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As to plurality

a. Conjunctive
b. Alternative-

SECTION 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 parties-

SECTION 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 co-debtors, 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 co-debtors, 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 co-partners, 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. Divisible
b. Indivisible
c. Joint Indivisible
d. 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 non-payment 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. Fraud- art. 1171, 1338,1344


2. Negligence- arts. 1171-1173
3. Delay- arts. 1169, 1165, 1786, 1788, 1896, 1942
4. 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 quasi-delict. 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 CA-G.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) His necessary clothing and articles for ordinary personal use, excluding jewelry;

(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.