TELFAST v. CASTRO, GR No.73867, February 29, 1988.

Facts: Sofia Castro sent a telegram via Telfast company to her family in the US to inform them that
their mother had died. Nobody ever received the message, and the deceased was buried only with
Sofia present. Upon her return to the US, she learned that the telegram she sent was never received.
She then filed a complaint against Telfast for breach of contract and damages. Telfast’s defense was
that it was unable to send the telegram because of technical issues. The CFI ruled in Castro’s favor
and ordered Telfast to pay them damages. Upon appeal, the IAC affirmed the CFI ruling. Petitioner
Telfast now comes to the SC for relief, asking that the award for moral damages be eliminated
because their negligence was not motivated by fraud and bad faith and that their liability be reduced
to a meager P31.92.

Issue: WON Telfast is liable for damages.

Held: Yes it is. Petitioner and Sofia Castro entered into a contract in which the agreement was that
Telfast would send her telegram to her family in exchange for a fee. Despite this, petitioner was
unable to fulfill their end of the bargain. Petitioner is therefore guilty of contravening its obligation to
Sofia. The liability here is not limited to quantifiable damages, because from the evidence presented,
it can be inferred that petitioner’s act of omission was the proximate cause of respondent’s suffering,
thus, the award for moral damages is but proper.

Decision: Petition is DENIED.

CETUS DEVELOPMENT v. COURT OF APPEALS AND NAVALTA ET AL., GR No. 77647, August 7, 1989.

Facts: Private respondents were lessees of a premises in Manila originally owned by Susana Realty.
Their individual leases were on a month-to-month basis. Then, Susana Realty sold the premises to
petitioner, and private respondents continued to pay their leases to a collector sent by petitioner. But
from July-September 1984, petitioner failed to send a collector to private respondents that thus, the
respondents were unable to pay their individual leases. The petitioner then sent a letter to the private
respondents demanding them to vacate the premises immediately and to pay the back wages they
owe petitioner. Private respondents then paid their back wages to petitioner which it accepted along
with the payments for the subsequent months. Then, for failure to vacate the premises as ordered,
petitioner filed ejectment cases against the private respondents. In their answer, private respondents
said that because petitioner failed to send their collector to them to receive their payments as was
customary, then they were unable to pay their respective leases. But upon the demand of petitioner
to pay their leases, they did so without delay, thus, because of that, they argue that they should not
be ejected out of the premises. The MTC dismissed the 6 cases filed by petitioner against the private
respondents. Upon appeal to the RTC, the same was dismissed. The same thing happened in the CA.
Thus, petitioner comes to the SC for relief.

Issue: WON there is a basis for the complaint of petitioner against private respondents.

Held: No there is not. There was no failure on the part of the private respondents to pay the rent for
three months since there was no demand, whether written or verbal, on the part of petitioner. Thus,
the private respondents should not be faulted for mora solvendi or delay on the part of the debtor for
something which they could not do because of petitioner’s failure to demand such. It is settled that
obligations can only be legally demandable upon demand by the creditor, whether judicially or
extrajudicially. Without such demand, the effects of default do not arise. Plus, it is also worthy to add
that upon demand by the petitioner that private respondents pay their respective back wages, the
private respondents immediately complied, and which petitioner accepted. Thus, because of this, no
complaint for ejectment has no basis. The private respondents could not said to be in default in the
payment of their rentals as the delay in paying the same was not their fault, rather it was the
petitioner’s fault, omission or neglect to collect. Thus, the CA did not commit grave abuse of
discretion in affirming the RTC ruling dismissing petitioner’s complaint for lack of cause of action.

Decision: The petition for review on certiorari is DENIED, the ruling of the Court of Appeals is
AFFIRMED.

CHAVEZ v. GONZALES, GR No. L-27454, April 30, 1970.

Facts: Chavez delivered to Gonzales, who is a typewriter repairer a portable typewriter for cleaning
and servicing. Gonzales was not able to finish the job despite repeated by Chavez.. Gonzales merely
made assurances which he did not comply with. Then, Gonzales asked for P6.00 for the purchase of
spare parts which Chavez gave. Then, after getting tired of numerous delays, Chavez wrote a formal
Chavez, but when Chavez checked the typewriter’s condition, it was in shambles. Many parts were
missing from it. Chavez demanded the missing parts from Gonzales which he gave, and Chavez had his
typewriter repaired somewhere else, at the cost of P 89.95. Chavez then filed a complaint against
Gonzales for damages amounting to more than P1,000.00. The trial court ruled in his favor, but only
awarded him P31.10 as damages for the repair of the typewriter. Although he won, Chavez felt
aggrieved and shortchanged by the amount awarded to him by the trial court, thus Chavez recourses
to the SC for relief.

Issue: WON Gonzales is guilty of contravention of tenor, and whether the amount of P31.10 awarded
by the trial court to Chavez is justifiable.

Held: Gonzales argues that he his not guilty of delay of his obligation to Chavez, as he did not stipulate
a period within which to comply with the obligation. But, as can be inferred from the evidence
presented, both parties executed a perfected contract in which, for a fee which was to be paid by
Chavez, Gonzales would repair and service the typewriter which was to be finished in the future,
although the time frame for him to do so was not specified. The mere fact that Gonzales returned the
typewriter to Chavez in shambles already constituted a breach of obligation. The time for his
compliance had evidently expired and there was no need for Chavez to specify a time frame for such
would only be a mere formality and would serve no other purpose but to delay the performance of
the obligation. It is clear that Gonzales contravened the tenor of his obligation not only when he failed
to repair the typewriter of Chavez, but when he returned the same in shambles. Thus, Gonzales is
liable for the costs of repairing Chavez’s typewriter amounting to P89.95. As to the moral damages
which the trial court rejected, since Chavez did not allege such in his complaint, the trial court was
correct in not awarding him moral damages.

Decision: Defendant Gonzales is ordered to pay plaintiff Chavez the cost of repairing his typewriter at
P89.95 with interest.

ABELLA v. FRANCISCO, GR No.32336, December 20, 1930, 55 Phil. 447.

Facts: Francisco purchased lots from the government on installments. He subsequently sold these lots
to Abella. He then signed a document attesting that Abella paid P500.00 for the purchase of such lots.
After which, Abella proposed to sell the lots Francisco purchased at a higher price to a certain George.
After he paid the P500.00, Abella made another payment of more than P400.00 upon demand of
Francisco. Francisco, being in Cebu at that time attached a Special Power of Attorney authorizing his
representative to sign all documents for the transfer of lots to Abella. Francisco also instructed his
representative to tell Abella that if he did not pay the remainder of the selling price by January 5, the
contract would be considered canceled and the amount which Abella already paid would be returned
to him. But Abella was only able to pay of January 9, thus, Francisco informed him that the contract
was considered canceled. Abella then filed a complaint against Francisco to compel the latter to sell
the land to him and that Abella be judicially declared as the owner of said lots. The lower court
dismissed Abella’s complaint stating that since time was of the essence in this contract and since
Abella was not able to pay the remainder of the selling price within the stipulated time, the contract
was now deemed canceled as time was an essential factor in this contract which was not duly
complied with.

Issue: WON time was an essential element in the assailed agreement.

Held: Yes it was. The contract in question was an option for the purchase for the lots, and in an
agreement of this nature, the period is deemed essential. Thus, time was an essential element in this
transaction and defendant Francisco wanted to sell those lots to Abella in order to pay off his own
obligations which had already fallen due. The time fixed for the payment of the remainder price was
therefore essential for Francisco, and since Abella was not able to pay within the stipulated time,
Francisco was entitled to cancel the contract.

Decision: Judgment is AFFIRMED.

VDA. DE VILLARUEL v. MANILA MOTOR, GR No. L-10394, December13, 1958.

Facts: Plaintiff (Villaruel) entered into a contract with defendant (Manila Motor) wherein they agreed
that Villaruel would lease his building to Manila Motor for a monthly rental of P300.00 and a P50 for
the manager’s rent. The agreement went smoothly at first, the defendant was allowed to use the
building for their company, while the plaintiff collected the rentals. When the Japanese invaded the
Philippines in 1941, the U.S. forces occupied the building owned by plaintiff. The foreign occupiers
paid the same amount of rent that the defendants paid until they were ousted in 1945. The foreign
occupiers then gave up usage of the premises and defendant Manila Motor decided to renew the
contract for another 5 years. It was stipulated in the new agreement that the occupancy of the U.S.
forces of their premises would not be counted. However, plaintiff then sought the advice of a lawyer
on whether they had a right to collect from the defendant company the rentals corresponding to the
time when foreign fighters had control over the premises. The lawyer told them that they had a right
to collect, and thus, Villaruel demanded payment thereof which defendant refused to pay. Plaintiff
then notified the defendant that he was rescinding the contract, which was also rejected by the
defendant. The defendant company then offered to pay rent for that particular month, which plaintiff
accepted. He however told the defendants that this did not affect his demand to rescind the contract.
When it became evident that the dispute could no longer be settled amicably, plaintiff commenced an
action before the courts. Then, a fire engulfed the premises which defendants were occupying, the
one owned by plaintiff. Plaintiff then demanded reimbursement for the damages to the building, to
which the defendant refused. Defendants prayed for the dismissal of the case based on several
grounds, one of them was that the Debt Moratorium was still in effect, thus the plaintiffs could not
legally demand payment for the rentals that accrued during the period of invasion.

Issue:WON defendant Manila Motor should be held liable for the rentals of the premises for the
period when foreign occupants occupied the premises owned by plaintiff Villaruel and WON the
defendants were now in default for refusal to pay such rentals.

Held: Under the Civil Code, there are two kinds of trespassing. First is the mere act of trespass
(perturbacion de mero hecho) and trespass under color of title (perturbacion de derecho). Under this
principle, a lessor does not answer for a mere act to trespass But for trespass under color of title, the
lessors (Villaruel) would be liable. In the case at bar, it is evident that what happened here was a
perturbacion de derecho and thus the lessees, (Manila Motor) should not be held liable for the
trespass of enemy forces into the premises which they were renting from the plaintiffs. It is also
worthy to note that the plaintiffs agreed after the liberation to renew their contract with defendant
company for another 5 years without making any reservation regarding to the alleged liability of the
defendants to pay the rentals corresponding to the time when the foreign occupants occupied their
premises. Thus, the passivity of the plaintiffs strongly indicates that the rentals in question were
waived. Furthermore, the dispossession of the premises from the defendant company by the
Japanese forces exempted them from paying the rentals for the period of its ouster, thus, plaintiff’s
insistence that they collect the payments for the period in which they were ousted is unwarranted in
law. Finally it was improper for the plaintiffs to refuse to accept current rents tendered by the
defendant, and thus the plaintiffs incurred default and they must now shoulder the costs of the loss
of the premises due to fire.

Decision: The defendants are ordered to only pay the plaintiffs rentals for the leased premises.

ARRIETA v. NARIC, G.R. No. L-15645, January 31, 1964.

Facts: Arrieta participated in a public bidding called by the NARIC for the supply of 20,000 tons of
Burmese rice. She was then awarded the contract. Both of them then agreed that Arrieta would
supply the Burmese rice, while NARIC would pay her for her work by means of a letter of credit
immediately. Despite this, it was only after a month (July 30) that NARIC was able to open up a letter
of credit. Then, Arrieta advised NARIC of the urgency to open up the letter of credit since she already
made a tender to her Burmese supplier, and that such tender would be confiscated by them if the
letter of credit is not received by August 4. As it turned out, the NARIC had no means financially to
meet the said conditions. This the NARIC confessed to Arrieta. As a result of the delay, the supply of
Burmese rice allocated to Arrieta was canceled, and she lost about P200,000.00. Yet the confiscation
was not made until August 20, or a full half month from the expiration of the stipulated deadline.
Arrieta tried but failed to restore the canceled rice collection. Then, she offered to substitute Thai rice
to the NARIC, but the NARIC rejected such an offer. So,Arrieta filed a complaint for damages from
NARIC for lost profits.

Issue: WON NARIC’s failure to open up a letter of credit amounted to a breach of contract and WON it
is liable for damages.

Held: The sole reason for the cancellation of the supply of rice made by Arrieta was the failure of the
NARIC to open up a letter of credit. This constituted a breach of contract, and thus, NARIC is liable for
damages in favor or Arrieta. NARIC’s defense that the delay incurred was due to Arrieta’s failure to
name a supplier in Burma is not tenable because it is clear that what delayed the opening of the letter
of credit which caused the cancellation of the supply of rice was NARIC’s inability to meet the
condition imposed by the Bank for granting the same. Thus, the liability attached to NARIC stems not
only from its failure to satisfy the bank’s requirements, but also from its willful and deliberate
assumption that they would be able to pay Arrieta, when in fact, they could not. Thus, NARIC is guilty
of fraud and contravention of the tenor of their agreement with Arrieta. Since that is the case, under
the Civil Code, any debtor who fails in the performance of his/her obligation is bound to indemnify
the creditor for the losses caused thereby. The SC also ruled that the offer of Arrieta to substitute Thai
rice in lieu of Burmese rice did not constitute a waiver as waivers are not presumed. Finally, the SC
ruled that the amount of damages awarded to Arrieta should be counted by the prevailing exchange
rate at the time the obligation was incurred, not at the time the judgment attained finality.

Decision The decision appealed is hereby AFFIRMED.

CENTRAL BANK v. COURT OF APPEALS AND TOLENTINO, 139 SCRA 46 (1985).

Facts: In 1965, Island Savings Bank approved Tolentino’s application of loan amounting to P80,000.00,
in which the collateral for such loan was a real estate mortgage over his land. It was agreed that
Tolentino would use the loan as additional capital to develop his other property into a subdivision.
But then, a mere partial release of P17,000.00 was given by the Bank and Tolentino signed a
promissory note for P17,000 with interest. An advance interest for the P80,000 load was deducted
from the partial release of the P17,000, but was then refunded. Then, the Monetary Board of the
Central Bank prohibited the bank from securing new loans due to liquidity problems. The Central Bank
subsequently closed down the Bank. In view of the non-payment of the P17K due to them, the Island
Savings Bank filed to foreclose Tolentino’s mortgage. Tolentino then filed a complaint before the CFI
for specific performance, rescission of contract and damages against Island Savings, alleging that since
Island Savings failed to deliver the P63K balance of the P80K loan, he is entitled to receive such
amount from Island Savings. The CFI dismissed Tolentino’s complaint, and ordered him to pay Island
Savings P17K and ordering the sheriff to proceed with the foreclosure of the mortgage. The CA
affirmed the dismissal of Tolentino’s complaint, but it also ruled that Island Savings could not collect
the P17K nor proceed with the foreclosure. Hence, the instant petition filed by the Central Bank.

Issues: Can Tolentino’s action for specific performance prosper? Is he liable to pay the P17K debt
covered by the promissory note?And if yes, can his real estate mortgage be foreclosed to satisfy such
amount?

Held: When Tolentino made a loan of P80K, he entered into a reciprocal obligation with Island Savings
wherein the obligation of each party is the consideration of that of the other. Thus, if one of the
parties in a reciprocal obligation incurs delay in the performance of his/her obligation, then the other
party may legally decline to perform his/her part of the obligation. Tolentino’s promise to pay was
anchored on the promise made by Island Savings to release to him the P80K loan. Thus, the bank’s
delay in releasing such loan lasted for 3 years, when the Central Bank closed down Island Savings.
Thus, it was legally impossible for Island Savings to furnish Tolentino the P63K remaining from the
P80K loan. The order of the Central Bank for Island Savings against them accepting new loans did not
release them from complying with its obligation to secure the P63K loan, as the Central Bank merely
ordered Island Savings to stop accepting new loans. It did not prohibit them from releasing the
balance of loan agreements already contracted. Also, mere financial incapability to fulfill an
engagement does not discharge the obligation of the contract, nor does it constitute any defense of
specific performance. In fact, the mere fact of insolvency of the debtor is never an excuse for
non-fulfillment of an obligation, but it is instead taken a a breach of contract by the insolvent party.
The fact that Tolentino accepted a P4.8K for the supposed P80K loan is not a waiver on hi right to
collect the P63K balance. This was improper considering that only P17K of the P80K was released. A
person cannot be legally charged for a non-existing debt. Furthermore, the alleged discovery by the
bank of over valuation of the loan collateral cannot exempt it from complying with its reciprocal
obligation to furnish the P80K loan. And since Island Savings is now in default in fulfilling its reciprocal
obligations, Tolentino may opt for specific performance of the obligation or rescission of the
agreement. But since specific performance is no longer possible in light of the bank’s closure, the only
remedy left for Tolentino is rescission. But since Tolentino failed to pay the P17K he owed, and Island
Savings failed to furnish him the entire loan, both parties here are at fault, thus, in accordance with
the Civil Code, the liability of the 1st infractor shall be equitably tempered by the courts. Thus, the SC
held that Tolentino’s real estate mortgage cannot be entirely foreclosed to satisfy the payment of the
P17K loan. What can only be foreclosed is the part of the mortgage which would be equivalent to the
P17K loan which Tolentino owes. Decision: The assailed CA decision is MODIFIED.