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L-24856 November 14, 1986 Facts: The National Power Corp. (NPC) awarded a contract to Ein Chemical Corp.(Ein) to supply and deliver 3,691 long tons of crude sulfur in one shipment to the Maria Cristina Fertilizer Plant in Iligan City on or before May 10, 1956, for the price of P374,374.91 to be paid by NPC. To guarantee its obligation, EIN posted a bond from the Philippine International Surety Co. in the amount of P74,874.98. Thereafter, NPC opened a letter of credit with PNB for Ein where the expiry date of such letter of credit were thrice adjusted from its original date of expiration upon Eins request for exte nsion of the expiration date for it anticipated that it cannot deliver its obligation on the date agreed in the contract. However on the day of its delivery, Ein only delivered 1,000 long tons of crude sulfur ostensibly due to lack of bottoms; but was paid therefor by NPC the amount of P101,764.05. As a consequence for failure to comply with its obligation, NPC prohibited Ein to participate in another of its public bidding. The failure also led NPC to file an action against EIN for breach of contract. The lower court ruled in favour of EIN on the ground that the extension of the expiry date of the letter of credit carried with it the extension of the delivery time. Hence, NPC appealed the adverse ruling of the lower court. Issue: Whether or not EIN committed a breach of contract which would entitle NPC to damages? Held: Yes. Ratio: The EIN clearly committed a breach of contract by failing to completely deliver on its contract in spite of the leniency of the NPC in enforcing its rights. Laxity of a contracting party in the enforcement of its rights under the contract does not in any manner diminish its rights there under. The provisions of the contract, however, indicate that there is no relationship between the delivery date and the opening of the letter of credit which was anyway opened within a reasonable time after the signing of the contract. The extensions of the expiry dates of the letter of credit cannot, by any means, be interpreted as extensions of the delivery date. If this was the intention of the parties, then a corresponding date or deadline could have been provided. As the terms show, no other delivery date can even be inferred. NPC has been very lenient by extending the expiry date of the letter of credit thrice despite the failure of EIN to fully deliver on the contract. The problem of bottoms is one that is well-known and anticipated by suppliers and shippers, and NPC cannot be faulted for such problem since it opened the letter of credit within a reasonable time after the signing of the contract. The NPC, in fact, had no duty to inform EIN of -the shipping time between the US Atlantic ports and the Philippines since all shippers and suppliers are presumed to know this as part of their business.

RADIO COMMUNICATIONS OF THE PHILS., INC. (RCPI). vs.COURT OF APPEALS and LORETO DIONELA G.R. No. L-44748 August 29, 1986 Facts: Mr. Loreto Dionela is a businessman who received a telegram delivered by RCPI. The telegram included defamatory remarks (SA IYO WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG PADALA DITO KAHIT BULBUL MO) which caused him distress and embarrassment. The said words likewise adversely affected his business for it became known in public. This prompted Mr. Dionela to file against RCPI for Damages. Defendant corporation as a defense, alleges that the additional words in Tagalog was a private joke between the sending and receiving operators and that they were not addressed to or intended for plaintiff and therefore did not form part of the telegram and that the Tagalog words are not defamatory. The lower court ruled in favour of the plaintiff. On appeal, the CA affirmed the lower courts ruling declaring the additional Tagalog words at the bottom of the telegram are libelous per se, and from which malice may be presumed in the absence of any showing of good intention and justifiable motive on the part of the appellant. Hence, RCPI filed a petition before the Supreme Court. Issue: Whether or not the RCPI is liable for damages? Held: Yes. Ratio: The action for damages was filed in the lower court directly against respondent corporation not as an employer subsidiarily liable under the provisions of Article 1161 of the New Civil Code in relation to Art. 103 of the Revised Penal Code. The cause of action of the private respondent is based on Arts. 19 and 20 of the New Civil Code (supra). As well as on respondent's breach of contract thru the negligence of its own employees. Petitioner is a domestic corporation engaged in the business of receiving and transmitting messages. Everytime a person transmits a message through the facilities of the petitioner, a contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to transmit the message accurately. There is no question that in the case at bar, libelous matters were included in the message transmitted, without the consent or knowledge of the sender. There is a clear case of breach of contract by the petitioner in adding extraneous and libelous matters in the message sent to the private respondent. As a corporation, the petitioner can act only through its employees. Hence the acts of its employees in receiving and transmitting messages are the acts of the petitioner. To hold that the petitioner is not liable directly for the acts of its employees in the pursuit of petitioner's business is to deprive the general public availing of the services of the petitioner of an effective and adequate remedy. In most cases, negligence must be proved in order that plaintiff may recover. However, since negligence may be hard to substantiate in some cases, we may apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by considering the presence of facts or circumstances surrounding the injury.

VICENTE SABALVARO vs. ERLANGER & GALINGER, INC and WM. H. ANDERSON, S. FELDSTEIN, H. N. SALET, WM. WOLFF, F.C. HAGEDORN, and W. H. RENNOLDS G.R. No. L-43045 August 17, 1937 When Vicente Sabalvaro became an employee of the respondent corporation, he was offered to buy shares of the corporation. The payment, however, will be derived from the dividends of the shares since Mr. Sabalvaro could not afford at the time to buy the shares since it cost P500 a share. A promissory note was made as proof of the manner of payment for the shares. The respondent corporation subsequently cancelled Mr. Sabalvaros promissory note serving as an equivalent amount of increase of his salary. Thereaf ter, two of the majority of the stockholders of the corporation, Wm. H. Anderson and S. Feldstein, offered him an option to buy 7 shares of the corporation. The sale of the 7 shares of the corporation to him was attended with several conditions which were embodied in a document manifesting their agreement where Mr. Sabalvaro and the defendants have signed. When Mr. Sabalvaro left the corporation, he asked the corporation and its officers to buy the 10 shares he has acquired from the corporation and pay the 7 per cent of the value of his said shares as interest during the year 1932. Such request were denied except that he was given the authority to sell to whomsoever he wished, 7 said 10 shares which he had in the corporation. This compelled Mr. Sabalvaro to file a case against the defendants where the lower court ruled in favour of the respondents. Issues: (1) Is the defendant corporation or its officer, who are the other defendants, under obligation or not to purchase from the plaintiff his ten shares of stock in the corporation, which had been assigned to him upon partial payments with the same dividends earned by said shares of after the plaintiff separation from said defendant corporation? Held: No. Ratio: It is evident that in no contract may a contracting party be obligated to more than what he has really bound himself and that the contract should not be construed as including things and cases different from those with respect to which the persons interested intended to contract (art. 1283, Civil Code). The assignment of said share to him was made through mere liberality, as a present, according to said document, without being subject to any condition and without any obligation on the part of Feldstein it from him, either during his stay in the service of the defendant corporation or after his separation there from. It should be borne in mind that said shares were not purchased by the plaintiff with his own money but with the dividend or profits earned by the same. It may therefore be stated that the plaintiff loses nothing if the clause of Exhibit B, providing for the reversion of said shares to Feldstein, is carried into effect, inasmuch as such reversion may take place as soon as the plaintiff leaves the employ of the defendant corporation. In other words, if he remains in the service, he obtains the benefit of earning the dividends of the shares in question which really did not cost him anything, and he certainly received such dividends from the time the certificates covering said shares were issued to him until his separation from the service. He cannot claim that he was led into error because he had before him Exhibit B, which is clear enough, and it is to be presumed that he read and considered it with the necessary mature reflection, before giving his consent to the transaction proposed to him therein By reading the entire text of the latter document, it will clearly appear that the only thing to which the defendant corporation bound itself upon affixing its signature thereto (Nos. 4 and 5 and paragraph next to No. 6 of Exhibit A) was to approve or disapprove the transfer or transfers which the plaintiff might wish to make of his 7 shares in favor of persons not connected with the corporation (par. 40, and to pay him interest at 7 per cent per annum on the purchase price thereof plus such dividends as the board of directors might authorize (par. 5), the former obligation having been performed by it by means of its resolution of February 23, 1933 (Exhibit 3). There is nothing in Exhibit A to indicate that the defendant corporation or the officers thereof, that is, the other defendants, or its employees, are under obligation to purchase the shares of the plaintiff after his separation from the service. The fact that on previous occasions the defendant corporation voluntarily and spontaneously purchased the shares of some other officers and stockholders thereof, who had separated from its service, does not permit the inference that the understanding had between it and the plaintiff was that it would purchase the latter's as soon as he left its service. The clear terms of a contract should never be the subject matter of interpretation. Their true meaning must be enforced as it is to be presumed that the contradicting parties know their scope and effects. Construction and interpretation should not be resorted to where it is necessary and where it is possible to apply the terms of a contract, because to do so would result in making precisely a new contract between the parties (2) Is the defendant corporation under obligation or not to pay to the plaintiff on amount equivalent to seven per cent of the value of his said ten share of stock, as interest during the year 1932? Held: No. Ratio: With respect to the second question, suffice it to state that the plaintiff, as it clearly appears in Exhibit P which, by the way, was executed in December, 1932, expressly and formally renounced the stipulated interest of 7 per cent per annum corresponding to said year, that is, from January 1st to December 31st, thereby relieving the defendant corporation of the obligation to pay it to him. It is true that during the hearing the plaintiff testified that if he subscribed the document in question it was in difference to the wishes of the defendant corporation, but it is no less true that he was contradicted on this point by H. N. Salet, the vice-president of said corporation, saying that it was he and not Wm. H. Anderson who had intervened in the transaction; that the plaintiff signed said document with absolute freedom and as voluntarily as did the others who signed it; that no threat or pressure of any kind on the part of anybody intervened in the execution thereof, and that the payment of interest ceased due to the fact that the economic conditions of the defendant corporation no longer permitted it (t. s. n., p. 28). The argument that the plaintiff signed the document in question for fear of being dismissed from the corporation, which fear was unfounded because it does not appear that he has been intimidated by somebody, does not prove that his consent was obtained by means of intimidation; and if he were to allege that it was for fear of incurring the displeasure of his employers that he signed the document in question, the answer would be the provision of article 1267 of the Civil Code that: "Fear of displeasing persons to whom obedience and respect are due shall not annul a contract."