Hicks v Manila Hotel Company

Facts:
- 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
- The terms of the contract are:
o Exclusive right to serve Manila Hotel patrons
o For a period of 1 year
o Renewable after 1 year period with preference over others
- 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
- 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
- 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)
a. 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 1st year of Hicks ended
b. 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
c. 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
a. 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.

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.

In case of fraud, the debtor shall be liable for all those which clearly may
originate from the no-fulfillment of the obligation.
b. 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
i. The 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.
ii. Two elements to be considered:
1. Damage has been done
2. Damage is the result of breach
iii. 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.
iv. Amount can be estimated based only on reasonable accuracy but
evidence of loss will require stricter proof
v. 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
Cariaga v Laguna Tayabas Bus Company (LTB)
Facts:
- LTB bus was driven by Moncada one of the passengers was a 4th year medical student of
UST. Edgardo Cariaga
- The bus bumped into the engine of the train causing the train to derail. The bus was
wrecked. Bus driver dies, passengers including Edgardo were severely injured