Art. 1157 – 1170

Cathay Pacific v. Vasquez

Facts:

Dr. Vasquez and his spouse, as frequent flyers of Cathay Pacific and Gold Card

members of Marco Polo Club, were given seat upgrades from Business Class to First Class

during their flight from Hong Kong to Manila. However, the spouses declined this

privilege since they were with their colleagues whom they wanted to talk to during their

flight, which is why they all selected Business Class seats. The flight attendant, Ms. Chiu,

then consulted her supervisor regarding the issue and her supervisor told her to insist

the Vasquezes to take the seat changes because the Business Class was fully booked and if

they did not take the privilege, they wouldn’t be able to take the flight. Because of this,

the Vasquezes had no choice so they accepted the upgraded and proceeded to the First

Class section of the plane. When the Vasquezes returned to Manila, they demanded

P1,000,000 as damages from Cathay and also a written apology. Cathay replied that they

would first investigate about the incident and they will get back to their request.

However, Cathay failed to reply during the self-imposed date by the Vasquezes.

The Vasquezes filed for damages to the Regional Trial Court of Makati and they

rendered their decision in favor of the spouses because there was a breach on behalf of

Cathay because Cathay’s obligation is to transport their passengers in the class the

passengers have chosen and that Cathay cannot change said choices involuntarily.

The CA affirmed the decision of the trial court but they made modifications

regarding the damages because the bad faith of the employees was not sufficiently

proven by the spouses.

Issues:

1.) Whether or not Cathay committed breach of contract of carriage when they

upgraded the seats of the Vasquezes

2.) Whether or not there was bad faith involved

3.) Whether or not the Vasquezes are entitled to damages

Held:

1.) The Court held that there was indeed a breach because even if the Vasquezes

were entitled to such privilege, this privilege could be waived by the declination of

the spouses for whatever reason. Because Cathay insisted on the acceptance of

the upgrade, they breached their contract of carriage with the Vasquezes.

2.) The Court held that there was no persuasive proof of the bad faith or fraud that

was allegedly committed by Cathay or their employees.

3.) Since the bad faith or fraud of the petitioners was not proven, moral damages

(pursuant to Art. 2220) and exemplary damages (no bad faith) were deleted. Only

the nominal damages should be paid for by Cathay pursuant to Art. 2221.

Oblicon Doctrines:

1.) Breach of contract is defined as the “failure without legal reason to comply with

the terms of a contract.” It is also defined as the “[f]ailure, without legal excuse, to

perform any promise which forms the whole or part of the contract.”

2.) Identity of Payment – Debtor must deliver the specific obligation that is due.

San Pedro’s Comments:

Sir feels that there was negligence on part of Cathay because the flight attendant

did not think of offering the flight upgrade to other passengers in the business class

instead of insisting the Vasquezes to take the first class. Cathay should have been liable

for moral and exemplary damages since Cathay did not exercise all means to prevent the

humiliation and anguish that was experienced by the Vasquezes.

Art. 1169

Almocera v. Ong

Art. 1174

Ace-Agro v. CA

Facts:

Cosmos was a soft drinks manufacturer and Ace-Agro cleaned soft drinks bottles

and repaired wooden shells for Cosmos in San Francisco, Pampanga. Cosmos and Ace-

Agro had a contract of service with a period from January 1, 1990 to December 31, 1990.

Cosmos also has a contract of service with Aren Enterprises which was working outside

the factory of Cosmos and was also able to cope with Cosmos’ daily production of 8.000

softdrinks. On April 25, 1990, there was a fire in Cosmos’ plantation which destroyed

even the working area of Ace-Agro. Because of the fire, Ace-Agro’s employees were not

able to continue their work. On May 15, 1990, Ace-Agro was asking for the resumption of

work but Cosmos declined because the whole area was still recuperating from the fire

and asked for the termination of the contract with Ace-Agro. Ace-Agro asked for a

Cosmos’ reconsideration regarding the termination and there was no reply from the

respondent so the petitioner said that they need to recuperate from the termination of

the contract with Cosmos and they had to dismiss the employees. The employees then

filed for an illegal dismissal case. Cosmos received another letter of reconsideration from

the petitioner regarding the displaced workers. Cosmos then informed Ace-Agro that the

contract resumed but the petitioner had to work outside the plantation of Cosmos.

Petitioner complained, claiming that the original terms of the contract were not sufficient

for such a change. Cosmos then told Ace-Agro that they may resume working on wooden

shells in the plantation, but Ace-Agro still complained about the pending illegal dismissal

cases against them because of the premature termination of the existing contract with

Cosmos.

Petitioner filed for damages in the RTC due to breach of contract allegedly

committed by the respondent and the RTC ruled in favor of Ace-Agro because it found

that Cosmos did commit breach. After filing for an appeal by the respondent, the trial

court then reversed the decision of the RTC.

Issues:

1.) Whether or not it was justified for Cosmos to terminate the contract due to force

majeure (fire)

2.) Whether or not it was the unjustified refusal of Ace-Agro that terminated the

contract between the two parties

Held:

1.) According to Tolentino, “In some contracts, either because of its indeterminate

duration or because of the nature of the prestation which is its object, one of the

parties may free himself from the contractual tie by his own will (unilateral

extinguishment).”

Cosmos’ termination of the contract was due to the loss of objects of the

prestation (soft drinks bottles and wooden shells) because of the fire, which was

an unseen event (force majeure). Ace-Agro was expecting an extension of the

contract because of the force majeure, however, a force majeure only suspends the

obligation of the parties but the period is still running (Tolentiono).

2.) The Court held that there was unjust refusal on the part of Ace-Agro because

despite their requests being compromised with by Cosmos, they still refused to

their terms. The complaint regarding Aren Enterprises was also found to have no

basis since there was no stipulation in the contract of Ace-Agro and Cosmos

regarding the latter’s being prohibited to contract the services of other

companies.

Oblicon Doctrine:

1.) The stipulation that in the event of a fortuitous event or force majeure the

contract shall be deemed suspended during the said period does not mean that the

happening of any of those events stops the running of the period the contract has

been agreed upon to run.  It only relieves the parties from the fulfillment of their

respective obligations during that time. 

San Pedro’s Comments:

Ace-Agro should have added “In case of occurrence of force majeure, …”

(regarding the extension of the period of the contract).

Art. 1190 – 1192

Cannu v. Galang

Solid Homes v. Tan

Art. 1207 – 1222

Boston v. CA

Art. 1236 – 1243

Republic v. De Guzman