incur in delay only from the moment the other party demands fulfillment
of the formers obligation.
Thus, even in reciprocal obligations, if the period for the fulfillment of the obligation is fixed, demand upon the obligee is still necessary
before the obligor can be considered in default and before a cause of action for rescission will accrue.

Solar Harvest, Inc. Vs. Davao Corrugated Carton Corporation
GR No. 176858, July 26, 2010

FACTS:
In the 1
st
Quarter of 1998, Solar Harvest and Davao Corrugated entered into an unwritten agreement. Solar Harvest placed orders
for customized boxes for its business of exporting bananas at USD 1.10 each. Petitioner made a full payment of USD 40,150.00. By Jan. 3,
2001 petitioner had not received any of the ordered boxes. On Feb. 19, 2001Davao Corrugated replied that as early as April 3, 1998,
order/boxes are completed and Solar Harvest failed to pick them up from their warehouse within 30 days from completion as agreed upon.
Respondent mentioned that petitioner even placed additional order of 24,000.00 boxes, out of which, 14,000 had already been manufactured
without any advance payment from Solar Harvest. Davao Corrugated then demanded that Solar Harvest remove boxes from their
warehouse, pay balance of USD 15,400.00 for the additional boxes and P132,000 as storage fee. On August 17, 2001 Solar harvest filed
complaint against Davao Corrugated for sum of money and damages claiming that the agreement was for the delivery of the boxes, which
Davao Corrugated did not do. They further alleged that whenever repeated follow-up was made to Davao Corrugated, they would only see
sample boxes and get promise of delivery. Due to Davao Corrugateds failure to deliver, Solar Harvest had to cancel the order and
demanded payment and/or refund which Davao Corrugated refused to pay. Davao Corrugated counterclaimed that they had already
completed production of the 36,500 boxes plusan additional 14,000 boxes (which was part of the additional 24,000 order that is unpaid). The
agreement was for Solar Harvest to pick up the boxes, which they did not do. They even averred that on Oct. 8, 1998 Solar Harvests
representative Bobby Que even went to the warehouse to inspect and saw that indeed boxes were ready for pick up. OnFeb. 20, 1999, Que
visited the factory again and said that they ought to sell the boxes to recoup some of the costs of the14,000 additional orders because their
transaction to ship the bananas did not materialize. Solar Harvest denies that they made the additional order. On March 20, 2004 the RTC
ruled in favor of Davao Corrugated.

ISSUE:
Whether or not Davao Corrugated was responsible for breach of contract as Solar Harvest had not yet demanded from it the
delivery of the boxes?

HELD:
NO. The CA held that it was unthinkable that for around 2 years petitioner merely followed up and did notdemand the delivery of
the boxes. Even assuming that the agreement is for delivery by Davao Corrugated, respondent would not be liable for breach of contract as
petitioner had not yet demanded from it the delivery of the boxes. There is no error in the decision of the RTC. Furthermore, the claim for
reimbursement is actually one for rescission or resolution of contract under Article 1191 of the Civ. Code. The right to rescind contracts
arises once the party defaults in the performance of his obligation. Article 1191 should be taken in conjunction with Article 1169: Those
obliged to deliver or to do something in delay from the time the obligee judicially or extrajudicially demands form them the fulfilment of
their obligation. However the demand from creditor shall not be necessary in order that delay may exist.:
1. When the obligation or the law expressly so declares, or
2. When from the nature and the circumstance of the obligation it appears that the designation of the time when the thing is to be
delivered or the service is to be rendered was a controlling motive for the establishment of the contract; OR
3. When the demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal
obligations, the general rule is that the fulfilment of the parties s respective obligations should be simultaneous. No demand is necessary
because once a party fulfills his obligation and the other party fails to do his, the latter automatically incurs delay. When dates are set, the
default for each obligation is determined by the rules given in the 1
st
paragraph of the article. Thus even in reciprocal obligations, if the
period for the fulfilment of the obligation is fixed, demand from the obligee is still necessary before the obligor can be considered in default
and before a cause of action for rescission will accrue. In the case of Solar Harvest, merely following up the order was not the same as
demanding for the boxes. The SC held that Solar Harvests petition is denied and that Davao Corrugated did not commit breach of contract
and may remove the boxes from their premises after petitioner is given a period of time to remove them from their warehouse as they deem
proper (Court gave 30day period to comply with this).



Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc.
Diligence; standard. Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of diligence which is to
be observed in the performance of an obligation then that which is expected of a good father of a family or ordinary diligence shall be
required.

Mindanao Terminal, a stevedoring company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard
M/V Mistrau, had acted merely as a labor provider in the case at bar. There is no specific provision of law that imposes a higher degree of
diligence than ordinary diligence for a stevedoring company or one who is charged only with the loading and stowing of cargoes. It was
neither alleged nor proven by Phoenix and McGee that Mindanao Terminal was bound by contractual stipulation to observe a higher degree
of diligence than that required of a good father of a family. Hence, the Supreme Court concluded that following Article 1173, Mindanao
Terminal was required to observe ordinary diligence only in loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau. ,


Due diligence; stevedore. There is a distinction between an arrastre and a stevedore. Arrastre, a Spanish word which refers to hauling of
cargo, comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and the ships tackle. The
responsibility of the arrastre operator lasts until the delivery of the cargo to the consignee. The service is usually performed by
longshoremen. On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or between the ships tackle and
the holds of the vessel. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel. It is not disputed
that Mindanao Terminal was performing purely stevedoring function while the private respondent in theSumma case was performing
arrastre function.

Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc.
Quasi-delict; solidary liability. Loadmasters claim that it was never privy to the contract entered into by Glodel with the consignee
Columbia or R&B Insurance as subrogee, is not a valid defense. It may not have a direct contractual relation with Columbia, but it is liable
for tort under the provisions of Article 2176 of the Civil Code on quasi-delicts. Pertinent is the ruling enunciated in the case of Mindanao
Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New York,/McGee & Co., Inc. where this Court held that a tort
may arise despite the absence of a contractual relationship.

In connection therewith, Article 2180 provides:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons
for whom one is responsible.

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business or industry.

It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver and helper) were
instrumental in the hijacking or robbery of the shipment. As employer, Loadmasters should be made answerable for the damages caused by
its employees who acted within the scope of their assigned task of delivering the goods safely to the warehouse.

Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer
failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. To
avoid liability for a quasi-delict committed by its employee, an employer must overcome the presumption by presenting convincing proof
that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. In this regard,
Loadmasters failed. Loadmasters Customs Services, Inc. vs. Glodel Brokerage Corporation and R & B Insurance Corporation; G.R. No.
179446, January 10, 2011.


MINDANAO TERMINAL AND BROKERAGESERVICE, INC.- versus -PHOENIX ASSURANCE COMPANY OF NEW
YORK/MCGEE & CO., INC
G.R. No. 162467 May 8, 2009
FACTS:
Del Monte Philippines, Inc. contracted petitioner Mindanao Terminal and Brokerage Service, Inc., a stevedoring company, to
load and stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202cartons of fresh pineapples belonging to Del
Monte Fresh Produce International, Inc. into the cargo hold of the vessel
M/V Mistrau. The vessel was docked at the port of Davao City and the goods were to be transported by it to the port of Inchon, Korea in
favor of consignee Taegu Industries, Inc. Del Monte Produce insured the shipment under an "open cargo policy" with private respondent
Phoenix Assurance Company of New York , a non-life insurance company, and private respondent McGee & Co. Inc. (McGee), the
underwriting manager/agent of Phoenix. The vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then
discovered upon discharge that some of the cargo was in bad condition. The Marine Cargo Damage Surveyor of Incok Loss and Average
Adjuster of Korea, through its representative Byeong Yong Ahn (Byeong), surveyed the extent of the damage of the shipment. In a survey
report, it was stated that16,069 cartons of the banana shipment and2,185 cartons of the pineapple shipment were so damaged that they no
longer had commercial value.

Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from the port of Davao City and arrived at
the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad condition. Del Monte Produce filed a
claim under the open cargo policy for the damages to its shipment. McGees Marine Claims Insurance Adjusterevaluated the claim and
recommended that payment in the amount of $210,266.43 be made. Phoenix and McGee instituted an action for damages against Mindanao
Terminal After trial, the RTC held that the only participation of Mindanao Terminal was to load the cargoes on board the
M/V Mistrau under the direction and supervision of the ships officers, who would not have accepted the cargoes on board the vessel and
signed the foremans report unless they were properly arranged and tightly secured to with stand voyage across the open seas. Accordingly,
Mindanao Terminal cannot be held liable for whatever happened to the cargoes after it had loaded and stowed them. Moreover, citing the
survey report, it was found by the RTC that the cargoes were damaged on account of a typhoon which
M/V Mistrau had encountered during the voyage. It was further held that Phoenix and McGee had no cause of action against Mindanao
Terminal because the latter, whose services were contracted by Del Monte a distinct corporation from Del Monte Produce, had no contract
with the assured Del Monte Produce. The RTC dismissed the complaint and awarded the counterclaim of Mindanao Terminal in the amount
of P83,945.80 as actual damages and P100,000.00 as attorneys fees.

ISSUE:
Whether or not Phoenix and McGee have a cause of action and whether Mindanao Terminal is liable for not having exercised
extraordinary diligence in the transport and storage of the cargo.

RULING:
No, in the present case, Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the cargoes from
the pier to the ships cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore is not a common carrier for
it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for profit. **Phoenix and McGee
appealed to the Court of Appeals. The appellate court reversed and set aside the decision The same court ordered Mindanao Terminal to pay
Phoenix and McGee" the total amount of $210,265.45 plus legal interest from the filing of the complaint until fully paid and attorneys fees
of 20% of the claim." It sustained Phoenixs and McGees argument that the damage in the cargoes was the result of improper stowage by
Mindanao Terminal.** Mindanao Terminal filed a motion for reconsideration, which the Court of Appeals denied in its 26 February 2004
resolution. Hence, the present petition for review.



AGCAOILI VS. GSIS
No. L-30056, August 30, 1988

FACTS:
The appellant Government Service Insurance System (GSIS) approved the application of the appellee Marcelo
Agcaoili for the purchase of the house and lot in the GSIS Housing Project at Nangka, Marikina, Rizal, but said
application was subject to the condition that the latter should forthwith occupy the house. Agcaoili lost no time in
occupying the house but he could not stay in it and had to leave the very next day because the house was nothing
more than a shell, in such a state that civilized occupation was not possible: ceiling, stairs, double walling, lighting
facilities, water connection, bathroom, toilet kitchen, drainage, were inexistent. Agcaoili did however asked a homeless
friend, a certain Villanueva, to stay in the premises as some sort of watchman, pending the completion of the
construction of the house. He thereafter complained to the GSIS but to no avail.
Subsequently, the GSIS asked Agcaoili to pay the monthly amortizations of P35.56 and other fees. He paid the first
monthly amortizations and incidental fees, but refused to make further payments until and unless the GSIS completed
the housing unit. Thereafter, GSIS cancelled the award and required Agcaoili to vacate the premise. The house and lot
was consequently awarded to another applicant. Agcaoili reacted by instituting suit in the Court of First Instance of
Manila for specific performance and damages. The judgment was rendered in favor of Agcaoili. GSIS then appealed
from that judgment.

ISSUE:
Was the cancellation by GSIS of the award in favor of petitioner Agcaoili just and proper?

RULING:
No. It was the duty of the GSIS, as seller, to deliver the thing sold in a condition suitable for its enjoyment by
the buyer for the purpose contemplated. There would be no sense to require the awardee to immediately occupy and
live in a shell of a house, structure consisting only of four walls with openings, and a roof. GSIS had an obligation to
deliver to Agcaoili a reasonably habitable dwelling in return for his undertaking to pay the stipulated price. Since GSIS
did not fulfill that obligation, and was not willing to put the house in habitable state, it cannot invoke Agcaoilis
suspension of payment of amortizations as cause to cancel the contract between them. It is axiomatic that In
reciprocal obligations, neither party incurs in delay if the other does not comply in a proper manner with what is
incumbent upon him.

AGCAOILI VS. GSIS
No. L-30056, August 30, 1988

FACTS:
The appellant Government Service Insurance
System (GSIS) approved the application of the appellee
Marcelo Agcaoili for the purchase of the house and lot in
the GSIS Housing Project at Nangka, Marikina, Rizal, but
said application was subject to the condition that the latter
should forthwith occupy the house. Agcaoili lost no time in
occupying the house but he could not stay in it and had to
leave the very next day because the house was nothing
more than a shell, in such a state that civilized occupation
was not possible: ceiling, stairs, double walling, lighting
facilities, water connection, bathroom, toilet kitchen,
drainage, were inexistent. Agcaoili did however asked a
homeless friend, a certain Villanueva, to stay in the
premises as some sort of watchman, pending the
completion of the construction of the house. He thereafter
complained to the GSIS but to no avail.
Subsequently, the GSIS asked Agcaoili to pay the
monthly amortizations of P35.56 and other fees. He paid
the first monthly amortizations and incidental fees, but
refused to make further payments until and unless the
GSIS completed the housing unit. Thereafter, GSIS
cancelled the award and required Agcaoili to vacate the
premise. The house and lot was consequently awarded to
another applicant. Agcaoili reacted by instituting suit in
the Court of First Instance of Manila for specific
performance and damages. The judgment was rendered in
favor of Agcaoili. GSIS then appealed from that judgment.

ISSUE:
Was the cancellation by GSIS of the award in favor
of petitioner Agcaoili just and proper?

RULING:
No. It was the duty of the GSIS, as seller, to deliver
the thing sold in a condition suitable for its enjoyment by
the buyer for the purpose contemplated. There would be
no sense to require the awardee to immediately occupy and
live in a shell of a house, structure consisting only of four
walls with openings, and a roof. GSIS had an obligation to
deliver to Agcaoili a reasonably habitable dwelling in
return for his undertaking to pay the stipulated price.
Since GSIS did not fulfill that obligation, and was not
willing to put the house in habitable state, it cannot invoke
Agcaoilis suspension of payment of amortizations as cause
to cancel the contract between them. It is axiomatic that
In reciprocal obligations, neither party incurs in delay if
the other does not comply.




Contravention of the tenor of the obligation
Arrieta vs. NaricBurmese Rice, di naman pala
kayang mag-open ng Letter of Credit.
Pet participated in the public bidding by Naric
for the supply of 20K MT of Burmese rice. Her
bidding being the highest, she was awarded the
contract. In 1952, entered into contract, Naric
and Pet, sale of rice. Pet obligated herself to
deliver to the latter the tons os Burmese rice
and in turn corp has to pay for the imported rice
by means of an irrevocable, confirmed and
assignable letter of credit in US currency. It was
only In July that def took first step to open
letter of credit. Pet already made a tender to
her supplier a 5% and this will be confiscated if
L/C will not be received before Aug. 4. PNB
informed Naric that L?C approved but has a
condition that the 50% marginal cash deposit be
paid. Naric was not in any financial position to
meet the condition and wrote the pet about it.
L/C was opened in Sept thus 5% deposit was
forfeited. When appellee failed to restore
cancelled Burmese rice she offered a sub but
Naric rejected.
Issue: WON Naric should be liable for damages.
Held: Yes. Failure of the letter of credit to be
opened in the contemplated period. Immediate
cause of damages. No necessary data but pet
would not win bid had she not furnish them with
it. Waiver bec Pet suggested to sub it Thai rice.
Waiver are not presumed. Express stipulation.
Contravention: That Burmese Rice should be
delivered and should not deliver another thing.


Article 1170
Arrieta, et al. vs. National Rice and Corn Corp.
10 SCRA 79

Facts:
This is a appeal of the defendant-appellant NARIC from the decision of the trial court,
awarding to the plaintiffs-appellees the amount of $286,000.00 as damages for breach of
contract and dismissing the counterclaim and third party complaint of the defendant-appellant
NARIC.
On May 19,1952, plaintiff-appellee participated in the public bidding called by the NARIC for
the supply of 20,00 metric tons of Burmese rice. As her bid of $203.00 per metric ton was the
lowest, she was awarded for the contract. Plaintiff-appellee Paz P. Arrieta and the appellant
corporation entered into a contract of sale of rice, under the terms of which the former
obligated herself to deliver the latter 20,000 metric tons of Burmese Rice at $203.00 per
metric ton, CIF Manila. In turn, the defendant corporation committed itself to pay for the
imported rice by means of an irrevocable, confirmed and assignable letter of credit in U.S.
currency in favor of the plaintiff-appellee and /or supplier in Burma, immediately.
Despite the commitments to pay immediately, it was only on July 30,1952, or afull month
from the execution of the contract, that the defendant Corp. took the first step to open a letter
of credit.
On August 4, 1952, the bank informed the appellant corporation that its application, for a
letter of credit has been approved with the condition that 50% marginal cash deposit be paid
and that drafts are to be paid upon presentment. Furthermore, the Bank represent that it will
hold your application in abeyance pending compliance with the above stated requirement.
It turned out that the appellant corporation was not in any financial position to meet the
condition, NARIC bluntly confessed to the appellee.
Consequently, the credit instrument applied for was opened only on September 8, 1952. As a
result of the delay, the allocation of the appellees supplier in Rangoon was cancelled.

Issue:
Whether or not the appellant failure to open immediately the letter of credit in dispute
amounted to a breach of the contract of July 1, 1952 for which it may be held liable in
damages.

Ruling:
it is clear upon the records that the sale and principal reason for the cancellation of
the allocation contracted by the appellee herein in Rangoon, Burma, was the the failure of the
letter of credit to be opened with the contemplated period. This failure must, therefore, be
taken as the immediate cause for the consequent damage which resulted.
Secondly, from the correspondence and communications which form part of the record of this
case, it is clear that what singularly delayed the opening of the stipulated letter of credit and
which, in turn, caused the cancellation of the allocation in Burma, was the inability of the
appellant corporation to meet the condition imposed by the Bank for granting the same.

The liability of the appellant, however stems not alone from the failure or inability to satisfy
the requirements of the bank. Its culpability arises from its willful and deliberate assumption
of contractual obligations even as it was well aware of its financial incapacity to undertake the
presentation.
Under the provision of Article 1170 of the Civil Code, not only debtors guilty of fraud,
negligence or defaults in the performance of obligations are decreed liable; in general, every
debtor who fails in the performance of his obligations is bound to indemnify for the losses and
damages caused.
The decision appealed from is hereby affirmed.



Telefast vs. Castrodahil sa telegrama, mag-isa
lang nang ilibing ang mama.
Consolacion Bravo-Castro died in Pangasinan and
on the same day the daughter sent a telegram to
the US to inform the other siblings and dad about
death of Mom. The Mom was interred by
daughter alone. When she came back to the
states, she found out that the telegram never
reached her siblings. Telefast claimed force
majeure bec of technical and atmospheric
factors but no evidence to support.
Issue: WON force majeure applies.
Held: No. No evidence to support. And even so,
def should have informed the plaintiff that it
cannot transmit the telegram. 1170 and 2176,
guilty of fraud, negligence or delay. 2217 for
moral damages.
Non-fulfillment: Sending of telegram.

FACTS:
Sofia Crouch was in the Philippines for vacation when her mother died. Onthat same day, she adddressed a telegramannouncing
her mothers death to Ignacio Castro, Sr at 685, Wanda, Scottsburg, Indiana, USA. The defendants, after receiving the required fees and
charges, accepted the telegram for transmission.
The husband and the children of the deceased who were all residing in the US never received the telegram. Sofia Crouch was the
only one present during the internment.
Sofia and the other plaintiffs then filed an action to recover damages arising from the breach of contract against the defendants.
The only defense of the defendants was that, the failure was due to the technical and atmospheric factors beyond its control. However no
evidence appeared on record that the defendant ever make any attempt to advise Sofia as to why they could not transmit the telegram.

ISSUE:
Whether or not the petitioner are liable for damages for their failure to transmit the telegram.
Whether or not the petitioners should only liable for actual or quantified damages.

RULING:
YES. TELEFAST COMMUNICATIONS/PHIL. WIRELESS INC ARE LIABLE TO INDEMNIFY THE RESPONDENTS FOR
DAMAGES THEY HAVE SUFFERED FROM THE FAILURE OF THE PLAINTIFFS ON TRANSMITTING THE TEEGRAM.
The defendant Sofia Crouch and the plaintiffs entered into a contract whereby the plaintiffs shall send the respondents message overseas by
telegram, after paying the required fees. The defendant has performed her part in the obligation. However, the plaintiffs failed to do their
part. Petitoner therefore was guilty of contravening its obligation and is liable for damages pursuant to the provisions of Art 1170 and Art.
2176 of the Civil Code.
NO. THE PETITIONERS LIABILITY ARE NOT LIMITED TO ACTUAL OR QUANTIFIED DAMAGES.
Pursuant to Art. 2217 of the Civil Code, the petitioners are liable to indmenify the respondents for the moral damages they had suffered. The
petitioners act or omissionwas the precise cause of the sufferings that the respondents have to undergo. Respondents Sofia Crouch shall be
awarded with P16 000 as compensatory damages. Each of the respondents shall be awarded with P10 000 as moral damages and P1 000 as
exemplary damages.

Telefast v. Castro
G.R. No. 73867 February 29, 1988

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

Issue:
Whether or not the award of the moral, compensatory and exemplary damages is proper.

RULING:
Yes, there was a contract between the petitioner and private respondent Sofia C. Crouch whereby, for a fee, petitioner undertook
to send said private respondent's message overseas by telegram. Petitioner failed to do this despite performance by said private respondent of
her obligation by paying the required charges. Petitioner was therefore guilty of contravening its and is thus liable for damages. This liability
is not limited to actual or quantified damages. To sustain petitioner's contrary position in this regard would result in an inequitous situation
where petitioner will only be held liable for the actual cost of a telegram fixed thirty (30) years ago.

Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of fraud, negligence or
delay, and those who in any manner contravene the tenor thereof, are liable for damages." Art. 2176 also provides that "whoever by act or
omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done."

Award of Moral, compensatory and exemplary damages is proper.

The petitioner's act or omission, which amounted to gross negligence, was precisely the cause of the suffering private
respondents had to undergo. Art. 2217 of the Civil Code states: "Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary
computation, moral damages may be recovered if they are the proximate results of the defendant's wrongful act or omission."

Then, the award of P16,000.00 as compensatory damages to Sofia C. Crouch representing the expenses she incurred when she
came to the Philippines from the United States to testify before the trial court. Had petitioner not been remiss in performing its obligation,
there would have been no need for this suit or for Mrs. Crouch's testimony.

The award of exemplary damages by the trial court is likewise justified for each of the private respondents, as a warning to all
telegram companies to observe due diligence in transmitting the messages of their customers.



NPC v. CA
Facts:

At the height of the typhoon Kading, a flash flood covered the towns near the Angat Dam, causing deaths and destructions to
residents and their properties. Respondents blamed the tragedy to the reckless and imprudent opening of the 3 floodgates by petitioner,
without prior warning to the residents within the vicinity of the dam. Petitioners denied the allegations and contended that they have kept the
water at a safe level, that the opening of floodgates was done gradually, that it exercises diligence in the selection of its employees, and that
written warnings were sent to the residents. It further contended that there was no direct causal relationship between the damage and the
alleged negligence on their part, that the residents assumed the risk by living near the dam, and that what happened was a fortuitous event
and are of the nature of damnum absque injuria.

Issues:

(1) Whether the petitioner can be held liable even though the coming of the typhoon is a fortuitous event

(2) Whether a notice was sent to the residents

(3) Whether the damage suffered by respondents is one of damnum absque injuria

Held:

(1) The obligor cannot escape liability, if upon the happening of a fortuitous event or an act of God, a corresponding fraud,
negligence, delay or violation or contravention in any manner of the tenor of the obligation as provided in Article 1170 of the Civil Code
which results in loss or damage. Even if there was no contractual relation between themselves and private respondents, they are still liable
under the law on quasi-delict. Article 2176 of the Civil Code explicitly provides "whoever by act or omission causes damage to another
there being fault or negligence is obliged to pay for the damage done." Act of God or force majeure, by definition, are extraordinary events
not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable. It is therefore not enough that the
event should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The
principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by the violence of nature. Human
intervention is to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the result of the
participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed
from the rules applicable to the acts of God. In the case at bar, although the typhoon "Kading" was an act of God, petitioners can not escape
liability because their negligence was the proximate cause of the loss and damage.

(2) The letter itself, addressed merely "TO ALL CONCERNED", would not strike one to be of serious importance, sufficient
enough to set alarm and cause people to take precautions for their safety's sake. The notices were not delivered, or even addressed to
responsible officials of the municipalities concerned who could have disseminated the warning properly. They were delivered to ordinary
employees and policemen. As it happened, the said notices do not appear to have reached the people concerned, which are the residents
beside the Angat River. The plaintiffs in this case definitely did not receive any such warning. Indeed, the methods by which the defendants
allegedly sent the notice or warning was so ineffectual that they cannot claim, as they do in their second assignment of error, that the
sending of said notice has absolved them from liability.

(3) We cannot give credence to petitioners' third assignment of error that the damage caused by the opening of the dam was in the
nature of damnum absque injuria, which presupposes that although there was physical damage, there was no legal injury in view of the
fortuitous events. There is no question that petitioners have the right, duty and obligation to operate, maintain and preserve the facilities of
Angat Dam, but their negligence cannot be countenanced, however noble their intention may be. The end does not justify the means,
particularly because they could have done otherwise than simultaneously opening the spillways to such extent. Needless to say, petitioners
are not entitled to counterclaim.



JIMENEZ VS. CITY OF MANILA, 150 SCRA 510 , G.R. No. L-71049, May 29, 1987



Nakpil vs. CAEngr/Archi pati Contractors
liable sa pagguho ng bldg.
Phil Bar Assoc decided to construct its building in
INtramuros Manila. Construction was undertaken
by UCCI on administration basis and the plans
and specifications of the building were prepared
by another party Nakpil. It was completed in
June 1966. In 1968, a strong earthquake hit
Manila and building sustained major damages. As
temporary remedy UCCI shoved up the building
at its own expense. PBA commenced action
against UCCI for the partial collapse of the
building. Allegations were that there was a
failure of the contractors to follow plans and
specifications and violations by the defendants
of the terms of the contract. Def then filed
against 3rd party-architects who prepared plans
and specifications alleging collapse was due to
the defect of it.
Issue: WON UCCI and Nakpil be held liable.
Held: Yes. The case was referred to the
Commissioner and found out that there were
defects in plans and specifications and that
contractors failed to observe requisite of
workmanship and even the owners failed to
observe requisite degree of supervision in the
construction.
Fortuitous even will not be applied bec there is negligence.
1723 will apply.
Engineer/ arch who drew up plans and spec
liable for damages. Contractor liable if edifice
falls within the same period on acct of defects in
the construction or the use of materials of
inferior quality. Engr/archi will be held solidary
liable if supervises construction.
Fortuitous Event: Will not apply bec there is
negligence.

NAKPIL & SONS v. CA
To be exempt from liability due to an act of God, the engineer/architect/contractor must not have been negligent in the
construction of the building.

FACTS:

Private respondents Philippine Bar Association (PBA) a non-profit organization formed under the corporation law decided to
put up a building in Intramuros, Manila. Hired to plan the specifications of the building were Juan Nakpil & Sons, while United
Construction was hired to construct it. The proposal was approved by the Board of Directors and signed by the President, Ramon Ozaeta.
The building was completed in 1966.

In 1968, there was an unusually strong earthquake which caused the building heavy damage, which led the building to tilt
forward, leading the tenants to vacate the premises. United Construction took remedial measures to sustain the building.

PBA filed a suit for damages against United Construction, but United Construction subsequently filed a suit against Nakpil and
Sons, alleging defects in the plans and specifications.

Technical Issues in the case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved for the demolition of
the building, but was opposed. PBA eventually paid for the demolition after the building suffered more damages in 1970 due to previous
earthquakes. The Commissioner found that there were deviations in the specifications and plans, as well as defects in the construction of the
building.

ISSUE:

Whether or not an act of God (fortuitous event) exempts from liability parties who would otherwise be due to negligence?

HELD:

Art. 1723 dictates that the engineer/architect and contractor are liable for damages should the building collapse within 15 years
from completion.

Art. 1174 of the NCC, however, states that no person shall be responsible for events, which could not be foreseen. But to be
exempt from liability due to an act of God, the ff must occur:

1) cause of breach must be independent of the will of the debtor
2) event must be unforeseeable or unavoidable
3) event must be such that it would render it impossible for the debtor to fulfill the obligation
4) debtor must be free from any participation or aggravation of the industry to the creditor.

In the case at bar, although the damage was ultimately caused by the earthquake which was an act of God, the defects in the
construction, as well as the deviations in the specifications and plans aggravated the damage, and lessened the preventive measures that the
building would otherwise have had.