CERRANO V.

CHUCO

Facts:

- Vivencio Cerrano (plaintiff-appellee)

- Tan Chuco (defendant-appellant)
- Jan. 1918: Defendant (then owner of Casco No. 1033) rented casco to plaintiff at a monthly rent
at P70 wherein rent is payable at the end of the month
- Contract made in Manila however there is no express agreement as regards to the duration of
the contract.
- Some tome in May 1916, defendant notified plaintiff that the following month the casco must
be sent to Malabon for repairs. Plaintiff informs desire to rent the said casco after repairs. The
former informs the latter that there will be an increase in rent fee, from P70 to P80.
- Jun. 1916: Casco was brought to Malabon by plaintiff and delivered to the shipyard selected by
the defendant. It remain until Jul. 24, 1916.
- One week before the end of repairs, defendant sold the casco to Siy Cong Being, Co.
- J. Santos, employed by the plaintiff as the patron of the casco when he was still renting it, went
to Siy Cong Being, Co. office in Manila for employment, P5 wage. He was then instructed to go
to Malabon and bring the casco to Manila.
- Upon arrival in Manila, plaintiff claims possession of the casco under the contract with the
defendant and induced Santos to refuse orders from new owners.
- Siy Cong Being & Co. filed for an action for replevin against Santos.
- The sheriff took possession of casco but redelivered to Santos upon delivery bond by plaintiff
and wife.
- The casco was under Santos possession for 3 months
- When the replevin suit was submitted and processed, the illegal detention of the casco by
Santos had caused damages of P457.98. The ruling was return of casco and the P 457.98.
Additionally, Cerrano was ordered to pay the judgement of the replevin suit since evidence was
found the Santos was just a nominal defendant and was moving under the orders of the later.
Also, Cerrano was found liable of the replevin suit due to the delivery bond. Plaintiff was asked
to pay P500 for the attorneys fee for Santos in the replevin case.
- In Cerrano v. Chuco case, the plaintiff testified of earning an average income of P60 per month
during rental period of the casco from defendant. Additionally, plaintiff argues that the contract
duration is 10 mons. which is in accordance to the custom in port of Manila.
- Chuco contested that the rent duration was only for a month. Additionally, there was no
acceptance of the increased rental rate of the plaintiff urging him to assume that there was no
renewal of contract.
- The trial court ruled in favor of plaintiff. Defendant breached contract with plaintiff (10 months
contract) and ordered to pay P600 (loss of profit for 10 months), 457.98 (liable to damages to
SCB & Co. in the replevin suit), and P500 (for the attorneys fee for Santos).
- Defendant appealed to higher court of the decision

ISSUE:

- Whether it was agreed between plaintiff and defendant that the casco was to be leased again
after the repairs
 o Court sustains decision of lower court. Evidence showed that plaintiff will rent with the
increased rate (plaintiff paid towage fee, left equipment in casco, and patron stayed
with casco in Malabon)
- Duration of the term (contract)
o Court finds that evidence of the existence of the custom is unsatisfactory and very
conflicting; docking duration cannot be fixed. Since no rule of law is applicable to the
renting of personal property in general/in vessels in particular, Civil Code Art. 6 will be
applied.
o Civil Code Art. 6: may adopt and apply the analogy the general rules established by the
code relating to the lease of real property. Thus Art. 1581 of the Civil Code will be used.
o Art. 1581 of the CC: when no definite agreement on the duration was made, the lease is
deemed to have been made from day to day, month to month, year to year.
o Conclusion: defendant was bound to deliver the casco to plaintiff for 1 month rent after
repairs but no obligation to renew the contract at the end of the month.

ON THE APPEAL OF THE RULING OF THE TRAIL COURT:

- Court sustains the breach of contract made upon the defendant

- (Art. 1106 of CC) Plaintiff is entitle to recover the profit which he would have been able to make
had the contract been performed. (Reduced net profit of P50).
- (Art. 1107 of CC) Defendant must have foreseen damages to plaintiff upon failure to perform
obligations
- Injured party is warranted to receive all remedy for damages upon showcase of evidence.
- Well recognized principle of law. Damages resulting from the avoidable consequences of breach
of contract are not recoverable. Injured party mist take steps to reduce damages. This favors
the defendant if he can show evidence of how plaintiff could have reduced damages (e.g. same
rental rate of similar casco)
- Defendant failed to show evidence thus damages incurred by the plaintiff is warranted.
- Trail court erred defendant by holding him liable of the SCB & Co. replevin suit. Plaintiff was not
a party in suit thus damages and lost must be presumed by the plaintiff upon voluntary actions.

RULING:

- Reversal of the lower court ruling.

- Defendant will pay P50 as damages incurred by the plaintiff plus plaintiffs costs in the Court of
First Instance.