SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER vs.

COURT OF APPEALS
(Thirteenth Division) and PIONEER INSURANCE and SURETY CORPORATION
G.R. No.119771. 24 Apr 1998.
FACTS: At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van
being driven by its owner Annie U. Jao and a passenger bus of herein petitioner San
Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular mishap at the intersection
of Julia Vargas Avenue and Rodriguez Lanuza Avenue in Pasig, Metro Manila, totally
wrecking the Toyota van and injuring Ms. Jao and her two (2) passengers in the
process.
A criminal case was thereafter filed with the Regional Trial Court of Pasig on
September 18, 1991 charging the driver of the bus, herein petitioner Eduardo Javier,
with reckless imprudence resulting in damage to property with multiple physical
injuries.
About four (4) months later, or on January 13, 1992, herein private respondent
Pioneer Insurance and Surety Corporation (PISC), as insurer of the van and
subrogee, filed a case for damages against petitioner SILI with the Regional Trial
Court of Manila, seeking to recover the sums it paid the assured under a motor
vehicle insurance policy as well as other damages, totaling P564,500.00
(P454,000.00 as actual/compensatory damages; P50,000.00 as exemplary damages;
P50,000.00 as attorney's fees; P10,000.00 as litigation expenses; and P500.00 as
appearance fees.)
ISSUEs: 1) If a criminal case was filed, can an independent civil action based on
quasi-delict under Article 2176 of the Civil Code be filed if no reservation was made in
the said criminal case?
2) Can a subrogee of an offended party maintain an independent civil action during
the pendency of a criminal action when no reservation of the right to file an
independent civil action was made in the criminal action and despite the fact that the
private complainant is actively participating through a private prosecutor in the
aforementioned criminal case?
RULING: WHEREFORE, premises considered, the assailed decision of the Court of
Appeals dated February 24, 1995 and the Resolution dated April 3, 1995 denying the
motion for reconsideration thereof are hereby REVERSED and SET ASIDE. The
"MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS" filed by
petitioners is GRANTED.
RATIO: Now that the necessity of a prior reservation is the standing rule that shall
govern the institution of the independent civil actions referred to in Rule 111 of the
Rules of Court, past pronouncements that view the reservation requirement as an
"unauthorized amendment" to substantive law - i.e., the Civil Code, should no longer
be controlling. There must be a renewed adherence to the time-honored dictum that
procedural rules are designed, not to defeat, but to safeguard the ends of substantial
justice. And for this noble reason, no less than the Constitution itself has mandated
this Court to promulgate rules concerning the enforcement of rights with the end in
view of providing a simplified and inexpensive procedure for the speedy disposition of
cases which should not diminish, increase or modify substantive rights. Far from

altering substantive rights, the primary purpose of the reservation is, to borrow the
words of the Court in "Caos v. Peralta"
Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil
Code, is not exempt from the reservation requirement with respect to its damages suit
based on quasi-delict arising from the same act or omission of petitioner Javier
complained of in the criminal case. As private respondent PISC merely stepped into
the shoes of Ms. Jao (as owner of the insured Toyota van), then it is bound to observe
the procedural requirements which Ms. Jao ought to follow had she herself instituted
the civil case.
RAFAEL REYES VS. PEOPLE, 329 SCRA 600
Facts:
In the early morning of June 20, 1989, the White Truck driven by Dunca left
Tuguegarao, Cagayan bound to San Fernando, Pampanga loaded with 2,000 cases
of empty beer Grande bottles. Seated at the front right seat beside him was
Ferdinand Domingo, his truck helper. At around 4:00 oclock that same morning while
the truck was descending at a slight downgrade along the national road at Tagaran,
Cauayan, Isabela, it approached a damaged portion of the road covering the full width
of the trucks right lane going south and about six meters in length. These made the
surface of the road uneven because the potholes were about five to six inches deep.
The left lane parallel to this damaged portion is smooth. As narrated by Ferdinand
Domingo, before approaching the potholes, he and Dunca saw the Nissan with its
headlights on coming from the opposite direction. They used to evade this damaged
road by taking the left lance but at that particular moment, because of the incoming
vehicle, they had to run over it. This caused the truck to bounce wildly. Dunca lost
control of the wheels and the truck swerved to the left invading the lane of the Nissan.
As a result, Duncas vehicle rammed the incoming Nissan dragging it to the left
shoulder of the road and climbed a ridge above said shoulder where it finally stopped.
The Nissan was severely damaged and its two passengers, namely, Feliciano Balcita
and Francisco Dy, Jr. died instantly. On October 10, 1989, Provincial Prosecutor
Durian filed with the RTC an amended information charging Dunca with reckless
imprudence resulting in double homicide and damage to property. On November 29,
1989, the offended parties filed with the RTC a complaint against petitioner Rafael
Reyes Trucking Corporation, as employer of driver Dunca, based on quasi delict.
Respondents opted to pursue the criminal action but did not withdraw the civil case
quasi ex delicto they filed against petitioner. On December 15, 1989, respondents
withdrew the reservation to file a separate civil action against the accused and
manifested that they would prosecute the civil aspect ex delicto in the criminal action.
However, they did not withdraw the separate civil action based on quasi delict against
petitioner as employer arising from the same act or omission of the accused driver.
The RTC held that the driver was guilty. Respondents moved for amendment of the
dispositive portion of the joint decision so as to hold petitioner subsidiarily liable for
the damages awarded to the private respondents in the event of insolvency of the
accused, which the lower court granted.
Issues: (1) Whether or not petitioner as owner of the truck involved in the accident
may be held subsidiarily liable for the damages awarded to the offended parties in the
criminal action against the truck driver despite the filing of a separate civil action by
the offended parties against the employer of the truck driver; and

(2) Whether or not the Court may award damages to the offended parties in the
criminal case despite the filing of a civil action against the employer of the truck driver.
Held:
(1) No. In negligence cases, the aggrieved party has the choice between (1) an action
to enforce civil liability arising from crime under Article 100 of the Revised Penal
Code; and (2) a separate action for quasi delict under Article 2176 of the Civil Code of
the Philippines. Once the choice is made, the injured party can not avail himself of
any other remedy because he may not recover damages twice for the same negligent
act or omission of the accused. This is the rule against double recovery.In other
words, the same act or omission can create two kinds of liability on the part of the
offender, that is, civil liability ex delicto, and civil liability quasi delicto either of which
may be enforced against the culprit, subject to the caveat under Article 2177 of the
Civil Code that the offended party can not recover damages under both types of
liability. In the instant case, the offended parties elected to file a separate civil action
for damages against petitioner as employer of the accused, based on quasi delict,
under Article 2176 of the Civil Code of the Philippines. Petitioner, as employer of the
accused who has been adjudged guilty in the criminal case for reckless imprudence,
cannot be held subsidiarily liable because of the filing of the separate civil action
based on quasi delict against it. In view of the reservation to file, and the subsequent
filing of the civil action for recovery of civil liability, the same was not instituted with the
criminal action. Such separate civil action was for recovery of damages under Article
2176 of the Civil Code, arising from the same act or omission of the accused.
(2) No. The award of damages in the criminal case was improper because the civil
action for the recovery of civil liability was waived in the criminal action by the filing of
a separate civil action against the employer. The only issue brought before the trial
court in the criminal action is whether accused Dunca is guilty of reckless imprudence
resulting in homicide and damage to property. The action for recovery of civil liability
is not included therein, but is covered by the separate civil action filed against the
petitioner as employer of the accused truck-driver. The policy against double recovery
requires that only one action be maintained for the same act or omission whether the
action is brought against the employee or against his employer. The injured party
must choose which of the available causes of action for damages he will bring.
RAFAEL REYES TRUCKING CORPORATION, Petitioner, vs. PEOPLE OF THE
PHILIPPINES and ROSARIO P. DY (for herself and on behalf of the minors Maria
Luisa, Francis Edward, Francis Mark and Francis Rafael, all surnamed
Dy), Respondents.
FACTS: The defendant Rafael Reyes Trucking Corporation is a domestic corporation
engaged in the business of transporting beer products for the San Miguel Corporation
(SMC for short) from the latters San Fernando, Pampanga plant to its various sales
outlets in Luzon. Among its fleets of vehicles for hire is the white truck trailer driven by
Romeo Dunca y Tumol, a duly licensed driver. Aside from the Corporations
memorandum to all its drivers and helpers to physically inspect their vehicles before
each trip, the SMCs Traffic Investigator-Inspector certified the roadworthiness of this
White Truck trailer. In addition to a professional drivers license, it also conducts a rigid
examination of all driver applicants before they are hired.

In the early morning of June 20, 1989, the White Truck driven by Dunca left
Tuguegarao, Cagayan bound to San Fernando, Pampanga loaded with 2,000 cases
of empty beer "Grande" bottles. Seated at the front right seat beside him was
Ferdinand Domingo, his truck helper ("pahinante" in Pilipino). At around 4:00 oclock
that same morning while the truck was descending at a slight downgrade along the
national road at Tagaran, Cauayan, Isabela, it approached a damaged portion of the
road covering the full width of the trucks right lane going south and about six meters
in length. These made the surface of the road uneven because the potholes were
about five to six inches deep. The left lane parallel to this damaged portion is smooth.
As narrated by Ferdinand Domingo, before approaching the potholes, he and Dunca
saw the Nissan with its headlights on coming from the opposite direction. They used
to evade this damaged road by taking the left lance but at that particular moment,
because of the incoming vehicle, they had to run over it. This caused the truck to
bounce wildly. Dunca lost control of the wheels and the truck swerved to the left
invading the lane of the Nissan. As a result, Duncas vehicle rammed the incoming
Nissan dragging it to the left shoulder of the road and climbed a ridge above said
shoulder where it finally stopped. The Nissan was severely damaged and its two
passengers, namely: Feliciano Balcita and Francisco Dy, Jr. died instantly from
external and internal hemorrhage and multiple fractures.
For the funeral expenses of Francisco Dy, Jr. her widow spent P651,360.00. At the
time of his death he was 45 years old. He was the President and Chairman of the
Board of the Dynamic Wood Products and Development Corporation (DWPC), a
wood processing establishment, from which he was receiving an income of
P10,000.00 a month. In the Articles of Incorporation of the DWPC, the spouses
Francisco Dy, Jr. and Rosario Perez Dy appear to be stockholders of 10,000 shares
each with par value of P100.00 per share out of its outstanding and subscribed capital
stock of 60,000 shares valued at P6,000,000.00. Under its 1988 Income Tax Returns
the DWPC had a taxable net income of P78,499.30. Francisco Dy, Jr. was a La Salle
University graduate in Business Administration, past president of the Pasay Jaycees,
National Treasurer and President of the Philippine Jaycees in 1971 and 1976,
respectively, and World Vice-President of Jaycees International in 1979. He was also
the recipient of numerous awards as a civic leader. His children were all studying in
prestigious schools and spent about P180,000.00 for their education in 1988 alone.
The trial court rendered a joint decision finding the accused Romeo Dunca y de
Tumol guilty beyond reasonable doubt of the crime of Double Homicide through
Reckless Imprudence with violation of the Motor Vehicle Law (Rep. Act No. 4136),
and appreciating in his favor the mitigating circumstance of voluntary surrender
without any aggravating circumstance to offset the same, the Court sentences him to
suffer two (2) indeterminate penalties of four months and one day of arresto mayor as
minimum to three years, six months and twenty days as maximum; to indemnify the
Heirs of Francisco Dy. Jr. in the amount of P3,000,000.00 as compensatory damages,
P1,000,000.00 as moral damages, and P1,030,000.00 as funeral expenses; Ordering
the plaintiff in Civil Case No. Br. 19-424 to pay the defendant therein actual damages
in the amount of P84,000.00; and Ordering the dismissal of the complaint in Civil
Case No. Br. 19-424.
Petitioner and the accused filed a notice of appeal from the joint decision.On the other
hand, private respondents moved for amendment of the dispositive portion of the joint

decision so as to hold petitioner subsidiarily liable for the damages awarded to the
private respondents in the event of insolvency of the accused.
The trial court rendered a supplemental decision ordering the defendant Reyes
Trucking Corporation subsidiarily liable for all the damages awarded to the heirs of
Francisco Dy, Jr., in the event of insolvency of the accused but deducting therefrom
the damages of P84,000.00 awarded to said defendant.
Petitioner filed with the trial court a supplemental notice of appeal from the
supplemental decision. During the pendency of the appeal, the accused jumped bail
and fled to a foreign country. The Court of Appeals dismissed the appeal of the
accused in the criminal case and rendered an amended decision affirming that of the
trial court. Petitioner filed a motion for reconsideration of the amended decision. The
Court of Appeals denied petitioners motion for reconsideration for lack of merit.
Hence, this petition for review.
ISSUES: 1. May petitioner as owner of the truck involved in the accident be held
subsidiarily liable for the damages awarded to the offended parties in the criminal
action against the truck driver despite the filing of a separate civil action by the
offended parties against the employer of the truck driver?
2. May the Court award damages to the offended parties in the criminal
case despite the filing of a civil action against the employer of the truck driver; and in
amounts exceeding that alleged in the information for reckless imprudence resulting
in homicide and damage to property?
RULING: 1. Rafael Reyes Trucking Corporation, as employer of the accused who has
been adjudged guilty in the criminal case for reckless imprudence, can not be held
subsidiarily liable because of the filing of the separate civil action based on quasi
delict against it. In view of the reservation to file, and the subsequent filing of the civil
action for recovery of civil liability, the same was not instituted with the criminal action.
Such separate civil action was for recovery of damages under Article 2176 of the Civil
Code, arising from the same act or omission of the accused. In negligence cases, the
aggrieved party has the choice between (1) an action to enforce civil liability arising
from crime under Article 100 of the Revised Penal Code; and (2) a separate action
for quasi delict under Article 2176 of the Civil Code of the Philippines. Once the
choice is made, the injured party can not avail himself of any other remedy because
he may not recover damages twice for the same negligent act or omission of the
accused. This is the rule against double recovery.In other words, "the same act or
omission can create two kinds of liability on the part of the offender, that is, civil
liability ex delicto, and civil liability quasi delicto" either of which "may be enforced
against the culprit, subject to the caveat under Article 2177 of the Civil Code that the
offended party can not recover damages under both types of liability." In the instant
case, the offended parties elected to file a separate civil action for damages against
petitioner as employer of the accused, based on quasi delict, under Article 2176 of the
Civil Code of the Philippines. Private respondents sued petitioner Rafael Reyes
Trucking Corporation, as the employer of the accused, to be vicariously liable for the
fault or negligence of the latter. Under the law, this vicarious liability of the employer is
founded on at least two specific provisions of law.The first is expressed in Article 2176
in relation to Article 2180 of the Civil Code, which would allow an action predicated
on quasi-delict to be instituted by the injured party against the employer for an act or

omission of the employee and would necessitate only a preponderance of evidence to

prevail. Here, the liability of the employer for the negligent conduct of the subordinate
is direct and primary, subject to the defense of due diligence in the selection and
supervision of the employee. The enforcement of the judgment against the employer
in an action based on Article 2176 does not require the employee to be insolvent
since the nature of the liability of the employer with that of the employee, the two
being statutorily considered joint tortfeasors, is solidary. The second, predicated on
Article 103 of the Revised Penal Code, provides that an employer may be held
subsidiarily civilly liable for a felony committed by his employee in the discharge of his
duty. This liability attaches when the employee is convicted of a crime done in the
performance of his work and is found to be insolvent that renders him unable to
properly respond to the civil liability adjudged. Pursuant to the provision of Rule 111,
Section 1, paragraph 3 of the 1985 Rules of Criminal Procedure, when private
respondents, as complainants in the criminal action, reserved the right to file the
separate civil action, they waived other available civil actions predicated on the same
act or omission of the accused-driver. Such civil action includes the recovery of
indemnity under the Revised Penal Code, and damages under Articles 32, 33, and 34
of the Civil Code of the Philippines arising from the same act or omission of the
accused. The intention of private respondents to proceed primarily and directly
against petitioner as employer of accused truck driver became clearer when they did
not ask for the dismissal of the civil action against the latter based on quasi
delict.Consequently, the Court of Appeals and the trial court erred in holding the
accused civilly liable, and petitioner-employer of the accused subsidiarily liable for
damages arising from crime (ex delicto) in the criminal action as the offended parties
in fact filed a separate civil action against the employer based on quasi delict resulting
in the waiver of the civil action ex delicto.It might be argued that private respondents
as complainants in the criminal case withdrew the reservation to file a civil action
against the driver (accused) and manifested that they would pursue the civil liability of
the driver in the criminal action. However, the withdrawal is ineffective to reverse the
effect of the reservation earlier made because private respondents did not withdraw
the civil action against petitioner based on quasi delict. In such a case, the provision
of Rule 111, Section 1, paragraph 3 of the 1985 Rules on Criminal Procedure is clear
that the reservation to file or the filing of a separate civil action results in a waiver of
other available civil actions arising from the same act or omission of the accused.
Rule 111, Section 1, paragraph 2 enumerated what are the civil actions deemed
waived upon such reservation or filing, and one of which is the civil indemnity under
the Revised Penal Code. Rule 111, Section 1, paragraph 3 of the 1985 Rules on
Criminal Procedure specifically provides: "A waiver of any of the civil actions
extinguishes the others. The institution of, or the reservation of the right to file, any of
said civil actions separately waives the others."The rationale behind this rule is the
avoidance of multiple suits between the same litigants arising out of the same act or
omission of the offender. The restrictive phraseology of the section under
consideration is meant to cover all kinds of civil actions, regardless of their source in
law, provided that the action has for its basis the same act or omission of the offender.
However, petitioner as defendant in the separate civil action for damages filed against
it, based on quasi delict, may be held liable thereon. Thus, the trial court grievously
erred in dismissing plaintiffs civil complaint. And the Court of Appeals erred in
affirming the trial courts decision. Unfortunately private respondents did not appeal
from such dismissal and could not be granted affirmative relief.The Court, however, in
exceptional cases has relaxed the rules "in order to promote their objectives and
assist the parties in obtaining just, speedy, and inexpensive determination of every
action or proceeding" or exempted "a particular case from the operation of the rules."

Invoking this principle, we rule that the trial court erred in awarding civil damages in
the criminal case and in dismissing the civil action. Apparently satisfied with such
award, private respondent did not appeal from the dismissal of the civil case.
However, petitioner did appeal. Hence, this case should be remanded to the trial court
so that it may render decision in the civil case awarding damages as may be
warranted by the evidence.
2. The award of damages in the criminal case was improper because the civil action
for the recovery of civil liability was waived in the criminal action by the filing of a
separate civil action against the employer. As enunciated in Ramos vs. Gonong, "civil
indemnity is not part of the penalty for the crime committed." The only issue brought
before the trial court in the criminal action is whether accused Romeo Dunca y de
Tumol is guilty of reckless imprudence resulting in homicide and damage to property.
The action for recovery of civil liability is not included therein, but is covered by the
separate civil action filed against the petitioner as employer of the accused truckdriver. In this case, accused-driver jumped bail pending his appeal from his
conviction. Thus, the judgment convicting the accused became final and executory,
but only insofar as the penalty in the criminal action is concerned. The damages
awarded in the criminal action was invalid because of its effective waiver. The
pronouncement was void because the action for recovery of the civil liability arising
from the crime has been waived in said criminal action. With respect to the issue that
the award of damages in the criminal action exceeded the amount of damages
alleged in the amended information, the issue is de minimis. At any rate, the trial court
erred in awarding damages in the criminal case because by virtue of the reservation
of the right to bring a separate civil action or the filing thereof, "there would be no
possibility that the employer would be held liable because in such a case there would
be no pronouncement as to the civil liability of the accused. As a final note, the Court
reiterate that "the policy against double recovery requires that only one action be
maintained for the same act or omission whether the action is brought against the
employee or against his employer. The injured party must choose which of the
available causes of action for damages he will bring.
LRT vs. NAVIDAD
G.R. No. 145804. February 6, 2003
FACTS:
Navidad was drunk when he entered the boarding platform of the LRT. He got into an
altercation with the SG Escartin. They had a fistfight and Navidad fell onto the tracks
and was killed when a train came and ran over him.
The Heirs of Navidad filed a complaint for damages against Escartin, the train driver,
(Roman) the LRTA, the Metro Transit Organization and Prudent Security Agency
(Prudent). The trial court found Prudent and Escartin jointly and severally liable for
damages to the heirs. The CA exonerated Prudent and instead held the LRTA and the
train driver Romero jointly and severally liable as well as removing the award for
compensatory damages and replacing it with nominal damages.
The reasoning of the CA was that a contract of carriage already existed between
Navidad and LRTA (by virtue of his havA ing purchased train tickets and the liability
was caused by the mere fact of Navidad's death after being hit by the train being
managed by the LRTA and operated by Roman. The CA also blamed LRTA for not

having presented expert evidence showing that the emergency brakes could not have
stopped the train on time.
ISSUES:
(1) Whether or not LRTA and/or Roman is liable for the death.
(2) Whether or not Escartin and/or Prudent are liable.
(3) Whether or not nominal damages may coexist with compensatory damages.
HELD:
(1) Yes. The foundation of LRTA's liability is the contract of carriage and its obligation
to indemnify the victim arising from the breach of that contract by reason of its failure
to exercise the high diligence required of a common carrier.
(2) Fault was not established. Liability will be based on Tort under Art. 2176 of the
New Civil Code.
(3) No. It is an established rule that nominal damages cannot co-exist with
compensatory damages.
RATIO:
Liability of LRTA Read Arts. 1755,1756, 1759 and 1763 of the New Civil Code
A common carrier is required by these above statutory provisions to use utmost
diligence in carrying passengers with due regard for all circumstances. This obligation
exists not only during the course of the trip but for so long as the passengers are
within its premises where they ought to be in pursuance to then contract of carriage.
Art. 1763 renders a common carrier liable for death of or injury to passengers (a)
through the negligence or wilful acts of its employees or (b) on account of willful acts
or negligence of other passengers or of strangers if the common carriers employees
through theexercise of due diligence could have prevented or stopped the act or
omission. In case of such death or injury, a carrier is presumed to have been at fault
or been negligent, and by simple proof of injury, the passenger is relieved of the duty
to still establish the fault or negligence of the carrier or of its employees and the
burden shifts upon the carrier to prove that the injury is due to an unforeseen event or
to force majeure.
Liability of Security Agency If Prudent is to be held liable, it would be for a tort
under Art. 2176 in conjunction with Art. 2180. Once the fault of the employee Escartin
is established, the employer, Prudent, would be held liable on the presumption that it
did not exercise the diligence of a good father of the family in the selection and
supervision of its employees.
Relationship between contractual and non-contractual breach How then must
the liability of the common carrier, on the one hand, and an independent contractor,
on the other hand, be described? It would be solidary. A contractual obligation can be
breached by tort and when the same act or omission causes the injury, one resulting
in culpa contractual and the other in culpa aquiliana, Article 2194 of the Civil Code
can well apply. In fine, a liability for tort may arise even under a contract, where tort is
that which breaches the contract. Stated differently, when an act which constitutes a
breach of ontract would have itself constituted the source of a quasi-delictual liability
had no contract existed between the parties, the contract can be said to have been

breached

by

tort,

thereby

allowing

the

rules

on

tort

to

apply.

Nominal Damages - The award of nominal damages in addition to actual damages

is untenable. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him. It is an established rule that nominal damages cannot co-exist with
compensatory damages. The award was deleted/\.
LRT vs. NAVIDAD
G.R. No. 145804 February 6, 2003
Lessons Applicable: Actionable Document (transportation)
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763
FACTS:

October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor) entered the
EDSA LRT station after purchasing a token.

While Nicanor was standing at the platform near the LRT tracks, the
guard Junelito Escartin approached him.

Due to misunderstanding, they had a fist fight

Nicanor fell on the tracks and killed instantaneously upon

being hit by a moving train operated by Rodolfo Roman

December 8, 1994: The widow of Nicanor, along with her children, filed a
complaint for damages against Escartin, Roman, LRTA, Metro Transit Org. Inc.
and Prudent (agency of security guards) for the death of her husband.

LRTA and Roman filed a counter-claim against Nicanor and a

cross-claim against Escartin and Prudent

Prudent: denied liability averred that it had exercised due

diligence in the selection and surpervision of its security guards

LRTA and Roman: presented evidence

Prudent and Escartin: demurrer contending that Navidad

had failed to prove that Escartin was negligent in his assigned task

RTC: In favour of widow and against Prudent and Escartin, complaint

against LRT and Roman were dismissed for lack of merit

CA: reversed by exonerating Prudent and held LRTA and Roman liable

they prove that they observed extraordinary diligence as prescribed in articles

1733 and 1755
Art. 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or wilful acts of the formers employees,
although such employees may have acted beyond the scope of their authority or
in violation of the orders of the common carriers
This liability of the common carriers does NOT cease upon proof that they
Exercised all the diligence of a good father of a family in the selection and
supervision of their employees

ISSUE: W/N LRTA and Roman should be liable according to the contract of carriage

HELD: NO. Affirmed with Modification: (a) nominal damages is DELETED (CANNOT
co-exist w/ compensatory damages) (b) Roman is absolved.

Law and jurisprudence dictate that a common carrier, both from the nature of
its business and for reasons of public policy, is burdened with the duty off
exercising utmost diligence in ensuring the safety of passengers

Civil Code:

Art. 1755. A common carrier is bound to carry the passengers

safely as far as human care and foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all the circumstances

Art. 1756. In case of death or injuries to passengers, common

carriers are presumed to have been at fault or to have acted negligently, unless

Art. 1763. A common carrier is responsible for injuries suffered by a

passenger on account of the wilful acts or negligence of other passengers or of
strangers, if the common carriers employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act or
omission.
Carriers presumed to be at fault or been negligent and by simple proof of
injury, the passenger is relieaved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden shifts upon the
carrier to prove that the injury is due to an unforeseen event or to force majeure
Where it hires its own employees or avail itself of the services of an outsider
or an independent firm to undertake the task, the common carrier is NOT
relieved of its responsibilities under the contract of carriage
GR: Prudent can be liable only for tort under Art. 2176 and related provisions
in conjunction with Art. 2180 of the Civil Code. (Tort may arise even under a
contract, where tort [quasi-delict liability] is that which breaches the contract)
EX: if employers liability is negligence or fault on the part of the
employee, employer can be made liable on the basis of the presumption juris
tantum that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees.
EX to the EX: Upon showing due diligence in the selection and
supervision of the employee
Factual finding of the CA: NO link bet. Prudent and the death of Nicanor for
the reason that the negligence of Escartin was NOT proven
NO showing that Roman himself is guilty of any culpable act or omission, he
must also be absolved from liability
Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation
bet. Nicanor and Roman
Roman can be liable only for his own fault or negligence

LIGA vs. ALLEGRO RESOURCES

575 SCRA 310 (Art. 1159)
Facts:
Ortigas & Company, Limited Partnership entered into a lease agreement with La Paz
Investment & Realty Corporation wherein the former leased to the latter its parcel of
land located in San Juan. La Paz constructed the Greenhills Shopping Arcade and
divided it into several stalls and subleased them to other people. One of the sublessees was Edsel Liga (Liga), who obtained the leasehold right to Unit No. 26, Level
A of the GSA.

 As the lease expired, the stallholders made several attempts to have their leasehold
rights extended.
Allegro Resources became the new lessee. As the new lessee, Allegro offered to
sublease Unit No. 26, Level A to Liga. They entered into a lease agreement dubbed
Rental Information in which Liga agreed to pay rental of P40K monthly. She also
agreed to pay the back rentals due Ortigas. Liga also gave P40K as one month
advance rental and another P40K as one month security deposit as provided in the
agreement.
Liga failed to pay the subsequent due rent. Despite repeated demands from Allegro,
Liga had failed to pay her rentals for the subleased property, as well as the back
rentals from January to August 2001 due Ortigas.
Issues:
1. WON Liga should pay to Ortigas back rentals covering the period 1 January 2001
to 31 August 2001? NO
2. WON Liga should pay to Allegro back rentals in the amount of P40K a month
starting from 1 September 2001 until such time as she vacates the leased property?
YES
3. WON Liga should pay to Allegro the amount of P20K as attorney's fees and the
costs of suit? YES
Held:
1. (1) Ortigas is not a party to this case, whether as plaintiff or otherwise. It is basic
that no relief can be extended in a judgment to a stranger or one who is not a party to
a case. (2) Allegro cannot justify the award as a legal representative by virtue of a
provision in its lease agreement with Ortigas. Allegro did not aver in its complaint that
it was acting as Ortigas's legal representative and seeking the back rentals due
Ortigas. (3) There is no allegation or prayer in the complaint that Allegro was seeking
the collection of the back rentals due Ortigas.
2. The Court cannot countenance the obstinate refusal of Liga to pay P40K a month
to Allegro since she had already acquiesced to pay such rental rate when she signed
the Rental Information. It is fundamental that a contract is the law between the
parties. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
It is a general principle of law that no one may be permitted to change his mind or
disavow and go back upon his own acts, or to proceed contrary thereto, to the
prejudice of the other party.
Likewise, it is settled that if the terms of the contract clearly express the intention of
the contracting parties, the literal meaning of the stipulations would be controlling.
3. Law and jurisprudence support the award of attorney's fees and costs of suit in
favor of Allegro. Attorney's fees and costs of litigation are awarded in instances where
"the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's
plainly valid, just and demandable claim." Having delivered possession over the

leased property to Liga, Allegro had already performed its obligation under the lease
agreement. Liga should have exercised fairness and good judgment in dealing with
Allegro by religiously paying the agreed monthly rental of P40,000.00.
LIGA vs. ALLEGRO RESOURCES
575 SCRA 310 (Art. 1159)
Facts: Ortigas & Company, Limited Partnership entered into a lease agreement with
La Paz Investment & Realty Corporation wherein the former leased to the latter its
parcel of land located in San Juan. La Paz constructed the Greenhills Shopping
Arcade and divided it into several stalls and subleased them to other people. One of
the sub-lessees was Edsel Liga (Liga), who obtained the leasehold right to Unit No.
26, Level A of the GSA.
As the lease expired, the stallholders made several attempts to have their leasehold
rights extended.
Allegro Resources became the new lessee. As the new lessee, Allegro offered to
sublease Unit No. 26, Level A to Liga. They entered into a lease agreement dubbed
Rental Information in which Liga agreed to pay rental of P40K monthly. She also
agreed to pay the back rentals due Ortigas. Liga also gave P40K as one month
advance rental and another P40K as one month security deposit as provided in the
agreement.
Liga failed to pay the subsequent due rent. Despite repeated demands from Allegro,
Liga had failed to pay her rentals for the subleased property, as well as the back
rentals from January to August 2001 due Ortigas.
Issues:
WON Liga should pay to Ortigas back rentals covering the period 1 January 2001 to
31 August 2001? NO
WON Liga should pay to Allegro back rentals in the amount of P40K a month starting
from 1 September 2001 until such time as she vacates the leased property? YES
WON Liga should pay to Allegro the amount of P20K as attorneys fees and the costs
of suit? YES
Held:
(1) Ortigas is not a party to this case, whether as plaintiff or otherwise. It is basic that
no relief can be extended in a judgment to a stranger or one who is not a party to a
case. (2) Allegro cannot justify the award as a legal representative by virtue of a
provision in its lease agreement with Ortigas. Allegro did not aver in its complaint that
it was acting as Ortigass legal representative and seeking the back rentals due
Ortigas. (3) There is no allegation or prayer in the complaint that Allegro was seeking
the collection of the back rentals due Ortigas.

The Court cannot countenance the obstinate refusal of Liga to pay P40K a month to
Allegro since she had already acquiesced to pay such rental rate when she signed
the Rental Information. It is fundamental that a contract is the law between the
parties. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
It is a general principle of law that no one may be permitted to change his mind or
disavow and go back upon his own acts, or to proceed contrary thereto, to the
prejudice of the other party.
Likewise, it is settled that if the terms of the contract clearly express the intention of
the contracting parties, the literal meaning of the stipulations would be controlling.
Law and jurisprudence support the award of attorneys fees and costs of suit in favor
of Allegro. Attorneys fees and costs of litigation are awarded in instances where the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim. Having delivered possession over the
leased property to Liga, Allegro had already performed its obligation under the lease
agreement. Liga should have exercised fairness and good judgment in dealing with
Allegro by religiously paying the agreed monthly rental of P40,000.00.
MAKATI STOCK EXCHANGE, INC., vs. MIGUEL V. CAMPOS
G.R. No. 138814 , April 16, 2009
FACTS:
Respondent Miguel V. Campos filed a petition with the Securities, Investigation and
Clearing Department (SICD) of the Securities and Exchange Commission (SEC)
against the petitioners Makati Stock Exchange, Inc. (MKSE) The petition sought: (1)
to nullify the Resolution dated 3 June 1993 of the MKSE Board of Directors, which
allegedly deprived him of his right to participate equally in the allocation of Initial
Public Offerings (IPO) of corporations registered with MKSE; (2) the delivery of the
IPO shares he was allegedly deprived of, for which he would pay IPO prices;.
SICD granted the issuance of a Temporary Restraining Order to enjoin petitioners
from implementing or enforcing the resolution of the MKSE. they also issued a writ of
preliminary injunction for the implementation or enforcement of the MKSE Board
Resolution in question.

HELD: The petition filed by respondent Miguel Campos should be dismissed for
failure to state a cause of action.
A cause of action is the act or omission by which a party violates a right of
another.
It contains three essential elements: 1) the legal right of the plaintiff 2) the
correlative obligation of the defendant and 3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint will be
dismissed on the ground of failure to state a cause of action. Furthermore, the
petition filed by respondent failed to lay down the source or basis of respondents right
and/or petitioners obligation.
Article 1157 of the Civil Code, provides that Obligations arise from: law,
Contracts, Quasi Contracts, Acts or omissions punished by law and quasi delicts.
Therefore an obligation imposed on a person and the corresponding right granted to
another, must be rooted in at least one of these five sources.
The mere assertion of a right and claim of an obligation in an initiatory
pleading, whether a Complaint or Petition, without identifying the basis or source
thereof, is merely a conclusion of fact and law. A pleading should state the ultimate
facts essential to the rights of action or defense asserted, as distinguished from mere
conclusions of fact or conclusions of law.
The Respondent merely quoted in his Petition the MKSE Board Resolution,
passed sometime in 1989, granting him the position of Chairman Emeritus of MKSE
for life. However, there is nothing in the said Petition from which the Court can deduce
that respondent, by virtue of his position as Chairman Emeritus of MKSE, was
granted by law, contract, or any other legal source, the right to subscribe to the IPOs
of corporations listed in the stock market at their offering prices.
CHAVEZ VS. GONZALES

I. Nature and effect of obligations - Article 1167

II. Where obligation does not fix a period - Article 1197 cannot be invoked
in this case

On March 11,1994, petitioners filed a motion to dismiss on the following grounds: (1)
Petition became moot due to the cancellation of the license of the MKSE (2) The
SICD had no jurisdiction over the petition and (3) the petition failed to state a cause of
action. However, the SICD denied petitioners motion to dismiss.

DIESEL CONSTRUCTION CO., INC V. UPSI PROPERTY HOLDINGS, INC.

G.R. No. 154885, March 24, 2008

ISSUE: Whether or not the petition failed to state a cause of action.

Facts: On August 26, 1995, Diesel, as contractor, and UPSI, as Owner, entered into a
Construction Agreement for the interior architectural construction works for the 14 th to
the 16th floors of the UPSI Building 3 Meditel/Condotel Project located on Gen. Luna

UPSI PROPERTY HOLDINGS, INC., V. DIESEL CONSTRUCTION CO., INC. AND

FGU INSURANCE CORP., G.R. No. 154937, March 24, 2008

St., Ermita, Manila. Under the Agreement, as amended, Diesel, for PHP 12,739,099,
agreed to undertake the Project, payable by progress billing. As stipulated, Diesel
posted, through FGU Insurance corp. (FGU), a performance bond in favor of UPSI.
The Agreement contained provisions and contract provisions on contract
works and Project completing, extensions of contract period, change/extra work
orders, delays and damages for negative slippage. Under the Agreement, the Project
Prosecution proper was to run for a period of 90 days from August 2, 1999 to
November 8, 1999. They later agreed to move the commencement date to August 21,
1999 and the completion was moved to November 20, 1999. Also this includes the
section obliging the contractor, in case of unjustifiable delay, to pay the owner
liquidated damages in the amount equivalent to one-fifth (1/5) of one (1) percent of
the total Project cost for each calendar day of delay.
During the course of Project implantation, change orders were effective and
extensive sought. Diesel requested for extension owing to the following causes or
delaying factors: (1) manual hauling of materials from the 14 th to 16th floors; (2)
delayed supply of marble; (3) various change orders; and (4) delayed in the
installation of shower assembly. UPSI disapproved the desired extensions on the
basis of the foregoing causes, thus putting Diesel in default for a given contract of
work. Furthermore, for every default situation, UPSI assessed Diesel for liquidated
damages in the form of deductions from Diesels progress payments, as stipulated in
the Agreement. On March 16, 2000, Diesel sent a letter notice to UPSI stating that the
Project has been completed as of the date. UPSI, however, disregarded the notice,
and refused to accept delivery of the contracted premises, claiming that Diesel
abandoned the Project unfinished Diesel then filed a complaint compelling to pay the
unpaid balance of UPSI of the contract price, plus damages and attorneys fees. UPSI
denied liability.
ISSUE: Whether or not Diesel can be entitled to full payment of the contract amount.
HELD: As evidenced, by UPSIs Progress Report No. 19 for the period ending March
22, 2000, Diesels scope of work , as of that date, was already 97.56% complete.
Such level of work accomplishment would, by any natural norm, be considered as
substantial to warrant full payment of the contract amount, less actual damages
suffered by UPSI. Article 1234 of the Civil Code says as much, If the obligation had
substantially performed in good faith, the obligor may recover as though there had
been and complete fulfillment, less damages suffered by the obligee.
PANTALEON VS AMERICAN EXPRESS INTERNATIONAL
G.R. No. 174269
May 8, 2009
Facts: Polo Pantaleon (Petitioner) and his family joined an escorted tour of Western
Europe. In a guided city tour in Amsterdam, Mrs. Pantaleon while she was in Coster
she purchased a diamond, pendant and a chain which totalled U.S. 13,826.00. To
pay for these purchases Petitioner presented an American Express card together with
his passport. The sales clerk took the cards imprint, and asked Pantaleon to sign the
charge slip. Ten minutes later, the store clerk informed Pantaleon that his AmexCard
had not yet been approved.
His son, who had already boarded the tour bus, soon returned to Coster and informed
the other members of the Pantaleon family that the entire tour group was waiting for
them. Pantaleon asked the store clerk to cancel the sale. The store manager though
asked plaintiff to wait a few more minutes. After 15 minutes, the store manager

informed Pantaleon that respondent had demanded bank references. Pantaleon

supplied the names of his depositary banks, then instructed his daughter to return to
the bus and apologize to the tour group for the delay. The Pantaleon family then went
United States before returning to. While in the United States, Pantaleon continued to
use his Amex card, several times without hassle or delay, but with two other incidents
similar to the Amsterdam brouhaha. On 30 October 1991, Pantaleon purchased golf
equipment amounting to US $1,475.00 using his AmEx card, but he cancelled his
credit card purchase and borrowed money instead from a friend, after more than 30
minutes had transpired without the purchase having been approved. Pantaleon used
the card to purchase childrens shoes worth $87.00 at a store in Boston, and it took
20 minutes before this transaction was approved by respondent.
In Manila, Pantaleon sent a letter through counsel to American Express (Respondent),
demanding an apology for the "inconvenience, humiliation and embarrassment he
and his family thereby suffered" for respondents refusal to provide credit
authorization for the aforementioned purchases. Respondent did give the apology
requested. Pantaleon then instituted an action for damages with the Regional Trial
Court (RTC) of Makati City, Branch 145. Pantaleon prayed that he be
awarded P2,000,000.00, as moral damages; P500,000.00, as exemplary
damages; P100,000.00, as attorneys fees; and P50,000.00 as litigation expense
Issues: Whether or Not American Express committed mora solvendi in its obligations
to Pantaleon
Held: The accepted relationship between a credit card provider and its card holders is
that of creditor-debtor, with the card company as the creditor extending loans and
credit to the card holder, who as debtor is obliged to repay the creditor. This
relationship already takes exception to the general rule that as between a bank and
its depositors, the bank is deemed as the debtor while the depositor is considered as
the creditor. we shift perspectives see the credit card company as the debtor/obligor,
insofar as it has the obligation to the customer as creditor/obligee to act promptly on
its purchases on credit. There was delay on the part of respondent in its normal role
as creditor to the cardholder, such delay would not have been in the acceptance of
the performance of the debtors obligation (i.e., the repayment of the debt), but it
would be delay in the extension of the credit in the first place. Such delay would not
fall under mora accipiendi, which contemplates that the obligation of the debtor, such
as the actual purchases on credit, has already been constituted. Herein, the
establishment of the debt itself (purchases on credit of the jewelry) had not yet been
perfected, as it remained pending the approval or consent of the respondent credit
card company. There was an obligation on the part of respondent to act on
Pantaleons purchases with "timely dispatch," or within a period significantly less than
the one hour it apparently took before the purchase at Coster was finally approved.
PANTALEON VS AMERICAN EXPRESS INTERNATIONAL
G.R. No. 174269, May 8 2009 [Credit Transaction]
FACTS:
After the Amsterdam incident that happened involving the delay of American Express
Card to approve his credit card purchases worth US$13,826.00 at the Coster store,

Pantaleon commenced a complaint for moral and exemplary damages before the
RTC against American Express. He said that he and his family experienced
inconvenience and humiliation due to the delays in credit authorization. RTC rendered
a decision in favor of Pantaleon. CA reversed the award of damages in favor of
Pantaleon, holding that AmEx had not breached its obligations to Pantaleon, as the
purchase at Coster deviated from Pantaleon's established charge purchase pattern.

-The petitioner, lawyer Polo Pantaleon, his wife, daughter and son joined an escorted
tour of Western Europe organized by Trafalgar Tours of Europe, Ltd., in October of
1991.

ISSUE:
1. Whether or not AmEx had committed a breach of its obligations to Pantaleon.
2. Whether or not AmEx is liable for damages.

-The tour group arrived in Amsterdam in the afternoon of 25 October 1991, the
second to the last day of the tour. As the group had arrived late in the city, they failed
to engage in any sight-seeing so they agreed that they would start early the next day
to see the entire city before ending the tour.

RULING:
1. Yes. The popular notion that credit card purchases are approved within seconds,
there really is no strict, legally determinative point of demarcation on how long must it
take for a credit card company to approve or disapprove a customers purchase,
much less one specifically contracted upon by the parties. One hour appears to be
patently unreasonable length of time to approve or disapprove a credit card purchase.

-The following day, the last day of the tour, the group arrived at the Coster Diamond
House. The group had agreed that the visit to Coster should end by 9:30 a.m. to allow
enough time to take in a guided city tour of Amsterdam.

The culpable failure of AmEx herein is not the failure to timely approve petitioners
purchase, but the more elemental failure to timely act on the same, whether favorably
or unfavorably. Even assuming that AmExs credit authorizers did not have sufficient
basis on hand to make a judgment, we see no reason why it could not have promptly
informed Pantaleon the reason for the delay, and duly advised him that resolving the
same could take some time.

- While in the diamond house, led to the stores showroom to allow them to select
items for purchase. Mrs. Pantaleon decided to buy a 2.5 karat diamond brilliant cut,
and she found a diamond close enough in approximation. Mrs. Pantaleon also
selected for purchase a pendant and a chain, all of which totaled U.S. $13,826.00.

2. Yes. The reason why Pantaleon is entitled to damages is not simply because AmEx
incurred delay, but because the delay, for which culpability lies under Article 1170, led
to the particular injuries under Article 2217 of the Civil Code for which moral damages
are remunerative. The somewhat unusual attending circumstances to the purchase at
Coster that there was a deadline for the completion of that purchase by petitioner
before any delay would redound to the injury of his several traveling companions
gave rise to the moral shock, mental anguish, serious anxiety, wounded feelings and
social humiliation sustained by Pantaleon, as concluded by the RTC.

-Pantaleon presented his American Express credit card together with his passport to
the Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before the
tour group was slated to depart from the store. The sales clerk took the cards imprint,
and asked Pantaleon to sign the charge slip. The charge purchase was then referred
electronically to respondents Amsterdam office at 9:20 a.m.

PANTALEON v AMERICAN EXPRESS INTERNATIONAL, INC

RATIO DECIDENDI: Moral damages avail in cases of breach of contract where the
defendant acted fraudulently or in bad faith.
QUICK FACTS: Petitioner purchased items when he was in the States using his
AmEx credit card. During three particular instances, clearance of his purchase took
too long and under those circumstances caused him moral shock, mental anguish,
serious anxiety, wounded feelings and social humiliation.
FACTS:
Name of Offended party (petitioner): Polo S. Pantaleon
Name of respondent: American Express International, Inc.

-clearance took too long. At 9:40am, Pantaleon asked the store clerk to cancel the
sale to avoid further delaying and inconveniencing the tour group. At around 10:00
a.m, 30 minutes after the tour group was supposed to have left the store, Coster
decided to release the items even without respondents approval of the purchase.

-due to the delay, the city tour of Amsterdam was to be canceled due to lack of
remaining time. The spouses Pantaleon allegedly offered their apologies but were
met by their tourmates with stony silence and visible irritation. Mrs. Pantaleon ended
up weeping, while her husband had to take a tranquilizer to calm his nerves.

-two instances similar to the Castor incident happened.

purchased golf equipment amounting to US $1,475.00 using his AmEx card,

but he cancelled his credit card purchase and borrowed money instead from
a friend, after more than 30 minutes had transpired without the purchase
having been approved.

used the card to purchase childrens shoes worth $87.00 at a store in

Boston, and it took 20 minutes before this transaction was approved by
respondent.

respondent "had exercised diligent efforts to effect the approval" of the

purchases, which were "not in accordance with the charge pattern" petitioner
had established for himself

ISSUE:

Petitioners: after coming back to Manila, sent a letter demanding an apology for the
"inconvenience, humiliation and embarrassment he and his family thereby suffered"
for respondents refusal to provide credit authorization for the aforementioned
purchases.

Respondent: refused to give an apology, sent a letter stating among others that the
delay in authorizing the purchase from Coster was attributable to the circumstance
that the charged purchase of US $13,826.00 "was out of the usual charge purchase
pattern established."

RTC: petitioner instituted an action for damages. Petitioner won.

Court awarded P500,000.00 as moral damages, P300,000.00 as exemplary

damages, P100,000.00 as attorneys fees, and P85,233.01 as expenses of
litigation.

normal approval time for purchases was "a matter of seconds." Based on
that standard, respondent had been in clear delay with respect to the three
subject transactions.

CA: reversed the award of damages in favor of Pantaleon, holding that respondent
had not breached its obligations to petitioner.

1)

WON has committed a breach of its obligations.

2)

WON respondent is liable for damages.

DECISION: Petition granted. CA decision set aside.

HELD:
1) There was a breach.
-Notwithstanding the popular notion that credit card purchases are approved "within
seconds," there really is no strict, legally determinative point of demarcation on how
long must it take for a credit card company to approve or disapprove a customers
purchase, much less one specifically contracted upon by the parties. Yet this is one of
those instances when "youd know it when youd see it," and one hour appears to be
an awfully long, patently unreasonable length of time to approve or disapprove a
credit card purchase.
-the respondent has the right, if not the obligation, to verify whether the credit it is
extending upon on a particular purchase was indeed contracted by the cardholder,
and that the cardholder is within his means to make such transaction. The culpable
failure of respondent herein is not the failure to timely approve petitioners purchase,
but the more elemental failure to timely act on the same, whether favorably or
unfavorably.

Respondent should have promptly informed petitioner the reason for the
delay, and duly advised him that resolving the same could take some time so
that petitioners will know WON to continue with the purchases

2)

YES.

-Moral damages avail in cases of breach of contract where the defendant acted
fraudulently or in bad faith, and the court should find that under the circumstances,
such damages are due.

delay was not attended by bad faith, malice, or gross negligence.

-in this case, there was bad faith and unjustified neglect of respondent, attributable in
particular to the "dilly-dallying" of respondents Manila credit authorizer, Edgardo
Jaurique. This, to the Courts mind, amounts to a wanton and deliberate refusal to

comply with its contractual obligations, or at least abuse of its rights, under the
contract.

instalments corresponding to the month of August, 1966 for more than 5 months,
thereby constraining the defendants to cancel the said contract.

-The delay committed by defendant was clearly attended by unjustified neglect and
bad faith, since it alleges to have consumed more than one hour to simply go over
plaintiffs past credit history with defendant, his payment record and his credit and
bank references, when all such data are already stored and readily available from its
computer and the fact that there were no delinquencies in the plaintiffs account

The Court of First Instance rendered judgment in favour of the plaintiffs, hence this
appeal.

-It should be emphasized that the reason why petitioner is entitled to damages
is not simply because respondent incurred delay, but because the delay, for
which culpability lies under Article 1170, led to the particular injuries under
Article 2217 of the Civil Code for which moral damages are remunerative. In this
case, it was sufficiently shown that the incident gave rise to the moral shock, mental
anguish, serious anxiety, wounded feelings and social humiliation to the petitioner.

Amount should be commensurate to the loss or injury suffered. Petitioners

original prayer for P5,000,000.00 for moral damages is excessive under the
circumstances, and the amount awarded by the trial court of P500,000.00 in
moral damages more seemly.1avvphi1

-Likewise, we deem exemplary damages available under the circumstances, and the
amount of P300,000.00 appropriate. There is similarly no cause though to disturb the
determined award of P100,000.00 as attorneys fees, and P85,233.01 as expenses of
litigation.
ANGELES VS. CALASANZ
135 SCRA 323
FACTS: On December 19, 1957, defendants-appellants Ursula Torres Calasanz and
plaintiffs-appellees Buenaventura Angeles and Teofila Juani entered into a contract to
sell a piece of land located in Cainta, Rizal for the amount of P3,920.00 plus 7%
interest per annum. The plaintiffs-appellees made a down payment of P392.00 upon
the execution of the contract. They promised to pay the balance in monthly
instalments of P41.20 until fully paid, the instalment being due and payable on the
19th day of each month. The plaintiffs-appellees paid the monthly instalments until
July 1966, when their aggregate payment already amounted to P4,533.38.
On December 7, 1966, the defendants-appellants wrote the plaintiffs-appellees a
letter requesting the remittance of past due accounts. On January 28, 1967, the
defendants-appellants cancelled the said contract because the plaintiffs failed to meet
subsequent payments. The plaintiffs letter with their plea for reconsideration of the
said cancellation was denied by the defendants.
The plaintiffs-appellees filed a case before the Court of First Instance to compel the
defendant to execute in their favour the final deed of sale alleging inter alia that after
computing all subsequent payments for the land in question, they found out that they
have already paid the total amount including interests, realty taxes and incidental
expenses. The defendants alleged in their answer that the plaintiffs violated par. 6 of
the contract to sell when they failed and refused to pay and/or offer to pay monthly

ISSUE: Has the Contract to Sell been automatically and validly cancelled by the
defendants-appellants?
RULING:
No. While it is true that par.2 of the contract obligated the plaintiffs-appellees to pay
the defendants the sum of P3,920 plus 7% interest per annum, it is likewise true that
under par 12 the seller is obligated to transfer the title to the buyer upon payment of
the said price.
The contract to sell, being a contract of adhesion, must be construed against the
party causing it. The Supreme Court agree with the observation of the plaintiffsappellees to the effect that the terms of a contract must be interpreted against the
party who drafted the same, especially where such interpretation will help effect
justice to buyers who, after having invested a big amount of money, are now sought to
be deprived of the same thru the prayed application of a contract clever in its
phraseology, condemnable in its lopsidedness and injurious in its effect which, in
essence, and its entirety is most unfair to the buyers.
Thus, since the principal obligation under the contract is only P3,920.00 and the
plaintiffs-appellees have already paid an aggregate amount of P4,533.38, the courts
should only order the payment of the few remaining instalments but not uphold the
cancellation of the contract. Upon payment of the balance of P671.67 without any
interest thereon, the defendant must immediately execute the final deed of sale in
favour of the plaintiffs and execute the necessary transfer of documents, as provided
in par.12 of the contract.
ANGELES vs CALASANZ
Nature: Appeal form the decision that the contract to sell was not validly cancelled
and ordering the defendants to execute the final deed of sale.
Facts
-

Dec 1957- Calasanz spouses and Angeles and Juani entered into contract of
sale on a parcel of land for Php3920.00 with 7% interest per annum. Angeles
and Juani made downpayment of Php392.00 and promised to pay the
remaining amount at Php41.20 a month until the full amount is paid for.
Calasanz spouses accepted several delayed payments. They paid until July
1966 when their aggregate payment already reached Php4533.38.
Dec 1966- Calasanz requested the past due accounts, particularly for the
Aug 1966 payment. And because Angeles and Juani failed to pay, Calasanz
cancelled the contract. When the plaintiffs brought this to court, the RTC
ruled in their favor.
Calasanz claims that they had the right to rescission under Art 1191 and the
stipulation in their contract, Paragraph 6 saying they may cancel the contract

in case the second party fails to satisfy the monthly installments. They
continue to invoke that Paragraph 9 of their contract states that they do not
lose this right though they concede some delayed payments.
Issue
Was the contract automatically and validly cancelled?
Held
NO. Though ART 1191 NCC states that the law does not prohibit the injured party
form cancelling a contract due to non-compliance of the other party, the case does not
apply that. This is because it is stated in jurisprudence Universal Food Corp vs CA
that rescission is not permitted where the breach is only slight and casual. Here, the
breach is considered to be just that because though they did not pay the Aug 1966
due, they did not have to because they already reached full payment even before
that. This is already unjust enrichment on their part. As well, the defendant spouses
are estopped from invoking the right of rescission when they continued to receive
delayed payment of installments from the spouses Angeles and Juani.
ANGELES VS. CALASANZ
G.R. No. L-42283, 18 March 1985.
The contract of adhesion, must be construed against the party causing it. The terms
of a contract must be interpreted against the party who drafted the same, especially
where such interpretation will help effect justice to persons who would be deprived of
their rights thru the application of a contract clever in its phraseology, condemnable in
its lopsidedness and injurious in its effect which, in essence, and in its entirety is most
unfair to the other party.
FACTS: Plaintiffs-appellees and defendants- appellants entered into a contract to sell
apiece of land located in Rizal for the amountof P3, 920 plus 7% interest per annum.
Theplaintiffs-appellees paid in monthlyinstalments and defendants-appellants told
plaintiffs-appellants to remit past dueaccounts. On January 28, 1967, defendantsappellants Calasanz cancelled the contracton the basis of failure of Angeles to secure
payment. Plaintiff-appellant Angeles filed acase with the CFI of Rizal on the basis that
they had discovered they already paid P4,533.38, including all surcharges and
expenses. The lower court ruled in favour ofplaintiffs. The CA then brought the case
fordecision before the SC.
ISSUE: WON the contract was validly cancelled by the defendant-appellants
Calasanz? NO
RATIO: Defendant appellant received the
delayed payment of plaintiffs-appellees onseveral occasions. They have then waived
and are now estopped from exercising theiralleged right to rescind the contract. Article
1234 of the Civil Code also says that if anobligation has been substantially performed
ingood faith, the obligor may recover as thoughthere had been a strict and complete
compliance and fulfillment
ROQUE VS. LAPUS
96 SCRA 741
FACTS:

Sometime in 1964, plaintiff and defendant entered into an agreement of sale covering
Lots 1, 2 and 9, Block 1, of said property, payable in 120 equal monthly installments
at the rate of P16.00, P15.00 per square meter, respectively. In accordance with said
agreement, defendant paid to plaintiff the sum of P150.00 as deposit and the further
sum of P740.56 to complete the payment of four monthly installments covering the
months of July, August, September, and October, 1954.
On January 24, 1955, defendant requested plaintiff that he be allowed to abandon
and substitute Lots 1, 2 and 9, the subject with Lots 4 and 12, Block 2 of the Rockville
Subdivision, which are corner lots, to which request plaintiff graciously acceded. The
evidence discloses that defendant proposed to plaintiff modification of their previous
contract to sell because he found it quite difficult to pay the monthly installments on
the three lots, and besides the two lots he had chosen were better lots, being corner
lots. In addition, it was agreed that the purchase price of these two lots would be at
the uniform rate of P17.00 per square meter payable in 120 equal monthly
installments, with interest at 8% annually on the balance unpaid. Pursuant to this new
agreement, defendant occupied and possessed Lots 4 and 12, and enclosed them,
including the portion where his house now stands, with barbed wires and adobe walls.
However, aside from the deposit of P150.00 and the amount of P740.56, which were
paid under their previous agreement, defendant failed to make any further payment
on account of the agreed monthly installments for the two lots in dispute, under the
new contract to sell. Plaintiff demanded upon defendant not only to pay the stipulated
monthly installments in arrears, but also to make up-to-date his payments, but
defendant refused to comply with plaintiff's demands.
On or about November 3, 1957, plaintiff demanded upon defendant to vacate the lots
in question and to pay the reasonable rentals thereon at the rate of P60.00 per month
from August, 1955. On January 22, 1960, petitioner Felipe C, Roque filed the
complaint against defendant Nicanor Lapuz for rescission and cancellation of the
agreement of sale between them involving the two lots in question and prayed that
judgment be rendered ordering the rescission and cancellation of the agreement of
sale, the defendant to vacate the two parcels of land and remove his house therefrom
and to pay to the plaintiff the reasonable rental thereof at the rate of P60.00 a month
from August 1955 until such time as he shall have vacated the premises, and to pay
the sum of P2,000.00 as attorney's fees, costs of the suit and award such other relief
or remedy as may be deemed just and equitable in the premises.
The Court of Appeals rendered its decision that the defendant Nicanor Lapuz is
granted a period of ninety (90) days from entry hereof within which to pay the
balance. Hence, this appeal.
ISSUE: Can private respondent be entitled to the Benefits of the third paragraph of
Article 1191, New Civil Code, for the fixing of period
RULING:
No. Respondent as obligor is not entitled to the benefits of paragraph 3 of Art. 1191,
NCC Having been in default and acted in bad faith, he is not entitled to the new
period of 90 days from entry of judgment within which to pay petitioner the balance of
P11,434.44 with interest due on the purchase price of P12,325.00 for the two lots. To
allow and grant respondent an additional period for him to pay the balance of the

purchase price, which balance is about 92% of the agreed price, would be tantamount
to excusing his bad faith and sanctioning the deliberate infringement of a contractual
obligation that is repugnant and contrary to the stability, security and obligatory force
of contracts. Moreover, respondent's failure to pay the succeeding 116 monthly
installments after paying only 4 monthly installments is a substantial and material
breach on his part, not merely casual, which takes the case out of the application of
the benefits of pa paragraph 3, Art. 1191, N.C.C.
Pursuant to Art. 1191, New Civil Code, petitioner is entitled to rescission with payment
of damages which the trial court and the appellate court, in the latter's original
decision, granted in the form of rental at the rate of P60.00 per month from August,
1955 until respondent shall have actually vacated the premises, plus P2,000.00 as
attorney's fees. The Court affirmed the same to be fair and reasonable. The Court
also sustained the right of the petitioner to the possession of the land, ordering
thereby respondent to vacate the same and remove his house therefrom.
AYSON-SIMON VS. ADAMOS
131 SCRA 439
FACTS: On December 13, 1943, Nicolas Adamos and Vicente Feria defendantsappellants herein purchased two lots from Juan Porciuncula. Porciunculas successor
in interest sought for the annulment and cancellation of the sale which the court a quo
favorably ruled.In the meantime during the pendency of the above mentioned case,
defendants-appellants sold to Generosa Ayson Simon the lots in question. Due to the
failure of defendants appellants to comply with their commitment to have the
subdivision plan of the lots approved and to deliver to deliver the titles and
possession to Generosa, the latter filed suit for specific performance. As a result of
the sale of the lot to said defendants sppellants being null and void, there is
impossibity that they can comply with their commitment to Generosa, the latter then
seek the rescission of the contract plus damages.The defendants-appellants contend
that Generosas action had prescribed, considering that she had only four years from
May 29, 1946 to rescind the transaction.
ISSUE: Whether or not the action to rescind the obligation has prescribed.
HELD: Article 1191 of the Civil Code provides that an injured party may also seek
rescission if the fulfillment should have become impossible. The cause of action to
claim rescission arises when the fulfillment of the obligation became imppossible
when the court declared that the sale was null and void. The Generosa cannot be
assailed on the ground that she slept on her rights.

part of the Piedad Estate in Quezon City, from Juan Porciuncula. Thereafter, the
successors-in-interest of the latter filed Civil Case No. 174 for annulment of the sale
and the cancellation of TCT No. 69475, which had been issued to defendantsappellants by virtue of the disputed sale. The Court rendered a Decision annulling the
saleThe said judgment was affirmed by the Appellate Court and had attained finality.
Meanwhile, during the pendency of the case above, defendants sold the said two lots
to Petitioner Generosa Ayson-Simon for Php3,800.00 plus Php800.00 for facilitating
the issuance of the new titles in favor of petitioner. Due to the failure of the
defendants to deliver the said lots, petitioner filed a civil case for specific
performance. The trial court rendered judgment to petitioners favor. However,
defendants could not deliver the said lots because the CA had already annulled the
sale of the two lots in Civil Case No. 174. Thus, petitioner filed another civil case for
the rescission of the contract.
Defendants were contending that petitioner cannot choose to rescind the contract
since petitioner chose for specific performance of the obligation. Also, even though
petitioner can choose to rescind the contract, it would not be possible, because it has
already prescribed.
ISSUES:
1. Can petitioner choose to rescind the contract even after choosing for the specific
performance of the obligation?
2. Had the option to rescind the contract prescribed?
RULING:
1. Yes. The rule that the injured party can only choose between fulfillment and
rescission of the obligation, and cannot have both, applies when the obligation is
possible of fulfillment. If, as in this case, the fulfillment has become impossible, Article
1191 allows the injured party to seek rescission even after he has chosen fulfillment.
2. No. Article 1191 of the Civil Code provides that the injured party may also seek
rescission, if the fulfillment should become impossible. The cause of action to claim
rescission arises when the fulfillment of the obligation became impossible when the
Court of First Instance of Quezon City in Civil Case No. 174 declared the sale of the
land to defendants by Juan Porciuncula a complete nullity and ordered the
cancellation of Transfer Certificate of Title No. 69475 issued to them. Since the two
lots sold to plaintiff by defendants form part of the land involved in Civil Case No. 174,
it became impossible for defendants to secure and deliver the titles to and the
possession of the lots to plaintiff. But plaintiff had to wait for the finality of the decision
in Civil Case No. 174,
According to the certification of the clerk of the Court of First Instance of Quezon City
(Exhibit "E-2"), the decision in Civil Case No. 174 became final and executory "as per
entry of Judgment dated May 3, 1967 of the Court of Appeals." The action for
rescission must be commenced within four years from that date, May 3, 1967. Since
the complaint for rescission was filed on August 16, 1968, the four year period within
which the action must be commenced had not expired.

AYSON-SIMON VS. ADAMOS AND FERIA

G.R. NO. L-39378 AUGUST 28, 1984
FACTS: Defendants, Nicolas Adamos and Vicente Feria, purchased two lots forming