UNIVERSITY OF THE PHILIPPINES VS.

DE LOS ANGELES

35 SCRA 102

FACTS:
On November 2, 1960, UP and ALUMCO entered into a logging agreement whereby the latter was granted exclusive
authority to cut, collect and remove timber from the Land Grant for a period starting from the date of agreement to December
31, 1965, extendible for a period of 5 years by mutual agreement.

On December 8, 1964, ALUMCO incurred an unpaid account of P219,362.94. Despite repeated demands, ALUMCO still
failed to pay, so UP sent a notice to rescind the logging agreement. On the other hand, ALUMCO executed an instrument
entitled “Acknowledgment of Debt and Proposed Manner of Payments. It was approved by the president of UP, which
stipulated the following:

3. In the event that the payments called for are not sufficient to liquidate the foregoing indebtedness, the balance outstanding
after the said payments have been applied shall be paid by the debtor in full no later than June 30, 1965.

5. In the event that the debtor fails to comply with any of its promises, the Debtor agrees without reservation that Creditor
shall have the right to consider the Logging Agreement rescinded, without the necessity of any judicial suit…

ALUMCO continued its logging operations, but again incurred an unpaid account. On July 19,1965, UP informed ALUMCO
that it had, as of that date, considered rescinded and of no further legal effect the logging agreement, and that UP had already
taken steps to have another concessionaire take over the logging operation. ALUMCO filed a petition to enjoin UP from
conducting the bidding. The lower court ruled in favor of ALUMCO, hence, this appeal.

ISSUE:
Can petitioner UP treat its contract with ALUMCO rescinded, and may disregard the same before any judicial
pronouncement to that effect?

RULING:
Yes. In the first place, UP and ALUMCO had expressly stipulated that upon default by the debtor, UP has the right and the
power to consider the Logging Agreement of December 2, 1960 as rescinded without the necessity of any judicial suit. As to
such special stipulation and in connection with Article 1191 of the Civil Code, the Supreme Court, stated in Froilan vs. Pan
Oriental Shipping Co:

“There is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract
would cause cancellation thereof, even without court intervention. In other words, it is not always necessary for the injured
party to resort to court for rescission of the contract.”

BOYSAW VS. INTERPHIL PROMOTIONS

148 SCRA 635

FACTS:
Solomon Boysaw and his then Manager, Willie Ketchum, signed with Interphil Promotions, Inc. represented by Lope Sarreal,
Sr., a contract to engage Gabriel "Flash" Elorde in a boxing contest for the junior lightweight championship of the world. It
was stipulated that the bout would be held at the Rizal Memorial Stadium in Manila on September 30, 1961 or not later than
thirty [30] days thereafter should a postponement be mutually agreed upon, and that Boysaw would not, prior to the date of
the boxing contest, engage in any other such contest without the written consent of Interphil Promotions, Inc.
However, before September 30, 1961, Boysaw entered into a non-title bout on June 19, 1961 and without consent from
Interphil, Ketchum assigned to Amado Araneta the managerial rights over Boysaw. Amado Araneta in turn transferred the
earlier acquired managerial rights to Alfredo again without the consent from Interphil. Yulo thereafter informed Interphil
Boysaw’s readiness to comply with the boxing contract of May 1, 1961. The GAB after a series of conferences of both
parties scheduled the Elorde-Boysaw fight on November 4, 1961. Yulo refused to accept the charge in the fight date even
after Sarreal offered to advance the fight date to October 28, 1961. However, he changed his mind and decided to accept the
fight date on November 4, 1961. While an Elorde-Boysaw fight was eventually staged, the fight contemplated in the May 1,
1961 boxing contract never materialized.

As a result, Yulo and Boysaw sued Interphil for damages allegedly due to the latter’s refusal to honor their commitments
under the boxing contract of May 1, 1961.

ISSUES:

2. In reciprocal obligations, who has the power to rescind?

RULING:
2. 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. There is no doubt that the contract in question gave rise to reciprocal obligations. "Reciprocal
obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such
that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously, so that the
performance of one is conditioned upon the simultaneous fulfillment of the other"The power to rescind is given to the injured
party. "Where the plaintiff is the party who did not perform the undertaking which he was bound by the terms of the
agreement to perform 4 he is not entitled to insist upon the performance of the contract by the defendant, or recover damages
by reason of his own breach "

On the validity of the fight postponement, the violations of the terms of the original contract by appellants vested the
appellees with the right to rescind and repudiate such contract altogether. That they sought to seek an adjustment of one
particular covenant of the contract, is under the circumstances, within the appellee's rights.

PEDRO D. DIOQUINO VS. LAUREANO

G.R. No. L-25906 May 28, 1970

FACTS:
Attorney Pedro Dioquino is the owner of a car. He went to the office of the MVO, Masbate, to register the same where he
met the defendant Federico Laureano, a patrol officer of said MVO office. Dioquino requested Laureano to introduce him to
one of the clerks in the MVO Office, who could facilitate the registration of his car and the request was attended to. Laureano
rode on the car of Atty. Dioquino on his way to the P.C. Barracks at Masbate. While about to reach their destination, the car
driven by plaintiff's driver and with Laureano as the sole passenger was stoned by some 'mischievous boys,' and its
windshield was broken. Laureano chased the boys and he was able to catch one of them. The plaintiff and Laureano with the
boy returned to the P.C. barracks and the father of the boy was called, but no satisfactory arrangements were made about the
damage to the windshield.

It was likewise noted in the decision now on appeal: "The defendant Federico Laureano refused to file any charges against
the boy and his parents because he thought that the stone-throwing was merely accidental and that it was due to force
majeure. So he did not want to take any action and after delaying the settlement, after perhaps consulting a lawyer, the
defendant Federico Laureano refused to pay the windshield himself and challenged that the case be brought to court for
judicial adjudication. There is no question that the plaintiff tried to convince the defendant Federico Laureano just to pay the
value of the windshield and he even came to the extent of asking the wife to convince her husband to settle the matter
amicably but the defendant Federico Laureano refused to make any settlement, clinging [to] the belief that he could not be
held liable because a minor child threw a stone accidentally on the windshield and therefore, the same was due to force
majeure."

ISSUE:
WON Federico Laureano liable for the payment of the windshield of Atty Dioquino?

RULING:
No.The law being what it is, such a belief on the part of defendant Federico Laureano was justified. The express language of
Art. 1174 of the present Civil Code which is a restatement of Art. 1105 of the Old Civil Code, except for the addition of the
nature of an obligation requiring the assumption of risk, compels such a conclusion. It reads thus: "Except in cases expressly
specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which could not be, foreseen, or which, though foreseen
were inevitable." Even under the old Civil Code then, as stressed by us in the first decision dating back to 1908, in an opinion
by Justice Mapa, the rule was well-settled that in the absence of a legal provision or an express covenant, "no one should be
held to account for fortuitous cases." Its basis, as Justice Moreland stressed, is the Roman law principle major casus est, cui
humana infirmitas resistere non potest. Authorities of repute are in agreement, more specifically concerning an obligation
arising from contract "that some extraordinary circumstance independent of the will of the obligor, or of his employees, is an
essential element of a caso fortuito." If it could be shown that such indeed was the case, liability is ruled out. There is no
requirement of "diligence beyond what human care and foresight can provide."

Angeles vs. Calasanz

Lot buyer (P) vs. Seller (D)
GR L-42283 [T]

Summary: A buyer of a property paid monthly installments for nine years, but was five months late on the installment
payment due. The seller rescinded the contract and applied the installments made as rentals.

Rule of Law: The act of a party in treating a contract as canceled or resolved on account of infractions by the other is always
provisional, being ever subject to scrutiny and review by the proper court.

Facts: Ursula and Tomas Calasanz (D) sold a piece of land to Buenaventura Angeles (P) and Teofila Juani covered by a
contract to sell.

Angeles (P) paid a downpayment upon the execution of the contract and started paying the balance in monthly installments.
Angeles (P) paid monthly installments for nine years with only a few remaining installments left to pay. Although Calasanz
(D) accepted late payments before, Angeles (P) was now five months late.

Calasanz (D) demanded payment of past due accounts, but did not receive any. Eventually, Calansanz (D) canceled the said
contract because Angeles (P) failed to pay the subsequent payments. Angeles (P) asked for reconsideration, but was denied.

Angeles (P) filed a case to compel the Calasanz (D) to execute in their favor the final deed of sale alleging that they have
already fully paid the total price of the property. Calasanz (D) alleged in their answer that Angeles (P) violated the contract to
sell when they failed to pay a monthly installment.
A provision in the contract to sell gave Calasanz (D) the right to cancel the contract and consider the amounts paid as rent for
the property. However, the lower court ruled that the contract was not validly canceled and ordered Calasanz (D) to execute a
final Deed of Sale in favor of Angeles (P)

Issues: Was the contract to sell validly canceled?

Ruling: No. The rule that it is not always necessary for the injured party to resort to court for rescission of the contract when
the contract itself provides was qualified by this Court in University of the Philippines v. De los Angeles, (35 SCRA 102)
where we explained (paraphrased) that:
Of course, the act of a party in treating a contract as canceled or resolved on account of infractions by the other must be made
known to the other and is always provisional, being ever subject to scrutiny and review by the proper court. If the other party
denies that rescission is justified, it is free to bring the matter to court. Then, should the court decide that the resolution of the
contract was not warranted, the responsible party will be sentenced to damages; in the contrary case, the resolution will be
affirmed and indemnity awarded to the party prejudiced.

In short, the party who deems the contract violated many consider it resolved or rescinded without previous court action, but
it proceeds at its own risk. For it is only the final judgment of the court that will conclusively and finally settle whether the
action taken was or was not correct in law.

The right to rescind the contract for non-performance of one of its stipulations, therefore, is not absolute. In Universal Food
Corporation vs. Court of Appeals (33 SCRA 1) the Court stated that:
The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for such
substantial and fundamental breach as would defeat the very object of the parties in making the agreement. (Song Fo & Co.
vs. Hawaiian-Philippine Co., 47 Phil. 821) The question of whether a breach of a contract is substantial depends upon the
attendant circumstances. (Corpus vs. Alikpala, GR L-23707 & L-23720, January 17, 1968)

The breach of the contract alleged by Calasanz (D) is so slight considering that Angeles (P) had already paid monthly
installments for almost nine years. In only a short time, the entire obligation would have been paid. To sanction the rescission
made by Calasanz (D) will work injustice to Angeles (P) and unjustly enrich Calasanz (D).

Article 1234 of the Civil Code which provides that:

If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and
complete fulfillment, less damages suffered by the obligee.

also militates against the unilateral act of the Calasanz (P) in cancelling the contract.

Ong v. CA
Facts:

Petitioner Jaime Ong, on the one hand, and respondent spouses Miguel K. Robles and Alejandra Robles, on the other hand,
executed an "Agreement of Purchase and Sale" respecting two parcels of land situated at Barrio Puri, San Antonio, Quezon.
On May 15, 1983, petitioner Ong took possession of the subject parcels of land together with the piggery, building, ricemill,
residential house and other improvements thereon.

For failure of the vendee to pay the price as agreed upon, a complaint for rescission of contract and recovery of properties
with damages. Later, while the case was still pending with the trial court, petitioner introduced major improvements on the
subject properties. These prompted the respondent spouses to ask for a writ of preliminary injunction. The trial court granted
the application and enjoined petitioner from introducing improvements on the properties except for repairs. Eventually, the
trial court ordered the rescission of the contract.
Issues:

(1) whether the contract entered into by the parties may be validly rescinded under Article 1191 of the New Civil Code

(2) whether the parties had novated their original contract as to the time and manner of payment

Held:

Article 1191 of the New Civil Code refers to rescission applicable to reciprocal obligations. Reciprocal obligations are those
which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of
one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one
is conditioned upon the simultaneous fulfillment of the other.

A careful reading of the parties' "Agreement of Purchase and Sale" shows that it is in the nature of a contract to sell, as
distinguished from a contract of sale. In a contract of sale, the title to the property passes to the vendee upon the delivery of
the thing sold; while in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee
until full payment of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive
condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force. The non-fulfillment of the condition of full payment rendered the contract to
sell ineffective and without force and effect. It must be stressed that the breach contemplated in Article 1191 of the New Civil
Code is the obligor's failure to comply with an obligation. Failure to pay, in this instance, is not even a breach but merely an
event which prevents the vendor's obligation to convey title from acquiring binding force. Hence, the agreement of the parties
in the case at bench may be set aside, but not because of a breach on the part of petitioner for failure to complete payment of
the purchase price. Rather, his failure to do so brought about a situation which prevented the obligation of respondent spouses
to convey title from acquiring an obligatory force.

Vda. De Mistica vs. Naguiat

418 SCRA 73
Art. 1182. Potestative Condition

Issue/Scope
Potestative Condition under Art. 1182 in relation to Art. 1191 of Civil Code

Facts
Predecessor-in-interest of Petitioner and herein Defendants entered into a contract to sell in which the latter prayed the initial
payment and undertake to pay the remaining by installment within 10 years subject to 12% interest per annum
Petitioner filed a complaint for rescission alleging failure and refusal of Defendants to pay the balance constitutes a violation
of the contract which entitles her to rescind the same
Petitioner argues that period for performance of obligation cannot be extended to 10 years because to do so would convert the
obligation to purely potestative

Held
Under Art. 1191 of Civil Code, the right to rescind an obligation is predicated on violation between parties brought about by
breach of faith by one of them. Rescission, however, is allowed only when the breach is substantial and fundamental to the
fulfillment of the obligation
In this case, no substantial breach – in the Kasulatan, it was stipulated that payment could be made even after 10 years from
execution of contract, provided they will pay the 12% interest
Civil Code prohibits purely potestative, suspensive, conditional obligation that depend on the whims of the debtor. Nowhere
in the deed that payment of purchase price is dependent whether respondents want to pay it or not, the fact that they already
made partial payment shows that parties intended to be bound by the Kasulatan

Rescissible Contracts: Ke Hong Cheng vs CA G.R. No 144169 No.

Facts: Petitioner is the owner of Butuan Shipping Line. In one the vessels owned by the petitioner, Philippine Agricultural
Trading Corporation boarded 3,400 bags of copra to be shipped from Masbate to Dipolog City and which said shipment of
copra was insured by PhilAm. While on board, the ship sank amounting to total loss of the shipments. Because of the loss,
the insurer paid the damages to the consignee. Having subrogated the rights of the consignee, PhilAm instituted a civil case
to recover the money paid to the consignee based on breach of contract of carriage. While the case was pending, petitioner
executed deeds of donations of parcels of land to his children. The trial court rendered judgment against the petitioner Ke
Hong Cheng in the civil case on December 29, 1993. After the decision became final a writ of execution was issued but it
was not served, Therefore an alias writ was was applied for which was granted. The sheriff did not found any property under
Butuan Shipping Lines and/or Ke Hong Cheng. In 1997, PhilAm filed complaint for annulling the deeds of donation made by
herein petitioner to his children and alleged the donation was to defraud his creditors including PhilAm. Petitioner filed an
answer stating that the action had already prescribed.

Issue: Whether or not the action to rescind the donation had already prescribed.

Held: According to the trial court, the period began from December 29, 1993 when the civil case was resolved. Thus, The CA
maintained that, that the four year period began only on January 1997, the time when it first learned that the judgment award
could not be satisfied because the Ke Hong Cheng had no more properties in his name. Article 1389 of the Civil Code simply
provide that "The action to claim rescission must be commenced within four years." When the law is silent as to when the
prescriptive shall commence, general rule must apply that it will commence when the moment the action accrues. An action
for rescission must be the last resort of the creditors and can only be availed after the creditor had exhausted all the
properties. The herein respondent came to know only in January 1997 about the unlawful conveyances of the petitioner when
together with the sheriff and counsel were to attach the property of the petitioner and it was then only when they found out it
is no longer in the name of the petitioner. Since the respondent filed accion pauliana on February 1997, a month after the
discovery that petitioner had no property in his name to satisfy the judgment, action for rescission of subject deeds had not
yet prescribed.

Siguan v. Lim 318 SCRA 725, G.R. No. 134685 (November 19, 1999)
Facts:

On 25 and 26 August 1990, Rosa Lim (respondent, LIM) issued two Metrobank checks to satisfy her debts to Maria Antonia
Siguan (petitioner, SIGUAN).
Upon presentment by SIGUAN with the drawee bank, the checks were dishonoured for the reason account closed.
Criminal case for violation of BP 22 was filed by SIGUAN against LIM.
On December 29 1992, RTC convicted LIM as charged. The case is pending before this Court for review.
On August 10, 1989, LIM executed a Deed of Donation in favour of her children, and the same was registered with the Office
of the Register of Deeds on July 2, 1991.
June 23, 193, SIGUAN filed an accion pauliana against LIM and her children, to rescind the questioned Deed of Donation
and to declare as null and void the new transfer certificates of title.
Issue/s:

Whether or not the questioned Deed of Donation was made in fraud of petitioner and, therefore, rescissible.
Ruling:

No. The rescission required the existence of creditors at the time of alleged fraudulent alienation, and this must be proved as
one of the bases of the judicial pronouncement setting aside the contract. Without prior existing debt, there can neither be
injury nor fraud. While it is necessary that the credit of the plaintiff in the accion pauliana must exist prior to the fraudulent
alienation, the date of the judgment enforcing it is immaterial.
Since LIMs indebtedness to SIGUAN was incurred in August 1990, or a year after the execution of the Deed of Donation, the
first requirement of accion pauliana was not met.

Even assuming arguendo that petitioner became a creditor of LIM prior to the celebration of the contract of donation, still her
action for rescission would not fare well because the third requisite was not met. It is essential that the party asking for
rescission prove that he has exhausted all other legal means to obtain satisfaction of his claim. SIGUAN neither alleged nor
proved that she did so. On his score, her action for rescission of the questioned deed is not maintainable even if the fraud
charged actually did exist.

The fourth requisite for an accion pauliana to prosper is not present either. (4) the act being impugned is fraudulent. It was
not sufficiently established that the properties left behind by LIM were not sufficient to cover her debts existing before the
donation was made.

Note / Doctrine:

Requisites of accion pauliana

Plaintiff asking for rescission has a credit prior to the alienation, although demandable later.
Debtor has made a subsequent contract conveying a patrimonial benefit to a third persons.
Creditor has no other legal remedy to satisfy his claim, but would benefit by rescission of the conveyance to the person.
Act being impugned is fraudulent.
The third parsons who received the property conveyed, if by onerous title, has been an accomplice in the fraud.
(New Civil Code) Article 1381. Contracts entered into in fraud of creditors may be rescinded only when the creditors cannot
in any manner collect the claims due to them.
(New Civil Code) Article 1383. The action for rescission is but a subsidiary remedy which cannot be instituted except when
the party suffering damage has no other legal means to obtain reparation for the same.
(New Civil Code) Article 1387(1). All contracts by virtue of which the debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of creditors when donor did not reserve sufficient property to pay all debts
contracted before the donation.
(New Civil Code) Article 759. Donation is always presumed to be in fraud of creditors when at the time thereof the donor did
not reserve sufficient property to pay his debts prior to the donation.
(New Civil Code) Article 1384. Rescission shall only be to the extent necessary to cover the damages caused.
Only the creditor who brought the action for rescission can benefit from the rescission; those who are strangers to the action
cannot benefit from its effects.
Revocation is only to the extent of the plaintiff creditors unsatisfied debts; as to the excess, alienation is maintained.

Republic vs Luzon Stevedoring Corporation (GR No. L-21749, September 29, 1967)
Facts: A barge being towed by tugboats "Bangus" and "Barbero" all owned by Luzon Stevedoring Corp. rammed one of the
wooden piles of the Nagtahan Bailey Bridge due to the swollen current of the Pasig after heavy rains days before. The
Republic sued Luzon Stevedoring for actual and consequential damages. Luzon Stevedoring claimed it had exercised due
diligence in the selection and supervision of its employees; that the damages to the bridge were caused by force majeure; that
plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is an obstruction to navigation.

Issue: Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan bridge was in law caused
by fortuitous event or force majeure.
Held: There is a presumption of negligence on part of the employees of Luzon Stevedoring, as the Nagtahan Bridge is
stationary. For caso fortuito or force majeure (which in law are identical in so far as they exempt an obligor from liability) by
definition, are extraordinary events not foreseeable or avoidable, "events that could not be foreseen, or which, though
foreseen, were inevitable" (Art. 1174, Civ. Code of the Philippines). 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. Luzon Stevedoring knew the perils posed by the
swollen stream and its swift current, and voluntarily entered into a situation involving obvious danger; it therefore assured the
risk, and can not shed responsibility merely because the precautions it adopted turned out to be insufficient. It is thus liable
for damages.

Yobido v. Court of Appeals 281 SCRA 1, G.R. No. 113003 (October 17, 1997)
Facts:

Spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin boarded a Yobido Liner bus.
The left front tire of the bus exploded.
The bus fell into a ravine which resulted in the death of 28-year old Tumboy and physical injuries to other passengers.
Issue/s:

Whether or not the Yobido (bus-owner) be exempt from liability because the tire blowout was no more than a fortuitous event
that could not have foreseen.
Ruling:

No. Under the circumstances of the present case, the explosion of the new tire may not be considered a fortuitous event. It is
settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito
that would exempt the carrier from liability for damages.
A common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. The common carrier
must still prove that it was not negligent in causing the death or injury resulting from an accident.

In culpa contractual, once a passenger dies or injured, the carrier is presumed to have been at fault or to have acted
negligently. This presumption may only be overcome by evidence that the carrier had observed extraordinary diligence.

The Yobido failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the driver to
slow down. These contradictory facts must, be resolved in favor of liability in view of the presumption of negligence of the
carrier in the law. Coupled with this is the established condition of the road tough, winding and wet due to rain. It was
incumbent upon the defense to establish that it took precautionary measures considering partially dangerous condition of the
road.

Yobido failed to discharge its duty to overthrow the presumption of negligence with clear and convincing evidence.

Austria v. Court of Appeals 31 SCRA 527, G.R. No. L-29640 (June 10, 1971)
Facts:

Maria G. Abad received from Guillermo Austria one (1) pendant with diamonds to be sold on commission basis or to be
returned on demand.
Maria Abad while walking home, two men snatched her purse containing jewelry and cash, and ran away.
Thus, Abad failed to return the jewelry or pay its value notwithstanding demands.
Austria filed an action against Abad and Abad’s husband for recovery of the pendant or of its value, and damages.
Abad raised the defense that the alleged robbery had extinguished their obligation.
Issue/s:
Whether or not in a contract of agency (consignment of good for sole) it is necessary that there be prior conviction for
robbery before the loss of the article shall exempt the consignee from liability for such loss.
Whether or not Abad was negligent.
Ruling:

No. To avail of the exemption granted in the law, it is not necessary that the persons responsible for the occurrence should be
found or punished, it would only be sufficient to establish that the enforceable event, the robbery in this case did take place
without any concurrence fault on the debtor’s part, and this can be done by preponderance of evidence.
A court finding that a robbery has happened would not necessary mean that those accused in the criminal action should be
found guilty of the crime; nor would a ruling that those actually accused did not commit the robbery be inconsistent with a
finding that a robbery did take place.

No. In 1961, when the robbery in question did take place, for at that time criminality had not by far reached the levels
attained in the present day. The diligence that Abad portrayed when she went home before she was robbed was not a sign of
negligence on her part.

National Power Corporation v. Court of Appeals 161 SCRA 334, G.R. No. L-47379 (May 16, 1998)
Facts:

Engineering Construction, Inc. (petitioner, ECI for brevity), being a successful bidder, executed a contract in Manila with the
National Waterworks and Sewerage Authority (NAWASA), whereby the former undertook:
to furnish all tools, labor, equipment and materials, and
to construct the proposed 2nd Ipo-Bicti Tunnel, Intake and Outlet Structures, and Appurtenant Structures, and Appurtenant
Features at Norzagaray, Bulacan and to complete said works within 800 calendar days. (Angat Hydro-electric Project and
Dam)
The project involves two (2) major phases: (1) tunnel work covering a distance of 7 kilometres and (2) the outworks at both
ends of the tunnel.
The ECI already had completed the first major phase of the work (Tunnel Excavation Work), all the equipment no longer
needed there were transferred to another site where some projects were yet to be completed. Some portion of the Bicti site
were still under construction (2nd phase).
On November 4, 1967, Typhoon “Welming” hit Central Luzon, passing through corporations’ Angat Hydro-electric Project
and Dam.
Due to the heavy downpour, the water in the reservoir of the Angat Dam was rising perilously at the rate of 60 cm per hour.
To prevent an overflow of water from the dam, the National Power Corporation(NPC) caused the opening of the spillway
gates.
Extraordinary large volume of water rushed out of the gates, and hit the installations and construction works of ECI at Ipo
site with terrific impact, as a result of which the latter’s stockpile of materials supplies, camp facilities and permanent
structures and accessories whether washed away, lost or destroyed.
Issue/s:

Whether or not the destruction and loss of ECI’s equipment and facilities were due to force majeure, which will exempt NPC
from liability.
Ruling:

No, NPC will not be exempted from liability. NPC was undoubtedly negligent because it opened the spillway gates of the
Angat Dam only at the height of typhoon “Welming” when it knew very well that it was safer to have opened the same
gradually and earlier, as it was also undeniable that NPC know of the coming typhoon at least four days before it actually
struck.
The typhoon was an act of God or what we may call force majeure, NPC cannot escape liability because its negligence was
the proximate cause of the loss and damage.
As we have ruled in Juan F. Nakpil & Sons v. Court of Appeals:

“If upon the happening of a fortuitous event or an act of God, there concurs a corresponding fraud, negligence, delay or
violation or contravention in any manner of the tenor of the obligation, which results in loss or damage, the obligor cannot
escape liability.

The principle embodied in the act of God doctrine strictly requires that the act must be one occasioned exclusively by the
violence of nature and human agencies are to be excluded from creating or entering into the cause of the mischief. When the
effect, the cause of which is to be considered, is found to be in part the result of the participation of man, whether it be from
active intervention or neglect, or failure to act, the whole occurrence is thereby HUMANIZED, as it were, and removed from
the rules applicable to the acts of God.

Juan Nakpil and Sons v. CA Digest

G.R. No. L-47851 October 3, 1986

Facts of the Case:
The private respondent (Philippine Bar Association) hired the services of the petitioner to make the plans and specifications
for the construction of their office building. The building was completed by the contractor but subsequently, an earthquake
struck causing its partial collapse and damage.
Issue: Is the petitioner liable for damages in this case?
HELD: Yes. The petitioner made substantial deviations from the plans and specifications and failed to observe requisite
workmanship standards in the construction of the building while their architect drew plans that contain defects and other
inadequacies. Both the contractor and the architect cannot escape liability for damages when the building collapsed due to an
earthquake. Other buildings in the area withstood the tremor. The lower court also found that the spirals in one of the
columns in the ground floor has been cut. One who creates a dangerous condition cannot escape liability even if an act of
God may have intervened as in this case. As such, the liability of the contractor (herein petitioner) and the architect for the
collapse of the building is solidary.

Bacolod-Murcia Milling v. Court of Appeals 182 SCRA 24, G.R. No. 81100-01 (February 7, 1990)
Facts:

Bacolod-Murcia Milling Co., Inc.(BMMC) is the owner and operator of the sugar central in Bacolod.
Alonso Gatuslao (Gatuslao) is a registered plantor of the Bacolod-Muria Mill District.
BMMC and Gatuslao executed an “Extension and Modification of Milling Contract.
From crop year 1957-1958 up to crop year 1967-1968, Gatuslao has been milling all the sugarcane grown and produced with
the Mill of BMMC.
From crop year 1920-21 to crop year 1967-68, the canes of planters adhered to the mill of BMMC were transported from the
plantation to the mill by means of cane cars and through railway system operated by BMMC.
BMMC has been hauling planter Gatuslao’s sugar cane to its mill or factory continuously until crop year 1967 – 1968.
The milling contract between BMMC and owners of the hacienda Helvetica expired at the end of the 1964-1965 crop year.
The portion of the railway traversing the hacienda Helvetica was closed as per decision of the court.
The use of the railroad tracks(traversing hacienda Helvetica) was temporarily allowed due to the intervention of the President
of the Philippines, which is until 1967-1978 milling season only.
Gatuslao loaded their cut cranes on trucks provided by the Bacolod-Murcia Agricultural Cooperative Marketing Association,
Inc. (B-MACMA) during 1968-1969 crop year.
BMMC had not been able to use its cane cars and railway system for the cargo crop year 1968-1989.
Issue/s:
Whether or not the termination of petitioner’s right of way over the hacienda Helvetica caused by the expiration of its
amended milling contracts with the landowners of the land in question is fortuitous event or force majeure which will exempt
petitioner BMMC from fulfillment of its contractual obligation.
Whether or not BMMC was able to provide adequate and efficient transportation facilities of the canes of Gatuslao and the
other planters milling with BMMC during the crop year 1968-69.
Ruling:

No. The terms of the milling contracts were clear and undoubtedly there was no reason for BMMC to expect otherwise. The
closure of any portion of the railroad track, not necessarily in the hacienda Helvetica but in any of the properties whose
owners decided not to renew their milling contracts with the Central upon their expiration, was foreseeable and inevitable.
Despite its awareness that the conventional contract of lease would expire in crop year 1964-1965 and that refusal on the part
of any one of the landowners to renew their milling contracts and the corresponding use of the right of way on their lands
would render impossible compliance of its commitments, BMMC took a calculated risk that all the landowners would renew
their contracts.

The closure of the railway lines was not an act of God nor it constitute force majeure. It was due to the termination of the
contractual relationships of the parties, for which BMMC is charged with knowledge. Owners of the hacienda Helvetica
notified BMMC as far back as August 1965 of its intention not to allow the passage of the railway system thru its land after
the aforesaid crop year. Adequate measures should have been adopted by BMMC to forestall such paralyzations but the
records show none.

No, BMMC failed to provide adequate transportation facilities to Gatuslao and other adherent parties.
The inadequacies of the reparto or trailer allotment as well as the state of unpreparedness on the part of BMMC to meet the
problem posed by the closure of the railway lines.

It was established that after Gatuslao had cut his sugarcanes for hauling, no trailers arrived and when two trailers finally
arrived on October 1968 after several unheeded requests, they were left on the national highway about one kilometer away
from the loading station, the means of transportation provided by BMMC is very inadequate to answer the needs of Gatuslao.

Philcomsat v. Globe Telecom

429 SCRA 153, G.R. No. 147324 (May 25, 2004)

Facts:

Globe Telecom, Inc. (Globe) is engaged in the coordination of the provision of various communication facilities for the
military bases of the United States of America (US) in the Clark Air Base and Subic Naval Base.
Saud communication facilities were installed and configured for the exclusive use of the US Defense Communications
Agency (USDCA).
Globe contracted Philippine Communications Satellite Corporation (Philcomsat) for the provision of the communication
facilities.
Philcomsat and Globe entered into an agreement whereby Philcomsat obliged itself to establish, operate and provide an IBS
Standard B earth station (earth station) for the exclusive use of the USDCA. Globe promised to pay Philcomsat monthly
rentals for each leased circuit involved.
Philcomsat installed and established the earth station and the USDCA made use of the same.
Senate passed and adopted its resolution, expressing its decision not to concur in the ratification of the Treaty of Friendship,
Cooperation and Security and its Supplementary Agreements that was supposed to extend the term of the use by the US of
Subic Naval Base, among others.
PH government sent a Note Verbale to the US government through the US Embassy, notifying it of the Philippine termination
of the RP-US Military Base Agreement. The withdrawal of all US military forces from Subic Naval Base should be
completed by December 31. 1992.
Globe notified Philcomsat of its intention to discontinue the use of the earth station.
Philcomsat demand payment of rentals for the balance of lease term, despite the non-use of earth station.
Issue/s:

Whether the termination of the RP-US Military Base Agreement, the non-ratification of the Treaty of Friendship,
Cooperation and Security, and the consequent withdrawal of US military forces and personnel from Cubi Point constitute
force majeure which would exempt Globe from complying with its obligation to pay rentals under its Agreement with
Philcomsat.
Whether Globe is liable to pay rentals under the Agreement for the month of December 1992.
Whether Philcomsat is entitled to attorney’s fees and exemplary damages.
Ruling:

Yes. Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military Base Agreement when the
same expired in 1991, because the prerogative to ratify the treaty extending the life thereof belonged to the Senate. Neither
did the parties have control over the subsequent withdrawal of the US military forces and personnel from Cubi Point in
December 1992.
As a consequence of the termination of the RP-US Military Base Agreement the continued stay of all US Military forces and
personnel from Subic Naval Base would no longer be allowed, hence, plaintiff would no longer be in any position to render
service it was obligated under the Agreement.

Events made impossible the continuation of the Agreement until the end of its five-year term without fault on the part of
either party. Such fortuitous events rendered Globe exempt from payment of rentals for the remainder of the term of the
Agreement.

Philcomsat would like to charge globe rentals for the balance of the lease term without being any corresponding
telecommunications service subject of the lease. It will be grossly unfair and iniquitous to hold globe liable for lease charges
for a service that was not and could not have been rendered due to an act of the government which was clearly beyond globes
control.

Yes. The US military forces and personnel completely withdrew from Cubi Point only on December 31, 1992. Thus, until
that date, USDCA had control over the earth station and had the option of using the same. Furthermore, Philcomsat could not
have removed or rendered ineffective said communication facility until after December 31, 1992 because Cubi Point was
accessible only to US naval personnel up to that time.
No. The award of attorney’s fees is the exemption rather than the rule. In cases where both parties have legitimate claims
against each other and no party actually prevailed, such as in the present case where the claims of both parties were sustained
in part, an award of attorney’s fees would not be warranted.
Exemplary damages may be awarded in cases involving contracts, if the erring party acted in wanton, fraudulent, reckless,
oppressive or malevolent manner. It was not shown that Globe acted wantonly or oppressively in not heeding Philcomsats
demands for payment of rentals. Globe had valid grounds for refusing to comply with its contractual obligations after 1992.