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FACTS
ISSUES
HELD
Paez appealed with the CA who set aside the decision and declared
both the Deed and the Addendum null and void, and ordered the
petitioner to pay P20,000 for unrealized profits.
Issue:
Whether the IAC erred in finding that the petitioner, not
respondent, have cause for rescission of the contracts and in ruling
that rescission was not available in rescission of contracts under
Art. 1191.
Held:
In favor of petitioners.
Under the agreement, Reliance Commodities was to pay Paez P70
for every ton of manganese ores delivered with a grade of 40-46%
or over, to be made upon delivery to the stockpile yard in Nueva
Ecija. Petitioner was to advance the expenses of mining and haling
as they were incurred every 15 days, and advances made
deductible from the agreed consideration.
Decision of the IAC is reversed and the decision of the trial court is
revived and affirmed.
ISSUE:
WON the Deed of Absolute Sale is valid and binding?
HELD:
NO. The deed is void in its entirety. Rescission of reciprocal
obligations under Article 1191 of the New Civil Code should be
distinguished from rescission of contracts under Article 1383 of the
same Code. Both presuppose contracts validly entered into as well
as subsisting, and both require mutual restitution when proper,
nevertheless they are not entirely identical.
While Article 1191 uses the term rescission, the original term used
in Article 1124 of the old Civil Code, from which Article 1191 was
based, was resolution. Resolution is a principal action that is based
on breach of a party, while rescission under Article 1383 is a
subsidiary action limited to cases of rescission for lesion under
Article 1381 of the New Civil Code.
Obviously, the Kasunduan does not fall under any of those
situations mentioned in Article 1381. Consequently, Article 1383 is
inapplicable. Hence, we rule in favor of the respondents.
May the contract entered into between the parties, however, be
rescinded based on Article 1191? A careful reading of the
Kasunduan reveals 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.
Respondents in this case bound themselves to deliver a deed of
absolute sale and clean title covering Lot No. 1083-C after
petitioners have made the second installment. This promise to sell
was subject to the fulfillment of the suspensive condition that
petitioners pay P750,000 on August 31, 1987, and deposit a
postdated check for the third installment of P1M. Petitioners,
however, failed to complete payment of the second installment.
The non-fulfillment of the condition 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 already extant,
not a failure of a condition to render binding that obligation. Failure
to pay, in this instance, is not even a breach but an event that
prevents the vendor’s obligation to convey title from acquiring
binding force. Hence, the agreement of the parties in the instant
case may be set aside, but not because of a breach on the part of
petitioners for failure to complete payment of the second
installment. Rather, their failure to do so prevented the obligation
of respondents to convey title from acquiring an obligatory force.
Coming now to the matter of prescription. Contrary to petitioners’
assertion, we find that prescription has not yet set in. Article 1391
states that the action for annulment of void contracts shall be
brought within four years. This period shall begin from the time the
fraud or mistake is discovered. Here, the fraud was discovered in
1992 and the complaint filed in 1993. Thus, the case is well within
the prescriptive period
BARREDO v. LEANO
Facts:
In 1979, Manuel and Jocelyn Barredo bought a house and lot in Las
Pinas with an SSS loan of P50,000 payable in 25 yrs. and an Apex
Mortgage and Loans Corporation of P88,400 payable in 20 years.
To secure the loans, they executed a first mortgage in favor of SSS
and a second one for Apex. On Jul. 10, 1987, the sold their house
and lot to Eustaquio and Emilda Leano by way of a Conditional
Deed of Sale with Assumption of Mortgage. The Leano Spouses
would pay the Barredo Spouses P200,000, half of which would be
payable on Jul. 15, 1987, with the balance paid in 10 equal monthly
payments after the signing of the contract. They would also assume
the mortgages and pay the monthly amortizations beginning Jul.
1987 until both obligations were fully paid.
Two years later, Sept. 4, 1989, the Barredo Spouses initiated a
complaint before the RTC of Las Pinas seeking the rescission of the
contract on the ground that the Leanos failed to pay the mortgage
amortizations despite repeated demands. The Leanos contended
that they were up-to-date with Apex payments but were not able
to pay SSS because their payments were refused upon instructions
by the Barredos. The Barredos took it upon themselves to settle
the mortgage loans and paid P27,494 on Sept. 11, 1989 and
P41,401.91 on Jan. 9, 1990. SSS issued a Release of Real Estate
Mortgage Loan. They also settled the Apex loan with P5,379.23 on
Oct. 3, 1989 and P64,000 on Jan. 9, 1990. Apex issued a
Certification of Full Payment of Loan. The Barredos also paid the
real estate property taxes for 1987-1990. The RTC ruled in favor
of the Barredos, declaring the contract as rescinded and null and
void, and ordering the defendants to pay.
The Leanos, who had turned over the house and lot to the
Barredos, appealed to the CA, who reversed the decision on the
ground that the payments of amortization were mere collateral
matters which did not detract from the condition of paying the
principal consideration, and ordered the Barredos to execute the
Deed of Absolute Sale upon full payment of P140,492.74 and turn
over the property to the Leanos.
Issue:
W/N the CA erred in holding that the payments of amortization are
mere collateral matters.
Held:
The principal object of the contract was the sale of the Barredo
house and lot, for which the Leanos gave P200,000. The
assumption of the mortgages by the Leanos and their payment of
amortizations are just mere collateral matters which are natural
consequences of the sale of the mortgaged property. ¶3 of the
agreement provides that the Leanos merely bound themselves to
assume, which they actually did upon signing of the agreement,
the obligations of the Barredos with SSS and Apex. Nowhere in the
contract is it stipulated that the sale was conditioned upon their full
payment of the loans. To include the full payment of the obligations
with SSS and Apex as a condition would be to unnecessarily stretch
and put a new meaning to the provisions of the agreement.
Facts:
On Jan. 15, 1990, Generoso Villanueva and Raul Villanueva, Jr.,
business entrepreneurs engaged in the operation of transloading
stations and sugar trading, and the Estate of Gerardo L. Gonzaga,
represented by its Judicial Administratix, Ma. Villa J. Gonzaga,
executed a MOA which read that the latter was the owner of land
in Bacolod City, mortgaged with the Philippine National Bank as
collateral for loan, and that the former was to purchase portions of
the lot for P150 per sq. m. for the total price of P486,000 subject
to the ff. conditions:
a.) That the Estate of Gonzaga would release the lots from PNB.
b.) That the Villanuevas would pay the amount P100,000 upon
signing the agreement, P191,600 on Jan. 10, 1990, and
P194,400 upon approval of the PNB of the release of the lots.
c.) That the P100,000 downpayment shall be considered forfeited
if the Villanuevas withdraw from their agreement.
d.) Upon 60% payment, the Villanuevas may start to introduce
improvements.
e.) Upon the release of the lots by the PNB, the Estate of Gonzaga
would execute a Deed of Sale.
Held:
The PNB’s letter of approval shows that the approval was
conditional. It was therefore premature for respondents to demand
payment of the balance of the purchase price and rescinding the
MOA. Moreover, there is no legal basis for the rescission. The
remedy of rescission under Art. 1191 is predicated on a breach of
faith by the other party that violates the reciprocity between them.
The remedy does not apply to contracts to sell. In a contract to
sell, title remains with the vendor and does not pass on to the
vendee until the purchase price is paid in full. Thus, the payment
of the purchase price is a positive suspensive condition. Failure to
pay the price agreed upon is not a mere breach, casual or serious,
but a situation that prevents the obligation of the vendor to convey
title from acquiring an obligatory force. In a contract to sell, the
vendor remains the owner for as long as the vendee has not
complied fully with the condition of paying the purchase price. If
the vendor should eject the vendee for failure to meet the condition
precedent, he is enforcing the contract and not rescinding it.
The MOA between the two parties is a conditional contract to sell.
Ownership over the lots is not to pass to the petitioners until full
payment of the purchase price. The petitioners’ obligation to pay,
in turn, is conditioned upon the release of the lots from mortgage
with the PNB to be secured by the respondents. Since ownership
had not been transferred, no legal action need have been taken by
the respondents. The records show that the lots were finally
released from mortgage in Jul. 1991 and petitioners should be
allowed to pay. However, petitioners may not demand production
of the titles as condition for the payment as it was not required
under the MOA. Petition is granted and the decision is reversed.
SPS. GUANIO VS. MAKATI SHANGRI-LA HOTEL
Facts: Petitioner spouses, Luigi M. Guanio and Anna Hernandez-
Guanio, booked respondent Makati Shangre-La Hotel for their
wedding reception.
A week before their wedding reception, the hotel scheduled a food
tasting. Eventually, the parties agreed to a package where the final
price was P1,150.00 per person.
According to the complainants, when the actual reception took
place, ” the respondent’s representatives did not show up despite
their assurance that they would; their guests complained of the
delay in the service of the dinner; certain items listed in the
published menu were unavailable; the hotel’s waiters were rude
and unapologetic when confronted about the delay; and despite
Alvarez’s promise that there would be no charge for the extension
of the reception beyond 12:00 midnight, they were billed and paid
P8,000 per hour for the three-hour extension of the event up to
4:00 A.M. the next day. They further claim that they brought wine
and liquor in accordance with their open bar arrangement, but
these were not served to the guests who were forced to pay for
their drinks. They sent a letter-complaint to hotel and received an
apologetic reply from the hotel’s Executive Assistant Manager in
charge of Food and Beverage.
They nevertheless filed a complaint for breach of contract and
damages before the Regional Trial Court (RTC) of Makati City.
Answering, the hotel said that complainants requested a
combination of king prawns and salmon, hence, the price was
increased to P1,200.00 per person, but discounted at P1,150.00;
that contrary to their claim, the hotel representatives were present
during the event, albeit they were not permanently stationed
thereat as there were three other hotel functions; that while there
was a delay in the service of the meals, the same was occasioned
by the sudden increase of guests to 470 from the guaranteed
expected minimum number of guests of 350 to a maximum of 380,
as stated in the Banquet Event Order (BEO);2 and the Banquet
Service Director in fact relayed the delay in the service of the meals
to complainant’s father.
The RTC, relying heavily on the letter of the hotel’s Executive
Assistant ruled in favour of the complainants and awarded
damages in their favour.
The Court of Appeals reversed the decision, noting that the
proximate cause of the complainant’s injury was the unexpected
increase in the number of their guests.
Issue:
WON Makati Shangri-La Hotel may be held liable for damages.
Held:
The Supreme Court reversed the Court of Appeals decision, noting
that in this case, the obligation was based on a contract, hence,
the concept of proximate cause has no application.
In absolving the hotel from damages, the Supreme Court noted
that: “The appellate court, and even the trial court, observed that
petitioners were remiss in their obligation to inform respondent of
the change in the expected number of guests. The observation is
reflected in the records of the case. Petitioners’ failure to discharge
such obligation thus excused, as the above-quoted paragraph 4.5
of the parties’ contract provide, respondent from liability for “any
damage or inconvenience” occasioned thereby”
Nevertheless, on grounds of equity, the High Court awarded
P50,000.00 in favour of the complainants and justified it by saying:
“The exculpatory clause notwithstanding, the Court notes that
respondent could have managed the “situation” better, it being
held in high esteem in the hotel and service industry. Given
respondent’s vast experience, it is safe to presume that this is not
its first encounter with booked events exceeding the guaranteed
cover. It is not audacious to expect that certain measures have
been placed in case this predicament crops up. That regardless of
these measures, respondent still received complaints as in the
present case, does not amuse.
Respondent admitted that three hotel functions coincided with
petitioners’ reception. To the Court, the delay in service might have
been avoided or minimized if respondent exercised prescience in
scheduling events. No less than quality service should be delivered
especially in events which possibility of repetition is close to nil.
Petitioners are not expected to get married twice in their lifetimes.”
What applies in the present case is Article 1170 of the Civil Code
which reads:
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.
RCPI v. Verchez, et al. enlightens: In culpa contractual x x x the
mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief. The
law, recognizing the obligatory force of contracts, will not permit a
party to be set free from liability for any kind of misperformance of
the contractual undertaking or a contravention of the tenor thereof.
A breach upon the contract confers upon the injured party a valid
cause for recovering that which may have been lost or suffered.
The remedy serves to preserve the interests of the promissee that
may include his “expectation interest ,” which is his interest in
having the benefit of his bargain by being put in as good a position
as he would have been in had the contract been performed, or his
“reliance interest ,”which is his interest in being reimbursed for loss
caused by reliance on the contract by being put in as good a
position as he would have been in had the contract not been made;
or his ”restitution interest,” which is his interest in having restored
to him any benefit that he has conferred on the other party.
Indeed, agreements can accomplish little, either for their makers
or for society, unless they are made the basis for action.
The effect of every infraction is to create a new duty, that is, to
make RECOMPENSE to the one who has been injured by the failure
of another to observe his contractual obligation unless he can show
extenuating circumstances, like proof of his exercise of due
diligence or of the attendance of fortuitous event to excuse him
from his ensuing liability.
FACTS:
The basis of the complaint against the defendant corporation is a
telegram sent through its Manila Office to the offended party,
Loreto Dionela, reading as follows: SA IYO WALANG PAKINABANG
DUMATING KA DIYAN-WALAKANG PADALA DITO KAHIT BULBUL
MO
Loreto Dionela alleges that the defamatory words on the telegram
sent to him not only wounded his feelings but also caused him
undue embarrassment and affected adversely his business as well
because other people have come to know of said defamatory
words. Defendant corporation as a defense, alleges that the
additional words in Tagalog was a private joke between the sending
and receiving operators and that they were not addressed to or
intended for plaintiff and therefore did not form part of the
telegram and that the Tagalog words are not defamatory. The
telegram sent through its facilities was received in its station at
Legaspi City. Nobody other than the operator manned the teletype
machine which automatically receives telegrams being
transmitted. The said telegram was detached from the machine
and placed inside a sealed envelope and delivered to plaintiff,
obviously as is. The additional words in Tagalog were never noticed
and were included in the telegram when delivered.
RTC ruled in favor of Dionela, holding that the additional Tagalog
words are libelous. It ruled that there was sufficient publication
because the office file of the defendant containing copies of
telegrams received are open and held together only by a metal
fastener. Moreover, they are open to view and inspection by third
parties. RTC also held that the defendant is sued directly not as an
employer. The business of the defendant is to transmit telegrams.
It will open the door to frauds and allow the defendant to act with
impunity if it can escape liability by the simple expedient of
showing that its employees acted beyond the scope of their
assigned tasks.
ISSUE:
WON Petitioner-employer should answer directly and primarily for
the civil liability arising from the criminal act of its employee.
HELD:
YES. The action for damages was filed in the lower court directly
against respondent corporation not as an employer subsidiarily
liable under the provisions of Article 1161 of the New Civil Code in
relation to Art. 103 of the Revised Penal Code. The cause of action
of the private respondent is based on Arts. 19 and 20 of the New
Civil Code, as well as on respondent's breach of contract thru the
negligence of its own employees.
Petitioner is a domestic corporation engaged in the business of
receiving and transmitting messages. Every time a person
transmits a message through the facilities of the petitioner, a
contract is entered into. Upon receipt of the rate or fee fixed, the
petitioner undertakes to transmit the message accurately. There is
no question that in the case at bar, libelous matters were included
in the message transmitted, without the consent or knowledge of
the sender. There is a clear case of breach of contract by the
petitioner in adding extraneous and libelous matters in the
message sent to the private respondent. As a corporation, the
petitioner can act only through its employees. Hence the acts of its
employees in receiving and transmitting messages are the acts of
the petitioner. To hold that the petitioner is not liable directly for
the acts of its employees in the pursuit of petitioner's business is
to deprive the general public availing of the services of the
petitioner of an effective and adequate remedy. In most cases,
negligence must be proved in order that plaintiff may recover.
However, since negligence may be hard to substantiate in some
cases, we may apply the doctrine of RES IPSA LOQUITUR (the thing
speaks for itself), by considering the presence of facts or
circumstances surrounding the injury.
FACTS:
Pursuant to a Deed of Sale and an Interment Order executed
between plaintiff and defendant, Juan J. Syquia (father of deceased
Vicente Syquia) authorized and instructed defendant to inter the
remains of the deceased in the Manila Memorial Park Cemetery
conformably and in accordance with defendant's interment
procedures.
After a few months, preparatory to transferring the said remains
to a newly purchased family plot also at the Manila Memorial Park
Cemetery, the concrete vault encasing the coffin of the deceased
was removed from its niche underground with the assistance of
certain employees of defendant. As the concrete vault was being
raised to the surface, plaintiffs discovered that the concrete vault
had a hole approximately 3 inches in diameter near the bottom of
one of the walls closing out the width of the vault on one end and
that for a certain length of time, water drained out of the hole.
Pursuant to an authority granted by the MTC, plaintiffs, with the
assistance of licensed morticians and certain personnel of
defendant, caused the opening of the concrete vault. Upon opening
the vault, the following became apparent: (a) the interior walls of
the concrete vault showed evidence of total flooding; (b) the coffin
was entirely damaged by water, filth and silt causing the wooden
parts to warp and separate and to crack the viewing glass panel
located directly above the head and torso of the deceased; (c) the
entire lining of the coffin, the clothing of the deceased, and the
exposed parts of the deceased's remains were damaged and soiled
by the action of the water and silt and were also coated with filth.
Plaintiffs filed a case for damages, based on the alleged unlawful
and malicious breach by the defendant of its obligation to deliver a
defect-free concrete vault designed to protect the remains of the
deceased and the coffin against the elements which resulted in the
desecration of deceased's grave and in the alternative, because of
defendant-appellee's gross negligence conformably to Article 2176
of the New Civil Code in failing to seal the concrete vault.
ISSUE:
WON DEFENDANT IS LIABLE FOR QUASI-DELICT?
HELD:
NO, there was no fault or negligence on the part of the defendant
that would render him liable for quasi-delict. Although a pre-
existing contractual relation between the parties does not preclude
the existence of a culpa aquiliana, we find no reason to disregard
the respondent's Court finding that there was no negligence. In this
case, it has been established that the Syquias and the Manila
Memorial Park Cemetery, Inc., entered into a contract entitled
"Deed of Sale and Certificate of Perpetual Care." That agreement
governed the relations of the parties and defined their respective
rights and obligations. Hence, had there been actual negligence on
the part of the Manila Memorial Park Cemetery, Inc., it would be
held liable not for a quasi-delict or culpa aquiliana, but for culpa
contractual as provided by Article 1170 of the Civil Code.
The Manila Memorial Park Cemetery, Inc. bound itself to provide
the concrete box to be sent in the interment. Rule 17 of the Rules
and Regulations of private respondent provides that: Rule 17.
Every earth interment shall be made enclosed in a concrete box,
or in an outer wall of stone, brick or concrete, the actual installment
of which shall be made by the employees of the Association.
Pursuant to this above-mentioned Rule, a concrete vault was
provided the day before the interment, and was, on the same day,
installed by private respondent's employees in the grave which was
dug earlier. After the burial, the vault was covered by a cement lid.
Petitioners however claim that private respondent breached its
contract with them as the latter held out in the brochure it
distributed that the lot may hold a single or double internment
underground, in a sealed concrete vault. Petitioners claim that the
vault provided by private respondent was not sealed, that is, not
waterproof. Consequently, water seeped through the cement
enclosure and damaged everything inside it. We do not agree.
There was no stipulation in the Deed of Sale and Certificate of
Perpetual Care and in the Rules and Regulations of the Manila
Memorial Park Cemetery, Inc. that the vault would be waterproof.
Private respondent's witness, Mr. Dexter Heuschkel, explained that
the term "sealed" meant "closed." Moreover, it is also quite clear
that "sealed" cannot be equated with "waterproof". Well settled is
the rule that when the terms of the contract are clear and leave no
doubt as to the intention of the contracting parties, then the literal
meaning of the stipulation shall control. Contracts should be
interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment.
We hold, therefore, that private respondent did not breach the
tenor of its obligation to the Syquias. While this may be so, can
private respondent be liable for culpa aquiliana for boring the hole
on the vault? It cannot be denied that the hole made possible the
entry of more water and soil than was natural had there been no
hole.
The law defines negligence as the "omission of that diligence which
is required by the nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the place." In
the absence of stipulation or legal provision providing the contrary,
the diligence to be observed in the performance of the obligation
is that which is expected of a good father of a family.
FACTS:
Private respondent Luis A. Luna applied for, and was accorded, a
FAREASTCARD issued by petitioner FEBTC. Upon his request, the
bank also issued a supplemental card to private respondent Clarita
S. Luna. Later, Clarita lost her credit card. FEBTC was informed. In
order to replace the lost card, Clarita submitted an affidavit of loss.
In cases of this nature, the bank's internal security procedures and
policy would be to record the lost card, along with the principal
card, as a "Hot Card" or "Cancelled Card" in its master file.
Luis then tendered a despedida lunch for a close friend, a Filipino-
American, and another guest at the Bahia Rooftop Restaurant of
the Hotel Intercontinental Manila. To pay for the lunch, Luis
presented his fareastcard to the attending waiter who promptly had
it verified through a telephone call to the bank's Credit Card
Department. Since the card was not honored, Luis was forced to
pay in cash the bill amounting to P588.13. Naturally, Luis felt
embarrassed by this incident.
Private respondent Luis Luna, through counsel, demanded from
FEBTC the payment of damages. Adrian V. Festejo, a vice-
president of the bank, expressed the bank's apologies to Luis,
admitting that: “An investigation of your case revealed that
FAREASTCARD failed to inform you about its security policy.
Furthermore, an overzealous employee of the Bank's CIV LAW
REVIEW - OBLICON DIGESTS Credit Card Department did not
consider the possibility that it may have been you who was
presenting the card at that time (for which reason, the unfortunate
incident occurred).”
Luna then filed a case for damages in the RTC, which rendered a
decision against FEBTC, and awarded moral damages.
ISSUE:
WON FEBTC IS LIABLE FOR QUASI-DELICT?
HELD:
NO. In culpa contractual, moral damages may be recovered where
the defendant is shown to have acted in bad faith or with malice in
the breach of the contract. Bad faith, in the context of Article 2220,
includes gross, but not simple, negligence. Exceptionally, in a
contract of carriage, moral damages are also allowed in case of
death of a passenger attributable to the fault (which is presumed)
of the common carrier.
Concededly, the bank was remiss in indeed neglecting to personally
inform Luis of his own card's cancellation. Nothing in the findings
of the trial court and the appellate court, however, can sufficiently
indicate any deliberate intent on the part of FEBTC to cause harm
to private respondents. Neither could FEBTC's negligence in failing
to give personal notice to Luis be considered so gross as to amount
to malice or bad faith.
Malice or bad faith implies a conscious and intentional design to do
a wrongful act for a dishonest purpose or moral obliquity; it is
different from the negative idea of negligence in that malice or bad
faith contemplates a state of mind affirmatively operating with
furtive design or ill will.
We are not unaware of the previous rulings of this Court,
sanctioning the application of Article 21, in relation to Article 2217
and Article 2219 7 of the Civil Code to a contractual breach similar
to the case at bench. Article 21 of the Code, it should be observed,
contemplates a conscious act to cause harm. Thus, even if we are
to assume that the provision could properly relate to a breach of
contract, its application can be warranted only when the
defendant's disregard of his contractual obligation is so deliberate
as to approximate a degree of misconduct certainly no less worse
than fraud or bad faith. Most importantly, Article 21 is a mere
declaration of a general principle in human relations that clearly
must, in any case, give way to the specific provision of Article 2220
of the Civil Code authorizing the grant of moral damages in culpa
contractual solely when the breach is due to fraud or bad faith.
Justice Jose B.L. Reyes, in his ponencia in Fores vs. Miranda,
explained: ”Moral damages are not recoverable in damage actions
predicated on a breach of the contract of transportation, in view of
Articles 2219 and 2220 of the new Civil Code. By contrasting the
provisions of these two articles it immediately becomes apparent
that: (a) In case of breach of contract (including one of
transportation) proof of bad faith or fraud (dolus), i.e., wanton or
deliberately injurious conduct, is essential to justify an award of
moral damages; and (b) That a breach of contract can not be
considered included in the descriptive term "analogous cases" used
in Art. 2219; not only because Art. 2220 specifically provides for
the damages that are caused contractual breach, but because the
definition of quasi-delict in Art. 2176 of the Code expressly
excludes the cases where there is a "preexisitng contractual
relations between the parties."
The distinction between fraud, bad faith or malice in the sense of
deliberate or wanton wrong doing and negligence (as mere
carelessness) is too fundamental in our law to be ignored (Arts.
1170-1172); their consequences being clearly differentiated by the
Code. It is to be presumed, in the absence of statutory provision
to the contrary, that this difference was in the mind of the
lawmakers when in Art. 2220 they limited recovery of moral
damages to breaches of contract in bad faith. It is true that
negligence may be occasionally so gross as to amount to malice;
but the fact must be shown in evidence, and a carrier's bad faith is
not to be lightly inferred from a mere finding that the contract was
breached through negligence of the carrier's employees.
The Court has not in the process overlooked another rule that a
quasi-delict can be the cause for breaching a contract that might
thereby permit the application of applicable principles on tort even
where there is a pre-existing contract between the plaintiff and the
defendant. This doctrine, unfortunately, cannot improve private
respondents' case for it can aptly govern only where the act or
omission complained of would constitute an actionable tort
independently of the contract. The test (whether a quasi-delict can
be deemed to underlie the breach of a contract) can be stated
thusly: Where, without a pre-existing contract between two
parties, an act or omission can nonetheless amount to an
actionable tort by itself, the fact that the parties are contractually
bound is no bar to the application of quasi-delict provisions to the
case. Here, private respondents' damage claim is predicated solely
on their contractual relationship; without such agreement, the act
or omission complained of cannot by itself be held to stand as a
separate cause of action or as an independent actionable tort.
FACTS
Respondents Navalta et al were lessees of the premises originally
owned by Susana Realty. They would pay on a month-to-month
basis to a collector who would come every month to collect the
rent.
The premises were later sold to Cetus Development and the
respondents continued paying their monthly rentals to a collector
sent by the petitioner.
For a period of three months (July, Aug, Sept), however, no
collector came and thus the respondents could not pay.
On October, the petitioner sent a letter to the respondents
demanding that they vacate the premises and pay the back rentals
for the 3 months. Respondents then paid the back rentals as well
as subsequent monthly rentals which were all accepted by
petitioner but without prejudice to the filing of an ejectment suit.
Petitioner filed for respondents’ ejectment but respondents counter
that their non-payment was due to petitioner’s failure to send a
collector.
Issue:
WON there is a cause for ejectment due to respondents’ supposed
failure to pay during the 3 months.
Held:
There is no cause for ejectment because there is no failure to pay
on the part of the respondents. CA is affirmed in denying ejectment
suit.
Ratio:
In order to file an ejectment suit, there must be 1. A failure to pay
or to comply with the conditions agreed upon and 2. Demand both
to pay or comply and vacate.
However, there is no failure to pay on the part of the respondents
for the 3 months because, as a general rule, default in the
fulfillment of an obligation exists only when the creditor demands
payment at the time of maturity or at any time thereafter.1 (from
Art 1169) The petitioner has failed to prove that their agreement
with respondents falls under the exceptions where demand is
required: a.) when law declares as such, b.) when it can be inferred
from the essence of the contract, c.) when demand would be
useless.
Demand can also come in any form, provided it can be proved by
the creditor. But the petitioner in this case has failed to prove that
demand was made, more so since no collector was sent during the
3 months. It could not therefore be said that the respondents were
in delay of payment rentals. Moreover, when petitioner actually
made the demand (in the form of the letter), respondents lost no
time in making payment, which the petitioner accepted.
Therefore, petitioner cannot ask for respondents’ ejectment
because there is no right on his part to rescind the contract of
lease.
4. Fraud