Orient Freight International v.

Keihin-Everett Forwarding
G.R. No. 191937,
Aug. 9, 2017

Facts:
On October 16, 2001, Keihin-Everett and Matsushita entered a Trucking Service Agreement,
subcontracting services to Orient Freight. After the agreement expired on December 31, 2001,
Keihin-Everett signed an In-House Brokerage Service Agreement for Matsushita's export
operations, continuing to use Orient Freight, which subcontracted to Schmitz Transport. In April
2002, Matsushita informed Keihin-Everett of a stolen truck incident. Orient Freight downplayed
it, citing a breakdown. Keihin-Everett directed an investigation, and when the shipment arrived
in Japan, 10 pallets worth $34,226.14 were missing. Orient Freight's initial report was proven
erroneous. Matsushita terminated the agreement, and Keihin-Everett demanded indemnity from
Orient Freight, leading to a legal complaint. The Regional Trial Court ruled in favor of Keihin-
Everett in 2008, citing Orient Freight's negligence and lack of due diligence in disclosing facts.
Orient Freight was ordered to pay damages and attorney's fees. The Court of Appeals affirmed
this decision in 2010, acknowledging Orient Freight's knowledge of the incident and withholding
information.
Issue:
WON Orient Freight, Inc. was negligent for failing to disclose the facts surrounding the
hijacking incident on April 17, 2002, which led to the termination of the Trucking Service
Agreement between Keihin-Everett Forwarding Co., Inc. and Matsushita Communication
Industrial Corporation of the Philippines
Ruling:
YES. Article 1170 of the Civil Code holds parties liable for damages in case of negligence during
the performance of obligations. Negligence is defined as the failure to exercise required care,
with the standard being that of a good father of a family. In this case, both the Regional Trial
Court and the Court of Appeals found petitioner negligent for inadequately reporting a hijacking
incident and failing to conduct a thorough investigation, causing income losses to the respondent.
Articles 2200 and 2201 of the Civil Code govern the liability for damages in contractual
obligations. Damages cover not only the loss suffered but also the profits that the obligee failed
to obtain. In cases of fraud, bad faith, malice, or wanton attitude, the obligor is responsible for all
reasonably attributed damages. The lower courts established that petitioner's negligence led to
the cancellation of the contract with respondent, causing foreseeable damages. The failure to
disclose true facts resulted in a breach of trust and loss of confidence, justifying the award of
damages.

Marquez v. Elisan
G.R. No. 194642
April 06, 2015

Facts:
The petitioner secured two loans from the respondent, with the second loan covered by a
promissory note and a chattel mortgage on a motorcycle. Despite paying more than the principal
amount, the respondent filed for judicial foreclosure, alleging non-settlement of the second loan.
The Municipal Trial Court (MTC) ruled in favor of the petitioner, stating the second loan was
fully settled. The Regional Trial Court (RTC) initially affirmed the MTC but later reversed its
decision, arguing that payment of the principal is not deemed made until interest is covered. The
Court of Appeals (CA) upheld the RTC's ruling, emphasizing that daily payments primarily
covered interest. The petitioner seeks a reversal of the CA's decision and resolution.
Issue:
WON the respondent act lawfully when it credited the daily payments against the interest instead
of the principal? Could the chattel mortgage cover the second loan?
Ruling:
Yes, the respondent acted in accordance with law and jurisprudence by crediting daily payments
against the interest rather than the principal. No, the chattel mortgage could not cover the second
loan. Article 1176, while a general presumption, is subject to the more specific presumption
under Article 1253, which establishes a hierarchy for payment application: first to interest, then
to principal. The court ruled that the respondent rightly applied daily payments to interest,
considering the debt produced interest, a portion of the second loan remained unpaid, and the
respondent did not waive interest payments. The foreclosure order lacked legal and factual basis
as the parties did not execute a new chattel mortgage or amend the existing one, rendering it
ineffective for covering the second loan upon full payment of the first.

Rivera v. Chua
G.R. 184458
Jan. 14, 2015

Facts:
Rodrigo Rivera, a longtime friend of the Spouses Chua, borrowed P120,000 from them in 1995
through a promissory note. Despite the due date of December 31, 1995, Rivera issued two
dishonored checks in October 1998 as partial payment. The Spouses Chua filed a lawsuit in June
1999, alleging Rivera's refusal to pay. Rivera, denying the promissory note's validity, claimed his
loans were always secured and had an existing indebtedness with a real estate mortgage. The
MeTC ruled in favor of the Spouses Chua, ordering Rivera to pay P120,000 plus interest. On
appeal, the RTC affirmed with the exclusion of attorney's fees. The Court of Appeals upheld
Rivera's liability, reduced interest to 12%, and reinstated attorney's fees at P50,000.
Issue:
Whether or not the honorable court of appeals erred in holding that demand is no longer
necessary.
Ruling:
No. Article 1169 of the Civil Code establishes that demand is not always necessary for a debtor
to be in default. Default can occur when there's an express stipulation, legal provision, the
specified period is a significant factor, or when demand would be useless. In this case, the
Promissory Note designates 31 December 1995 as the payment date, making Rivera liable for the
5% monthly interest starting from 1 January 1996. The court denies the petition (G.R. No.
184458) and modifies the Court of Appeals' decision, ordering Rivera to pay the principal
amount, legal interest of 12% per annum until June 2013, 6% per annum from July 2013 until
finality of the decision, attorney's fees of P50,000.00, and 6% per annum interest on the total
amount until full payment. Costs are to be borne by Rivera.

Tumibay v. Spouses Lopez

G.R. No. 171692
June 3, 2013

Facts:
On March 23, 1998, petitioners filed a Complaint for the nullity of sale and recovery of land
ownership with the RTC of Malaybalay City. They claimed ownership of a parcel of land sold by
Reynalda to her daughter Rowena without their knowledge and consent. The sale was for an
unreasonably low amount. Respondents argued that petitioners executed a special power of
attorney, allowing Reynalda to sell the land, and that Rowena agreed to buy it for Php 800,000 in
installments. They contended that the sale had petitioners' consent, evidenced by payment
receipts. Petitioners countered that Reynalda violated the SPA terms, and the monthly payments
were mere deposits pending a price agreement. They alleged bad faith, stating that Reynalda
executed the deed of sale in her favor but placed it in Rowena's name, making the sale null and
void.
Issue:
WON the sale is void on the ground of public policy
Ruling:
Yes.The parties engaged in a contract to sell, a bilateral agreement where the seller retains
ownership until full payment. ROWENA breached the contract by executing a deed of sale
before completing the full payment, resulting in a premature transfer of title without petitioners'
consent. This breach makes the contract rescissible under Article 1191 of the Civil Code, which
allows rescission for substantial and fundamental breaches. Petitioners are entitled to moral
damages and attorney's fees, while ROWENA is eligible for reimbursement of monthly
installments with legal interest. ROWENA's actions, characterized by fraud and bad faith, justify
the award of moral damages.

Gaisano v Insurance company of North America

G.R. No. 147839
June 8, 2006

Facts:
The case involves a fire insurance dispute between Gaisano Cagayan, Inc. (petitioner) and the
insurance company (respondent). Petitioner, the owner of a store, suffered losses due to a fire
that destroyed ready-made clothing materials supplied by Inter Capitol Marketing Corporation
(IMC) and Levi Strauss (Phils.) Inc. (LSPI). IMC and LSPI filed claims, which the insurance
company paid, and then sought reimbursement from petitioner. The trial court dismissed the
complaint, stating the fire was accidental and not due to petitioner's negligence. The Court of
Appeals reversed the decision, holding petitioner liable for the amounts paid by the insurance
company to IMC and LSPI, plus legal interest. The court emphasized that the sales invoices
established petitioner's obligation to pay its unpaid accounts, and subrogation gave the insurer
the right to recover from petitioner.
Issue:
Is petitioner liable for the unpaid accounts?
Ruling:
YES. Under Article 1263 of the Civil Code, the loss or destruction of a generic thing does not
extinguish the obligation to deliver it. In the context of money, which is considered a generic
obligation, the rule applies, and the fortuitous loss of specific property does not excuse the
debtor's obligation to pay. The key issue in this case is whether petitioner has outstanding
accounts with Inter Capitol Marketing Corporation (IMC) and Levi Strauss (Phils.) Inc. (LSPI).
Regarding LSPI, the evidence presented by the respondent is insufficient to establish a cause of
action. The letter from petitioner's General Manager only confirms the loss in the fire but does
not admit to an unpaid account. Additionally, there is no proof of full settlement of LSPI's
insurance claim, and no subrogation receipt was provided. Without substantiating the claim of
subrogation, petitioner's case for recovery of the amount pertaining to LSPI is not supported.