TORRICO, LARA JANE G.

LAW1101 – SECTION 3 MN

1. Essay answering the questions:

a. Is the Covid 19 pandemic a fortuitous event or not? Explain.

YES, COVID 19 pandemic is a fortuitous event under Extra-ordinary fortuitous events or

those events which are uncommon and which that contracting parties could not have reasonably
foreseen. The coronavirus disease 2019 (COVID-19) is a novel and highly infectious disease
which was unknown before the outbreak began in Wuhan, China last December. However, in
2020, the rapid spread of the contagious disease claimed thousands of lives worldwide causing
global alarm that includes the Philippines. Moreover, a fortuitous event is any event which
cannot be foreseen, or which, though foreseen, is inevitable. Stated otherwise, it is an event
which is either impossible to foresee or impossible to avoid. It may either be an act of man or an
act of God. Act of man – fortuitous event is an event independent of the will of the obligor but
not of other human wills (war, fire, robbery, etc.). Act of God – refer to what is called majeure or
those events which are totally independent will of every human being like earthquake, flood,
rain, shipwreck, etc. (De Leon, 2014).

b. From Art. 1156 to 1419, think at least 2 articles you want to change, amend, repeal or
remove. Explain why you choose the article.

1. Article 1156. An obligation is a juridical necessity to give, to or not to do.

It is well settled that a moral obligation is enough consideration to support a subsequent promise
to pay where the promisor has received a material benefit, although there was no original duty or
liability resting on the promisor. The case at bar is clearly distinguishable from that class of cases
where the consideration is a mere moral obligation or conscientious duty unconnected with
receipt by the promisor of benefits of a material or pecuniary nature. Here the promisor received
a material benefit constituting a valid consideration for his promise.

It is important to classify moral obligations, differentiating between those involving an economic

advantage to the community, and those devoid of commercial utility. In this respect, one can
speak of a moral obligation to do or refrain from doing something and mean that, based on
religion or philosophy, a certain act or restraint is obligatory. Yet in the field of contracts, moral
obligation must be restricted to the recognition of a commercial connection.

If one were to attempt to arrange promises based on moral obligation on a continuum,

they could be logically arranged in the following order:

(1) Moral obligations arising from strictly ethical considerations without the receipt of
material benefit;

(2) Moral obligations arising from the receipt of a material benefit which did not give rise
to a legal obligation;

(3) Moral obligations arising from an antecedent legal obligation previously performed;

(4) Moral obligations arising from a legal obligation still enforceable;

(5) Moral obligations arising from a prior legal obligation

2. Article 1174. 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. (1105a)

Though, stated that there are no person shall be responsible for those events which could not be
foreseen, or which though foreseen, were inevitable, but when such fortuitous event occurs the
creditor must give a grace or consideration to the debtor when the object is destroyed with such
event. With this case the party who is ought to give an object to another party but then destroyed
will have less damage for himself.

2. Choose at least 2 cases from our syllabus for case digests

a) MADRIGAL VASQUEZ, G.R.NO. 150843, MARCH 14, 2003]

CATHAY PACIFIC AIRWAYS v. MADRIGAL VAZQUEZ

G.R. No. 150843, March 14, 2003

DAVIDE, JR., C.J.:

FACTS:

Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez are
frequent flyers of Cathay and are Gold Card members of its Marco Polo Club. The
Vazquezes, together with their maid and two friends Pacita Cruz and Josefina Vergel de
Dios, went to Hong Kong. For their return flight to Manila on 28 September 1996, they were
booked on Cathay’s Flight CX-905 given their respective boarding passes, to wit, Business
Class boarding passes for the Vazquezes and their two friends, and Economy Class for their
maid.

or their return flight to Manila... the Vazquezes and their companions checked in their
luggage at Cathay's check-in counter at Kai Tak

Airport and were given their respective boarding passes, to wit, Business Class boarding
passes for the Vazquezes and their two friends, and Economy Class for their maid. They then
proceeded to the Business Class passenger lounge.

When boarding time was announced, the Vazquezes and their two friends went to Departure
Gate No. 28, which was designated for Business Class passengers. Dr. Vazquez presented his
boarding pass to the ground stewardess, who in turn inserted it into an electronic machine
reader or... computer at the gate. The ground stewardess was assisted by a ground attendant
by the name of Clara Lai Han Chiu. When Ms. Chiu glanced at the computer monitor, she
saw a message that there was a "seat change" from Business Class to First Class for the
Vazquezes.

Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes' accommodations were
upgraded to First Class. Dr. Vazquez refused the upgrade, reasoning that it would not look
nice for them as hosts to travel in First Class and their guests, in the Business Class; and
moreover,... they were going to discuss business matters during the flight.

He also told Ms. Chiu that she could have other passengers instead transferred to the First
Class Section.
Ms. Chiu informed the latter that the Business Class was fully booked, and that since they
were Marco Polo Club members, they had the priority to be upgraded to the First Class.

Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they would not avail
themselves of the privilege, they would not be allowed to take the flight. Eventually, after
talking to his two friends, Dr. Vazquez gave in. He and Mrs. Vazquez then proceeded to the
First-Class Cabin.

Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996 addressed to
Cathay's Country Manager, demanded that they be indemnified in the amount of P1million
for the "humiliation and embarrassment" caused by its employees. They also demanded "a
written... apology from the management of Cathay, preferably a responsible person with a
rank of no less than the Country Manager, as well as the apology from Ms. Chiu" within
fifteen days from receipt of the letter

In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathay's Country Manager
Argus Guy Robson, informed the Vazquezes that Cathay would investigate the incident and
get back to them within a week's time.

On 8 November 1996, after Cathay's failure to give them any feedback within its self-
imposed deadline, the Vazquezes instituted before the Regional Trial Court of Makati City an
action for damages against Cathay, ... In their complaint, the Vazquezes alleged that when
they informed Ms. Chiu that they preferred to stay in Business Class, Ms. Chiu "obstinately,
uncompromisingly and in a loud, discourteous and harsh voice threatened" that they could
not board and leave with the flight unless... they go to First Class, since the Business Class
was overbooked.

Ms. Chiu's loud and stringent shouting annoyed, embarrassed, and humiliated them because
the incident was witnessed by all the other passengers waiting for boarding.

They also claimed that they were unjustifiably... delayed boarding the plane, and when they
were finally permitted to get into the aircraft, the forward storage compartment was already
full.
Because he was not assisted by... any of the crew in putting up his luggage, his bilateral
carpal tunnel syndrome was aggravated, causing him extreme pain on his arm and wrist.

In its answer, Cathay alleged that it is a practice among commercial airlines to upgrade
passengers to the next better class of accommodation, whenever an opportunity arises, such
as when a certain section is fully booked. Priority in upgrading is given to its frequent flyers,
who are considered favored passengers like the Vazquezes.

Because of Dr. Vazquez's outburst, Ms. Chiu thought of upgrading the traveling companions
of the Vazquezes. But when she checked the computer, she learned that the Vazquezes'
companions did not have priority for upgrading.

She then tried to book the Vazquezes again to their original seats. However, since the
Business Class Section was already fully booked, she politely informed Dr. Vazquez of such
fact and explained that the upgrading was in recognition of their status as Cathay's valued...
passengers. Finally, after talking to their guests, the Vazquezes eventually decided to take the
First-Class accommodation.

Cathay also asserted that its employees at the Hong Kong airport acted in good faith in
dealing with the Vazquezes; none of them shouted, humiliated, embarrassed, or committed
any act of disrespect against them (the Vazquezes).

Assuming that there was indeed a breach of... contractual obligation, Cathay acted in good
faith, which negates any basis for their claim for temperate, moral, and exemplary damages
and attorney's fees.

ISSUES: WETHER OR NOT an involuntary upgrading of an airline passenger's

accommodation from one class to a more superior class at no extra cost a breach of contract
of carriage that would entitle the passenger to an award of damages?

(1) by upgrading the seat accommodation of the Vazquezes from Business Class to First
Class Cathay breached its contract of carriage with the Vazquezes; (2) the upgrading was
tainted with fraud or bad faith; and (3) the Vazquezes... are entitled to damages.

RULING:

We resolve the first issue in the affirmative.

A contract is a meeting of minds between two persons whereby one agrees to give something
or render some service to another for a consideration. There is no contract unless the
following requisites concur: (1) consent of the contracting parties; (2) an object certain which
is... the subject of the contract; and (3) the cause of the obligation which is established.[4]
Undoubtedly, a contract of carriage existed between Cathay and the Vazquezes. They
voluntarily and freely gave their consent to an agreement whose object was the...
transportation of the Vazquezes from Manila to Hong Kong and back to Manila, with seats in
the Business Class Section of the aircraft, and whose cause or consideration was the fare paid
by the Vazquezes to Cathay.

The only problem is the legal effect of the upgrading of the seat accommodation of the
Vazquezes. Did it constitute a breach of contract?

Breach of contract is defined as the "failure without legal reason to comply with the terms of
a contract."[5] It is also defined as the "[f]ailure, without legal excuse, to perform any
promise which forms the whole or part of the... contract."[6]

In previous cases, the breach of contract of carriage consisted in either the bumping off of a
passenger with confirmed reservation or the downgrading of a passenger's seat
accommodation from one class to a lower class. In this case, what happened was the reverse. [
CITATION Placeholder1 \l 13321 ][ CITATION The03 \l 13321 ]

We note that in all their pleadings, the Vazquezes never denied that they were members of
Cathay's Marco Polo Club. They knew that as members of the Club, they had priority for
upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just
like... other privileges, such priority could be waived. The Vazquezes should have been
consulted first whether they wanted to avail themselves of the privilege or would consent to a
change of seat accommodation before their seat assignments were given to other passengers.
Normally, one... would appreciate and accept an upgrading, for it would mean a better
accommodation. But, whatever their reason was and however odd it might be, the Vazquezes
had every right to decline the upgrade and insist on the Business Class accommodation they
had booked for and which was... designated in their boarding passes. They clearly waived
their priority or preference when they asked that other passengers be given the upgrade. It
should not have been imposed on them over their vehement objection. By insisting on the
upgrade, Cathay breached its contract of... carriage with the Vazquezes.

We are not, however, convinced that the upgrading or the breach of contract was attended by
fraud or bad faith. Thus, we resolve the second issue in the negative.

Bad faith does not simply connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty
through some motive or interest or ill will that partakes of the nature of fraud.[8]

We find no persuasive proof of fraud or bad faith in this case. The Vazquezes were not
induced to agree to the upgrading through insidious words or deceitful machination or
through willful concealment of material facts. Upon boarding, Ms. Chiu told the Vazquezes
that their... accommodations were upgraded to First Class in view of their being Gold Card
members of Cathay's Marco Polo Club. She was honest in telling them that their seats were
already given to other passengers and the Business Class Section was fully booked. Ms. Chiu
might have failed to... consider the remedy of offering the First Class seats to other
passengers. But, we find no bad faith in her failure to do so, even if that amounted to an
exercise of poor judgment.

We are not persuaded by the Vazquezes' argument that the overbooking of the Business Class
Section constituted bad faith on the part of Cathay. Section 3 of the Economic Regulation
No. 7 of the Civil Aeronautics Board, as amended, provides:

Sec 3. Scope. This regulation shall apply to every Philippine and foreign air carrier with
respect to its operation of flights or portions of flights originating from or terminating at, or
serving a point within the territory of the Republic of the Philippines... insofar as it denies
boarding to a passenger on a flight, or portion of a flight inside or outside the Philippines, for
which he holds confirmed reserved space. Furthermore, this Regulation is designed to cover
only honest mistakes on the part of the carriers and excludes... deliberate and willful acts of
non-accommodation. Provided, however, that overbooking not exceeding 10% of the seating
capacity of the aircraft shall not be considered as a deliberate and willful act of non-
accommodation.
 It is clear from this section that an overbooking that does not exceed ten percent is not
considered deliberate and therefore does not amount to bad faith.[10] Here, while there was
admittedly an overbooking of the Business Class, there was no evidence of... overbooking of
the plane beyond ten percent, and no passenger was ever bumped off or was refused to board
the aircraft.

b) LAGARDA HERMANOS VS. SALADAÑA, L- 26578, JAN 28, 1974

LEGARDA v. SALDAÑA

G.R. NO. L-26578, January 28, 1974

TEEHANKEE, J.:

FACTS: Saldaña had entered into two written contracts with Legarda, a subdivision owner,
whereby Legarda agreed to sell to him two of his lots for 1,500 per lot, payable over a span of 10
years on 120 monthly installments with 10% interest per annum. Saldaña paid for eight
consecutive years but did not make any further payments due to Legarda’s failure to make the
necessary improvement on the said lot which was promised by their representative, the said Mr.
Cenon. Saldaña already paid a total of Php3,582.06. The statement of account shows that
Saldaña paid Php1,682.28 of the principal and Php1,889.78 for the interest. It did not distinguish
which of the two said lots was paid. Petitioner, then, rescinded the contract based on the
stipulation of the contract that payments made by respondent shall be considered as rentals and
any improvements made shall be forfeited in favor of the petitioner. The lower court ruled
sustaining petitioner’s cancellation of contract. So, respondent appealed, and judgment was
reversed in favor of the respondent ordering petitioners to deliver to plaintiff one of the two lots
at the choice of the defendant and execute the deed of conveyance. Hence this petition.

ISSUE: WETHER OR NOT the cancellation of the sale of contract is valid?

RULING: No, even though it was stipulated that failure to complete the payment would result to
the cancellation of the contract, it was still not valid. As clearly shown in the statement of
account, Saldaña was able to pay one of the two said lots. Under Article 1234 of the New Civil
Code, “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”.
Hence, under the authority of Article 1234 of the New Civil Code, Saladaña is entitled to one of
the two lots of his choice and the interest paid shall be forfeited in favor of the petitioners.

References

De Leon, H. S. (2014). The Law on Obligatins and Contracts. Manila: Rex Book Store.

F. Micheal Adkins. (1974). Conflicts of Laws: Contracts and Other Obligations. Louisiana Law
Review, Vol. 35.

Project, T. L. (1974). G.R. No. L-26578. Philippine Laws and Jurispudence Databank,
https://lawphil.net/judjuris/juri1974/jan1974/gr_l_26578_1974.html.

Project, T. L. (2003). G.R. No. 150843. Philippine Laws and Jurispudence Databank,
https://lawphil.net/judjuris/juri2003/mar2003/gr_150843_2003.html.