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Obligations and Contracts

by: Ybarita, Julius Reyes


SAMSON v CA
G.R. No. 108245 (Nov. 25, 1994)

PEDRO D. DIOQUINO VS. LAUREANO


G.R. No. L-25906 (May 28, 1970)
FACTS:
Attorney Pedro Dioquino is the owner of a car. He
went to the office of the MVO, Masbate, to register
the same where he met the defendant Federico
Laureano, a patrol officer of said MVO office.
Dioquino requested Laureano to introduce him to
one of the clerks in the MVO Office, who could
facilitate the registration of his car and the request
was attended to. Laureano rode on the car of Atty.
Dioquino on his way to the P.C. Barracks at Masbate.
While about to reach their destination, the car
driven by plaintiff's driver and with Laureano as the
sole passenger was stoned by some 'mischievous
boys,' and its windshield was broken. Laureano
chased the boys and he was able to catch one of
them. The plaintiff and Laureano with the boy
returned to the P.C. barracks and the father of the
boy was called, but no satisfactory arrangements
were made about the damage to the windshield. It
was likewise noted in the decision now on appeal:
"The defendant Federico Laureano refused to file
any charges against the boy and his parents because
he thought that the stone-throwing was merely
accidental and that it was due to force majeure. So
he did not want to take any action and after delaying
the settlement, after perhaps consulting a lawyer,
the defendant Federico Laureano refused to pay the
windshield himself and challenged that the case be
brought to court for judicial adjudication. There is no
question that the plaintiff tried to convince the
defendant Federico Laureano just to pay the value of
the windshield and he even came to the extent of
asking the wife to convince her husband to settle the
matter amicably but the defendant Federico
Laureano refused to make any settlement, clinging
[to] the belief that he could not be held liable
because a minor child threw a stone accidentally on
the windshield and therefore, the same was due to
force majeure."
ISSUE:
Is Federico Laureano liable for the payment of the
windshield of Atty Dioquino?
HELD:
No. The law being what it is, such a belief on the
part of defendant Federico Laureano was justified.
The express language of Art. 1174 of the present
Civil Code which is a restatement of Art. 1105 of the
Old Civil Code, except for the addition of the nature
of an obligation requiring the assumption of risk,
compels such a conclusion. It reads thus: "Except in

cases expressly specified by the law, or when it is


otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of
risk, no person shall be responsible for those events
which could not be, foreseen, or which, though
foreseen were inevitable." Even under the old Civil
Code then, as stressed by us in the first decision
dating back to 1908, in an opinion by Justice Mapa,
the rule was well-settled that in the absence of a
legal provision or an express covenant, "no one
should be held to account for fortuitous cases." Its
basis, as Justice Moreland stressed, is the Roman law
principle major casus est, cui humana infirmitas
resistere non potest. Authorities of repute are in
agreement, more specifically concerning an
obligation arising from contract "that some
extraordinary circumstance independent of the will
of the obligor, or of his employees, is an essential
element of a caso fortuito." If it could be shown that
such indeed was the case, liability is ruled out. There
is no requirement of "diligence beyond what human
care and foresight can provide." The error
committed by the lower court in holding defendant
Federico Laureano liable appears to be thus obvious.
Its own findings of fact repel the motion that he
should be made to respond in damages to the
plaintiff for the broken windshield. What happened
was clearly unforeseen. It was a fortuitous event
resulting in a loss which must be borne by the owner
of the car. It 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.
A more careful analysis would have led the lower
court to a different and correct interpretation. The
very wording of the law dispels any doubt that what
is therein contemplated is the resulting liability even
if caused by a fortuitous event where the party
charged may be considered as having assumed the
risk incident in the nature of the obligation to be
performed. It would be an affront, not only to the
logic but to the realities of the situation, if in the
light of what transpired, as found by the lower court,
defendant Federico Laureano could be held as
bound to assume a risk of this nature. There was no
such obligation on his part. The decision of the lower
court of November 2, 1965 insofar as it orders
defendant Federico Laureano to pay plaintiff the
amount of P30,000.00 as damages plus the
payment of costs, is hereby reversed. It is affirmed
insofar as it dismissed the case against the other two
defendants, Juanita Laureano and Aida de Laureano,
and declared that no moral damages should be
awarded the parties.
JARCO MARKETING CO. v. CA
321 SCRA 375 (1999)
Facts:
Petitioner is the owner of Syvel's Department Store,

Obligations and Contracts


by: Ybarita, Julius Reyes
Makati City. Petitioners Leonardo Kong, Jose Tiope
and Elisa Panelo are the store's branch manager,
operations manager, and supervisor, respectively.
Private respondents Conrado and Criselda Aguilar
are spouses and the parents of Zhieneth Aguilar.
On May 9, 1983, Criselda and Zhieneth were at the
department store. Criselda was signing her credit
card slip when she heard a loud thud. She looked
behind her and beheld her daughter pinned beneath
the gift-wrapping counter structure. She was crying
and shouting for help. He was brought to Makati
Medical Center, where she died after 14 days. She
was 6 years old.
Private respondents demanded upon petitioners the
reimbursement of the hospitalization, medical bills
and wake and funeral expenses which they had
incurred. Petitioners refused to pay. Consequently,
private respondents filed a complaint for damages
wherein they sought the payment of P157,522.86 for
actual damages, P300,000 for moral damages,
P20,000 for attorney's fees and an unspecified
amount for loss of income and exemplary damages.
The trial court dismissed the complaint, ruling that
the proximate cause of the fall of the counter was
Zhieneths act of clinging to it. The Court of Appeals
reversed the decision of the trial court. It found that
petitioners were negligent in maintaining a
structurally dangerous counter. The counter was
defective, unstable and dangerous. It also ruled that
the child was absolutely incapable of negligence or
tort. Petitioners now seek for the reversal of this
decision.
Issues:
(1) Whether the death of ZHIENETH was accidental
or attributable to negligence
(2) In case of a finding of negligence, whether the
same was attributable to private respondents for
maintaining a defective counter or to CRISELDA and
ZHIENETH for failing to exercise due and reasonable
care while inside the store premises
Held:
(1) An accident pertains to an unforeseen event in
which no fault or negligence attaches to the
defendant. It is "a fortuitous circumstance, event or
happening; an event happening without any human
agency, or if happening wholly or partly through
human agency, an event which under the
circumstances is unusual or unexpected by the
person to whom it happens." On the other hand,
negligence is the omission to do something which a
reasonable man, guided by those considerations
which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a
prudent and reasonable man would not do.
Negligence is "the failure to observe, for the
protection of the interest of another person, that

degree of care, precaution and vigilance which the


circumstances justly demand, whereby such other
person suffers injury." The test in determining the
existence of negligence is: Did the defendant in
doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person
would have used in the same situation? If not, then
he is guilty of negligence. We rule that the tragedy
which befell ZHIENETH was no accident and that
ZHIENETH's death could only be attributed to
negligence.
(2) It is axiomatic that matters relating to
declarations of pain or suffering and statements
made to a physician are generally considered
declarations and admissions. All that is required for
their admissibility as part of the res gestae is that
they be made or uttered under the influence of a
startling event before the declarant had the time to
think and concoct a falsehood as witnessed by the
person who testified in court. Under the
circumstances thus described, it is unthinkable for
ZHIENETH, a child of such tender age and in extreme
pain, to have lied to a doctor whom she trusted with
her life. We therefore accord credence to Gonzales'
testimony on the matter, i.e., ZHIENETH performed
no act that facilitated her tragic death. Sadly,
petitioners did, through their negligence or omission
to secure or make stable the counter's base.
Without doubt, petitioner Panelo and another store
supervisor were personally informed of the danger
posed by the unstable counter. Yet, neither initiated
any concrete action to remedy the situation nor
ensure the safety of the store's employees and
patrons as a reasonable and ordinary prudent man
would have done. Thus, as confronted by the
situation petitioners miserably failed to discharge
the due diligence required of a good father of a
family. Anent the negligence imputed to ZHIENETH,
we apply the conclusive presumption that favors
children below nine (9) years old in that they are
incapable of contributory negligence. Even if we
attribute contributory negligence to ZHIENETH and
assume that she climbed over the counter, no injury
should have occurred if we accept petitioners'
theory that the counter was stable and sturdy. For if
that was the truth, a frail six-year old could not have
caused the counter to collapse. The physical analysis
of the counter by both the trial court and Court of
Appeals and a scrutiny of the evidence on record
reveal otherwise, i.e., it was not durable after all.
Shaped like an inverted "L," the counter was heavy,
huge, and its top laden with formica. It protruded
towards the customer waiting area and its base was
not secured. CRISELDA too, should be absolved from
any contributory negligence. Initially, ZHIENETH held
on to CRISELDA's waist, later to the latter's hand.
CRISELDA momentarily released the child's hand
from her clutch when she signed her credit card slip.

Obligations and Contracts


by: Ybarita, Julius Reyes
At this precise moment, it was reasonable and usual
for CRISELDA to let go of her child. Further, at the
time ZHIENETH was pinned down by the counter,
she was just a foot away from her mother; and the
gift-wrapping counter was just four meters away
from CRISELDA. The time and distance were both
significant. ZHIENETH was near her mother and did
not loiter as petitioners would want to impress upon
us. She even admitted to the doctor who treated her
at the hospital that she did not do anything; the
counter just fell on her.
PEOPLE v FALLOUNA
242 SCRA 655 (2004)

PHILIPPINE AIRLINES v CA
106 SCRA 391
There was gross negligence by PAL for allowing Capt.
Bustamante to fly on that fateful day of the accident,
even if he was sick, having tumor on his nose. No
one will certify the fitness to fly a plane of one
suffering from the disease. One month prior to the
crash-landing, when the pilot was preparing to land
in Daet, private respondent warned him that they
were not in the vicinity of Daet but above the town
of Ligao. The dizziness, headaches and general
debility of private respondent were after-effects of
the crash-landing. And therefore there is causal
connection between the accident and said aftereffects. The negligence of PAL is clearly a quasi-delict
and therefore Art.2219(2) is applicable, justifying the
recovery of moral damages. Even from the
standpoint of the petitioner that there is an
employee-employer relationship between it and
private respondent arising from the contract
of employment, private respondent is still
entitled to moral damages in view of the finding of
bad faith or malice, applying the provisions of Article
2220.
LA MALLORCA v CA
17 SCRA 739
Facts:
Plaintiffs husband and wife, together with their
minor children, boarded a La Mallorca bus. Upon
arrival at their destination, plaintiffs and their
children alighted from the bus and the father led
them to a shaded spot about 5 meters from the
vehicle. The father returned to the bus to get a piece
of baggage which was not unloaded. He was
followed by her daughter Raquel. While the father
was still on the running board awaiting for the
conductor to give his baggage, the bus started to run
so that the father had to jump. Raquel, who was
near the bus, was run over and killed.
Lower court rendered judgment for the plaintiff
which was affirmed by CA, holding La Mallorca liable

for quasi-delict and ordering it to pay P6,000 plus


P400. La Mallorco contended that when the child
was killed, she was no longer a passenger and
therefore the contract of carriage terminated.
Issue:
Whether or not the contractual obligation between
the parties ceases the moment the passenger
alighted form the vehicle.
Held:
On the question whether the liability of the carrier,
as to the child who was already led a place 5 meters
from the bus under the contract of carrier, still
persists, we rule in the affirmative. It is a recognized
rules that the relation between carrier and
passengers does not cease at the moment the
passenger alights from the carriers premises, to
be determined from the circumstances. In this case,
there was no utmost diligence. Firstly, the driver,
although stopping the bus, did not put off the
engine. Secondly, he started to run the bus even
before the bus conductor gave him the signal and
while the latter was unloading cargo. Here, the
presence of said passenger near the bus was not
unreasonable and the duration of responsibility still
exists. Averment of quasi-delict is permissible under
the Rules of Court, although incompatible with the
contract of carriage. The Rules of Court allows the
plaintiffs to allege causes of action in the alternative,
be they compatible with each other or not (Sec. 2,
Rule 1). Even assuming arguendo that the contract
of carriage has already terminated, herein petitioner
can be held liable for the negligence of
its driver pursuant to Art. 2180 of NCC. Decision
MODIFIED. Only question raised in the briefs can be
passed upon, and as plaintiffs did not appeals the
award of P3,000.00 the increase by the CA of the
award to P6,000.00 cannot be sustained.
TRANS-ASIA SHIPPING LINES, INC. v CA
G.R. No. 118126 (March 4, 1996)
FACTS:
Respondent Atty. Renato Arroyo, a public attorney,
bought a ticket from herein petitioner for the voyage
of M/V Asia Thailand vessel to Cagayan de Oro City
from Cebu City on November 12, 1991.
At around 5:30 in the evening of November 12,
1991, respondent boarded the M/V Asia Thailand
vessel during which he noticed that some repairs
were being undertaken on the engine of the vessel.
The vessel departed at around 11:00 in the evening
with only one (1) engine running.
After an hour of slow voyage, the vessel stopped
near Kawit Island and dropped its anchor thereat.
After half an hour of stillness, some passengers
demanded that they should be allowed to return to
Cebu City for they were no longer willing to continue
their voyage to Cagayan de Oro City. The captain
acceded to their request and thus the vessel headed

Obligations and Contracts


by: Ybarita, Julius Reyes
back to Cebu City.
In Cebu City, plaintiff together with the other
passengers who requested to be brought back to
Cebu City, were allowed to disembark. Thereafter,
the vessel proceeded to Cagayan de Oro City.
Petitioner, the next day, boarded the M/V Asia Japan
for its voyage to Cagayan de Oro City, likewise a
vessel of defendant.
On account of this failure of defendant to transport
him to the place of destination on November 12,
1991, respondent Arroyo filed before the trial court
an action for damage arising from bad faith, breach
of contract and from tort, against petitioner. The
trial court ruled only for breach of contract. The CA
reversed and set aside said decision on appeal.
ISSUE:
Whether or not the petitioner Trans-Asia was
negligent?
HELD:
Yes.
Before commencing the contracted voyage, the
petitioner undertook some repairs on the cylinder
head of one of the vessels engines. But even before
it could finish these repairs, it allowed the vessel to
leave the port of origin on only one functioning
engine, instead of two. Moreover, even the lone
functioning engine was not in perfect condition as
sometime after it had run its course, it conked out.
This caused the vessel to stop and remain adrift at
sea, thus in order to prevent the ship from capsizing,
it had to drop anchor. Plainly, the vessel was
unseaworthy even before the voyage began. For a
vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a
sufficient number of competent officers and
crew.[21] The failure of a common carrier to
maintain in seaworthy condition its vessel involved
in a contract of carriage is a clear breach of is duty
prescribed in Article 1755 of the Civil Code.
ASIAN CONSTRUCTION & DEV. CORP. v PCIB
488 SCRA 192 (2006)

FIL-ESTATE PROPERTIES INC. v GO


530 SCRA 624 (2007)
Facts:
On December 29, 1995, petitioner Fil-Estate
Properties, Inc. (Fil-Estate) entered into a contract to
sell a condominium unit to respondent spouses
Gonzalo and Consuelo Go. The spouses paid a total
of P3, 439,000.07 of the full contract price set at P3,
620,000.00.
Fil-Estate failed to develop the condominium
project. On August 4, 1999, the spouses demanded

the refund of the amount they paid, plus


interest. When Fil-Estate did not refund the
spouses, the latter filed a complaint against
petitioner for reimbursement plus interest before
the Housing and Land Use Regulatory Board
(HLURB). In answer, Fil-Estate claimed that
respondents had no cause of action since the delay
in the construction of the condominium was caused
by the financial crisis that hit the Asian region, a
fortuitous event over which petitioner had no
control.
HLURB Regional Director approved the decision of
the Housing and Land Use Arbiter in favor of the
spouses Go. The Court of Appeals affirmed the
actions taken by the HLURB and the Office of the
President and declared that the Asian financial crisis
could not be considered a fortuitous event.
Fil-Estate explained that the extreme economic
exigency and extraordinary currency fluctuations
could not have been reasonably foreseen and were
beyond the contemplation of both parties when they
entered the contract. It further asserted that the
resultant economic collapse of the real estate
industry was unforeseen by the whole Asia and if it
was indeed foreseeable, then all those engaged in
the real estate business should have foreseen the
impending fiasco.
Issue:
Whether or not the Asian financial crisis could be
considered a fortuitous event.
Held:
No. The Supreme Court held that the Asian financial
crisis cannot be generalized as unforeseeable and
beyond the control of the business corporation. A
real estate enterprise engaged in the pre-selling of
condominium units is concededly a master in
projections on commodities and currency
movements and business risks. The fluctuating
movement of the Philippine peso in the foreign
exchange market is an everyday occurrence, and
fluctuations in currency exchange rates happen
every day, thus, not an instance of caso fortuito.
VICTORIAS PLANTERS ASSO., INC. v VICTORIAS
MILLING CO.
G.R. No. L-6648 (July 25, 1955)
FACTS:
The petitioners Victorias Planters Association, Inc.
and North Negros Planters Association, Inc. and thr
respondent Victorias Milling Co., Inc entered into a
milling contract whereby they stipulated a 30-year
period within which the sugar cane produced by the
petitioner would be milled by the respondent
central. The parties also stipulated that in the event
of force majuere, the contract shall be deemed
suspended during this period. The petitioner failed
to deliver the sugar cane during the four years of the

Obligations and Contracts


by: Ybarita, Julius Reyes
Japanese occupation and the two years after
liberation when the mill was being rebuilt or a total
of six years.
ISSUE:
Can the petitioners be compelled to deliver sugar
cane for six more years after the expiration of the
30-year period to make up for what they failed to
deliver to the respondent?
RULING:
No. Fortuitous event relieves the obligor from
fulfilling the contractual obligation under Article
1174 of the Civil Code. The stipulation in the
contract that in the event of force majeure the
contract shall be deemed
suspended during the 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 petitioner from
delivering the sugar cane and the respondent central
from milling. In order that the respondent central
may be entitled to demand from the petitioner the
fulfillment of their part in the contracts, the
latter must have been able to perform it but failed or
refused to do so and not when they were prevented
by force majeure such as war. To require the
petitioners to deliver the sugar cane which they
failed to deliver during the six years is to demand
from them the fulfillment of an obligation, which
was impossible of performance during the time it
became due. Nemo tenetur ed impossibilia. The
respondent central not being entitled to demand
from the petitioners the performance of the latters
part of the contracts under those circumstances
cannot later on demand its fulfillment. The
performance of what the law has written off cannot
be demanded and required. The prayer that the
petitioners be compelled to deliver sugar cannot for
six years more to make up for what they failed
to deliver, the fulfillment of which was impossible, of
granted, would in effect be an extension of the
terms of the contracts entered into by and between
the parties.

damages. Luzon Stevedoring claimed 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:
Whether or not the collision of appellant's barge
with the supports or piers of the Nagtahan bridge
was in law caused by fortuitous event or force
majeure.
Held:
There is a presumption of negligence on part of the
employees of Luzon Stevedoring, as the Nagtahan
Bridge is stationary. For caso fortuito or force
majeure (which in law are identical in so far as they
exempt an obligor from liability) by definition, are
extraordinary events not foreseeable or avoidable,
"events that could not be foreseen, or which, though
foreseen, were inevitable" (Art. 1174, Civ. Code of
the Philippines). It is, therefore, not enough that the
event should not have been foreseen or anticipated,
as is commonly believed, but it must be one
impossible to foresee or to avoid. The
mere difficulty to foresee the happening is not
impossibility to foresee the same. Luzon
Stevedoring knew the perils posed by the swollen
stream and its swift current, and voluntarily entered
into a situation involving obvious danger; it
therefore assured the risk, and can not shed
responsibility merely because the precautions it
adopted turned out to be insufficient. It is thus liable
for damages.

ACE-AGRO DEV. CORP. v CA


G.R. No. 119729 (Jan 21, 1997)

REPUBLIC v LUZON STEVEDORING


G.R. No. L-21749 (Sept. 29, 1967)
Facts:
A barge being towed by tugboats "Bangus" and
"Barbero" all owned by Luzon Stevedoring Corp.
rammed one of the wooden piles of the Nagtahan
Bailey Bridge due to the swollen current of the Pasig
after heavy rains days before. The Republic sued
Luzon Stevedoring for actual and consequential