PSBA vs.

Court of Appeals
G.R. No. 84698, February 4, 1992

Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. This Court discussed this doctrine
in the afore-cited cases of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs. Court of Appeals. In all such cases, it had been
stressed that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or students of the
educational institution sought to be held liable for the acts of its pupils or students while in its custody. However, this material situation
does not exist in the present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts the
school could be made liable.

Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that promotes
or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or
higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where
there looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are
taken to maintain peace and order within the campus premises and to prevent the breakdown thereof.

FACTS:
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the second-floor premises of the
Philippine School of Business Administration (PSBA) prompted the parents of the deceased to file suit in the Regional Trial C ourt of
Manila for damages
against the said PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third year commerce course at the
PSBA. It was established that his assailants were not members of the school's academic community but were elements from outside the
school. Substantially, the plaintiffs (now private respondents) sought to adjudge them liable for the victim's untimely demise due to
their alleged negligence, recklessness and lack of security precautions, means and methods before, during and after the attack on the
victim.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are presumably sued under Article 2180
of t he Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to the effect that ac ademic
institutions, such as the PSBA, are beyond the ambit of the rule in the afore-stated article.
The respondent trial court, however, overruled petitioners’ contention and thru an order dated 8 December 1987, denied their motion
to dismiss. Said decision of the respondent appellate court was primarily anchored on the law of quasi-delicts, as enunciated in Articles
2176 and 2180 of the Civil Code.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. It had be en stressed
that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or students of the educational
institution sought to be held liable for the acts of its pupils or students while in its custody. However, this material situation does not
exist in the present case for the assailants of Carlitos were not students of the PSBA, for whose acts the school could be made liable.

ISSUE:
Whether or not the appellate court's failure to consider such material facts means the exculpation of the petitioners from liability.

HELD:
It does not necessarily follow. When an academic institution accepts students for enrollment, there is established a contract
between them, resulting in bilateral obligations which both parties are bound to comply with. For its part, the school undertakes to
provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher
education or a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its
rules and regulations.Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an
atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the
intricacies of physics or higher mathematics or explore the realm of the arts and other sciences where there looms around the school
premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and
order within the campus premises and to prevent the breakdown thereof. Because the circumstances of the present case evince a
contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not apply.
However, there is, as yet, no finding that the contract between the school and Bautista had been breached thru the former's negligence
in providing proper security measures. Even if there be a finding of negligence, the same could give rise generally to a breach of
contractual obligation only. Using the test of Cangco, supra, the negligence of the school would not be relevant absent a contract. In
fact, that negligence becomes material only because of the contractual relation between PSBA and Bautista. In other words, a
contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot exist independently of the
contract, unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code.
Amadora v. Court of Appeals

G.R. No. L-47745, 15 April 1988

FACTS:

Alfredo Amadora, while in the auditorium of the school, was mortally hit by a gun by PablitoDaffon resulting to the former’s death.
Daffon was convicted of homicide through reckless imprudence. The victim’s parents, herein petitioners, filed a civil action for damages
against Colegio de San Jose-Recoletos, its rectors, high school principal, dean of boys, the physics teacher together with Daffon and 2
other students. Complaints against the students were dropped. Respondent Court absolved the defendants completely and reve rsed
CFI Cebu’s decision for the following reasons: 1. Since the school was an academic institution of learning and not a school o f arts and
trades 2. Those students were not in the custody of the school since the semester has already ended 3. There was no clear identification
of the fatal gun, and 4. In any event, defendants exercised the necessary diligence through enforcement of the school regulat ions in
maintaining discipline. Petitioners on the other hand claimed their son was under school custody because he went to school to comply
with a requirement for graduation (submission of Physics reports).

ISSUE:

Whether or not Collegio de San Jose-Recoletos should be held liable.

RULING:

No. Collegio de San Jose-Recoletos should not be held liable.

Article 2180 of the Civil Code states that “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. Responsibility shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to prevent damage.”

Even though at the time Alfredo was fatally shot, he was in the custody of the authorities of the school notwithstanding classes had
formally ended when the incident happened; it was immaterial if he was in the school auditorium to finish his physics require ment.
What was important is that he was there for a legitimate purpose. On the other hand, the rector, high school principal and the dean of
boys cannot be held liable because none of them was the teacher-in-charge as defined in the provision. Each was exercising only a
general authority over the students and not direct control and influence exerted by the teacher placed in-charge of particular classes.

In the absence of a teacher- in charge, dean of boys should probably be held liable considering that he had earlier confiscated an
unlicensed gun from a student and later returned to him without taking disciplinary action or reporting the matter to the higher
authorities. Though it was clear negligence on his part, no proof was shown to necessarily link this gun with the shooting incident.

Collegio San Jose-Recoletos cannot directly be held liable under the provision because only the teacher of the head of school of arts and
trade is made responsible for the damage caused by the student. Hence, under the facts disclosed, none of the respondents were held
liable for the injury inflicted with Alfredo resulting to his death.
Song Fo & Company vs Hawaiian Philippine Co.

G.R. No. 23769 – September 16, 1925

FACTS:

Hawaiian-Philippine Co (HPC) entered into a contract with Song Fo and Co (SFC) where it would deliver molasses to the latter evidenced
by a letter containing their contract. The same states that Mr. Song Fo agreed to the delivery of 300,000 gallons of molasses and the
same requested for an additional 100,000 molasses which the HPC promised that it will do its best to comply with the addition al
shipment. However, the HPC was only able to deliver 55,006 gallons. SFC thereafter filed a complaint with two causes of action for
breach of contract against the HPC and asked for P70,369.50. HPC answered that there was a delay in the payment from
SFC and that HPC has the right to rescind the contract because of the same· The trial court condemned HPC to pay SFC a total of
P35,317.93, with legal interest.

ISSUES:

1. Whether or not SFC is entitled to damages

2. Whether or not HPC has a right to rescind the contract?

RULING:

As to the first question, yes, SFC is entitled to damages. Article 1170 of the Civil Code provides “Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages”

The failure of HPC to deliver the rest of the molasses constitutes a breach of contract by contravention of tenor and is thus liable for
damages. The bases for damages is the cost in excess of the agreed price in the contract when SFC was made to acquire the needed
molasses from another supplier and the expenses related to the transportation of the same. Loss of profits would have been in cluded
as part of damages had SFC been able to substantiate such a claim.

As to the second question, no, HPC has no right to rescind the contract.

The court provided that the general rule is 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.

It should be noted that the time of payment stipulated for in the contract should be treated as of the essence of the contract. There
was only a slight breach of contract when the payment was delayed for 20 days and does not violate essential condition of the contract
which warrants rescission for non-performance. Furthermore, HPC accepted the payment of the overdue accounts and continued with
the contract, waiving its right to rescind the same.

Petition of partly granted, and the judgment appealed is modified. Plaintiff shall have and recover from the defendant the sum of P3,000,
with legal interest from date of judgment, no special costs.
Woodhouse v. Halili

G.R. No. L-4811, 31 July 1953

FACTS:

On November 29, 1947, plaintiff Woodhouse entered into a written agreement with defendant Halili stating among others that: 1) that
they shall organize a partnership for the bottling and distribution of Missionsoft drinks, plaintiff to act as industrial partner or manager,
and the defendant as a capitalist, furnishing the capital necessary therefore; 2) that plaintiff was to secure the Mission So ft Drinks
franchise for and in behalf of the proposed partnership and 3) that the plaintiff was to receive 30 per cent of the net profits of the
business. Prior to entering into this agreement, plaintiff had informed the Mission Dry Corporation of Los Angeles, Californi a, that he
had interested a prominent financier (defendant herein) in the business, who was willing to invest half a milliondollars in the bottling
and distribution of the said beverages, and requested, in order that he may close the deal with him, that the right to bottle and distribute
be granted him for a limited time under the condition that it will finally be transferred to the corporation. Pursuant to this request,
plaintiff was given “a thirty days’ option on exclusive bottling and distribution rights for the Philippines”. The contract was finally signed
by plaintiff on December 3, 1947.

When the bottling plant was already in operation, plaintiff demanded of defendant that the said partnership papers be executed.
Defendant Halili gave excuses and would not execute said agreement, thus the complaint by the plaintiff. Plaintiff prays for the :
1.execution of the contract of partnership; 2) accounting of profits and 3)share thereof of 30 percent with 4) damages in the amount
of P200,000. The Defendant on the other hand claims that: 1) the defendant’s consent to the agreement, was secured by the
representation of plaintiff that he was the owner, or was about to become owner of an exclusive bottling franchise, which representation
was false, and that plaintiff did not secure the franchise but was given to defendant himself 2) that defendant did not fail to carry out
his undertakings, but that it was plaintiff who failed and 3)that plaintiff agreed to contribute to the exclusive franchise to the partnership,
but plaintiff failed to do so with a 4) counterclaim for P200,00 as damages.

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

ISSUE:

1. Whether or Not plaintiff falsely represented that he had an exclusive franchise to bottle Mission beverages.

2. Whether or Not false representation, if it existed, annuls the agreement to form the partnership.

RULING:

1. Plaintiff did make false representation and this can be seen through his letter to Mission Dry Corporation asking for the latter
to grant him temporary franchise so he could settle the agreement with defendant. The trial court reasoned, and the plaintiff
on this appeal argues, that plaintiff only undertook in the agreement “to secure the Mission Dry franchise for and in behalf of
the proposed partnership.” The existence of this provision in the final agreement does not militate against plaintiff having
represented that he had the exclusive franchise; it rather strengthens belief that he did actually make the representation. The
defendant believed, or was made to believe, that plaintiff was the grantee of an exclusive franchise. Thus it is that it was also
agreed upon that the franchise was to be transferred to the name of the partnership, and that, upon its dissolution or
termination, the same shall be reassigned to the plaintiff. Again, the immediate reaction of defendant, when in California he
learned that plaintiff did not have the exclusive franchise, was to reduce, as he himself testified, plaintiff’s participation in the
net profits to one half of that agreed upon. He could not have had such a feeling had not plaintiff actually made him believe
that he (plaintiff) was the exclusive grantee of the franchise.

2. In consequence, Article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud the causal fraud, which may be
ground for the annulment of a contract, and the incidental deceit, which only renders the party who employs it liable for
damages only. The Supreme Court has held that in order that fraud may vitiate consent, it must be the causal (dolo causante),
not merely the incidental (dolo incidente) inducement to the making of the contract. The record abounds with circumstances
indicative of the fact that the principal consideration, the main cause that induced defendant to enter into the partnership
agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to bottle and distribute for the defendant or
for the partnership. The original draft prepared by defendant’s counsel was to the effect that plaintiff obligated himself to
secure a franchise for the defendant. But if plaintiff was guilty of a false representation, this was not the causal consideration,
 or the principal inducement, that led plaintiff to enter into the partnership agreement. On the other hand, this supposed
ownership of an exclusive franchise was actually the consideration or price plaintiff gave in exchange for the share of 30 pe r
cent granted him in the net profits of the partnership business. Defendant agreed to give plaintiff 30 per cent share in the net
profits because he was transferring his exclusive franchise to the partnership.

Having arrived at the conclusion that the contract cannot be declared null and voidmay the agreement be carried out or executed? The
SC finds no merit in the claim of plaintiff that the partnership was already a fait accompli from the time of the operation of the plant, as
it is evident from the very language of the agreement that the parties intended that the execution of the agreemen t to form a
partnership was to be carried out at a later date. , The defendant may not be compelled against his will to carry out the agreement nor
execute the partnership papers. The law recognizes the individual’s freedom or liberty to do an act he has promised to do, or not to do
it, as he pleases.
Sarmiento v. Sps. Cabrido

G.R. No. 141258, April 9, 2003, 401 SCRA 122

FACTS:

Tomasa Sarmiento’s friend, Dra. Virginia Lao, requested her to find someone to reset a pair of diamond earrings into two gold rings.
Sarmiento sent Tita Payag with the earrings to Dingding’s Jewelry Shop, owned and managed by spouses Luis and Rose Cabrido, which
accepted the job order for P400. Respondent Marilou Sun went on to dismount the diamond from original settings. Unsuccessful, she
asked their goldsmith, Zenon Santos, to do it. He removed the diamond by twisting the setting with a pair of pliers, breaking the gem in
the process. Petitioner required the respondents to replace the diamond with the same size and quality. When they refused, th e
petitioner was forced to buy a replacement in the amount of P30,000. Rose Cabrido, manager, denied having any transaction with Payag
whom she met only after the latter came to seek compensation for the broken piece of jewelry. Marilou, on the other hand, adm itted
knowing Payag to avail their services and recalled that when Santos broke the jewelry, Payag turned to her for reimbursement thinking
she was the owner. Santos also recalled that Payag requested him to dismount what appeared to him as sapphire and that the st one
accidentally broke. He denied being an employee of the Jewelry shop.

ISSUE:

1. WoN dismounting of the diamond from its original setting was part of the obligation
2. WoN respondents are liable for damages and moral damages.

RULING:

Yes. The contemporaneous and subsequent acts of the parties reveal the scope of obligation assumed by the jewelry shop to reset the
pair of earrings. Marilou expressed no reservation regarding the dismounting of the diamonds. She could have instructed Payag to have
the diamonds dismounted first, but instead, she readily accepted the job order and charged P400. After the new settings were
completed, she called petitioner to bring the diamond earrings to be reset. She examined one of them and went on to dismount the
diamond from the original setting. After failing to do the same, she delegated it to the goldsmith. Having acted the way she did, she
cannot deny that the dismounting was part of the shop’s obligation to reset the pair of earrings.

Yes. 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. Santos acted negligently in dismounting the diamond from its original setting. Ins tead of using
a miniature wire, which is the practice of the trade, he used a pair of pliers. Moral damages may also be awarded in a breach of contract
when there is proof that defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton disregard
of his contractual obligation.

Doctrine:

Obligations arising from contracts have the force of law between the contracting parties. Corollarily, 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 liab le for
damages. 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 the time and of the place.
Crisostomo v. CA

G.R. No. 138334, August 25, 2003, 409 SCRA 528

FACTS:

Petitioner contracted the services of respondent Caravan Travel and Tours International, Inc. to arrange and facilitate her booki ng,
ticketing and accommodation in a tour dubbed Jewels of Europe. Pursuant to said contract, the travel documents and plane tick ets were
delivered to the petitioner who in turn gave the full payment for the package tour on June 12, 1991. Without checking her tra vel
documents, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the first leg of her journey from Manila to
Hongkong. To petitioner’s dismay, she discovered that the flight she was supposed to take had already departed the previous d ay. She
learned that her plane ticket was for the flight scheduled on June 14, 1991. She thus called up Menor to complain. Subsequently, Menor
prevailed upon petitioner to take another tour- the British Pageant. Upon petitioner’s return from Europe, she demanded from
respondent the reimbursement of the difference between the sum she paid for Jewels of Europe and the amount she owed respondent
for the British Pageant tour.

Petitioner filed a complaint against respondent for breach of contract of carriage and damages alleging that her failure to join Jewels of
Europe was due to respondent’s fault since it did not clearly indicate the departure date on the plane, failing to observe the standard
of care required of a common carrier when it informed her wrongly of the flight schedule. For its part, respondent company, d enied
responsibility for petitioner’s failure to join the first tour, insisting that petitioner was informed of the correct departure date, which
was clearly and legibly printed on the plane ticket. The travel documents were given to petitioner two days ahead of the scheduled trip.
Respondent further contend that petitioner had only herself to blame for missing the flight, as she did not bother to read or confirm
her flight schedule as printed on the ticket.

ISSUE:

Whether or not Caravan Travel & Tours International Inc. is negligent in the fulfilment of its obligation to petitioner Crisostomo thus
granting to the petitioner the consequential damages due her as a result of breach of contract of carriage.

RULING:

Contention of petitioner has no merit. A contract of carriage or transportation is one whereby a certain person or association of persons
obligate themselves to transport persons, things, or news from one place to another for a fixed price. Such person or associa tion of
persons are regarded as carriers and are classified as private or special carriers and common or public carriers. Respondent is not an
entity engaged in the business of transporting either passengers or goods and is therefore, neither a private nor a common ca rrier.
Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make
travel arrangements in their behalf. Respondent’s services as a travel agency include procuring tickets and facilitating trav el permits or
visas as well as booking customers for tours.

The object of petitioner’s contractual relation with respondent is the service of arranging and facilitating petitioners booking, ticketing
and accommodation in the package tour. In contrast, the object of a contract of carriage is the transportation of passengers or goods.
It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carria ge. Since the
contract between the parties is an ordinary one for services, the standard of care required of respondent is that of a good father of a
family under Article 1173 of the Civil Code. The evidence on record shows that respondent exercised due diligence in performi ng its
obligations under the contract and followed standard procedure in rendering its services to petitioner. As correctly observed by the
lower court, the plane ticket issued to petitioner clearly reflected the departure date and time, contrary to petitioner’s contention. The
travel documents, consisting of the tour itinerary, vouchers and instructions, were likewise delivered to petitioner two days prior to the
trip. Respondent also properly booked petitioner for the tour, prepared the necessary documents and procured the plane ticket s. It
arranged petitioner’s hotel accommodation as well as food, land transfers and sightseeing excursions, in accordance with its avowed
undertaking. The evidence on record shows that respondent company performed its duty diligently and did not commit any contractual
breach. Hence, petitioner cannot recover and must bear her own damage.
Abella v. Francisco

55 Phil. 447 (1931)

FACTS:

Defendant Guillermo B. Francisco purchased from the Government on installments, lots 937 to 945 of the Tala Estate in Novaliches,
Caloocan, Rizal. He was in arrears for some of these installments. On the 31st of October, 1928, he signed a document acknowledging
payment of P500 and the balance to be paid on or before December 15, 1928, extendible fifteen days thereafter. On December 27th of
the same year, the defendant, being in the Province of Cebu, wrote to Roman Mabanta of this City of Manila, attaching a power of
attorney authorizing him to sign in behalf of the defendant all the documents required by the Bureau of Lands for the transfe r of the
lots to the plaintiff. Mabanta, as attorney-in-fact, did what was instructed to him. The plaintiff, asked for an extension until January 9,
1929. However, Mabanta, only extended it until January 5, 1929. When Abella was not able to pay of the said date, Mabanta refused to
accept the full payment on January 9, 1929 and already considered the contract rescinded. On the same day, Mabanta returned by
check the sum of P915.31 which the plaintiff had paid.

ISSUE:

Whether or not the defendant be compelled to accept the payment and the plaintiff be judicially declared as owner of the land.

RULING:

The court relied on the fact that the plaintiff had failed to pay the price of the lots within the stipulated time; and that since the contract
between plaintiff and defendant was an option for the purchase of the lots,’ time was an essential element in it. It is to be noted that in
the document signed by the defendant, the 15th of December was fixed as the date, extendible for fifteen days, for the payment by the
plaintiff of the balance of the selling price. It has been admitted that the plaintiff did not offer to complete the payment until January 9,
1929. He contends that Mabanta, as attorney-in-fact for the defendant in this transaction, granted him an extension of time until the
9th of January. But Mabanta has stated that he only extended the time until the 5th of that month. Mabanta’s testimony on this point
is corroborated by that of Paz Vicente and by the plaintiff’s own admission to Narciso Javier that his option to purchase tho se lots
expired on January 5, 1929. The defendant wanted to sell those lots to the plaintiff in order to pay off certain obligations which fell due
in the month of December, 1928. The time fixed for the payment of the price was therefore essential for the defendant, and th is view
is borne out by his letter to his representative Mabanta instructing him to consider the contract rescinded if the price was not completed
in time. In accordance with article 1124 of the Civil Code, the defendant is entitled to resolve the contract for failure to pay the price
within the time specified.
Chavez v. Gonzales

G.R. No. 27454, April 30, 1970, 32 SCRA 547

FACTS:

On July 1963, Rosendo Chavez brought his typewriter to Fructuoso Gonzales a typewriter repairman for the cleaning and servici ng of
the said typewriter but the latter was not able to finish the job. During October 1963, the plaintiff gave the amount of P6.00 to the
defendant which the latter asked from the plaintiff for the purchase of spare parts, because of the delay of the repair the plaintiff
decided to recover the typewriter to the defendant which he wrapped it like a package. When the plaintiff reached their home he
opened it and examined that some parts and screws was lost. That on October 29, 1963 the plaintiff sent a letter to the defendant for
the return of the missing parts, the interior cover and the sum of P6.00 (Exhibit D). The following day, the defendant return ed to the
plaintiff some of the missing parts, the interior cover and the P6.00. The plaintiff brought his typewriter to Freixas Business Machines
and the repair cost the amount of P89.85. He commenced this action on August 23, 1965 in the City Court of Manila, demanding from
the defendant the payment of P90.00 as actual and compensatory damages, P100.00 for temperate damages, P500.00 for moral
damages, and P500.00 as attorney’s fees. The defendant made no denials of the facts narrated above, except the claim of the plaintiff
that the cost of the repair made by Freixas Business Machines be fully chargeable against him.

ISSUE:

Whether or not the defendant is liable for the total cost of the repair made by Freixas Business Machines with the plaintiff typewriter?

RULING:

No, he is not liable for the total cost of the repair made by Freixas Business Machines instead he is only liable for the cost of the missing
parts and screws. The defendant contravened the tenor of his obligation in repairing the typewriter of the plaintiff that he fails to repair
it and returned it with the missing parts.

Under Article 1167 of the Civil Code, a person who is obliged to do something and fails to do it shall be liable for the cost of executing
the obligation in a proper manner. The cost of execution of the obligation to repair a typewriter is the cost of the labor or service
expended in the repair of the typewriter. In addition, the obligor, under Article 1170 of the Code, is liable for the cost of the missing
parts because in his obligation to repair the typewriter he is bound to return the typewriter in the same condition it was wh en he
received it.

This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore it may be decreed that what
has been poorly done he undone.”
Telefast v. Castro

G.R. No. 73867, February 29, 1988, 158 SCRA 445

FACTS:

Sofia, one of the plaintiffs, sent a telegram thru Telefast to her father and other siblings in the USA to inform about the de ath 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 b reach
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 per annum plus attorney’s fees. The Court of Appeals affirmed this ruling but modified and eliminated the compensato ry
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 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 o r
recklessness.

ISSUE:

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

RULING:

Yes, award of moral, compensatory and exemplary damages is proper.

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.”

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 an xiety,
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 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 obliga tion, there
would have been no need for this suit or for her 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.
Yobido v. CA

G.R. No. 113003, October 17, 1997, 281 SCRA 1

FACTS:

On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin, boarded at Mangagoy, Surigao del
Sur, a Yobido Liner bus bound for Davao City. Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus
exploded. The bus fell into a ravine around three (3) feet from the road and struck a tree. The incident resulted in the death of 28-year-
old Tito Tumboy and physical injuries to other passengers. On November 21, 1988, a complaint for breach of contract of carriage,
damages and attorneys fees was filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yob ido, its
driver, before the Regional Trial Court of Davao City. When the defendants therein filed their answer to the complaint, they raised the
affirmative defense of caso fortuito. They also filed a third-party complaint against Philippine Phoenix Surety and Insurance, Inc. This
third-party defendant filed an answer with compulsory counterclaim. Defendants contented that they exerted due diligence such that
the bus was not full that time and that the tire was new. On August 29, 1991, the lower court rendered a decision dismissing the action
for lack of merit. However, on August 23, 1993, the Court of Appeals rendered the Decision reversing that of the lower court. Hence
this case.

ISSUE:

1. Whether or not the tire blowout was a fortuitous event.

2. Whether or not defendants did not exercise utmost and/or extraordinary diligence required of carriers under Article 1755 of the
Civil Code

RULING:

The Supreme Court affirmed the decision of the Court of Appeals, reiterating provisions of the Civil Code.

Art. 1756. In case of death or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.

Article 1755 provides that (a) common carrier is bound to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Accordingly, in culpa contractual, once
a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted negligently. This disputable presumption
may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733, 1755 a nd 1756
of the Civil Code or that the death or injury of the passenger was due to a fortuitous event. Consequently, the court need not make an
express finding of fault or negligence on the part of the carrier to hold it responsible for damages sought by the passenger

A fortuitous event is possessed of the following characteristics: (a) the cause of the unforeseen and unexpected occurrence, or the
failure of the debtor to comply with his obligations, must be independent of human will; (b) it must be impossible to foresee the event
which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render
it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the obligor must be free from any particip ation in the
aggravation of the injury resulting to the creditor.

Under the circumstances of this case, the explosion of the new tire may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire bought and used in the vehicle is of a brand name noted for quality,
resulting in the conclusion that it could not explode within five days use. Be that as it may, it is settled that an accident caused either by
defects in the automobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liability for
damages. As stated above, proof that the tire was new and of good quality is not sufficient proof that it was not negligent. Petitioners
should have shown that it undertook extraordinary diligence in the care of its carrier, such as conducting daily routinary check-ups of
the vehicles parts.
Nacar v. Gallery Frames

G.R. No. 189871, August 13, 2013, 703 SCRA 439

FACTS:

Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey, Jr. Nacar alleged that he was dismissed without cause
by Gallery Frames on January 24, 1997. On October 15, 1998, the Labor Arbiter (LA) found Gallery Frames guilty of illegal dis missal hence
the Arbiter awarded Nacar P158,919.92 in damages consisting of backwages and separation pay.
Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court affirmed the decision of the Labor Arbiter and the
decision became final on May 27, 2002. After the finality of the SC decision, Nacar filed a motion before the LA for recomputation as he
alleged that his backwages should be computed from the time of his illegal dismissal (January 24, 1997) until the finality of the SC
decision (May 27, 2002) with interest. The LA denied the motion as he ruled that the reckoning point of the computation should only
be from the time Nacar was illegally dismissed (January 24, 1997) until the decision of the LA (October 15, 1998). The LA reasoned that
the said date should be the reckoning point because Nacar did not appeal hence as to him, that decision became final and executory.

ISSUE:

Whether or not the Labor Arbiter is correct.

RULING:

No. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases where the dismissed employ ee wins, or
loses but wins on appeal). The first part is the ruling that the employee was illegally dismissed. This is immediately final even if the
employer appeals – but will be reversed if employer wins on appeal. The second part is the ruling on the award of backwages and/or
separation pay. For backwages, it will be computed from the date of illegal dismissal until the date of the decision of the Labor Arbiter.
But if the employer appeals, then the end date shall be extended until the day when the appellate court’s decision shall become final.
Hence, as a consequence, the liability of the employer, if he loses on appeal, will increase – this is just but a risk that the employer
cannot avoid when it continued to seek recourses against the Labor Arbiter’s decision. This is also in accordance with Article 279 of the
Labor Code.

Anent the issue of award of interest in the form of actual or compensatory damages, the Supreme Court ruled that the old case of
Eastern Shipping Lines vs CA is already modified by the promulgation of the Bangko Sentral ng Pilipinas Monetary Board Resolution No.
796 which lowered the legal rate of interest from 12% to 6%. Specifically, the rules on interest are now as follows:

1. Monetary Obligations ex. Loans:

a. If stipulated in writing:
a.1. shall run from date of judicial demand (filing of the case)
a.2. rate of interest shall be that amount stipulated

b. If not stipulated in writing

b.1. shall run from date of default (either failure to pay upon extra-judicial demand or upon judicial demand whichever is appropriate
and subject to the provisions of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum

2. Non-Monetary Obligations (such as the case at bar)

a. If already liquidated, rate of interest shall be 6% per annum, demandable from date of judicial or extra-judicial demand (Art. 1169,
Civil Code)
b. If unliquidated, no interest

Except: When later on established with certainty. Interest shall still be 6% per annum demandable from the date of judgment because
such on such date, it is already deemed that the amount of damages is already ascertained.
3. Compounded Interest– This is applicable to both monetary and non-monetary obligations– 6% per annum computed against award
of damages (interest) granted by the court. To be computed from the date when the court’s decision becomes final and executory until
the award is fully satisfied by the losing party.

4. The 6% per annum rate of legal interest shall be applied prospectively:– Final and executory judgments awarding damages prior to
July 1, 2013 shall apply the 12% rate;– Final and executory judgments awarding damages on or after July 1, 2013 shall apply the 12%
rate for unpaid obligations until June 30, 2013; unpaid obligations with respect to said judgments on or after July 1, 2013 s hall still incur
the 6% rate.
UP vs. De Los Angeles

G.R. No. L-28602, 29 September 1970

FACTS:

Petitioner and respondent ALUMCO entered into a logging agreement under which the latter was granted exclusive authority, for a
period starting from the date of the agreement to 31 December 1965, extendible for a further period of five (5) years by mutu al
agreement, to cut, collect and remove timber from the Land Grant, in consideration of payment to UP of royalties, forest fees, etc. The
Land Grant, situated at the Lubayat areas in the provinces of Laguna and Quezon, was segregated from the public domain and given as
an endowment to UP, an institution of higher learning, to be operated and developed for the purpose of raising additional income for
its support, pursuant to Act 3608. ALUMCO cut and removed timber therefrom but, as of 8 December 1964, it had incurred an unp aid
account of P219,362.94, which, despite repeated demands, it had failed to pay. After a notice was given by the petitioner tha t they
would rescind or terminate the logging agreement, ALUMCO executed an instrument, entitled “Acknowledgment of Debt and Proposed
Manner of Payments,” dated 9 December 1964, which was approved by the president of UP, and which stipulated the following:

3. In the event that the payments called for in Nos. 1 and 2 of this paragraph are not sufficient to liquidate the foregoing indebtedness
of the DEBTOR in favor of the CREDITOR, the balance outstanding after the said payments have been applied shall be paid by the DEBTOR
in full no later than June 30, 1965;

5. In the event that the DEBTOR fails to comply with any of its promises or undertakings in this document, the DEBTOR agrees without
reservation that the CREDITOR shall have the right and the power to consider the Logging Agreement dated December 2, 1960 as
rescinded without the necessity of any judicial suit, and the CREDITOR shall be entitled as a matter of right to Fifty Thousand Pesos
(P50,000.00) by way of and for liquidated damages;

ALUMCO continued its logging operations, but again incurred an unpaid account, for the period from 9 December 1964 to 15 July 1965,
in the amount of P61,133.74, in addition to the indebtedness that it had previously acknowledged. Four days later, petitioner UP
informed respondent ALUMCO that it had, as of that date, considered as rescinded and of no further legal effect the logging agreement
that they had entered in 1960.

ISSUE:

Whether or not petitioner UP treat its contract with ALUMCO rescinded, and may disregard the same before any judicial pronouncement
to that effect.

RULING:

Yes to both. UP and ALUMCO had expressly stipulated in the “Acknowledgment of Debt and Proposed Manner of Payments” that, upon
default by the debtor ALUMCO, the creditor (UP) has “the right and the power to consider, the Logging Agreement dated 2 Decem ber
1960 as rescinded without the necessity of any judicial suit.” As to such special stipulation, and in connection with Article 1191 of the
Civil Code, this Court stated in Froilan vs. Pan Oriental Shipping Co., et al., L-11897, 31 October 1964, 12 SCRA 276:

there is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract would
cause cancellation thereof, even without court intervention. In other words, it is not always necessary for the injured party to resort to
court for rescission of the contract.

Of course, it must be understood that the act of party in treating a contract as cancelled or resolved on account of infractions by the
other contracting party must be made known to the other and is always provisional, being ever subject to scrutiny and review by the
proper court. If the other party denies that rescission is justified, it is free to resort to judicial action in its own beha lf, and bring the
matter to court. Then, should the court, after due hearing, decide that the resolution of the contract was not warranted, the responsible
party will be sentenced to damages; in the contrary case, the resolution will be affirmed, and the consequent indemnity awarded to the
party prejudiced.
Ponce de Leon v. Syjuco

G.R. No. L-3316, 31 October 1951

FACTS:

Plaintiff obtained from defendant Syjuco two loans in 1944. One is for P200,000 obtained on May 5, 1944, and another for P16, 000
obtained on July 31, 1944. These two loans appear in two promissory notes signed by the plaintiff which were couched in practically the
same terms and conditions and were secured by two deeds of mortgage covering the same parcels of land. In said promissory notes it
was expressly agreed upon that plaintiff shall pay the loans “within one year from May 5, 1948, . . . peso for peso in the coin or currency
of the Government of the Philippines that, at the time of payment above fixed it is the legal tender for public and private d ebts, with
interests at the rate of 6% per annum, payable in advance for the first year, and semi-annually in advance during the succeeding years”,
and that, the period above set forth having been established for the mutual benefit of the debtor and creditor, the former binds himself
to pay, and the latter not to demand the payment of, the loans except within the period above mentioned. And as corollary to having
the above stipulations, it was likewise agreed upon in the two deeds of mortgage that “if either party should attempt to annul or alter
any of the stipulations of this deed or of the note which it secures, or do anything which has for its purpose or effect an alteration or
annulment of any of said stipulations, he binds himself to indemnify the other for the losses and damages, which the parties hereby
liquidate and fix the amount of P200,000”.

The facts show that, on November 15, 1944, or thereabouts, contrary to the stipulation above mentioned, plaintiff offered to pay to the
defendant not only the principal sum due on the two promissory notes but also all the interests which said principal sum may earn up
to the dates of maturity of the two notes, and as the defendant refused to accept the payment so tendered, plaintiff deposite d the
money with the clerk of court and brought this action to compel the defendant to accept it to relieve himself of further liability.

ISSUE:

Is the consignation made by the plaintiff valid in the light of the law and the stipulations agreed upon in the two promissory notes signed
by the plaintiff?

RULING:

Negative. In order that consignation may be effective, the debtor must first comply with certain requirements prescribed by law. The
debtor must show (1) that there was a debt due; (2) that the consignation of the obligation had been made bacause the credito r to
whom tender of payment was made refused to accept it, or because he was absent for incapacitated, or because several persons
claimed to be entitled to receive the amount due (Art. 1176, Civil Code); (3) that previous notice of the consignation has been given to
the person interested in the performance of the obligation (Art. 1177, Civil Code); (4) that the amount due was placed at the disposal
of the court (Art 1178, Civil Code); and (5) that after the consignation had been made the person interested was notified the reof (Art.
1178, Civil Code). In the instant case, while it is admitted a debt existed, that the consignation was made because of the refusal of the
creditor to accept it, and the filing of the complaint to compel its acceptance on the part of the creditor can be considered sufficient
notice of the consignation to the creditor, nevertheless, it appears that at least two of the above requirements have not been complied
with. Thus, it appears that plaintiff, before making the consignation with the clerk of the court, failed to give previous notice thereof to
the person interested in the performance of the obligation. It also appears that the obligation was not yet due and demandable wh en
the money was consigned, because, as already stated, by the very express provisions of the document evidencing the same, the
obligation was to be paid within one year after May 5, 1948, and the consignation was made before this period matured. The failure of
these two requirements is enough ground to render the consignation ineffective. And it cannot be contended that plaintiff is justified
in accelerating the payment of the obligation because he was willing to pay the interests due up to the date of its maturity, because,
under the law, in a monetary obligation contracted with a period, the presumption is that the same is deemed co nstituted in favor of
both the creditor and the debtor unless from its tenor or from other circumstances it appears that the period has been established for
the benefit of either one of them (Art. 1127, Civil Code). Here no such exception or circumstance exists.
Lafarge Cement Phil v. Continental Cement

G.R. No. 155173, 23 November 2004

FACTS:

In the Letter of Intent (LOI) executed by both parties, Petitioner Lafarge Cement Philippines, Inc. on behalf of its affiliat es and other
qualified entities agreed to purchase the cement business of Respondent Continental Cement Corporation. Both parties entered into a
Sale and Purchase Agreement knowing that respondent has a case pending with the Supreme Court. In anticipation of future liab ility,
the parties allegedly agreed to retain from the purchase price a certain amount to be deposited in an account for payment to the
complainant who sued respondent herein. Upon the finality of the decision of the said case wherein liability was imposed to t he
respondent, petitioner allegedly refused to apply the sum for payment despite repeated instructions of the Respondent. Respondent
filed a Complaint with Application for Preliminary Attachment against petitioners.

Petitioners filed their Answer and Compulsory Counterclaims denying all the allegations and alleged that respondent`s majority
stockholder (Lim) which is also the company president and the corporate secretary (Mariano), influences respondent to file the baseless
complaint and procured the Writ of Attachment in bad faith. Hence, petitioners prayed that both the president and corporate secretary
be held jointly and solidarily liable with respondent. RTC dismissed petitioner`s counterclaims.

ISSUE:

May defendants in civil cases implead in their counterclaims persons who were not parties to the original complaint?

RULING:

Counterclaims are defined in Section 6 of Rule 6 of the Rules of Civil Procedure as any claim which a defending party may have against
an opposing party. They are generally allowed in order to avoid a multiplicity of suits and to facilitate the disposition of the whole
controversy in a single action, such that the defendants demand may be adjudged by a counterclaim rather than by an independe nt
suit. The only limitations to this principle are (1) that the court should have jurisdiction over the subject matter of the counterclaim, and
(2) that it could acquire jurisdiction over third parties whose presence is essential for its adjudication.

The general rule that a defendant cannot by a counterclaim bring into the action any claim against persons other than the plaintiff
admits of an exception under Section 14, Rule 6 which provides that when the presence of parties other than those to the original action
is required for the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be
brought in as defendants, if jurisdiction over them can be obtained.

The foregoing procedural rules are founded on practicality and convenience. They are meant to discourage duplicity and multiplicity of
suits. This objective is negated by insisting — as the court a quo has done — that the compulsory counterclaim for damages be dismissed,
only to have it possibly re-filed in a separate proceeding. Respondents Lim and Mariano are real parties in interest to the compulsory
counterclaim; it is imperative that they be joined therein. Moreover, in joining Lim and Mariano in the compulsory countercla im,
petitioners are being consistent with the solidary nature of the liability alleged therein.

WHEREFORE, the Petition is GRANTED and the assailed Orders REVERSED. The court of origin is hereby ORDERED to take cognizance of
the counterclaims pleaded in petitioners Answer with Compulsory Counterclaims and to cause the service of summons on Respondents
Gregory T. Lim and Anthony A. Mariano.
Taylor v. Uy Tieng Piao

43 Phil. 873 (1922)

FACTS:

On December 12, 1918, the plaintiff contracted his services to Tan Liuan and Co., as superintendent of an oil factory which the latter
contemplated establishing in this city. The period of the contract extended over two years from the date mentioned; and the s alary was
to be at the rate of P600 per month during the first year and P700 per month during the second, with electric light and water for
domestic consumption, and a residence to live in, or in lieu thereof P60 per month.

At the time this agreement was made, the machinery for the factory had not been acquired, though ten expellers had been ordered
from the U.S. as agreed, for any reason the machinery failed to arrived in the city of Manila for the period of six months fr om the date
given, the contract may be canceled by the party of the second part.

The machinery stated in the contract did not arrive in the city of Manila within the six months succeeding the making of the contract,
and other equipment necessary for the factory. On June 28, 1919, the defendants informed the plaintiff that they had decided to rescind
the contract effective June 30th. The plaintiff thereupon instituted this action to recover damages in the amount of P13,000, covering
salary and perquisites due and to become due under the contract.

ISSUE:

Whether or not the plaintiff may demand perquisites under the rescinded contract.

RULING:

Yes, it has been concluded that the Court of First Instance committed no error in rejecting the plaintiff claim in so far as damages are
sought for the period subsequent to the expiration of the first six months, but in the assessment of damages due for six months period,
the trial judge evidently overlooked the item of P60 specified in the plaintiff fourth assignment of error, which represent commutation
of house rental for the month of June 1919. This amount the plaintiff is clearly entitled to recover, in addition to the P300 awarded in
the lower court.

The judgment of CFI is modified, the defendant shall pay the plaintiff the sum of P360 instead of P300 as allowed by the lower court.

DOCTRINE:

A condition at once facultative and resolutory may be valid even though the condition is made to depend upon the will of the obligor.
In the case ate bar, the defendants were under a positive obligation to cause the machinery to arrive in Manila, they would o f course
be liable, in the absence of affirmative proof showing that the non-arrival of the machinery was due to some cause not having its origin
in their own act or will.