As to plurality

a. Conjunctive
b. AlternativeSECTION 3. Alternative Obligations

Art. 1199. A person alternatively bound by different prestations shall completely perform one of them.
The creditor cannot be compelled to receive part of one and part of the other undertaking. (1131)
Art. 1200. The right of choice belongs to the debtor, unless it has been expressly granted to the
creditor.
The debtor shall have no right to choose those prestations which are impossible, unlawful or which
could not have been the object of the obligation. (1132)
Art. 1201. The choice shall produce no effect except from the time it has been communicated. (1133)
Art. 1202. The debtor shall lose the right of choice when among the prestations whereby he is
alternatively bound, only one is practicable. (1134)
Art. 1203. If through the creditors acts the debtor cannot make a choice according to the terms of
the obligation, the latter may rescind the contract with damages. (n)
Art. 1204. The creditor shall have a right to indemnity for damages when, through the fault of the
debtor, all the things which are alternatively the object of the obligation have been lost, or the
compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis the value of the last thing which disappeared, or that
of the service which last became impossible.
Damages other than the value of the last thing or service may also be awarded. (1135a)
Art. 1205. When the choice has been expressly given to the creditor, the obligation shall cease to be
alternative from the day when the selection has been communicated to the debtor.
Until then the responsibility of the debtor shall be governed by the following rules:

(1) If one of the things is lost through a fortuitous event, he shall perform the obligation by delivering
that which the creditor should choose from among the remainder, or that which remains if only one
subsists;
(2) If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any of
those subsisting, or the price of that which, through the fault of the former, has disappeared, with a
right to damages;
(3) If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon
the price of any one of them, also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do in case one, some or all of the
prestations should become impossible.

c. Facultative
Art. 1206. When only one prestation has been agreed upon, but the obligor may render another in
substitution, the obligation is called facultative.
The loss or deterioration of the thing intended as a substitute, through the negligence of the obligor,
does not render him liable. But once the substitution has been made, the obligor is liable for the loss
of the substitute on account of his delay, negligence or fraud.

As to rights and obligations of multiple partiesSECTION 4. Joint and Solidary Obligations

Art. 1207. The concurrence of two or more creditors or of two or more debtors in
one and the same obligation does not imply that each one of the former has a right
to demand, or that each one of the latter is bound to render, entire compliance with
the prestation. There is a solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation requires solidarity. (1137a)

Art. 1208. If from the law, or the nature or the wording of the obligations to which
the preceding article refers the contrary does not appear, the credit or debt shall be
presumed to be divided into as many shares as there are creditors or debtors, the

credits or debts being considered distinct from one another, subject to the Rules of
Court governing the multiplicity of suits. (1138a)

Art. 1209. If the division is impossible, the right of the creditors may be prejudiced
only by their collective acts, and the debt can be enforced only by proceeding
against all the debtors. If one of the latter should be insolvent, the others shall not
be liable for his share. (1139)

Art. 1210. The indivisibility of an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply indivisibility. (n)

Art. 1211. Solidarity may exist although the creditors and the debtors may not be
bound in the same manner and by the same periods and conditions. (1140)

Art. 1212. Each one of the solidary creditors may do whatever may be useful to the
others, but not anything which may be prejudicial to the latter. (1141a)

Art. 1213. A solidary creditor cannot assign his rights without the consent of the
others. (n)

Art. 1214. The debtor may pay any one of the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by one of them, payment should be made to
him. (1142a)

Art. 1215. Novation, compensation, confusion or remission of the debt, made by any
of the solidary creditors or with any of the solidary debtors, shall extinguish the
obligation, without prejudice to the provisions of Article 1219.

The creditor who may have executed any of these acts, as well as he who collects
the debt, shall be liable to the others for the share in the obligation corresponding
to them. (1143)

Art. 1216. The creditor may proceed against any one of the solidary debtors or
some or all of them simultaneously. The demand made against one of them shall
not be an obstacle to those which may subsequently be directed against the others,
so long as the debt has not been fully collected. (1144a)

Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation.
If two or more solidary debtors offer to pay, the creditor may choose which offer to
accept.

He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the
payment is made before the debt is due, no interest for the intervening period may
be demanded.

When one of the solidary debtors cannot, because of his insolvency, reimburse his
share to the debtor paying the obligation, such share shall be borne by all his codebtors, in proportion to the debt of each. (1145a)

Art. 1218. Payment by a solidary debtor shall not entitle him to reimbursement from
his co-debtors if such payment is made after the obligation has prescribed or
become illegal. (n)

Art. 1219. The remission made by the creditor of the share which affects one of the
solidary debtors does not release the latter from his responsibility towards the codebtors, in case the debt had been totally paid by anyone of them before the
remission was effected. (1146a)

Art. 1220. The remission of the whole obligation, obtained by one of the solidary
debtors, does not entitle him to reimbursement from his co-debtors. (n)

Art. 1221. If the thing has been lost or if the prestation has become impossible
without the fault of the solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the
creditor, for the price and the payment of damages and interest, without prejudice
to their action against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become
impossible after one of the solidary debtors has incurred in delay through the
judicial or extrajudicial demand upon him by the creditor, the provisions of the
preceding paragraph shall apply. (1147a)

Art. 1222. A solidary debtor may, in actions filed by the creditor, avail himself of all
defenses which are derived from the nature of the obligation and of those which are
personal to him, or pertain to his own share. With respect to those which personally
belong to the others, he may avail himself thereof only as regards that part of the
debt for which the latter are responsible.

a. Joint
b. Solidary- Arts. 927, 1824,1199,1915,1945,2157,2194, 2146, 94, 121
fc, 90 rpc
Art. 927. If two or more heirs take possession of the estate, they shall be solidarily
liable for the loss or destruction of a thing devised or bequeathed, even though only
one of them should have been negligent.
Art. 1824. All partners are liable solidarily with the partnership for everything
chargeable to the partnership under Articles 1822 and 1823.
Art. 1822. Where, by any wrongful act or omission of any partner acting in the
ordinary course of the business of the partnership or with the authority of copartners, loss or injury is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is liable therefor to the same
extent as the partner so acting or omitting to act.
Art. 1823. The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his apparent authority receives
money or property of a third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or property
of a third person and the money or property so received is misapplied by any
partner while it is in the custody of the partnership. (n)
Art. 1911. Even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to act as though he
had full powers
Art. 1915. If two or more persons have appointed an agent for a common
transaction or undertaking, they shall be solidarily liable to the agent for all the
consequences of the agency.
Art. 1945. When there are two or more bailees to whom a thing is loaned in the
same contract, they are liable solidarily.
Art. 2157. The responsibility of two or more payees, when there has been payment
of what is not due, is solidary.
Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is
solidary.
Art. 2146. If the officious manager delegates to another person all or some of his
duties, he shall be liable for the acts of the delegate, without prejudice to the direct
obligation of the latter toward the owner of the business.

The responsibility of two or more officious managers shall be solidary, unless the
management was assumed to save the thing or business from imminent danger.
Art. 96. The existing laws which punish acts or omissions concerning the marriage
license, solemnization of marriage, authority to solemnize marriages, and other acts
or omissions relative to the celebration of marriage shall remain and continue to be
in force.
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and the legitimate children of
either spouse; however, the support of illegitimate children shall be governed by the
provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the designated
administrator-spouse for the benefit of the conjugal partnership of gains, or by both
spouses or by one of them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of the
other to the extent that the family may have benefited;

(4) All taxes, liens, charges, and expenses, including major or minor repairs upon
the conjugal partnership property;
(5) All taxes and expenses for mere preservation made during the marriage upon
the separate property of either spouse;
(6) Expenses to enable either spouse to commence or complete a professional,
vocational, or other activity for self-improvement;
(7) Ante-nuptial debts of either spouse insofar as they have redounded to the
benefit of the family;
(8) The value of what is donated or promised by both spouses in favor of their
common legitimate children for the exclusive purpose of commencing or completing
a professional or vocational course or other activity for self-improvement; and
(9) Expenses of litigation between the spouses unless the suit is found to
groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the
spouses shall be solidarily liable for the unpaid balance with their separate
properties.
Art. 90. Prescription of crime. Crimes punishable by death, reclusion perpetua or
reclusion temporal shall prescribe in twenty years.
Crimes punishable by other afflictive penalties shall prescribe in fifteen years.

c. Disjunctive
Calang and philtranco vs people
FACTS:
At around 2:00 p.m. of April 22, 1989, Rolito Calang was driving Philtranco
Bus, owned by Philtranco, along Daang Maharlika Highway in Barangay Lambao,
Sta. Margarita, Samar when its rear left side hit the front left portion of a Sarao
jeep coming from the opposite direction. As a result of the collision, Cresencio
Pinohermoso, the jeeps driver, lost control of the vehicle, and bumped and killed
Jose Mabansag, a bystander who was standing along the highways shoulder. The
jeep turned turtle three (3) times before finally stopping at about 25 meters from
the point of impact. Two of the jeeps passengers, Armando Nablo and an
unidentified woman, were instantly killed, while the other passengers sustained
serious physical injuries.

The prosecution charged Calang with multiple homicide, multiple serious

physical injuries and damage to property thru reckless imprudence before the
Regional Trial Court (RTC). RTC found Calang guilty beyond reasonable doubt of
reckless imprudence resulting to multiple homicide, multiple physical injuries and
damage to property. The RTC ordered Calang and Philtranco, jointly and severally,
to pay indemnity and damages to the private complainants. On appeal, the Court of
Appeals (CA) affirmed RTC decision in toto.
ISSUE:
Whether or not there was basis to hold Philtranco jointly and severally liable
with Calang because the former was not a party in the criminal case before the
RTC
HELD:
The court holds that the RTC and the CA both erred in holding Philtranco
jointly and severally liable with Calang. It emphasized that Calang was charged
criminally before the RTC. Undisputedly, Philtranco was not a direct party in this
case. Since the cause of action against Calang was based on delict, both the RTC
and the CA erred in holding Philtranco jointly and severally liable with Calang,
based on quasi-delict under Articles 2176 and 2180 of the Civil Code. Articles 2176
and 2180 of the Civil Code pertain to the vicarious liability of an employer for
quasi-delicts that an employee has committed. Such provision of law does not
apply to civil liability arising from delict. If at all, Philtrancos liability may only be
subsidiary under Article 102 of the Revised Penal Code.
Ronquillo vs CA
Facts
Petitioner Ernesto V. Ronquillo was one of four (4)
defendants for the collection of the sum of P117,498.98
plus attorney's fees and costs. The other defendants were
Offshore Catertrade, Inc., Johnny Tan and Pilar Tan.
On December 13, 1979, the lower court rendered
its Decision based on the compromise agreement, which
stipulates, among others, that the Plaintiff agrees to reduce
its total claim of P117,498.95 to only P110,000.00 and
defendants agree to acknowledge the validity of such claim

and further bind themselves to initially pay out of the total

indebtedness of P110,000.00 the amount of P55,000.00
on or before December 24, 1979, the balance of
P55,000.00, defendants individually and jointly agree to
pay within a period of six months from January 1980, or
before June 30, 1980.

Upon the defendants default, herein private

respondent (then plaintiff) filed a Motion for Execution.
Ronquillo and another defendant Pilar Tan offered to pay
their shares of the 55,000 already due.

But on January 22, 1980, private respondent

Antonio So moved for the reconsideration and/or
modification of the aforesaid Order of execution and
prayed instead for the "execution of the decision in its
entirety against all defendants, jointly and severally.

Petitioner opposed the said motion arguing that

under the decision of the lower court being executed which
has already become final, the liability of the four (4)
defendants was not expressly declared to be solidary,
consequently each defendant is obliged to pay only his own
pro-rata or 1/4 of the amount due and payable.

ISSUE:

What is the nature of the liability of the defendants

(including petitioner), was it merely joint, or was it several
or solidary?

RULING:

SOLIDARY.

In this regard, Article 1207 and 1208 of the Civil

Code provides "Art. 1207. The concurrence of two or more
debtors in one and the same obligation does not imply that
each one of the former has a right to demand, or that each
one of the latter is bound to render, entire compliance with
the prestation. There is a solidary liability only when the
obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.

Art. 1208. If from the law, or the nature or the

wording of the obligation to which the preceding article
refers the contrary does not appear, the credit or debt shall
be presumed to be divided into as many equal shares as
there are creditors and debtors, the credits or debts being
considered distinct from one another, subject to the Rules
of Court governing the multiplicity of suits."

Clearly then, by the express term of the

compromise agreement, the defendants obligated
themselves to pay their obligation "individually and
jointly."

The term "individually" has the same meaning as

"collectively", "separately", "distinctively", respectively or
"severally". An agreement to be "individually liable"
undoubtedly creates a several obligation, and a "several
obligation" is one by which one individual binds himself to
perform the whole obligation.

The obligation in the case at bar being described as

"individually and jointly", the same is therefore enforceable against one of the
numerous obligors.
Malayan Insurance vs CA

Facts:
TKC Marketing imported 3,000 metric tons of soya from Brazil to Manila. It was
insured by Malayan at the value of almost 20 million pesos. The vessel, however,
was stranded on South Africa because of a lawsuit regarding the possession of the
soya. TKC consulted Malayan on recovery of the amount, but the latter claimed that
it wasnt covered by the policy. The soya was sold in Africa for Php 10 million, but
TKC wanted Malayan to shoulder the remaining value of 10 million as well.
Petitioner filed suit due to Malayans reticence to pay. Malayan claimed that arrest
by civil authorities wasnt covered by the policy. The trial court ruled in TKCs favor
with damages to boot. The appellate court affirmed the decision under the reason
that clause 12 of the policy regarding an excepted risk due to arrest by civil
authorities was deleted by Section 1.1 of the Institute War Clauses which covered
ordinary arrests by civil authorities. Failure of the cargo to arrive was also covered
by the Theft, Pilferage, and Non-delivery Clause of the contract. Hence this petition.

Issues:
1. WON the arrest of the vessel was a risk covered under the subject insurance
policies.
2. WON the insurance policies must strictly construed against the insurer.

Held: Yes. Yes. Petition dismissed.

Ratio:
1. Section 12 or the "Free from Capture & Seizure Clause" states: "Warranted free
of capture, seizure, arrest, restraint or detainment, and the consequences thereof or
of any attempt thereat Should Clause 12 be deleted, the relevant current institute
war clauses shall be deemed to form part of this insurance.
This was really replaced by the subsection 1.1 of section 1 of Institute War Clauses
(Cargo) which included the risks excluded from the standard form of English Marine
Policy by the clause warranted free of capture, seizure, arrest, restraint or
detainment, and the consequences thereof of hostilities or warlike operations,
whether there be a declaration of war or not.
The petitioners claim that the Institute War Clauses can be operative in case of
hostilities or warlike operations on account of its heading "Institute War Clauses" is
not tenable. It reiterated the CAs stand that its interpretation in recent years to
include seizure or detention by civil authorities seems consistent with the general
purposes of the clause. This interpretation was regardless of the fact whether the
arrest was in war or by civil authorities.
The petitioner was said to have confused the Institute War clauses and the F.C.S. in
English law.
It stated that "the F.C. & S. Clause was "originally incorporated in insurance policies
to eliminate the risks of warlike operations". It also averred that the F.C. & S. Clause
applies even if there be no war or warlike operations. In the same vein, it
contended that subsection 1.1 of Section 1 of the Institute War Clauses (Cargo)
"pertained exclusively to warlike operations" and yet it also stated that "the deletion
of the F.C. & S. Clause and the consequent incorporation of subsection 1.1 of
Section 1 of the Institute War Clauses (Cargo) was to include "arrest, etc. even if it
were not a result of hostilities or warlike operations."

The court found that the insurance agency tried to interpret executive and political
acts as those not including ordinary arrests in the exceptions of the FCS clause , and
claims that the War Clauses now included executive and political acts without
including ordinary arrests in the new stipulation.
A strained interpretation which is unnatural and forced, as to lead to an absurd
conclusion or to render the policy nonsensical, should, by all means, be avoided.
2. Indemnity and liability insurance policies are construed in accordance with the
general rule of resolving any ambiguity therein in favor of the insured, where the
contract or policy is prepared by the insurer. A contract of insurance, being a
contract of adhesion, means that any ambiguity should be resolved against the
insurer.

PNB vs Independent Planters

Appeal by PNB from the Order of the defunct Court of First Instance of Manila
dismissing PNB's complaint against several solidary debtors for the collection of a
sum of money on the ground that one of the defendants (Ceferino Valencia) died
during the pendency of the case (i.e., after the plaintiff had presented its evidence)
and therefore the complaint, being a money claim based on contract, should be
prosecuted in the testate or intestate proceeding for the settlement of the estate of
the deceased defendant pursuant to Section 6 of Rule 86 of the Rules of Court which
reads: SEC. 6. Solidary obligation of decedent. the obligation of the decedent is
solidary with another debtor, the claim shall be filed against the decedent as if he
were the only debtor, without prejudice to the right of the estate to recover
contribution from the other debtor. In a joint obligation of the decedent, the claim
shall be confined to the portion belonging to him.
The appellant assails the order of dismissal, invoking its right of recourse against
one, some or all of its solidary debtors under Article 1216 of the Civil Code ART.
1216. The creditor may proceed against any one of the solidary debtors or some or
all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long
as the debt has not been fully collected.
ISSUE: whether in an action for collection of a sum of money based on contract
against all the solidary debtors, the death of one defendant deprives the court of
jurisdiction to proceed with the case against the surviving defendants.
HELD: It is now settled that the quoted Article 1216 grants the creditor the
substantive right to seek satisfaction of his credit from one, some or all of his
solidary debtors, as he deems fit or convenient for the protection of his interests;

and if, after instituting a collection suit based on contract against some or all of
them and, during its pendency, one of the defendants dies, the court retains
jurisdiction to continue the proceedings and decide the case in respect of the
surviving defendants.
Similarly, in PNB vs. Asuncion, A cursory perusal of Section 6, Rule 86 of the Revised
Rules of Court reveals that nothing therein prevents a creditor from proceeding
against the surviving solidary debtors. Said provision merely sets up the procedure
in enforcing collection in case a creditor chooses to pursue his claim against the
estate of the deceased solidary, debtor.
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision
in this matter. Said provision gives the creditor the right to 'proceed against anyone
of the solidary debtors or some or all of them simultaneously.' The choice is
undoubtedly left to the solidary, creditor to determine against whom he will enforce
collection. In case of the death of one of the solidary debtors, he (the creditor) may,
if he so chooses, proceed against the surviving solidary debtors without necessity of
filing a claim in the estate of the deceased debtors. It is not mandatory for him to
have the case dismissed against the surviving debtors and file its claim in the
estate of the deceased solidary debtor . . .
Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over
Article 1216 of the New Civil Code, the former being merely procedural, while the
latter, substantive.

As to Performance of Prestation
Art. 1221. If the thing has been lost or if the prestation has become impossible
without the fault of the solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the
creditor, for the price and the payment of damages and interest, without prejudice
to their action against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become
impossible after one of the solidary debtors has incurred in delay through the
judicial or extrajudicial demand upon him by the creditor, the provisions of the
preceding paragraph shall apply. (1147a)

Art. 1222. A solidary debtor may, in actions filed by the creditor, avail himself of all
defenses which are derived from the nature of the obligation and of those which are
personal to him, or pertain to his own share. With respect to those which personally
belong to the others, he may avail himself thereof only as regards that part of the
debt for which the latter are responsible. (1148a)

SECTION 5. - Divisible and Indivisible Obligations

Art. 1223. The divisibility or indivisibility of the things that are the object of
obligations in which there is only one debtor and only one creditor does not alter or
modify the provisions of Chapter 2 of this Title. (1149)
Art. 1224. A joint indivisible obligation gives rise to indemnity for damages from the
time anyone of the debtors does not comply with his undertaking. The debtors who
may have been ready to fulfill their promises shall not contribute to the indemnity
beyond the corresponding portion of the price of the thing or of the value of the
service in which the obligation consists. (1150)

Art. 1225. For the purposes of the preceding articles, obligations to give definite
things and those which are not susceptible of partial performance shall be deemed
to be indivisible.

When the obligation has for its object the execution of a certain number of days of
work, the accomplishment of work by metrical units, or analogous things which by
their nature are susceptible of partial performance, it shall be divisible.

However, even though the object or service may be physically divisible, an

obligation is indivisible if so provided by law or intended by the parties.

In obligations not to do, divisibility or indivisibility shall be determined by the

character of the prestation in each particular case.

Art. 1209. If the division is impossible, the right of the creditors may be prejudiced
only by their collective acts, and the debt can be enforced only by proceeding
against all the debtors. If one of the latter should be insolvent, the others shall not
be liable for his share. (1139)

Art. 1210. The indivisibility of an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply indivisibility.
a.
b.
c.
d.

Divisible
Indivisible
Joint Indivisible
Solidary Indivisible

As to the Presence of an Accessory undertaking in case of breach

SECTION 6. - Obligations with a Penal Clause

Art. 1226. In obligations with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of noncompliance, if
there is no stipulation to the contrary. Nevertheless, damages shall be paid if the
obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the
obligation.
The penalty may be enforced only when it is demandable in accordance with the
provisions of this Code. (1152a)

Art. 1227. The debtor cannot exempt himself from the performance of the obligation
by paying the penalty, save in the case where this right has been expressly
reserved for him. Neither can the creditor demand the fulfillment of the obligation
and the satisfaction of the penalty at the same time, unless this right has been
clearly granted him. However, if after the creditor has decided to require the
fulfillment of the obligation, the performance thereof should become impossible
without his fault, the penalty may be enforced. (1153a)

Art. 1228. Proof of actual damages suffered by the creditor is not necessary in order
that the penalty may be demanded. (n)

Art. 1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if there
has been no performance, the penalty may also be reduced by the courts if it is
iniquitous or unconscionable. (1154a)

Art. 1230. The nullity of the penal clause does not carry with it that of the principal
obligation.

The nullity of the principal obligation carries with it that of the penal clause.
Distinguish from Liquidated Damages

Bachrach vs Espiritu
These two cases, Nos. 28497 and 28948, were tried together.

It appears, in connection with case 28497; that on July 28, 1925 the
defendant Faustino Espiritu purchased of the plaintiff corporation a two-ton White
truck for P11,983.50, paying P1,000 down to apply on account of this price, and
obligating himself to pay the remaining P10,983.50 within the periods agreed upon.
To secure the payment of this sum, the defendants mortgaged the said truck
purchased and, besides, three others, two of which are numbered 77197 and 92744
respectively, and all of the White make (Exhibit A). These two trucks had been
purchased from the same plaintiff and were fully paid for by the defendant and his
brother Rosario Espiritu. The defendant failed to pay P10,477.82 of the price
secured by this mortgage.

In connection with case 28498, it appears that on February 18, 1925 the
defendant bought a one-ton White truck of the plaintiff corporation for the sum of
P7,136.50, and after having deducted the P500 cash payment and the 12 per cent
annual interest on the unpaid principal, obligated himself to make payment of this
sum within the periods agreed upon. To secure this payment the defendant
mortgaged to the plaintiff corporation the said truck purchased and two others,
numbered 77197 and 92744, respectively, the same that were mortgaged in the
purchase of the other truck referred to in the other case. The defendant failed to
pay P4,208.28 of this sum.

In both sales it was agreed that 12 per cent interest would be paid upon the
unpaid portion of the price at the executon of the contracts, and in case of nonpayment of the total debt upon its maturity, 25 per cent thereon, as penalty.

In addition to the mortagage deeds referred to, which the defendant executed
in favor of the plaintiff, the defendant at the same time also signed a promissory
note solidarily with his brother Rosario Espiritu for the several sums secured by the
two mortgages (Exhibits B and D).

Rosario Espiritu appeared in these two cases as intervenor, alleging to be the

exclusive owner of the two White trucks Nos. 77197 and 92744, which appear to
have been mortgaged by the defendants to the plaintiff. lawphi1.net

While these two cases were pending in the lower court the mortgaged trucks
were sold by virtue of the mortgage, all of them together bringing in, after
deducting the sheriff's fees and transportation charges to Manila, the net sum of
P3,269.58.

The judgment appealed from ordered the defendants and the intervenor to
pay plaintiff in case 28497 the sum of P7,732.09 with interest at the rate of 12 per
cent per annum from May 1, 1926 until fully paid, and 25 per cent thereof in
addition as penalty. In case 28498, the trial court ordered the defendant and the
intervenor to pay plaintiff the sum of P4,208.28 with interest at 12 per cent per
annum from December 1, 1925 until fully paid, and 25 per cent thereon as penalty.

The appellants contend that trucks 77197 and 92744 were not mortgaged,
because, when the defendant signed the mortgage deeds these trucks were not
included in those documents, and were only put in later, without defendant's
knowledge. But there is positive proof that they were included at the time the
defendant signed these documents. Besides, there were presented two of
defendant's letters to Hidalgo, an employee of the plaintiff's written a few days
before the transaction, acquiescing in the inclusion of all his White trucks already
paid for, in the mortgage (Exhibit H-I).

Appellants also alleged that on February 4, 1925, the defendant sold his
rights in said trucks Nos. 77197 and 92744 to the intervenor, and that as the latter

did not sign the mortgage deeds, such trucks cannot be considered as mortgaged.
But the evidence shows that while the intervenor Rosario Espiritu did not sign the
two mortgage deeds (Exhibits A and C), yet, together with the defendants Faustino
Espiritu, he signed the two promissory notes (Exhibits B and D) secured by these
two mortgages. All these instruments were executed at the same time, and when
the trucks 77197 and 92744 were included in the mortgages, the intervenor Rosario
Espiritu was aware of it and consented to such inclusion. These facts are supported
by the testimony of Bachrach, manager of the plaintiff corporation, of Agustin
Ramirez, who witnessed the execution of all these documents, and of Angel Hidalgo,
who witnessed the execution of Exhibits B and D.

We do not find the statement of the intervenor Rosario Espiritu that he did not
sign promissory notes Exhibits B and C to be sufficient to overthrow this evidence. A
comparison of his genuine signature on Exhibit AA with those appearing on
promissory notes B and C, convinces us that the latter are his signatures. And such
is our conclusion, notwithstanding the evidence presented to establish that on the
date when Exhibits B appears to have been signed, that is July 25, 1925, the
intervenor was in Batac, Ilocos Norte, many miles away from Manila. And the fact
that on the 24th of said month of July, the plaintiff sent some truck accessory parts
by rail to Ilocos for the intervenor does not necessarily prove that the latter could
not have been in Manila on the 25th of that month.

In view of his conclusion that the intervenor signed the promissory notes
secured by trucks 77197 and 92744 and consented to the mortgage of the same, it
is immaterial whether he was or was not the exclusive owner thereof.

It is finally contended that the 25 per cent penalty upon the debt, in addition
to the interest of 12 per cent per annum, makes the contract usurious. Such a
contention is not well founded. Article 1152 of the Civil Code permits the agreement
upon a penalty apart from the interest. Should there be such an agreemnet, the
penalty, as was held in the case of Lopez vs. Hernaez (32 Phil., 631), does not
include the interest, and which may be demamded separetely. According to this, the
penalty is not to be added to the interest for the determination of whether the
interest exceeds the rate fixed by the law, since said rate was fixed only for the
interest. But considering that the obligation was partly performed, and making use
of the power given to the court by article 1154 of the Civil Code, this penalty is
reduced to 10 per cent of the unpaid debt.

With the sole modification that instead of 25 per cent upon the sum owed, the
defendants need pay only 10 per cent thereon as penalty, the judgment appealed
from is affired in all other respects without special pronouncement as to costs. So
ordered.

Robes- Francisco vs CFI

NATURE: Direct appeal on question of law where the petitioner company questions
the awarding of payment of nominal damages. They state it is excessive and
unjustified.
Facts
-

May 1962- petitioner company agreed to sell a parcel of land to Lolita Millan
worth P3,864 payable in installments. She complied with her obligation
finishing the payment on December 21, 1971. She made repeated demands
for the company to execute the deed of sale and transfer certificate title.
It was stipulated in their contract that this should be done within six months
after the full payment was made. If not, the vendee is entitled to refund with
4% interest per annum. The company failed to comply so Millan filed against
them for specific performance and damages. She asked that the deed of
absolute sale be executed as well as the transfer certificate title, or if not, pay
her the present value of the land which was around Php27k, and to pay her
for damages. She invokes ART 1226 saying that if the obligation has a penal
clause, it will substitute the indemnity for damages and the payment of
interest in case of non-compliance.
The company said they are not liable for anything because it was covered by
their contract that in the event of delay in delivery, the vendee is entitled to a
refund with 4% interest per annum.
During trial, the court found that the company could not execute the deed of
sale nor the transfer certificate title because the same land was mortgaged
to the GSIS to secure a prior obligation of P10mil.
Millan asks for the compensatory damages despite the return rate of 4%
interest in the contract.

Issue
Should Millan be entitled to the P27,000 nominal damages despite the stipulation in
the contract of the 4% interest in the event of delay or failure to deliver?
Held
NO. Though Millan failed to present evidence on the amount of damage caused to
her, she is still entitled to nominal damages because her right to acquire the land
she bought was violated. As the company acted in neglect, they are to be held

liable for damages to Millan. However, her right to claim the damages is limited
because the contract already covers for compensatory damages in such an occasion
of non-performance on the part of the company. Her contention that this was to be
read as a penal clause is incorrect because even without it she is still entitled to
recover the amount she paid with the interest.
Pamintuan vs CA

Breach of obligations Article 1170

Manner of Breach
1.
2.
3.
4.

Fraud- art. 1171, 1338,1344

Negligence- arts. 1171-1173
Delay- arts. 1169, 1165, 1786, 1788, 1896, 1942
Any other manner of contravention

Excuse of Non- Compliance

1. Fortuitous Event- art. 1174, 552, 1165, 2147, 2159
2. Act of Creditor
Sicam vs Jorge

Facts:

Lulu Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam to secure a
loan.

On October 19, 1987, two armed men entered the pawnshop and took away
whatever cash and jewelry were found inside the pawnshop vault.

Sicam sent respondent Lulu a letter informing her of the loss of her jewelry due to
the robbery incident in the pawnshop. Respondent Lulu expressed disbelief stating
that when the robbery happened, all jewelry pawned were deposited with Far East
Bank near the pawnshop since it had been the practice that before they could
withdraw, advance notice must be given to the pawnshop so it could withdraw the
jewelry from the bank. Respondent Lulu then requested petitioner Sicam to prepare

the pawned jewelry for withdrawal on but petitioner Sicam failed to return the
jewelry.

Respondent Lulu is seeking indemnification for the loss of pawned jewelry and
payment of damages. Petitioner is interposing the defense of caso fortuito on the
robber committed against the pawnshop.

Issue:

WON Sicam is liable for the loss of the pawned articles in their possession? YES

Held:

Fortuitous events by definition are extraordinary events not foreseeable or

avoidable. It is therefore, not enough that the event should not have been foreseen
or anticipated, as is commonly believed but it must be one impossible to foresee or
to avoid. The mere difficulty to foresee the happening is not impossibility to foresee
the same.

Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose
the possibility of negligence on the part of herein petitioners.

A review of the records clearly shows that petitioners failed to exercise reasonable
care and caution that an ordinarily prudent person would have used in the same
situation. Petitioners were guilty of negligence in the operation of their pawnshop
business. No sufficient precaution and vigilance were adopted by petitioners to
protect the pawnshop from unlawful intrusion. There was no clear showing that
there was any security guard at all.

Sicams admission that the vault was open at the time of robbery is clearly a proof
of petitioners failure to observe the care, precaution and vigilance that the
circumstances justly demanded. Petitioner Sicam testified that once the pawnshop
was open, the combination was already off. Instead of taking the precaution to

protect them, they let open the vault, providing no difficulty for the robbers to cart
away the pawned articles.

In contrast, the robbery in this case took place in 1987 when robbery was already
prevalent and petitioners in fact had already foreseen it as they wanted to deposit
the pawn with a nearby bank for safekeeping. Moreover, unlike in Austria, where no
negligence was committed, we found petitioners negligent in securing their
pawnshop as earlier discussed.
Meralco vs Ramoy
FACTS: In the year 1987, the National Power Corporation (NPC) filed with the MTC
Quezon City a case for ejectment against several persons allegedly illegally
occupying its properties in Baesa, Quezon City. among the defendants in the
ejectment case was Leoncio Ramoy, one of the plaintiffs in the case at bar. On April
28, 1989 the MTC rendered judgment for MERALCO to demolish or remove the
building and structure they built on the land of the plaintiff and to vacate the
premises. On June 20, 1999 NPC wrote to MERALCO requesting the immediate
disconnection of electric power supply to all residential and commercial
establishments beneath the NPC transmission lines along Baesa, Quezon City.
In a letter dated August 17, 1990 MERALCO requested NPC for a joint survey to
determine all the establishments which are considered under NPC property. In due
time, the electric service connection of the plaintiffs was disconnected. During the
ocular inspection ordered by the Court, it was found out that the residence of the
plaintiffs-spouses was indeed outside the NPC property.
ISSUES:
(1) WON the Court of Appeals gravely erred when it found MERALCO
negligent when it disconnected the subject electric service of respondents.
(2) WON the Court of Appeals gravely erred when it awarded moral and
exemplary damages and attorneys fees against MERALCO under the circumstances
that the latter acted in good faith in the disconnection of the electric services of the
respondents.
RULING:

(1) No. The Court agrees with the CA that under the factual milieu of the present
case, MERALCO failed to exercise the utmost degree of care and diligence required
of it, pursuant to Articles 1170 & 1173 of the Civil Code. It was not enough for
MERALCO to merely rely on the Decision of the MTC without ascertaining whether it
had become final and executory. Verily, only upon finality of the said Decision can it

be said with conclusiveness that respondents have no right or proper interest over
the subject property, thus, are not entitled to the services of MERALCO.

(2) No. MERALCO willfully caused injury to Leoncio Ramoy by withholding from him
and his tenants the supply of electricity to which they were entitled under the
Service Contract. This is contrary to public policy because, MERALCO, being a vital
public utility, is expected to exercise utmost care and diligence i the performance of
its obligation. Thus, MERALCOs failure to exercise utmost care and diligence in the
performance of its obligation to Leoncio Ramoy is tantamount to bad faith. Leoncio
Ramoy testified that he suffered wounded feelings because of MERALCOs actions.
Furthermore, due to the lack of power supply, the lessees of his four apartments on
subject lot left the premises. Clearly, therefore Leoncio Ramoy is entitled to moral
damages in the amount awarded by the CA. Nevertheless, Leoncio is the sole
person entitled to moral damages as he is the only who testified on the witness
stand of his wounded feelings. Pursuant to Article 2232 of the Civil Code, exemplary
damages cannot be awarded as MERALCOs acts cannot be considered wanton,
fraudulent, reckless, oppressive or malevolent. Since the Court does not deem it
proper to award exemplary damages in this case then the CAs award of attorneys
fees should likewise be deleted, as pursuant to Article 2208 of the Civil Code of
which the grounds were not present.
Solar harvest Inc vs Davao corrugated Carton Corp.
FACTS: In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered into
an unwritten agreement. Solar Harvest placed orders for customized boxes for its
business of exporting bananas at USD 1.10 each. Petitioner made a full payment of
USD 40,150.00. By Jan. 3, 2001 petitioner had not received any of the ordered
boxes. On Feb. 19, 2001 Davao Corrugated replied that as early as April 3, 1998,
order/boxes are completed and Solar Harvest failed to pick them up from their
warehouse within 30 days from completion as agreed upon. Respondent mentioned
that petitioner even placed additional order of 24,000.00 boxes, out of which,
14,000 had already been manufactured without any advance payment from Solar
Harvest. Davao Corrugated then demanded that Solar Harvest remove boxes from
their warehouse, pay balance of USD 15,400.00 for the additional boxes and
P132,000 as storage fee. On August 17, 2001 Solar harvest filed complaint against
Davao Corrugated for sum of money and damages claiming that the agreement was
for the delivery of the boxes, which Davao Corrugated did not do. They further
alleged that whenever repeated follow-up was made to Davao Corrugated, they
would only see sample boxes and get promise of delivery. Due to Davao
Corrugateds failure to deliver, Solar Harvest had to cancel the order and demanded
payment and/or refund which Davao Corrugated refused to pay. Davao Corrugated
counterclaimed that they had already completed production of the 36,500 boxes
plus an additional 14,000 boxes (which was part of the additional 24,000 order that

is unpaid). The agreement was for Solar Harvest to pick up the boxes, which they
did not do. They even averred that on Oct. 8, 1998 Solar Harvests representative
Bobby Que even went to the warehouse to inspect and saw that indeed boxes were
ready for pick up. On Feb. 20, 1999, Que visited the factory again and said that they
ought to sell the boxes to recoup some of the costs of the 14,000 additional orders
because their transaction to ship the bananas did not materialize. Solar Harvest
denies that they made the additional order. On March 20, 2004 the RTC ruled in
favor of Davao Corrugated.
ISSUE: Whether or not Davao Corrugated was responsible for breach of contract as
Solar Harvest had not yet demanded from it the delivery of the boxes?
HELD: NO. The CA held that it was unthinkable that for around 2 years petitioner
merely followed up and did not demand the delivery of the boxes. Even assuming
that the agreement is for delivery by Davao Corrugated, respondent would not be
liable for breach of contract as petitioner had not yet demanded from it the delivery
of the boxes. There is no error in the decision of the RTC. Furthermore, the claim for
reimbursement is actually one for rescission or resolution of contract under Article
1191 of the Civ. Code. The right to rescind contracts arises once the party defaults
in the performance of his obligation. Article 1191 should be taken in conjunction
with Article 1169: Those obliged to deliver or to do something in delay from the time
the obligee judicially or extrajudicially demands form them the fulfilment of their
obligation. However the demand from creditor shall not be necessary in order that
delay may exist.:
1.

When the obligation or the law expressly so declares, or

2.
When from the nature and the circumstance of the obligation it appears that
the designation of the time when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment of the contract; OR
3.
When the demand would be useless, as when the obligor has rendered it
beyond his power to perform.

In reciprocal obligations, the general rule is that the fulfilment of the partiess
respective obligations should be simultaneous. No demand is necessary because
once a party fulfills his obligation and the other party fails to do his, the latter
automatically incurs delay. When dates are set, the default for each obligation is
determined by the rules given in the 1st paragraph of the article. Thus even in
reciprocal obligations, if the period for the fulfilment of the obligation is fixed,
demand from the obligee is still necessary before the obligor can be considered in
default and before a cause of action for rescission will accrue. In the case of Solar
Harvest, merely following up the order was not the same as demanding for the
boxes. The SC held that Solar Harvests petition is denied and that Davao Corrugated

did not commit breach of contract and may remove the boxes from their premises
after petitioner is given a period of time to remove them from their warehouse as
they deem proper (Court gave 30day period to comply with this)

Mindanao Terminal vs Phoenix Assurance

Before us is a petition for review on certiorari1 under Rule 45 of the 1997 Rules of
Civil Procedure of the 29 October 20032 Decision of the Court of Appeals and the 26
February 2004 Resolution3 of the same court denying petitioners motion for
reconsideration.

The facts of the case are not disputed.

Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao Terminal and
Brokerage Service, Inc. (Mindanao Terminal), a stevedoring company, to load and
stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202
cartons of fresh pineapples belonging to Del Monte Fresh Produce International, Inc.
(Del Monte Produce) into the cargo hold of the vessel M/V Mistrau. The vessel was
docked at the port of Davao City and the goods were to be transported by it to the
port of Inchon, Korea in favor of consignee Taegu Industries, Inc. Del Monte Produce
insured the shipment under an "open cargo policy" with private respondent Phoenix
Assurance Company of New York (Phoenix), a non-life insurance company, and
private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of
Phoenix.4

Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The
vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It
was then discovered upon discharge that some of the cargo was in bad condition.
The Marine Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea,
through its representative Byeong Yong Ahn (Byeong), surveyed the extent of the
damage of the shipment. In a survey report, it was stated that 16,069 cartons of the
banana shipment and 2,185 cartons of the pineapple shipment were so damaged
that they no longer had commercial value.5

Del Monte Produce filed a claim under the open cargo policy for the damages to its
shipment. McGees Marine Claims Insurance Adjuster evaluated the claim and
recommended that payment in the amount of $210,266.43 be made. A check for

the recommended amount was sent to Del Monte Produce; the latter then issued a
subrogation receipt6 to Phoenix and McGee.

Phoenix and McGee instituted an action for damages7 against Mindanao Terminal in
the Regional Trial Court (RTC) of Davao City, Branch 12. After trial, the RTC,8 in a
decision dated 20 October 1999, held that the only participation of Mindanao
Terminal was to load the cargoes on board the M/V Mistrau under the direction and
supervision of the ships officers, who would not have accepted the cargoes on
board the vessel and signed the foremans report unless they were properly
arranged and tightly secured to withstand voyage across the open seas.
Accordingly, Mindanao Terminal cannot be held liable for whatever happened to the
cargoes after it had loaded and stowed them. Moreover, citing the survey report, it
was found by the RTC that the cargoes were damaged on account of a typhoon
which M/V Mistrau had encountered during the voyage. It was further held that
Phoenix and McGee had no cause of action against Mindanao Terminal because the
latter, whose services were contracted by Del Monte, a distinct corporation from Del
Monte Produce, had no contract with the assured Del Monte Produce. The RTC
dismissed the complaint and awarded the counterclaim of Mindanao Terminal in the
amount of P83,945.80 as actual damages and P100,000.00 as attorneys fees.9 The
actual damages were awarded as reimbursement for the expenses incurred by
Mindanao Terminals lawyer in attending the hearings in the case wherein he had to
travel all the way from Metro Manila to Davao City.

Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed
and set aside10 the decision of the RTC in its 29 October 2003 decision. The same
court ordered Mindanao Terminal to pay Phoenix and McGee "the total amount of
$210,265.45 plus legal interest from the filing of the complaint until fully paid and
attorneys fees of 20% of the claim."11 It sustained Phoenixs and McGees
argument that the damage in the cargoes was the result of improper stowage by
Mindanao Terminal. It imposed on Mindanao Terminal, as the stevedore of the cargo,
the duty to exercise extraordinary diligence in loading and stowing the cargoes. It
further held that even with the absence of a contractual relationship between
Mindanao Terminal and Del Monte Produce, the cause of action of Phoenix and
McGee could be based on quasi-delict under Article 2176 of the Civil Code.12

Mindanao Terminal filed a motion for reconsideration,13 which the Court of Appeals
denied in its 26 February 200414 resolution. Hence, the present petition for review.

Mindanao Terminal raises two issues in the case at bar, namely: whether it was
careless and negligent in the loading and stowage of the cargoes onboard M/V
Mistrau making it liable for damages; and, whether Phoenix and McGee has a cause
of action against Mindanao Terminal under Article 2176 of the Civil Code on quasidelict. To resolve the petition, three questions have to be answered: first, whether
Phoenix and McGee have a cause of action against Mindanao Terminal; second,
whether Mindanao Terminal, as a stevedoring company, is under obligation to
observe the same extraordinary degree of diligence in the conduct of its business as
required by law for common carriers15 and warehousemen;16 and third, whether
Mindanao Terminal observed the degree of diligence required by law of a
stevedoring company.

We agree with the Court of Appeals that the complaint filed by Phoenix and McGee
against Mindanao Terminal, from which the present case has arisen, states a cause
of action. The present action is based on quasi-delict, arising from the negligent and
careless loading and stowing of the cargoes belonging to Del Monte Produce. Even
assuming that both Phoenix and McGee have only been subrogated in the rights of
Del Monte Produce, who is not a party to the contract of service between Mindanao
Terminal and Del Monte, still the insurance carriers may have a cause of action in
light of the Courts consistent ruling that the act that breaks the contract may be
also a tort.17 In fine, a liability for tort may arise even under a contract, where tort
is that which breaches the contract18 . In the present case, Phoenix and McGee are
not suing for damages for injuries arising from the breach of the contract of service
but from the alleged negligent manner by which Mindanao Terminal handled the
cargoes belonging to Del Monte Produce. Despite the absence of contractual
relationship between Del Monte Produce and Mindanao Terminal, the allegation of
negligence on the part of the defendant should be sufficient to establish a cause of
action arising from quasi-delict.19

The resolution of the two remaining issues is determinative of the ultimate result of
this case.

Article 1173 of the Civil Code is very clear that if the law or contract does not state
the degree of diligence which is to be observed in the performance of an obligation
then that which is expected of a good father of a family or ordinary diligence shall
be required. Mindanao Terminal, a stevedoring company which was charged with
the loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had
acted merely as a labor provider in the case at bar. There is no specific provision of
law that imposes a higher degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with the loading and stowing of

cargoes. It was neither alleged nor proven by Phoenix and McGee that Mindanao
Terminal was bound by contractual stipulation to observe a higher degree of
diligence than that required of a good father of a family. We therefore conclude that
following Article 1173, Mindanao Terminal was required to observe ordinary
diligence only in loading and stowing the cargoes of Del Monte Produce aboard M/V
Mistrau.

imposing a higher degree of diligence,21 on Mindanao Terminal in loading and

stowing the cargoes. The case of Summa Insurance Corporation v. CA, which
involved the issue of whether an arrastre operator is legally liable for the loss of a
shipment in its custody and the extent of its liability, is inapplicable to the factual
circumstances of the case at bar. Therein, a vessel owned by the National Galleon
Shipping Corporation (NGSC) arrived at Pier 3, South Harbor, Manila, carrying a
shipment consigned to the order of Caterpillar Far East Ltd. with Semirara Coal
Corporation (Semirara) as "notify party." The shipment, including a bundle of PC 8 U
blades, was discharged from the vessel to the custody of the private respondent,
the exclusive arrastre operator at the South Harbor. Accordingly, three good-order
cargo receipts were issued by NGSC, duly signed by the ship's checker and a
representative of private respondent. When Semirara inspected the shipment at
house, it discovered that the bundle of PC8U blades was missing. From those facts,
the Court observed:

x x x The relationship therefore between the consignee and the arrastre operator
must be examined. This relationship is much akin to that existing between the
consignee or owner of shipped goods and the common carrier, or that between a
depositor and a warehouseman[22 ]. In the performance of its obligations, an
arrastre operator should observe the same degree of diligence as that required of a
common carrier and a warehouseman as enunciated under Article 1733 of the Civil
Code and Section 3(b) of the Warehouse Receipts Law, respectively. Being the
custodian of the goods discharged from a vessel, an arrastre operator's duty is to
take good care of the goods and to turn them over to the party entitled to their
possession. (Emphasis supplied)23

There is a distinction between an arrastre and a stevedore.24 Arrastre, a Spanish

word which refers to hauling of cargo, comprehends the handling of cargo on the
wharf or between the establishment of the consignee or shipper and the ship's
tackle. The responsibility of the arrastre operator lasts until the delivery of the cargo
to the consignee. The service is usually performed by longshoremen. On the other
hand, stevedoring refers to the handling of the cargo in the holds of the vessel or

between the ship's tackle and the holds of the vessel. The responsibility of the
stevedore ends upon the loading and stowing of the cargo in the vessel.1avvphi1

It is not disputed that Mindanao Terminal was performing purely stevedoring

function while the private respondent in the Summa case was performing arrastre
function. In the present case, Mindanao Terminal, as a stevedore, was only charged
with the loading and stowing of the cargoes from the pier to the ships cargo hold; it
was never the custodian of the shipment of Del Monte Produce. A stevedore is not a
common carrier for it does not transport goods or passengers; it is not akin to a
warehouseman for it does not store goods for profit. The loading and stowing of
cargoes would not have a far reaching public ramification as that of a common
carrier and a warehouseman; the public is adequately protected by our laws on
contract and on quasi-delict. The public policy considerations in legally imposing
upon a common carrier or a warehouseman a higher degree of diligence is not
present in a stevedoring outfit which mainly provides labor in loading and stowing of
cargoes for its clients.

In the third issue, Phoenix and McGee failed to prove by preponderance of

evidence25 that Mindanao Terminal had acted negligently. Where the evidence on
an issue of fact is in equipoise or there is any doubt on which side the evidence
preponderates the party having the burden of proof fails upon that issue. That is to
say, if the evidence touching a disputed fact is equally balanced, or if it does not
produce a just, rational belief of its existence, or if it leaves the mind in a state of
perplexity, the party holding the affirmative as to such fact must fail.261avvphi1

We adopt the findings27 of the RTC,28 which are not disputed by Phoenix and
McGee. The Court of Appeals did not make any new findings of fact when it reversed
the decision of the trial court. The only participation of Mindanao Terminal was to
load the cargoes on board M/V Mistrau.29 It was not disputed by Phoenix and
McGee that the materials, such as ropes, pallets, and cardboards, used in lashing
and rigging the cargoes were all provided by M/V Mistrau and these materials meets
industry standard.30

It was further established that Mindanao Terminal loaded and stowed the cargoes of
Del Monte Produce aboard the M/V Mistrau in accordance with the stowage plan, a
guide for the area assignments of the goods in the vessels hold, prepared by Del
Monte Produce and the officers of M/V Mistrau.31 The loading and stowing was done
under the direction and supervision of the ship officers. The vessels officer would

order the closing of the hatches only if the loading was done correctly after a final
inspection.32 The said ship officers would not have accepted the cargoes on board
the vessel if they were not properly arranged and tightly secured to withstand the
voyage in open seas. They would order the stevedore to rectify any error in its
loading and stowing. A foremans report, as proof of work done on board the vessel,
was prepared by the checkers of Mindanao Terminal and concurred in by the Chief
Officer of M/V Mistrau after they were satisfied that the cargoes were properly
loaded.33

Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn34 and on
the survey report35 of the damage to the cargoes. Byeong, whose testimony was
refreshed by the survey report,36 found that the cause of the damage was improper
stowage37 due to the manner the cargoes were arranged such that there were no
spaces between cartons, the use of cardboards as support system, and the use of
small rope to tie the cartons together but not by the negligent conduct of Mindanao
Terminal in loading and stowing the cargoes. As admitted by Phoenix and McGee in
their Comment38 before us, the latter is merely a stevedoring company which was
tasked by Del Monte to load and stow the shipments of fresh banana and pineapple
of Del Monte Produce aboard the M/V Mistrau. How and where it should load and
stow a shipment in a vessel is wholly dependent on the shipper and the officers of
the vessel. In other words, the work of the stevedore was under the supervision of
the shipper and officers of the vessel. Even the materials used for stowage, such as
ropes, pallets, and cardboards, are provided for by the vessel. Even the survey
report found that it was because of the boisterous stormy weather due to the
typhoon Seth, as encountered by M/V Mistrau during its voyage, which caused the
shipments in the cargo hold to collapse, shift and bruise in extensive extent.39 Even
the deposition of Byeong was not supported by the conclusion in the survey report
that:

CAUSE OF DAMAGE

xxx

From the above facts and our survey results, we are of the opinion that damage
occurred aboard the carrying vessel during sea transit, being caused by ships
heavy rolling and pitching under boisterous weather while proceeding from 1600 hrs
on 7th October to 0700 hrs on 12th October, 1994 as described in the sea
protest.40

As it is clear that Mindanao Terminal had duly exercised the required degree of
diligence in loading and stowing the cargoes, which is the ordinary diligence of a
good father of a family, the grant of the petition is in order.

However, the Court finds no basis for the award of attorneys fees in favor of
petitioner.lawphil.net None of the circumstances enumerated in Article 2208 of the
Civil Code exists. The present case is clearly not an unfounded civil action against
the plaintiff as there is no showing that it was instituted for the mere purpose of
vexation or injury. It is not sound public policy to set a premium to the right to
litigate where such right is exercised in good faith, even if erroneously.41 Likewise,
the RTC erred in awarding P83,945.80 actual damages to Mindanao Terminal.
Although actual expenses were incurred by Mindanao Terminal in relation to the trial
of this case in Davao City, the lawyer of Mindanao Terminal incurred expenses for
plane fare, hotel accommodations and food, as well as other miscellaneous
expenses, as he attended the trials coming all the way from Manila. But there is no
showing that Phoenix and McGee made a false claim against Mindanao Terminal
resulting in the protracted trial of the case necessitating the incurrence of
expenditures.42

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CAG.R. CV No. 66121 is SET ASIDE and the decision of the Regional Trial Court of
Davao City, Branch 12 in Civil Case No. 25,311.97 is hereby REINSTATED MINUS the
awards of P100,000.00 as attorneys fees and P83,945.80 as actual damages.

SO ORDERED.
Agcaoili vs GSIS
Facts: In this case, appellant GSIS approved an application of the appellee Agcaoli
for the purchase of a house and lot in the GSIS Housing Project at Nangka, Marikina,
subject to the condition that the latter should forthwith occupy the house, a
condition that Agcaoli tried to fulfill but could not because the house was absolutely
uninhabitable. However, Agcaoli ask a homeless friend, a certain Villanueva, to stay
in the premises as some sort of watchman, pending completion of the construction
of the house.

Agcaoli after paying the first installment and other fees, having thereafter refused
to make further payment of other stipulated installments until GSIS had made the
house habitable; and appellant having refused to do so, opting instead to cancel the
award and demanded the vacation by Agcaoli of the premises; and the latter having
sued the GSIS in the Court of First Instance of Manila for specific performance with
damages and having obtained a favorable judgment, the cases was appealed by the
GSIS.

Issue: Whether or not Agcaoli is entitled for specific performance with damages.

Held: Appeal of GSIS must fail.

There was then a perfected contract of sale between the parties; there had been a
meeting of minds upon the purchase by Agcaoli of a determinate house and lot from
GSIS at a definite price which is payable in amortizations and from that moment the
parties acquired the right to reciprocally demand performance. It was, to be sure,
the duty of the GSIS, as seller, to deliver the thing soled in acondition suitable for its
enjoyment by the buyer, in other words to deliver the house subject of the contract
in a reasonably livable state. This it failed to do.

Since GSIS failed to fulfill its obligation, and was not willing to put the house in a
habitable state, it cannot invoke Agcaolis suspension of payment as cause to
cancel the contract between them. In recipient obligation, neither party incur in
delay of the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. Nor may the GSIS succeed in justifying its
cancellation of the award by the claim tha Agcaoli had not complied with the
condition of occupying the house within three (3) days. The record shows that
Agcaoli did try to fulfill the condition.

Finally appellant having caused the ambiguity as the exact prestation of the
agreement, the question of interpretation arising therefrom, should be resolved
against it.
Arrieta vs Naric
FACTS

On 19 May 1952, Paz and Vitaliado Arrieta participated in the public bidding called
by NARIC for the supply of 20,000 metric tons of Burmese rice. Ad her bid of $203
per metric ton was the lowest, she was awarded the contract for the same. As a
result of the delay in the opening of the letter of credit by NARIC, the allocation of
Arrietas supplier in Rangoon was cancelled and the 5% deposit amounting to an
equivalent of P200,000 was forfeited. Arrieta endeavored but failed to restore the
cancelled Burmese rice allocation, and thus offered Thailand rice instead. Such offer
was rejected by NARIC. Subsequently, Arrieta sent a letter to NARIC, demanding
compensation for the damages caused her in the sum of US$286,000 representing
unrealized profit. The demand having been rejected, she instituted the case.

ISSUE
Whether the rate of exchange to be applied in the conversion is that prevailing at
the time of breach, or at the time the obligation was incurred, or on the
promulgation of the decision.

HELD
As pronounced in Eastboard Navigation vs. Ismael, if there is any agreement to pay
an obligation in the currency other than Philippine legal tender, the same is null and
void as contrary to public policy (RA 529), and the most that could be demanded is
to pay said obligation in Philippine currency to be measured in the prevailing rate of
exchange at the time the obligation was incurred. Herein, the rate of exchange to
be applied is that of 1 July 1952, when the contract was executed.
Telefast vs Castro
Sofia Crouch was in the Philippines for vacation when her mother died. Onthat same
day, she adddressed a telegramannouncing her mothers death to Ignacio Castro, Sr
at 685, Wanda, Scottsburg, Indiana, USA. The defendants, after receiving the
required fees and charges, accepted the telegram for transmission.
The husband and the children of the deceased who were all residing in the US never
received the telegram. Sofia Crouch was the only one present during the
internment.
Sofia and the other plaintiffs then filed an action to recover damages arising from
the breach of contract against the defendants. The only defense of the defendants
was that, the failure was due to the technical and atmospheric factors beyond its
control. However no evidence appeared on record that the defendant ever make
any attempt to advise Sofia as to why they could not transmit the telegram.

ISSUE:
Whether or not the petitioner are liable for damages for their failure to transmit the
telegram.
Whether or not the petitioners should only liable for actual or quantified damages.
RULING:
YES. TELEFAST COMMUNICATIONS/PHIL. WIRELESS INC ARE LIABLE TO INDEMNIFY
THE RESPONDENTS FOR DAMAGES THEY HAVE SUFFERED FROM THE FAILURE OF
THE PLAINTIFFS ON TRANSMITTING THE TEEGRAM.
The defendant Sofia Crouch and the plaintiffs entered into a contract whereby the
plaintiffs shall send the respondents message overseas by telegram, after paying
the required fees. The defendant has performed her part in the obligation. However,
the plaintiffs failed to do their part. Petitoner therefore was guilty of contravening its
obligation and is liable for damages pursuant to the provisions of Art 1170 and Art.
2176 of the Civil Code.
NO. THE PETITIONERS LIABILITY ARE NOT LIMITED TO ACTUAL OR QUANTIFIED
DAMAGES.
Pursuant to Art. 2217 of the Civil Code, the petitioners are liable to indmenify the
respondents for the moral damages they had suffered. The petitioners act or
omissionwas the precise cause of the sufferings that the respondents have to
undergo. Respondents Sofia Crouch shall be awarded with P16 000 as compensatory
damages. Each of the respondents shall be awarded with P10 000 as moral
damages and P1 000 as exemplary damages.
NPC vs CA
FACTS: In the early morning hours of October 27, 1978, at the height of typhoon "Kading", a massive
flood covered the towns near Angat Dam, particularly the town of Norzagaray, causing several deaths and
the loss and destruction of houses, farms, plants, working animals and other properties of the people
residing near the Angat River. Private respondents blamed the sudden rush of water to the reckless and
imprudent opening of all the three (3) floodgates of the Angat Dam spillway, without prior warning to the
people living near or within the vicinity of the dam. In view of these, an action for damages was filed by
respondents. The trial court ruled in favor of the latter. Likewise the Court of Appeals affirmed with said
decision. Hence, a petition for review on certiorari was instituted by the National Power Corporation
(NPC) and Benjamin Chavez, Plant Superintendent of NPC.
Petitioners denied private respondents' allegations and, by way of defense, contended that they
have maintained the water in the Angat Dam at a safe level and that the opening of the spillways was
done gradually and after all precautionary measures had been taken. Petitioner NPC further contended
that it had always exercised the diligence of a good father in the selection of its officials and employees
and in their supervision. It also claimed that written warnings were earlier sent to the towns concerned,

and that there was no direct causal relationship between the alleged damages suffered by the respondents
and the acts and omissions attributed to the former. That it was the respondents who assumed the risk of
residing near the Angat River, and even assuming that respondents suffered damages, the cause was due
to a fortuitous event and such damages are of the nature and character of damnum absque injuria, hence,
respondents have no cause of action against them.
ISSUE: Whether petitioners can escape civil liability by invoking force majeure as the proximate cause of
the loss and damage.
HELD: No. Petitioners cannot escape liability because their negligence is the proximate cause of the loss
and damage. Act of God or force majeure, by definition, are extraordinary events not foreseeable or
avoidable, events that could not be foreseen, or which, though foreseen, are inevitable. It is therefore not
enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must
be one impossible to foresee or to avoid. 7 As a general rule, no person shall be responsible for those
events which could not be foreseen or which though foreseen, were inevitable.
However, the principle embodied in the act of God doctrine strictly requires that the act must be
occasioned solely by the violence of nature. Human intervention is to be excluded from creating or
entering into the cause of the mischief. When the effect is found to be in part the result of the participation
of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then
humanized and removed from the rules applicable to the acts of God.
Generally it cannot be said that damage, injury or loss is due to an act of God where it was
caused merely by excessive or heavy rainfall, storms and to weather conditions which are not unusual in
character, those which could have been reasonably anticipated or where the injury complained of is due
rather to the negligence or mismanagement of man than to the disturbance of the elements or where such
damage, injury or loss might have been mitigated or prevented by diligence exercised after the
occurrence.
In the case at bar, although the typhoon "Kading" was an act of God, petitioners can not escape
liability because their negligence was the proximate cause of the loss and damage. The Court of Appeals
found that the defendants failed to take the necessary safeguards to prevent the danger that the Angat Dam
posed in a situation of such nature as that of typhoon "Kading". The representative of the "PAG-ASA"
who testified in these proceedings, Justo Iglesias, Jr., stated that based on their records the rainfall on
October 26 and 27, 1978 is classified only as moderate, and could not have caused flash floods. He
testified that flash floods exceeds 50 millimeters per hour and lasts for at least two (2) hours. He stated
that typhoon "Yaning" which occurred on October 7 to 14, 1978 gave a much heavier rainfall than
"Kading", and so did other previous typhoons.
Also, despite of the announcements of the newspaper of the expected occurrence of a powerful
typhoon code-named "Kading", the water level in the dam was maintained at its maximum from October
21, until midnight of October 26, 1978.
It has been held in several cases that when the negligence of a person concurs with an act of God
producing a loss, such person is not exempt from liability by showing that the immediate cause of the

damage was the act of God. To be exempt he must be free from any previous negligence or misconduct by
which the loss or damage may have been occasioned.
WHEREFORE, finding no reversible error in the Decision appealed from, the same is hereby
affirmed in toto, with cost against petitioner.

Jimenez vs City of Manila

Nakpil and Sons vs CA
Facts: The Philippine Bar Association wanted to erect a building in its lot in
Intramuros. They were able to obtain a contract with the United Construction
Company Inc for the construction of the building and the design was obtained from
Juan M. Nakpil & Sons and Juan F. Nakpil. The Building was completed in June 1966.
On August 2, 1968 a massive earthquake hit Manila with an intensity of about 7.3.
This earthquake caused damage to the building and caused it to lean forward
dangerously which led to the vacation of the building. United Construction Company
in turn shored up the building and incurred 13,661.28 php as costs. The PBA then
instituted a case against UCC for damages due to its negligence regarding the
construction of the said building thru its failure to follow the designs coming from
the architects. UCC then filed a complint against the archetechts (Nakpil & Sons)
alleging that it was the designs that are flawed and that caused the buildings
inability to withstand an earthquake. UCC also included the president of PBA for
including them in their petition. Nakpil & Sons answer that the petitioners need not
to change the defendants in their petition as UCC deviated from the plans which
caused the damages to the building. In the course of the trial a commissioner was
appointed by both parties to give a report regarding the technical aspects of the
case. His report concluded that indeed there were faults arising from the negligence
of both defendants. The report stated that the design was flawed and that UCC
deviated from the designs which aggravated the problem. The defendants then put
up the Act of God defense.

Issue: Whether or not the defendants could escape liability from the building due to
a fortuitous event which is unforeseeable and inevitable even if their negligence is
established

Held: The defendants cannot validly invoke the Act of God defense. This is because
of the report submitted by the appointed Commissioner which established their

negligence. Acceptance of the building, after completion, does not imply waiver of
any of the causes of action by reason of any defect. To exempt the obligor from its
liability these requisites should first concur: (a) the cause of the breach of the
obligation must be independent of the will of the debtor; (b) the event must be
either unforseeable or unavoidable; (c) the event must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (d) the
debtor must be free from any participation in, or aggravation of the injury to the
creditor. The report of the Commissioner established that the defects that occurred
to the building could be attributed to the act of man specifically that of the
architects and the engineers as well as the builders. This was because of the fact
that UCC deviated from the plans submitted by the architects and their failure to
observe the required marksmanship in constructing the building as well as the
required degree of supervision. Nakpil & Sons are also liable for the inadequacies
and defect in their submitted plan and specifications. These circumstances are the
proximate causes of the damages that the PBA building incurred. The costs are to
be paid by the defendants amounting to 5M which includes all appreciable damages
as well as indemnity plus 100,000php for the atty fee.

One who negligently creates a dangerous condition cannot escape liability for the
natural and probable consequences thereof, although the act of a third person, or
an act of God for which he is not responsible, intervenes to precipitate the loss.

Remedies for Breach of Obligations

Art. 1165. When what is to be delivered is a determinate thing, the creditor, in
addition to the right granted him by Article 1170, may compel the debtor to make
the delivery.

If the thing is indeterminate or generic, he may ask that the obligation be complied
with at the expense of the debtor.

If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery. (1096)

Art. 1166. The obligation to give a determinate thing includes that of delivering all
its accessions and accessories, even though they may not have been mentioned.
(1097a)

Art. 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be
undone. (1098)

Art. 1168. When the obligation consists in not doing, and the obligor does what has
been forbidden him, it shall also be undone at his expense.
Art. 1170. 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.
Art. 1177. The creditors, after having pursued the property in possession of the
debtor to satisfy their claims, may exercise all the rights and bring all the actions of
the latter for the same purpose, save those which are inherent in his person; they
may also impugn the acts which the debtor may have done to defraud them. (1111)

Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary.
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage
Law. (1124)

Art. 1192. In case both parties have committed a breach of the obligation, the
liability of the first infractor shall be equitably tempered by the courts. If it cannot
be determined which of the parties first violated the contract, the same shall be
deemed extinguished, and each shall bear his own damages.
Art. 2236. The debtor is liable with all his property, present and future, for the
fulfillment of his obligations, subject to the exemptions provided by law.
Art. 302. Neither the right to receive legal support nor any money or property
obtained as such support or any pension or gratuity from the government is subject
to attachment or execution.
Art. 1708. The laborer's wages shall not be subject to execution or attachment,
except for debts incurred for food, shelter, clothing and medical attendance.
Family code:
Art. 153. The family home is deemed constituted on a house and lot from the time it
is occupied as a family residence. From the time of its constitution and so long as
any of its beneficiaries actually resides therein, the family home continues to be
such and is exempt from execution, forced sale or attachment except as hereinafter
provided and to the extent of the value allowed by law.
Art. 155. The family home shall be exempt from execution, forced sale or
attachment except:
(1) For nonpayment of taxes;
(2) For debts incurred prior to the constitution of the family home;
(3) For debts secured by mortgages on the premises before or after such
constitution; and
(4) For debts due to laborers, mechanics, architects, builders, materialmen and
others who have rendered service or furnished material for the construction of the
building.
Rules of Court
SEC. 13. Property exempt from execution.Except as otherwise expressly provided
by law, the following property, and no other, shall be exempt from execution:

(a)
The judgment obligors family home as provided by law, or the
homestead in which he resides, and land necessarily used in connection therewith;

(b)
Ordinary tools and implements personally used by him in his trade,
employment, or livelihood;

(c)
Three horses, or three cows, or three carabaos, or other beasts of burden,
such as the judgment obligor may select necessarily used by him in his ordinary
occupation;

(d)
jewelry;

His necessary clothing and articles for ordinary personal use, excluding

(e)
Household furniture and utensils necessary for house-keeping, and used
for that purpose by the judgment obligor and his family, such as the judgment
obligor may select, of a value not exceeding one hundred thousand pesos;

(f)

Provisions for individual or family use sufficient for four months;

(g)
The professional libraries and equipment of judges, lawyers, physicians,
pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other
professionals, not exceeding three hundred thousand pesos in value;

(h)
One fishing boat and accessories not exceeding the total value of one
hundred thousand pesos owned by a fisherman and by the lawful use of which he
earns his livelihood;

(i) So much of the salaries, wages, or earnings of the judgment obligor for his
personal services within the four months preceding the levy as are necessary for
the support of his family;

(j) Lettered gravestones;

(k)
Monies, benefits, privileges, or annuities accruing or in any manner
growing out of any life insurance;

(1)
The right to receive legal support, or money or property obtained as such
support, or any pension or gratuity from the Government;

(m)

Properties specially exempted by law.

But no article or species of property mentioned in this section shall be exempt from
execution issued upon a judgment recovered for its price or upon a judgment of
foreclosure of a mortgage thereon.
1. Extra- judicial Remedies
a. Expressly granted by law- arts. 1786, 1788, 1586
Art. 1786. Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto.
He shall also be bound for warranty in case of eviction with regard to specific and determinate things which he may
have contributed to the partnership, in the same cases and in the same manner as the vendor is bound with respect to
the vendee. He shall also be liable for the fruits thereof from the time they should have been delivered, without the
need of any demand.