HICKS V MANILA HOTEL

FACTS:
1. Manila Hotel and Hicks entered into a contract where Hicks would provide transport services to Manila Hotel’s
patrons using Hick’s 5 passenger bus
2. The terms of the contract are:
a. Exclusive right to serve Manila Hotel patrons
b. For a period of 1 year
c. Renewable after 1 year period with preference over others
3. Hicks was able to provide services to Manila Hotel for about half a year when Manila Hotel started bidding for
similar services for the next year. Brown was one of these service providers and Manila Hotel chose his
services for the following year
4. The year ended and Brown’s contract period started but Hicks protested and refused to permit allow Manila
Hotel to proceed with its contract with brown. Hicks was evicted
5. Hicks files a case against Manila Hotel for breach of contract claiming that the terms of contract gave
preference to the renewal of his contract over those who bid for a new contract

ISSUE:
1. W/N Hicks is entitled to the renewal of his contracts? Yes, the terms of the contract are clear in its construction that
the contract is renewable for another year with preference over others
2. W/N there was waiver on the part of Hicks to renew his contract? No, No waiver because Hicks had an immediate right
to sue Manila Hotel because of the legal principle of breach of contract by anticipation and his right to seek employment
after Manila Hotel’s repudiation
3. W/N Hicks was entitled to damages? Yes, not only as to damages for breach of the contract but also for those
profits that Hicks lost due to the failure to renew the contract. Only one action is needed to collect all amounts
of damages suffered

HELD:
1. The term “with preference over others of renewing for a further period of one year” was placed in the
contract for the purpose of conferring upon the plaintiff an enforceable right and one which related to the very
contract in which it was placed. This clause sets out with sufficient clearness an agreement for a renewal of
the contract for a second year. It cannot have any other significance in language.
a. The grammatical structure of the stipulation shows both that the thing to be renewed was agreement in force
the first year and that the party who possessed the right to renew was the plaintiff.
b. What Manila Hotel is claiming is that the term means that Hicks only has the right to participate in the meeting
the bids of other competitors beneficial to Manila Hotel and not the renewal of his original contract. SC says this is
wrong. Using the rules of construction, it is readily apparent that the contract’s terms mean that the contract shall be
renewed again for a second year
2. Manila hotel claims that since Hicks failed to request for a renewal of his contract, but instead sought different
arrangements with Brown and the Hotel indicated Hicks’ intention to abandon or waive his right (Hicks
allegedly entered into a partnership agreement with Brown and the Hotel where he would help Brown fulfill his
contract with the Hotel)
. SC says that there was no proof of such agreement. Hotel impliedly repudiated Hicks’ right to the renewal of
his contract for another year when the Hotel took bids even before the 1 year of Hicks ended
st

a. When a person who is under an obligation to another to perform certain acts upon the demand of that person,
repudiates that obligation prior to the time when the demand for its fulfillment is necessary, the person to whom that
obligation runs is not required to sit down, fold his hands and calmly await the disaster which the violation of the
obligation entails. Under such circumstances, he is entirely within his rights and, therefore, waives nothing, when he
seeks other employment or the same or similar employment with others, or attempts to make other arrangement relative
to the same subject matter even with the person or corporation which owed him the obligation repudiated. So long as
it appears with fair clearness that his purpose is to protect himself against the result of the repudiation, his acts do not
constitute a waiver of his rights under the obligation repudiated, nor do they estop him from making a claim by reason
of its breach
b. Where a party bound to the future performance of a contract puts it out of his power to perform it, the other
party may treat this as a breach and sue him at once, having thus an immediate right of action for breach of the
contract by anticipation.
3. Damages (relevant), P10,800 as profits he would have received if he had continued the business for
the second year
. Art 1106 and 1107 of Civil Code
i. Indemnity for losses and damages includes not only the amount of the loss which may have suffered, but
also that of the profits which the creditor many have failed to realize, reserving the provisions contained in the
following articles.
 ii. The losses and damages for which a debtor in good faith is liable, are those foreseen or which may have been
foreseen, at the time of constituting the obligation, and which may be necessary consequence of its non-fulfillment.
iii. In case of fraud, the debtor shall be liable for all those which clearly may originate from the no-fulfillment of
the obligation.
a. Hicks claims that he made 11K for the first year and that he would have made 1.2K a month if he were allowed
to operate for another year
. he weight of authorities in modern jurisprudence either holds or concedes that, where a loss of profits is not
too remote or conjectural to be susceptible of computation with reasonable accuracy, they are proper elements
of damage.
i. Two elements to be considered:
1. Damage has been done
2. Damage is the result of breach
ii. But the amount must be computed with reasonable accuracy computed based on the plainest, easiest, and
most accurate measure which will do justice in the premises, and if from the conditions in the contract, and the nature
of the breach, it reasonably appears that the extent or amount of damages may be more readily, easily, correctly, and
justly ascertained by applying the loss of profits as a measure, if it is evident that profits were lost and the amount
thereof can be calculated with reasonable accuracy, then such profits are the true measure to be applied. In such
cases, however, it should appear evident that profits were lost.
iii. Amount can be estimated based only on reasonable accuracy but evidence of loss will require stricter
proof
iv. While the estimate of the amount of profits for the second year is an estimate of necessity, it is one which is
based upon facts testified to by the plaintiff, which were within his knowledge and which appear to the court
to sustain his contention. While the evidence is not as conclusive as in cases where the damages are certain and
capable of accurate statement, we are satisfied with its sufficiency, particularly in view of the fact that all that courts
may require of litigants is the production of the best evidence of which the case is susceptible. This damage includes
damages sustained even though it is only anticipated. Only one action is needed to collect the entire amount
of damages to avoid annoyance, embarrassment and the clogging of court dockets