BAUTISTA vs F.O. Borromeo, Inc.
PELAYO vs LAURON
Facts:
On September 15, 1964, the Ford truck of
petitioner Roberto Tan Ting driven by
Abelardo Bautista, the other petitioner, and the
Volkswagen delivery panel truck owned by
respondent Federico O. Borromeo, Inc.
(hereinafter called Borromeo) were involved in a
traffic accident along Epifanio de los Santos
Avenue. In said traffic accident, Quintin Delgado, a
helper in Borromeo's delivery panel truck,
sustained injuries which resulted in his
instantaneous death. Borromeo had to pay
Delgado's widow the sum of P4,444 representing
the compensation (death benefit) and funeral
expenses due Delgado under the Workmen's
Compensation Act.
On June 17, 1965, upon the averment that the said
vehicular accident was caused by petitioners'
negligence, Borromeo started suit in the Municipal
Court of Mandaluyong, Rizal to recover from
petitioners the compensation and funeral expenses
it paid to the widow of Quintin Delgado.
Ruling:
Borromeo paid the widow of its employee, Quintin
Delgado, compensation (death benefit) and funeral
expenses for the latter's death while in the course of
employment. This obligation arises from law —
Section 2 of the Workmen's Compensation Act.
It is evident from the foregoing that "if compensation
is claimed and awarded, and the employer pays it, the
employer becomes subrogated to and acquires, by
operation of law, the worker's rights against the
tortfeasor.
No need then there is to establish any contractual
relationship between Quintin Delgado and herein
petitioners. Indeed, there is none. The cause of action
of respondent corporation is one which does not
spring from a creditor-debtor relationship. It arises by
virtue of its subrogation to the right of Quintin
Delgado to sue the guilty party. Such subrogation is
sanctioned by the Workmen's Compensation Law
aforesaid. It is as a subrogee to the rights of its
deceased employee, Quintin Delgado,
that Borromeo filed a suit against petitioners in the
Municipal Court of Mandaluyong, Rizal.
Facts:
On the 23d of November, 1906, Arturo Pelayo, a
physician-residing in Cebu, filed a complaint against
Marcelo Lauron and Juana Abella setting forth that
on or about the 13th of October of said year, at night,
the plaintiff was called to the house of the
defendants, situated in San Nicolas, and that upon
arrival he was requested by them to render medical
assistance to their daughter-in-law who was about to
give birth to a child; that therefore, and after
consultation with the attending physician, Dr. Escano,
it was found necessary, on account of the difficult
birth, to remove the fetus by means of forceps which
operation was performed by the plaintiff, who also
had to remove the after birth, in which service he was
occupied until the following morning, and that
afterwards, on the same day, he visited the patient
several times; that the just and equitable value of the
services rendered by him was P500, which the
defendants refuse to pay without alleging any good
reason there for.
It becomes necessary to decide who is bound to pay
the bill, whether the father and mother-in-law of the
patient, or the husband of the latter. ||
Ruling:
In the face of the above legal precepts it is
unquestionable that the person bound to pay the fees
due to the plaintiff for the professional services that
he rendered to the daughter-in-law of the defendants
during her childbirth is the husband of the patient.
According to article 1089 of the Civil Code,
obligations are created by law, by contracts, by
quasi-contracts, and by illicit acts and omissions or
by those in which any kind of fault or negligence
occurs.
Obligations arising from law are not presumed.
Those expressly determined in the code or in
special laws, etc., are the only demandable ones.
Obligations arising from contracts have legal force
between the contracting parties and must be
fulfilled in accordance with their stipulations. (Arts.
1090 and 1091.)
The rendering of medical assistance in case of
illness is comprised among the mutual obligations
to which spouses are bound by way of mutual Perez vs Pomar 2 Phil. 682 (1903)
support. (Arts. 142 and 143.).
If every obligation consists in giving, doing, or not FACTS
doing something (art. 1088), and spouses are
mutually bound to support each other, there can be
Perez filed in the Court of First Instance of Laguna a
no question but that, when either of them by
complaint asking the Court to determine the amount
reason of illness should be in need of medical
due him for services rendered as an interpreter for
assistance, the other is under the unavoidable
Pomar and for judgement to be rendered in his favor.
obligation to furnish the necessary services of a
physician in order that health may be restored, and
he or she may be freed from the sickness by which Pomar, on his part, denied having sought the services
life is jeopardized; the party bound to furnish such of Perez, contending that, Perez being his friend, he
support is therefore liable for all expenses, only accepted the services for they were rendered in
including the fees of the medical expert for his a spontaneous, voluntary and officious manner.
professional services. This liability originates from
the above-cited mutual obligation which the law
has expressly established between the married ISSUE
couple.
Whether or not consent has been given by the other
party.

HELD

Yes. It does not appear that any written contract was

entered into between the parties for the employment
of the plaintiff as interpreter, or that any other
innominate contract was entered into, but whether
the plaintiff’s services were solicited or whether they
were offered to the defendant for his assistance,
inasmuch as these services were accepted and made
use of by the latter, there was a tacit and mutual
consent as to the rendition of services. This gives rise
to the delegation upon the person benefited by the
services to make compensation thereof, since the
bilateral obligation to render services as interpreter,
on the one hand, and on the other to pay for the
services rendered is thereby incurred.

As was held in the Supreme Court of Spain in its

decision of February 12, 1889, it stated that “not only
is there an express and tacit consent which produces
real contract but there is also a presumptive consent
which is the basis of quasi-contracts this giving rise to
the multiple judicial relations which result in
obligations for the delivery of a thing or the rendition
of a service.
MARITIME CO OF THE PH vs REPARATIONS
COMMISSION
Facts:
Maritime Co alleged that shipments of reparations
goods were loaded in three of its vessels consigned to
defendant (Reparations Commission), with
corresponding freight charges amounting to
P228,250.58.
Then came the allegation that said vessels arrived in
Manila and discharged all such shipment of
reparations goods, which were duly delivered to and
received by defendant as consignee in good order and
condition, but defendant failed and refused to pay,
notwithstanding repeated demands, the total
amount of the freight charge, above-mentioned.
There was no denial in the answer of defendant filed
on September 10, 1965 of the facts as alleged, but
Section 11 of the Reparations Act was invoked to
show that it was not liable at all for the freight
charges, a matter which, according to defendant, was
fully known to plaintiff as it had in several instances
collected, freight charges from the end-users
concerned
Ruling:
It is to be recognized that a large degree of autonomy
is accorded contracting parties. Not that it is
unfettered. They may, according to the Civil Code,
"establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs,
public order, or public policy."(Art. 1306) The law
thus sets limits. It is a fundamental requirement
that the contract entered into must be in accordance
with, and not repugnant to, an applicable statute. Its
terms are embodied therein. The contracting parties
need not repeat them. They do not even have to be
referred to. Every contract thus contains not only
what has been explicitly stipulated, but the statutory
provisions that have any bearing
on the matter.||| (Maritime Company of the
Philippines v. Reparations Commission, G.R. No. L-
29203, [July 26, 1971], 148-B PHIL 65-76)
"It is an elementary rule of contracts that the laws, in
force at the time the contract was made, enter into
and govern it." 14 This is how the matter is put in the
latest decision: "The principle is thus well-settled that
an existing law enters into and forms part of a valid
contract without the need for the parties expressly
making reference to it. Only thus could its validity
insofar as some of its provisions are concerned be
assured."
Section 11 of Republic Act No. 1789 as
amended. 18 More specifically: "The insurance, ocean
freight and other expenses incident to importation
shall be paid by the end-user in accordance with usual
business practice." The Last sentence is equally plain:
"Nothing herein shall be construed as exempting the
end-user from paying in full all the necessary costs,
charges and expenses incident to the application for
and the procurement, production, delivery and
acquisition, of, the goods concerned." The above
provisions, then, form part of and must be read into
the shipping contracts between plaintiff-appellant
and defendant-appellee, unless they could be "clearly
excluded therefrom", assuming "such exclusion is
allowed."
There is thus no persuasive force to the first error
imputed to the lower court for their being applied to
the contractual relationship between the parties.
There is no showing that the shipping contracts
between them are clearly excluded from the law,
much less that such exclusion could be allowed. The
lower court had no choice then. It yielded obedience
to the law. What it did certainly cannot be stigmatized
as error.
It is in that sense that reliance by plaintiff-appellant
on the force and effect to be given the usual contracts
between shipper and carriers, while finding support
in the applicable provisions both of the Civil Code and
the Code of Commerce, is far from persuasive. As was
pointed out in the equally forceful brief of defendant-
appellee, to so view the matter is to ignore what has
been explicitly set forth in Section 11 of the
Reparations Act which is controlling.
NHA vs CA (2004)
Facts:
On June 13, 1986, respondent Grace Baptist Church
(hereinafter, the Church) wrote a letter to petitioner
National Housing Authority (NHA), manifesting its
interest in acquiring Lots 4 and 17 of the General
Mariano Alvarez Resettlement Project in Cavite.[4] In
its letter-reply dated July 9, 1986, petitioner informed
respondent:
In reference to your request letter dated 13 June
1986, regarding your application for Lots 4 and 17,
Block C-3-CL, we are glad to inform you that your
request was granted and you may now visit our
Project Office at General Mariano Alvarez for
processing of your application to purchase said lots.
We hereby advise you also that prior to approval of
such application and in accordance with our existing
policies and guidelines, your other accounts with us
shall be maintained in good standing.[5]
Respondent entered into possession of the lots and
introduced improvements thereon.[6]
On February 22, 1991, the NHA's Board of Directors
passed Resolution No. 2126, approving the sale of the
subject lots to respondent Church at the price of
P700.00 per square meter, or a total price of
P430,500.00.[7] The Church was duly informed of this
Resolution through a letter sent by the NHA.[8]
On April 8, 1991, the Church tendered to the NHA a
manager's check in the amount of P55,350.00,
purportedly in full payment of the subject
properties.[9] The Church insisted that this was the
price quoted to them by the NHA Field Office, as
shown by an unsigned piece of paper with a
handwritten computation scribbled
thereon.[10] Petitioner NHA returned the check,
stating that the amount was insufficient considering
that the price of the properties have changed. The
Church made several demands on the NHA to accept
their tender of payment, but the latter refused. Thus,
the Church instituted a complaint for specific
performance and damages against the NHA with the
Regional Trial Court of Quezon City,[11] where it was
docketed as Civil Case No. Q-91-9148.
Ruling:
It is a fundamental rule that contracts, once
perfected, bind both contracting parties, and
obligations arising therefrom have the force of law
between the parties and should be complied with in
good faith. [19] However, it must be understood that
contracts are not the only source of law that govern
the rights and obligations between the parties. More
specifically, no contractual stipulation may contradict
law, morals, good customs, public order or public
policy.[20] Verily, the mere inexistence of a contract,
which would ordinarily serve as the law between the
parties, does not automatically authorize disposing of
a controversy based on equitable principles
alone. Notwithstanding the absence of a perfected
contract between the parties, their relationship may
be governed by other existing laws which provide for
their reciprocal rights and obligations.
It must be remembered that contracts in which the
Government is a party are subject to the same rules
of contract law which govern the validity and
sufficiency of contract between individuals. All the
essential elements and characteristics of a contract in
general must be present in order to create a binding
and enforceable Government contract.[21]
It appearing that there is no dispute that this case
involves an unperfected contract, the Civil Law
principles governing contracts should apply.
In the case at bar, the offer of the NHA to sell the
subject property, as embodied in Resolution No.
2126, was similarly not accepted by the
respondent.[24] Thus, the alleged contract involved in
this case should be more accurately denominated
as inexistent. There being no concurrence of the offer
and acceptance, it did not pass the stage of
generation to the point of perfection.[25] As such, it is
without force and effect from the very beginning or
from its incipiency, as if it had never been entered
into, and hence, cannot be validated either by lapse
of time or ratification.[26] Equity can not give validity
to a void contract,[27] and this rule should apply with
equal force to inexistent contracts.
CRUZ vs TUASON & CO. G.R. No. L-23749 April 29,
1977
FACTS:
As requested by the Deudors, the family of Telesforo
Deudor who laid claim in question on the strength of
an informacion posesoria, Cruz made permanent
improvements on the said land having an area of
more or less 20 quinones.
The improvements were valued at P30,400 and for
which he incurred expenses amounting to P7,781.74
In 1952, Tuason & Co. availed of Cruz’ services as an
intermediary with the Deudors, to work for the
amicable settlement in a civil case. The said case
involved 50 quiones of land, of which the 20 quiones
of land mentioned formed part.
A compromise agreement between the Deudors and
Tuason & Co. was entered into on 1963 which was
approved by court.
Cruz alleged that Tuason & Co. promised to convey
him the 3,000 sq. meters of land occupied by him
which was part of the 20 quiones of land within 10
years from the date of signing of the compromise
agreement between the Deudors and the latter as
consideration of his services. The said land was not
conveyed to him by Tuason & Co.
expense of another, Article 2124 creates the legal
fiction of a quasi-contract precisely because of the
absence of any actual agreement between the parties
concerned. Corollarily, if the one who claims having
enriched somebody has done so pursuant to a
contract with a third party, his cause of action should
be against the latter, who in turn may, if there is any
ground therefor, seek relief against the party
benefited. It is essential that the act by which the
defendant is benefited must have been voluntary and
unilateral on the part of the plaintiff. As one
distinguished civilian puts it, "The act is voluntary.
because the actor in quasi-contracts is not bound by
any pre-existing obligation to act. It is unilateral,
because it arises from the sole will of the actor who is
not previously bound by any reciprocal or bilateral
agreement. The reason why the law creates a juridical
relations and imposes certain obligation is to prevent
a situation where a person is able to benefit or take
advantage of such lawful, voluntary and unilateral
acts at the expense of said actor." In the case at bar,
since appellant has a clearer and more direct recourse
against the Deudors with whom he had entered into
an agreement regarding the improvements and
expenditures made by him on the land of appellees.
It Cannot be said, in the sense contemplated in Article
2142, that appellees have been enriched at the
expense of appellant.

Cruz further alleged that Tuason & Co. was unjustly

enriched at his expense since they enjoyed the
benefits of the improvements he made on the land
acquired by the latter.

The trial court dismissed the case on the ground that

there was no cause of action. Hence, this appeal.

ISSUE: Whether or not a presumed quasi-contract be

emerged as against one part when the subject matter
thereof is already covered by a contract with another
party.

HELD: From the very language of this provision, it is

obvious that a presumed quasi-contract cannot
emerge as against one party when the subject matter
thereof is already covered by an existing contract with
another party. Predicated on the principle that no one
should be allowed to unjustly enrich himself at the
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs. ROGELIO BAYOTAS y CORDOVA, accused-
appellant
G.R. No. 102207. September 2, 1994
FACTS:
Rogelio Bayotas, accused and charged with Rape,
died on February 4, 1992 due to cardio respiratory
arrest. The Solicitor General then submitted a
comment stating that the death of the accused does
not excuse him from his civil liability (supported by
the Supreme Court’s decision in People vs
Sendaydiego). On the other hand, the counsel of the
accused claimed that in the Supreme Court’s decision
in People vs Castillo, civil liability is extinguished if
accused should die before the final judgement is
rendered.
ISSUE:
Whether or not the death of the accused pending
appeal of his conviction extinguish his civil liability.
RULING:
The Court decided on this case through stating the
cases of Castillo and Sendaydiego. In the Castillo case,
the Court said that civil liability is extinguished only
when death of the accused occurred before the
final judgement. Judge Kapunan further stated that
civil liability is extinguished because there will be
“no party defendant” in the case. There will be no
civil liability if criminal liability does not exist. Further,
the Court stated “it is, thus, evident that… the rule
established was that the survival of the
civil liability depends on whether the same can be
predicated on the sources of obligations other than
delict.
In the Sendaydiego case, the Court
issued Resolution of July 8, 1977 where it states that
civil liability will only survive if death came after the
final judgement of the CFI of Pangasinan. However,
Article 30 of the Civil Code could
not possibly lend support to the ruling in
Sendaydiego. Civil liability ex delicto is extinguished
by the death of the accused while his conviction is on
appeal. The Court also gave a summary on which
cases should civil liability be extinguished, to wit:
Death of the accused pending appeal of
his conviction extinguishes his criminal liability as
well as the civil liability based solely thereon.
Therefore, Bayotas’s death extinguished his criminal
and civil liability based solely on the act complained
of.
People vs Susan Sayo y Reyes
That on November 15, 2005, in Pasig City, and within
the jurisdiction of the Honorable Court,
accused Susan Sayo, willfully and unlawfully, did then
and there, recruit and transport minors [AAA], 6 15
years old, [BBB], 7 16 years old, together with
[CCC], 8 by taking advantage of their vulnerability, for
the purpose of prostitution and sexual exploitation;
while accused Alfredo Roxas, in conspiracy with
accused Sayo, did then and there, willfully, and
unlawfully, own, manage and operate a room in his
apartment in Pasig City used as a prostitution den,
receive and harbor said trafficked persons, also by
taking advantage of their vulnerability and for the
purpose of prostitution and sexual
exploitation.||| (People v. Sayo y Reyes, G.R. No.
227704, [April 10, 2019])
Accused-appellants filed a Notice of Appeal 19 on
July 30, 2015, which was given due course by the
CA in its Resolution 20 dated August 20, 2015. Both
plaintiff-appellee and accused-appellants
manifested before the Court that they would not be
filing supplemental briefs. 21
In a Certification 22 issued on May 12, 2017, the
Correctional Institution for Women, Bureau of
Corrections, certified that Sayo had died on
November 30, 2011 due to multiple organ failure,
secondary to cervical cancer, attaching thereto the
Certificate of Death 23 issued by the Office of the
Civil Registrar.
Ruling:
Sayo's death extinguished her
criminal and civil liability
At the outset, the Court notes that Sayo had
already died on November 30, 2011. Thus, the
death of Sayo extinguished her criminal liability.
Likewise, the civil liability of Sayo arising from her
criminal liability is extinguished upon her death. The
rules on the effect of the death of the accused on civil
liability pending appeal are summarized in People v. them||| (Cruzado v. Bustos, G.R. No. 10244,
Bayotas. [February 29, 1916], 34 PHIL 17-38)

Death of the accused pending appeal of his conviction Defendant, as a special defense, alleged that the title
extinguishes his criminal liability as well as the civil to the said land, produced by the plaintiff, was not a
liability based solely thereon. As opined by Justice lawful one, for the reason that only a simulated sale
Regalado, in this regard, "the death of the accused of the land was made by and between herself and the
prior to final judgment terminates his criminal liability deceased Agapito Geronimo Cruzado, plaintiff's
and only the civil liability directly arising from and father, and that for more than thirty years preceding
based solely on the offense committed, i.e., civil the present time she had been the sole, exclusive, and
liability ex delicto in senso strictiore. lawful owner of the said parcel of land in question;
that she had been holding it quietly, peaceably,
Corollarily, the claim for civil liability survives
publicly and in good faith||| (Cruzado v. Bustos, G.R.
notwithstanding the death of accused, if the same
No. 10244, [February 29, 1916], 34 PHIL 17-38)
may also be predicated on a source of obligation
other than delict. Article 1157 of the Civil
During his lifetime Agapito G. Cruzado aspired to hold
Code enumerates these other sources of obligation
the office of procurador in the Court of First Instance
from which the civil liability may arise as a result of
of Pampanga, but notwithstanding that he possessed
the same act or omission:
the required ability for the discharge of the duties of
a) Law that position, he was unable to give the required
bond, an indispensable condition for his
b) Contracts
appointment, as he was possessed of no means or
c) Quasi-contracts real property wherewith to guarantee the proper
discharge of his duties in the manner prescribed by
d) x x x
the laws then in force.||| (Cruzado v. Bustos, G.R. No.
e) Quasi-delicts 10244, [February 29, 1916], 34 PHIL 17-38)
Where the civil liability survives, as explained in
Ruling:
Number 2 above, an action for recovery therefor may
be pursued but only by way of filing a separate civil
Facts conclusively prove that
action and subject to Section 1, Rule 111 of the 1985
Estefania Bustos executed the deed of sale Exhibit A
Rules on Criminal Procedure as amended. This
in favor of the deceased Cruzado in order to enable
separate civil action may be enforced either against
the latter, by showing that he was a property owner,
the executor/administrator or the estate of the
to hold the office of procurador. This position he held
accused, depending on the source of obligation upon
for many years, thanks to the liberality of the
which the same is based as explained above.
pretended vendor, who, notwithstanding the
statements contained in the deed of sale, does not
appear to have been paid anything as a result of the
CRUZADO vs BUSTOS
sham sale, a sale which was effected, not in prejudice
or fraud of any person, nor those who were entitled
Plaintiff alleged was the owner of certain rural
to hold Cruzado liable for the proper discharge of the
property situated in the barrio of Dolores, formerly
duties of his office, because, had the need arisen, any
San Isidro, of the municipality of Bacolor, Pampanga,
liability of his could have been covered by the value
containing an area of 65 balitas and bounded as set
of the land, the sale of which was fictitiously set forth
forth in the complaint; that Estefania Bustos, during
in that deed as lawfully belonging to Cruzado, and
her lifetime, and now the administrator of her estate,
then Estefania Bustos would have had no right either
together with the other defendant, Manuel Escaler,
to object to or escape the consequences of that
had, since the year 1906 up to the present, been
alienation, although simulated.||| (Cruzado v.
detaining the said parcel of land, and had refused to
Bustos, G.R. No. 10244, [February 29, 1916], 34 PHIL
deliver the possession thereof to plaintiff and to
17-38)
recognize his ownership of the same,
notwithstanding the repeated demands made upon
The plaintiff, Santiago Cruzado, a son of the
vendee, claiming that the said land was being
detained by the vendor, or by the administrator of
the latter's estate on her death after the
commencement of these proceedings, and by the
other defendant Manuel Escaler, prayed the court
to declare him to be the owner thereof, to order
the defendants to return it to him and to pay him
for losses and damages, and the costs.
The action brought by the plaintiff is evidently one
for recovery of possession, founded on the right
transmitted to him by his father at his death, — a
right arising from the said simulated deed of sale of
the land in question. This action is of course
improper, not only because the sale was simulated,
but also because it was not consummated.
A contract of sale was simulated for the sole purpose
of making it appear that the vendee acquired for the
sum of P2,200, and became the owner of a piece of
real properly, which was to serve him as security to
enable him to hold the office of procurador of a Court
of First Instance, pursuant to the statutes in force
during the previous sovereignty. Such contract was
perfect and binding upon both contracting parties, it
appearing in the public instrument executed for the
purpose that the vendor and the vendee agreed upon
the property sold and on the price stipulated; but
such contract cannot be considered to have been
consummated, unless it is proved that the purchaser
paid the price and took possession of the
property.||| (Cruzado v. Bustos, G.R. No. 10244,
[February 29, 1916], 34 PHIL 17-38)
Even though the said fictitious deed of sale be
considered valid and effective, as being a perfect and
binding contract between the contracting parties, yet
when the vendee has not paid the price nor taken
possession of the property which continued in the
possession of the vendors until they later sold it to a
third person, such contract cannot give rise to an
action for the recovery of possession. Such an action
arises from a consummated contract and the contract
is what confers a title which transfers the
ownership.||| (Cruzado v. Bustos, G.R. No. 10244,
[February 29, 1916], 34 PHIL 17-38)
The vendee of a piece of real property acquired by
means of a simulated purchase, who has neither paid
the price of the said property nor taken possession of
it, cannot convey to his successors in interest any
property right or title therein, but only the right to
demand in a personal action the fulfillment of the
perfected contract of sale; and he cannot be
permitted to assert any right of ownership, nor to
bring an action for recovery of possession, for the
reason that said contract of sale was not
consummated.||| (Cruzado v. Bustos, G.R. No.
10244, [February 29, 1916], 34 PHIL 17-38)
AREOLA vs CA
On June 29, 1985, seven months after the
issuance of petitioner Santos Areola's Personal
Accident Insurance Policy No. PA-20015, respondent
insurance company unilaterally cancelled the same
since company records revealed that petitioner-
insured failed to pay his premiums.
On August 3, 1985, respondent insurance
company offered to reinstate same policy it had
previously cancelled and even proposed to extend its
lifetime to December 17, 1985, upon a finding that
the cancellation was erroneous and that the
premiums were paid in full by petitioner-insured but
were not remitted by Teofilo M. Malapit, respondent
insurance company's branch manager. LLphil
||| (Areola v. Court of Appeals, G.R. No. 95641,
[September 22, 1994], 306 PHIL 656-667)
Ruling:
Malapit's fraudulent act of misappropriating the
premiums paid by petitioner-insured is beyond
doubt directly imputable to respondent insurance
company. A corporation, such as respondent
insurance company, acts solely thru its employees.
The latters' acts are considered as its own for which
it can be held to account. 11 The facts are clear as to
the relationship between private respondent
insurance company and Malapit. As admitted by
private respondent insurance company in its
answer, 12 Malapit was the manager of its Baguio
branch. It is beyond doubt that he represented its
interests and acted in its behalf. His act of receiving
the premiums collected is well within the
province of his authority. Thus, his receipt of said
premiums is receipt by private respondent insurance
company who, by provision of law, particularly under
Article 1910 of the Civil Code, is bound by the
acts of its agent.||| (Areola v. Court of Appeals, G.R.
No. 95641, [September 22, 1994], 306 PHIL 656-667)
 Consequently, respondent insurance
company is liable by way of damages for the
fraudulent acts committed by Malapit that gave
occasion to the erroneous cancellation of subject
insurance policy. Its earlier act of reinstating the
insurance policy can not obliterate the injury inflicted
on petitioner-insured. Respondent company should
be reminded that a contract of insurance creates
reciprocal obligations for both insurer and insured.
Reciprocal obligations are those which arise from the
same cause and in which each party is both a debtor
and a creditor of the other, such that the
obligation of one is dependent upon the
obligation of the other. 15
Under the circumstances of instant case, the
relationship as creditor and debtor between the
parties arose from a common cause; i.e., by
reason of their agreement to enter into a
contract of insurance under whose terms,
respondent insurance company promised to extend
protection to petitioner-insured against the risk
insured for a consideration in the form of premiums
to be paid by the latter. Under the law governing
reciprocal obligations, particularly the second
paragraph of Article 1191, 16 the injured party,
petitioner-insured in this case, is given a choice
between fulfillment or rescission of the obligation in
case one of the obligors, such as respondent
insurance company, fails to comply with what is
incumbent upon him. However, said article entitles
the injured party to payment of damages,
regardless of whether he demands fulfillment or
rescission of the obligation. Untenable then is
respondent insurance company's argument, namely,
that reinstatement being equivalent to
fulfillment of its obligation, divests petitioner-
insured of a rightful claim for payment of damages.
Such a claim finds no support in our laws on
obligations and contracts. cdphil
The nature of damages to be awarded,
however, would be in the form of nominal
damages 17 contrary to that granted by
the court below. Although the erroneous
cancellation of the insurance policy constituted a
breach of contract, private respondent insurance
company, within a reasonable time took steps to
rectify the wrong committed by reinstating the
insurance policy of petitioner. Moreover, no actual or
substantial damage or injury was inflicted on
petitioner Areola at the time the insurance policy was
cancelled.
PICART vs SMITH
SINGSON vs BPI
On May 8, 1963, the Singsong commenced the
present action against the Bank and its president,
Freixas, for damages in consequence of said illegal
freezing of plaintiffs' account.
After appropriate proceedings, the CFI Mla rendered
judgment dismissing the complaint upon the ground
that plaintiffs cannot recover from the defendants
upon the basis of a quasi-delict, because the relation
between the parties is contractual in nature.
Ruling:
the existence of a contract between the parties does
not bar the commission of a tort by the one
against the order and the consequent
recovery of damages therefor. 2 Indeed, this view has
been in effect, reiterated in a comparatively recent
case. Thus, in Air France vs. Carrascoso, 3 involving an
airplane passenger who, despite his first- class ticket,
had been illegally ousted from his first-class
accommodation, and compelled to take a seat
in the tourist compartment, was held entitled to
recover damages from the air- carrier,
upon the ground of tort on the latter's part, for,
although the relation between a passenger
and the carrier is "contractual both in origin and
nature . . . the act that breaks the contract may also
be a tort".||| (Singson v. Bank of the Philippine
Islands, G.R. No. L-24837, [June 27, 1968], 132 PHIL
597-600)
CALALAS vs CA
Private respondent Eliza Jujeurche G. Sunga took a
passenger jeepney owned and operated by petitioner
Vicente Calalas. As the jeepney was already full,
Calalas gave Sunga an stool at the back of the door at
the rear end of the vehicle. Along the way, the
jeepney stopped to let a passenger off. Sunga stepped
down to give way when an Isuzu truck owned by
Francisco Salva and driven by Iglecerio Verena
bumped the jeepney. As a result, Sunga was injured.
Sunga filed a complaint against Calalas for violation of
contract of carriage. Calalas filed a third party
complaint against Salva. The trial court held Salva
liable and absolved Calalas, taking cognisance of
another civil case for quasi-delict wherein Salva and
Verena were held liable to Calalas.
On appeal, the Court of Appeals reversed the
ruling of the lower court on the ground that Sunga's
cause of action was based on a contract of carriage,
not quasi-delict, and that the common carrier failed
to exercise the diligence required under the Civil
Code||| (Calalas v. Court of Appeals, G.R. No.
122039, [May 31, 2000], 388 PHIL 146-155)
Ruling:
quasi-delict, also known as culpa aquiliana or culpa
extra contractual, has as its source the
negligence of the tortfeasor. The second,
breach of contract or culpa contractual, is premised
upon the negligence in the performance of a
contractual obligation. Consequently, in quasi-delict,
the negligence or fault should be clearly established
because it is the basis of the action, whereas in
breach of contract, the action can be prosecuted
merely by proving the existence of the contract and
the fact that the obligor, in this case the common
carrier, failed to transport his passenger safely to his
destination. In case of death or injuries to passengers,
Art. 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or to have
acted negligently unless they prove that they
observed extraordinary diligence as defined in Arts.
1733 and 1755 of the Code. This provision necessarily
shifts to the common carrier the
burden of proof.||| (Calalas v. Court of Appeals, G.R.
No. 122039, [May 31, 2000], 388 PHIL 146-155)
The doctrine of proximate cause is applicable only in
actions for quasi-delict, not in actions involving
breach of contract. The doctrine is a device for
imputing liability to a person where there is no
relation between him and another party. In such a
case, the obligation is created by law itself. But,
where there is a pre-existing contractual relation
between the parties, it is the parties themselves who
create the obligation, and the function of the law is
merely to regulate the relation thus created. Insofar
as contracts of carriage are concerned, some aspects
regulated by the Civil Code are those respecting the
diligence required of common carriers with regard to
the safety of passengers as well as the
presumption of negligence in cases of death or injury
to passengers.||| (Calalas v. Court of Appeals, G.R.
No. 122039, [May 31, 2000], 388 PHIL 146-155)
PHILIPPINE RABBIT BUS LINE vs IAC
1.The passengers boarded the jeep owned by the
Mangune Spouses and driven by Manalo to bring
them to Carmen Rosales Pangasinan.
2. Upon reaching barrio Sinayoan Tarlack,The right
rear wheel of the truck was detouch so the driver
steps on the brake as a result of which, the jeep
who is running unbalance made a uturn so that the
front part face the south where it come from and its
rear face the north where it is going.
3. The bus of the petitioner driven by Delos Reyes
bump the jeep resulting in the death of the three
passengers of the jeepney and injuries to others.
Ruling:
After a minute scrutiny of the factual matters and
duly proven evidence, We find that the proximate
cause of the accident was the negligence of Manalo
and spouses Mangune and Carreon. They all failed to
exercise the precautions that are needed
precisely pro hac vice.
In culpa contractual, the moment a passenger dies or
is injured, the carrier is presumed to have been at
fault or to have acted negligently, and this disputable
presumption may only be overcome by evidence that
he had observed extra-ordinary diligence as
prescribed in Articles 1733, 1755 and 1756 of the New
Civil Code 2 or that the death or injury of the
passenger was due to a fortuitous event 3 (Lasam v.
Smith, Jr., 45 Phil. 657).
The negligence of Manalo was proven during the trial
by the unrebutted testimonies of Caridad Pascua,
Police Investigator Tacpal, Police Corporal Cacalda,
his (Manalo's) conviction for the crime of Multiple
Homicide and Multiple Serious Injuries with Damage
to Property thru Reckless Imprudence, and the
application of the doctrine of res ipsa loquitur, supra.
||| (Philippine Rabbit Bus Lines, Inc. v. Intermediate
Appellate Court, G.R. Nos. 66102-04, [August 30,
1990], 267 PHIL 188-207)
In any event, "[i]n an action for damages against
the carrier for his failure to safely carry his
passenger to his destination, an accident caused
either by defects in the automobile or through
 the negligence of its driver, is not a caso
fortuito which would avoid the carrier's liability
for damages (Son v. Cebu Autobus Company, 94
Phil. 892 citing Lasam, et al. v. Smith, Jr., 45 Phil.
657; Necesito, etc. v. Paras, et al., 104 Phil. 75).
The trial court was therefore right in finding that
Manalo and spouses Mangune and Carreon were
negligent. However, its ruling that spouses Mangune
and Carreon are jointly and severally liable with
Manalo is erroneous. The driver cannot be held jointly
and severally liable with the carrier in case of breach
of the contract of carriage.
Firstly, the contract of carriage is between the carrier
and the passenger, and in the event of contractual
liability, the carrier is exclusively responsible
therefore to the passenger, even if such breach be
due to the negligence of his driver (see Viluan v.
The Court of Appeals, et al., G.R. Nos. L-21477-81,
April 29, 1966, 16 SCRA 742). In other words, the
carrier can neither shift his liability on the contract to
his driver nor share it with him, for his driver's
negligence is his. 4 Secondly, if We make the driver
jointly and severally liable with the carrier, that would
make the carrier's liability personal instead of merely
vicarious and consequently, entitled to recover only
the share which corresponds to the
driver, 5 contradictory to the explicit provision
of Article 2181 of the New Civil Code. 6||| (Philippine
Rabbit Bus Lines, Inc. v. Intermediate Appellate Court,
G.R. Nos. 66102-04, [August 30, 1990], 267 PHIL 188-
207)
MACALINAO vs ONG
Facts:
Macalinao and Ong were employed as utility man and
driver, respectively, at the Genetron International
Marketing (Genetron), a single proprietorship owned
and operated by Sebastian. On 25 April 1992,
Sebastian instructed Macalinao, Ong and two truck
helpers to deliver a heavy... piece of machinery a
reactor/motor for mixing chemicals, to Sebastian's
manufacturing plant in Angat, Bulacan. While in the
process of complying with the order, the vehicle
driven by Ong, Genetron's Isuzu Elf truck with plate
no. PMP-106 hit and bumped the front portion of a...
private jeepney with plate no. DAF-922 along
Caypombo, Sta. Maria, Bulacan at around 11:20 in the
morning
Both vehicles incurred severe damages while the
passengers sustained physical injuries as a
consequence of the collision.[4] Macalinao incurred
the most serious injuries among the passengers of the
truck.
Macalinao's body was paralyzed and immobilized
from the neck down as a result of the accident and
per doctor's advice, his foot was amputated. He also
suffered from bed sores and infection. His
immedicable condition, coupled with the doctor's
recommendation, led his family to... bring him home
where he died on 7 November 1992.
Before he died, Macalinao was able to file an action
for damages against both Ong and Sebastian before
the Regional Trial Court (RTC) of Quezon City, Branch
81.[7] After his death, Macalinao was substituted by
his parents in the action.[8] A criminal case for
reckless imprudence resulting to serious physical
injuries[9] had also been instituted earlier against
Ong but for reasons which do not appear in the
records of this case, trial thereon did not ensue.[10]
After trial in the civil action, the RTC held that based
on the evidence, Ong drove the Isuzu truck in a
reckless and imprudent manner thereby causing the
same to hit the private jeepney. It observed that while
respondents claimed that Ong was driving cautiously
and prudently at... the time of the mishap, no
evidence was presented to substantiate the
claim.[11] It declared Ong negligent and at the same
time, it held that Sebastian failed to exercise the
diligence of a good father of a family in the selection
and supervision of Ong.
Consequently, the trial court pronounced the two of
them jointly liable to pay actual, moral, and
exemplary damages as well as civil indemnity for
Macalinao's death.
the appellate court reversed the findings of the trial
court. It held that the evidence presented by
petitioners was woefully scant to support a verdict of
negligence against Ong. And since respondents'
liability hinged squarely on proof of Ong's negligence,
neither... of them could be held liable for damages to
petitioners.
Issues:
The issue of negligence is factual and, in quasi-delicts,
crucial in the award of damages.[14] In the case at
bar, the crux of the controversy is the sufficiency of
the evidence presented to support a finding of
negligence against Ong.
Ruling:
The petition is meritorious.
In this case, while there is a dearth of testimonial
evidence to enlighten us about what actually
happened, photographs[21] depicting the relative
positions of the vehicles immediately after the
accident took place do exist. It is well established
that... photographs, when duly verified and shown by
extrinsic evidence to be faithful representations of
the subject as of the time in question, are, in the
discretion of the trial court, admissible in evidence as
aids in arriving at an understanding of the evidence,
the situation or... condition of objects or premises or
the circumstances of an accident.
While ending up at the opposite lane is not conclusive
proof of fault in automobile collisions, the position of
the two vehicles gives rise to the conclusion that it
was the Isuzu truck which hit the private jeepney
rather than the other way around. The smashed front
of the
Isuzu truck is pressed against the private jeepney's
left front portion near the driver's side. The private
jeepney is positioned diagonally in the right lane; its
front at the rightmost corner of the road while its rear
remained a few feet from the demarcation line. Based
on... the angle at which it stopped, the private
jeepney obviously swerved to the right in an
unsuccessful effort to avoid the Isuzu truck. This
would support the statement of the police
investigator that the Isuzu truck lost control[28] and
hit the left front... portion of the private jeepney.[29]
It would also explain why the driver of the private
jeepney died immediately after being brought to the
hospital,[30] since in such a scenario, the brunt of the
collision logically bore down on... him.
Another piece of evidence which supports a finding of
negligence against Ong is the police report of the
incident denoted as Entry No. 04-229 of the Sta.
Maria Police Station. The report states that the Isuzu
truck was the one which hit the left front portion of
the private... jeepney.[31] This piece of evidence was
disregarded by the Court of Appeals on the ground
that entries in police blotters should not be given
significance or probative value as they do not
constitute conclusive proof of the truth thereof.
While not constituting direct proof of Ong's
negligence, the foregoing pieces of evidence justify
the application of res ipsa loquitur, a Latin phrase
which literally means "the thing or the transaction
speaks for itself."
We are convinced that all the above requisites are
present in the case at bar.
No two motor vehicles traversing opposite lanes will
collide as a matter of course unless someone is
negligent, thus, the first requisite for the application
of the doctrine is present. Ong was driving the Isuzu
truck which, from the evidence adduced, appears to
have... precipitated the collision with the private
jeepney. Driving the Isuzu truck gave Ong exclusive
management and control over it, a fact which shows
that the second requisite is also present. No
contributory negligence could be attributed to
Macalinao relative to the happening of... the accident
since he was merely a passenger in the Isuzu truck.
Respondents' allegation that Macalinao was guilty of
contributory negligence for failing to take the
necessary precautions to ensure his safety while
onboard the truck[43] is too specious for... belief
particularly as respondents did not even present any
evidence to prove such allegation. The last requisite
is, therefore, likewise present.
All the requisites for the application of the rule of res
ipsa loquitur are present, thus a reasonable
presumption or inference of Ong's negligence arises.
In consonance with the effect of the doctrine, the
burden of proving due care at the time in question
shifts... to respondents. Unfortunately, as previously
discussed, aside from blanket allegations that Ong
exercised prudence and due care while driving on the
day of the accident, respondents proffered no other
proof. As a consequence, the prima facie finding of
negligence... against Ong, remaining unexplained
and/or uncontradicted, is deemed established. This in
turn warrants a finding that Ong is liable for damages
to petitioners.
Such liability of Ong is solidary with Sebastian
pursuant to Art. 2176 in relation to Art. 2180 of the
Civil Code which provide:
Whenever an employee's negligence causes damage
or injury to another, there instantly arises a
presumption juris tantum that the employer failed to
exercise diligentissimi patris families in the selection
(culpa in eligiendo) or supervision
(culpa in vigilando) of its employees.[45] To avoid
liability for a quasi-delict committed by his employee,
an employer must overcome the presumption by
presenting convincing proof that he exercised the
care and diligence of a good father of a... family in the
selection and supervision of his employee.[46]
On the other hand, due diligence in supervision
requires the formulation of rules and regulations for
the guidance of employees and the issuance of proper
instructions as well as actual implementation and
Facts
1. On June 27, 1986,
petitioner Aerospace Industries, Inc.
purchased five hundred metric tons of
sulfuric acid from private respondent
Philippine Phosphate Fertilizer
Corporation.
2. Petitioner agreed to secure the means of
transport to pick-up the sulfuric acid
from private respondents' loadports in
Basay, Negros Oriental and Sangi, Cebu.
3. On October 3, 1986, petitioner paid the
purchased price of 500 MT of sulfuric
acid. Then, it chartered M/T Sultan
Kayumanggi to carry the agreed volumes
of freight from designated loading areas.
4. But the vessel was able to withdraw a
partial amount of sulfuric acid from
Basay and Sangi because it tilted. And
later, it sank with a total amount of
227.51 MT of sulfuric acid on board.
5. Petitioner sent a demand letter to
private respondent for delivery of the
272.49 MT of sulfuric acid.
6. Petitioner then filed a complaint against
private respondent for specific
performance and/or damages before the
Regional Trial Court of Pasig.
7. The private respondent filed an answer
with counterclaim and alleged that it was
the petitioner which was remiss in the
performance of its obligation in
arranging the shipping requirements of
its purchases and, hence, should pay
damages.
8. Petitioner prevailed in the trial court.
9. However, on appeal, the Court of
Appeals reversed the decision of the trial
court and instead found petitioner guilty
of delay and therefore, liable for
damages.
10. Hence, this petition.
Issue
1. Did the respondent court err in holding
that the petitioner committed breach of
contract, considering that:
a. the petitioner allegedly paid the
full value of its purchases, yet
received only a portion of said
purchases?
b. petitioner and private
respondent allegedly had also
agreed for the purchase and
supply of an additional 227.519
MT of sulfuric acid, hence prior
delay, if any, had been waived?
2. Did the respondent court err in awarding
damages to private respondent?
3. Should expenses for the storage and
preservation of the purchased fungible
goods, namely sulfuric acid, be on seller's
account pursuant to Article 1504 of the
Civil Code?
Ruling
1. No, CA did not err in absolving the private
respondent from liability.
Petitioner, as the buyer, was obligated
under the contract to undertake the
shipping requirements of the cargo from
the private respondent's loadports to the
petitioner's designated warehouse. It
was petitioner which chartered M/T
Sultan Kayumanggi. The vessel was
petitioner's agent. When it failed to
comply with the necessary loading
conditions of sulfuric acid, it was
 incumbent upon petitioner to
immediately replace M/T Sultan
Kayumanggi with another sea worthy
vessel.
Where there has been breach of contract
by the buyer, the seller has a right of
action for damages. Following this rule, a
cause of action of the seller for damages
may arise where the buyer refuses to
remove the goods, such that buyer has to
remove them. Article 1170 of Civil Code
provides: "Those who in the
performance of their obligations are
guilty of fraud, negligence, or delay and
those who in any manner contravene the
tenor thereof, are liable for damages."
2. No, respondent court did not err in
awarding damages to private
respondent.
Where there has been breach of contract
by the buyer, the seller has a right of
action for damages. Following this rule, a
cause of action of the seller for damages
may arise where the buyer refuses to
remove the goods, such that buyer has to
remove them. Article 1170 of Civil Code
provides: "Those who in the
performance of their obligations are
3. No, Article 1504 is not applicable.
guilty of fraud, negligence, or delay and
those who in any manner contravene the
tenor thereof, are liable for damages."
Delay begins from the time the obligee
judicially or extrajudicially demands from
the obligor the performance of the
obligation. Art. 1169 states: "Art. 1169.
Those obliged to deliver or to do
something incur in delay from the time
the obligee judicially or extrajudicially
demands from them the fulfillment of
their obligation." In order that the debtor
may be in default, it is necessary that the
following requisites be present:
(1) that the obligation be
demandable and already
liquidated;
(2) that the debtor delays
performance; and
(3) that the creditor requires the
performance judicially or
extrajudicially.
Records reveal that a tanker ship had to
pick up sulfuric acid in Basay, then
proceed to get the remaining stocks in
Sangi, Cebu. A period of three days
appears to us reasonable for a vessel to
travel between Basay and Sangi.
Logically, the computation of damages
arising from the shipping delay would
then have to be from December 15,
1986, given said reasonable period after
the December 12th letter. More
important, private respondent was
forced to vacate Basay wharf only on
December 15th. Its Basay expenses
incurred before December 15, 1986,
were necessary and regular business
expenses for which the petitioner should
not be obliged to pay. AaID
The general rule that before delivery, the
risk of loss is borne by the seller who is
still the owner, is not applicable in this
case because petitioner had incurred
delay in the performance of its
obligation. Article 1504 of the Civil Code
clearly states: "Unless otherwise agreed,
the goods remain at the seller's risk until
the ownership therein is transferred to
the buyer, but when the ownership
therein is transferred to the buyer the
goods are at the buyer's risk whether
actual delivery has made or not except
that: . . . (2) Where actual delivery had
been delayed through the fault of either
 the buyer or seller the goods are at the
risk of the party at fault.
As pointed out earlier, petitioner is guilty
of delay, after private respondent made
the necessary extrajudicial demand by
requiring petitioner to lift the cargo at its
designated loadports. When petitioner
failed to comply with its obligations
under the contract it became liable for its
shortcomings. Petitioner is indubitably
liable for proven damages.
monitoring of consistent compliance with the
rules.[51] Admonitions to drive carefully without the
corresponding guidelines and monitoring of the
employee do not satisfy the due diligence required by
law either.
In short, Sebastian's claims fall short of what is
required by law to overcome the presumption of
negligence in the selection and supervision of his
employee. The trial court therefore correctly held him
solidarily liable with Ong to petitioners.
In an obvious ploy to relieve himself from liability
should the appellate court's decision be reversed,
Sebastian averred that Macalinao is not entitled to
damages. He anchored his claim on the novel
argument that the provisions of Art. 2180 apply only
when the injured party is... a third person but it has
no application to an employee like Macalinao.[52] He
likewise postulated that recovery from the Social
Security System, State Insurance Fund, Employee's
Compensation Commission, and the Philippine
Medical Care Act, the government... agencies with
which petitioners filed a claim in view of Macalinao's
injury and subsequent death, preclude pursuing
alternate recourse or recovering from other sources
until the former claims have been rejected.[53]
Sebastian is grasping at straws. Art. 2180 makes no
distinction whatsoever whether the claimant is an
employee or a third person relative to the employer.
Ubi lex non distinguit nec nos distinguere debemos.
Where the law does not distinguish, neither... should
we.[54]
Moreover, petitioner's claim against Sebastian is not
based upon the fact of Macalinao's previous
employment with him but on the solidary liability of
the latter for the negligent act of one of his
employees. Such is not precluded by prior claims with
the government agencies... enumerated. One is
based on compulsory coverage of government
benefits while the other is based on a cause of action
provided by law.
AEROSPACE CHEM INDUSTRIES vs CA
Facts
11. On June 27, 1986,
petitioner Aerospace Industries, Inc.
purchased five hundred metric tons of
sulfuric acid from private respondent
Philippine Phosphate Fertilizer Corporation.
12. Petitioner agreed to secure the means of
transport to pick-up the sulfuric acid from
private respondents' loadports in Basay,
Negros Oriental and Sangi, Cebu.
13. On October 3, 1986, petitioner paid the
purchased price of 500 MT of sulfuric acid.
Then, it chartered M/T Sultan Kayumanggi to
carry the agreed volumes of freight from
designated loading areas.
14. But the vessel was able to withdraw a partial
amount of sulfuric acid from Basay and Sangi
because it tilted. And later, it sank with a
total amount of 227.51 MT of sulfuric acid on
board.
15. Petitioner sent a demand letter to private
respondent for delivery of the 272.49 MT of
sulfuric acid.
16. Petitioner then filed a complaint against
private respondent for specific performance
and/or damages before the Regional Trial
Court of Pasig.
17. The private respondent filed an answer with
counterclaim and alleged that it was the
petitioner which was remiss in the
performance of its obligation in arranging
the shipping requirements of its purchases
and, hence, should pay damages.
18. Petitioner prevailed in the trial court.
19. However, on appeal, the Court of
Appeals reversed the decision of the trial
court and instead found petitioner guilty of
delay and therefore, liable for damages.
20. Hence, this petition.
Issue
 4. Did the respondent court err in holding that More important, private respondent was forced to
the petitioner committed breach of vacate Basay wharf only on December 15th. Its Basay
contract, considering that: expenses incurred before December 15, 1986, were
necessary and regular business expenses for which
a. the petitioner allegedly paid the full
the petitioner should not be obliged to pay. AaID
value of its purchases, yet received
only a portion of said purchases?
b. petitioner and private respondent No, Article 1504 is not applicable.
allegedly had also agreed for the
The general rule that before delivery, the risk of loss
purchase and supply of an
is borne by the seller who is still the owner, is not
additional 227.519 MT of sulfuric
applicable in this case because petitioner had
acid, hence prior delay, if any, had
incurred delay in the performance of its obligation.
been waived?
Article 1504 of the Civil Code clearly states: "Unless
5. Did the respondent court err in awarding otherwise agreed, the goods remain at the seller's risk
damages to private respondent? until the ownership therein is transferred to the
buyer, but when the ownership therein is transferred
6. Should expenses for the storage and
to the buyer the goods are at the buyer's risk whether
preservation of the purchased fungible
actual delivery has made or not except that: . .
goods, namely sulfuric acid, be on seller's
. (2) Where actual delivery had been delayed through
account pursuant to Article 1504 of the Civil
the fault of either the buyer or seller the goods are at
Code?
the risk of the party at fault.

Ruling
As pointed out earlier, petitioner is guilty of delay,
Delay begins from the time the obligee judicially or after private respondent made the necessary
extrajudicially demands from the obligor the extrajudicial demand by requiring petitioner to lift the
performance of the obligation. Art. 1169 states: "Art. cargo at its designated loadports. When petitioner
1169. Those obliged to deliver or to do something failed to comply with its obligations under the
incur in delay from the time the obligee judicially or contract it became liable for its shortcomings.
extrajudicially demands from them the fulfillment of Petitioner is indubitably liable for proven damages.
their obligation." In order that the debtor may be in
default, it is necessary that the following requisites be
present:
(1) that the obligation be
demandable and already
liquidated;
(2) that the debtor delays
performance; and
(3) that the creditor requires the
performance judicially or
extrajudicially.

Records reveal that a tanker ship had to pick up

sulfuric acid in Basay, then proceed to get the
remaining stocks in Sangi, Cebu. A period of three
days appears to us reasonable for a vessel to travel
between Basay and Sangi. Logically, the computation
of damages arising from the shipping delay would
then have to be from December 15, 1986, given said
reasonable period after the December 12th letter.