1 NIKKO HOTEL MANILA GARDEN and RUBY LIM, petitioners, vs. ROBERTO REYES, a.k.a. AMAY BISAYA, respondent.

DECISION CHICO-NAZARIO, J.: In this petition for review on certiorari, petitioners Nikko Hotel Manila Garden (Hotel Nikko)[1] and Ruby Lim assail the Decision[2] of the Court of Appeals dated 26 November 2001 reversing the Decision[3] of the Regional Trial Court (RTC) of Quezon City, Branch 104, as well as the Resolution[4] of the Court of Appeals dated 09 July 2002 which denied petitioners motion for reconsideration. The cause of action before the trial court was one for damages brought under the human relations provisions of the New Civil Code. Plaintiff thereat (respondent herein) Roberto Reyes, more popularly known by the screen name Amay Bisaya, alleged that at around 6:00 oclock in the evening of 13 October 1994, while he was having coffee at the lobby of Hotel Nikko, [5] he was spotted by his friend of several years, Dr. Violeta Filart, who then approached him.[6] Mrs. Filart invited him to join her in a party at the hotels penthouse in celebration of the natal day of the hotels manager, Mr. Masakazu Tsuruoka. [7] Mr. Reyes asked if she could vouch for him for which she replied: of course. [8] Mr. Reyes then went up with the party of Dr. Filart carrying the basket of fruits which was the latters present for the celebrant.[9] At the penthouse, they first had their picture taken with the celebrant after which Mr. Reyes sat with the party of Dr. Filart. [10] After a couple of hours, when the buffet dinner was ready, Mr. Reyes lined-up at the buffet table but, to his great shock, shame and embarrassment, he was stopped by petitioner herein, Ruby Lim, who claimed to speak for Hotel Nikko as Executive Secretary thereof.[11] In a loud voice and within the presence and hearing of the other guests who were making a queue at the buffet table, Ruby Lim told him to leave the party (huwag ka nang kumain, hindi ka imbitado, bumaba ka na lang).[12] Mr. Reyes tried to explain that he was invited by Dr. Filart.[13] Dr. Filart, who was within hearing distance, however, completely ignored him thus adding to his shame and humiliation.[14] Not long after, while he was still recovering from the traumatic experience, a Makati policeman approached and asked him to step out of the hotel.[15] Like a common criminal, he was escorted out of the party by the policeman.[16] Claiming damages, Mr. Reyes asked for One Million Pesos actual damages, One Million Pesos moral and/or exemplary damages and Two Hundred Thousand Pesos attorneys fees.[17] Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not under the ignominious circumstance painted by the latter. Ms. Lim narrated that she was the Hotels Executive Secretary for the past twenty (20) years.[18] One of her functions included organizing the birthday party of the hotels former General Manager, Mr. Tsuruoka.[19] The year 1994 was no different. For Mr. Tsuruokas party, Ms. Lim generated an exclusive guest list and extended invitations accordingly.[20] The guest list was limited to approximately sixty (60) of

2 Mr. Tsuruokas closest friends and some hotel employees and that Mr. Reyes was not one of those invited.[21] At the party, Ms. Lim first noticed Mr. Reyes at the bar counter ordering a drink.[22] Mindful of Mr. Tsuruokas wishes to keep the party intimate, Ms. Lim approached Mr. Boy Miller, the captain waiter, to inquire as to the presence of Mr. Reyes who was not invited. [23] Mr. Miller replied that he saw Mr. Reyes with the group of Dr. Filart.[24] As Dr. Filart was engaged in conversation with another guest and as Ms. Lim did not want to interrupt, she inquired instead from the sister of Dr. Filart, Ms. Zenaida Fruto, who told her that Dr. Filart did not invite Mr. Reyes.[25] Ms. Lim then requested Ms. Fruto to tell Mr. Reyes to leave the party as he was not invited.[26] Mr. Reyes, however, lingered prompting Ms. Lim to inquire from Ms. Fruto who said that Mr. Reyes did not want to leave.[27] When Ms. Lim turned around, she saw Mr. Reyes conversing with a Captain Batung whom she later approached.[28] Believing that Captain Batung and Mr. Reyes knew each other, Ms. Lim requested from him the same favor from Ms. Fruto, i.e., for Captain Batung to tell Mr. Reyes to leave the party as he was not invited.[29] Still, Mr. Reyes lingered. When Ms. Lim spotted Mr. Reyes by the buffet table, she decided to speak to him herself as there were no other guests in the immediate vicinity. [30] However, as Mr. Reyes was already helping himself to the food, she decided to wait.[31] When Mr. Reyes went to a corner and started to eat, Ms. Lim approached him and said: alam ninyo, hindo ho kayo dapat nandito. Pero total nakakuha na ho kayo ng pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na kayo.[32] She then turned around trusting that Mr. Reyes would show enough decency to leave, but to her surprise, he began screaming and making a big scene, and even threatened to dump food on her.[33] Dr. Violeta Filart, the third defendant in the complaint before the lower court, also gave her version of the story to the effect that she never invited Mr. Reyes to the party.[34] According to her, it was Mr. Reyes who volunteered to carry the basket of fruits intended for the celebrant as he was likewise going to take the elevator, not to the penthouse but to Altitude 49.[35] When they reached the penthouse, she reminded Mr. Reyes to go down as he was not properly dressed and was not invited.[36] All the while, she thought that Mr. Reyes already left the place, but she later saw him at the bar talking to Col. Batung.[37] Then there was a commotion and she saw Mr. Reyes shouting.[38] She ignored Mr. Reyes.[39] She was embarrassed and did not want the celebrant to think that she invited him.[40] After trial on the merits, the court a quo dismissed the complaint,[41] giving more credence to the testimony of Ms. Lim that she was discreet in asking Mr. Reyes to leave the party. The trial court likewise ratiocinated that Mr. Reyes assumed the risk of being thrown out of the party as he was uninvited: Plaintiff had no business being at the party because he was not a guest of Mr. Tsuruoka, the birthday celebrant. He assumed the risk of being asked to leave for attending a party to which he was not invited by the host. Damages are pecuniary consequences which the law imposes for the breach of some duty or the violation of some right. Thus, no recovery can be had against defendants

3 Nikko Hotel and Ruby Lim because he himself was at fault (Garciano v. Court of Appeals, 212 SCRA 436). He knew that it was not the party of defendant Violeta Filart even if she allowed him to join her and took responsibility for his attendance at the party. His action against defendants Nikko Hotel and Ruby Lim must therefore fail.[42] On appeal, the Court of Appeals reversed the ruling of the trial court as it found more commanding of belief the testimony of Mr. Reyes that Ms. Lim ordered him to leave in a loud voice within hearing distance of several guests: In putting appellant in a very embarrassing situation, telling him that he should not finish his food and to leave the place within the hearing distance of other guests is an act which is contrary to morals, good customs . . ., for which appellees should compensate the appellant for the damage suffered by the latter as a consequence therefore (Art. 21, New Civil Code). The liability arises from the acts which are in themselves legal or not prohibited, but contrary to morals or good customs. Conversely, even in the exercise of a formal right, [one] cannot with impunity intentionally cause damage to another in a manner contrary to morals or good customs.[43] The Court of Appeals likewise ruled that the actuation of Ms. Lim in approaching several people to inquire into the presence of Mr. Reyes exposed the latter to ridicule and was uncalled for as she should have approached Dr. Filart first and both of them should have talked to Mr. Reyes in private: Said acts of appellee Lim are uncalled for. What should have been done by appellee Lim was to approach appellee Mrs. Filart and together they should have told appellant Reyes in private that the latter should leave the party as the celebrant only wanted close friends around. It is necessary that Mrs. Filart be the one to approach appellant because it was she who invited appellant in that occasion. Were it not for Mrs. Filarts invitation, appellant could not have suffered such humiliation. For that, appellee Filart is equally liable. ... The acts of [appellee] Lim are causes of action which are predicated upon mere rudeness or lack of consideration of one person, which calls not only protection of human dignity but respect of such dignity. Under Article 20 of the Civil Code, every person who violates this duty becomes liable for damages, especially if said acts were attended by malice or bad faith. Bad faith does not simply connote bad judgment or simple negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty to some motive or interest or ill-will that partakes of the nature of fraud (Cojuangco, Jr. v. CA, et al., 309 SCRA 603).[44]

4 Consequently, the Court of Appeals imposed upon Hotel Nikko, Ruby Lim and Dr. Violeta Filart the solidary obligation to pay Mr. Reyes (1) exemplary damages in the amount of Two Hundred Thousand Pesos (P200,000); (2) moral damages in the amount of Two Hundred Thousand Pesos (P200,000); and (3) attorneys fees in the amount of Ten Thousand Pesos (P10,000).[45] On motion for reconsideration, the Court of Appeals affirmed its earlier decision as the argument raised in the motion had been amply discussed and passed upon in the decision sought to be reconsidered.[46] Thus, the instant petition for review. Hotel Nikko and Ruby Lim contend that the Court of Appeals seriously erred in I. NOT APPLYING THE DOCTRINE OF VOLENTI NON FIT INJURIA CONSIDERING THAT BY ITS OWN FINDINGS, AMAY BISAYA WAS A GATE-CRASHER II. HOLDING HOTEL NIKKO AND RUBY LIM JOINTLY AND SEVERALLY LIABLE WITH DR. FILART FOR DAMAGES SINCE BY ITS OWN RULING, AMAY BISAYA COULD NOT HAVE SUFFERED SUCH HUMILIATION, WERE IT NOT FOR DR. FILARTS INVITATION III. DEPARTING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AS REGARDS THE CIRCUMSTANCES THAT ALLEGEDLY CAUSED THE HUMILIATION OF AMAY BISAYA IV. IN CONCLUDING THAT AMAY BISAYA WAS TREATED UNJUSTLY BECAUSE OF HIS POVERTY, CONSIDERING THAT THIS WAS NEVER AN ISSUE AND NO EVIDENCE WAS PRESENTED IN THIS REGARD V. IN FAILING TO PASS UPON THE ISSUE ON THE DEFECTS OF THE APPELLANTS BRIEF, THEREBY DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit injuria, they cannot be made liable for damages as respondent Reyes assumed the risk of being asked to leave (and being embarrassed and humiliated in the process) as he was a gate-crasher.

5 The doctrine of volenti non fit injuria (to which a person assents is not esteemed in law as injury[47]) refers to self-inflicted injury[48] or to the consent to injury[49] which precludes the recovery of damages by one who has knowingly and voluntarily exposed himself to danger, even if he is not negligent in doing so. [50] As formulated by petitioners, however, this doctrine does not find application to the case at bar because even if respondent Reyes assumed the risk of being asked to leave the party, petitioners, under Articles 19 and 21 of the New Civil Code, were still under obligation to treat him fairly in order not to expose him to unnecessary ridicule and shame. Thus, the threshold issue is whether or not Ruby Lim acted abusively in asking Roberto Reyes, a.k.a. Amay Bisaya, to leave the party where he was not invited by the celebrant thereof thereby becoming liable under Articles 19 and 21 of the Civil Code. Parenthetically, and if Ruby Lim were so liable, whether or not Hotel Nikko, as her employer, is solidarily liable with her. As the trial court and the appellate court reached divergent and irreconcilable conclusions concerning the same facts and evidence of the case, this Court is left without choice but to use its latent power to review such findings of facts. Indeed, the general rule is that we are not a trier of facts as our jurisdiction is limited to reviewing and revising errors of law.[51] One of the exceptions to this general rule, however, obtains herein as the findings of the Court of Appeals are contrary to those of the trial court.[52] The lower court ruled that Ms. Lim did not abuse her right to ask Mr. Reyes to leave the party as she talked to him politely and discreetly. The appellate court, on the other hand, held that Ms. Lim is liable for damages as she needlessly embarrassed Mr. Reyes by telling him not to finish his food and to leave the place within hearing distance of the other guests. Both courts, however, were in agreement that it was Dr. Filarts invitation that brought Mr. Reyes to the party. The consequential question then is: Which version is credible? From an in depth review of the evidence, we find more credible the lower courts findings of fact. First, let us put things in the proper perspective. We are dealing with a formal party in a posh, five-star hotel,[53] for-invitationonly, thrown for the hotels former Manager, a Japanese national. Then came a person who was clearly uninvited (by the celebrant)[54] and who could not just disappear into the crowd as his face is known by many, being an actor. While he was already spotted by the organizer of the party, Ms. Lim, the very person who generated the guest list, it did not yet appear that the celebrant was aware of his presence. Ms. Lim, mindful of the celebrants instruction to keep the party intimate, would naturally want to get rid of the gate-crasher in the most hushhush manner in order not to call attention to a glitch in an otherwise seamless affair and, in the process, risk the displeasure of the celebrant, her former boss. To unnecessarily call attention to the presence of Mr. Reyes would certainly reflect badly on Ms. Lims ability to follow the instructions of the celebrant to invite

6 only his close friends and some of the hotels personnel. Mr. Reyes, upon whom the burden rests to prove that indeed Ms. Lim loudly and rudely ordered him to leave, could not offer any satisfactory explanation why Ms. Lim would do that and risk ruining a formal and intimate affair. On the contrary, Mr. Reyes, on crossexamination, had unwittingly sealed his fate by admitting that when Ms. Lim talked to him, she was very close. Close enough for him to kiss: Q: And, Mr. Reyes, you testified that Miss Lim approached you while you were at the buffet table? How close was she when she approached you? A: Very close because we nearly kissed each other. Q: And yet, she shouted for you to go down? She was that close and she shouted? A: Yes. She said, wag kang kumain, hindi ka imbitado dito, bumaba ka na lang.

Q: So, you are testifying that she did this in a loud voice? ... A: Yes. If it is not loud, it will not be heard by many.[55]

In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and expose him to ridicule and shame, it is highly unlikely that she would shout at him from a very close distance. Ms. Lim having been in the hotel business for twenty years wherein being polite and discreet are virtues to be emulated, the testimony of Mr. Reyes that she acted to the contrary does not inspire belief and is indeed incredible. Thus, the lower court was correct in observing that Considering the closeness of defendant Lim to plaintiff when the request for the latter to leave the party was made such that they nearly kissed each other, the request was meant to be heard by him only and there could have been no intention on her part to cause embarrassment to him. It was plaintiffs reaction to the request that must have made the other guests aware of what transpired between them. . . Had plaintiff simply left the party as requested, there was no need for the police to take him out.[56] Moreover, another problem with Mr. Reyess version of the story is that it is unsupported. It is a basic rule in civil cases that he who alleges proves. Mr. Reyes, however, had not presented any witness to back his story up. All his witnesses Danny Rodinas, Pepito Guerrero and Alexander Silva - proved only that it was Dr. Filart who invited him to the party.[57]

7 Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not invited, cannot be made liable to pay for damages under Articles 19 and 21 of the Civil Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from that of its employee.[58] Article 19, known to contain what is commonly referred to as the principle of abuse of rights,[59] is not a panacea for all human hurts and social grievances. Article 19 states: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Elsewhere, we explained that when a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be responsible.[60] The object of this article, therefore, is to set certain standards which must be observed not only in the exercise of ones rights but also in the performance of ones duties.[61] These standards are the following: act with justice, give everyone his due and observe honesty and good faith.[62] Its antithesis, necessarily, is any act evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. [63] When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to damages arising from a violation of law[64] which does not obtain herein as Ms. Lim was perfectly within her right to ask Mr. Reyes to leave. Article 21, on the other hand, states: Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Article 21[65] refers to acts contra bonus mores and has the following elements: (1) There is an act which is legal; (2) but which is contrary to morals, good custom, public order, or public policy; and (3) it is done with intent to injure.[66] A common theme runs through Articles 19 and 21, [67] and that is, the act complained of must be intentional.[68] As applied to herein case and as earlier discussed, Mr. Reyes has not shown that Ms. Lim was driven by animosity against him. These two people did not know each other personally before the evening of 13 October 1994, thus, Mr. Reyes had nothing to offer for an explanation for Ms. Lims alleged abusive conduct except the statement that Ms. Lim, being single at 44 years old, had a very strong bias and prejudice against (Mr. Reyes) possibly influenced by her associates in her work at the hotel with foreign businessmen.[69] The lameness of this argument need not be belabored. Suffice it to say that a complaint based on

8 Articles 19 and 21 of the Civil Code must necessarily fail if it has nothing to recommend it but innuendos and conjectures. Parenthetically, the manner by which Ms. Lim asked Mr. Reyes to leave was likewise acceptable and humane under the circumstances. In this regard, we cannot put our imprimatur on the appellate courts declaration that Ms. Lims act of personally approaching Mr. Reyes (without first verifying from Mrs. Filart if indeed she invited Mr. Reyes) gave rise to a cause of action predicated upon mere rudeness or lack of consideration of one person, which calls not only protection of human dignity but respect of such dignity. [70] Without proof of any illmotive on her part, Ms. Lims act of by-passing Mrs. Filart cannot amount to abusive conduct especially because she did inquire from Mrs. Filarts companion who told her that Mrs. Filart did not invite Mr. Reyes. [71] If at all, Ms. Lim is guilty only of bad judgment which, if done with good intentions, cannot amount to bad faith. Not being liable for both actual and moral damages, neither can petitioners Lim and Hotel Nikko be made answerable for exemplary damages [72] especially for the reason stated by the Court of Appeals. The Court of Appeals held Not a few of the rich people treat the poor with contempt because of the latters lowly station in life. This has to be limited somewhere. In a democracy, such a limit must be established. Social equality is not sought by the legal provisions under consideration, but due regard for decency and propriety (Code Commission, pp. 33-34). And by way of example or correction for public good and to avert further commission of such acts, exemplary damages should be imposed upon appellees.[73] The fundamental fallacy in the above-quoted findings is that it runs counter with the very facts of the case and the evidence on hand. It is not disputed that at the time of the incident in question, Mr. Reyes was an actor of long standing; a cohost of a radio program over DZRH; a Board Member of the Music Singer Composer (MUSICO) chaired by popular singer Imelda Papin; a showbiz Coordinator of Citizen Crime Watch; and 1992 official candidate of the KBL Party for Governor of Bohol; and an awardee of a number of humanitarian organizations of the Philippines.[74] During his direct examination on rebuttal, Mr. Reyes stressed that he had income[75] and nowhere did he say otherwise. On the other hand, the records are bereft of any information as to the social and economic standing of petitioner Ruby Lim. Consequently, the conclusion reached by the appellate court cannot withstand scrutiny as it is without basis. All told, and as far as Ms. Lim and Hotel Nikko are concerned, any damage which Mr. Reyes might have suffered through Ms. Lims exercise of a legitimate right done within the bounds of propriety and good faith, must be his to bear alone. WHEREFORE, premises considered, the petition filed by Ruby Lim and Nikko Hotel Manila Garden is GRANTED. The Decision of the Court of Appeals

9 dated 26 November 2001 and its Resolution dated 09 July 2002 are hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Quezon City, Branch 104, dated 26 April 1999 is hereby AFFIRMED. No costs. SO ORDERED.

10 G.R. No. 160273 January 18, 2008

CEBU COUNTRY CLUB, INC., SABINO R. DAPAT, RUBEN D. ALMENDRAS, JULIUS Z. NERI, DOUGLAS L. LUYM, CESAR T. LIBI, RAMONTITO * E. GARCIA and JOSE B. SALA, petitioners, vs. RICARDO F. ELIZAGAQUE, respondent. DECISION SANDOVAL-GUTIERREZ, J.: For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated January 31, 2003 and Resolution dated October 2, 2003 of the Court of Appeals in CA-G.R. CV No. 71506. The facts are: Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a non-profit and non-stock private membership club, having its principal place of business in Banilad, Cebu City. Petitioners herein are members of its Board of Directors. Sometime in 1987, San Miguel Corporation, a special company proprietary member of CCCI, designated respondent Ricardo F. Elizagaque, its Senior Vice President and Operations Manager for the Visayas and Mindanao, as a special non-proprietary member. The designation was thereafter approved by the CCCIs Board of Directors. In 1996, respondent filed with CCCI an application for proprietary membership. The application was indorsed by CCCIs two (2) proprietary members, namely: Edmundo T. Misa and Silvano Ludo. As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of CCCI, offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the share of a certain Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued Proprietary Ownership Certificate No. 1446 to respondent. During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on respondents application for proprietary membership was deferred. In another Board meeting held on July 30, 1997, respondents application was voted upon. Subsequently, or on August 1, 1997, respondent received a letter from Julius Z. Neri, CCCIs corporate secretary, informing him that the Board disapproved his application for proprietary membership.

11 On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration. As CCCI did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still, CCCI kept silent. On November 5, 1997, respondent again sent CCCI a letter inquiring whether any member of the Board objected to his application. Again, CCCI did not reply. Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71, Pasig City a complaint for damages against petitioners, docketed as Civil Case No. 67190. After trial, the RTC rendered its Decision dated February 14, 2001 in favor of respondent, thus: WHEREFORE, judgment is hereby rendered in favor of plaintiff: 1. Ordering defendants to pay, jointly and severally, plaintiff the amount of P2,340,000.00 as actual or compensatory damages. 2. Ordering defendants to pay, jointly and severally, plaintiff the amount of P5,000,000.00 as moral damages. 3. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as exemplary damages. 4. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as and by way of attorneys fees and P80,000.00 as litigation expenses. 5. Costs of suit. Counterclaims are hereby DISMISSED for lack of merit. SO ORDERED.2 On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the trial courts Decision with modification, thus: WHEREFORE, premises considered, the assailed Decision dated February 14, 2001 of the Regional Trial Court, Branch 71, Pasig City in Civil Case No. 67190 is hereby AFFIRMED with MODIFICATION as follows: 1. Ordering defendants-appellants to pay, jointly and severally, plaintiffappellee the amount ofP2,000,000.00 as moral damages;

12 2. Ordering defendants-appellants to pay, jointly and severally, plaintiffappellee the amount ofP1,000,000.00 as exemplary damages; 3. Ordering defendants-appellants to pay, jointly and severally, plaintiffappellee the mount of P500,000.00 as attorneys fees and P50,000.00 as litigation expenses; and 4. Costs of the suit. The counterclaims are DISMISSED for lack of merit. SO ORDERED.3 On March 3, 2003, petitioners filed a motion for reconsideration and motion for leave to set the motion for oral arguments. In its Resolution4 dated October 2, 2003, the appellate court denied the motions for lack of merit. Hence, the present petition. The issue for our resolution is whether in disapproving respondents application for proprietary membership with CCCI, petitioners are liable to respondent for damages, and if so, whether their liability is joint and several. Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant damages to respondent despite the lack of evidence that they acted in bad faith in disapproving the latters application; and in disregarding their defense of damnum absque injuria. For his part, respondent maintains that the petition lacks merit, hence, should be denied. CCCIs Articles of Incorporation provide in part: SEVENTH: That this is a non-stock corporation and membership therein as well as the right of participation in its assets shall be limited to qualified persons who are duly accredited owners of Proprietary Ownership Certificates issued by the corporation in accordance with its By-Laws. Corollary, Section 3, Article 1 of CCCIs Amended By-Laws provides: SECTION 3. HOW MEMBERS ARE ELECTED The procedure for the admission of new members of the Club shall be as follows: (a) Any proprietary member, seconded by another voting proprietary member, shall submit to the Secretary a written proposal for the admission of a candidate to the "Eligible-for-Membership List";

13 (b) Such proposal shall be posted by the Secretary for a period of thirty (30) days on the Club bulletin board during which time any member may interpose objections to the admission of the applicant by communicating the same to the Board of Directors; (c) After the expiration of the aforesaid thirty (30) days, if no objections have been filed or if there are, the Board considers the objections unmeritorious, the candidate shall be qualified for inclusion in the "Eligiblefor-Membership List"; (d) Once included in the "Eligible-for-Membership List" and after the candidate shall have acquired in his name a valid POC duly recorded in the books of the corporation as his own, he shall become a Proprietary Member, upon a non-refundable admission fee of P1,000.00, provided that admission fees will only be collected once from any person. On March 1, 1978, Section 3(c) was amended to read as follows: (c) After the expiration of the aforesaid thirty (30) days, the Board may, by unanimous vote of all directors present at a regular or special meeting, approve the inclusion of the candidate in the "Eligible-forMembership List". As shown by the records, the Board adopted a secret balloting known as the "black ball system" of voting wherein each member will drop a ball in the ballot box. A white ball represents conformity to the admission of an applicant, while a black ball means disapproval. Pursuant to Section 3(c), as amended, cited above, a unanimous vote of the directors is required. When respondents application for proprietary membership was voted upon during the Board meeting on July 30, 1997, the ballot box contained one (1) black ball. Thus, for lack of unanimity, his application was disapproved. Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or disapprove an application for proprietary membership. But such right should not be exercised arbitrarily. Articles 19 and 21 of the Civil Code on the Chapter on Human Relations provide restrictions, thus: Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

14 In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and correlated it with Article 21, thus: This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. (Emphasis in the original) In rejecting respondents application for proprietary membership, we find that petitioners violated the rules governing human relations, the basic principles to be observed for the rightful relationship between human beings and for the stability of social order. The trial court and the Court of Appeals aptly held that petitioners committed fraud and evident bad faith in disapproving respondents applications. This is contrary to morals, good custom or public policy. Hence, petitioners are liable for damages pursuant to Article 19 in relation to Article 21 of the same Code. It bears stressing that the amendment to Section 3(c) of CCCIs Amended ByLaws requiring the unanimous vote of the directors present at a special or regular meeting was not printed on the application form respondent filled and submitted to CCCI. What was printed thereon was the original provision of Section 3(c) which was silent on the required number of votes needed for admission of an applicant as a proprietary member. Petitioners explained that the amendment was not printed on the application form due to economic reasons. We find this excuse flimsy and unconvincing. Such amendment, aside from being extremely significant, was introduced way back in 1978 or almost twenty (20) years before respondent filed his application. We cannot fathom why such a prestigious and exclusive golf country club, like the CCCI, whose members are all affluent, did not have enough money to cause the printing of an updated application form.

15 It is thus clear that respondent was left groping in the dark wondering why his application was disapproved. He was not even informed that a unanimous vote of the Board members was required. When he sent a letter for reconsideration and an inquiry whether there was an objection to his application, petitioners apparently ignored him. Certainly, respondent did not deserve this kind of treatment. Having been designated by San Miguel Corporation as a special nonproprietary member of CCCI, he should have been treated by petitioners with courtesy and civility. At the very least, they should have informed him why his application was disapproved. The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm. When the right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal wrong is committed for which the wrongdoer must be held responsible.6 It bears reiterating that the trial court and the Court of Appeals held that petitioners disapproval of respondents application is characterized by bad faith. As to petitioners reliance on the principle of damnum absque injuria or damage without injury, suffice it to state that the same is misplaced. In Amonoy v. Gutierrez,7 we held that this principle does not apply when there is an abuse of a persons right, as in this case. As to the appellate courts award to respondent of moral damages, we find the same in order. Under Article 2219 of the New Civil Code, moral damages may be recovered, among others, in acts and actions referred to in Article 21. We believe respondents testimony that he suffered mental anguish, social humiliation and wounded feelings as a result of the arbitrary denial of his application. However, the amount of P2,000,000.00 is excessive. While there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, the same should not be palpably and scandalously excessive. Moral damages are not intended to impose a penalty to the wrongdoer, neither to enrich the claimant at the expense of the defendant.8 Taking into consideration the attending circumstances here, we hold that an award to respondent of P50,000.00, instead of P2,000,000.00, as moral damages is reasonable. Anent the award of exemplary damages, Article 2229 allows it by way of example or correction for the public good. Nonetheless, since exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions,9 we reduce the amount fromP1,000,000.00 to P25,000.00 only. On the matter of attorneys fees and litigation expenses, Article 2208 of the same Code provides, among others, that attorneys fees and expenses of litigation may be recovered in cases when exemplary damages are awarded and where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered, as in this case. In any event, however, such award must be

16 reasonable, just and equitable. Thus, we reduce the amount of attorneys fees (P500,000.00) and litigation expenses (P50,000.00) to P50,000.00 andP25,000.00, respectively. Lastly, petitioners argument that they could not be held jointly and severally liable for damages because only one (1) voted for the disapproval of respondents application lacks merit. Section 31 of the Corporation Code provides: SEC. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faithin directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. (Emphasis ours) WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 71506 are AFFIRMED with modification in the sense that (a) the award of moral damages is reduced fromP2,000,000.00 to P50,000.00; (b) the award of exemplary damages is reduced from P1,000,000.00 to P25,000.00; and (c) the award of attorneys fees and litigation expenses is reduced from P500,000.00 and P50,000.00 toP50,000.00 and P25,000.00, respectively. Costs against petitioners. SO ORDERED.

17

FIDEL C. CABARDO, petitioner, vs. THE JUANITO C. RODIL, respondents. DECISION MENDOZA, J.:

COURT

OF

APPEALS

and

This is a petition for review on certiorari of the decision[1] of the Court of Appeals, reversing the decision of the Regional Trial Court and absolving private respondent from liability for damages to petitioner Fidel Cabardo. The facts are as follows: Jose Peralta was a driver of the Consolidated Industrial Gases Incorporated (CIGI). On October 26, 1987, while driving the companys truck-tanker bearing Plate No. NBG-925 on the southbound lane of the South Luzon Expressway, on his way back to the CIGI office in Santa Rosa, Laguna, he met an accident. Peralta claimed that when the truck-tanker reached Barangay San Francisco, Bian, Laguna, a Volkswagen car suddenly took the inner lane occupied by his truck, as a result of which he was forced to swerve to the left. This caused the truck-tanker to veer and roll over the center island of the expressway until it fell on its right side, lying perpendicular to the expressway with its underside facing the north.[2] With him at the time of the accident was petitioner Fidel Cabardo who was his helper and pump operator.[3] Moments later, private respondent Juanito Rodil came along in a Toyota Corolla car, bearing Plate No. DAU-124, also southbound, on the inner lane of the highway. There was a heavy rain which affected visibility along the highway. Rodil claimed that upon seeing the disabled vehicle on the center island, he immediately stepped on his brakes, causing his car to swerve to the left and slide sideways towards the truck-tanker, stopping only after it had crashed into the underside of the truck-tanker. With private respondent was his wife Leveminda. Private respondent and his wife were injured.[4] The truck-tanker driver, Jose Peralta, was unhurt but his helper, petitioner Cabardo, suffered a fractured left leg. He and the Rodil spouses were taken to the hospital by passing motorists.[5] A PNCC highway patrol team, with investigators from the Bian Integrated National Police, arrived later at the scene of the accident. Only Peralta was there to give a statement.[6] The police investigators made a report, on the basis of which the accident was entered in the police blotter.[7] On March 1, 1988 and March 22, 1988, petitioner Fidel Cabardo and the truck driver Jose Peralta gave their respective statements,[8] on the basis of which a criminal case for Reckless Imprudence resulting in Serious Physical

18 Injuries was filed by the Bian INP police against private respondent Juanito Rodil.[9] On April 12, 1988, the Rodils filed a complaint for damages against CIGI and truck driver Jose Peralta. The case was filed in the Regional Trial Court at Santa Cruz, Laguna, where it was docketed as Civil Case No. SC-2559.[10] On the other hand, petitioner Cabardo filed a complaint for damages against private respondent Juanito Rodil in the Regional Trial Court of Malolos, Bulacan on November 6, 1989, where the matter was docketed as Civil Case No. 639-M89.[11] In his complaint, petitioner claimed that he and Peralta were able to get out of the vehicle unhurt after the truck tanker fell on its right side in the middle portion of the center island of the [South Luzon] Expressway; [12] that, as he was about to put up the early warning device, however, private respondent, driving a Toyota Corolla in a reckless and negligent manner. . . , bumped the truck-tanker and hit [him] on his left leg, causing him to be thrown off balance and lose consciousness and that as a result, he suffered a fractured left leg and other injuries.[13] In his answer, private respondent denied having caused petitioners injury. He alleged that the same was sustained when the truck-tanker, driven by Jose Peralta, fell on its side.[14] He contended that petitioners action was barred by Civil Case No. SC-2559, then pending in the RTC of Santa Cruz, Laguna, which he had filed against CIGI and Jose Peralta.[15] On November 21, 1989, the RTC of Santa Cruz, Laguna rendered judgment finding CIGI and Peralta guilty of negligence, even as it held private respondent Juanito Rodil guilty of contributory negligence.[16] The dispositive portion of its decision reads:[17] WHEREFORE, and in view of all the foregoing consideration, judgment is hereby rendered for the plaintiffs and against the defendants, with the latters liability being mitigated by the contributory negligence of plaintiff driver, and orders the defendants, to pay plaintiffs, jointly and severally, as follows: 1. The sum of P41,000.00 as actual damages, which was incurred for the hospitalization of both plaintiffs and the repairs of their car and; 2. The sum of P25,000.00 as moral damages, P10,000.00 as exemplary damages and the further sum of P15,000.00 for and as attorneys fees and costs. Meanwhile, private respondent Juanito Rodil filed in the Malolos court a Manifestation and Motion for Hearing on affirmative defense, alleging that Cabardos action was barred by the pendency of the suit filed by him and his wife in the Santa Cruz court. On February 8, 1990, the Malolos court considered private respondents motion as a motion to dismiss and denied it on the ground that[18]

19 In the defense of litis pendencia, it is necessary that there be another action pending involving the same parties, subject matter and cause of action (Santa Ana vs. Narvades, 30 SCRA, 454). The plaintiff in the case at bar is not a party in the Santa Cruz, Laguna case. The cause of action in the instant case is the reckless imprudence of defendant Juanito C. Rodil which caused the injuries sustained by Fidel C. Cabardo while the cause of action in the Santa Cruz case is the simple negligence of driver Jose C. Peralta for failure to install an early warning device. The judgment rendered in the Santa Cruz case would not be res judicata in the instant case. WHEREFORE, motion to dismiss (affirmative defenses pleaded) is hereby denied for lack of merit. On January 3, 1991, after hearing on the merits, the trial court rendered judgment against private respondent Juanito Rodil. It found private respondent guilty of recklessness in driving his car which, it held, was the proximate cause of the injuries suffered by petitioner Fidel Cabardo.[19] The dispositive portion of its decision reads:[20] WHEREFORE, premises considered, judgment is rendered against the defendant and in favor of the plaintiff, ordering the former to pay the latter, the following: 1) 2) 3) 4) 5) The sum of P8,215.17 for medical expenses; The sum of P30,469.92 for loss of earning; The sum of P20,000.00 as moral damages; The sum of P10,000.00 as attorneys fees; and, To pay the costs.

Private respondent Rodil filed a motion for reconsideration, but his motion was denied in an order of the court dated March 15, 1991.[21] Private respondent then appealed to the Court of Appeals which rendered its now questioned decision reversing the RTCs decision on August 9, 1994. The Court of Appeals held that the testimonies of petitioner Cabardo and Peralta could not be believed because of inconsistencies.[22] Petitioner Cabardo filed a motion for reconsideration but his motion was denied by the Court of Appeals in its resolution dated December 8, 1994. [23] Hence, this petition. Petitioner contends that the Court of Appeals erred:[24]

20 I. IN DISMISSING THE COMPLAINT OF THE PETITIONER AGAINST PRIVATE RESPONDENT. II. IN STATING THAT THERE WERE APPARENT INCONSISTENCIES IN THE STATEMENT OF PETITIONER AND PERALTA. III. IN STATING THAT NEITHER THE PETITIONER NOR PERALTA WAS CATEGORICAL IN THEIR TESTIMONIES REGARDING THE INCIDENT. IV. IN STATING THAT PETITIONER SUFFERED INJURIES WHEN THE TRUCK-TANKER SWERVED TO THE CENTER ISLAND OF THE EXPRESSWAY. Private respondents, on the other hand, argue[25] that I. The petition suffers from numerous procedural deficiencies for the following reasons: 1. The motion for extension of time to file petition for review on certiorari was filed in the name and in behalf of Consolidated Industrial Gases Inc. (CIGI). 2. The petition has not fully complied with the requirements of Revised Circular No. 28-91 of this Court issued on February 8, 1994. 3. The petition does not state the assignment of errors made in private respondents brief as filed in the Court of Appeals as required under Section 2, Rule 45. II. The petition raises only questions of fact not cognizable by this Court through a petition for review on certiorari under Rule 45 and neither does this case constitute an exception. We find the petition to be meritorious. To begin with, both the Santa Cruz court and the court below found private respondent Juanito Rodil guilty of negligence in running his Toyota Corolla at a high speed in driving rain with the result that he did not see the disabled truck-tanker until it was late and thus failed to stop his car on time. The Santa Cruz court found: . . . . Letter of Instructions No. 229, which requires the installation of an early warning devi[c]e infront [sic] and rear of a stalled vehicle, is precisely intended to prevent fatal or serious accidents. Here, there was that omission. While the defendant driver, attempted to show, that he gave instructions to his helper to install the early warning devi[c]e, there is absolutely no corroboration on this alleged fact. As a matter of fact, not one of the several defense witnesses testified as to the existence of that early warning device. If it existed, than it would have been presented as a piece of evidence. Consequently, it is here

21 clear, that the defendant driver, was negligent when he failed to cause the installation of the early warning device, the same of which could have warned the plaintiffs of the stalled truck tanker on the middle of expressway island, which ordinarily should not be staying there. In fact, there is even now a doubt as to whether or not said truck had any early warning device. ... Be all that as it may, however, the plaintiff driver [herein private respondent Juanito Rodil], in this case, does not appear without a fault. He testified that it was raining heavily and that while driving for home, he noticed the truck tanker from about 5 to 10 meters, more or less, from his car. When he applied his brakes, his car skidded to the left and slipped to the right and smashed into the truck tanker. From the way his car reacted to his application of its brakes, the plaintiff driver [Rodil], was driving at a fast pace, because it skidded for a very long space, that of about 5 to 10 meters, and the impact it caused on the truck tanker, was strong. Clearly, therefore, the plaintiff driver, was driving fast, while it was raining heavily.[26] If the court allowed recovery to private respondent, it was only because the defendants in that case (CIGI and Peralta) were negligent in failing to install an EWD. On the other hand, the Malolos court likewise found private respondent negligent:[27] The defendant was reckless in driving his car. This conclusion is based on defendants own admission, he was travelling on the left lane of the expressway at the rate of 60 to 70 kilometers per hour despite the heavy rain and he could hardly see an object at the distance of ten (10) meters. The heavy rain fell between San Pedro and Bian, Laguna, according to the defendant which is a few kilometers away from the scene of the accident. A careful and prudent driver would slow down, put his head lights on and transfer to the lane for slow moving vehicles. This precaution the defendant failed to take. Instead he recklessly and imprudently continued to drive on the left lane without regard to the surrounding circumstances at that time. Not a portion of the truck-tanker was protruding the asphalted portion of the expressway, according to the police investigator. The police investigator testified that when he arrived at the scene of the accident he saw the truck-tanker and the car in contact inside the center island. The defendant is liable for the injury sustained by the plaintiff even assuming that a portion of the truck-tanker was protruding the pavement of the expressway. The accident could have been prevented had defendant exercised reasonable care in driving his car. He was driving unreasonably fast even if he could hardly see an object at a distance of ten meters. The truck-tanker was

22 already stationary inside the center island of the expressway. Had defendant exercised reasonable care and prudence the accident would have been avoided and the plaintiff would not have been injured as a consequence. The law provides that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. x x x (Art. 2176, Civil Code). Indeed, there is no question that private respondent drove his car negligently. The question in this case is whether petitioners injuries were caused by private respondents car or whether he was injured as a result of the fact that the truck-tanker in which he was riding turned turtle and fell on its side. After reviewing the evidence in this case, we are inclined to agree with the trial courts finding that petitioners injuries were caused by private respondents car. The Court of Appeals reversed the trial courts decision on the ground that petitioner, as plaintiff below, failed to prove that he sustained injuries as a result of having been hit by private respondents car and not as a result of the trucktanker having veered and rolled over its side. The appellate courts decision is based mainly on alleged inconsistencies in the testimonies of petitioner and his witness Jose Peralta. The Court of Appeals stated:[28] On direct examination, appellee testified that after the truck landed on its side, Peralta and he (Cabardo) got out of the truck. He found that the truck did not sustain any damage. He was then told by Peralta to put up the early warning device (EWD) behind the truck. He was then hit on the left leg by the rear tire of the car after which he lost consciousness. (TSN, May 7, 1990, pp. 8-9). On cross-examination, appellee stated that after coming out of the truck he was asked by Peralta who stood nearby to inspect the truck. In the course of his inspection of the truck, he depressurized its valve and it was while he was looking for the pressure gauge when the car bumped him. (Ibid., pp. 23-24). When confronted with a portion of his answer to question No. 7 in his statement. Exhibit A, which reads, thus: x x x Tumaob ang sasakyan namin sa mismong sakop ng center island ng expressway. Ako naman ay matiwasay na nakalabas mula sa loob ng tumaob naming sasakyan at hindi ako nagkaroon ng anumang pinsala sa katawan. Kinuha ko ang early warning device na dala-dala ng trak para ilagay sa bandang likuran ng aming tumaob na trak sa pinanggalingan ng mga sasakyan. Hindi pa ako gaanong nakakalayo sa aming trak ay bigla na lamang na may kotseng bumundol sa aking kaliwang paa ako ay tumilapon at nawalan ng ulirat. x x x. and asked which version was correct: his statement on cross-examination that after getting out of the truck, he looked around the truck and at the gauge at which time he was hit by the car, or his written statement that after coming out of

23 the truck, he got the EWD and he was on his way to putting it up when he was hit by the car, appellee initially answered that he was confused (Ibid., p. 25), then later explained that at the time, he was also carrying the EWD but he did not follow Peraltas instructions to set it up (Ibid., p. 27). Farther down his testimony on cross-examination, appellee changed his statement again by saying that at the time when he was looking at the gauge and he was hit by the car, he was not holding anything, not even the EWD, because he did not follow Peraltas instructions right away (TSN, May 14, 1990, p. 4). Peralta, on the other hand, testified that after he and appellee got out of the truck, it was he (Peralta), who checked the pressure on the gauge and that he also instructed appellee to put up the EWD, but he was not sure if appellee followed his instruction, although appellee was able to get the EWD (TSN, May 21, 1990, pp. 4, 16). Concerning the exact moment when appellee was hit by the car, Peraltas testimony is far from being clear-cut and straightforward. In one breath, he stated that he saw appellee hit by the car (supra). In another, he said he did not see appellee bumped by the car but that he saw appellant fall down (ibid., pp. 18, 19 and 20). Peraltas answer to question No. 5 in his written statement, Exhibit C, taken by the police reads, thus: x x x Kapwa kami hindi nasugatan ng aking kasamang si Fidel Cabardo at kami ay lumabas mula sa trak at inutusan ko si Fidel na kunin iyong aming daladalang early warning device para ilagay sa lugar na di-kalayuan sa aming sasakyan na pinagmulan ng mga sasakyang dumadaan. Ng bitbit na ni Fidel iyong early warning device ay nakita ko na lamang (sic) na mayroong isang kotse na nag-slide doon sa tinatakbuhan niyang lane ng expressway at tinumbok nitong kotse si Fidel. Nabunggo si Fidel nung kotse at si Fidel ay tumilapon at tinamaan din ng kotse iyong aming bumaligtad na trak. x x x. In view of the apparent inconsistencies in the statements of appellee and Peralta which cannot be considered as insignificant, their version of the incident can not inspire credence and should not have been given much weight by the court a quo. Where the narrations concern essential facts and the very event sought to be established, such inconsistencies cannot inspire belief in the integrity of the witnesses testimonies. There are indeed inconsistencies but these are minor and inconsequential. What is important is that the statements dovetail in essential details with the testimonies given in court: Petitioner claimed that he was unhurt after their vehicle turned turtle and fell on its side; that he and Jose Peralta, who was driving the vehicle, got out of the truck-tanker; that he was asked by Peralta to put up the EWD; and that petitioner was hurt because he was hit by private respondents car. Petitioner said in court that he was hit while checking the

24 pressure gauge. It is possible that this happened before he could put up the EWD. The statement (Exh. A) that he was hit while in the act of putting the EWD could be a mistake of the police investigator who took down petitioners statement. We have noted in a number of cases inaccuracies and their causes, but as long as the inaccuracies concern only minor matters, we have not allowed the resulting inconsistencies to affect our judgment of the credibility of witnesses. Indeed, as we have also said, a witness is not expected to remember an occurrence with perfect recollection down to insignificant and minute details.[29] Nor is the contradiction between petitioners statement (Exh. A) that he was holding the EWD when hit by the car and Peraltas testimony in court that he (Peralta) was not sure whether petitioner followed his (Peraltas) instruction to put the EWD fatal to his credibility. What is important is that Peralta said he had instructed petitioner to put the EWD and that petitioner was hurt because he was hit by private respondents speeding car. It is noteworthy that at the scene of the accident, Peralta told police investigators of the Bian Police Station that petitioner had been hit by a car which crashed against their truck-tanker. That was shortly after the accident and before he had time to invent a story. His statement to the police is reflected in the entry made in the police blotter on the day of the accident, which reads:[30] ENTRY NR. DATED TIME CASE (Self Accident) : 8084 : 26 October 1987 : 2:30 P.M. : Reckless Imprudence Resulting to Damage to Property

On this date and time indicated above Pfc. Jenario Zavalla and Pat Antonio Enriquez of this station reported a vehicular accident that occurred on or about 12:20 P.M., this dated at the Luzon South Expressway, Brgy. San Francisco, this locality wherein a Cargo Truck with Plate No. NBG-925 T Pil 86 owned by CONSOLIDATED INDUSTRIAL GASES INCORPORATED with office address at Brgy. Macabling, Santa Rosa, Laguna and driven by one: JOSE PERALTA y CARUNGAN, 37 yrs old, resident of same address, holder of Prof-DLR-8972935 was accidentally swerved to the left to avoid hitting the volkswagen running ahead while travelling towards South direction, simultaneously lost control of its wheel and turned side-down which plunged at the center island of the highway. x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x ENTRY NR. : 8085

25 DATE TIME : 26 October 1987 : 2:35 P.M. Resulting to Multiple

CASE : Reckless Imprudence Physical Injuries and Damage to Property

ICOW re-Entry No. 8084, after a couple minutes later a coming Toyota Corolla with Plate No. DAU-124 owned and driven by one: JUANITO RODIL y CASAS, 57 yrs old, married, Provl Engineer, and residing at Villa Silangan Subd., Santa Cruz, Laguna, - holder of a NPDL-D12-66-005198 with DLR-8815262 coming from North to South direction swerved also to the left upon seeing the sidedown truck and applied the brakes, causing lost control of its wheel, thereby hitting the said truck (CIGI) with Plate No. NBG-925 and the person standing thereat identified as one: FIDEL CABARDO y CABREGA, 52 yrs old, married, helper of the truck, a resident at Brgy. Macabling, Santa Rosa, Laguna. The accident resulted to the injuries of the victim, the driver of the car and its occupant/wife as one: LEVY MINDA TAJONERA-RODIL, 47 yrs old, married, housewife are treated at Perpetual Help Hospital, this locality and damages to the said car. N O T E : Recorded by: P/SGT ARMANDO SALVADOR, SR. - Duty Desk Officer (Italics added) Indeed, it is more probable that petitioners injuries were caused by private respondents car hitting him. First, as the Court of Appeals itself found, petitioner was taken to a hospital in Bian, Laguna together with the Rodils. Had he been injured earlier when the truck-tanker turned turtle, he would, in all probability, have been taken for treatment much earlier. Second, as the trial court observed:[31] The plaintiff, as passenger of the truck-tanker was seated at the right side of the driver. The driver did not sustain any injury. On the other hand, the plaintiff sustained and was treated of the following injuries. Fracture, closed, complete, lateral tebial condyle, knee. If the plaintiff sustained his injuries when the truck-tanker he was riding turned turtle and landed on its right side in the center island of the expressway, it would not have been on his left knee but in some parts of the body, more especially on the right side that must have came in contact with the door. This is the law of gravity, and testimony to the contrary should not be given

26 credence. The plaintiff was categorical in his testimony that after the car fell on its right side the driver and he came out of the truck and he was already looking at the guage [sic] carrying the EWD when the car hit him. The defendant, in contrast, did not state categorically that his car did not hit the plaintiff. What defendant testified was that he did not see a person hit by the car. Moreover, defendant admitted that immediately before the accident he was driving on the left lane at the rate of 60 to 70 kilometers per hour and he could hardly see an object at a distance of ten (10) meters because of the heavy rain. Private respondent argues that the petition in this case should be dismissed on procedural grounds. It is not true that the petition does not contain an assignment of errors. There is an assignment of errors,[32] and it is quoted in this opinion. It is further contended that the motion for extension to file petition was made on behalf of the Consolidated Industrial Gases Inc. This is obviously a mere typographical error made in the title of the motion. A reading of the allegations of the motion for extension shows plainly that it was actually filed on behalf of petitioner Cabardo.[33] Anyway, the defect should have been pointed out earlier, instead of only now. Lastly, petitioners failure to state in the certificate of non-forum shopping that he undertakes to inform the Court of any petition which might be filed, as required under Revised Circular No. 28-91, may be overlooked since it does not appear that any petition related to this case has ever been filed in any other court. On the other hand, to dismiss the petition on this ground would be to uphold technicality over substantial justice. WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and that of the Regional Trial Court is REINSTATED. SO ORDERED.

27

NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA,respondents. DECISION MENDOZA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the Regional Trial Courts award of damages to private respondents for the death of relatives as a result of the sinking of petitioners vessel. In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets (#74411, 74412, 74413 and 74414) for his wife, daughter, son and niece who were going to Bacolod City to attend a family reunion. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980. The ship sailed from the port of Manila on schedule. At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the victims were found and brought to shore, but the four members of private respondents families were never found. Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila, Branch 34, against the Negros Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26. In its answer, petitioner admitted that private respondents purchased ticket numbers 74411, 74412, 74413 and 74414; that the ticket numbers were listed in the passenger manifest; and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank that night after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision, some of the passengers of the M/V Don Juan died. Petitioner, however, denied that the four relatives of private respondents actually boarded the vessel as shown by the fact that their bodies were never recovered. Petitioner further averred that the Don Juan was seaworthy and manned by a full and competent crew, and that the collision was entirely due to the fault of the crew of the M/TTacloban City.

28 On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise agreement whereby petitioner assumed full responsibility for the payment and satisfaction of all claims arising out of or in connection with the collision and releasing the PNOC and the PNOC/STC from any liability to it. The agreement was subsequently held by the trial court to be binding upon petitioner, PNOC and PNOC/STC. Private respondents did not join in the agreement. After trial, the court rendered judgment on February 21, 1991, the dispositive portion of which reads as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs, ordering all the defendants to pay jointly and severally to the plaintiffs damages as follows: To Ramon Miranda: P42,025.00 for actual damages; P152,654.55 P90,000.00 as compensatory damages for loss of earning capacity of his wife; as compensatory damages for wrongful death of three (3) victims;

P300,000.00 as moral damages; P50,000.00 as exemplary damages, of P634,679.55; and all in the total amount

P40,000.00 as attorneys fees. To Spouses Ricardo and Virginia de la Victoria: P12,000.00 for actual damages; P158,899.00 as compensatory damages for loss of earning capacity;

P30,000.00 as compensatory damages for wrongful death; P100,000.00 as moral damages; P20,000.00 as exemplary damages, of P320,899.00; and all in the total amount

P15,000.00 as attorneys fees.

29 On appeal, the Court of Appeals[1] affirmed the decision of the Regional Trial Court with modification 1. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of P23,075.00 as actual damages instead of P42,025.00; 2. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of P150,000.00, instead of P90,000.00, as compensatory damages for the death of his wife and two children; 3. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiffs-appellees Dela Victoria spouses the amount of P50,000.00, instead of P30,000.00, as compensatory damages for the death of their daughter Elfreda Dela Victoria; Hence this petition, raising the following issues: (1) whether the members of private respondents families were actually passengers of the Don Juan; (2) whether the ruling in Mecenas v. Court of Appeals,[2] finding the crew members of petitioner to be grossly negligent in the performance of their duties, is binding in this case; (3) whether the total loss of the M/V Don Juan extinguished petitioners liability; and (4) whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted. First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private respondent Ramon Miranda, who testified that he purchased tickets numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati office of petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980. This was corroborated by the passenger manifest (Exh. E) on which the numbers of the tickets and the names of Ardita Miranda and her children and Elfreda de la Victoria appear. Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims actually took the trip. Petitioner asserts that it is common knowledge that passengers purchase tickets in advance but do not actually use them. Hence, private respondent should also prove the presence of the victims on the ship. The witnesses who affirmed that the victims were on the ship were biased and unreliable. This contention is without merit. Private respondent Ramon Miranda testified that he personally took his family and his niece to the vessel on the day of the voyage and stayed with them on the ship until it was time for it to leave. There is no reason he should claim members of his family to have perished in the

30 accident just to maintain an action. People do not normally lie about so grave a matter as the loss of dear ones. It would be more difficult for private respondents to keep the existence of their relatives if indeed they are alive than it is for petitioner to show the contrary. Petitioners only proof is that the bodies of the supposed victims were not among those recovered from the site of the mishap. But so were the bodies of the other passengers reported missing not recovered, as this Court noted in the Mecenas[3] case. Private respondent Mirandas testimony was corroborated by Edgardo Ramirez. Ramirez was a seminarian and one of the survivors of the collision. He testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship and that he talked with them. He knew Mrs. Miranda who was his teacher in the grade school. He also knew Elfreda who was his childhood friend and townmate. Ramirez said he was with Mrs. Miranda and her children and niece from 7:00 p.m. until 10:00 p.m. when the collision happened and that he in fact had dinner with them. Ramirez said he and Elfreda stayed on the deck after dinner and it was there where they were jolted by the collision of the two vessels. Recounting the moments after the collision, Ramirez testified that Elfreda ran to fetch Mrs. Miranda. He escorted her to the room and then tried to go back to the deck when the lights went out. He tried to return to the cabin but was not able to do so because it was dark and there was a stampede of passengers from the deck. Petitioner casts doubt on Ramirez testimony, claiming that Ramirez could not have talked with the victims for about three hours and not run out of stories to tell, unless Ramirez had a storehouse of stories. But what is incredible about acquaintances thrown together on a long journey staying together for hours on end, in idle conversation precisely to while the hours away? Petitioner also points out that it took Ramirez three (3) days before he finally contacted private respondent Ramon Miranda to tell him about the fate of his family. But it is not improbable that it took Ramirez three days before calling on private respondent Miranda to tell him about the last hours of Mrs. Miranda and her children and niece, in view of the confusion in the days following the collision as rescue teams and relatives searched for survivors. Indeed, given the facts of this case, it is improper for petitioner to even suggest that private respondents relatives did not board the ill-fated vessel and perish in the accident simply because their bodies were not recovered. Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage of passengers, both the trial court and the appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate Court,[4] which case was brought for the death of other passengers. In that case it was found that although the proximate cause of the mishap was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found that the latters master, Capt. Rogelio Santisteban, was playing mahjong at the time of collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed to call the

31 attention of Santisteban to the imminent danger facing them. This Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least delay the sinking of the ship and supervise the abandoning of the ship. Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the ship captain and other crew members while on board the ship and failing to keep the M/VDon Juan seaworthy so much so that the ship sank within 10 to 15 minutes of its impact with the M/T Tacloban City. In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated August 27, 1979, issued by the Philippine Coast Guard Commander at Iloilo City stated that the total number of persons allowed on the ship was 864, of whom 810 are passengers, but there were actually 1,004 on board the vessel when it sank, 140 persons more than the maximum number that could be safely carried by it. Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and better-equipped vessel, could have avoided a collision with the PNOC tanker, this Court held that even if the Tacloban City had been at fault for failing to observe an internationally-recognized rule of navigation, the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this Court held: The grossness of the negligence of the Don Juan is underscored when one considers the foregoing circumstances in the context of the following facts: Firstly, the Don Juan was more than twice as fast as the Tacloban City. The Don Juans top speed was 17 knots; while that of the Tacloban City was 6.3. knots. Secondly, the Don Juan carried the full complement of officers and crew members specified for a passenger vessel of her class. Thirdly, the Don Juan was equipped with radar which was functioning that night. Fourthly, the Don Juans officer on-watch had sighted the Tacloban City on his radar screen while the latter was still four (4) nautical miles away. Visual confirmation of radar contact was established by the Don Juan while the Tacloban City was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the Don Juan, had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the Tacloban City. Indeed, the Don Juan might well have avoided the collision even if it had exercisedordinary diligence merely. It is true that the Tacloban City failed to follow Rule 18 of the International Rules of the Road which requires two (2) power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the port side (left) of the other. The Tacloban City, when the two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for the second time) 15o to port side while the Don Juan veered hard to starboard. . . . [But] route observance of the International Rules of the Road will not relieve a vessel

32 from responsibility if the collision could have been avoided by proper care and skill on her part or even by a departure from the rules. In the petition at bar, the Don Juan having sighted the Tacloban City when it was still a long way off was negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such close quarters as to render the collision inevitable when there was no necessity for passing so near to the Tacloban City as to create that hazard or inevitability, for the Don Juan could choose its own distance. It is noteworthy that the Tacloban City, upon turning hard to port shortly before the moment of collision, signalled its intention to do so by giving two (2) short blasts with its horn. The Don Juan gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence in connection with the collision of the Don Juan and Tacloban City and the sinking of the Don Juan leading to the death of hundreds of passengers. . . .[5] Petitioner criticizes the lower courts reliance on the Mecenas case, arguing that, although this case arose out of the same incident as that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case. The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there can only be one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other! Adherence to the Mecenas case is dictated by this Courts policy of maintaining stability in jurisprudence in accordance with the legal maxim stare decisis et non quieta movere (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.[6] In Woulfe v. Associated Realties Corporation,[7] the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v. Gill,[8] it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this wise: Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the

33 same, even though the parties may be different.[9] Thus, in J. M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of stare decisis et non quieta movere. Indeed, the evidence presented in this case was the same as those presented in the Mecenas case, to wit: Document case Mecenas This case Exh.

Decision of Commandant 10[10] Exh. 11-B-NN/X Phil. Coast Guard in BMI Case No. 415-80 dated 3/26/81 Decision of the Minister of National Defense dated 3/12/82 Exh. 11[11]

Exh. ZZ

Resolution on the motion Exh. 13[12] Exh. AAA for reconsideration of the (private respondents) decision of the Minister of National Defense dated 7/24/84 Certificate of inspection NN dated 8/27/79 Certificate of Stability D-NN dated 12/16/76 Exh. 1-A[13] Exh. 19-

Exh. 6-A[14]

Exh. 19-

Nor is it true that the trial court merely based its decision on the Mecenas case. The trial court made its own independent findings on the basis of the testimonies of witnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gave substantially the same testimony on petitioners behalf before the Board of Marine Inquiry. The trial court agreed with the conclusions of the then Minister of National Defense finding both vessels to be negligent. Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. The issue is not one of first impression. The rule is well-entrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers notwithstanding the exclusively real

34 and hypothecary nature of maritime law if fault can be attributed to the shipowner.[15] In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in playing mahjong during the voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent. Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed to claim only P43,857.14 each as moral damages because in theMecenas case, the amount of P307,500.00 was awarded to the seven children of the Mecenas couple. Under petitioners formula, Ramon Miranda should receive P43,857.14, while the De la Victoria spouses should receive P97,714.28. Here is where the principle of stare decisis does not apply in view of differences in the personal circumstances of the victims. For that matter, differentiation would be justified even if private respondents had joined the private respondents in the Mecenas case. The doctrine of stare decisis works as a bar only against issues litigated in a previous case. Where the issue involved was not raised nor presented to the court and not passed upon by the court in the previous case, the decision in the previous case is not stare decisis of the question presently presented.[16] The decision in the Mecenas case relates to damages for which petitioner was liable to the claimants in that case. In the case at bar, the award of P300,000.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda suffered as a result of the loss of his entire family. As a matter of fact, three months after the collision, he developed a heart condition undoubtedly caused by the strain of the loss of his family. The P100,000.00 given to Mr. and Mrs. de la Victoria is likewise reasonable and should be affirmed. As for the amount of civil indemnity awarded to private respondents, the appellate courts award of P50,000.00 per victim should be sustained. The amount of P30,000.00 formerly set in De Lima v. Laguna Tayabas Co.,[17] Heirs of Amparo delos Santos v. Court of Appeals,[18] and Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court[19] as benchmark was subsequently increased to P50,000.00 in the case of Sulpicio Lines, Inc. v. Court of Appeals, [20] which involved the sinking of another interisland ship on October 24, 1988. We now turn to the determination of the earning capacity of the victims. With respect to Ardita Miranda, the trial court awarded damages computed as follows:
[21]

In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years, her life expectancy was computed to be 21.33 years, and therefore, she could have lived up to almost 70 years old. Her gross earnings for 21.33 years based on P10,224.00 per annum, would be P218,077.92. Deducting

35 therefrom 30% as her living expenses, her net earnings would be P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory damages for the loss of earning capacity of his wife. In considering 30% as the living expenses of Ardita Miranda, the Court takes into account the fact that plaintiff and his wife were supporting their daughter and son who were both college students taking Medicine and Law respectively. In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals,[22] we think the life expectancy of Ardita Miranda was correctly determined to be 21.33 years, or up to age 69. Petitioner contends, however, that Mrs. Miranda would have retired from her job as a public school teacher at 65, hence her loss of earning capacity should be reckoned up to 17.33 years only. The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). It may be that in the Philippines the age of retirement generally is 65 but, in calculating the life expectancy of individuals for the purpose of determining loss of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased would have earned income even after retirement from a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a masters degree and a good prospect of becoming principal of the school in which she was teaching. There was reason to believe that her income would have increased through the years and she could still earn more after her retirement, e.g., by becoming a consultant, had she not died. The gross earnings which Mrs. Miranda could reasonably be expected to earn were it not for her untimely death was, therefore, correctly computed by the trial court to be P218,077.92 (given a gross annual income of P10,224.00 and life expectancy of 21.33 years). Petitioner contends that from the amount of gross earnings, 60% should be deducted as necessary living expenses, not merely 30% as the trial court allowed. Petitioner contends that 30% is unrealistic, considering that Mrs. Mirandas earnings would have been subject to taxes, social security deductions and inflation. We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals, the Court allowed a deduction of P1,184.00 for living expenses from the P2,184.00 annual salary of the victim, which is roughly 54.2% thereof. The deceased was 29 years old and a training assistant in the Bacnotan Cement Industries. In People v. Quilaton,[24] the deceased was a 26-year old laborer earning a daily wage. The court allowed a deduction of P120,000.00 which was 51.3% of his annual gross earnings of P234,000.00. In People v. Teehankee, [25] the court allowed a deduction of P19,800.00, roughly 42.4% thereof from the deceaseds annual salary of P46,659.21. The deceased, Maureen Hultman, was 17 years old and had just received her first paycheck as a secretary. In the case at bar, we hold that a deduction of 50% from Mrs. Mirandas gross earnings (P218,077.92) would be reasonable, so that her net earning capacity should beP109,038.96. There is no basis for supposing that her living expenses constituted a smaller percentage of her gross income than the living expenses in
[23]

36 the decided cases. To hold that she would have used only a small part of her income for herself, a larger part going to the support of her children would be conjectural and unreasonable. As for Elfreda de la Victoria, the trial court found that, at the time of her death, she was 26 years old, a teacher in a private school in Malolos, Bulacan, earning P6,192.00 per annum. Although a probationary employee, she had already been working in the school for two years at the time of her death and she had a general efficiency rating of 92.85% and it can be presumed that, if not for her untimely death, she would have become a regular teacher. Hence, her loss of earning capacity is P111,456.00, computed as follows: net earning capacity (x) = life expectancy x income less reasonable & necessary living expenses (50%) ] x = [ 2 (80-26) ] 3 = = 36 x 3,096.00 x [P6,192.00 [ gross annual

P3,096.00]

P111,456.00

On the other hand, the award of actual damages in the amount of P23,075.00 was determined by the Court of Appeals on the basis of receipts submitted by private respondents. This amount is reasonable considering the expenses incurred by private respondent Miranda in organizing three search teams to look for his family, spending for transportation in going to places such as Batangas City and Iloilo, where survivors and the bodies of other victims were found, making long distance calls, erecting a monument in honor of the four victims, spending for obituaries in the Bulletin Today and for food, masses and novenas. Petitioners contention that the expenses for the erection of a monument and other expenses for memorial services for the victims should be considered included in the indemnity for death awarded to private respondents is without merit. Indemnity for death is given to compensate for violation of the rights of the deceased, i.e., his right to life and physical integrity.[26] On the other hand, damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased. As for the award of attorneys fees, we agree with the Court of Appeals that the amount of P40,000.00 for private respondent Ramon Miranda and P15,000.00 for the de la Victoria spouses is justified. The appellate court correctly held: The Mecenas case cannot be made the basis for determining the award for attorneys fees. The award would naturally vary or differ in each case. While it is

37 admitted that plaintiff-appellee Ramon Miranda who is himself a lawyer, represented also plaintiffs-appellees Dela Victoria spouses, we note that separate testimonial evidence were adduced by plaintiff-appellee Ramon Miranda (TSN, February 26, 1982, p. 6) and plaintiffs-appellees spouses Dela Victoria (TSN, August 13, 1981, p. 43). Considering the amount of work and effort put into the case as indicated by the voluminous transcripts of stenographic notes, we find no reason to disturb the award of P40,000.00 for plaintiff-appellee Ramon Miranda and P15,000.00 for plaintiffs-appellees Dela Victoria spouses.[27] The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and P100,000.00 for the de la Victoria spouses in accordance with our ruling in the Mecenascase: Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property. The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea.[28] WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and petitioner is ORDERED to pay private respondents damages as follows: To private respondent Ramon Miranda: P23,075.00 P109,038.96 P150,000.00 P300,000.00 for actual damages; as compensatory damages for loss of earning capacity of his wife; as compensatory damages for wrongful death of three (3) victims; as moral damages;

38 P300,000.00 P40,000.00 as exemplary damages, all in the total amount of P882,113.96; and as attorneys fees.

To private respondents Spouses Ricardo and Virginia de la Victoria: P12,000.00 P111,456.00 P50,000.00 P100,000.00 P100,000.00 P15,000.00 for actual damages; as compensatory damages for loss of earning capacity; as compensatory damages for wrongful death; as moral damages; as exemplary damages, all in the total amount of P373,456.00; and as attorneys fees.

Petitioners are further ordered to pay costs of suit. In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport Corporation pay or are required to pay all or a portion of the amounts adjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of them such amount or amounts as either may have paid, and in the event of failure of Negros Navigation Co., Inc., to make the necessary reimbursement, PNOC and/or PNOC/STC shall be entitled to a writ of execution without need of filing another action. SO ORDERED.

39

G.R. No. L-57079 September 29, 1989 PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., petitioner, vs. COURT OF APPEALS and SPOUSES ANTONIO ESTEBAN and GLORIA ESTEBAN, respondents.

REGALADO, J.: This case had its inception in an action for damages instituted in the former Court of First Instance of Negros Occidental 1 by private respondent spouses against petitioner Philippine Long Distance Telephone Company (PLDT, for brevity) for the injuries they sustained in the evening of July 30, 1968 when their jeep ran over a mound of earth and fell into an open trench, an excavation allegedly undertaken by PLDT for the installation of its underground conduit system. The complaint alleged that respondent Antonio Esteban failed to notice the open trench which was left uncovered because of the creeping darkness and the lack of any warning light or signs. As a result of the accident, respondent Gloria Esteban allegedly sustained injuries on her arms, legs and face, leaving a permanent scar on her cheek, while the respondent husband suffered cut lips. In addition, the windshield of the jeep was shattered. 2 PLDT, in its answer, denies liability on the contention that the injuries sustained by respondent spouses were the result of their own negligence and that the entity which should be held responsible, if at all, is L.R. Barte and Company (Barte, for short), an independent contractor which undertook the construction of the manhole and the conduit system. 3 Accordingly, PLDT filed a third-party complaint against Barte alleging that, under the terms of their agreement, PLDT should in no manner be answerable for any accident or injuries arising from the negligence or carelessness of Barte or any of its employees. 4 In answer thereto, Barte claimed that it was not aware nor was it notified of the accident involving respondent spouses and that it had complied with the terms of its contract with PLDT by installing the necessary and appropriate standard signs in the vicinity of the work site, with barricades at both ends of the excavation and with red lights at night along the excavated area to warn the traveling public of the presence of excavations. 5

40 On October 1, 1974, the trial court rendered a decision in favor of private respondents, the decretal part of which reads: IN VIEW OF THE FOREGOING considerations the defendant Philippine Long Distance Telephone Company is hereby ordered (A) to pay the plaintiff Gloria Esteban the sum of P20,000.00 as moral damages and P5,000.00 exemplary damages; to plaintiff Antonio Esteban the sum of P2,000.00 as moral damages and P500.00 as exemplary damages, with legal rate of interest from the date of the filing of the complaint until fully paid. The defendant is hereby ordered to pay the plaintiff the sum of P3,000.00 as attorney's fees. (B) The third-party defendant is hereby ordered to reimburse whatever amount the defendant-third party plaintiff has paid to the plaintiff. With costs against the defendant. 6 From this decision both PLDT and private respondents appealed, the latter appealing only as to the amount of damages. Third-party defendant Barte did not appeal. On September 25, 1979, the Special Second Division of the Court of Appeals rendered a decision in said appealed case, with Justice Corazon Juliano Agrava as ponente, reversing the decision of the lower court and dismissing the complaint of respondent spouses. It held that respondent Esteban spouses were negligent and consequently absolved petitioner PLDT from the claim for damages. 7 A copy of this decision was received by private respondents on October 10, 1979. 8 On October 25, 1979, said respondents filed a motion for reconsideration dated October 24, 1979. 9 On January 24, 1980, the Special Ninth Division of the Court of Appeals denied said motion for reconsideration. 10 This resolution was received by respondent spouses on February 22, 1980. 11 On February 29, 1980, respondent Court of Appeals received private respondents' motion for leave of court to file a second motion for reconsideration, dated February 27, 1980. 12 On March 11, 1980, respondent court, in a resolution likewise penned by Justice Agrava, allowed respondents to file a second motion for reconsideration, within ten (10) days from notice thereof. 13 Said resolution was received by private respondents on April 1, 1980 but prior thereto, private respondents had already filed their second motion for reconsideration on March 7, 1980.14 On April 30,1980 petitioner PLDT filed an opposition to and/or motion to dismiss said second motion for reconsideration. 15 The Court of Appeals, in view of the divergent opinions on the resolution of the second motion for reconsideration, designated two additional justices to form a division of five. 16 On September 3,

41 1980, said division of five promulgated its resolution, penned by Justice Mariano A. Zosa, setting aside the decision dated September 25, 1979, as well as the resolution dated, January 24,1980, and affirming in toto the decision of the lower court. 17 On September 19, 1980, petitioner PLDT filed a motion to set aside and/or for reconsideration of the resolution of September 3, 1980, contending that the second motion for reconsideration of private respondent spouses was filed out of time and that the decision of September 25, 1979 penned by Justice Agrava was already final. It further submitted therein that the relationship of Barte and petitioner PLDT should be viewed in the light of the contract between them and, under the independent contractor rule, PLDT is not liable for the acts of an independent contractor. 18 On May 11, 1981, respondent Court of Appeals promulgated its resolution denying said motion to set aside and/or for reconsideration and affirming in toto the decision of the lower court dated October 1, 1974. 19 Coming to this Court on a petition for review on certiorari, petitioner assigns the following errors: 1. Respondent Court of Appeals erred in not denying private respondents' second motion for reconsideration on the ground that the decision of the Special Second Division, dated September 25, 1979, and the resolution of the Special Ninth Division, dated January 24, 1980, are already final, and on the additional ground that said second motion for reconsideration is pro forma. 2. Respondent court erred in reversing the aforesaid decision and resolution and in misapplying the independent contractor rule in holding PLDT liable to respondent Esteban spouses. A convenient resume of the relevant proceedings in the respondent court, as shown by the records and admitted by both parties, may be graphically presented as follows: (a) September 25, 1979, a decision was rendered by the Court of Appeals with Justice Agrava asponente; (b) October 10, 1979, a copy of said decision was received by private respondents; (c) October 25, 1979, a motion for reconsideration was filed by private respondents; (d) January 24, 1980, a resolution was issued denying said motion for reconsideration;

42 (e) February 22, 1980, a copy of said denial resolution was received by private respondents; (f) February 29, 1980, a motion for leave to file a second motion for reconsideration was filed by private respondents (g) March 7, 1980, a second motion for reconsideration was filed by private respondents; (h) March 11, 1980, a resolution was issued allowing respondents to file a second motion for reconsideration within ten (10) days from receipt; and (i) September 3, 1980, a resolution was issued, penned by Justice Zosa, reversing the original decision dated September 25, 1979 and setting aside the resolution dated January 24, 1980. From the foregoing chronology, we are convinced that both the motion for leave to file a second motion for reconsideration and, consequently, said second motion for reconsideration itself were filed out of time. Section 1, Rule 52 of the Rules of Court, which had procedural governance at the time, provided that a second motion for reconsideration may be presented within fifteen (15) days from notice of the order or judgment deducting the time in which the first motion has been pending. 20 Private respondents having filed their first motion for reconsideration on the last day of the reglementary period of fifteen (15) days within which to do so, they had only one (1) day from receipt of the order denying said motion to file, with leave of court, a second motion for reconsideration. 21 In the present case, after their receipt on February 22, 1980 of the resolution denying their first motion for reconsideration, private respondents had two remedial options. On February 23, 1980, the remaining one (1) day of the aforesaid reglementary period, they could have filed a motion for leave of court to file a second motion for reconsideration, conceivably with a prayer for the extension of the period within which to do so. On the other hand, they could have appealed through a petition for review on certiorari to this Court within fifteen (15) days from February 23, 1980. 22 Instead, they filed a motion for leave to file a second motion 'for reconsideration on February 29, 1980, and said second motion for reconsideration on March 7, 1980, both of which motions were by then time-barred. Consequently, after the expiration on February 24, 1980 of the original fifteen (15) day period, the running of which was suspended during the pendency of the first motion for reconsideration, the Court of Appeals could no longer validly take further proceedings on the merits of the case, much less to alter, modify or reconsider its aforesaid decision and/or resolution. The filing of the motion for leave to file a second motion for reconsideration by herein respondents on

43 February 29, 1980 and the subsequent filing of the motion itself on March 7, 1980, after the expiration of the reglementary period to file the same, produced no legal effects. Only a motion for re-hearing or reconsideration filed in time shall stay the final order or judgment sought to be re-examined. 23 The consequential result is that the resolution of respondent court of March 11, 1980 granting private respondents' aforesaid motion for leave and, giving them an extension of ten (10) days to file a second motion for reconsideration, is null and void. The period for filing a second motion for reconsideration had already expired when private respondents sought leave to file the same, and respondent court no longer had the power to entertain or grant the said motion. The aforesaid extension of ten (10) days for private respondents to file their second motion for reconsideration was of no legal consequence since it was given when there was no more period to extend. It is an elementary rule that an application for extension of time must be filed prior to the expiration of the period sought to be extended. 24 Necessarily, the discretion of respondent court to grant said extension for filing a second motion for reconsideration is conditioned upon the timeliness of the motion seeking the same. No appeal having been taken seasonably, the respondent court's decision, dated September 25, 1979, became final and executory on March 9, 1980. The subsequent resolutions of respondent court, dated March 11, 1980 and September 3, 1980, allowing private respondents to file a second motion for reconsideration and reversing the original decision are null and void and cannot disturb the finality of the judgment nor restore jurisdiction to respondent court. This is but in line with the accepted rule that once a decision has become final and executory it is removed from the power and jurisdiction of the court which rendered it to further alter or amend, much less revoke it. 25 The decision rendered anew is null and void. 26 The court's inherent power to correct its own errors should be exercised before the finality of the decision or order sought to be corrected, otherwise litigation will be endless and no question could be considered finally settled. Although the granting or denial of a motion for reconsideration involves the exercise of discretion, 27 the same should not be exercised whimsically, capriciously or arbitrarily, but prudently in conformity with law, justice, reason and equity. 28 Prescinding from the aforesaid procedural lapses into the substantive merits of the case, we find no error in the findings of the respondent court in its original decision that the accident which befell private respondents was due to the lack of diligence of respondent Antonio Esteban and was not imputable to negligent omission on the part of petitioner PLDT. Such findings were reached after an exhaustive assessment and evaluation of the evidence on record, as evidenced by the respondent court's resolution of January 24, 1980 which we quote with approval:

44 First. Plaintiff's jeep was running along the inside lane of Lacson Street. If it had remained on that inside lane, it would not have hit the ACCIDENT MOUND. Exhibit B shows, through the tiremarks, that the ACCIDENT MOUND was hit by the jeep swerving from the left that is, swerving from the inside lane. What caused the swerving is not disclosed; but, as the cause of the accident, defendant cannot be made liable for the damages suffered by plaintiffs. The accident was not due to the absence of warning signs, but to the unexplained abrupt swerving of the jeep from the inside lane. That may explain plaintiffhusband's insistence that he did not see the ACCIDENT MOUND for which reason he ran into it. Second. That plaintiff's jeep was on the inside lane before it swerved to hit the ACCIDENT MOUND could have been corroborated by a picture showing Lacson Street to the south of the ACCIDENT MOUND. It has been stated that the ditches along Lacson Street had already been covered except the 3 or 4 meters where the ACCIDENT MOUND was located. Exhibit B-1 shows that the ditches on Lacson Street north of the ACCIDENT MOUND had already been covered, but not in such a way as to allow the outer lane to be freely and conveniently passable to vehicles. The situation could have been worse to the south of the ACCIDENT MOUND for which reason no picture of the ACCIDENT MOUND facing south was taken. Third. Plaintiff's jeep was not running at 25 kilometers an hour as plaintiff-husband claimed. At that speed, he could have braked the vehicle the moment it struck the ACCIDENT MOUND. The jeep would not have climbed the ACCIDENT MOUND several feet as indicated by the tiremarks in Exhibit B. The jeep must have been running quite fast. If the jeep had been braked at 25 kilometers an hour, plaintiff's would not have been thrown against the windshield and they would not have suffered their injuries. Fourth. If the accident did not happen because the jeep was running quite fast on the inside lane and for some reason or other it had to swerve suddenly to the right and had to climb over the ACCIDENT MOUND, then plaintiff-husband had not exercised the diligence of a good father of a family to avoid the accident. With the drizzle, he should not have run on dim lights, but should have put on his regular lights which should have made him see the ACCIDENT MOUND in time. If he was running on the outside lane at 25 kilometers an hour, even on dim lights, his failure to see the

45 ACCIDENT MOUND in time to brake the car was negligence on his part. The ACCIDENT MOUND was relatively big and visible, being 2 to 3 feet high and 1-1/2 feet wide. If he did not see the ACCIDENT MOUND in time, he would not have seen any warning sign either. He knew of the existence and location of the ACCIDENT MOUND, having seen it many previous times. With ordinary precaution, he should have driven his jeep on the night of the accident so as to avoid hitting the ACCIDENT MOUND. 29 The above findings clearly show that the negligence of respondent Antonio Esteban was not only contributory to his injuries and those of his wife but goes to the very cause of the occurrence of the accident, as one of its determining factors, and thereby precludes their right to recover damages. 30 The perils of the road were known to, hence appreciated and assumed by, private respondents. By exercising reasonable care and prudence, respondent Antonio Esteban could have avoided the injurious consequences of his act, even assuming arguendothat there was some alleged negligence on the part of petitioner. The presence of warning signs could not have completely prevented the accident; the only purpose of said signs was to inform and warn the public of the presence of excavations on the site. The private respondents already knew of the presence of said excavations. It was not the lack of knowledge of these excavations which caused the jeep of respondents to fall into the excavation but the unexplained sudden swerving of the jeep from the inside lane towards the accident mound. As opined in some quarters, the omission to perform a duty, such as the placing of warning signs on the site of the excavation, constitutes the proximate cause only when the doing of the said omitted act would have prevented the injury. 31 It is basic that private respondents cannot charge PLDT for their injuries where their own failure to exercise due and reasonable care was the cause thereof. It is both a societal norm and necessity that one should exercise a reasonable degree of caution for his own protection. Furthermore, respondent Antonio Esteban had the last clear chance or opportunity to avoid the accident, notwithstanding the negligence he imputes to petitioner PLDT. As a resident of Lacson Street, he passed on that street almost everyday and had knowledge of the presence and location of the excavations there. It was his negligence that exposed him and his wife to danger, hence he is solely responsible for the consequences of his imprudence. Moreover, we also sustain the findings of respondent Court of Appeals in its original decision that there was insufficient evidence to prove any negligence on the part of PLDT. We have for consideration only the self-serving testimony of respondent Antonio Esteban and the unverified photograph of merely a portion of the scene of the accident. The absence of a police report of the incident and the non-submission of a medical report from the hospital where private respondents were allegedly treated have not even been satisfactorily explained.

46 As aptly observed by respondent court in its aforecited extended resolution of January 24, 1980 (a) There was no third party eyewitness of the accident. As to how the accident occurred, the Court can only rely on the testimonial evidence of plaintiffs themselves, and such evidence should be very carefully evaluated, with defendant, as the party being charged, being given the benefit of any doubt. Definitely without ascribing the same motivation to plaintiffs, another person could have deliberately engineered a similar accident in the hope and expectation that the Court can grant him substantial moral and exemplary damages from the big corporation that defendant is. The statement is made only to stress the disadvantageous position of defendant which would have extreme difficulty in contesting such person's claim. If there were no witness or record available from the police department of Bacolod, defendant would not be able to determine for itself which of the conflicting testimonies of plaintiffs is correct as to the report or non-report of the accident to the police department. 32 A person claiming damages for the negligence of another has the burden of proving the existence of such fault or negligence causative thereof. The facts constitutive of negligence must be affirmatively established by competent evidence. 33 Whosoever relies on negligence for his cause of action has the burden in the first instance of proving the existence of the same if contested, otherwise his action must fail. WHEREFORE, the resolutions of respondent Court of Appeals, dated March 11, 1980 and September 3,1980, are hereby SET ASIDE. Its original decision, promulgated on September 25,1979, is hereby REINSTATED and AFFIRMED. SO ORDERED.

47 G.R. No. 153076 June 21, 2007

LAPANDAY AGRICULTURAL and DEVELOPMENT CORPORATION (LADECO), HENRY BERENGUEL, and APOLONIO R. DEOCAMPO, petitioners, vs. MICHAEL RAYMOND ANGALA, respondent. DECISION CARPIO, J.: The Case Before the Court is a petition for review1 assailing the 25 July 2001 Decision2 and 11 March 2002 Resolution3 of the Court of Appeals in CA-G.R. CV No. 51134. The Antecedent Facts On 4 May 1993, at about 2:45 p.m., a Datsun crewcab with plate no. PEC-903 driven by Apolonio Deocampo (Deocampo) bumped into a 1958 Chevy pick-up with plate no. MAM-475 owned by Michael Raymond Angala (respondent) and driven by Bernulfo Borres (Borres). Lapanday Agricultural and Development Corporation (LADECO) owned the crewcab which was assigned to its manager Manuel Mendez (Mendez). Deocampo was the driver and bodyguard of Mendez. Both vehicles were running along Rafael Castillo St., Agdao, Davao City heading north towards Lanang, Davao City. The left door, front left fender, and part of the front bumper of the pick-up were damaged. Respondent filed an action for Quasi-Delict, Damages, and Attorneys Fees against LADECO, its administrative officer Henry Berenguel4 (Berenguel) and Deocampo. Respondent alleged that his pick-up was slowing down to about five to ten kilometers per hour (kph) and was making a left turn preparatory to turning south when it was bumped from behind by the crewcab which was running at around 60 to 70 kph. The crewcab stopped 21 meters from the point of impact. Respondent alleged that he heard a screeching sound before the impact. Respondent was seated beside the driver and was looking at the speedometer when the accident took place. Respondent testified that Borres made a signal because he noticed a blinking light while looking at the speedometer.5 Respondent sent a demand letter to LADECO for the payment of the damages he incurred because of the accident but he did not receive any reply. Thus, respondent filed the case against LADECO, Berenguel, and Deocampo. Deocampo alleged that the pick-up and the crewcab he was driving were both running at about 40 kph. The pick-up was running along the outer lane. The pick-

48 up was about 10 meters away when it made a U-turn towards the left. Deocampo testified that he did not see any signal from the pick-up.6 Deocampo alleged that he tried to avoid the pick-up but he was unable to avoid the collision. Deocampo stated that he did not apply the brakes because he knew the collision was unavoidable. Deocampo admitted that he stepped on the brakes only after the collision. The Ruling of the Trial Court In its 3 March 1995 Decision,7 the Regional Trial Court of Davao City, Branch 15 (trial court) ruled: WHEREFORE, judgment is hereby rendered ordering the defendants LADECO and Apolonio Deocampo to solidarily pay the plaintiffs the following sums: 1. Twenty three thousand two hundred (P23,200.00) pesos as actual damages. 2. Ten thousand (P10,000.00) pesos as moral damages. 3. Ten thousand (P10,000.00) pesos as attorneys fees. 4. Costs of suit. SO ORDERED.8 The trial court found that the crewcab was running very fast while following the pick-up and that the crewcabs speed was the proximate cause of the accident. The trial court observed that the crewcab stopped 21 meters away from the point of impact despite Deocampos claim that he stepped on the brakes moments after the collision. The trial court ruled that Deocampo had the last opportunity to avoid the accident. The trial court found that Berenguel was not liable because he was not the owner of the crewcab. LADECO and Deocampo (petitioners)9 filed a motion for reconsideration. The trial court denied petitioners motion in its 13 June 1995 Order.10 Petitioners filed an appeal before the Court of Appeals. The Ruling of the Court of Appeals The Court of Appeals affirmed in toto the trial courts decision.

49 The Court of Appeals sustained the finding of the trial court that Deocampo was negligent. The Court of Appeals applied the doctrine of last clear chance and ruled that Deocampo had the responsibility of avoiding the pick-up. The Court of Appeals also sustained the solidary liability of LADECO and Deocampo. The Court of Appeals ruled that under Article 2180 of the Civil Code, the negligence of the driver is presumed to be the negligence of the owner of the vehicle. The dispositive portion of the Court of Appeals Decision reads: WHEREFORE, premises considered, the appeal is DISMISSED for lack of merit, and the assailed Decision of the Court a quo in Civil Case No. 22067-93 is AFFIRMED in toto. Costs against defendants-appellants. SO ORDERED.11 Petitioners filed a motion for reconsideration. In its 11 March 2002 Resolution, the Court of Appeals denied the motion for lack of merit. Hence, the petition before this Court. The Issues The issues before the Court are the following: 1. Whether the provisions of Section 45(b) of Republic Act No. 413612 (RA 4136) and Article 2185 of the Civil Code apply to this case; and 2. Whether respondent is entitled to the damages awarded. The Ruling of this Court The petition is partly meritorious. Both Drivers are Negligent Both the trial court and the Court of Appeals found that Deocampo was at fault because he was driving very fast prior to the collision. The Court of Appeals sustained the trial courts finding that Deocampo was running more than the normal cruising speed. Both the trial court and the Court of Appeals noted that the crewcab stopped 21 meters away from the point of impact. Deocampo admitted that he stepped on the brakes only after the collision.

50 Petitioners allege that Borres did not take the proper lane before executing the Uturn. Petitioners allege that Borres violated Section 45(b) of RA 4136 and it was his recklessness that was the proximate cause of the accident. Section 45(b) of RA 4136 states: Sec. 45. Turning at intersections. x x x (b) The driver of a vehicle intending to turn to the left shall approach such intersection in the lane for traffic to the right of and nearest to the center line of the highway, and, in turning, shall pass to the left of the center of the intersection, except that, upon highways laned for traffic and upon one-way highways, a left turn shall be made from the left lane of traffic in the direction in which the vehicle is proceeding. Petitioners further allege that since Borres was violating a traffic rule at the time of the accident, respondent and Borres were the parties at fault. Petitioners cite Article 2185 of the Civil Code, thus: Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. We rule that both parties were negligent in this case. Borres was at the outer lane when he executed a U-turn. Following Section 45(b) of RA 4136, Borres should have stayed at the inner lane which is the lane nearest to the center of the highway. However, Deocampo was equally negligent. Borres slowed down the pick-up preparatory to executing the U-turn. Deocampo should have also slowed down when the pick-up slowed down. Deocampo admitted that he noticed the pick-up when it was still about 20 meters away from him.13 Vehicular traffic was light at the time of the incident. The pick-up and the crewcab were the only vehicles on the road.14 Deocampo could have avoided the crewcab if he was not driving very fast before the collision, as found by both the trial court and the Court of Appeals. We sustain this finding since factual findings of the Court of Appeals affirming those of the trial court are conclusive and binding on this Court.15 Further, the crewcab stopped 21 meters from the point of impact. It would not have happened if Deocampo was not driving very fast. Doctrine of Last Clear Chance Applies Since both parties are at fault in this case, the doctrine of last clear chance applies. The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who

51 had the last clear opportunity to avoid the loss but failed to do so is chargeable with the loss.16 In this case, Deocampo had the last clear chance to avoid the collision. Since Deocampo was driving the rear vehicle, he had full control of the situation since he was in a position to observe the vehicle in front of him.17Deocampo had the responsibility of avoiding bumping the vehicle in front of him.18 A U-turn is done at a much slower speed to avoid skidding and overturning, compared to running straight ahead.19 Deocampo could have avoided the vehicle if he was not driving very fast while following the pick-up. Deocampo was not only driving fast, he also admitted that he did not step on the brakes even upon seeing the pick-up. He only stepped on the brakes after the collision. Petitioners are Solidarily Liable LADECO alleges that it should not be held jointly and severally liable with Deocampo because it exercised due diligence in the supervision and selection of its employees. Aside from this statement, LADECO did not proffer any proof to show how it exercised due diligence in the supervision and selection of its employees. LADECO did not show its policy in hiring its drivers, or the manner in which it supervised its drivers. LADECO failed to substantiate its allegation that it exercised due diligence in the supervision and selection of its employees. Hence, we hold LADECO solidarily liable with Deocampo. Respondent is Entitled to Moral Damages We sustain the award of moral damages. Moral damages are awarded to allow a plaintiff to obtain means, diversion, or amusement that will serve to alleviate the moral suffering he has undergone due to the defendants culpable action. 20 The trial court found that respondent, who was on board the pick-up when the collision took place, suffered shock, serious anxiety, and fright when the crewcab bumped his pick-up. We sustain the trial court and the Court of Appeals in ruling that respondent sufficiently showed that he suffered shock, serious anxiety, and fright which entitle him to moral damages. Both the trial court and the Court of Appeals failed to give any justification for the award of attorneys fees. Awards of attorneys fees must be based on findings of fact and of law and stated in the decision of the trial court.21Further, no premium should be placed on the right to litigate.22 Hence, we delete the award of attorneys fees. WHEREFORE, we AFFIRM the 25 July 2001 Decision and 11 March 2002 Resolution of the Court of Appeals in CA-G.R. CV No. 51134 with MODIFICATION by deleting the award of attorneys fees. SO ORDERED.

52

LBC Air Cargo, Inc. vs. Court of Appeals, G.R. No. 101683, 241 SCRA 619 , February 23, 1995 G.R. No. 101683 February 23, 1995 LBC AIR CARGO, INC. FERNANDO M. YU and JAIME TANO, petitioners, vs. HON. COURT OF APPEALS, Fourth Division, SHERWIN MONTEROLA y OYON-OYON, represented by PATROCENIA GRONDIANO y MONTEROLA, and PATROCENIA GRONDIANO y MONTEROLA, respondents. VITUG, J.: In this petition for review, the application of the doctrines of "proximate cause" and "last clear chance" is, once again, being put to test. The petition questions the decision of the Court of Appeals, dated 18 July 1991, which has reversed that of the trial court. The case arose from a vehicular collision which occurred at about 11:30 in the morning of 15 November 1987. Rogelio Monterola, a licensed driver, was traveling on board his Suzuki motorcycle towards Mangagoy on the right lane along a dusty national road in Bislig, Surigao del Sur. At about the same time, a cargo van of the LBC Air Cargo Incorporated, driven by defendant Jaime Tano, Jr., was coming from the opposite direction on its way to the Bislig Airport. On board were passengers Fernando Yu, Manager of LBC Air Cargo, and his son who was seated beside Tano. When Tano was approaching the vicinity of the airport road entrance on his left, he saw two vehicles racing against each other from the opposite direction. Tano stopped his vehicle and waited for the two racing vehicles to pass by. The stirred cloud of dust made visibility extremely bad. Instead of waiting for the dust to settled, Tano started to make a sharp left turn towards the airport road. When he was about to reach the center of the right lane, the motorcycle driven by Monterola suddenly emerged from the dust and smashed head-on against the right side of the LBC van. Monterola died from the severe injuries he sustained. A criminal case for "homicide thru reckless imprudence" was filed against Tano. A civil suit was likewise instituted by the heirs of deceased Monterola against Tano, along with Fernando Yu and LBC Air Cargo Incorporated, for the recovery of damages. The two cases were tried jointly by the Regional Trial Court, Branch 29, of Surigao del Sur. On 29 July 1990, the trial court dismissed both cases on the ground that the proximate cause of the "accident" was the negligence of deceased Rogelio Monterola.

53 Private respondent appealed the dismissal of the civil case to the Court of Appeals. On 18 July 1991, the appellate court reversed the court a quo. It held: WHEREFORE, the judgment appealed from is REVERSED, and another one is hereby rendered ordering the defendants Jaime Tano and LBC Air Cargo, Inc. to jointly and severally pay the plaintiff Patrocinia Monterola the following amounts: To SHERWIN MONTEROLA: 1. Indemnity for the Rogelio Monterola P50,000.00 2. For Moral damages P20,000.00 To PATROCINIA GRONDIANO Y MONTEROLA: 3. Actual Damages P7,361.00 4. Hospitals & Burial Expenses 15,000.00 5. Attorneys' Fees of Litigation 10,000.00 Plus the costs. death of

and

expenses

Actual payment of the aforementioned amounts should however be reduced to twenty (20%) percent. 1 In the instant petition for review, petitioners contend that 1. The Court of Appeals erred in finding that Jaime Tano, Jr. was negligent in the driving of his vehicle and in failing to give a signal to approaching vehicles of his intention to make a left turn. 2. The Court of Appeals erred in not finding that the proximate cause of the accident was the victim's negligence in the driving of his motorcycle in a very fast speed and thus hitting the petitioner's cargo van. 2 The issues raised are thus essentially factual. The intrinsic merit of, as well as cogency in, the detailed analyses made by the Court of Appeals in arriving at its findings is at once apparent. Said the appellate court: That visibility was poor when Jaime Tano made a left turn was admitted by the latter. Q When these two vehicles passed by your parked vehicle, as you said, there were clouds of dust, did I get you right? A Yes sir, the road was dusty. Q So much so that you could no longer see the vehicles from the opposite direction following these vehicles? A It is not clear, sir, so I even turned on my left signal and the headlight. Q What do you mean by it was not clear, you could not see the incoming vehicles?

54 A I could not see because of the cloud of dust. Q And it was at this juncture, when you were to follow your theory, when you started your LBC van again and swerved to the left leading to the Bislig airport? A I did not enter immediately the airport, I waited the dust to clear a little before I drove. xxx xxx xxx Q In other words when you said that it was slightly clear, you would like to tell the Honorable Court that you could only clearly see big vehicles . . . but not small vehicles like a motorcycle? A I could see clearly big vehicles but not small vehicles like a motorcycle. Q Like the motorcycle of Rogelio Monterola? A Yes, sir. I could not see clearly. (Tano, tsn, April 18, 1989, pp. 26-30) (p. 15, Appellant's brief). Tano should not have made a left turn under the conditions admitted by him. Under the Land Transportation and Traffic Code, the driver of any vehicle upon a highway, before starting, stopping or turning from a direct line, is called upon to first see that such movement can be made in safety, and whenever the operation of any other vehicle approaching may be affected by such movement, shall give a signal plainly visible to the driver of such other vehicles of the intention to make such movement (Sec. 44, R.A. 4136, as amended). This means that before a driver turns from a direct line, in this case to the left, the driver must first see to it that there are no approaching vehicles and, if there are, to make the turn only if it can be made in safety, or at the very least give a signal that is plainly visible to the driver of such other vehicle. Tano did neither in this case, for he recklessly made a left turn even as visibility was still very poor, and thus failed to see the approaching motorcycle and warn the latter, of his intention to make a left turn. This is plain and simple negligence. In thus making the left turn, he placed his vehicle directly at the path of the motorcycle which, unaware of Tano's intention to make a left turn, smashed at Tano's vehicle. It was Tano's negligence that created the risk or the condition of danger that set into operation the event that led to the smashedup and untimely death of Rogelio Monterola. Rogelio Monterola's motorcycle would not have hit the cargo van had Tano, in operating it, not recklessly turned left when visibility was still poor, and instead observed the direct line of the Land Transportation Code that before doing so, he should first see to it that such movement can be made in safety, and that whenever any other vehicle approaching may be affected by such movement,

55 should give a signal plainly visible to the driver of such other vehicle of the intention to make such movement. That Rogelio Monterola was running fast despite poor visibility as evidenced by the magnitude of the damage to the vehicles is no defense. His negligence would at most be contributory (Article 2179, N.C.C.). Having negligently created the condition of danger, defendants may not avoid liability by pointing to the negligence of the former. xxx xxx xxx Tano's proven negligence created a presumption of negligence on the part of his employer, the LBC Air Cargo Corporation, in supervising its employees properly and adequately (Phoenix Construction, Inc. vs. Intermediate Appellate Court, supra), which may only be destroyed by proof of due diligence in the selection and supervision of his employees to prevent the damage (Article 2180, N.C.C.). No such defense was interposed by defendants in their answer. We, however, fail to see Fernando Yu's liability as Manager of LBC-Mangagoy Branch Office, there being no employer-employee relationship between him and Jaime Tano who is a driver of the LBC Air Cargo Inc. It was held in Philippine Rabbit Bus Lines Inc. et al. vs. Phil. American Forwarders, Inc., 63 SCRA 231, that the term "Manager" in Article 2180 is used in the sense of "employer." Hence, no tortuous or quasi-delictual liability can be fastened on Fernando Yu as branch manager of LBC Air Cargo Inc. Now for the amount of damages. Aside from the indemnity for death which has been pegged at P50,000.00 (Resolution En Banc, August 30, 1990, cited in People vs. Sazon, 189 SCRA 700), the evidence disclose that as a result of the accident, Rogelio Monterola's motorcycle was damaged, the repair cost of which amounted to P7,361.00 (Exh. E-1), for hospitalization, wake and burial expenses, plaintiff spent P15,000.00. There is likewise no question that by reason of Rogelio Monterola's untimely death, his only child 14 years old Sherwin Monterola, suffered mental anguish, fright, serious anxiety, wounded feelings and moral shock that entitles him to moral damages which we hereby fix at P20,000.00. Because of defendants' refusal to indemnify the plaintiff for his father's death, the latter was compelled to litigate and engage the services of counsel. He is therefore entitled to an additional amount of P10,000.00 for attorney's fees and expenses of litigation. Considering, however, the contributory negligence of Rogelio Monterola in driving at a fast clip despite the fact that the road was dusty, we reduce the aggregate amount of damages to which the plaintiff is entitled by twenty per cent (Phoenix Construction Inc. vs. Intermediate Appellate Court, Supra). 3 From every indication, the proximate cause of the accident was the negligence of Tano who, despite extremely poor visibility, hastily executed a left turn (towards the Bislig airport road entrance) without first waiting for the dust to settle. It was this negligent act of Tano, which had placed his vehicle (LBC van) directly on the path of the motorcycle coming from the opposite direction, that almost instantaneously caused the collision to occur. Simple prudence required him not to attempt to cross the other lane until after it would have been safe from and clear of any oncoming vehicle.

56 Petitioners poorly invoke the doctrine of "last clear chance" (also referred to, at times, as "supervening negligence" or as "discovered peril"). The doctrine, in essence, is to the effect that where both parties are negligent, but the negligent act of one is appreciably later in time than that of the other, or when it is impossible to determine whose fault or negligence should be attributed to the incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof (seePicart vs. Smith, 37 Phil. 809). Stated differently, the rule would also mean that an antecedent negligence of a person does not preclude the recovery of damages for supervening negligence of, or bar a defense against the liability sought by, another if the latter, who had the last fair chance, could have avoided the impending harm by the exercise of due diligence (Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384; Glan People's Lumber and Hardware vs. Intermediate Appellate Court, 173 SCRA 464). In the case at bench, the victim was traveling along the lane where he was rightly supposed to be. The incident occurred in an instant. No appreciable time had elapsed, from the moment Tano swerved to his left to the actual impact; that could have afforded the victim a last clear opportunity to avoid the collision. It is true however, that the deceased was not all that free from negligence in evidently speeding too closely behind the vehicle he was following. We, therefore, agree with the appellate court that there indeed was contributory negligence on the victim's part that could warrant a mitigation of petitioners liability for damages. WHEREFORE, the appealed decision is AFFIRMED. Costs against petitioners. SO ORDERED.

57

CRESENCIA ACHEVARA, ALFREDO ACHEVARA, and BENIGNO VALDEZ, Petitioners,

G.R. No. 175172 Present: YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR. NACHURA, and PERALTA, JJ. Promulgated: September 29, 2009

- versus -

ELVIRA RAMOS, JOHN ARNEL RAMOS, and KHRISTINE CAMILLE RAMOS, Respondents.

x-------------------------------------------------------------------------------------------------x DECISION PERALTA, J.:

This is a petition for review on certiorari[1] of the Decision dated April 25, 2006 of the Court of Appeals in CA-G.R. CV No. 67027, and its Resolution dated October 23, 2006, denying petitioners motion for reconsideration. The Court of Appeals affirmed with modification the Decision of the Regional Trial Court (RTC) of Ilocos Sur, Branch 22, dated February 14, 2000, holding petitioners solidarily liable to respondents for damages incurred due to a vehicular accident, which resulted in the death of Arnulfo Ramos. The facts are as follows: On June 27, 1995, respondents Elvira Ramos and her two minor children, namely, John Arnel Ramos and Khristine Camille Ramos, filed with the RTC of Ilocos Sur a Complaint[2] for damages under Article 2176[3] of the Civil Code

58 against petitioners Cresencia Achevara, Alfredo Achevara and Benigno Valdez for the death of Arnulfo Ramos, husband of Elvira Ramos and father of her two children, in a vehicular accident that happened on April 22, 1995 at the national highway along Barangay Tablac, Candon, Ilocos Sur. Crescencia Achevara was sued as the operator of the passenger jeep with Plate No. DKK-995, which was involved in the vehicular accident. Alfredo Achevara was impleaded as the husband of the operator and as the administrator of the conjugal partnership properties of the Spouses Achevara. In their Complaint,[4] respondents alleged that in the morning of April 22, 1995, Benigno Valdez was driving a passenger jeep heading north on the national highway inBarangay Tablac, Candon, Ilocos Sur in a reckless, careless, and negligent manner. He tried to overtake a motorcycle, causing the passenger jeep to encroach on the opposite lane and bump the oncoming vehicle driven by Arnulfo Ramos. The injuries sustained by Arnulfo Ramos caused his death, notwithstanding prompt medical assistance. Respondents alleged that Crescencia Achevara failed to exercise due diligence in the selection and supervision of Benigno Valdez as driver of the passenger jeep. Respondents sought to recover actual damages for medical expenses in the sum of P33,513.00 and funeral expenses in the sum of P30,000.00, as well as moral and exemplary damages, lost earnings, attorney's fees and litigation expenses. In their Answer,[5] petitioners denied respondents allegation that Benigno Valdez overtook a motorcycle and bumped the vehicle driven by Arnulfo Ramos. They alleged that on April 22, 1995, Benigno Valdez was driving southward at a moderate speed when he saw an owner-type jeep coming from the south and heading north, running in a zigzag manner, and encroaching on the west lane of the road. To avoid a collision, Valdez drove the passenger jeep towards the shoulder of the road, west of his lane, but the owner-type jeep continued to move toward the western lane and bumped the left side of the passenger jeep. Petitioners alleged that it was Arnulfo Ramos who was careless and negligent in driving a motor vehicle, which he very well knew had a mechanical defect. Hence, respondents had no cause of action against petitioners.

59 During trial on the merits, respondents presented three witnesses: Alfredo Gamera, Dr. Emilio Joven and Elvira Ramos. Alfredo Gamera testified that at about 10:00 a.m. of April 22, 1995, he and his wife were seated at the waiting shed along the national highway in Tablac, Candon, Ilocos Sur, waiting for a ride to the town proper of Candon. He saw a motorcycle, driven by Police Officer 3 (PO3) Baltazar de Peralta, coming from the interior part of Tablac and proceeding south toward the town proper. He also saw a southbound passenger jeep, driven by Benigno Valdez, that wanted to overtake the motorcycle of PO3 De Peralta. As it tried to overtake the motorcycle, the passenger jeep encroached on the lane of the northbound owner-type jeep driven by Arnulfo Ramos, which resulted in the collision. Gamera stated that the point of impact was on the lane of the vehicle of Arnulfo Ramos. Thereafter, the passenger jeep screeched to a halt at the fence of the Funtanilla family. The owner-type jeep was destroyed and the windshield was broken.[6] Gamera testified that he was about 100 meters from the place where the vehicular accident occurred. The speed of the passenger jeep was about 70 kilometers per hour, while that of the owner-type jeep was about 30 kilometers per hour.[7] On cross-examination, it was found that Gamera went to the Police Station in Candon, Ilocos Sur to execute his sworn statement only on May 30, 1992, one month after the incident and after respondent Elvira Ramos talked to him. Moreover, at the preliminary investigation, Gamera did not mention in his sworn statement that his wife was present during the incident, which fact was admitted by respondents counsel. Further, at that time, Gamera was working as a jueteng collector at the same joint where the deceased Arnulfo Ramos was also employed, and he had known Ramos for five years.[8] Dr. Emilio Joven, a surgeon of the Lorma Medical Center, San Fernando, La Union, testified that Arnulfo Ramos was admitted at the Lorma Hospital at about 12:50 p.m.on April 22, 1995. The latter sustained external injuries, mostly on the left side of the body, which could have been caused by a vehicular accident. The CT scan result of Arnulfo Ramos showed blood clots inside the brain, scattered small hemorrhagic contusions, and swelling and blood clots on the base of the brain, which internal injuries caused his death.[9] The immediate cause of death was acute cranio-cerebral injury.[10]

60

Respondent Elvira Ramos testified on the damages she incurred due to the vehicular accident, which resulted in the death of her husband. She spent P33,513.00 for hospitalization and P30,000.00 for the funeral. She prayed for the award of lost earnings, moral damages, exemplary damages, attorneys fees, appearance fees and other costs of litigation.[11] She also testified that the owner-type jeep was registered in the name of Matilde Tacad[12] of Sto. Domingo, Ilocos Sur.[13] Petitioners presented six witnesses, namely, PO3 Baltazar de Peralta, Special Police Officer 2 (SPO2) Marvin Valdez, Herminigildo Pagaduan, Benigno Valdez, Emilia Achevara and Alfredo Achevara. PO3 Baltazar de Peralta stated that he was assigned to Santiago, Ilocos Sur. He testified that at about 9:00 a.m. of April 22, 1995, he was on board his motorcycle at the waiting shed erected on the eastern side of the national highway in Tablac, Ilocos Sur. He was about to go southward, but waited a while to let a southbound passenger jeep pass by. Then he followed behind the passenger jeep. When the passenger jeep was about 75 meters away from him on the western lane of the national highway, PO3 De Peralta spotted an owner-type jeep coming from the south on the eastern lane of the road. He observed that the owner-type jeep was running in a zigzag manner as it went over the many holes on the road. It did not slacken speed, causing the jeeps front wheels to wiggle, before it bumped the passenger jeep coming from the north. The collision occurred on the lane of the passenger jeep, about two feet away from the center line of the road, causing the owner-type jeep to turn around and return to its former position, with its right wheel removed; while the passenger jeep veered to the right lane.[14] After the collision, PO3 De Peralta assisted the owner-type jeeps driver, who fell to the ground, and helped load him into a tricycle that would take him to the hospital. Then he went to the driver of the passenger jeep and asked him what happened. The driver remarked, Even if you do not like to meet an accident, if that is what happened, you cannot do anything. Thereafter, PO3 De Peralta proceeded on his way southward. He reported the incident at the Police Station of Candon, Ilocos Sur.[15]

61

PO3 De Peralta testified that the accident happened on a straight part of the highway, but there were many holes on the eastern lane. He stated that nothing impeded his view of the incident.[16] PO3 De Peralta also testified that he had known respondents witness, Alfredo Gamera, who was his barangay mate for 20 years. He declared that he never saw Gamera at the waiting shed or at the scene of the incident on the morning of April 22, 1995.[17] Investigator SPO2 Marvin Valdez of the Candon Police Station testified that at about 11:00 a.m. of April 22, 1995, he received a report of the vehicular accident that occurred at the national highway in Tablac, Candon, Ilocos Sur, which was three kilometers from the police station. He proceeded to the site with some companions. He saw a passenger jeep positioned diagonally on the western shoulder of the road facing southwest, while an owner-type jeep was on the right lane. The driver of the owner-type jeep was seriously injured and was brought to the hospital.[18] SPO2 Valdez testified that the owner-type jeeps right tire was detached, and its left front portion was damaged, while the passenger jeeps left tire was detached, and its left side portion was damaged.[19] Herminigildo Pagaduan testified that at 7:00 a.m. of April 22, 1995, he was at the house of Barangay Captain Victorino Gacusan of San Antonio, Candon, Ilocos Sur. Gacusan was then the overall monitor of the jueteng joint operation in Candon, Ilocos Sur. Pagaduan and Gacusan had earlier agreed to attend the wake of an army captain at Tamorong, Candon, Ilocos Sur that morning. While Pagaduan was waiting for Barangay Captain Gacusan, the latter made a phone call requesting for a vehicle to take them to Tamorong. Not long after, a yellow owner-type jeep arrived, which was driven by Arnulfo Ramos, an employee of the jueteng joint. All of them rode the jeep with Plate No. ACG 713. Barangay Captain Gacusan was on the drivers seat, Pagaduan sat beside Gacusan, while Arnulfo Ramos and the others sat on the rear seat.[20] Pagaduan further testified that the group headed west to Tamorong via Darapidap. When they reached a bridge, Barangay Captain Gacusan tried to increase the speed of the jeep, but it suddenly wiggled. Gacusan stopped the jeep, and they all alighted from it. Gacusan told Arnulfo Ramos to have the mechanical defect repaired at the auto shop. Hence, they did not proceed to

62 Tamorong, but returned to the house of Gacusan by tricycle. The next day, he heard from Gacusan that the jeep they had used in their aborted trip to Tamorong met an accident.[21] On cross-examination, Pagaduan testified that it was defense counsel Atty. Tudayan who requested him to testify, because Atty. Tudayan had heard him discuss the incident with some jueteng employees.[22] Petitioner Benigno Valdez testified that on April 22, 1995, he was driving the passenger jeep of his aunt, Crescencia Achevara, on the national highway in Tablac, Candon, Ilocos Sur heading south, while the owner-type jeep of Arnulfo Ramos was heading north. Valdez stated that the owner-type jeep was wiggling and running fast in a zigzag manner, when its right front wheel got detached and the owner-type jeep bumped the left side of his passenger jeep. Valdez swerved the passenger jeep to the western edge of the road to avoid a collision, but to no avail, as it bumped a post. He passed out. When he regained consciousness, he saw the driver of the owner-type jeep being rescued.
[23]

Valdez surrendered himself to the Police Station in Candon, Ilocos Sur. He informed the police that his vehicle was bumped by the ownertype jeep driven by Arnulfo Ramos, and he showed his drivers license to the police.[24] Valdez branded as false the testimony of respondents witness, Alfredo Gamera, that the former tried to overtake the motorcycle of PO3 Baltazar de Peralta and encroached on the lane of the owner-type jeep driven by Arnulfo Ramos. Valdez testified that before the vehicular accident, he saw a policeman following him, but there was a tricycle between them. He denied that he was driving fast and stated that his speed at that time registered only 20 on the speedometer.[25] Petitioner Alfredo Achevara testified that Crescencia Achevara was his wife, while Benigno Valdez was the nephew of his wife. He and his wife owned the passenger jeep with Plate No. DKK-995 that was involved in the vehicular accident. Valdez had been the driver of the vehicle since 1992, although he drove it only during daytime.[26]

63 Alfredo Achevara declared that before they employed Benigno Valdez to drive the passenger jeep, the former exercised the diligence of a good father of a family in selecting, training and supervising the latter. [27] They required Valdez to show them his professional drivers license, and investigated his personal background and training/experience as a driver. For his apprenticeship, they required him to drive from Metro Manila to Tagaytay City, and then back to Metro Manila for a day. Achevara stated that he knew Benigno Valdez since 1988. As their driver since 1992, Valdez never committed any traffic violation. On April 22, 1995, he handed the key of the jeep to Valdez at about 7:30 a.m. at their barangay in Padaoil, Sta. Cruz, Ilocos Sur to fetch the sound system in Santiago, Ilocos Sur for their fiesta. He told Valdez to avoid an accident, bring his license and avoid being hot-tempered.[28] On February 14, 2000, the RTC of Narvacan, Ilocos Sur, Branch 22, rendered a Decision in Civil Case No. 1431-N in favor of respondents. The trial court found that the testimony of respondents witness, Alfredo Gamera, was controverted by the testimony of PO3 Baltazar de Peralta and the finding of police investigator SPO2 Marvin Valdez. Gamera testified that the vehicular accident occurred because the passenger jeep tried to overtake the motorcycle driven by PO3 Baltazar de Peralta and encroached on the lane of the owner-type jeep driven by Arnulfo Ramos. Gameras testimony was, however, refuted by PO3 Baltazar de Peralta, who testified that the passenger jeep did not overtake his motorcycle since he was the one following behind the passenger jeep. Hence, the trial court concluded that the passenger jeep did not encroach on the lane of the owner-type jeep on the left side of the road to allegedly overtake the motorcycle. Moreover, Gamera testified that the collision occurred on the lane of the owner-type jeep, and one of the wheels of the owner-type jeep was detached, so that it stayed immobile at the place of collision, about two meters east from the center line of the national highway. However, SPO2 Marvin Valdez, who investigated the incident, found both vehicles on the western lane of the national highway. Thus, the trial court stated that it was undeniable that the collision took place on the western lane of the national highway, which was the passenger jeeps lane.

64 The trial court held that, as contended by respondents, the doctrine of last clear chance was applicable to this case. It cited Picart v. Smith,[29] which applied the said doctrine, thus, where both parties are guilty of negligence, but the negligent act of one succeeds that of the other by an appreciable interval of time, the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. The trial court held that the driver of the passenger jeep, Benigno Valdez, having seen the risk exhibited by the wiggling of the front wheels of the owner-type jeep, causing it to run in a zigzag manner, should have parked his vehicle on the right shoulder of the road so that the mishap could have been prevented. Since he ignored to take this reasonable precaution, the omission and/or breach of this duty on his part was the constitutive legal cause of the mishap.[30] The trial court stated that the doctrine of last clear chance, as applied to this case, implied a contributory negligence on the part of the late Arnulfo Ramos, who knew of the mechanical defect of his vehicle. Further, the trial court held that the evidence of the Spouses Achevara failed to show that they exercised due diligence in the selection and supervision of Benigno Valdez as driver of their passenger jeep.[31] The dispositive portion of the trial courts Decision reads: WHEREFORE, a decision is hereby rendered in favor of the plaintiffs and against the defendants, the latter to account for and to pay jointly and solidarily to the plaintiffs, because of the contributory negligence on the part of the late Arnulfo Ramos, the reduced amount itemized as follows to wit: 1) 2) 3) Thirty Thousand Pesos (P30,000.00) - part of the total receipted expenses at the hospitals; Twenty Thousand Pesos (P20,000.00) - for funeral expenses; Sixty Thousand Pesos (P60,000.00) - for moral damages;

65 4) 5) 6) Fifty Thousand Pesos (P50,000.00) - for exemplary damages; Thirty Thousand Pesos (P30,000.00) - for attorney's fees, and Ten Thousand Pesos (P10,000.00) - for actual and other costs of litigation.[32]

The Spouses Achevara and Benigno Valdez appealed the trial courts Decision to the Court of Appeals. In a Decision dated April 25, 2009, the Court of Appeals affirmed with modification the Decision of the trial court, the dispositive portion of which reads: WHEREFORE, premises considered, the appeal is hereby DISMISSED and the assailed February 14, 2000 Decision of the RTC of Narvacan, Ilocos Sur, Branch 22, in Civil Case No. 1431-N, is hereby AFFIRMED with MODIFICATION, that in addition to other awards made by the trial court, defendants-appellants are hereby ordered to pay, jointly and severally, the plaintiffsappellees the sum of P50,000.00 as indemnity for the death of Arnulfo Ramos and the moral damages and attorney's fees awarded by the trial court are hereby REDUCED to P50,000.00 and P10,000.00, respectively, while the awards made by the trial court for exemplary damages and for actual and other costs of litigation are hereby DELETED.[33]

The motion for reconsideration of the Spouses Achevara and Benigno Valdez was denied for lack of merit by the Court of Appeals in a Resolution[34] dated October 23, 2006. Hence, the Spouses Achevara and Benigno Valdez filed this petition. The main issue is whether or not petitioners are liable to respondents for damages incurred as a result of the vehicular accident. Petitioners contend that the doctrine of last clear chance is not applicable to this case, because the proximate cause of the accident was the negligence of

66 the late Arnulfo Ramos in knowingly driving the defective owner-type jeep. When the front wheel of the owner-type jeep was removed, the said jeep suddenly encroached on the western lane and bumped the left side of the passenger jeep driven by Benigno Valdez. Considering that the interval between the time the owner-type jeep encroached on the lane of Valdez to the time of impact was only a matter of seconds, Valdez no longer had the opportunity to avoid the collision. Pantranco North Express Inc. v. Besa[35] held that the doctrine of last clear chance can never apply where the party charged is required to act instantaneously, and if the injury cannot be avoided by the application of all means at hand after the peril is or should have been discovered. Petitioners assert that Arnulfo Ramos negligence in driving the ownertype jeep despite knowledge of its mechanical defect, and his failure to have it repaired first before driving, to prevent damage to life and property did not only constitute contributory negligence. Ramos negligence was the immediate and proximate cause of the accident, which resulted in his untimely demise. Benigno Valdez should not be made to suffer the unlawful and negligent acts of Ramos. Since forseeability is the fundamental basis of negligence, Valdez could not have foreseen that an accident might happen due to the mechanical defect in the vehicle of Ramos. It was Ramos alone who fully knew and could foresee that an accident was likely to occur if he drove his defective jeep, which indeed happened. Hence, the proximate cause of the vehicular accident was the negligence of Ramos in driving a mechanically defective vehicle. In short, petitioners contend that Arnulfo Ramos own negligence in knowingly driving a mechanically defective vehicle was the immediate and proximate cause of his death, and that the doctrine of last clear chance does not apply to this case. Petitioners arguments are meritorious. The Court notes that respondents version of the vehicular accident was rebutted by petitioners. The testimony of respondents witness, Alfredo Gamera, that the vehicular accident occurred because the passenger jeep driven by Benigno Valdez tried to overtake the motorcycle driven by PO3 Baltazar de Peralta and encroached on the lane of the owner-type jeep, which resulted in the collision, was refuted by PO3 Baltazar de Peralta, who testified

67 that the passenger jeep did not overtake his motorcycle since he was the one following behind the passenger jeep. Hence, the trial court correctly concluded that the passenger jeep did not encroach on the lane of the owner-type jeep on the left side of the road to allegedly overtake the motorcycle. Gamera also testified that the collision took place on the lane of the owner-type jeep, and one of its wheels was detached and stayed immobile at the place of collision, about two meters east the center line of the national highway. However, SPO2 Marvin Valdez, who investigated the incident, found both vehicles on the western lane of the national highway. The owner-type jeep was diagonally positioned on the right, western lane; while the passenger jeep was on the western shoulder of the road, diagonally facing southwest. The trial court, therefore, correctly held that it was undeniable that the collision took place on the western lane of the national highway or the lane of the passenger jeep driven by Benigno Valdez. It was the owner-type jeep driven by Arnulfo Ramos that encroached on the lane of the passenger jeep. It must be pointed out that Herminigildo Pagaduan testified that in the early morning of April 22, 1995, he and Barangay Captain Gacusan, along with Arnulfo Ramos, aborted their trip to Tamorong, Candon, Ilocos Sur, using the same owner-type jeep because it was wiggling. Ramos was advised to have the mechanical defect repaired. Yet, later in the morning, Ramos was driving the owner-type jeep on the national highway in Candon. Benigno Valdez testified that the owner-type jeep was wiggling and running fast in a zigzag manner when its right front wheel got detached, and the owner-type jeep suddenly bumped the passenger jeep he was driving, hitting the left side of the passenger jeep opposite his seat. Although Valdez swerved the passenger jeep to the western edge of the road, it was still hit by the owner-type jeep. Foreseeability is the fundamental test of negligence. To be negligent, a defendant must have acted or failed to act in such a way that an ordinary reasonable man would have realized that certain interests of certain persons were unreasonably subjected to a general but definite class of risks.[36] Seeing that the owner-type jeep was wiggling and running fast in a zigzag manner as it travelled on the opposite side of the highway, Benigno Valdez was made aware of the danger ahead if he met the owner-type jeep on the road. Yet he failed to take precaution by immediately veering to the rightmost portion of the road or by stopping the passenger jeep at the right shoulder of the road and

68 letting the owner-type jeep pass before proceeding southward; hence, the collision occurred. The Court of Appeals correctly held that Benigno Valdez was guilty of inexcusable negligence by neglecting to take such precaution, which a reasonable and prudent man would ordinarily have done under the circumstances and which proximately caused injury to another. On the other hand, the Court also finds Arnulfo Ramos guilty of gross negligence for knowingly driving a defective jeep on the highway. An ordinarily prudent man would know that he would be putting himself and other vehicles he would encounter on the road at risk for driving a mechanically defective vehicle. Under the circumstances, a prudent man would have had the ownertype jeep repaired or would have stopped using it until it was repaired. Ramos was, therefore, grossly negligent in continuing to drive on the highway the mechanically defective jeep, which later encroached on the opposite lane and bumped the passenger jeep driven by Benigno Valdez. Gross negligence is the absence of care or diligence as to amount to a reckless disregard of the safety of persons or property.[37] It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.[38] The acts of negligence of Arnulfo Ramos and Benigno Valdez were contemporaneous when Ramos continued to drive a wiggling vehicle on the highway despite knowledge of its mechanical defect, while Valdez did not immediately veer to the rightmost side of the road upon seeing the wiggling vehicle of Ramos perhaps because it still kept to its lane and Valdez did not know the extent of its mechanical defect. However, when the owner-type jeep encroached on the lane of the passenger jeep, Valdez realized the peril at hand and steered the passenger jeep toward the western shoulder of the road to avoid a collision. It was at this point that it was perceivable that Ramos must have lost control of his vehicle, and that it was Valdez who had the last opportunity to avoid the collision by swerving the passenger jeep towards the right shoulder of the road. The doctrine of last clear chance applies to a situation where the plaintiff was guilty of prior or antecedent negligence, but the defendant who had the last fair chance to avoid the impending harm and failed to do so is made liable for all the consequences of the accident, notwithstanding the prior negligence of the plaintiff.[39] However, the doctrine does not apply where the party charged is required to act instantaneously, and the injury cannot be avoided by the

69 application of all means at hand after the peril is or should have been discovered.
[40]

The doctrine of last clear chance does not apply to this case, because even if it can be said that it was Benigno Valdez who had the last chance to avoid the mishap when the owner-type jeep encroached on the western lane of the passenger jeep, Valdez no longer had the opportunity to avoid the collision. The Answer of petitioners stated that when the owner-type jeep encroached on the lane of the passenger jeep, Benigno Valdez maneuvered his vehicle towards the western shoulder of the road to avoid a collision, but the owner-type jeep driven by Ramos continued to move to the western lane and bumped the left side of the passenger jeep. Thus, petitioners assert in their Petition that considering that the time the owner-type jeep encroached on the lane of Valdez to the time of impact was only a matter of seconds, he no longer had the opportunity to avoid the collision. Although the records are bereft of evidence showing the exact distance between the two vehicles when the ownertype jeep encroached on the lane of the passenger jeep, it must have been near enough, because the passenger jeep driven by Valdez was unable to avoid the collision. Hence, the doctrine of last clear chance does not apply to this case. Article 2179 of the Civil Code provides: When the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendants lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded.[41]

In this case, both Arnulfo Ramos and Benigno Valdez failed to exercise reasonable care and caution that an ordinarily prudent man would have taken to prevent the vehicular accident. Since the gross negligence of Arnulfo Ramos and the inexcusable negligence of Benigno Valdez were the proximate cause of the vehicular accident, respondents cannot recover damages pursuant to Article 2179 of the Civil Code. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 67027, dated April 25, 2006, and its Resolution dated October 23, 2006, are hereby REVERSED and SET ASIDE.

70 No costs. SO ORDERED.

JIMMY CO, doing business under the name & style DRAGON METAL MANUFACTURING, Petitioner, vs. COURT OF APPEALS and BROADWAY MOTOR SALES CORPORATION, Respondents. DECISION MARTINEZ, J.: On July 18, 1990, petitioner entrusted his Nissan pick-up car 1988 model[1] to private respondent - which is engaged in the sale, distribution and repair of motor vehicles - for the following job repair services and supply of parts: - Bleed injection pump and all nozzles; - Adjust valve tappet; - Change oil and filter; - Open up and service four wheel brakes, clean and adjust; - Lubricate accelerator linkages; - Replace aircon belt; and - Replace battery[2] Private respondent undertook to return the vehicle on July 21, 1990 fully serviced and supplied in accordance with the job contract. After petitioner paid in full the repair bill in the amount ofP1,397.00,[3] private respondent issued to him a gate pass for the release of the vehicle on said date. But came July 21, 1990, the latter could not release the vehicle as its battery was weak and was not yet replaced. Left with no option, petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the same day. However, the battery was not installed and the delivery of the car was rescheduled to July 24, 1990 or three (3) days later. When petitioner sought to reclaim his car in the afternoon of July 24, 1990, he was told that it was carnapped earlier that morning while being road-tested by private respondents employee along Pedro Gil and

71 Perez Streets in Paco, Manila. Private respondent said that the incident was reported to the police. Having failed to recover his car and its accessories or the value thereof, petitioner filed a suit for damages against private respondent anchoring his claim on the latters alleged negligence. For its part, private respondent contended that it has no liability because the car was lost as a result of a fortuitous event - the carnapping. During pre-trial, the parties agreed that: (T)he cost of the Nissan Pick-up four (4) door when the plaintiff purchased it from the defendant is P332,500.00 excluding accessories which were installed in the vehicle by the plaintiff consisting of four (4) brand new tires, magwheels, stereo speaker, amplifier which amount all in all to P20,000.00. It is agreed that the vehicle was lost on July 24, 1990 `approximately two (2) years and five (5) months from the date of the purchase. It was agreed that the plaintiff paid the defendant the cost of service and repairs as early as July 21, 1990 in the amount of P1,397.00 which amount was received and duly receipted by the defendant company. It was also agreed that the present value of a brand new vehicle of the same type at this time is P425,000.00 without accessories.[4] They likewise agreed that the sole issue for trial was who between the parties shall bear the loss of the vehicle which necessitates the resolution of whether private respondent was indeed negligent.[5] After trial, the court a quo found private respondent guilty of delay in the performance of its obligation and held it liable to petitioner for the value of the lost vehicle and its accessories plus interest and attorneys fees.[6] On appeal, the Court of Appeals (CA) reversed the ruling of the lower court and ordered the dismissal of petitioners damage suit.[7] The CA ruled that: (1) the trial court was limited to resolving the issue of negligence as agreed during pre-trial; hence it cannot pass on the issue of delay; and (2) the vehicle was lost due to a fortuitous event. In a petition for review to this Court, the principal query raised is whether a repair shop can be held liable for the loss of a customers vehicle while the same is in its custody for repair or other job services? The Court resolves the query in favor of the customer. First, on the technical aspect involved. Contrary to the CAs pronouncement, the rule that the determination of issues at a pre-trial conference bars the consideration of other issues on appeal, except those that may involve privilege or impeaching matter,[8] is inapplicable to this case. The question of delay, though not specifically mentioned as an issue at the pre-trial may be tackled by the court considering that it is necessarily intertwined and intimately connected with the principal issue agreed upon by the parties, i.e. who will bear the loss and whether there was negligence. Petitioners imputation of negligence to private respondent is premised on delay which is the very basis of the formers complaint. Thus, it was unavoidable for the court to resolve the case, particularly the question of negligence without considering whether private respondent was guilty of delay in the performance of its obligation.

72 On the merits. It is a not a defense for a repair shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from anothers rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be considered as such, carnapping entails more than the mere forceful taking of anothers property. It must be proved and established that the event was an act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negligent has any participation.[9] In accordance with the Rules of evidence, the burden of proving that the loss was due to a fortuitous event rests on him who invokes it[10]- which in this case is the private respondent. However, other than the police report of the alleged carnapping incident, no other evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to which only private respondent is privy, does not suffice to established the carnapping. Neither does it prove that there was no fault on the part of private respondent notwithstanding the parties agreement at the pre-trial that the car was carnapped. Carnapping does not foreclose the possibility of fault or negligence on the part of private respondent. Even assuming arguendo that carnapping was duly established as a fortuitous event, still private respondent cannot escape liability. Article 1165 [11] of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the delivery. In this case, private respondent was already in delay as it was supposed to deliver petitioners car three (3) days before it was lost. Petitioners agreement to the rescheduled delivery does not defeat his claim as private respondent had already breached its obligation. Moreover, such accession cannot be construed as waiver of petitioners right to hold private respondent liable because the car was unusable and thus, petitioner had no option but to leave it. Assuming further that there was no delay, still working against private respondent is the legal presumption under Article 1265 that its possession of the thing at the time it was lost was due to its fault.[12] This presumption is reasonable since he who has the custody and care of the thing can easily explain the circumstances of the loss. The vehicle owner has no duty to show that the repair shop was at fault. All that petitioner needs to prove, as claimant, is the simple fact that private respondent was in possession of the vehicle at the time it was lost. In this case, private respondents possession at the time of the loss is undisputed. Consequently, the burden shifts to the possessor who needs to present controverting evidence sufficient enough to overcome that presumption. Moreover, the exempting circumstances - earthquake, flood, storm or other natural calamity - when the presumption of fault is not applicable [13] do not concur in this case. Accordingly, having failed to rebut the presumption and since the case does not fall under the exceptions, private respondent is answerable for the loss.

73 It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil Code, liability attaches even if the loss was due to a fortuitous event if the nature of the obligation requires the assumption of risk. [14] Carnapping is a normal business risk for those engaged in the repair of motor vehicles. For just as the owner is exposed to that risk so is the repair shop since the car was entrusted to it. That is why, repair shops are required to first register with the Department of Trade and Industry (DTI)[15] and to secure an insurance policy for the shop covering the property entrusted by its customer for repair, service or maintenance as a pre-requisite for such registration/accreditation.[16] Violation of this statutory duty constitutes negligence per se.[17] Having taken custody of the vehicle, private respondent is obliged not only to repair the vehicle but must also provide the customer with some form of security for his property over which he loses immediate control. An owner who cannot exercise the seven (7) juses or attributes of ownership the right to possess, to use and enjoy, to abuse or consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits -[18] is a crippled owner. Failure of the repair shop to provide security to a motor vehicle owner would leave the latter at the mercy of the former. Moreover, on the assumption that private respondents repair business is duly registered, it presupposes that its shop is covered by insurance from which it may recover the loss. If private respondent can recover from its insurer, then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies. One last thing. With respect to the value of the lost vehicle and its accessories for which the repair shop is liable, it should be based on the fair market value that the property would command at the time it was entrusted to it or such other value as agreed upon by the parties subsequent to the loss. Such recoverable value is fair and reasonable considering that the value of the vehicle depreciates. This value may be recovered without prejudice to such other damages that a claimant is entitled under applicable laws. WHEREFORE, premises considered, the decision of the Court Appeals is REVERSED and SET ASIDE and the decision of the court a quo is REINSTATED. SO ORDERED.

74

ELIAS S. CIPRIANO and/or E.S. CIPRIANO ENTERPRISES, petitioner, vs. THE COURT OF APPEALS and MACLIN ELECTRONICS, INC.,respondents. DECISION MENDOZA, J.: This is a petition for review of the decision[1] of the Court of Appeals in CAG.R. CV No. 36045 which affirmed in toto the decision of Branch 58[2] of the Quezon City Regional Trial Court, ordering the petitioner to pay P252,155.00 to private respondent for the loss of the latters vehicle while undergoing rustproofing and P10,000.00 in attorneys fees. The facts of the case are as follows: Petitioner Elias S. Cipriano is the owner of E.S. Cipriano Enterprises, which is engaged in the rustproofing of vehicles, under the style Motobilkote. On April 30, 1991, private respondent Maclin Electronics, Inc., through an employee, brought a 1990 model Kia Pride Peoples car to petitioners shop for rustproofing. The car had been purchased the year before from the Integrated Auto Sales, Inc. for P252,155.00. The vehicle was received in the shop under Job Order No. 123581, [3] which showed the date it was received for rustproofing as well its condition at the time. Neither the time of acceptance nor the hour of release, however, was specified. According to the petitioner, the car was brought to his shop at 10 oclock in the morning of April 30, 1991 and was ready for release later that afternoon, as it took only six hours to complete the process of rustproofing. In the afternoon of May 1, 1991, fire broke out at the Lambat restaurant, which petitioner also owned, adjoining his Mobilkote rustproofing shop. The fire destroyed both the shop and the restaurant, including private respondents Kia Pride. The car had been kept inside the building, allegedly to protect it from theft. Petitioner claimed that despite efforts to save the vehicle, there was simply not enough time to get it out of the building, unlike three other cars which had been saved because they were parked near the entrance of the garage.[4] On May 8 1991, private respondent sent a letter to petitioner, demanding reimbursement for the value of the Kia Pride. In reply, petitioner denied liability

75 on the ground that the fire was a fortuitous event. This prompted private respondent to bring this suit for the value of its vehicle and for damages against petitioner. Private respondent alleged that its vehicle was lost due to the negligence and imprudence of the petitioner, citing petitioners failure to register his business with the Department of Trade and Industry under P.D. No. 1572 and to insure it as required in the rules implementing the Decree.[5] In his Answer, petitioner invoked Art. 1174 of the Civil Code and denied liability for the loss which he alleged was due to a fortuitous event. He later testified that he employed an electrician who regularly inspected the lighting in his restaurant and rustproofing shop. In addition, he claimed he had installed fire-fighting devices and that the fire was an accident entirely independent of his will and devoid of any negligence on his part. He further averred that private respondents car was ready for release as early as afternoon of April 30, 1991, and that it was private respondents delay in claiming it that was the cause of the loss. Petitioner explained that rustproofing involved spraying asphalt-like materials underneath motor vehicle so that rust will not corrode its body and that the materials and chemicals used for this purpose are not inflammable. Therefore, he could not be made to assume the risk of loss due to fire. He also claimed that he was not required to register his business with the Department of Trade and Industry, because he was not covered by P.D. No. 1572. On the other hand, private respondent argued that petitioner was liable for the loss of the car even if it was caused by a fortuitous event. It contended that the nature of petitioners business required him to assume the risk because under P.D. No. 1572, petitioner was required to insure his property as well as those of his customers. The trial court sustained the private respondents contention that the failure of defendant to comply with P.D. No. 1572 is in effect a manifest act of negligence which renders defendant [petitioner herein] liable for the loss of the car even if the same was caused by fire,[6] even as it ruled that the business of rustproffing is definitely covered by P.D. No. 1572. Since petitioner did not register his business and insure it, he must bear the cost of loss of his customers. As already noted, the court ordered petitioner to pay private respondent P252,155.00 with interest at 6% per annum from the filing of the case and attorneys fees in the amount of P10,000.00. On appeal, the decision was affirmed. The Court of Appeals ruled that the provisions of the Civil Code relied upon by the petitioner are not applicable to this case, and that the law applicable to the case is P.D. No. 1572, the purpose of which is to protect customers who entrust their properties to service and repair enterprises. The Court of Appeals held that by virtue of the provisions of P.D. No. 1572 and its implementing rules and regulations which require fire insurance coverage prior to accreditation, owners of service and repair enterprises assume the risk of loss of their customers property. The appellate court stated:

76 Defendant-appellant was operating the business of rustproofing of cars and other motor vehicles illegally at the time of the fire in question; i.e., without the necessary accreditation and license from the Department of Trade and Industry, and it is for this reason that it did not carry at least a fire insurance coverage to protect the vehicles entrusted to it by its customers. Therefore, it must bear the consequences of such illegal operation, including the risk of losses or injuries to the vehicles of its customers brought by unforeseen or fortuitous events like the fire that gutted its shop and completely burned appellees car while said vehicle was in its possession.[7] The Court of Appeals also affirmed the award of attorneys fees, ruling that although the lower court did not expressly and specifically state the reason for the award, the basis therefor could be inferred from the finding that petitioner unjustly refused to pay private respondents valid and demandable claim. Said the appellate court: Such wanton, reckless, and illegal operation of appellants business resulted in appellees lack of protection from the fire that gutted appellants shop and which completely burned its car while in appellants possession for rustproofing. Yet appellant adamantly and stubbornly refused to pay appellee the value of its lost car. It was, therefore, correctly ordered by the court a quo to pay appellee reasonable attorneys fees as it had unjustly and unreasonably refused to satisfy the latters plainly valid, just, and demandable claim, compelling said appellee to file this action to protect its interest (Art. 2208, pars. (2) and (5), New Civil Code).[8] Hence, this appeal. Petitioner contends that the fire which destroyed private respondents car was a fortuitous event for which he cannot be held responsible. In support of his argument, he cites the following provisions of the Civil Code: ART. 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. ART. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay. When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk.

77 The contention is without merit. The issue in this case is whether petitioner was required to insure his business and the vehicles received by him in the course of his business and, if so, whether his failure to do so constituted negligence, rendering him liable for loss due to the risk required to be insured against. We hold that both questions must be answered in the affirmative. We have already held that violation of a statutory duty is negligence per se. In F.F. Cruz and Co., Inc. v. Court of Appeals,[9] we held the owner of a furniture shop liable for the destruction of the plaintiffs house in a fire which started in his establishment in view of his failure to comply with an ordinance which required the construction of a firewall. In Teague v. Fernandez,[10] we stated that where the very injury which was intended to be prevented by the ordinance has happened, non-compliance with the ordinance was not only an act negligence, but also the proximate cause of the death. Indeed, the existence of a contract between petitioner and private respondent does not bar a finding of negligence under the principles of quasidelict, as we recently held in Fabre v. Court of Appeals.[11] Petitioner's negligence is the source of his obligation. He is not being held liable for breach of his contractual obligation due to negligence but for his negligence in not complying with a duty imposed on him by law. It is therefore immaterial that the loss occasioned to private respondent was due to a fortuitous event, since it was petitioners negligence in not insuring against the risk which was the proximate cause of the loss. Thus, P.D. No. 1572, 1 requires service and repair enterprises for motor vehicles, like that of petitioners to register with the Department of Trade and Industry. As condition for such registration or accreditation, Ministry Order No. 32 requires covered enterprises to secure insurance coverage. Rule III of this Order provides in pertinent parts:[12] 1- REQUIREMENTS FOR ACCREDITATION 1) Enterprises applying for original accreditation shall submit the following: 1.1. List of machineries/equipment/tools in useful condition; 1.2. List of certified engineers/accredited technicians mechanics with their personal data; 1.3. Copy of Insurance Policy of the shop covering the property entrusted by its customer for repair, service or maintenance together with a copy of the official receipt covering the full payment of premium; 1.4. Copy of Bond referred to under Section 7, Rule III of this Rules and Regulations;

78 1.5. Written service warranty in the form prescribed by the Bureau; 1.6. Certificate issued by the Securities and Exchange Commission and Articles of Incorporation or Partnership in case of corporation or partnership; 1.7. Such other additional documents which the Director may require from time to time. 8 - INSURANCE POLICY The insurance policy for the following risks like theft, pilferage, fire, flood and loss should cover exclusively the machines, motor vehicles, heavy equipment, engines, electronics, electrical, airconditioners, refrigerators, office machines and data processing equipment, medical and dental equipment, other consumer mechanical and industrial equipment stored for repair and/or service in the premises of the applicant. There is thus a statutory duty imposed on petitioner and it is for his failure to comply with this duty that he was guilty of negligence rendering him liable for damages to private respondent. While the fire in this case may be considered a fortuitous event,[13] this circumstance cannot exempt petitioner from liability for loss. We think, however, that the Court of Appeals erred in sustaining the award of attorneys fees by the lower court. It is now settled that the reasons or grounds for an award of attorneys fees must be set forth in the decision of the court. [14] They cannot be left to inference as the appellate court held in this case. The reason for this is that it is not sound policy to penalize the right to litigate. An award of attorneys fees, being an exception to this policy and limited to the grounds enumerated in the law,[15] must be fully justified in the decision. It can not simply be inserted as an item of recoverable damages in the judgment of the court. Since in this case there is no justification for the award of attorneys fees in the decision of the trial court, it was error for the Court of Appeals to sustain such award. WHEREFORE, the decision, dated November 18, 1992, of the Court of Appeals is AFFIRMED, with the modification that the award of attorneys fees is DELETED. SO ORDERED.

79

G.R. No. L-36481-2 October 23, 1982 AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees, vs. PHILIPPINE STEAM NAVIGATION CO., defendant-appellant. Zoilo de la Cruz, Jr. & Associate for plaintiff-appellee Amparo Servando. Benedicto, Sumbingco & Associate for appellee Clara Uy Bico. Ross, Salcedo, del Rosario, Bito & Misa for defendant-appellant.

ESCOLIN, J.: This appeal, originally brought to the Court of Appeals, seeks to set aside the decision of the Court of First Instance of Negros Occidental in Civil Cases Nos. 7354 and 7428, declaring appellant Philippine Steam Navigation liable for damages for the loss of the appellees' cargoes as a result of a fire which gutted the Bureau of Customs' warehouse in Pulupandan, Negros Occidental. The Court of Appeals certified the case to Us because only pure questions of law are raised therein. The facts culled from the pleadings and the stipulations submitted by the parties are as follows: On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental, the following cargoes, to wit: Clara Uy Bico

80 1,528 cavans of rice valued at P40,907.50; Amparo Servando 44 cartons of colored paper, toys and general merchandise valued at P1,070.50; as evidenced by the corresponding bills of lading issued by the appellant. 1 Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice 2 Appellees' claims for the value of said goods were rejected by the appellant. On the bases of the foregoing facts, the lower court rendered a decision, the decretal portion of which reads as follows: WHEREFORE, judgment is rendered as follows: 1. In case No. 7354, the defendant is hereby ordered to pay the plaintiff Amparo C. Servando the aggregate sum of P1,070.50 with legal interest thereon from the date of the filing of the complaint until fully paid, and to pay the costs. 2. In case No. 7428, the defendant is hereby ordered to pay to plaintiff Clara Uy Bico the aggregate sum of P16,625.00 with legal interest thereon from the date of the filing of the complaint until fully paid, and to pay the costs. Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. " The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant.

81 It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ... We sustain the validity of the above stipulation; there is nothing therein that is contrary to law, morals or public policy. Appellees would contend that the above stipulation does not bind them because it was printed in fine letters on the back-of the bills of lading; and that they did not sign the same. This argument overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals, promulgated June 29, 1979, 3 where the same issue was resolved in this wise: While it may be true that petitioner had not signed the plane ticket (Exh. '12'), he is nevertheless bound by the provisions thereof. 'Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation'. It is what is known as a contract of 'adhesion', in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice J.B.L. Reyes, Lawyer's Journal, Jan. 31, 1951, p. 49). Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of the basic principle of law written in Article 1 1 7 4 of the Civil Code: 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. Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability for non-performance. The Partidas, 4 the antecedent of Article 1174 of the Civil Code, defines 'caso fortuito'

82 as 'an event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers.' In its dissertation of the phrase 'caso fortuito' the Enciclopedia Juridicada Espanola 5 says: "In a legal sense and, consequently, also in relation to contracts, a 'caso fortuito' presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor." In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event. There is nothing in the record to show that appellant carrier ,incurred in delay in the performance of its obligation. It appears that appellant had not only notified appellees of the arrival of their shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand, appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse. Nor can the appellant or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with their knowledge and consent. Since the warehouse belonged to and was maintained by the government, it would be unfair to impute negligence to the appellant, the latter having no control whatsoever over the same. The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio 6, where this Court held the defendant liable for damages arising from a fire caused by the negligence of the defendant's employees while loading cases of gasoline and petroleon products. But unlike in the said case, there is not a shred of proof in the present case that the cause of the fire that broke out in the Custom's warehouse was in any way attributable to the negligence of the appellant or its employees. Under the circumstances, the appellant is plainly not responsible. WHEREFORE, the judgment appealed from is hereby set aside. No costs. SO ORDERED.

83

DELSAN TRANSPORT LINES, INC., petitioner, vs. C & A CONSTRUCTION, INC., respondent. DECISION YNARES-SANTIAGO, J.: Assailed in this petition for review under Rule 45 of the Revised Rules of Court are the June 14, 2002 decision[1] of the Court of Appeals in CA-G.R. CV No. 59034, which reversed the decision[2] of the Regional Trial Court of Manila, Branch 46, in Civil Case No. 95-75565, and its November 7, 2002 resolution[3] denying petitioners motion for reconsideration. The undisputed facts reveal that respondent C & A Construction, Inc. was engaged by the National Housing Authority (NHA) to construct a deflector wall at the Vitas Reclamation Area in Vitas, Tondo, Manila.[4] The project was completed in 1994 but it was not formally turned over to NHA. On October 9, 1994, M/V Delsan Express, a ship owned and operated by petitioner Delsan Transport Lines, Inc., anchored at the Navotas Fish Port for the purpose of installing a cargo pump and clearing the cargo oil tank. At around 12:00 midnight of October 20, 1994, Captain Demetrio T. Jusep of M/V Delsan Express received a report from his radio head operator in Japan [5] that a typhoon was going to hit Manila[6] in about eight (8) hours.[7] At approximately 8:35 in the morning of October 21, 1994, Capt. Jusep tried to seek shelter at the North Harbor but could not enter the area because it was already congested.[8] At 10:00 a.m., Capt. Jusep decided to drop anchor at the vicinity of Vitas mouth, 4 miles away from a Napocor power barge. At that time, the waves were already reaching 8 to 10 feet high. Capt. Jusep ordered his crew to go full ahead to counter the wind which was dragging the ship towards the Napocor power barge. To avoid collision, Capt. Jusep ordered a full stop of the vessel.[9] He succeeded in avoiding the power barge, but when the engine was re-started and the ship was maneuvered full astern, it hit the deflector wall constructed by respondent.[10] The damage caused by the incident amounted to P456,198.24.[11] Respondent demanded payment of the damage from petitioner but the latter refused to pay. Consequently, respondent filed a complaint for damages with the Regional Trial Court of Manila, Branch 46, which was docketed as Civil Case No.

84 95-75565. In its answer, petitioner claimed that the damage was caused by a fortuitous event.[12] On February 13, 1998, the complaint filed by respondent was dismissed. The trial court ruled that petitioner was not guilty of negligence because it had taken all the necessary precautions to avoid the accident. Applying the emergency rule, it absolved petitioner of liability because the latter had no opportunity to adequately weigh the best solution to a threatening situation. It further held that even if the maneuver chosen by petitioner was a wrong move, it cannot be held liable as the cause of the damage sustained by respondent was typhoon Katring, which is an act of God.[13] On appeal to the Court of Appeals, the decision of the trial court was reversed and set aside.[14] It found Capt. Jusep guilty of negligence in deciding to transfer the vessel to the North Harbor only at 8:35 a.m. of October 21, 1994 and thus held petitioner liable for damages. Hence, petitioner filed the instant petition contending that Capt. Jusep was not negligent in waiting until 8:35 in the morning of October 21, 1994 before transferring the vessel to the North Harbor inasmuch as it was not shown that had the transfer been made earlier, the vessel could have sought shelter.[15] It further claimed that it cannot be held vicariously liable under Article 2180 of the Civil Code because respondent failed to allege in the complaint that petitioner was negligent in the selection and supervision of its employees.[16] Granting that Capt. Jusep was indeed guilty of negligence, petitioner is not liable because it exercised due diligence in the selection of Capt. Jusep who is a duly licensed and competent Master Mariner.[17] The issues to be resolved in this petition are as follows (1) Whether or not Capt. Jusep was negligent; (2) If yes, whether or not petitioner is solidarily liable under Article 2180 of the Civil Code for the quasi-delict committed by Capt. Jusep? Article 2176 of the Civil Code provides that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict. The test for determining the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use the reasonable care and caution which an ordinary prudent person would have used in the same situation? If not, then he is guilty of negligence.[18] In the case at bar, the Court of Appeals was correct in holding that Capt. Jusep was negligent in deciding to transfer the vessel only at 8:35 in the morning of October 21, 1994. As early as 12:00 midnight of October 20, 1994, he received a report from his radio head operator in Japan[19] that a typhoon was going to hit Manila[20] after 8 hours.[21] This, notwithstanding, he did nothing, until 8:35 in the morning of October 21, 1994, when he decided to seek shelter at the North Harbor, which unfortunately was already congested. The finding of

85 negligence cannot be rebutted upon proof that the ship could not have sought refuge at the North Harbor even if the transfer was done earlier. It is not the speculative success or failure of a decision that determines the existence of negligence in the present case, but the failure to take immediate and appropriate action under the circumstances. Capt. Jusep, despite knowledge that the typhoon was to hit Manila in 8 hours, complacently waited for the lapse of more than 8 hours thinking that the typhoon might change direction.[22] He cannot claim that he waited for the sun to rise instead of moving the vessel at midnight immediately after receiving the report because of the difficulty of traveling at night. The hour of 8:35 a.m. is way past sunrise. Furthermore, he did not transfer as soon as the sun rose because, according to him, it was not very cloudy[23] and there was no weather disturbance yet.[24] When he ignored the weather report notwithstanding reasonable foresight of harm, Capt. Jusep showed an inexcusable lack of care and caution which an ordinary prudent person would have observed in the same situation. [25] Had he moved the vessel earlier, he could have had greater chances of finding a space at the North Harbor considering that the Navotas Port where they docked was very near North Harbor.[26] Even if the latter was already congested, he would still have time to seek refuge in other ports. The trial court erred in applying the emergency rule. Under this rule, one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless the danger in which he finds himself is brought about by his own negligence.[27] Clearly, the emergency rule is not applicable to the instant case because the danger where Capt. Jusep found himself was caused by his own negligence. Anent the second issue, we find petitioner vicariously liable for the negligent act of Capt. Jusep. Under Article 2180 of the Civil Code an employer may be held solidarily liable for the negligent act of his employee. Thus Art. 2180. The obligation imposed in Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom one is responsible. xxx xxx xxx

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. xxx xxx xxx

86 The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris familiesin the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. To avoid liability for a quasidelict committed by his employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. [28] There is no question that petitioner, who is the owner/operator of M/V Delsan Express, is also the employer of Capt. Jusep who at the time of the incident acted within the scope of his duty. The defense raised by petitioner was that it exercised due diligence in the selection of Capt. Jusep because the latter is a licensed and competent Master Mariner. It should be stressed, however, that the required diligence of a good father of a family pertains not only to the selection, but also to the supervision of employees. It is not enough that the employees chosen be competent and qualified, inasmuch as the employer is still required to exercise due diligence in supervising its employees. In Fabre, Jr. v. Court of Appeals,[29] it was held that due diligence in supervision requires the formulation of rules and regulations for the guidance of employees and the issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with the rules. Corollarily, in Ramos v. Court of Appeals,[30] the Court stressed that once negligence on the part of the employees is shown, the burden of proving that he observed the diligence in the selection and supervision of its employees shifts to the employer. In the case at bar, however, petitioner presented no evidence that it formulated rules/guidelines for the proper performance of functions of its employees and that it strictly implemented and monitored compliance therewith. Failing to discharge the burden, petitioner should therefore be held liable for the negligent act of Capt. Jusep. So also, petitioner cannot disclaim liability on the basis of respondents failure to allege in its complaint that the former did not exercise due diligence in the selection and supervision of its employees. In Viron Transportation Co., Inc. v. Delos Santos,[31] it was held that it is not necessary to state that petitioner was negligent in the supervision or selection of its employees, inasmuch as its negligence is presumed by operation of law. Allegations of negligence against the employee and that of an employer-employee relation in the complaint are enough to make out a case of quasi-delict under Article 2180 of the Civil Code.[32] Considering that petitioner did not assail the damages awarded by the trial court, we find no reason to alter the same. The interest imposed should, however, be modified. In Eastern Shipping Lines, Inc. v. Court of Appeals,[33] it

87 was held that the rate of interest on obligations not constituting a loan or forbearance of money is six percent (6%) per annum. If the purchase price can be established with certainty at the time of the filing of the complaint, the six percent (6%) interest should be computed from the date the complaint was filed until finality of the decision. After the judgment becomes final and executory until the obligation is satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed equivalent to a forbearance of credit.[34] Accordingly, the amount of P456,198.27 due the respondent shall earn 6% interest per annum from October 3, 1995 until the finality of this decision. If the adjudged principal and the interest (or any part thereof) remain unpaid thereafter, the interest rate shall be twelve percent (12%) per annum computed from the time the judgment becomes final and executory until it is fully satisfied. WHEREFORE, in view of all the foregoing, the instant petition is DENIED. The June 14, 2002 decision of the Court of Appeals in CA-G.R. CV No. 59034 ordering petitioner Delsan Transport Lines, Inc., to pay respondent C & A Construction, Inc., damages in the amount of P456,198.27, plus P30,000.00 as attorneys fees, is AFFIRMED with the MODIFICATION that the award of P456,198.27 shall earn interest at the rate of 6% per annum from October 3, 1995, until finality of this decision, and 12% per annum thereafter on the principal and interest (or any part thereof) until full payment. SO ORDERED.

88

SCHMITZ TRANSPORT & BROKERAGE CORPORATION, petitioner, vs. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now INCHCAPE SHIPPING SERVICES, respondents. DECISION CARPIO-MORALES, J.: On petition for review is the June 27, 2001 Decision [1] of the Court of Appeals, as well as its Resolution[2] dated September 28, 2001 denying the motion for reconsideration, which affirmed that of Branch 21 of the Regional Trial Court (RTC) of Manila in Civil Case No. 9263132[3] holding petitioner Schmitz Transport Brokerage Corporation (Schmitz Transport), together with Black Sea Shipping Corporation (Black Sea), represented by its ship agent Inchcape Shipping Inc. (Inchcape), and Transport Venture (TVI), solidarily liable for the loss of 37 hot rolled steel sheets in coil that were washed overboard a barge. On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V Alexander Saveliev (a vessel of Russian registry and owned by Black Sea) 545 hot rolled steel sheets in coil weighing 6,992,450 metric tons. The cargoes, which were to be discharged at the port of Manila in favor of the consignee, Little Giant Steel Pipe Corporation (Little Giant),[4] were insured against all risks with Industrial Insurance Company Ltd. (Industrial Insurance) under Marine Policy No. M91-3747-TIS.[5] The vessel arrived at the port of Manila on October 24, 1991 and the Philippine Ports Authority (PPA) assigned it a place of berth at the outside breakwater at the Manila South Harbor.[6] Schmitz Transport, whose services the consignee engaged to secure the requisite clearances, to receive the cargoes from the shipside, and to deliver them to its (the consignees) warehouse at Cainta, Rizal,[7] in turn engaged the services of TVI to send a barge and tugboat at shipside. On October 26, 1991, around 4:30 p.m., TVIs tugboat Lailani towed the barge Erika V to shipside.[8] By 7:00 p.m. also of October 26, 1991, the tugboat, after positioning the barge alongside the vessel, left and returned to the port terminal.[9] At 9:00 p.m., arrastre operator

89 Ocean Terminal Services Inc. commenced to unload 37 of the 545 coils from the vessel unto the barge. By 12:30 a.m. of October 27, 1991 during which the weather condition had become inclement due to an approaching storm, the unloading unto the barge of the 37 coils was accomplished.[10] No tugboat pulled the barge back to the pier, however. At around 5:30 a.m. of October 27, 1991, due to strong waves, [11] the crew of the barge abandoned it and transferred to the vessel. The barge pitched and rolled with the waves and eventually capsized, washing the 37 coils into the sea.[12] At 7:00 a.m., a tugboat finally arrived to pull the already empty and damaged barge back to the pier.[13] Earnest efforts on the part of both the consignee Little Giant and Industrial Insurance to recover the lost cargoes proved futile.[14] Little Giant thus filed a formal claim against Industrial Insurance which paid it the amount of P5,246,113.11. Little Giant thereupon executed a subrogation receipt[15] in favor of Industrial Insurance. Industrial Insurance later filed a complaint against Schmitz Transport, TVI, and Black Sea through its representative Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it paid to Little Giant plus adjustment fees, attorneys fees, and litigation expenses.[16] Industrial Insurance faulted the defendants for undertaking the unloading of the cargoes while typhoon signal No. 1 was raised in Metro Manila.[17] By Decision of November 24, 1997, Branch 21 of the RTC held all the defendants negligent for unloading the cargoes outside of the breakwater notwithstanding the storm signal.[18] The dispositive portion of the decision reads: WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff, ordering the defendants to pay plaintiff jointly and severally the sum of P5,246,113.11 with interest from the date the complaint was filed until fully satisfied, as well as the sum of P5,000.00 representing the adjustment fee plus the sum of 20% of the amount recoverable from the defendants as attorneys fees plus the costs of suit. The counterclaims and cross claims of defendants are hereby DISMISSED for lack of [m]erit.[19] To the trial courts decision, the defendants Schmitz Transport and TVI filed a joint motion for reconsideration assailing the finding that they are common carriers and the award of excessive attorneys fees of more than P1,000,000. And they argued that they were not motivated by gross or evident bad faith and that the incident was caused by a fortuitous event. [20] By resolution of February 4, 1998, the trial court denied the motion for reconsideration. [21] All the defendants appealed to the Court of Appeals which, by decision of June 27, 2001, affirmed in toto the decision of the trial court, [22] it finding that all the defendants were common carriers Black Sea and TVI for engaging in the transport of goods and cargoes over the seas as a regular business and not as an isolated transaction, [23] and Schmitz

90 Transport for entering into a contract with Little Giant to transport the cargoes from ship to port for a fee.[24] In holding all the defendants solidarily liable, the appellate court ruled that each one was essential such that without each others contributory negligence the incident would not have happened and so much so that the person principally liable cannot be distinguished with sufficient accuracy.[25] In discrediting the defense of fortuitous event, the appellate court held that although defendants obviously had nothing to do with the force of nature, they however had control of where to anchor the vessel, where discharge will take place and even when the discharging will commence.[26] The defendants respective motions for reconsideration having been denied by Resolution[27] of September 28, 2001, Schmitz Transport (hereinafter referred to as petitioner) filed the present petition against TVI, Industrial Insurance and Black Sea. Petitioner asserts that in chartering the barge and tugboat of TVI, it was acting for its principal, consignee Little Giant, hence, the transportation contract was by and between Little Giant and TVI.[28] By Resolution of January 23, 2002, herein respondents Industrial Insurance, Black Sea, and TVI were required to file their respective Comments.[29] By its Comment, Black Sea argued that the cargoes were received by the consignee through petitioner in good order, hence, it cannot be faulted, it having had no control and supervision thereover.[30] For its part, TVI maintained that it acted as a passive party as it merely received the cargoes and transferred them unto the barge upon the instruction of petitioner.[31] In issue then are: (1) Whether the loss of the cargoes was due to a fortuitous event, independent of any act of negligence on the part of petitioner Black Sea and TVI, and (2) If there was negligence, whether liability for the loss may attach to Black Sea, petitioner and TVI. When a fortuitous event occurs, Article 1174 of the Civil Code absolves any party from any and all liability arising therefrom: ART. 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. In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligation, must be independent of human will; (2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in

91 any manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.[32] [T]he principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by the violence of nature. Human intervention is to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the result of the participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules applicable to the acts of God.[33] The appellate court, in affirming the finding of the trial court that human intervention in the form of contributory negligence by all the defendants resulted to the loss of the cargoes, [34] held that unloading outside the breakwater, instead of inside the breakwater, while a storm signal was up constitutes negligence.[35] It thus concluded that the proximate cause of the loss was Black Seas negligence in deciding to unload the cargoes at an unsafe place and while a typhoon was approaching.[36] From a review of the records of the case, there is no indication that there was greater risk in loading the cargoes outside the breakwater. As the defendants proffered, the weather on October 26, 1991 remained normal with moderate sea condition such that port operations continued and proceeded normally.[37] The weather data report,[38] furnished and verified by the Chief of the Climate Data Section of PAG-ASA and marked as a common exhibit of the parties, states that while typhoon signal No. 1 was hoisted over Metro Manila on October 23-31, 1991, the sea condition at the port of Manila at 5:00 p.m. - 11:00 p.m. of October 26, 1991 was moderate. It cannot, therefore, be said that the defendants were negligent in not unloading the cargoes upon the barge on October 26, 1991 inside the breakwater. That no tugboat towed back the barge to the pier after the cargoes were completely loaded by 12:30 in the morning[39] is, however, a material fact which the appellate court failed to properly consider and appreciate[40] the proximate cause of the loss of the cargoes. Had the barge been towed back promptly to the pier, the deteriorating sea conditions notwithstanding, the loss could have been avoided. But the barge was left floating in open sea until big waves set in at 5:30 a.m., causing it to sink along with the cargoes.[41] The loss thus falls outside the act of God doctrine. The proximate cause of the loss having been determined, who among the parties is/are responsible therefor? Contrary to petitioners insistence, this Court, as did the appellate court, finds that petitioner is a common carrier. For it undertook to transport the cargoes from the shipside of M/V Alexander Saveliev to the consignees warehouse at Cainta, Rizal. As the appellate court put it, as long as a person or corporation holds [itself] to the public for the purpose of transporting goods as [a] business, [it] is already considered a common carrier regardless if [it] owns the vehicle to be used or has to hire one. [42] That petitioner is a common carrier, the testimony of its own Vice-President and General Manager Noel Aro that part of the services it offers to its clients as a brokerage firm includes the transportation of cargoes reflects so.

92 Atty. Jubay: Will you please tell us what [are you] functions x x x as Executive VicePresident and General Manager of said Company? Mr. Aro: Well, I oversee the entire operation of the brokerage and transport business of the company. I also handle the various division heads of the company for operation matters, and all other related functions that the President may assign to me from time to time, Sir. Q: Now, in connection [with] your duties and functions as you mentioned, will you please tell the Honorable Court if you came to know the company by the name Little Giant Steel Pipe Corporation? A: Yes, Sir. Actually, we are the brokerage firm of that Company. Q: And since when have you been the brokerage firm of that company, if you can recall? A: Since 1990, Sir. Q: Now, you said that you are the brokerage firm of this Company. What work or duty did you perform in behalf of this company? A: We handled the releases (sic) of their cargo[es] from the Bureau of Customs. We [are] also in-charged of the delivery of the goods to their warehouses. We also handled the clearances of their shipment at the Bureau of Customs, Sir. xxx Q: Now, what precisely [was] your agreement with this Little Giant Steel Pipe Corporation with regards to this shipment? What work did you do with this shipment? A: We handled the unloading of the cargo[es] from vessel to lighter and then the delivery of [the] cargo[es] from lighter to BASECO then to the truck and to the warehouse, Sir. Q: Now, in connection with this work which you are doing, Mr. Witness, you are supposed to perform, what equipment do (sic) you require or did you use in order to effect this unloading, transfer and delivery to the warehouse? A: Actually, we used the barges for the ship side operations, this unloading [from] vessel to lighter, and on this we hired or we sub-contracted with [T]ransport Ventures, Inc. which [was] in-charged (sic) of the barges. Also, in BASECO compound we are leasing cranes to have the cargo unloaded from the barge to trucks, [and] then we used trucks to deliver [the cargoes] to the consignees warehouse, Sir. Q: And whose trucks do you use from BASECO compound to the consignees warehouse?

93 A: We utilized of (sic) our own trucks and we have some other contracted trucks, Sir. xxx ATTY. JUBAY: Will you please explain to us, to the Honorable Court why is it you have to contract for the barges of Transport Ventures Incorporated in this particular operation? A: Firstly, we dont own any barges. That is why we hired the services of another firm whom we know [al]ready for quite sometime, which is Transport Ventures, Inc. (Emphasis supplied)[43] It is settled that under a given set of facts, a customs broker may be regarded as a common carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of Appeals,[44] held: The appellate court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732 of the Civil Code, to wit, Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. xxx Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only as an ancillary activity. The contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration.[45] And in Calvo v. UCPB General Insurance Co. Inc.,[46] this Court held that as the transportation of goods is an integral part of a customs broker, the customs broker is also a common carrier. For to declare otherwise would be to deprive those with whom [it] contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel of petitioners business.[47] As for petitioners argument that being the agent of Little Giant, any negligence it committed was deemed the negligence of its principal, it does not persuade. True, petitioner was the broker-agent of Little Giant in securing the release of the cargoes. In effecting the transportation of the cargoes from the shipside and into Little Giants warehouse, however, petitioner was discharging its own personal obligation under a contact of carriage. Petitioner, which did not have any barge or tugboat, engaged the services of TVI as handler[48] to provide the barge and the tugboat. In their Service Contract,[49] while Little

94 Giant was named as the consignee, petitioner did not disclose that it was acting on commission and was chartering the vessel for Little Giant.[50] Little Giant did not thus automatically become a party to the Service Contract and was not, therefore, bound by the terms and conditions therein. Not being a party to the service contract, Little Giant cannot directly sue TVI based thereon but it can maintain a cause of action for negligence.[51] In the case of TVI, while it acted as a private carrier for which it was under no duty to observe extraordinary diligence, it was still required to observe ordinary diligence to ensure the proper and careful handling, care and discharge of the carried goods. Thus, Articles 1170 and 1173 of the Civil Code provide: 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. ART. 1173. The fault or negligence of the obligor consists in 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. When negligence shows bad faith, the provisions of articles 1171 and 2202, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. Was the reasonable care and caution which an ordinarily prudent person would have used in the same situation exercised by TVI?[52] This Court holds not. TVIs failure to promptly provide a tugboat did not only increase the risk that might have been reasonably anticipated during the shipside operation, but was the proximate cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable number of hours, at such a precarious time, and in the open sea, knowing that the barge does not have any power of its own and is totally defenseless from the ravages of the sea. That it was nighttime and, therefore, the members of the crew of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat. As for petitioner, for it to be relieved of liability, it should, following Article 1739 [53] of the Civil Code, prove that it exercised due diligence to prevent or minimize the loss, before, during and after the occurrence of the storm in order that it may be exempted from liability for the loss of the goods. While petitioner sent checkers[54] and a supervisor[55] on board the vessel to countercheck the operations of TVI, it failed to take all available and reasonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt towage of the barge despite the deteriorating sea conditions, it should have summoned the same or another tugboat to extend help, but it did not.

95 This Court holds then that petitioner and TVI are solidarily liable[56] for the loss of the cargoes. The following pronouncement of the Supreme Court is instructive: The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that contract by reason of its failure to exercise the high diligence required of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier may choose to hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the task. In either case, the common carrier is not relieved of its responsibilities under the contract of carriage. Should Prudent be made likewise liable? If at all, that liability could only be for tort under the provisions of Article 2176 and related provisions, in conjunction with Article 2180 of the Civil Code. x x x [O]ne might ask further, how then must the liability of the common carrier, on one hand, and an independent contractor, on the other hand, be described? It would be solidary. A contractual obligation can be breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract. Stated differently, when an act which constitutes a breach of contract would have itself constituted the source of a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been breached by tort, thereby allowing the rules on tort to apply. [57] As for Black Sea, its duty as a common carrier extended only from the time the goods were surrendered or unconditionally placed in its possession and received for transportation until they were delivered actually or constructively to consignee Little Giant.[58] Parties to a contract of carriage may, however, agree upon a definition of delivery that extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering the shipment provides that delivery be made to the port of discharge or so near thereto as she may safely get, always afloat.[59] The delivery of the goods to the consignee was not from pier to pier but from the shipside of M/V Alexander Saveliev and into barges, for which reason the consignee contracted the services of petitioner. Since Black Sea had constructively delivered the cargoes to Little Giant, through petitioner, it had discharged its duty.[60] In fine, no liability may thus attach to Black Sea. Respecting the award of attorneys fees in an amount over P1,000,000.00 to Industrial Insurance, for lack of factual and legal basis, this Court sets it aside. While Industrial Insurance was compelled to litigate its rights, such fact by itself does not justify the award of attorneys fees under Article 2208 of the Civil Code. For no sufficient showing of bad faith would be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause.[61] To award attorneys fees to a party just because the judgment is rendered in its favor would be tantamount to imposing a premium on ones right to litigate or seek judicial redress of legitimate grievances.[62]

96 On the award of adjustment fees: The adjustment fees and expense of divers were incurred by Industrial Insurance in its voluntary but unsuccessful efforts to locate and retrieve the lost cargo. They do not constitute actual damages.[63] As for the court a quos award of interest on the amount claimed, the same calls for modification following the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals[64] that when the demand cannot be reasonably established at the time the demand is made, the interest shall begin to run not from the time the claim is made judicially or extrajudicially but from the date the judgment of the court is made (at which the time the quantification of damages may be deemed to have been reasonably ascertained).[65] WHEREFORE, judgment is hereby rendered ordering petitioner Schmitz Transport & Brokerage Corporation, and Transport Venture Incorporation jointly and severally liable for the amount ofP5,246,113.11 with the MODIFICATION that interest at SIX PERCENT per annum of the amount due should be computed from the promulgation on November 24, 1997 of the decision of the trial court. Costs against petitioner. SO ORDERED.