(Chavez v Gonzales by: Clyne
other.
III: TOPIC: Nature and effect of obligations
IV. DOCTRINE: Liability of the obligor in his/her failure of accomplishing such obligation
V. FACTS
- Rosendo Chavez brought his typewrite to Fructuoso Gonzales for repair and cleaning
-Such repair and cleaning wasn’t immediately accomplished by Gonzales
-On October 1963, Chavez gave Gonzales an amount of P6 in order to buy parts that are to be
replaced during the repair
-However, despite repeated demands and updates regarding the status of the repair, Gonzales wasn’t
able to fulfill his obligation to Chavez
-This prompted Chavez to get his typewriter back from Gonzales
-Upon inspection of his typewriter, he noticed that there were numerous parts that are missing and
asked for a reimbursement from Gonzales
-Gonzales later on replaced the missing parts and added P6 for such damages
-Chavez later on went to Freixas Business Machines to have it fixed
-The price of the repair was P89.95
-Chavez later on commenced an action before the CFI of Manila for actual and compensatory
damages
-Chavez won the case but the court only ordered Gonzales to pay an amount of P31.10 out of the
initial amount that Chavez was requesting which amounted to P690 (The amount of P31.10 was
garnered from the total amount of the missing parts)
-Hence, this case
VI. ISSUE
Whether the Gonzales is liable for such repair and reimbursement of spare parts
VII. HELD/RULING
Yes, payment is modified therefore Gonzales is now liable for the payment of such repair and parts
VIII. RATIO
Article 1167 of Civil Code provides that if a person obliged to do something fails to do it, the same shall
be executed at his cost. This same rule shall be observed if he does it in the contravention of the tenor
of the obligation. Furthermore, it may be decreed that what has been poorly done. Hence, from this
provision, the Supreme Court ratiocinated that since there was a meeting of the minds between them,
which gave birth to an obligation between them. Gonzales is hereby liable for such expense since he
wasn’t able to perform his obligation and that he should be liable for such breach of contract. From this
point, Chavez is now entitled to P89.95 from Gonzales.
Abaya v Standard Vacuum Oil
Doctrine:
Reciprocal obligations, the performance of one is conditioned on the simultaneous fulfillment of the
other obligation. When one party failed to do his obligation in a reciprocal obligation, the other party will
not be in default or in delay.
Facts:
Guys walang facts sinabi hahah issue and ruling kagad 
Issue:
Whether or not the appellant is entitled to damages, compensatory as well as moral and exemplary,
supposedly sustained as a consequence of appellee's refusal to appoint him operator of the station in
controversy
Ruling:
The trial court termed the stipulation of appointing Abaya as operator subject to the conditions of the
“Operator’s Agreement” as a reciprocal obligation.
In reciprocal obligation the performance of one is conditioned on the simultaneous fulfillment of the
When one party to the reciprocal obligation refuses to assume and perform the obligation imposed on
him, the other party does not incur in delay,
Article 119 of the Civil Code provides that "the power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent upon him." There is no
reason here to sustain the contention that in the circumstances fulfillment of the obligation was
impossible.
Agcaoili v GSIS
Topic:
Obligations; General Provisions; Nature and Effects of Obligations
Doctrine:
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him
Petitioner:
Marcelo Agcaoili
Respondent:
GSIS
Facts:
Respondent GSIS sold a house to petitioner Marcelo Agcaoili with the condition that “if you fail to
occupy the same within three (3) days from receipt of this notice, your application shall be considered
automatically disapproved and the said house and lot will be awarded to another applicant.”
Petitioner wasted no time and immediately moved in to the said house. However, he moved out after
one day because the house was uninhabitable. There were no ceilings, stairs, lighting, facilities, water
connection, bathroom, toilet kitchen, or drainage. Petitioner asked a homeless friend, a certain
Villanueva, to stay in the house as some sort of watchman.
He then complained to the GSIS but to no avail. The GSIS asked petitioner to pay the P35.56 monthly
amortization, but he refused until the house was completed. The GSIS then cancelled the award and
required petitioner to vacate the premise. The house and lot was awarded to another applicant.
Petitioner instituted a suit in the Court of First Instance of Manila for specific performance and
damages. The court ruled in favor of the petitioner and GSIS appealed that judgement.
Issue:
W/N cancellation by GSIS of the award in favor of petitioner was just and proper
Held:
No. Agcaoili’s offer to buy from GSIS was contained in a printed form drawn up by the latter, entitled
“Application to Purchase a House and/or Lot.” Agcaoili filled up the form, signed it, and submitted it.
The acceptance of the application was also set out in a form (mimeographed) also prepared by the
GSIS.
As already mentioned, this form sent to Agcaoili, duly filled up, advised him of the approval of his
“application to purchase a house and lot in our GSIS Housing Project at NANGKA, MARIKINA, RIZAL,”
and that “Lot No. 26, Block No. (48) 2, together with the housing unit constructed thereon, has been
allocated to you.”
Neither the application form nor the acceptance or approval form of the GSIS—nor the notice to
commence payment of monthly amortizations, which again refers to “the house and lot awarded”—
contained any hint that the house was incomplete, and was being sold “as is,” i.e., in whatever state of
completion it might be at the time.
The condition “to occupy the said house immediately” would imply that the construction of the house
was more or less complete and it was reasonable for someone to live in it. The contract was perfected,
there had been a meeting of the minds upon the purchase by Agcoali of a determinate house and lot in
GSIS housing project.
Since GSIS did not fulfill that obligation, and was not willing to put the house in habitable state, it
cannot invoke Agcaoili’s 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 or is not ready to comply in a proper manner with what is incumbent upon him.”
1
Blame for the imprecision cannot be imputed to Agcaoili; it was after all the GSIS which caused the
contract to come into being by its written acceptance of Agcaoili’s offer to purchase, that offer being
contained in a printed form supplied by the GSIS. Said appellant having caused the ambiguity of which
it would now make capital, the question of interpretation arising therefrom, should be resolved against
it.
On the other hand, assuming it to be feasible to still finish the construction of the house at this time, to
compel the GSIS to do so so that Agcaoili’s prestation to pay the price might in turn be demanded,
without modifying the price therefor, would not be quite fair. The cost to the GSIS of completion of
construction at present prices would make the stipulated price disproportionate, unrealistic.
In the exercise of its equity jurisdiction, the Court may adjust the rights of parties in accordance with
the circumstances obtaining at the time of rendition of judgment, when these are significantly different
from those existing at the time of generation of those rights. Adjustment of rights has been held to be
particularly applicable when there has been a depreciation of currency.
WHEREFORE, the judgment of the Court a quo insofar as it invalidates and sets aside the cancellation
by respondent GSIS of the award in favor of petitioner Agcaoili of Lot No. 26, Block No. (48) 2 of the
GSIS low cost housing project at Nangka, Marikina, Rizal, and orders the former to respect the
aforesaid award and to pay damages in the amounts specified, is AFFIRMED as being in accord with
the facts and the law.
Said judgments is however modified by deleting the requirement for respondent GSIS “to complete the
house in question so as to make the same habitable,” and instead it is hereby ORDERED that the
contract between the parties relative to the property above described be modified by adding to the cost
of the land, as of the time of perfection of the contract, the cost of the house in its unfinished state also
as of the time of perfection of the contract, and correspondingly adjusting the amortizations to be paid
by petitioner Agcaoili, the modification to be effected after determination by the Court a quo of the
value of said house on the basis of the agreement of the parties, or if this is not possible, by such
commissioner or commissioners as the Court may appoint. No pronouncement as to costs.
SO ORDERED.
CULION ICE, FISH & ELECTRIC CO., INC., v. PHILIPPINE MOTORS CORPORATION
by: Cheska Dominguez
TOPIC: Obligations; general provisions; nature and effect of obligations
DOCTRINE: When a person holds himself out as being competent to do things requiring professional
skill, he will be held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in
the particular work which he attempts to do.
FACTS:
H.D. Cranston, representative of the plaintiff and owner of a motor schooner Gwendoline, asked the
PH Motors Corp., defendant herein, to change the engine of Gwendoline from a gasoline consumer to
a crude oil burner. The latter, through its manager C.E. Quest, agreed to do the job.
Quest went to the motor schooner in the Pasig River. He was joined by a mechanic, and was assisted
by the crew of Gwendoline. He chose to install a Zenith carburetor, and once it was tried with gasoline
as fuel, the result was satisfactory.
A temporary tank was placed near the compartment covering the engine which contains the baser fuel
- a mixture of low grade of oil and distillate. It was connected with the carburetor by a tube which was
apparently not well fitted. In effect, the fuel mixture leaked and caused flood. Quest was informed on
the said matter but ignored it.
A trial run was made and the engine stopped a few times. A mechanic switched the tube and
connected it with a new mixture. This caused the burning of the Gwendoline. It was sold to only P150,
when its value before the accident was P10,000.
The plaintiff sued the defendant two years after. The trial court favored that plaintiff. The defendant
appealed.
ISSUE: WON defendant has no liability since it was an accident - No.
RATIO:
The loss of this boat was due to the negligence and lack of skill of Quest.
When a person holds himself out as being competent to do things requiring professional skill, he will be
held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in the particular
work which he attempts to do. Quest had experience in fixing engines of automobiles and tractors but
not of boats. The dripping of the mixture did not convey to his mind that such might cause fire, but a
person skilled in that particular work would have known that.
The burning of the Gwendoline may be said to have resulted from accident, but this accident was in no
sense an unavoidable accident. It would not have occurred but for Quest's carelessness or lack of skill.
The test of liability is not whether the jury was accidental in a sense, but whether Quest was free from
blame.
The court awarded P9850 with interest to the plaintiff for damages.
NOTES:
The plaintiff and defendant are domestic corporations.
Defendant was an automobile agency authorized to deal machinery engines and motors, and to build,
operate, buy and sell the same. (not boats)
McLeod and Co. is a firm dealing in tractors. It recommended PMC to the plaintiff.
PMC Office: Ongpin St., Manila
A carburetor is a device that mixes air and fuel for internal combustion engines in the proper ratio for
combustion. In this case, the hydrostatic pressure in the carburetor was greater than the delicate parts
of it could sustain.
Summary: The plaintiff owns Gwendoline used for his fishing trade. He chose the defendant to change
its engine but due to Quest's negligence, Gwendoline caught fire. Plaintiff then sued the defendant for
damages.
SYQUIA v COURT OF APPEALS
Created by: Migs Gayares
TOPIC:
Obligations; General Provisions; Nature and Effect of Obligations.
PETITIONERS:
Juan Syquia, Corazon Syquia, Carlota Syquia, Carlos Syquia, and Anthony Syquia
RESPONDENTS:
Court of Appeals and the Manila Memorial Park Cemetery, Inc. (MMPC)
DOCTRINE:
The rule is clear that when the terms of the contract are clear and leave no doubt as to the intention of
the contracting parties, then the literal meaning of the stipulation shall control. Contracts are
interpreted in their literal meaning and not beyond their obvious intendment.
FACTS:
 Petitioners (Syquias) were the parents and siblings of the deceased, Vicente Juan Syquia.
They filed a complaint on against private respondent, MMPC, for recovery of damages
arising from breach of contract and/or quasi-delict. The trial court dismissed the complaint.
 The complaint alleged that pursuant to a Deed of Sale and Interment Order executed
between the plaintiff-appellant Juan Syquia, father of the deceased Vicente Syquia, and
defendant-appellee, the former instructed the latter to inter the remains of the deceased in
the Manila Memorial Park Cemetery in the morning of July 25, 1978 in accordance with the
latter’s interment procedures.
 That on September 4, 1978, in preparation for the transfer of the remains to a newly
purchased plot also in the same cemetery, the concrete vault encasing the coffin of the
deceased was removed from its underground niche by the employees of MMPC. That as
the concrete vault was raised to the surface, plaintiffs discovered a hole approximately 3
inches in diameter near the bottom of the walls closing out the width of the vault and that for
a certain length of time (one hour, estimated), water drained out of the hole.
2
  Due to the discovery, plaintiffs became agitated and upset due to the water that had
collected inside the vault, which might have risen to the level of the coffin and flooded the
same as well as the remains of the deceased with ill effects.
 Pursuant to an authority granted by the Municipal Court of Parañaque on September 14,
1978, plaintiffs with the assistance of licensed morticians and the personnel of MMPC
opened the concrete vault and discovered evidence of total flooding:
a. Interior walls of the concrete vault were damaged by flooding;
b. Coffin was entirely damaged by water, filth, and slit causing the wooden parts to
warp and separate and to crack the viewing glass panel located above the head
and torso of the deceased;
c. Entire lining of the coffin, clothing of the deceased, and the exposed parts of the
deceased’s remains were damaged due to the flooding and the silt were also
coated with filth.
 Due to the alleged unlawful and malicious breach by the MMPC of its obligation to deliver a
defect-free concrete vault designed to protect the remains of the deceased and the coffin
against elements which resulted in the desecration of the deceased’s remains and due to
MMPC’s gross negligence conformably to Article 2176 of the Civil Code in failing to seal the
concrete vault, the plaintiff prayed that judgment be rendered ordering MMPC to pay P30k
for actual damages, P500k for moral damages, exemplary damages in the amount
determined by court, 20% of MMPC’s total liability as attorney’s fees, and litigation
expenses.
 RTC: Complaint dismissed since the contract between the parties did not guarantee that the
cement vault would be waterproof; that there could be no quasi-delict because the
defendant was not guilty of any fault or negligence and because there was a pre-existing
contractual relation between the Syquias and MMPC. Court also notes that the father, Juan
Syquia, chose the gravesite despite knowledge that said area had to be constantly sprinkled
with water to keep the grass green and that water would eventually seep through the vault.
The Court also accepts the explanation given by the defendant for the purpose of the hole,
which helped in draining the water from the vault.
 CA: Affirmed the judgment of the case’s dismissal. Motion for reconsideration was also
denied.
ISSUE:
W/N the act of boring a hole by MMPC on the vault of the deceased was a breach of the contractual
obligation to provide a sealed vault, which would constitute a negligent act leading to a quasi-delict?
HELD:
NO – The Court empathizes with the plaintiffs; however, there is not enough ground, both in fact and in
law, to justify a reversal of the decision by the lower courts and to uphold the pleas of the petitioners.
RATIO:
CA found no negligent act on the part of MMPC to justify an award of damages against it. Although a
pre-existing contractual relation between the parties does not preclude the existence of a culpa
aquiliana, the Court finds no reason to disregard the finding that there was no negligent act committed
in the case.
Art. 2176 – Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict.
In this case, the Syquias and MMPC entered into a contract entitled “Deed of Sale and Certificate of
Perpetual Care” on August 27, 1969. The agreement covered the relationship of the parties and their
rights and obligations. Hence, had there been negligence on MMPC’s side, it would be held liable NOT
for a quasi-delict or culpa aquiliana, but for culpa contractual as provided by Art. 1170 of the Civil
Code.
MMPC served its obligations to the Syquias but the latter claims that they breached its contract since
what was advertised in the brochure they held out was that underground internment was done in a
sealed concrete vault. The Syquias claim that the vault provided was not sealed, not waterproofed,
hence, water seeped through the cement enclosure and damaged everything. The Court does not
agree since there was no stipulation in their contract and in the Rules and Regulations of the MMPC
that the vault would be waterproof. MMPC’s witness, Dexter Heuschkel, explained that “sealed” meant
“closed.” Sealed cannot be equated with waterproof.
The rule is clear that when the terms of the contract are clear and leave no doubt as to the intention of
the contracting parties, then the literal meaning of the stipulation shall control. Contracts are
interpreted in their literal meaning and not beyond their obvious intendment.
MMPC did not breach the tenor of its obligation to the Syquias. As for the hole in the coffin, the Court
ruled that the circumstances surrounding the commission of such act negated the allegation of
negligence as the Interment Foreman explained it. MMPC exercised the diligence of a good father in
preventing the accumulation of water inside the vault, which would have resulted in the caving in of
earth around the grave.
No reason to award damages in favor of petitioners.
KWENTO:
The son of the Syquias died and he was buried in MMPC through their own services. They transferred
the body and discovered that the vault was flooded and that the flooding damaged everything. Syquias
accused MMPC of breaching the contract since they promised a “sealed” coffin. RTC, CA, and SC
denied the Syquia’s claim since “sealed” is not the same as “waterproofed.” Contracts must be
interpreted in their literal meaning.
BARZAGA v. COURT OF APPEALS
RECIT-READY: The case started when the wife of Barzaga died on the 19 th of December. Hence,
Barzaga, the petitioner, planned to have interment on the 24 th of December but unfortunately it
didn’t carry out properly due to the delay of materials of the niche of her wife. What happened was
that when Barzaga went to the respondent’s store to purchase materials, he requested that the
materials to be delivered at a specific, and hence, the store employees assured that the materials
will be delivered on time. However, on the day of the delivery of the material, the materials didn’t
arrive. Afterwards, the petitioner filed a complaint in the RTC which rendered in favor of the
petitioner, however, the CA reversed the decision because there was no contractual commitment
as to the exact time of delivery since it was not indicated in the receipts covering the sale. The SC
held the following: (1) The respondent incurred legal delay, on the reason that Alviar was
negligent and incurred in delay in the performance of his contractual obligation, because there was
a specific time agreed upon the deliver of the materials. Furthermore, there was a positive verbal
commitment; (2) There was no fortuitous event, the flattening of the tires cannot be sustained as
a defense for exempting the respondent from liabilities, because, such situation can be foreseen.;
and (3) The petitioner must be entitled of damages.
DOCTRINE: The law expressly provides that those who in the performance of their obligation are
guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof, are
liable for damages.
FACTS
 It was a depressing Christmas for Ignacio Barzaga and his family, that on 19 th of December,
Ignacio’s wife died from a sickness, after a prolonged pain and suffering. Her dying wish
was to die before Christmas day to spare her family from keeping lonely over her remains.
Barzaga, set out to arrange for his wife’s interment on the 24 th of December but
unfortunately could not be carried out.
o On December 21, 1990, Barzaga went to the hardware store of respondent to
inquire about the availability of certain materials to be used in the construction of
a niche for his wife. He also asked if the materials could be delivered at once.
Although the respondent’s storekeeper, replied that she had to verify it if they can
deliver. Petitioner left after.
o On December 22, Barzaga followed up his purchase of construction of materials.
Then he told the employees that the materials he was buying be delivered at the
Memorial Cemetery by 8 o’clock in the morning. One of the employees (Marina
3
 Boncales) agreed to deliver the item. With this assurance, Barzaga purchased
the materials and paid in full amount of Php 2,110.
o However, the materials didn’t arrive at 8:00 am as promised. After an hour, the
delivery was still nowhere. Barzaga returned to the store to inquire about the
delay. Boncales assured him that the delivery truck was not yet around it had
already left the garage and will be arriving soon at the cemetery.
o After hours of waiting, Barzaga was extremely upset and decided to dismiss his
laborers. He proceeded to the police station, and lodged a complaint against the
respondent, Alviar. But when he returned again to the store, he saw the delivery
truck already there but the materials he purchased were not yet ready for
loading. Barzaga then decided to cancel his transaction and look for construction
materials elsewhere.
o Due to the delay, he wasn’t able to make the niche of his wife.
 The petitioner, eventually sued the respondent, Alviar before the RTC. The TC, ruled in
favor of the petitioner and ordered the respondent, Alviar to pay the petitioner. However, the
Court of Appeals reversed the decision of the RTC because there was no contractual
commitment as to the exact time of delivery since this was not indicated in the receipts
covering the sale.
ISSUE
(1) WON respondent incurred legal delay.
(2) WON the respondent encountered fortuitous event resulting to the delay.
(3) WON the petitioner is entitled to be indemnified.
HELD/RATIO
(1) YES. The respondent incurred legal delay. The SC ruled that the respondent, Alviar was
negligent and incurred in delay in the performance of his contractual obligation. Contrary to
the appellate court’s factual determination, there was a specific time agreed upon for the
delivery of the materials to the cemetery. The argument that the invoices never indicated a
specific delivery time must fail in the face of the positive verbal commitment of respondent’s
storekeeper. Consequently, it was no longer necessary to indicate in the invoices the exact
time the purchased items were to be brought to the cemetery.
(2) NO. There was no fortuitous event resulting to the delay. The SC ruled that the
flattening of tires can be foreseen and as such should have been reasonably guarded
against. The nature of Alviar’s business requires that he should be ready at all times to meet
contingencies of this kind.
(3) YES. The petitioner must be entitled of damages. The SC ruled that it is sufficiently
entitles the petitioner, to be indemnified for the damage he suffered as a consequence of
delay or a contractual breach.
o The SC sustained the award of moral damages. It cannot be denied that
petitioner and his family suffered from the death of the wife of the petitioner and
most especially the family cannot have a proper interment.
o The SC also affirmed the grant of exemplary damages. The attitude of
employees of respondent over which he exercised supervisory authority indicates
gross negligence in the fulfillment of his business obligations.
o The SC did not affirm the grant of award of temperate damages.
7. Dioquino v. Laureano
GR No. L-25906 May 28, 1970
By: Madrid
Topic: Article 1174/ Liability for fortuitous events/ Assumption of risk
Plaintiff/Creditor: Atty. Pedro Dioquino
Defendant/Debtor: Federica Laureano
Doctrine:
The express language of Art. 1174 of the present Civil Code states that as a general rule, no
person shall be responsible for fortuitous events (events that could not be foreseen, or which,
though foreseen, were inevitable). However, the exceptions are: 1. When the law itself
expressly provides otherwise; 2. Otherwise declared by stipulation; and, 3. When the nature of
the obligation requires the assumption of risk.
Facts:
- Atty. Pedro Dioquino, the owner of a car, was registering his car in the MVO (Parang modern day
LTO) where he met the defendant who was a patrol officer of the same office.
- Defendant Laureano was waiting for a jeepney going to the Provincial Commander of Masbate.
- Dioquino requested Laureano to introduce him to one of the clerks of the MVO who could
facilitate the registration of his car (Prestate). Laureano accepted and rode on his car.
- While near the destination (Plaintiff’s driver was the one driving), some mischievous boys threw
stones at the car as a prank, but ended up breaking one of the car’s windshield.
- Plaintiff wanted Laureano to pay for the broken windshield arguing that even though the general rule
stated in Art. 1174 does not make a person liable for a fortuitous event, the nature of the obligation
requires the assumption of risk. Therefore, making him liable.
- But Laureano refused arguing that he was not liable since a minor child threw stones accidentally at
the windshield, therefore, it was force majeure.
- LC ruled that defendant is liable for damages.
Issue:
WON Laureano should be held liable for the incident.
Held:
No. Defendant should not have been made liable for a fortuitous event.
Ratio:
- What happened was clearly unforeseen. It was a fortuitous event resulting in a loss which must be
borne by the owner of the car.
- An element of reasonableness in the law would be manifestly lacking if, on the circumstances as thus
disclosed, legal responsibility could be imputed to an individual in the situation of defendant Laureano.
- LC was misled, apparently, by the inclusion of the exemption from the operation of such a provision
of a party assuming the risk, considering the nature of the obligation undertaken. However, in the case
at bar, there is no such risk to begin with. Therefore, without the presence of the assumption of risk,
and being a fortuitous event, Defendant Laureano should not be made liable.
Decision:
- LC decision reversed; Suit is dismissed.
Notes & Comments ni Boss Ger:
Medyo confused pa ako kung bakit di nalang yung mga bata ang singilin nila ng damages, pero yan
ang trip ni plaintiff.
So yun nga, yung nangyare is a fortuitous event kasi di naman expected na may babato na mga bata
sa kotse ni plaintiff.
Ang argument ni plaintiff na nag assume ng risk daw si defendant kaya dapat maging liable siya is of
no moment kasi wala naman risk sa pag hahatid sa office ng clerk ng MVO eh. Hahatid lang naman.
Buti sana kung yung lugar na yun medyo maraming mga NPA rebels, or delikado yung lugar na
pupuntahan, pero, dahil wala naman risk, di papasok yung exception sa Art. 1174. General rule ang
mag aapply.
AUSTRIA VS. CA
Topic :
Petitioner: Guillermo Austria
Respondents: First case: CA, Pacifico and Maria Abad (husband and wife)
Doctrine : Obligation is extinguished in case of fortuitous event.
For robbery to constitute a fortuitous event, it is not required that the
accused in robbery be convicted – it is sufficient that the unforeseeable event did take place without
any concurrent fault on the debtor’s part and can be done by preponderant of evidence.
FACTS:
 This is a petition for review of CA’s decision
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  Jan. 30, 1961: Maria Abad received from Guillermo Austria ONE pendant with diamonds
valued at P4,500 to be sold on commission basis or be returned on demand when not sold
 Feb. 1, 1961: (almost nighttime) while walking on the way home, Abad was said to have
been accosted by two men, one man hit her on the face and the other snatched her purse
where the pendant is
 Abad failed to return the jewelry or pay its value upon Austria’s demand
 Austria raised with CFI Manila against spouses Abad for the recovery of pendant or its value
and damages
 Spouses’ defense: robbery extinguished their obligation
 CFI’s decision: ordered spouses to pay P4,500 and P450 for attorney’s fee. That spouses
failed to prove fact of robbery and Abad was guilty of negligence going home without
companion although already getting dark and carrying large amount of money and
valuables so it does not free her from liability
 Spouses went to CA
 CA’s judgment: reversed CFI’s decision and held that an unfortunate day have been duly
established and declared the spouses not liable for the loss of jewelry on account of a
fortuitous event
 Austria then raised to SC that CA erred since nobody has been found guilty of the supposed
crime and that for robbery to fall under fortuitous event and could free the obligor from the
obligation, there ought to be a finding on the guilt of the persons responsible therefor.
ISSUE:
Whether in a contract agency it is necessary that there be prior conviction for robbery before
the loss of the article shall exempt the consignee from liability for such loss
HELD: No. SC found no merit on Austria’s contention
RULING:
 To constitute caso fortuito that would exempt a person from responsibility:
o Event must be independent of the human will
o Occurrence must render it impossible for the debtor to fulfill the obligation in a
normal manner
o Obligor must be free of participation in, or aggravation of, the injury to the creditor
 To avail of the exemption granted in the law, it is not necessary that the persons responsible
for the occurrence should be found or punished; it would only be sufficient to establish that
the enforceable event, the robbery in this case, did take place without any concurrent fault
on the debtor’s part and this can be done by preponderant of evidence
 To completely free the debtor for reason of fortuitous event, debtor must be free of any
concurrent or contributory fault or negligence in pursuant with Art. 1170 of NCC
o Art. 1170. Those who in the performance of their obligations are of fraud,
negligence or delay, or those who in any manner contravene the tenor thereof,
are liable for damages.
 Ten years previously when the robber happened (1961), criminality had not by far reached
the levels attained in the present days. Therefore, Abad is considered not negligent in this
case.
 Petition dismissed. Spouses declared free from liability and damages.
KEEP vs GIOCO
By: Enzo
TOPIC: Act of God (Liability in a Fortuitous Event)
Petitioners: CHAN KEEP
Respondents: LEON CHAN GIOCO
DOCTRINE: The debtor is liable for loss or damage of the object if it was not due to
fortuitous event.
FACTS:
1. The case started when the rice, in consideration of the sum of twenty-five centavos per cavan, having
been lost through the negligence, carelessness, and lack of due precaution taken by the defendants
(Leon Gioco) in the management of the boat on which it was being transported, as result of which
the boat sank as she (the boat) entered the port of San Fernando, on the night of the 8th of April,
1907.
2. Hence, the plaintiff, Chan Keep, sought action from the CFI of La Union to recover the value of 120
cavanes of rice claiming to have delivered to defendants upon a contract for its transportation by
boat (parao) from the port of Luna, in the Province of La Union, to the port of San Fernando
3. Leon Chan Gioco denied having entered into the transportation contract
4. However, the weight of the evidence sustains the finding that plaintiffs succeeded in establishing the
transportation contract set out in the complaint, and the delivery of the rice to the defendant Leon
Chan Gioco and his codefendant, Anastasio Atregenio, the latter being the captain of the boat,
employed by Gioco, on which the rice was loaded
5. The CFI of La Union ruled in favor of the plaintiffs, Chan Keep
6. Hence, an appeal taken by the defendants, Leon Chan Gioco, from a judgment of the CFI of La Union
7. Appellants contend that the loss of the rice was due to the sinking of the boat as a result of a strong
wind which struck her (the boat) and that appellants should not be held responsible therefor because
the loss resulted from an act of God (fuerza mayor) or an unavoidable accident (caso fortuíto)
 They cited article 1602 of the Civil Code, which is as follows: "Carriers (by land or sea) are
also responsible for losses and damages of the articles entrusted to them, unless they
prove that the loss or damage was the result of unavoidable accident (caso fortuíto) or an
act of God (fuerza mayor)."
ISSUE: WON defendant appellant (Gioco) is liable for the loss of the 120 cavans of rice. – YES.
HELD: The judgment appealed from should be and is hereby affirmed, with costs against the
appellants
RATIO:
8. The evidence in support of appellants' claim that the loss of the rice was the result of an act of God or
an unavoidable accident is not satisfactorily established.
9. The burden of proof is rested upon the defendants.
10.The only evidence in support of this contention is the testimony of the captain and one of the members
of the crew.
11.Neither of these witnesses pretend that at the time when the disaster occurred there was a storm
raging or that the seas were running dangerously high
12.We are satisfied from their testimony of the agent of the Weather Bureau station that, while there may
have been a strong wind moving on the night in question, there was no such heavy wind or violent
storm blowing as would unavoidably swamp a boat manned by a capable crew, commanded by a
careful navigator, and properly equipped for sailing the high seas.
13.It is to be presumed that the owner of the boat, Leon Chan Gioco, when he contracted to transport the
rice in question over the high seas, obligated himself to furnish a boat suitable for the work which he
undertook to perform, and a capable crew to man her
14.we do not think that the sinking of the boat can justly be said to have been the result of an act
of God or of an unavoidable accident; the blowing of strong winds must always be
anticipated by men who go down into the sea in ships, and in the absence of evidence of
some unusual intervening cause, we must hold that the exercise of due diligence in the
performance of their duty by the patron and the members of his crew, had they been
reasonably expert as seafaring men, could have and would have avoided the accident which
actually occurred, provided the boat was suited to the work required of her.
15.Mere proof that a strong wind is blowing when a properly manned and equipped sailing boat tacks its
course is not sufficient to sustain such a finding.
KWENTO:
Ito yung nag file for appeal si Gioco kasi daw dapat wala silang liability sa pagkawala ng rice cavanes
ng plaintiff so nag seek sila ng appeal sa SC against sa decision ng CFI which ruled in favor kanila
plaintiff Chan Keep
Contention ni Leon was (1) wala daw silang cataract of transpo ni Chan Keep and (2) that may heavy
wind daw na nag struck sa boat nila (which is an act of God as they contended) while anchoring sa
port so nag overturn yung boat
5
So yung issue na. Sabi ng SC di pwede na hindi sila maging liable kasi impossibleng may strong wind
talaga na ganun kalakas on that day kasi wala naman daw bagyo na kkaya mag patumba ng boat as
per the testimony of the weather forecasters dun sa place. Also presumed daw na since nag enter into
a contract si Leon Gioco, presumed na mag prprovide siya ng matibay na bangka (due diligence) to
meet his obligation.
(Limpangco and Sons V Yangco Steamship Co.)
II. Created by: Clyne
III: TOPIC: Nature and Effects of Obligations
IV. DOCTRINE: Failure of exercising due diligence in delivering a client’s loss
V. FACTS
- Limpangco and Sons employed Yangco Steamship Co. to tow from Guagua to Manila their 2 cascos
which were loaded with 2,041.80 piculs of sugar and of the value of P11,229.90.
- The tubs named “Tahimic” and “Matulin” towed such cascos on August 3,1913
- Tahimic towed the cascos into the Malabon River while Matulin later on continued to the trip to Manila
- On August 8,1913, while the cascos were tied up at Tansa, the tub named “Maturing” is now charged
with bringing the cascos to Manila upon the arrival at the mouth of the Malabon river
- However, as soon as the cascos crossed such channel, they were met with high seas and strong
winds for which they weren’t able to endure
- The cascos were swallowed immediately since they are only powered with their tikines or bamboo
poles
- The men in charge of the cascos were trying to find help from the men in charge of Matulin but they
weren’t given so
- Hence, the cascos were washed ashore and the merchandise of Limpangco and Sons were lost
- A previous judgment between two parties occurred and that the lower court granted such case in
favor of Yangco Steamship Co.
-Hence, this motion for reversal of judgement
VI. ISSUE
Whether Yangco Steamship Co. is liable for the loss incurred by Limpangco and Sons
VII. HELD/RULING
Yes, judgment in favor of Yangco Steamship Co. is now reversed in favor of Limpangco and Sons
VIII. RATIO
The Supreme Court held that when a vessel which undertakes a towage service is hereby now liable
for reasonable care of the tow and that there must be reasonable care in measuring the dangers and
hazards that may occur to the personal things of the client’s. However, in this case, the defense of
fortuitous event can’t be upheld on the basis that the workers and sailors knew that since it was the
month of August, which obviously means that there is monsoon which will be creating stormy weathers
and that the power to navigate by the cascos is only generated from the force of the bamboo poles.
Furthermore, the captain was also negligent in ordering his underlings to position such cascos in the
open sea instead of positioning such cascos somewhere free from the heavy tide produced by the
stormy weather.
11. Lasam v Smith
Topic: What constitutes Fortuitous Event
By: Mikhel Beltran
Doctrine:
Caso Fortuito/ Fortuitous Event essential charcteristics are;
(1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor
to comply with his obligation, must be independent of the human will.
(2) 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.
(3) The occurrence must be such as to render it impossible for the debtor to ful􏰀ll his
obligation in a normal manner. And
(4) The obligor (debtor) must be free from any participation in the aggravation of the injury
resulting to the creditor."
Facts:
● Frank Smith was engaged in the business of carrying passengers for hire from the one point
to another in the Province of La Union and the surrounding provinces.
● Smith had an agreement Honorio Lasam and Joaquina Sanchez to bring them to San
Fernando to Curirmao, Ilocos Norte using a Ford automobile.
● On leaving, the automobile was operated by a licensed chauffeur
● The chauffeur allowed his assistant, Remigio Bueno, to drive the car after reaching San
Juan with no driver’s license, little experience in driving.
● After crossing Abra river, there are slight engine problems which lead to steering gear
defects. The defects developed in the steering gear so as to make accurate steering
impossible, and after zigzagging for a distance of about half a kilometer, the car left the road
and went down a steep embankment
● The automobile was overturned and the plaintiffs pinned down under it.
o Mr. Lasam escaped with a few contusions and a “dislocated” rib
o Hiswife received serious injuries, among which was a compound fracture of one
of the bones in her left wrist and suffered nervous breakdown
● Plaintiff Lasam brought the action to recover damages against Smith for the physical injuries
sustained in an automobile accident.
● The Trial court ruled in favor of the plaintiff.
● Both the plaintiffs and the defendant appeal, Lasam maintained that the damages awarded
are insufficient while the Smith denies all liability for any damages whatever.
● RTC said breach of contract of carriage and articles 1101-1107 of the civil code and not
1903 and not due to fortuitous events should apply
Issue:
● Is the trial court correct in its findings that the breach of contract was not due to fortuitous
event?
● W/N Smith is liable to the injuries caused by the accident?
Ruling:
● Yes. Smith’s liability is contractual. The source of the its liability is the contract of
carriage; that by entering into that contract he bound himself to carry the plaintiffs
safely and securely to their destination; and that having failed to do so he is liable in
damages unless he shows that the failure to fulfill his obligation was due to causes
mentioned in article 1105 of the Civil Code.
● Some extraordinary circumstance independent of the will of the obligor of his employees is
an essential element of a caso fortuito. This element is lacking. It is not suggested that the
accident was due to an act of God or to adverse road conditions which could not have been
foreseen. The accident was caused either by defects in the automobile or else
through the negligence of its driver.
● Neither under the American nor Spanish law is a carrier of passengers an absolute
insurer against the risks of travel from which the passenger may protect himself
by exercising ordinary care and diligence. Here, the passengers had no means
of avoiding the danger or escaping the injury.
● In determining the extent of the liability for losses or damages resulting from negligence in
the fulfillment of a contractual obligation, the courts have “a discretionary power to
moderate the liability according to the circumstances”.
● As a consequence of her refusal to submit such an operation of Joaquina, a series of
infections ensued and which required constant and expensive medical treatment for several
years. The court agreed that the Smith should not be charged with these expenses.
6

Republic v Luzon Stevedoring Corporation
G.R. No. L-21749 | September 29, 1967
Topic:
Obligations; General Provisions; Nature and Effects of Obligations
Doctrine:
For caso fortuito or force majeure by definition, are extraordinary events not foreseeable or avoidable,
“events that could not be foreseen, or which, though foreseen, were inevitable
Petitioner:
Republic of The Philippines
Respondent:
Luzon Stevedoring Corporation
Facts:
The present case comes by direct appeal from a decision of the Court of First Instance of Manila (Case
No. 44572) adjudging the defendant-appellant, Luzon Stevedoring Corporation, liable in damages to
the plaintiff-appellee Republic of the Philippines.
On August 17, 1960, barge L-1892, owned by the respondent, was being towed down Pasig River by
tugboats “Bangus” and “Barbero”, also belonging to respondent.
The barge rammed against one of the wooden piles of the Nagtahan bridge, smashing the posts and
causing the bridge to list. Republic sued for actual and consequential damages amounting P200,000.
Defendant Luzon Stevedoring Corporation disclaimed liability therefor, on the grounds that it had
exercised due diligence in the selection and supervision of its employees; that the damages to the
bridge were caused by force majeure; that plaintiff has no capacity to sue; and that the Nagtahan
bailey bridge is an obstruction to navigation.
Issue:
W/N The collision of appellant’s barge with the bridge was caused by fortuitous event or force majeure
Held:
No. The appellant strongly stresses the precautions taken by it on the day in question: that it assigned
two of its most powerful tugboats to tow down river its barge L1892; that it assigned to the task the
more competent and experienced among its patrons, had the towlines, engines and equipment double-
checked and inspected; that it instructed its patrons to take extra precautions; and concludes that it
had done all it was called to do, and that the accident, therefore, should be held due to force majeure
or fortuitous event.
These very precautions, however, completely destroy the appellant’s defense. Force majeure by
definition, are extraordinary events not foreseeable or avoidable, “events that could not be foreseen, or
which, though foreseen, were inevitable. The appellant, knowing and appreciating the perils posed by
the swollen stream and its swift current, voluntarily entered into a situation involving obvious danger; it
therefore assured the risk, and cannot shed responsibility merely because the precautions it adopted
turned out to be insufficient. Lower Court committed no error in holding it negligent in not suspending
operations and in holding it liable for the damages caused.
It avails the appellant naught to argue that the dolphins, like the bridge, were improperly located. Even
if true, these circumstances would merely emphasize the need of even higher degree of care on
appellant’s part in the situation involved in the present case. The appellant, whose barges and tugs
travel up and down the river everyday, could not safely ignore the danger posed by these allegedly
improper constructions that had been erected and, in place, for years.
LAWYERS COOPERATIVE PUBLISHING COMPANY v. PERFECTO A. TABORA
by: Cheska Dominguez
TOPIC: Obligations; general provisions; nature and effect of obligations
DOCTRINE: The defense of force majeure may only be invoked if (1) the obligation consists the
delivery of a determinate thing; and (2) there is no stipulation holding him liable even in case of
fortuitous event.
FACTS:
Tabora, defendant herein, bought from the plaintiff one complete set of American Jurisprudence (48
volumes with 1954 pocket parts) and one set of American Jurisprudence, General Index (4 volumes)
for a total of P1,682.40. He made a partial payment of P300.00, leaving a balance of P1,382.40. The
books were delivered to his office at Ignacio Building, Naga City.
In the midnight of the same day, a big fire broke out which burned his office. He wrote a letter to the
plaintiff and out of good will, the company sent volumes 75-78 of the PH Reports for free.
However, Tabora failed to pay the monthly installment so the plaintiff filed a case with the CFI.
Plaintiff prayed for the recovery of the balance, and for the defendant be ordered to pay 25% of the
amount due as liquidated damages, and costs of action.
Defendant pleaded force majeure as a defense. He prayed for the complaint be dismissed and he be
awarded moral damages in the amount of P15,000.
The trial court favored the plaintiff. The case was then raised to the SC since it involves questions of
law.
In the contract, it provided that "Title to and ownership of the books shall remain with the seller until the
purchase price shall have been fully paid. Loss or damage to the books after delivery to the buyer shall
be borne by the buyer." Defendant argued that the loss is always borne by the owner, and since, in this
case, the title and ownership remain with the plaintiff, the company should bear the loss of the books.
He also used force majeure as defense.
ISSUE: WON the defense of force majeure may be invoked in this case - No.
RATIO:
The defense of force majeure may not be invoked in this case. Said defense may only be invoked if
(1) the obligation consists the delivery of a determinate thing; and (2) there is no stipulation holding him
liable even in case of fortuitous event.
In this case, the obligation does not refer to a determinate thing but is pecuniary in nature, and the
obligor bound himself to assume the loss after the delivery of the goods to him as provided for in the
contract, thus force majeure may not be invoked.
While as a rule, the loss of the object of the contract of sale is borne by the owner or in case of force
majeure the one under obligation to deliver the object is exempt from liability, the application of that
rule does not here obtain because the law and the contract entered into on the matter argue against it.
More so, under CC 1504, ownership is only retained by the seller to secure the performance of the
obligations by the buyer under the contract.
The SC favored the plaintiff and ordered the defendant to pay the remaining balance of his purchase.
NOTES:
General Rules:
The loss of the object of the contract of sale is borne by the owner.
In case of force majeure, the one under obligation to deliver the object is exempt from liability.
In installment sales, ownership remain with the seller but loss after delivery is borne by the buyer.
A debtor should not be made to pay liquidated damages when his denial to pay the balance of the
account is not due to bad faith.
VASQUEZ v CA
Created by: Migs Gayares
TOPIC:
7
Obligations; General Provisions; Nature and Effect of Obligations.
PETITIONERS:
Pedro Vasquez, Soledad Ortega, Cleto Bagaipo, Agustina Virtudes, Romeo Vasquez, and Maximina
Cainay
RESPONDENTS:
Court of Appeals and Filipinas Pioneer Lines, Inc.
DOCTRINE:
The liability of a shipowner is limited to the value of the vessel or to the insurance thereon. Despite the
total loss of the vessel, its insurance answers for the damages that a shipowner or agent may be held
liable for by reason of the death of its passengers.
FACTS:
● The claim for damages is due to the loss at sea of petitioners’ respective children after the
shipwreck of MV Pioneer Cebu due to typhoon “Klaring” in May 1996.
● The interisland vessel of MV Pioneer Cebu left the Port of Manila early in the morning of
May 15, 1966. The vessel was bound for Cebu and had the spouses Alfonso Vasquez and
Filipinas Bagaipo and a 4 y.o. boy, Mario Marlon Vasquez among her passengers.
● The MV Pioneer Cebu encountered typhoon “Klaring” and struck a reef on the southern part
of Malapascua Island, located somewhere north of the island of Cebu and subsequently
sunk. The aforementioned passengers were unheard from since then.
● Plantiffs Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez; Cleto
Bagaipo and Agustina Virtudes are the parents of Filipinas Bagaipo; and Romeo Vasquez
and Maximina Cainay are the parents of the child, Mario Marlon Vasquez. They seek the
recovery of damages due to the loss of the three aforementioned names.
● Defendant, during the pre-trial, admitted the contract of carriage with the victims and the fact
their vessel sinking. However, defendant’s claim that since the sinking of the vessel was
caused by force majeure, their liability has been extinguished by the total loss of the vessel.
● MV Pioneer Cebu was owned and operated by the defendant and used in the transportation
of goods and passengers in the interisland shipping. It was scheduled to leave the Port of
Manila at 9PM on May 14, 1966 but it actually left at 5AM the following day, May 15. It had a
passenger capacity of 322 including the crew. It also undertook the voyage on a special
permit issued by the Collector of Customs even if it was found to be without an emergency
electrical power system. The special permit only authorized 260 passengers due to the
deficiency and for the lack of safety devices for 322 passengers. When a headcount was
made, the tally was 168 adults and 20 minors, although the manifest only listed 106
passengers. It was then admitted, however, that the headcount is not reliable since only one
man on board the vessel did it.
● The officers of the vessel were also aware of the typhoon Klaring building up somewhere in
Mindanao. There being no typhoon signals on the route from Manila to Cebu, and being
cleared by Customs, the vessel left for Cebu despite the typhoon. When it reached
Romblon, it was decided not to seek shelter since the weather was still good. After passing
Romblon and while near Jintotolo Island, the barometer indicated that the existence of good
weather continued until Tanguingui Island. When the vessel passed the island, the weather
changed and heavy rains fell. Fearing 0 visibility and that the vessel might hit the Chocolate
Island group, the captain ordered a reversal of the course so that it could weather out the
typhoon by facing the winds and the waves in the open. But about noontime on May 16, the
vessel struck a reef near Malapascua Island, sustained leaks, and eventually sunk bring
with her Cap. Floro Yap who was in command.
● Petitioners sued for damages due to the loss of their children, while respondent defended
on the plea of force majeure and the extinction of its liability by the actual total loss of the
vessel.
● RTC: Defendant must pay Plaintiffs Vasquez and Ortega the sums of P15k for the loss of
the earning capacity of Alfonso Vasquez, P2.1k for support, and P10k for moral damages;
Plaintiffs Bagaipo and Virtudes the sum of P17k for loss of earning capacity of the deceased
Filipinas Bagaipo, and P10k for moral damages; Plaintiffs Vasquez and Cainay the sum of
P10k by way of moral damages by reason of the death of Mario Vasquez.
● CA: Reversed the judgment of the RTC and absolved respondent from any and all liability.
ISSUE:
W/N respondent is cleared of all liabilities for damages based on its plea of force majeure and total
loss of vessel?
HELD:
NO – The RTC found the defendant’s defense of caso fortuito untenable due to decisive factors such
as (a) the officers were aware of the typhoon in its general direction; (b) the crew took a calculated risk
in proceeding despite the typhoon advisory; and (c) the crew assumed greater risk when it decided to
proceed than seek shelter in Romblon.
Appellate court believed that the calamity was caused solely and proximately by fortuitous events,
which not even extraordinary diligence of the highest degree could have guarded against and that
there was no negligence on the part of the crew.
Court affirms the decision of the RTC.
RATIO:
To constitute caso fortuito that would exempt a person from responsibility, it is necessary that (1) the
event must be independent of the human will; (2) the occurrence must render it impossible for the
debtor to fulfill the obligation in a normal manner; and that (3) the obligor must be free of participation
in, or aggravation of, the injury to the creditor. In the language of the law, the event must have been
impossible to foresee or if it could have been foreseen, it must have been impossible to avoid. Must be
an entire exclusion of human agency from the cause of injury or loss.
In this case, officers were fully aware of the typhoon and that it was building to speeds up to 260kms at
east of Surigao before they left the Port of Manila. Despite hearing updates such as when they
reached Romblon they received information saying that the typhoon was 154kms southeast of
Tacloban and was moving west – northwest, they still proceeded. When they reached the typhoon
zone at Tanguigui Island, they still proceeded upon the info that the typhoon would weaken upon
crossing the mainland of Samar. After an hour, the vessel reached Chocolate Island where they were
met with a heavy downpour of rain, big waves, and zero visibility. The captain of the vessel decided to
reverse course and face the waves in the open sea but because visibility did not improve and they
were in total darkness, the vessel ran aground a reef and sank on May 16, 1966 around 12:45PM near
Malapascua Island somewhere north of the island of Cebu.
The typhoon was inevitable but the crew was well up to date with information concerning the weather
conditions and they still proceeded on taking the risk as they hop from island to island. They were
oblivious of the utmost diligence required. In risking the life of the passengers, they failed to observe
the extraordinary diligence required explicitly by law. They also failed to overcome the presumption of
fault or negligence that arises in cases of death or injuries to passengers.
The Board of Marine Inquiry exonerated the captain from any negligence since it considered that issue
moot and academic and that he had lived up to the true tradition of the profession. The Board did not
take into account the legal responsibility of a common carrier.
The liability of a shipowner is limited to the value of the vessel or to the insurance thereon. Despite the
total loss of the vessel, its insurance answers for the damages that a shipowner or agent may be held
liable for by reason of the death of its passengers.
CA’s judgment is reversed and the judgment of the RTC is reinstated.
SIA v. COURT OF APPEALS
RECIT-READY: The case is a petition for review on certiorari challenging the CA’s decision of the
RTC which rendered in favor of the petitioner. The case before the RTC was an action for damages
arising out of the destruction or loss of the stamp collection contained in the safety deposit box of
the petitioner which had been rented from the Security Bank. However, the respondent, argued that
the bank was not responsible or cannot be held liable on the destruction or loss of the stamp
8
 collection of the petitioner because of the following reasons: (1) the bank invoked the “Rules and
Regulations Governing the Lease of Safe Deposit Boxes” which stated that the liability of the bank
are only limited to the prevention of opening of the box and it has no control with the content of the
boxes; and (2) the flooded caused was beyond of their control and hence, it is a fortuitous event
which exempts them from the liability. The SC held that the Security Bank and Trust Co. must
be held liable for the failure of exercising diligence of a good father and must be guilty of
negligence, HOWEVER, the petitioner cannot be rewarded for moral damages. (1) The Court
cited the case of CA Agro v. Court of Appeals which provides that Safety deposit box is a special
kind of deposit, and may be a special contract. However, the company, in renting safety deposit
boxes, cannot exempt itself from liability for loss of the contents by its own fraud or negligence or
that of its agents or servants, and if a provision of the contract may be construed as an attempt to
do so, it will be held ineffective for the purpose. In the case at bar, the provisions under the Lease
Agreement, must be stricken down for being contrary to public policy as they meant to exempt
SBTC from any liability for damage, loss or destruction of the contents of the safety deposit box
which may arise from its own or its agents’ fraud, negligence or delay. Moreover, the SBTC is well
aware of the floods in 1985 and 1986 which the flood water overflowed in the room of the safety
deposit box of the petitioner. They should have notified the petitioner in order the box be retrieved
and changed its location to a safer one. In this respect, the bank failed to exercise the reasonable
care and prudence expected of a good father; (2) With regard to moral damages of the petitioner, it
cannot be sustained because, the relationship between the petitioner and the SBTC is based on a
contract, either of them may be held liable for moral damages for breach thereof only if said party
had acted fraudulently or in bad faith.
DOCTRINE: In renting safety deposit boxes, the company, cannot exempt itself from liability for loss
of the contents by its own fraud or negligence or that of its agents or servants, and if a provision of the
contract may be construed as an attempt to do so, it will be held ineffective for the purpose.
FACTS
 The case is a petition for review on certiorari challenging the Court of Appeal’s decision,
reversing and setting aside the decision of the RTC in the civil case of the petitioner.
o The case promulgated by the RTC was an action for damages arising out of the
destruction or loss of the stamp collection of the petitioner contained in a Safety
Deposit Box which had been rented from the Security Bank.
o Judgment Rendered: in favor of the petitioner and against the respondent,
Security Bank.
 The RTC ordered the Security Bank to pay the petitioner sum of – Php
20,000, as actual damages; Php. 100,000, as moral damages; and
Php 5,000, as Atty’s fees and legal expenses.
 Condition of the Safety Box: the petitioner rented the Safety Deposit Box No. 54 in the
Security Bank located at Binondo, Manila, wherein he placed his collection of stamps. The
said safety box was located at lowest level of the safety deposit boxes of the bank.
However, the floods that took place in 1985 and 1986, caused the destruction of the stamps
collection.
 The respondent, however, argued that they are not liable for such damages caused by the
flood.
o They invoked their “Rules and Regulations Governing the Lease of Safe Deposit
Boxes which stated that they are not liable and limited only to the exercise of the
diligence to prevent the opening of the safe by any person other than the Renter,
his authorized agent or legal representative.
o Also, the safe deposit box was only a lease and not of deposit, hence the rules
and regulations shall apply. Furthermore, the destruction of stamps collection
was due to a calamity which is beyond their control.
ISSUE
(1) WON the respondent (Security Bank) failed to exercise the required diligence in maintaining
the safety deposit box of the petitioner?
(2) WON the petitioner should be rewarded for moral damages?
HELD/RATIO
(1) Yes, the respondent, Security Bank failed to exercise the required due diligence in
maintaining the safety deposit box of the petitioner. Furthermore, the Court rejected
the contention of the respondent, stating that the liability of the Security Bank is only limited
which governed by the Rules and Regulations of the Bank and the Bank must be absolved
with such responsibilities because the damage was caused by a fortuitous event which
exempts the Bank from liabilities.
o The Court mentioned the case of CA Agro-Industrial Development Corp. v. CA
which rejected the contention that a contract for the use of a safety deposit box is
a contract of lease governed by Title VII (Barter or Exchange), Book IV of the
Civil Code.
 Safety Deposit Box is a special kind of deposit.
 With respect to property deposited in a safe-deposit box by a
customer of a safe-deposit company, the parties, since the relation is
a contractual one, may be special contract define their respective
duties or provide for increasing or limiting the liability of the deposit
company, provided such contract is not in violation of law or
public policy.
 Hence, the company, in renting safety deposit boxes, cannot exempt
itself from liability for loss of the contents by its own fraud or
negligence or that of its agents or servants, and if a provision of the
contract may be construed as an attempt to do so, it will be held
ineffective for the purpose.
 Moreover, the lessor of a safe deposit box cannot limit its liability for
loss of the contents thereof through its own negligence, the view has
been taken that such a lessor may limit its liability to some extent by
agreement or stipulation.
o The provision under the Lease Agreement of the Security Bank with regard to
Lease of Safe Deposit Box must be stricken down for being contrary to law and
public policy as they meant to exempt SBTC from any liability for damage, loss or
destruction of the contents of the safety deposit box which may arise from its own
or its agents’ fraud, negligence or delay.
o The Court also denied the contention that the Security Bank cannot be held
responsible for the destruction or loss of the stamps collection because the
flooding was a fortuitous event.
o In the case at bar, the Security Bank was guilty of negligence.
 The bank was aware of the floods of 1985 and 1986 and it also knew
that the floodwaters overflow the room where Safe Deposit Box of the
petitioner was located. The bank should have notified the petitioner in
order that the box be opened to retrieve the stamps, thus saving the
same from further destruction and loss. In this respect, it failed to
exercise the reasonable care and prudence expected of a good father.
(2) No. The Court cannot reward for the moral damages of the petitioner. The relationship
between the petitioner and the SBTC is based on a contract, either of them may be held
liable for moral damages for breach thereof only if said party had acted fraudulently or in
bad faith. There is no proof of fraud or bad faith on the part of SBTC.
16. Victoria’s Planters Assoc. Inc. v. Victoria’s Milling Co.
By: Madrid
Topic: Effect of failure to fulfill obligations due to force majeure
Plaintiff: Victoria’s Planters Association Inc./ North Negros Planters Assoc./ Gonzaga, Gaston, Lopez
Respondent: Victoria’s Milling Co.
Doctrine:
Fortuitous events relieves the obligor from fulfilling a contractual obligation.
Facts:
- Victoria’s Planters Assoc. Inc and North Negros Planters Assoc are non-stock corporations
composed of sugarcane planters. Petitioners Gonzaga, Gaston, and Lopez represent the Victoria’s
Planters Association Inc.
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- A 30-year milling contract was entered into by the Planters with the respondent corporation, from
1918-1948.
- The corporation did not want to terminate the contract after the 30-year period had expired because
from 1941-1947 (1941-1945 war period; 1946-1947 reparation period), the petitioners failed to perform
their obligation because of World War II.
- Since the country was occupied by Japanese forces, no sugar was planted.
- LC ruled in favor of plaintiffs.

Issue:
WON Petitioners can be compelled to fulfill their obligation, which is to deliver sugar cane to
respondent, for 6 more years as a form of defrayment during the 1941-1947 World War II period.

Held:
No. Plaintiffs are free from the responsibility because of the war that occurred during the pendency of
the 30-year contract.

Ratio:
- World War II is considered as a fortuitous event.
- Fortuitous events relieve the obligor the duty of fulfilling a contractual obligation.
-The stipulation in the contract that in the event of force majeure, the contract shall be deemed
suspended during said period, does not mean that the happening of any of those events stops the
running of the
period agreed upon. It only relieves the parties from the fulfillment of their respective
obligations during that time—the petitioners from delivering sugar cane and the respondent
central from milling it.
- To require the planters to deliver the sugar cane which they failed to deliver during the four years of
the Japanese occupation and the two years after liberation when the mill was being rebuilt is to
demand from the obligors the fulfillment of an obligation which was impossible of performance at the
time it became due. Nemo tenetur ad impossibilia.

Decision:
- Judgment affirmed

Notes & Comments ni Boss Ger:

The case speaks for itself naman. Both the LC and SC considered WW2 as a fortuitous event/force
majeure. Stipulated rin sa contract na in the event of force majeure, the contract shall be suspended
during those periods. Meaning, during those 6 years na yun, suspended yung contract. Therefore, the
fulfillment of obligations during those 6 years na yun ceases.

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