Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46179 January 31, 1978
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON
VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and
EVANGELINA VIRATA, petitioners,
vs.
VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE,
7
th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.
Remulla, Estrella & Associates for petitioners
Exequil C. Masangkay for respondents.

D E C I S I O N
FERNANDEZ, J.:
This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in Civil
Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground that there
is another action pending between the same parties for the same cause.
1

The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been
bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo Borilla
and registered in the name Of Victoria Ochoa; that Borilla is the employer of Ochoa; that for the death of
Arsenio Virata, a action for homicide through reckless imprudence was instituted on September 25, 1975
against Maximo Borilla in the Court of First Instance of Rizal at Pasay City, docketed as C Case No.
3162-P of said court; that at the hearing of the said criminal case on December 12, 1975, Atty. Julio
Francisco, the private prosecutor, made a reservation to file a separate civil action for damages against
the driver on his criminal liability; that on February 19, 1976 Atty. Julio Francisco filed a motion in said c
case to withdraw the reservation to file a separate civil action; that thereafter, the private prosecutor
actively participated in the trial and presented evidence on the damages; that on June 29, 1976 the heirs
of Arsenio Virata again reserved their right to institute a separate civil action; that on July 19, 1977 the
heirs of Arsenio Virata, petitioners herein, commenced Civil No. B-134 in the Court of First Instance of
Cavite at Bacoor, Branch V, for damages based on quasi-delict against the driver Maximo Borilla and the
registered owner of the jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private
respondents filed a motion to dismiss on the ground that there is another action, Criminal Case No. 3162-
P, pending between the same parties for the same cause; that on September 8, 1976 the Court of First
Instance of Rizal at Pasay City a decision in Criminal Case No. 3612-P acquitting the accused Maximo
Borilla on the ground that he caused an injury by name accident; and that on January 31, 1977, the Court
of First Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134 for damages.
2

The principal issue is whether or not the of the Arsenio Virata, can prosecute an action for the damages
based on quasi-delict against Maximo Borilla and Victoria Ochoa, driver and owner, respectively on the
passenger jeepney that bumped Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may choose between an action under the
Revised Penal Code or of quasi-delict under Article 2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the same negligent
act.
The Supreme Court has held that:
According to the Code Commission: The foregoing provision (Article 2177) though at first sight startling,
is not so novel or extraordinary when we consider the exact nature of criminal and civil negligence. The
former is a violation of the criminal law, while the latter is a culpa aquiliana or quasi-delict, of ancient
origin, having always had its own foundation and individuality, separate from criminal negligence. Such
distinction between criminal negligence and culpa extra-contractual or quasi-delito has been sustained
by decision of the Supreme Court of Spain and maintained as clear, sound and perfectly tenable by
Maura, an outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an
accusation of criminal negligence, whether on reasonable doubt or not, shall not be a bar to a subsequent
civil action, not for civil liability arising from criminal negligence, but for damages due to a quasi-delict or
culpa aquiliana. But said article forestalls a double recovery. (Report of the Code Commission, p. 162.)
Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same
argument of Justice Bocobo about construction that upholds the spirit that given life rather than that
which is literal that killeth the intent of the lawmaker should be observed in applying the same. And
considering that the preliminary chapter on human relations of the new Civil Code definitely establishes
the separability and independence of liability in a civil action for acts criminal in character (under Articles
29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Penal Code, and, in a
sense, the Rules of Court, under Sections 2 and 3(c), Rule 111, contemplate also the same separability, it
is more congruent with the spirit of law, equity and justice, and more in harmony with modern progress,
to borrow the felicitous language in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. to 359, to hod as We
do hold, that Article 2176, where it refers to fault covers not only acts not punishable by law but also
criminal in character, whether intentional and voluntary or consequently, a separate civil action lies
against the in a criminal act, whether or not he is criminally prosecuted and found guilty and acquitted,
provided that the offended party is not allowed, if he is actually charged also criminally, to recover
damages on both scores, and would be entitled in such eventuality only to the bigger award of the, two
assuming the awards made in the two cases vary. In other words the extinction of civil liability referred to
in Par. (c) of Section 13, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised
Penal Code, whereas the civil liability for the same act considered as a quasi-delict only and not as a
crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not
happened or has not been committed by the accused. Brief stated, We hold, in reitration of Garcia, that
culpa aquilina includes voluntary and negligent acts which may be punishable by law.
3

The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case No.
3162-P was decided, they manifested in said criminal case that they were filing a separate civil action for
damages against the owner and driver of the passenger jeepney based on quasi-delict. The acquittal of
the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P is not a bar to the
prosecution of Civil Case No. B-134 for damages based on quasi-delict The source of the obligation
sought to be enforced in Civil Case No. B-134 is quasi-delict, not an act or omission punishable by law.
Under Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or omission punishable by
law are two different sources of obligation.
Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have only to
establish their cause of action by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is
reinstated and remanded to the lower court for further proceedings, with costs against the private
respondents.
SO ORDERED.
Teehankee (Chairman), Makasiar, Muoz Palma and Guerrero, JJ., concur.


SECOND DIVISION

[G.R. No. 53401. November 6, 1989.]

THE ILOCOS NORTE ELECTRIC COMPANY, petitioner, vs. HONORABLE COURT OF APPEALS,
(First Division) LILIAN JUAN LUIS, JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA JUAN
CARAG, and PURISIMA JUAN, respondents.

Herman D. Coloma for petitioner.
Glicerio S. Ferrer for private respondents.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; BURDEN OF PROOF; EACH PARTY MUST PROVE HIS
OWN AFFIRMATIVE ALLEGATIONS. But in order to escape liability, petitioner ventures into the
theory that the deceased was electrocuted, if such was really the case, when she tried to open her
steel gate, which was electrically charged by an electric wire she herself caused to install to serve
as a burglar deterrent. Petitioner suggests that the switch to said burglar alarm was left on. But this
is mere speculation, not backed up with evidence. As required by the Rules, "each party must
prove his own affirmative allegations." (Rule 131, Sec. 1). Nevertheless, the CA significantly noted
that "during the trial, this theory was abandoned" by the petitioner.
2. ID.; ID.; EXCEPTIONS TO HEARSAY RULE; PART OF THE RES GESTAE; REQUISITES
FOR ADMISSION OF THE RES GESTAE IN EVIDENCE, CITED. For the admission of the res
gestae in evidence, the following requisites must be present: (1) that the principal act, the res
gestae, be a startling occurrence; (2) that the statements were made before the declarant had time
to contrive or devise; (3) that the statements made must concern the occurrence in question and
its immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs. Balbas, 122
SCRA 959). We do not find any abuse of discretion on the CA' part in view of the satisfaction of
said requisites in the case at bar.
3. ID.; ID.; ID.; ID.; RULE BASED ON TRUSTWORTHINESS AND NECESSITY;
RATIONALE. The statements made relative to the startling occurrence are admitted in evidence
precisely as an exception to the hearsay rule on the grounds of trustworthiness and necessity.
Trustworthiness" because the statements are made instinctively (Wesley vs. State, 53 Ala. 182),
and "necessity" because such natural and spontaneous utterances are more convincing than the
testimony of the same person on the stand (Mobile vs. Ascraft, 48 Ala. 31). Therefore, the fact that
the declarant, Ernesto de la Cruz, was not presented to testify does not make the testimony of
Linda Alonzo Estavillo and Aida Bulong hearsay since the said declaration is part of the res
gestae. Similarly, We considered part of the res gestae a conversation between two accused
immediately after commission of the crime as overheard by a prosecution witness (People vs.
Reyes, 82 Phil. 563).
4. ID.; ID.; WITNESS' SHOUTS EVEN IF HE DID NOT SEE THE SINKING OF THE
DECEASED, A PART OFRES GESTAE; CASE AT BAR. While it may be true that, as petitioner
argues, Ernesto de la Cruz was not an actual witness to the instant when the deceased sank into
the waist-deep water, he acted upon the call of help of Aida Bulong and Linda Alonzo Estavillo with
the knowledge of, and immediately after, the sinking of the deceased. In fact the startling event
had not yet ceased when Ernesto de la Cruz entered the scene considering that the victim
remained submerged. Under such a circumstance, it is undeniable that a state of mind
characterized by nervous excitement had been triggered in Ernesto de la Cruz's being as anybody
under the same contingency could have experienced. As such, We cannot honestly exclude his
shouts that the water was grounded from the res gestae just because he did not actually see the
sinking of the deceased nor hear her scream "Ay."
5. ID.; ID.; ID.; ID.; STATEMENT OF DECLARANT NOT A MERE OPINION. Neither can
We dismiss the said declaration as a mere opinion of Ernesto de la Cruz. While We concede to the
submission that the statement must be one of facts rather than opinion, We cannot agree to the
proposition that the one made by him was a mere opinion. On the contrary, his shout was a
translation of an actuality as perceived by him through his sense of touch.
6. ID.; ID.; DISPUTABLE PRESUMPTIONS; EVIDENCE SUPPRESSED MUST BE
AVAILABLE ONLY AGAINST A PARTY TO A CASE, NOT TO BOTH. We do not agree that the
taking of Ernesto de la Cruz' testimony was suppressed by the private respondents, thus, is
presumed to be adverse to them pursuant to Section 5(e), Rule 131. For the application of said
Rule as against a party to a case, it is necessary that the evidence alleged to be suppressed is
available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil. 953). The
presumption does not operate if the evidence in question is equally available to both parties
(Staples-Howe Printing Co. vs. Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records that
petitioner could have called Ernesto de la Cruz to the witness stand.
7. CIVIL LAW; QUASI-DELICTS; PETITIONER NOT EXONERATED AS VICTIM'S DEATH IS
CAUSED BY ITS NEGLIGENCE. The respondent CA acted correctly in disposing the argument
that petitioner be exonerated from liability since typhoons and floods are fortuitous events. While it
is true that typhoons and floods are considered Acts of God for which no person may be held
responsible, it was not said eventuality which directly caused the victim's death. It was through the
intervention of petitioner's negligence that death took place.
8. ID.; ID.; ID.; MEASURE OF CARE REQUIRED OF ELECTRIC COMPANIES; DUTY OF
EXERCISING HIGH DEGREE OF DILIGENCE AND CARE EXTENDS TO EVERY PLACE
WHERE PERSONS HAVE A RIGHT TO BE. Under the circumstances of the case, petitioner
was negligent in seeing to it that no harm is done to the general public". . . considering that
electricity is an agency, subtle and deadly, the measure of care required of electric companies
must be commensurate with or proportionate to the danger. The duty of exercising this high degree
of diligence and care extends to every place where persons have a right to be" (Astudillo vs.
Manila Electric, 55 Phil. 427). The negligence of petitioner having been shown, it may not now
absolve itself from liability by arguing that the victim's death was solely due to a fortuitous event.
"When an act of God combines or concurs with the negligence of the defendant to produce an
injury, the defendant is liable if the injury would not have resulted but for his own negligent conduct
or omission" (38 Am. Jur., p. 649).
9. ID.; ID.; ID.; A PERSON WHO VOLUNTARILY ASSENTS TO A KNOWN DANGER MUST
ABIDE BY THE CONSEQUENCES; EXCEPTIONS. The maxim "volenti non fit injuria" relied
upon by petitioner finds no application in the case at bar. It is imperative to note the surrounding
circumstances which impelled the deceased to leave the comforts of a roof and brave the
subsiding typhoon. As testified by Linda Alonzo Estavillo and Aida Bulong the deceased,
accompanied by the former two, were on their way to the latter's grocery store "to see to it that the
goods were not flooded." As such, shall We punish her for exercising her right to protect her
property from the floods by imputing upon her the unfavorable presumption that she assumed the
risk of personal injury? Definitely not. For it has been held that a person is excused from the force
of the rule, that when he voluntarily assents to a known danger he must abide by the
consequences, if an emergency is found to exist or if the life or property of another is in peril (65A
C.S.C. Negligence (174(5), p. 301), or when he seeks to rescue his endangered property (Harper
and James, "The Law of Torts." Little, Brown and Co., 1956, v. 2, p. 1167). Clearly, an emergency
was at hand as the deceased's property, a source of her livelihood, was faced with an impending
loss. Furthermore, the deceased, at the time the fatal incident occurred, was at a place where she
had a right to be without regard to petitioner's consent as she was on her way to protect her
merchandise. Hence, private respondents, as heirs, may not be barred from recovering damages
as a result of the death caused by petitioner's negligence.
10. ID.; ID.; ID.; PRESENT WHERE PETITIONER'S DUTY TO EXERCISE EXTRAORDINARY
DILIGENCE WAS NOT OBSERVED. "When a storm occurs that is liable to prostrate the wires,
due care requires prompt efforts to discover and repair broken lines" (Cooley on Torts, 4th ed., v.
3, p. 474). The fact is that when Engineer Antonio Juan of the National Power Corporation set out
in the early morning of June 29, 1967 on an inspection tour, he saw grounded and disconnected
lines hanging from posts to the ground but did not see any INELCO lineman either in the streets or
at the INELCO office. The foregoing shows that petitioner's duty to exercise extraordinary diligence
under the circumstance was not observed, confirming the negligence of petitioner.
11. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; GRAVE ABUSE OF
DISCRETION; ABSENT, REASON. We find that the CA did not abuse its discretion in reversing
the trial court's findings but tediously considered the factual circumstances at hand pursuant to its
power to review questions of fact raised from the decision of the Regional Trial Court, formerly the
Court of First Instance (see sec. 9, BP 129).
12. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; AWARD THEREOF INCREASED
PURSUANT TO RECENT JURISPRUDENCE. In considering the liability of petitioner, the
respondent CA awarded the following in private respondent's favor: P30,229.45 in actual damages
(i.e., P12,000 for the victim's death and P18,229.45 for funeral expenses); P50,000 in
compensatory damages, computed in accordance with the formula set in the Villa-Rey Transit case
(31 SCRA 511) with the base of P15,000 as average annual income of the deceased; P10,000 in
exemplary damages; P3,000 attorney's fees; and costs of suit. Except for the award of P12,000 as
compensation for the victim's death, We affirm the respondent CA's award for damages and
attorney's fees. Pursuant to recent jurisprudence (People vs. Mananquil, 132 SCRA 196;
People vs. Traya, 147 SCRA 381), We increase the said award of P12,000 to P30,000, thus,
increasing the total actual damages to P48,229.45.
13. ID.; ID.; ID.; AWARD OF DAMAGES AND ATTORNEY'S FEES UNWARRANTED WHERE
ACTION WAS FILED IN GOOD FAITH THERE BEING NO PENALTY ON RIGHT TO LITIGATE;
CONCEPT OF DAMNUM ABSQUE INJURIA, EXPLAINED. The exclusion of moral damages
and attorney's fees awarded by the lower court was properly made by the respondent CA, the
charge of malice and bad faith on the part of respondents in instituting this case being a mere
product of wishful thinking and speculation. Award of damages and attorney's fees is unwarranted
where the action was filed in good faith; there should be no penalty on the right to litigate
(Espirituvs. CA, 137 SCRA 50). If damage results from a person's exercising his legal rights, it
is damnum absque injuria(Auyong Hian vs. CTA, 59 SCRA 110).

D E C I S I O N

PARAS, J p:
Sought to be reversed in this petition is the Decision of the respondent Court of Appeals' First
Division, setting aside the Judgment of the then Court of First Instance (CFI) of Ilocos Norte, with the
following dispositive portion:
WHEREFORE, the appealed judgment is hereby set aside and another rendered in its stead whereby
defendant is hereby sentenced to pay plaintiffs actual damages of P30,229.45; compensatory damages
of P50,000.00; exemplary damages of P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in
both instances. (p. 27, Rollo).
Basically, this case involves a clash of evidence whereby both parties strive for the recognition of
their respective versions of the scenario from which the disputed claims originate. The respondent Court
of Appeals (CA) summarized the evidence of the parties as follows:
From the evidence of plaintiffs it appears that in the evening of June 28 until the early morning of June 29,
1967 a strong typhoon by the code name "Gening" buffeted the province of Ilocos Norte, bringing heavy
rains and consequent flooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the
typhoon had abated and when the floodwaters were beginning to recede, the deceased Isabel Lao Juan,
fondly called Nana Belen, ventured out of the house of her son-in-law, Antonio Yabes, on No. 19
Guerrero Street, Laoag City, and proceeded northward towards the direction of the Five Sisters
Emporium, of which she was the owner and proprietress, to look after the merchandise therein that might
have been damaged. Wading in waistdeep flood on Guerrero, the deceased was followed by Aida
Bulong, a Salesgirl at the Five Sisters Grocery, also owned by the deceased, and by Linda Alonzo
Estavillo, a ticket seller at the YJ Cinema, which was partly owned by the deceased. Aida and Linda
walked side by side at a distance of between 5 and 6 meters behind the deceased. Suddenly, the
deceased screamed "Ay" and quickly sank into the water. The two girls attempted to help, but fear
dissuaded them from doing so because on the spot where the deceased sank they saw an electric wire
dangling from a post and moving in snake-like fashion in the water. Upon their shouts for help, Ernesto
dela Cruz came out of the house of Antonio Yabes. Ernesto tried to go to the deceased, but at four
meters away from her he turned back shouting that the water was grounded. Aida and Linda prodded
Ernesto to seek help from Antonio Yabes at the YJ Cinema building which was four or five blocks away.
When Antonio Yabes was informed by Ernesto that his mother-in-law had been electrocuted, he acted
immediately. With his wife Jane, together with Ernesto and one Joe Ros, Yabes passed by the City Hall
of Laoag to request the police to ask the people of defendant Ilocos Norte Electric Company or INELCO
to cut off the electric current. Then the party waded to the house on Guerrero Street. The floodwater was
receding and the lights inside the house were out indicating that the electric current had been cut off in
Guerrero. Yabes instructed his boys to fish for the body of the deceased. The body was recovered about
two meters from an electric post.
In another place, at about 4:00 AM. on that fateful date, June 29, 1967, Engineer Antonio Juan, Power
Plant Engineer of the National Power Corporation at the Laoag Diesel-Electric Plant, noticed certain
fluctuations in their electric meter which indicated such abnormalities as grounded or short-circuited lines.
Between 6:00 and 6:30 A.M., he set out of the Laoag NPC Compound on an inspection. On the way, he
saw grounded and disconnected lines. Electric lines were hanging from the posts to the ground. Since he
could not see any INELCO lineman, he decided to go to the INELCO Office at the Life Theatre on Rizal
Street by way of Guerrero. As he turned right at the intersection of Guerrero and Rizal, he saw an electric
wire about 30 meters long strung across the street "and the other end was seeming to play with the
current of the water." (p. 64, TSN, Oct. 24, 1972) Finding the Office of the INELCO still closed, and seeing
no lineman therein, he returned to the NPC Compound.
At about 8:10 A.M., Engr. Juan went out of the compound again on another inspection trip. Having
learned of the death of Isabel Lao Juan, he passed by the house of the deceased at the corner of
Guerrero and M.H. del Pilar streets to which the body had been taken. Using the resuscitator which was a
standard equipment in his jeep and employing the skill he acquired from an in-service training on
resuscitation, he tried to revive the deceased. His efforts proved futile. Rigor mortis was setting in. On the
left palm of the deceased, Engr. Juan noticed a hollow wound. Proceeding to the INELCO Office, he met
two linemen on the way. He told them about the grounded lines of the INELCO. In the afternoon of the
same day, he went on a third inspection trip preparatory to the restoration of power. The dangling wire he
saw on Guerrero early in the morning of June 29, 1967 was no longer there.
Many people came to the house at the corner of Guerrero and M.H. del Pilar after learning that the
deceased had been electrocuted. Among the sympathizers was Dr. Jovencio Castro, Municipal Health
Officer of Sarrat, Ilocos Norte. Upon the request of the relatives of the deceased, Dr. Castro examined the
body at about 8:00 A.M. on June 29, 1967. The skin was grayish or, in medical parlance, cyanotic which
indicated death by electrocution. On the left palm, the doctor found an "electrically charged wound" (Exh.
C-1: p. 101, TSN, Nov. 28, 1972) or a first degree burn. About the base of the thumb on the left hand was
a burned wound. (Exh. C-2, pp. 102-103, Ibid.) The certificate of death prepared by Dr. Castro stated the
cause of death as "circulatory shock electrocution" (Exh. I; p. 103, Ibid.).
In defense and exculpation, defendant presented the testimonies of its officers and employees, namely,
Conrado Asis, electric engineer; Loreto Abijero, collector-inspector; Fabico Abijero, lineman; and Julio
Agcaoili, president-manager of INELCO. Through the testimonies of these witnesses, defendant sought to
prove that on and even before June 29, 1967 the electric service system of the INELCO in the whole
franchise area, including Area No. 9 which covered the residence of Antonio Yabes at No. 18 Guerrero
Street, did not suffer from any defect that might constitute a hazard to life and property. The service lines,
devices and other INELCO equipment in Area No. 9 had been newly-installed prior to the date in
question. As a public service operator and in line with its business of supplying electric current to the
public, defendant had installed safety devices to prevent and avoid injuries to persons and damage to
property in case of natural calamities such as floods, typhoons, fire and others. Defendant had 12
linesmen charged with the duty of making a round-the-clock check-up of the areas respectively assigned
to them.
Defendant asserts that although a strong typhoon struck the province of Ilocos Norte on June 29, 1967,
putting to streets of Laoag City under water, only a few known places in Laoag were reported to have
suffered damaged electric lines, namely, at the southern approach of the Marcos Bridge which was
washed away and where the INELCO lines and posts collapsed; in the eastern part near the residence of
the late Governor Simeon Mandac; in the far north near the defendant's power plant at the corner of
Segundo and Castro Streets, Laoag City; and at the far northwest side, near the premises of the Ilocos
Norte National High School. Fabico Abijero testified that in the early morning before 6 o'clock on June 29,
1967 he passed by the intersection of Rizal and Guerrero Streets to switch off the street lights in Area No.
9. He did not see any cut or broken wires in or near the vicinity. What he saw were many people fishing
out the body of Isabel Lao Juan.
A witness in the person of Dr. Antonio Briones was presented by the defense to show that the deceased
could not have died of electrocution. Substantially, the testimony of the doctor is as follows: Without an
autopsy on the cadaver of the victim, no doctor, not even a medico-legal expert, can speculate as to the
real cause of death. Cyanosis could not have been found in the body of the deceased three hours after
her death, because cyanosis, which means lack of oxygen circulating in the blood and rendering the color
of the skin purplish, appears only in a live person. The presence of the elongated burn in the left palm of
the deceased (Exhibits C-1 and C-2) is not sufficient to establish her death by electrocution; since burns
caused by electricity are more or less round in shape and with points of entry and exit. Had the deceased
held the lethal wire for a long time, the laceration in her palm would have been bigger and the injury more
massive. (CA Decision, pp. 18-21, Rollo).
An action for damages in the aggregate amount of P250,000 was instituted by the heirs of the
deceased with the aforesaid CFI on June 24, 1968. In its Answer (Vide, Record on Appeal, p. 55, Rollo),
petitioner advanced the theory, as a special defense, that the deceased could have died simply either by
drowning or by electrocution due to negligence attributable only to herself and not to petitioner. In this
regard, it was pointed out that the deceased, without petitioner's knowledge, caused the installation of a
burglar deterrent by connecting a wire from the main house to the iron gate and fence of steel matting,
thus, charging the latter with electric current whenever the switch is on. Petitioner then conjectures that
the switch to said burglar deterrent must have been left on, hence, causing the deceased's electrocution
when she tried to open her gate that early morning of June 29, 1967. After due trial, the CFI found the
facts in favor of petitioner and dismissed the complaint but awarded to the latter P25,000 in moral
damages and attorney's fees of P45,000. An appeal was filed with the CA which issued the controverted
decision.
In this petition for review the petitioner assigns the following errors committed by the respondent CA:
1. The respondent Court of Appeals committed grave abuse of discretion and error in
considering the purely hearsay alleged declarations of Ernesto de la Cruz as part of the res
gestae.
2. The respondent Court of Appeals committed grave abuse of discretion and error in holding
that the strong typhoon "Gening" which struck Laoag City and Ilocos Norte on June 29, 1967 and
the flood and deluge it brought in its wake were not fortuitous events and did not exonerate
petitioner-company from liability for the death of Isabel Lao Juan.
3. The respondent Court of Appeals gravely abused its discretion and erred in not applying the
legal principle of "assumption of risk" in the present case to bar private respondents from collecting
damages from petitioner company.
4. That the respondent Court of Appeals gravely erred and abused its discretion in completely
reversing the findings of fact of the trial court.
5. The findings of fact of the respondent Court of Appeals are reversible under the recognized
exceptions.
6. The trial court did not err in awarding moral damages and attorney's fees to defendant
corporation, now petitioner company.
7. Assuming arguendo that petitioner company may be held liable for the death of the late
Isabel Lao Juan, the damages granted by respondent Court of Appeals are improper and
exhorbitant. (Petitioner's Memorandum, p. 133, Rollo).
Basically, three main issues are apparent: (1) whether or not the deceased died of electrocution; (2)
whether or not petitioner may be held liable for the deceased's death; and (3) whether or not the
respondent CA's substitution of the trial court's factual findings for its own was proper
In considering the first issue, it is Our view that the same be resolved in the affirmative. By a
preponderance of evidence, private respondents were able to show that the deceased died of
electrocution, a conclusion which can be primarily derived from the photographed burnt wounds (Exhibits
"C", "C-1", "C-2") on the left palm of the former. Such wounds undoubtedly point to the fact that the
deceased had clutched a live wire of the petitioner. This was corroborated by the testimony of Dr.
Jovencio Castro who actually examined the body of the deceased a few hours after the death and
described the said burnt wounds as a "first degree burn" (p. 144, TSN, December 11, 1972) and that they
were "electrically charged" (p. 102, TSN, November 28, 1972). Furthermore, witnesses Linda Alonzo
Estavillo and Aida Bulong added that after the deceased screamed "Ay" and sank into the water, they
tried to render some help but were overcome with fear by the sight of an electric wire dangling from an
electric post, moving in the water in a snake-like fashion (supra). The foregoing therefore justifies the
respondent CA in concluding that "(t)he nature of the wounds as described by the witnesses who saw
them can lead to no other conclusion than that they were "burns," and there was nothing else in the street
where the victim was wading thru which could cause a burn except the dangling live wire of defendant
company" (CA Decision, p. 22, Rollo).
But in order to escape liability, petitioner ventures into the theory that the deceased was
electrocuted, if such was really the case, when she tried to open her steel gate, which was electrically
charged by an electric wire she herself caused to install to serve as a burglar deterrent. Petitioner
suggests that the switch to said burglar alarm was left on. But this is mere speculation, not backed up
with evidence. As required by the Rules, "each party must prove his own affirmative allegations." (Rule
131, Sec. 1). Nevertheless, the CA significantly noted that "during the trial, this theory was abandoned" by
the petitioner (CA Decision, p. 23, Rollo).
Furthermore the CA properly applied the principle of res gestae. The CA said:
Linda Alonzo Estavillo, a ticket seller, and Aida Bulong, a salesgirl, were with the deceased during that
fateful morning of June 29, 1967. This Court has not been offered any sufficient reason to discredit the
testimonies of these two young ladies. They were one in the affirmation that the deceased, while wading
in the waist-deep flood on Guerrero Street five or six meters ahead of them, suddenly screamed "Ay" and
quickly sank into the water. When they approached the deceased to help, they were stopped by the sight
of an electric wire dangling from a post and moving in snake-like fashion in the water. Ernesto dela Cruz
also tried to approach the deceased, but he turned back shouting that the water was grounded. These
bits of evidence carry much weight. For the subject of the testimonies was a startling occurrence, and the
declarations may be considered part of the res gestae. (CA Decision, p. 21, Rollo)
For the admission of the res gestae in evidence, the following requisites must be present: (1) that the
principal act, the res gestae, be a startling occurrence; (2) that the statements were made before the
declarant had time to contrive or devise; (3) that the statements made must concern the occurrence in
question and its immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs.
Balbas, 122 SCRA 959). We do not find any abuse of discretion on the CA' part in view of the satisfaction
of said requisites in the case at bar.
The statements made relative to the startling occurrence are admitted in evidence precisely as an
exception to the hearsay rule on the grounds of trustworthiness and necessity. "Trustworthiness" because
the statements are made instinctively (Wesley vs. State, 53 Ala. 182), and "necessity" because such
natural and spontaneous utterances are more convincing than the testimony of the same person on the
stand (Mobile vs. Ascraft, 48 Ala. 31). Therefore, the fact that the declarant, Ernesto de la Cruz, was not
presented to testify does not make the testimony of Linda Alonzo Estavillo and Aida Bulong hearsay since
the said declaration is part of the res gestae. Similarly, We considered part of the res gestae a
conversation between two accused immediately after commission of the crime as overheard by a
prosecution witness (People vs. Reyes, 82 Phil. 563).
While it may be true that, as petitioner argues (vide, petitioner's Memorandum, p. 135, Rollo),
Ernesto de la Cruz was not an actual witness to the instant when the deceased sank into the waist-deep
water, he acted upon the call of help of Aida Bulong and Linda Alonzo Estavillo with the knowledge of,
and immediately after, the sinking of the deceased. In fact the startling event had not yet ceased when
Ernesto de la Cruz entered the scene considering that the victim remained submerged. Under such a
circumstance, it is undeniable that a state of mind characterized by nervous excitement had been
triggered in Ernesto de la Cruz's being as anybody under the same contingency could have experienced.
As such, We cannot honestly exclude his shouts that the water was grounded from the res gestae just
because he did not actually see the sinking of the deceased nor hear her scream "Ay."
Neither can We dismiss the said declaration as a mere opinion of Ernesto de la Cruz. While We
concede to the submission that the statement must be one of facts rather than opinion, We cannot agree
to the proposition that the one made by him was a mere opinion. On the contrary, his shout was a
translation of an actuality as perceived by him through his sense of touch.
Finally, We do not agree that the taking of Ernesto de la Cruz' testimony was suppressed by the
private respondents, thus, is presumed to be adverse to them pursuant to Section 5(e), Rule 131. For the
application of said Rule as against a party to a case, it is necessary that the evidence alleged to be
suppressed is available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil. 953). The
presumption does not operate if the evidence in question is equally available to both parties (Staples-
Howe Printing Co. vs. Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records that petitioner could
have called Ernesto de la Cruz to the witness stand. This, precisely, was Linda Alonzo Estavillo's
suggestion to petitioner's counsel when she testified on cross examination: cdll
"Q. And that Erning de la Cruz, how far did he reach from the gate of the house?
A. Well, you can ask that matter from him sir because he is here. (TSN, p. 30, 26 Sept. 1972).
The foregoing shows that petitioner had the opportunity to verify the declarations of Ernesto de la
Cruz which, if truly adverse to private respondent, would have helped its case. However, due to reasons
known only to petitioner, the opportunity was not taken.
Coming now to the second issue, We tip the scales in the private respondents' favor. The
respondent CA acted correctly in disposing the argument that petitioner be exonerated from liability since
typhoons and floods are fortuitous events. While it is true that typhoons and floods are considered Acts of
God for which no person may be held responsible, it was not said eventuality which directly caused the
victim's death. It was through the intervention of petitioner's negligence that death took place. We
subscribe to the conclusions of the respondent CA when it found:
"On the issue whether or not the defendant incurred liability for the electrocution and consequent death of
the late Isabel Lao Juan, defendant called to the witness-stand its electrical engineer, chief lineman, and
lineman to show exercise of extraordinary diligence and to negate the charge of negligence. The
witnesses testified in a general way about their duties and the measures which defendant usually adopts
to prevent hazards to life and limb. From these testimonies, the lower court found "that the electric lines
and other equipment of defendant corporation were properly maintained by a well-trained team of
lineman, technicians and engineers working around the clock to insure that these equipments were in
excellent condition at all times." (p. 40, Record on Appeal) The finding of the lower court, however, was
based on what the defendant's employees were supposed to do, not on what they actually did or failed to
do on the date in question, and not on the occasion of theemergency situation brought about by the
typhoon.
The lower court made a mistake in assuming that defendant's employees worked around the clock during
the occurrence of the typhoon on the night of June 28 and until the early morning of June 29, 1967, Engr.
Antonio Juan of the National Power Corporation affirmed that when he first set out on an inspection trip
between 6:00 and 6:30 A.M. on June 29, 1967, he saw grounded and disconnected electric lines of the
defendant but he saw no INELCO lineman. The INELCO Office at the Life theatre on Rizal Street was still
closed. (pp. 63-64, TSN, Oct. 24, 1972) Even the witnesses of defendant contradict the finding of the
lower court. Conrado Asis, defendant's electrical engineer, testified that he conducted a general
inspection of the franchise area of the INELCO only on June 30, 1967, the day following the typhoon. The
reason he gave for the delay was that all their vehicles were submerged. (p. 337, TSN, July 20, 1973)
According to Asis, he arrived at his office at 8:00 A.M. on June 30 and after briefing his men on what to
do they started out. (p. 338, Ibid) One or two days after the typhoon, the INELCO people heard "rumors
that someone was electrocuted" so he sent one of his men to the place but his man reported back that
there was no damaged wire. (p. 385, Id.) Loreto Abijero, chief lineman of defendant, corroborated Engr.
Juan. He testified that at about 8:00 A.M. on June 29, 1967 Engr. Juan came to the INELCO plant and
asked the INELCO people to inspect their lines. He went with Engr. Juan and their inspection lasted from
8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan. 28, 1975) Fabico Abijero, lineman of defendant,
testified that at about 6:00 on June 29, 1967 the typhoon ceased. At that time, he was at the main
building of the Divine Word College of Laoag where he had taken his family for refuge. (pp. 510-
511, Ibid.).
In times of calamities such as the one which occurred in Laoag City on the might of June 28 until the early
hours of June 29, 1967, extraordinary diligence requires a supplier of electricity to be in constant vigil to
prevent or avoid any probable incident that might imperil life or limb. The evidence does not show that
defendant did that. On the contrary, evidence discloses that there were no men (linemen or otherwise)
policing the area, nor even manning its office. (CA Decision, pp. 24-25, Rollo).
Indeed, under the circumstances of the case, petitioner was negligent in seeing to it that no harm is
done to the general public". . . considering that electricity is an agency, subtle and deadly, the measure of
care required of electric companies must be commensurate with or proportionate to the danger. The duty
of exercising this high degree of diligence and care extends to every place where persons have a right to
be" (Astudillo vs. Manila Electric, 55 Phil. 427). The negligence of petitioner having been shown, it may
not now absolve itself from liability by arguing that the victim's death was solely due to a fortuitous event.
"When an act of God combines or concurs with the negligence of the defendant to produce an injury, the
defendant is liable if the injury would not have resulted but for his own negligent conduct or omission" (38
Am. Jur., p. 649).
Likewise, the maxim "volenti non fit injuria" relied upon by petitioner finds no application in the case
at bar. It is imperative to note the surrounding circumstances which impelled the deceased to leave the
comforts of a roof and brave the subsiding typhoon. As testified by Linda Alonzo Estavillo (see TSN, p. 5,
26 Sept. 1972) and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased, accompanied by the
former two, were on their way to the latter's grocery store "to see to it that the goods were not flooded."
As such, shall We punish her for exercising her right to protect her property from the floods by imputing
upon her the unfavorable presumption that she assumed the risk of personal injury? Definitely not. For it
has been held that a person is excused from the force of the rule, that when he voluntarily assents to a
known danger he must abide by the consequences, if an emergency is found to exist or if the life or
property of another is in peril (65A C.S.C. Negligence (174(5), p. 301), or when he seeks to rescue his
endangered property (Harper and James, "The Law of Torts." Little, Brown and Co., 1956, v. 2, p. 1167).
Clearly, an emergency was at hand as the deceased's property, a source of her livelihood, was faced with
an impending loss. Furthermore, the deceased, at the time the fatal incident occurred, was at a place
where she had a right to be without regard to petitioner's consent as she was on her way to protect her
merchandise. Hence, private respondents, as heirs, may not be barred from recovering damages as a
result of the death caused by petitioner's negligence (ibid., p. 1165, 1166).
But petitioner assails the CA for having abused its discretion in completely reversing the trial court's
findings of fact, pointing to the testimonies of three of its employees its electrical engineer, collector-
inspector, lineman, and president-manager to the effect that it had exercised the degree of diligence
required of it in keeping its electric lines free from defects that may imperil life and limb. Likewise, the said
employees of petitioner categorically disowned the fatal wires as they appear in two photographs taken
on the afternoon of June 29, 1967 (Exhs. "D" and "E"), suggesting that said wires were just hooked to the
electric post (petitioner's Memorandum, p. 170, Rollo). However, as the CA properly held, "(t)he finding of
the lower court . . . was based on what the defendant's employees were supposed to do, not on what they
actually did or failed to do on the date in question, and not on the occasion of the emergency
situation brought about by the typhoon" (CA Decision, p. 25, Rollo). And as found by the CA, which We
have already reiterated above, petitioner was in fact negligent. In a like manner, petitioner's denial of
ownership of the several wires cannot stand the logical conclusion reached by the CA when it held that
"(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion
than that they were 'burns', and there was nothing else in the street where the victim was wading thru
which could cause a burn except the dangling live wire of defendant company" (supra).
"When a storm occurs that is liable to prostrate the wires, due care requires prompt efforts to
discover and repair broken lines" (Cooley on Torts, 4th ed., v. 3, p. 474). The fact is that when Engineer
Antonio Juan of the National Power Corporation set out in the early morning of June 29, 1967 on an
inspection tour, he saw grounded and disconnected lines hanging from posts to the ground but did not
see any INELCO lineman either in the streets or at the INELCO office (vide, CA Decision, supra). The
foregoing shows that petitioner's duty to exercise extraordinary diligence under the circumstance was not
observed, confirming the negligence of petitioner. To aggravate matters, the CA found:
. . . even before June 28 the people in Laoag were already alerted about the impending typhoon, through
radio announcements. Even the fire department of the city announced the coming of the big flood. (pp.
532-534, TSN, March 13, 1975) At the INELCO irregularities in the flow of electric current were noted
because "amperes of the switch volts were moving". And yet, despite these danger signals, INELCO had
to wait for Engr. Juan to request that defendant's switch be cut off but the harm was done. Asked why
the delay, Loreto Abijero answered that he "was not the machine tender of the electric plant to switch off
the current." (pp. 467-468, Ibid.) How very characteristic of gross inefficiency! (CA Decision, p. 26, Rollo)
From the preceding, We find that the CA did not abuse its discretion in reversing the trial court's
findings but tediously considered the factual circumstances at hand pursuant to its power to review
questions of fact raised from the decision of the Regional Trial Court, formerly the Court of First Instance
(see sec. 9, BP 129).
In considering the liability of petitioner, the respondent CA awarded the following in private
respondent's favor: P30,229.45 in actual damages (i.e., P12,000 for the victim's death and P18,229.45 for
funeral expenses); P50,000 in compensatory damages, computed in accordance with the formula set in
the Villa-Rey Transit case (31 SCRA 511) with the base of P15,000 as average annual income of the
deceased; P10,000 in exemplary damages; P3,000 attorney's fees; and costs of suit. Except for the
award of P12,000 as compensation for the victim's death, We affirm the respondent CA's award for
damages and attorney's fees. Pursuant to recent jurisprudence (People vs. Mananquil, 132 SCRA 196;
People vs. Traya, 147 SCRA 381), We increase the said award of P12,000 to P30,000, thus, increasing
the total actual damages to P48,229.45.
The exclusion of moral damages and attorney's fees awarded by the lower court was properly made
by the respondent CA, the charge of malice and bad faith on the part of respondents in instituting this
case being a mere product of wishful thinking and speculation. Award of damages and attorney's fees is
unwarranted where the action was filed in good faith; there should be no penalty on the right to litigate
(Espiritu vs. CA, 137 SCRA 50). If damage results from a person's exercising his legal rights, it
is damnum absque injuria (Auyong Hian vs. CTA, 59 SCRA 110). LLjur
WHEREFORE, the questioned decision of the respondent, except for the slight modification that
actual damages be increased to P48,229.45 is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla, Sarmiento and Regalado, JJ., concur.


Today is Monday, November 25, 2013


Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION



G.R. No. 108017 April 3, 1995

MARIA BENITA A. DULAY, in her own behalf and in behalf of the minor children KRIZTEEN ELIZABETH,
BEVERLY MARIE and NAPOLEON II, all surnamed DULAY, petitioners,
vs.
THE COURT OF APPEALS, Former Eighth Division, HON. TEODORO P. REGINO, in his capacity as
Presiding Judge of the Regional Trial Court National Capital Region, Quezon City, Br. 84, SAFEGUARD
INVESTIGATION AND SECURITY CO., INC., and SUPERGUARD SECURITY CORPORATION,
respondents.



BIDIN, J.:

This petition for certiorari prays for the reversal of the decision of the Court of Appeals dated October 29,
1991 in CA-G.R. CV No. 24646 which affirmed the order of the Regional Trial Court dismissing Civil Case
No. Q-89-1751, and its resolution dated November 17, 1991 denying herein, petitioner's motion for
reconsideration.

The antecedent facts of the case are as follows:

On December 7, 1988, an altercation between Benigno Torzuela and Atty. Napoleon Dulay occurred at
the "Big Bang Sa Alabang," Alabang Village, Muntinlupa as a result of which Benigno Torzuela, the
security guard on duty at the said carnival, shot and killed Atty. Napoleon Dulay.

Herein petitioner Maria Benita A. Dulay, widow of the deceased Napoleon Dulay, in her own behalf and in
behalf of her minor children, filed on February 8, 1989 an action for damages against Benigno Torzuela
and herein private respondents Safeguard Investigation and Security Co., Inc., ("SAFEGUARD") and/or
Superguard Security Corp. ("SUPERGUARD"), alleged employers of defendant Torzuela. The complaint,
docketed as Civil Case No. Q-89-1751 among others alleges the following:

1. . . .

Defendants SAFEGUARD INVESTIGATION AND SECURITY CO., INC., (Defendant Safeguard) and
SUPERGUARD SECURITY CORPORATION (Defendant Superguard) are corporations duly organized
and existing in accordance with Philippine laws, with offices at 10th Floor, Manufacturers Building, Inc.,
Plaza Santa Cruz, Manila. They are impleaded as alternative defendants for, while the former appears to
be the employer of defendant BENIGNO TORZUELA (defendant TORZUELA), the latter impliedly
acknowledged responsibility for the acts of defendant TORZUELA by extending its sympathies to
plaintiffs.

Defendant BENIGNO TORZUELA is of legal age, an employee of defendant SAFEGUARD and/or
defendant SUPERGUARD and, at the time of the incident complained of, was under their control and
supervision. . . .

3. On December 7, 1988 at around 8:00 a.m., defendant TORZUELA, while he was on duty as
security guard at the "Big Bang sa Alabang," Alabang Village, Muntinlupa, Metro Manila shot and killed
NAPOLEON V. DULAY with a .38 caliber revolver belonging to defendant SAFEGUARD, and/or
SUPERGUARD (per Police Report dated January 7, 1989, copy attached as Annex A);

4. The incident resulting in the death of NAPOLEON V. DULAY was due to the concurring
negligence of the defendants. Defendant TORZUELA'S wanton and reckless discharge of the firearm
issued to him by defendant SAFEGUARD and/or SUPERGUARD was the immediate and proximate
cause of the injury, while the negligence of defendant SAFEGUARD and/or SUPERGUARD consists in its
having failed to exercise the diligence of a good father of a family in the supervision and control of its
employee to avoid the injury.

xxx xxx xxx

(Rollo, pp. 117-118)

Petitioners prayed for actual, compensatory, moral and exemplary damages, and attorney's fees. The
said Civil Case No. Q-89-1751 was raffled to Branch 84 of the Regional Trial Court of Quezon City,
presided by respondent Judge Teodoro Regino.

On March 2, 1989, private respondent SUPERGUARD filed a Motion to Dismiss on the ground that the
complaint does not state a valid cause of action. SUPERGUARD claimed that Torzuela's act of shooting
Dulay was beyond the scope of his duties, and that since the alleged act of shooting was committed with
deliberate intent (dolo), the civil liability therefor is governed by Article 100 of the Revised Penal Code,
which states:

Art. 100. Civil liability of a person guilty of a felony. Every person criminally liable for a felony is
also civilly liable.

Respondent SUPERGUARD further alleged that a complaint for damages based on negligence under
Article 2176 of the New Civil Code, such as the one filed by petitioners, cannot lie, since the civil liability
under Article 2176 applies only to quasi-offenses under Article 365 of the Revised Penal Code. In
addition, the private respondent argued that petitioners' filing of the complaint is premature considering
that the conviction of Torzuela in a criminal case is a condition sine qua non for the employer's subsidiary
liability (Rollo, p. 55-59).

Respondent SAFEGUARD also filed a motion praying that it be excluded as defendant on the ground that
defendant Torzuela is not one of its employees (Rollo, p. 96).

Petitioners opposed both motions, stating that their cause of action against the private respondents is
based on their liability under Article 2180 of the New Civil Code, which provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's 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 an
industry.

xxx xxx xxx

(Emphasis supplied)

Petitioners contended that a suit against alternative defendants is allowed under Rule 3, Section 13 of the
Rules of Court. Therefore, the inclusion of private respondents as alternative defendants in the complaint
is justified by the following: the Initial Investigation Report prepared by Pat. Mario Tubon showing that
Torzuela is an employee of SAFEGUARD; and through overt acts, SUPERGUARD extended its
sympathies to petitioners (Rollo, pp. 64 and 98).

Meanwhile, an Information dated March 21, 1989 charging Benigno Torzuela with homicide was filed
before the Regional Trial Court of Makati and was docketed as Criminal Case No. 89-1896.

On April 13, 1989, respondent Judge Regino issued an order granting SUPERGUARD'S motion to
dismiss and SAFEGUARD'S motion for exclusion as defendant. The respondent judge held that the
complaint did not state facts necessary or sufficient to constitute a quasi-delict since it does not mention
any negligence on the part of Torzuela in shooting Napoleon Dulay or that the same was done in the
performance of his duties. Respondent judge ruled that mere allegations of the concurring negligence of
the defendants (private respondents herein) without stating the facts showing such negligence are mere
conclusions of law (Rollo, p. 106). Respondent judge also declared that the complaint was one for
damages founded on crimes punishable under Articles 100 and 103 of the Revised Penal Code as
distinguished from those arising from, quasi-delict. The dispositive portion of the order dated April 13,
1989 states:

WHEREFORE, this Court holds that in view of the material and ultimate facts alleged in the verified
complaint and in accordance with the applicable law on the matter as well as precedents laid down by the
Supreme Court, the complaint against the alternative defendants Superguard Security Corporation and
Safeguard Investigation and Security Co., Inc., must be and (sic) it is hereby dismissed. (Rollo, p. 110)

The above order was affirmed by the respondent court and petitioners' motion for reconsideration thereof
was denied.

Petitioners take exception to the assailed decision and insist that quasi-delicts are not limited to acts of
negligence but also cover acts that are intentional and voluntary, citing Andamo v. IAC (191 SCRA 195
[1990]). Thus, petitioners insist that Torzuela' s act of shooting Napoleon Dulay constitutes a quasi-delict
actionable under Article 2176 of the New Civil Code.

Petitioners further contend that under Article 2180 of the New Civil Code, private respondents are
primarily liable for their negligence either in the selection or supervision of their employees. This liability is
independent of the employee's own liability for fault or negligence and is distinct from the subsidiary civil
liability under Article 103 of the Revised Penal Code. The civil action against the employer may therefore
proceed independently of the criminal action pursuant to Rule 111 Section 3 of the Rules of Court.
Petitioners submit that the question of whether Torzuela is an employee of respondent SUPERGUARD or
SAFEGUARD would be better resolved after trial.

Moreover, petitioners argue that Torzuela's act of shooting Dulay is also actionable under Article 33 of the
New Civil Code, to wit:

Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate
and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of evidence. (Emphasis
supplied)

In the same vein, petitioners cite Section 3, Rule 111 of the Rules of Court which provides:

Rule 111. . . . .

Sec. 3. When civil action may proceed independently In the cases provided for in Articles 32, 33, 34
and 2176 of the Civil Code of the Philippines, the independent civil action which has been reserved may
be brought by the offended party, shall proceed independently of the criminal action, and shall require
only a preponderance of evidence. (Emphasis supplied)

The term "physical injuries" under Article 33 has been held to include consummated, frustrated and
attempted homicide. Thus, petitioners maintain that Torzuela's prior conviction is unnecessary since the
civil action can proceed independently of the criminal action. On the other hand, it is the private
respondents' argument that since the act was not committed with negligence, the petitioners have no
cause of action under Articles 2116 and 2177 of the New Civil Code. The civil action contemplated in
Article 2177 is not applicable to acts committed with deliberate intent, but only applies to quasi-offenses
under Article 365 of the Revised Penal Code. Torzuela's act of shooting Atty. Dulay to death, aside from
being purely personal, was done with deliberate intent and could not have been part of his duties as
security guard. And since Article 2180 of the New Civil Code covers only: acts done within the scope of
the employee's assigned tasks, the private respondents cannot be held liable for damages.

We find for petitioners.

It is undisputed that Benigno Torzuela is being prosecuted for homicide for the fatal shooting of Napoleon
Dulay. Rule 111 of the Rules on Criminal Procedure provides:

Sec. 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the
recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives the
civil action , reserves his right to institute it separately or institutes the civil action prior to the criminal
action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under
Articles 32, 33, 34, and 2176 of the Civil Code of the Philippines arising from the same act or omission of
the accused. (Emphasis supplied)

It is well-settled that the filing of an independent civil action before the prosecution in the criminal action
presents evidence is even far better than a compliance with the requirement of express reservation
(Yakult Philippines v. Court of Appeals, 190 SCRA 357 [1990]). This is precisely what the petitioners
opted to do in this case. However, the private respondents opposed the civil action on the ground that the
same is founded on a delict and not on a quasi-delict as the shooting was not attended by negligence.
What is in dispute therefore is the nature of the petitioner's cause of action.

The nature of a cause of action is determined by the facts alleged in the complaint as constituting the
cause of action (Republic v. Estenzo, 158 SCRA 282 [1988]). The purpose of an action or suit and the
law to govern it is to be determined not by the claim of the party filing the action, made in his argument or
brief, but rather by the complaint itself, its allegations and prayer for relief. (De Tavera v. Philippine
Tuberculosis Society, 112 SCRA 243 [1982]). An examination of the complaint in the present case would
show that the plaintiffs, petitioners herein, are invoking their right to recover damages against the private
respondents for their vicarious responsibility for the injury caused by Benigno Torzuela's act of shooting
and killing Napoleon Dulay, as stated in paragraphs 1 and 2 of the complaint.

Article 2176 of the New Civil Code provides:

Art. 2176. 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 and is governed by the provisions of this Chapter.

Contrary to the theory of private respondents, there is no justification for limiting the scope of Article 2176
of the Civil Code to acts or omissions resulting from negligence. Well-entrenched is the doctrine that
article 2176 covers not only acts committed with negligence, but also acts which are voluntary and
intentional. As far back as the definitive case of Elcano v. Hill (77 SCRA 98 [1977]), this Court already
held that:

. . . Article 2176, where it refers to "fault or negligence," covers not only acts "not punishable by law" but
also acts criminal in character; whether intentional and voluntary or negligent. Consequently, a separate
civil action against the offender in a criminal act, whether or not he is criminally prosecuted and found
guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally,
to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of
the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability
referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of
the Revised Penal Code, whereas the civil liability for the same act considered as quasi-delict only and
not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged
has not happened or has not been committed by the accused. Briefly stated, We here hold, in reiteration
of Garcia, that culpa aquiliana includes voluntary and negligent acts which may be punishable by law.
(Emphasis supplied)

The same doctrine was echoed in the case of Andamo v. Intermediate Appellate Court (191 SCRA 195
[1990]), wherein the Court held:

Article 2176, whenever it refers to "fault or negligence," covers not only acts criminal in character, whether
intentional and voluntary or negligent. Consequently, a civil action lies against the offender in a criminal
act, whether or not he is prosecuted or found guilty or acquitted, provided that the offended party is not
allowed, (if the tortfeasor is actually also charged criminally), to recover damages on both scores, and
would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in
the two cases vary. [citing Virata v. Ochoa, 81 SCRA 472] (Emphasis supplied)

Private respondents submit that the word "intentional" in the Andamo case is inaccurate obiter, and
should be read as "voluntary" since intent cannot be coupled with negligence as defined by Article 365 of
the Revised Penal Code. In the absence of more substantial reasons, this Court will not disturb the above
doctrine on the coverage of Article 2176.

Private respondents further aver that Article 33 of the New Civil Code applies only to injuries intentionally
committed pursuant to the ruling in Marcia v. CA (120 SCRA 193 [1983]), and that the actions for
damages allowed thereunder are ex-delicto. However, the term "physical injuries" in Article 33 has
already been construed to include bodily injuries causing death (Capuno v. Pepsi-Cola Bottling Co. of the
Philippines, 121 Phil. 638 [1965); Carandang v. Santiago, 97 Phil. 94 [1955]). It is not the crime of
physical injuries defined in the Revised Penal Code. It includes not only physical injuries but also
consummated, frustrated, and attempted homicide (Madeja v. Caro, 126 SCRA 293 [1983]). Although in
the Marcia case (supra), it was held that no independent civil action may be filed under Article 33 where
the crime is the result of criminal negligence, it must be noted however, that Torzuela, the accused in the
case at bar, is charged with homicide, not with reckless imprudence, whereas the defendant in Marcia
was charged with reckless imprudence. Therefore, in this case, a civil action based on Article 33 lies.

Private respondents also contend that their liability is subsidiary under the Revised Penal Code; and that
they are not liable for Torzuela's act which is beyond the scope of his duties as a security guard. It having
been established that the instant action is not ex-delicto, petitioners may proceed directly against
Torzuela and the private respondents. Under Article 2180 of the New Civil Code as aforequoted, when an
injury is caused by the negligence of the employee, there instantly arises a presumption of law that there
was negligence on the part of the master or employer either in the selection of the servant or employee,
or in supervision over him after selection or both (Layugan v. Intermediate Appellate Court, 167 SCRA
363 [1988]). The liability of the employer under Article 2180 is direct and immediate; it is not conditioned
upon prior recourse against the negligent employee and a prior showing of the insolvency of such
employee (Kapalaran Bus Lines v. Coronado, 176 SCRA 792 [1989]). Therefore, it is incumbent upon the
private respondents to prove that they exercised the diligence of a good father of a family in the selection
and supervision of their employee.

Since Article 2176 covers not only acts of negligence but also acts which are intentional and voluntary, it
was therefore erroneous on the part of the trial court to dismiss petitioner's complaint simply because it
failed to make allegations of attendant negligence attributable to private respondents.

With respect to the issue of whether the complaint at hand states a sufficient cause of action, the general
rule is that the allegations in a complaint are sufficient to constitute a cause of action against the
defendants if, admitting the facts alleged, the court can render a valid judgment upon the same in
accordance with the prayer therein. A cause of action exist if the following elements are present, namely:
(1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of
damages (Del Bros Hotel Corporation v. CA, 210 SCRA 33 [1992]); Development Bank of the Philippines
v. Pundogar, 218 SCRA 118 [1993])

This Court finds, under the foregoing premises, that the complaint sufficiently alleged an actionable
breach on the part of the defendant Torzuela and respondents SUPERGUARD and/or SAFEGUARD. It is
enough that the complaint alleged that Benigno Torzuela shot Napoleon Dulay resulting in the latter's
death; that the shooting occurred while Torzuela was on duty; and that either SUPERGUARD and/or
SAFEGUARD was Torzuela's employer and responsible for his acts. This does not operate however, to
establish that the defendants below are liable. Whether or not the shooting was actually reckless and
wanton or attended by negligence and whether it was actually done within the scope of Torzuela's duties;
whether the private respondents SUPERGUARD and/or SAFEGUARD failed to exercise the diligence of
a good father of a family; and whether the defendants are actually liable, are questions which can be
better resolved after trial on the merits where each party can present evidence to prove their respective
allegations and defenses. In determining whether the allegations of a complaint are sufficient to support a
cause of action, it must be borne in mind that the complaint does not have to establish or allege the facts
proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits
of the case (Del Bros Hotel Corporation v. CA, supra). If the allegations in a complaint can furnish a
sufficient basis by which the complaint can be maintained, the same should not be dismissed regardless
of the defenses that may be assessed by the defendants (Rava Dev't. Corp. v. CA, 211 SCRA 152 [1992]
citing Consolidated Bank & Trust Corporation v. Court of Appeals, 197 SCRA 663 [1991]). To sustain a
motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not
exist rather than that a claim has been defectively stated, is ambiguous, indefinite or uncertain (Azur v.
Provincial Board, 27 SCRA 50 [1969]). Since the petitioners clearly sustained an injury to their rights
under the law, it would be more just to allow them to present evidence of such injury.

WHEREFORE, premises considered, the petition for review is hereby GRANTED. The decision of the
Court of Appeals as well as the Order of the Regional Trial Court dated April 13, 1989 are hereby
REVERSED and SET ASIDE. Civil Case No. Q-89-1751 is remanded to the Regional Trial Court for trial
on the merits. This decision is immediately executory.

SO ORDERED.

Narvasa, C.J., Regalado, Puno and Mendoza, JJ., concur.


The Lawphil Project - Arellano Law Foundation

Dulay vs. Court of Appeals, 243 SCRA 220
By LLBe:LawLifeBuzzEtcetera
Facts: On December 7, 1988, an altercation between Benigno Torzuela and Atty. Napoleon Dulay
occurred at the Big Bang Sa Alabang, Alabang Village, Muntinlupa as a result of which Benigno
Torzuela, the security guard on duty at the said carnival, shot and killed Atty. Napoleon Dulay. Petitioner
Maria Benita A. Dulay, widow of the deceased Napoleon Dulay, in her own behalf and in behalf of her
minor children, filed an action for damages against Benigno Torzuela and private respondents Safeguard
and/or Superguard, alleged employers of defendant Torzuela. Respondent Superguard filed a Motion to
Dismiss on the ground that the complaint does not state a valid cause of action. Superguard claimed that
Torzuelas act of shooting Dulay was beyond the scope of his duties, and that since the alleged act of
shooting was committed with deliberate intent (dolo), the civil liability therefor is governed by Article 100
of the Revised Penal Code. Superguard further alleged that a complaint for damages based on
negligence under Article 2176 of the New Civil Code, such as the one filed by petitioners, cannot lie,
since the civil liability under Article 2176 applies only to quasi-offenses under Article 365 of the Revised
Penal Code. In addition, the respondent argued that petitioners filing of the complaint is premature
considering that the conviction of Torzuela in a criminal case is a condition sine qua non for the
employers subsidiary liability. Respondent Safeguard also filed a motion praying that it be excluded as
defendant on the ground that defendant Torzuela is not one of its employees. Petitioners opposed both
motions, stating that their cause of action against the private respondents is based on their liability under
Article 2180 of the New Civil Code. Respondent judge declared that the complaint was one for damages
founded on crimes punishable under Articles 100 and 103 of the Revised Penal Code as distinguished
from those arising from, quasi-delict.

Issues:

(1) Whether or not Torzuela s act of shooting Napoleon Dulay constitutes a quasi-delict actionable
under Article 2176 of the New Civil Code;

(2) Whether or not Article 33 of the New Civil Code applies only to injuries intentionally committed; and

(3) Whether or not the liability or respondents is subsidiary under the Revised Penal Code.

Held:

(1) Yes. Article 2176 of the New 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 and is governed
by the provisions of this Chapter. Contrary to the theory of private respondents, there is no justification
for limiting the scope of Article 2176 of the Civil Code to acts or omissions resulting from negligence.
Well-entrenched is the doctrine that article 2176 covers not only acts committed with negligence, but also
acts which are voluntary and intentional.

(2) No. The term physical injuries in Article 33 has already been construed to include bodily injuries
causing death. It is not the crime of physical injuries defined in the Revised Penal Code. It includes not
only physical injuries but also consummated, frustrated, and attempted homicide. Although in the Marcia
case, it was held that no independent civil action may be filed under Article 33 where the crime is the
result of criminal negligence, it must be noted, however, that Torzuela, the accused in the case at bar, is
charged with homicide, not with reckless imprudence, whereas the defendant in Marcia was charged with
reckless imprudence. Therefore, in this case, a civil action based on Article 33 lies.

(3) No. Under Article 2180 of the New Civil Code, when an injury is caused by the negligence of the
employee, there instantly arises a presumption of law that there was negligence on the part of the master
or employer either in the selection of the servant or employee, or in supervision over him after selection or
both. The liability of the employer under Article 2180 is direct and immediate; it is not conditioned upon
prior recourse against the negligent employee and a prior showing of the insolvency of such employee.
Therefore, it is incumbent upon the private respondents to prove that they exercised the diligence of a
good father of a family in the selection and supervision of their employee.

DULAY V CA (SAFEGUARD,SUPERGUARD)
243 SCRA 220BIDIN; April 3, 1995


torts & damages
A2010 - 117 -

prof. casis
FACTS
- Benigno Torzuela, , a security guard on duty at the"Big Bang sa Alabang," and Atty. Napoleon Dulay
hadan altercation. Torzuela shot and killed Atty. Dulay.- Maria Benita Dulay, widow of Dulay, filed an
action fordamages against Torzuela and Safeguard Investigationand Security Co., Inc., (SAFEGUARD)
and/or SuperguardSecurity Corp. (SUPERGUARD), alleged employers of defendant Torzuela.
Respondent:
> that Torzuela's act of shooting Dulay was beyond thescope of his duties, and that since the alleged act
of shooting was committed w/ deliberate intent (dolo), thecivil liability is governed by Art 100 of the RPC.>
that a complaint for damages based on negligenceunder Art 2176 (the one filed by petitioners) cannot
lie,since the civil liability under Art 2176 applies only toquasi-offenses under Art 365 of the RPC.> that
petitioners' filing of the complaint is prematureconsidering that the conviction of Torzuela in a criminalcase
is a condition sine qua non for the employer'ssubsidiary liability.>
that Article 33 of the New Civil Code appliesonly to injuries intentionally committed (Marcia vCA)Petitioner
>

the incident resulting in the death of Dulay was dueto the concurring negligence of the defendants.
Torzuela's wanton and reckless discharge of the firearmissued to him by defendant SAFEGUARD
and/orSUPERGUARD was the immediate and proximate causeof the injury, while the negligence of
defendantSAFEGUARD and/or SUPERGUARD consists in its havingfailed to exercise the diligence of a
good father of afamily in the supervision and control of its employee toavoid the injury.> that their cause
of action against the privaterespondents is based on their liability under Article2180> that quasi-delicts
are not limited to acts of negligence but also cover acts that are intentional andvoluntary, citing Andamo
v. IAC. Thus, Torzuela's act of shooting Dulay constitutes a quasi-delict actionableunder Art 2176> that
Torzuela's act of shooting Dulay is alsoactionable under
Art 33
17
and Section 3, Rule 111 of the Rules of Court
18
17
Art. 33. In cases of defamation, fraud,
and physical injuries
, a civilaction for damages, entirely separate and distinct from the criminalaction, may be brought by the
injured party. Such civil action shallproceed independently of the criminal prosecution, and shall require
onlya preponderance of evidence
18
Rule 111.Sec. 3. When civil action may proceed independently - Inthe cases provided for in Articles 32,
33, 34 and 2176 of the Civil Code of the Philippines, the independent civil-action which has been
reserved may
ISSUE
WON civil action can proceed independently of thecriminal action
HELD
YES- Rule 111 of the Rules on Criminal Procedure provides:"Sec 1. Institution of criminal and civil
actions.When a criminal action is instituted,
the civil actionfor the recovery of civil liability is impliedlyinstituted with the criminal action
, unless theoffended party waives the civil action, reserves hisright to institute it separately, or institutes
the civilaction prior to the criminal action.Such civil action includes recovery of indemnityunder the
Revised Penal Code, and damages underArticles 32, 33, 34, and 2176 of the Civil Code of thePhilippines
arising from the same act or omission of the accused."- It is well-settled that the filing of an independent
civilaction before the prosecution in the criminal actionpresents evidence is even far better than a
compliancewith the requirement of an express reservation. This isprecisely what the petitioners opted to
do in this case.- The term
"physical injuries"
in
Article 33
hasalready been construed to
include bodily injuriescausing death
(Capuno v. Pepsi-Cola Bottling Co;Carandang v. Santiago). It is not the crime of physicalinjuries defined
in the Revised Penal Code.
It includesnot only physical injuries but also consummated,frustrated, and attempted homicide
(Madeja v.Caro).- Although in the Marcia case, it was held that noindependent civil action may be filed
under Article 33where the crime is the result of criminal negligence, itmust be noted however, that
Torzuela, the accused inthe case at bar, is charged with homicide, not withreckless imprudence, whereas
the defendant in Marciawas charged with reckless imprudence.
Therefore, inthis case, a civil action based on Article 33 lies.



Today is Monday, November 25, 2013


Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-12986 March 31, 1966

THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the HEIRS OF DOMINGA ONG,
petitioners-appellants,
vs.
CALTEX (PHIL.), INC., MATEO BOQUIREN and THE COURT OF APPEALS, respondents-appellees.

Ross, Selph, Carrascoso and Janda for the respondents.
Bernabe Africa, etc. for the petitioners.

MAKALINTAL., J.:

This case is before us on a petition for review of the decision of the Court of Appeals, which affirmed that
of the Court of First Instance of Manila dismissing petitioners' second amended complaint against
respondents.

The action is for damages under Articles 1902 and 1903 of the old Civil Code. It appears that in the
afternoon of March 18, 1948 a fire broke out at the Caltex service station at the corner of Antipolo street
and Rizal Avenue, Manila. It started while gasoline was being hosed from a tank truck into the
underground storage, right at the opening of the receiving tank where the nozzle of the hose was
inserted. The fire spread to and burned several neighboring houses, including the personal properties and
effects inside them. Their owners, among them petitioners here, sued respondents Caltex (Phil.), Inc. and
Mateo Boquiren, the first as alleged owner of the station and the second as its agent in charge of
operation. Negligence on the part of both of them was attributed as the cause of the fire.

The trial court and the Court of Appeals found that petitioners failed to prove negligence and that
respondents had exercised due care in the premises and with respect to the supervision of their
employees.

The first question before Us refers to the admissibility of certain reports on the fire prepared by the Manila
Police and Fire Departments and by a certain Captain Tinio of the Armed Forces of the Philippines.
Portions of the first two reports are as follows:

1. Police Department report:

Investigation disclosed that at about 4:00 P.M. March 18, 1948, while Leandro Flores was transferring
gasoline from a tank truck, plate No. T-5292 into the underground tank of the Caltex Gasoline Station
located at the corner of Rizal Avenue and Antipolo Street, this City, an unknown Filipino lighted a
cigarette and threw the burning match stick near the main valve of the said underground tank. Due to the
gasoline fumes, fire suddenly blazed. Quick action of Leandro Flores in pulling off the gasoline hose
connecting the truck with the underground tank prevented a terrific explosion. However, the flames
scattered due to the hose from which the gasoline was spouting. It burned the truck and the following
accessorias and residences.

2. The Fire Department report:

In connection with their allegation that the premises was (sic) subleased for the installation of a coca-cola
and cigarette stand, the complainants furnished this Office a copy of a photograph taken during the fire
and which is submitted herewith. it appears in this picture that there are in the premises a coca-cola
cooler and a rack which according to information gathered in the neighborhood contained cigarettes and
matches, installed between the gasoline pumps and the underground tanks.

The report of Captain Tinio reproduced information given by a certain Benito Morales regarding the
history of the gasoline station and what the chief of the fire department had told him on the same subject.

The foregoing reports were ruled out as "double hearsay" by the Court of Appeals and hence
inadmissible. This ruling is now assigned as error. It is contended: first, that said reports were admitted by
the trial court without objection on the part of respondents; secondly, that with respect to the police report
(Exhibit V-Africa) which appears signed by a Detective Zapanta allegedly "for Salvador Capacillo," the
latter was presented as witness but respondents waived their right to cross-examine him although they
had the opportunity to do so; and thirdly, that in any event the said reports are admissible as an exception
to the hearsay rule under section 35 of Rule 123, now Rule 130.

The first contention is not borne out by the record. The transcript of the hearing of September 17, 1953
(pp. 167-170) shows that the reports in question, when offered as evidence, were objected to by counsel
for each of respondents on the ground that they were hearsay and that they were "irrelevant, immaterial
and impertinent." Indeed, in the court's resolution only Exhibits J, K, K-5 and X-6 were admitted without
objection; the admission of the others, including the disputed ones, carried no such explanation.

On the second point, although Detective Capacillo did take the witness stand, he was not examined and
he did not testify as to the facts mentioned in his alleged report (signed by Detective Zapanta). All he said
was that he was one of those who investigated "the location of the fire and, if possible, gather witnesses
as to the occurrence, and that he brought the report with him. There was nothing, therefore, on which he
need be cross-examined; and the contents of the report, as to which he did not testify, did not thereby
become competent evidence. And even if he had testified, his testimony would still have been
objectionable as far as information gathered by him from third persons was concerned.

Petitioners maintain, however, that the reports in themselves, that is, without further testimonial evidence
on their contents, fall within the scope of section 35, Rule 123, which provides that "entries in official
records made in the performance of his duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated."

There are three requisites for admissibility under the rule just mentioned: (a) that the entry was made by a
public officer, or by another person specially enjoined by law to do so; (b) that it was made by the public
officer in the performance of his duties, or by such other person in the performance of a duty specially
enjoined by law; and (c) that the public officer or other person had sufficient knowledge of the facts by him
stated, which must have been acquired by him personally or through official information (Moran,
Comments on the Rules of Court, Vol. 3 [1957] p. 398).

Of the three requisites just stated, only the last need be considered here. Obviously the material facts
recited in the reports as to the cause and circumstances of the fire were not within the personal
knowledge of the officers who conducted the investigation. Was knowledge of such facts, however,
acquired by them through official information? As to some facts the sources thereof are not even
identified. Others are attributed to Leopoldo Medina, referred to as an employee at the gas station were
the fire occurred; to Leandro Flores, driver of the tank truck from which gasoline was being transferred at
the time to the underground tank of the station; and to respondent Mateo Boquiren, who could not,
according to Exhibit V-Africa, give any reason as to the origin of the fire. To qualify their statements as
"official information" acquired by the officers who prepared the reports, the persons who made the
statements not only must have personal knowledge of the facts stated but must have the duty to give
such statements for record.1

The reports in question do not constitute an exception to the hearsay rule; the facts stated therein were
not acquired by the reporting officers through official information, not having been given by the informants
pursuant to any duty to do so.

The next question is whether or not, without proof as to the cause and origin of the fire, the doctrine of res
ipsa loquitur should apply so as to presume negligence on the part of appellees. Both the trial court and
the appellate court refused to apply the doctrine in the instant case on the grounds that "as to (its)
applicability ... in the Philippines, there seems to he nothing definite," and that while the rules do not
prohibit its adoption in appropriate cases, "in the case at bar, however, we find no practical use for such
doctrine." The question deserves more than such summary dismissal. The doctrine has actually been
applied in this jurisdiction, in the case of Espiritu vs. Philippine Power and Development Co. (CA-G.R. No.
3240-R, September 20, 1949), wherein the decision of the Court of Appeals was penned by Mr. Justice
J.B.L. Reyes now a member of the Supreme Court.

The facts of that case are stated in the decision as follows:

In the afternoon of May 5, 1946, while the plaintiff-appellee and other companions were loading grass
between the municipalities of Bay and Calauan, in the province of Laguna, with clear weather and without
any wind blowing, an electric transmission wire, installed and maintained by the defendant Philippine
Power and Development Co., Inc. alongside the road, suddenly parted, and one of the broken ends hit
the head of the plaintiff as he was about to board the truck. As a result, plaintiff received the full shock of
4,400 volts carried by the wire and was knocked unconscious to the ground. The electric charge coursed
through his body and caused extensive and serious multiple burns from skull to legs, leaving the bone
exposed in some parts and causing intense pain and wounds that were not completely healed when the
case was tried on June 18, 1947, over one year after the mishap.

The defendant therein disclaimed liability on the ground that the plaintiff had failed to show any specific
act of negligence, but the appellate court overruled the defense under the doctrine of res ipsa loquitur.
The court said:

The first point is directed against the sufficiency of plaintiff's evidence to place appellant on its defense.
While it is the rule, as contended by the appellant, that in case of noncontractual negligence, or culpa
aquiliana, the burden of proof is on the plaintiff to establish that the proximate cause of his injury was the
negligence of the defendant, it is also a recognized principal that "where the thing which caused injury,
without fault of the injured person, is under the exclusive control of the defendant and the injury is such as
in the ordinary course of things does not occur if he having such control use proper care, it affords
reasonable evidence, in the absence of the explanation, that the injury arose from defendant's want of
care."

And the burden of evidence is shifted to him to establish that he has observed due care and diligence.
(San Juan Light & Transit Co. v. Requena, 244, U.S. 89, 56 L. ed. 680.) This rule is known by the name
of res ipsa loquitur (the transaction speaks for itself), and is peculiarly applicable to the case at bar, where
it is unquestioned that the plaintiff had every right to be on the highway, and the electric wire was under
the sole control of defendant company. In the ordinary course of events, electric wires do not part
suddenly in fair weather and injure people, unless they are subjected to unusual strain and stress or there
are defects in their installation, maintenance and supervision; just as barrels do not ordinarily roll out of
the warehouse windows to injure passersby, unless some one was negligent. (Byrne v. Boadle, 2 H & Co.
722; 159 Eng. Reprint 299, the leading case that established that rule). Consequently, in the absence of
contributory negligence (which is admittedly not present), the fact that the wire snapped suffices to raise a
reasonable presumption of negligence in its installation, care and maintenance. Thereafter, as observed
by Chief Baron Pollock, "if there are any facts inconsistent with negligence, it is for the defendant to
prove."

It is true of course that decisions of the Court of Appeals do not lay down doctrines binding on the
Supreme Court, but we do not consider this a reason for not applying the particular doctrine of res ipsa
loquitur in the case at bar. Gasoline is a highly combustible material, in the storage and sale of which
extreme care must be taken. On the other hand, fire is not considered a fortuitous event, as it arises
almost invariably from some act of man. A case strikingly similar to the one before Us is Jones vs. Shell
Petroleum Corporation, et al., 171 So. 447:

Arthur O. Jones is the owner of a building in the city of Hammon which in the year 1934 was leased to the
Shell Petroleum Corporation for a gasoline filling station. On October 8, 1934, during the term of the
lease, while gasoline was being transferred from the tank wagon, also operated by the Shell Petroleum
Corporation, to the underground tank of the station, a fire started with resulting damages to the building
owned by Jones. Alleging that the damages to his building amounted to $516.95, Jones sued the Shell
Petroleum Corporation for the recovery of that amount. The judge of the district court, after hearing the
testimony, concluded that plaintiff was entitled to a recovery and rendered judgment in his favor for
$427.82. The Court of Appeals for the First Circuit reversed this judgment, on the ground the testimony
failed to show with reasonable certainty any negligence on the part of the Shell Petroleum Corporation or
any of its agents or employees. Plaintiff applied to this Court for a Writ of Review which was granted, and
the case is now before us for decision.1wph1.t

In resolving the issue of negligence, the Supreme Court of Louisiana held:

Plaintiff's petition contains two distinct charges of negligence one relating to the cause of the fire and
the other relating to the spreading of the gasoline about the filling station.

Other than an expert to assess the damages caused plaintiff's building by the fire, no witnesses were
placed on the stand by the defendant.

Taking up plaintiff's charge of negligence relating to the cause of the fire, we find it established by the
record that the filling station and the tank truck were under the control of the defendant and operated by
its agents or employees. We further find from the uncontradicted testimony of plaintiff's witnesses that fire
started in the underground tank attached to the filling station while it was being filled from the tank truck
and while both the tank and the truck were in charge of and being operated by the agents or employees
of the defendant, extended to the hose and tank truck, and was communicated from the burning hose,
tank truck, and escaping gasoline to the building owned by the plaintiff.

Predicated on these circumstances and the further circumstance of defendant's failure to explain the
cause of the fire or to show its lack of knowledge of the cause, plaintiff has evoked the doctrine of res ipsa
loquitur. There are many cases in which the doctrine may be successfully invoked and this, we think, is
one of them.

Where the thing which caused the injury complained of is shown to be under the management of
defendant or his servants and the accident is such as in the ordinary course of things does not happen if
those who have its management or control use proper care, it affords reasonable evidence, in absence of
explanation by defendant, that the accident arose from want of care. (45 C.J. #768, p. 1193).

This statement of the rule of res ipsa loquitur has been widely approved and adopted by the courts of last
resort. Some of the cases in this jurisdiction in which the doctrine has been applied are the following, viz.:
Maus v. Broderick, 51 La. Ann. 1153, 25 So. 977; Hebert v. Lake Charles Ice, etc., Co., 111 La. 522, 35
So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505; Willis v. Vicksburg, etc., R. Co., 115 La. 63, 38 So. 892;
Bents v. Page, 115 La. 560, 39 So. 599.

The principle enunciated in the aforequoted case applies with equal force here. The gasoline station, with
all its appliances, equipment and employees, was under the control of appellees. A fire occurred therein
and spread to and burned the neighboring houses. The persons who knew or could have known how the
fire started were appellees and their employees, but they gave no explanation thereof whatsoever. It is a
fair and reasonable inference that the incident happened because of want of care.

In the report submitted by Captain Leoncio Mariano of the Manila Police Department (Exh. X-1 Africa) the
following appears:

Investigation of the basic complaint disclosed that the Caltex Gasoline Station complained of occupies a
lot approximately 10 m x 10 m at the southwest corner of Rizal Avenue and Antipolo. The location is
within a very busy business district near the Obrero Market, a railroad crossing and very thickly populated
neighborhood where a great number of people mill around t

until

gasoline

tever be theWactjvities of these peopleor lighting a cigarette cannot be excluded and this constitute a
secondary hazard to its operation which in turn endangers the entire neighborhood to conflagration.

Furthermore, aside from precautions already taken by its operator the concrete walls south and west
adjoining the neighborhood are only 2-1/2 meters high at most and cannot avoid the flames from leaping
over it in case of fire.

Records show that there have been two cases of fire which caused not only material damages but
desperation and also panic in the neighborhood.

Although the soft drinks stand had been eliminated, this gasoline service station is also used by its
operator as a garage and repair shop for his fleet of taxicabs numbering ten or more, adding another risk
to the possible outbreak of fire at this already small but crowded gasoline station.

The foregoing report, having been submitted by a police officer in the performance of his duties on the
basis of his own personal observation of the facts reported, may properly be considered as an exception
to the hearsay rule. These facts, descriptive of the location and objective circumstances surrounding the
operation of the gasoline station in question, strengthen the presumption of negligence under the doctrine
of res ipsa loquitur, since on their face they called for more stringent measures of caution than those
which would satisfy the standard of due diligence under ordinary circumstances. There is no more
eloquent demonstration of this than the statement of Leandro Flores before the police investigator. Flores
was the driver of the gasoline tank wagon who, alone and without assistance, was transferring the
contents thereof into the underground storage when the fire broke out. He said: "Before loading the
underground tank there were no people, but while the loading was going on, there were people who went
to drink coca-cola (at the coca-cola stand) which is about a meter from the hole leading to the
underground tank." He added that when the tank was almost filled he went to the tank truck to close the
valve, and while he had his back turned to the "manhole" he, heard someone shout "fire."

Even then the fire possibly would not have spread to the neighboring houses were it not for another
negligent omission on the part of defendants, namely, their failure to provide a concrete wall high enough
to prevent the flames from leaping over it. As it was the concrete wall was only 2-1/2 meters high, and
beyond that height it consisted merely of galvanized iron sheets, which would predictably crumple and
melt when subjected to intense heat. Defendants' negligence, therefore, was not only with respect to the
cause of the fire but also with respect to the spread thereof to the neighboring houses.

There is an admission on the part of Boquiren in his amended answer to the second amended complaint
that "the fire was caused through the acts of a stranger who, without authority, or permission of answering
defendant, passed through the gasoline station and negligently threw a lighted match in the premises."
No evidence on this point was adduced, but assuming the allegation to be true certainly any
unfavorable inference from the admission may be taken against Boquiren it does not extenuate his
negligence. A decision of the Supreme Court of Texas, upon facts analogous to those of the present
case, states the rule which we find acceptable here. "It is the rule that those who distribute a dangerous
article or agent, owe a degree of protection to the public proportionate to and commensurate with a
danger involved ... we think it is the generally accepted rule as applied to torts that 'if the effects of the
actor's negligent conduct actively and continuously operate to bring about harm to another, the fact that
the active and substantially simultaneous operation of the effects of a third person's innocent, tortious or
criminal act is also a substantial factor in bringing about the harm, does not protect the actor from liability.'
(Restatement of the Law of Torts, vol. 2, p. 1184, #439). Stated in another way, "The intention of an
unforeseen and unexpected cause, is not sufficient to relieve a wrongdoer from consequences of
negligence, if such negligence directly and proximately cooperates with the independent cause in the
resulting injury." (MacAfee, et al. vs. Traver's Gas Corporation, 153 S.W. 2nd 442.)

The next issue is whether Caltex should be held liable for the damages caused to appellants. This issue
depends on whether Boquiren was an independent contractor, as held by the Court of Appeals, or an
agent of Caltex. This question, in the light of the facts not controverted, is one of law and hence may be
passed upon by this Court. These facts are: (1) Boquiren made an admission that he was an agent of
Caltex; (2) at the time of the fire Caltex owned the gasoline station and all the equipment therein; (3)
Caltex exercised control over Boquiren in the management of the state; (4) the delivery truck used in
delivering gasoline to the station had the name of CALTEX painted on it; and (5) the license to store
gasoline at the station was in the name of Caltex, which paid the license fees. (Exhibit T-Africa; Exhibit U-
Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-Africa).

In Boquiren's amended answer to the second amended complaint, he denied that he directed one of his
drivers to remove gasoline from the truck into the tank and alleged that the "alleged driver, if one there
was, was not in his employ, the driver being an employee of the Caltex (Phil.) Inc. and/or the owners of
the gasoline station." It is true that Boquiren later on amended his answer, and that among the changes
was one to the effect that he was not acting as agent of Caltex. But then again, in his motion to dismiss
appellants' second amended complaint the ground alleged was that it stated no cause of action since
under the allegations thereof he was merely acting as agent of Caltex, such that he could not have
incurred personal liability. A motion to dismiss on this ground is deemed to be an admission of the facts
alleged in the complaint.

Caltex admits that it owned the gasoline station as well as the equipment therein, but claims that the
business conducted at the service station in question was owned and operated by Boquiren. But Caltex
did not present any contract with Boquiren that would reveal the nature of their relationship at the time of
the fire. There must have been one in existence at that time. Instead, what was presented was a license
agreement manifestly tailored for purposes of this case, since it was entered into shortly before the
expiration of the one-year period it was intended to operate. This so-called license agreement (Exhibit 5-
Caltex) was executed on November 29, 1948, but made effective as of January 1, 1948 so as to cover
the date of the fire, namely, March 18, 1948. This retroactivity provision is quite significant, and gives rise
to the conclusion that it was designed precisely to free Caltex from any responsibility with respect to the
fire, as shown by the clause that Caltex "shall not be liable for any injury to person or property while in the
property herein licensed, it being understood and agreed that LICENSEE (Boquiren) is not an employee,
representative or agent of LICENSOR (Caltex)."

But even if the license agreement were to govern, Boquiren can hardly be considered an independent
contractor. Under that agreement Boquiren would pay Caltex the purely nominal sum of P1.00 for the use
of the premises and all the equipment therein. He could sell only Caltex Products. Maintenance of the
station and its equipment was subject to the approval, in other words control, of Caltex. Boquiren could
not assign or transfer his rights as licensee without the consent of Caltex. The license agreement was
supposed to be from January 1, 1948 to December 31, 1948, and thereafter until terminated by Caltex
upon two days prior written notice. Caltex could at any time cancel and terminate the agreement in case
Boquiren ceased to sell Caltex products, or did not conduct the business with due diligence, in the
judgment of Caltex. Termination of the contract was therefore a right granted only to Caltex but not to
Boquiren. These provisions of the contract show the extent of the control of Caltex over Boquiren. The
control was such that the latter was virtually an employee of the former.

Taking into consideration the fact that the operator owed his position to the company and the latter could
remove him or terminate his services at will; that the service station belonged to the company and bore its
tradename and the operator sold only the products of the company; that the equipment used by the
operator belonged to the company and were just loaned to the operator and the company took charge of
their repair and maintenance; that an employee of the company supervised the operator and conducted
periodic inspection of the company's gasoline and service station; that the price of the products sold by
the operator was fixed by the company and not by the operator; and that the receipts signed by the
operator indicated that he was a mere agent, the finding of the Court of Appeals that the operator was an
agent of the company and not an independent contractor should not be disturbed.

To determine the nature of a contract courts do not have or are not bound to rely upon the name or title
given it by the contracting parties, should thereby a controversy as to what they really had intended to
enter into, but the way the contracting parties do or perform their respective obligations stipulated or
agreed upon may be shown and inquired into, and should such performance conflict with the name or title
given the contract by the parties, the former must prevail over the latter. (Shell Company of the
Philippines, Ltd. vs. Firemens' Insurance Company of Newark, New Jersey, 100 Phil. 757).

The written contract was apparently drawn for the purpose of creating the apparent relationship of
employer and independent contractor, and of avoiding liability for the negligence of the employees about
the station; but the company was not satisfied to allow such relationship to exist. The evidence shows that
it immediately assumed control, and proceeded to direct the method by which the work contracted for
should be performed. By reserving the right to terminate the contract at will, it retained the means of
compelling submission to its orders. Having elected to assume control and to direct the means and
methods by which the work has to be performed, it must be held liable for the negligence of those
performing service under its direction. We think the evidence was sufficient to sustain the verdict of the
jury. (Gulf Refining Company v. Rogers, 57 S.W. 2d, 183).

Caltex further argues that the gasoline stored in the station belonged to Boquiren. But no cash invoices
were presented to show that Boquiren had bought said gasoline from Caltex. Neither was there a sales
contract to prove the same.

As found by the trial court the Africas sustained a loss of P9,005.80, after deducting the amount of
P2,000.00 collected by them on the insurance of the house. The deduction is now challenged as
erroneous on the ground that Article 2207 of the New Civil Code, which provides for the subrogation of
the insurer to the rights of the insured, was not yet in effect when the loss took place. However,
regardless of the silence of the law on this point at that time, the amount that should be recovered be
measured by the damages actually suffered, otherwise the principle prohibiting unjust enrichment would
be violated. With respect to the claim of the heirs of Ong P7,500.00 was adjudged by the lower court on
the basis of the assessed value of the property destroyed, namely, P1,500.00, disregarding the testimony
of one of the Ong children that said property was worth P4,000.00. We agree that the court erred, since it
is of common knowledge that the assessment for taxation purposes is not an accurate gauge of fair
market value, and in this case should not prevail over positive evidence of such value. The heirs of Ong
are therefore entitled to P10,000.00.

Wherefore, the decision appealed from is reversed and respondents-appellees are held liable solidarily to
appellants, and ordered to pay them the aforesaid sum of P9,005.80 and P10,000.00, respectively, with
interest from the filing of the complaint, and costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala, Bengzon, J.P., Zaldivar and
Sanchez, JJ., concur.
Dizon, J., took no part.

Footnotes

1Thus, for instance, the record of a justice of the peace of marriage certificates transmitted to him by the
corresponding priest is admissible. The justice of the peace has no personal knowledge of the marriage,
but it was reported to him by a priest whose duty it was, under the law, to make the report for record
purposes. Similarly, the tax records of a provincial assessor are admissible even if the assessments were
made by subordinates. So also are entries of marriages made by a municipal treasurer in his official
record, because he acquires knowledge thereof by virtue of a statutory duty on the part of those
authorized to solemnize marriages to send a copy of each marriage contract solemnized by them to the
local civil registrar. (See Moran, Comments on the Rules of Court, Vol. 3 [1957] pp. 389-395.)


The Lawphil Project - Arellano Law Foundation
Africa vs. Caltex, 16 SCRA 448
By LLBe:LawLifeBuzzEtcetera
Facts: In the afternoon of March 18, 1948, a fire broke out at the Caltex service station at the corner of
Antipolo St. and Rizal Avenue, Manila. It started while gasoline was being hosed from a tank truck into
the underground storage, right at the opening of the receiving tank where the nozzle of the hose was
inserted. The fire spread to and burned several houses. The owners, among them petitioner spouses
Africa and heirs of Ong, sued respondents Caltex Phil., Inc., the alleged owner of the station, and Mateo
Boquiren, the agent in charge of its operation, for damages. The CFI and CA found that the petitioners
failed to prove negligence of the respondents, and that there was due care in the premises and with
respect to the supervision of their employees.

Issue: Whether or not, without proof as to the cause and origin of the fire, the doctrine of res ipsa loquitur
should apply so as to presume negligence on the part of the respondents.

Held: Yes. Res ipsa loquitur literally means the thing or transaction speaks for itself. For the doctrine of
res ipsa loquitur to apply, the following requisites should be present: (a) the accident is of a kind which
ordinarily does not occur in the absence of someones negligence; (b) it is caused by an instrumentality
within the exclusive control of the defendant or defendants; and (c) the possibility of contributing conduct
which would make the plaintiff responsible is eliminated. In the case at bar, the gasoline station, with all
its appliances, equipment and employees, was under the control of respondents. A fire occurred therein
and spread to and burned the neighboring houses. The persons who knew or could have known how the
fire started were respondents and their employees, but they gave no explanation thereof whatsoever. It is
a fair and reasonable inference that the incident happened because of want of care. The negligence of
the employees was the proximate cause of the fire, which in the ordinary course of things does not
happen. Therefore, the petitioners are entitled to the award for damages.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21749 September 29, 1967
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,
vs.
LUZON STEVEDORING CORPORATION, defendant-appellant.
Office of the Solicitor General for plaintiff-appellee.
H. San Luis and L.V. Simbulan for defendant-appellant.


REYES, J.B.L., J .:
The present case comes by direct appeal from a decision of the Court of First Instance of Manila
(Case No. 44572) adjudging the defendant-appellant, Luzon Stevedoring Corporation, liable in damages
to the plaintiff-appellee Republic of the Philippines.
In the early afternoon of August 17, 1960, barge L-1892, owned by the Luzon Stevedoring
Corporation was being towed down the Pasig river by tugboats "Bangus" and "Barbero"
1
also belonging
to the same corporation, when the barge rammed against one of the wooden piles of the Nagtahan bailey
bridge, smashing the posts and causing the bridge to list. The river, at the time, was swollen and the
current swift, on account of the heavy downpour of Manila and the surrounding provinces on August 15
and 16, 1960.
Sued by the Republic of the Philippines for actual and consequential damage caused by its
employees, amounting to P200,000 (Civil Case No. 44562, CFI of Manila), defendant Luzon Stevedoring
Corporation disclaimed liability therefor, on the grounds that it had exercised due diligence in the
selection and supervision of its employees; that the damages to the bridge were caused by force
majeure; that plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is an obstruction to
navigation.
After due trial, the court rendered judgment on June 11, 1963, holding the defendant liable for the
damage caused by its employees and ordering it to pay to plaintiff the actual cost of the repair of the
Nagtahan bailey bridge which amounted to P192,561.72, with legal interest thereon from the date of the
filing of the complaint.
Defendant appealed directly to this Court assigning the following errors allegedly committed by the
court a quo, to wit:
I The lower court erred in not holding that the herein defendant-appellant had exercised the
diligence required of it in the selection and supervision of its personnel to prevent damage or
injury to others.1awphl.nt
II The lower court erred in not holding that the ramming of the Nagtahan bailey bridge by barge
L-1892 was caused by force majeure.
III The lower court erred in not holding that the Nagtahan bailey bridge is an obstruction, if not
a menace, to navigation in the Pasig river.
IV The lower court erred in not blaming the damage sustained by the Nagtahan bailey bridge
to the improper placement of the dolphins.
V The lower court erred in granting plaintiff's motion to adduce further evidence in chief after it
has rested its case.
VI The lower court erred in finding the plaintiff entitled to the amount of P192,561.72 for
damages which is clearly exorbitant and without any factual basis.
However, it must be recalled that the established rule in this jurisdiction is that when a party
appeals directly to the Supreme Court, and submits his case there for decision, he is deemed to have
waived the right to dispute any finding of fact made by the trial Court. The only questions that may be
raised are those of law (Savellano vs. Diaz, L-17441, July 31, 1963; Aballe vs. Santiago, L-16307, April
30, 1963; G.S.I.S. vs. Cloribel, L-22236, June 22, 1965). A converso, a party who resorts to the Court of
Appeals, and submits his case for decision there, is barred from contending later that his claim was
beyond the jurisdiction of the aforesaid Court. The reason is that a contrary rule would encourage the
undesirable practice of appellants' submitting their cases for decision to either court in expectation of
favorable judgment, but with intent of attacking its jurisdiction should the decision be unfavorable (Tyson
Tan, et al. vs. Filipinas Compaia de Seguros) et al., L-10096, Res. on Motion to Reconsider, March 23,
1966). Consequently, we are limited in this appeal to the issues of law raised in the appellant's brief.
Taking the aforesaid rules into account, it can be seen that the only reviewable issues in this
appeal are reduced to two:
1) Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan
bridge was in law caused by fortuitous event or force majeure, and
2) Whether or not it was error for the Court to have permitted the plaintiff-appellee to introduce
additional evidence of damages after said party had rested its case.
As to the first question, considering that the Nagtahan bridge was an immovable and stationary
object and uncontrovertedly provided with adequate openings for the passage of water craft, including
barges like of appellant's, it is undeniable that the unusual event that the barge, exclusively controlled by
appellant, rammed the bridge supports raises a presumption of negligence on the part of appellant or its
employees manning the barge or the tugs that towed it. For in the ordinary course of events, such a thing
does not happen if proper care is used. In Anglo American Jurisprudence, the inference arises by what is
known as the "res ipsa loquitur" rule (Scott vs. London Docks Co., 2 H & C 596; San Juan Light & Transit
Co. vs. Requena, 224 U.S. 89, 56 L. Ed., 680; Whitwell vs. Wolf, 127 Minn. 529, 149 N.W. 299; Bryne vs.
Great Atlantic & Pacific Tea Co., 269 Mass. 130; 168 N.E. 540; Gribsby vs. Smith, 146 S.W. 2d 719).
The appellant strongly stresses the precautions taken by it on the day in question: that it assigned
two of its most powerful tugboats to tow down river its barge L-1892; that it assigned to the task the more
competent and experienced among its patrons, had the towlines, engines and equipment double-checked
and inspected; that it instructed its patrons to take extra precautions; and concludes that it had done all it
was called to do, and that the accident, therefore, should be held due to force majeure or fortuitous event.
These very precautions, however, completely destroy the appellant's defense. For caso
fortuito or force majeure (which in law are identical in so far as they exempt an obligor from liability)
2
by
definition, are extraordinary events not foreseeable or avoidable, "events that could not be foreseen, or
which, though foreseen, were inevitable" (Art. 1174, Civ. Code of the Philippines). It is, therefore, not
enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must
be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility
to foresee the same: "un hecho no constituye caso fortuito por la sola circunstancia de que su existencia
haga mas dificil o mas onerosa la accion diligente del presento ofensor" (Peirano Facio, Responsibilidad
Extra-contractual, p. 465; Mazeaud Trait de la Responsibilite Civil, Vol. 2, sec. 1569). The very measures
adopted by appellant prove that the possibility of danger was not only foreseeable, but actually foreseen,
and was not caso fortuito.
Otherwise stated, the appellant, Luzon Stevedoring Corporation, knowing and appreciating the
perils posed by the swollen stream and its swift current, voluntarily entered into a situation involving
obvious danger; it therefore assured the risk, and can not shed responsibility merely because the
precautions it adopted turned out to be insufficient. Hence, the lower Court committed no error in holding
it negligent in not suspending operations and in holding it liable for the damages caused.
It avails the appellant naught to argue that the dolphins, like the bridge, were improperly located.
Even if true, these circumstances would merely emphasize the need of even higher degree of care on
appellant's part in the situation involved in the present case. The appellant, whose barges and tugs travel
up and down the river everyday, could not safely ignore the danger posed by these allegedly improper
constructions that had been erected, and in place, for years.
On the second point: appellant charges the lower court with having abused its discretion in the
admission of plaintiff's additional evidence after the latter had rested its case. There is an insinuation that
the delay was deliberate to enable the manipulation of evidence to prejudice defendant-appellant.
We find no merit in the contention. Whether or not further evidence will be allowed after a party
offering the evidence has rested his case, lies within the sound discretion of the trial Judge, and this
discretion will not be reviewed except in clear case of abuse.
3

In the present case, no abuse of that discretion is shown. What was allowed to be introduced, after
plaintiff had rested its evidence in chief, were vouchers and papers to support an item of P1,558.00
allegedly spent for the reinforcement of the panel of the bailey bridge, and which item already appeared in
Exhibit GG. Appellant, in fact, has no reason to charge the trial court of being unfair, because it was also
able to secure, upon written motion, a similar order dated November 24, 1962, allowing reception of
additional evidence for the said defendant-appellant.
4

WHEREFORE, finding no error in the decision of the lower Court appealed from, the same is
hereby affirmed. Costs against the defendant-appellant.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Bengzon, J.P. J., on leave, took no part.
Footnotes
1
The lead-tugboat "Bangus" was pulling the barge, while the tugboat "Barbero" was holding or
restraining it at the back.
2
Lasam vs. Smith, 45 Phil. 661.
3
Lopez vs. Liboro, 81 Phil. 429.
4
p. 89, Record on Appeal.

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee vs. LUZON STEVEDORINGCORPORATION,
defendant-applellant [1967]

Aug. 17, 1960: barge L-1892 owned by Luzon Stevedoring Corp. (LSC) was beingtowed down the Pasig
River by said corporations tugboats, Bangus & Barbero. Bargehit one of the wooden piles of the
Nagtahan bailey bridge, smashing the posts & causing the bridge to list/tilt. The river was swollen & had
swift current then due tothe heavy downpour in Manila & surrounding provinces the previous days.

RP sued LSC for actual & consequential damages caused by its employees amountingto P200k.

LSC denied liability claiming that:1.it exercised due diligence in selecting its supervisors &
employees2.the damages were caused by force majeure3.RP has no capacity to sue4.the Nagtahan
Bailey Bridge is an obstruction to navigation.

CFI: LSC liable for damages caused by employees & ordered to pay actual cost of repair amounting to
P192,561.72 w/legal interest from date of filing complaint.

On appeal to the SC, LSC raised some questions of fact w/c of course the SC cantdecide since its
limited to questions of law.
Issues & Ratio:1.WON the collision was caused by a fortuitous event/force majeure. NO.

Note that the bridge is immovable & stationary w/adequate openings for the passageof water craft such
as LSCs barge. It is undeniable that a barge exclusivelycontrolled by appellant rammed the bridge
supports the presumption of negligenceon the part of the person manning the barge or the tugs that
towed it since in theordinary course of events, such does not happen if proper care is used. Res
ipsaloquitur.

LSC claims it took certain precautions on the day in question: 2 of its most powerfultugboats were
assigned to tow the barge, the more competent & experiencedpatrons had the towlines, engines &
equipment double-checked & inspected andthese patrons were instructed to take extra precautions &
concludes that id had doneall that it was called to do. But these very precautions destroy their defense of
forcemajeure. Fortuitous events are defined as extraordinary events not foreseeable oravoidable or
events that could not be foreseen or w/c though foreseen wereinevitable (CC Art. 1174). Mere difficulty to
foresee the happening is not equivalentto an impossibility to foresee. By taking these precautions, LSC
proved that thepossibility of danger was not only foreseeable but actually foreseen & was not casofortuito.
They knew the perils posed by swollen stream & its swift current yet theyvoluntarily entered into the
situation involving obvious danger. It assumed the risk & thus, it cant shed responsibility merely because
the precautions it adopted wereinsufficient.

Even if the bridge was improperly located, fact remains that it has been there formany years and LSC
cant safely ignore the danger it poses, if any. Thesecircumstances merely emphasize the need of even
higher degree of care on theirpart.
2.WON the lower court abused its discretion in admitting RPs additionalevidence after it rested its case.
NO.

LSC is trying to insinuate that this was done deliberately to manipulate the evidenceto prejudice said
corporation.

Admission of additional evidence after resting the case lies w/in the sound discretionof the trial judge &
this cant be reviewed except in clear case of abuse.

No abuse of discretion was shown since additional evidence included vouchers & papers to support an
item of P1,558.00 spent for the reinforcement of the baileybridge which already appeared in a previous
exhibit. Besides, LSC also did the same it presented additional evidence even after it has rested its case
so theres noreason to charge the trial court of being unfair.
Holding:
CFI decision affirmed.

THIRD DIVISION
[G.R. No. 120639. September 25, 1998]

BPI EXPRESS CARD CORPORATION, petitioner, vs. COURT OF APPEALS and RICARDO J.
MARASIGAN, respondents.
D E C I S I O N
KAPUNAN, J.:

The question before this Court is whether private respondent can recover moral damages arising from the
cancellation of his credit card by petitioner credit card corporation.

The facts of the case are as stated in the decision of the respondent court,[1] to wit:

The case arose from the dishonor of the credit card of the plaintiff Atty. Ricardo J. Marasigan by Cafe
Adriatico, a business establishment accredited with the defendant-appellant BPI Express Card
Corporation (BECC for brevity) on December 8, 1989 when the plaintiff entertained some guests thereat.

The records of this case show that plaintiff, who is a lawyer by profession was a complimentary member
of BECC from February 1988 to February 1989 and was issued Credit Card No. 100-012-5534 with a
credit limit of P3,000.00 and with a monthly billing every 27th of the month (Exh. N), subject to the terms
and conditions stipulated in the contract (Exh. 1-b). His membership was renewed for another year or
until February 1990 and the credit limit was increased to P5,000.00 (Exh. A). The plaintiff oftentimes
exceeded his credit limits (Exhs. I, I-1 to I-12) but this was never taken against him by the defendant and
even his mode of paying his monthly bills in check was tolerated. Their contractual relations went on
smoothly until his statement of account for October, 1989 amounting to P8,987.84 was not paid in due
time. The plaintiff admitted having inadvertently failed to pay his account for the said month because he
was in Quezon province attending to some professional and personal commitments. He was informed by
his secretary that defendant was demanding immediate payment of his outstanding account, was
requiring him to issue a check for P15,000.00 which would include his future bills, and was threatening to
suspend his credit card. Plaintiff issued Far East Bank and Trust Co. Check No. 494675 in the amount of
P15,000.00, postdated December 15, 1989 which was received on November 23, 1989 by Tess Lorenzo,
an employee of the defendant (Exhs. J and J-1), who in turn gave the said check to Jeng Angeles, a co-
employee who handles the account of the plaintiff. The check remained in the custody of Jeng Angeles.
Mr. Roberto Maniquiz, head of the collection department of defendant was formally informed of the
postdated check about a week later. On November 28, 1989, defendant served plaintiff a letter by
ordinary mail informing him of the temporary suspension of the privileges of his credit card and the
inclusion of his account number in their Caution List. He was also told to refrain from further use of his
credit card to avoid any inconvenience/embarrassment and that unless he settles his outstanding account
with the defendant within 5 days from receipt of the letter, his membership will be permanently cancelled
(Exh. 3). There is no showing that the plaintiff received this letter before December 8, 1989. Confident
that he had settled his account with the issuance of the postdated check, plaintiff invited some guests on
December 8, 1989 and entertained them at Caf Adriatico. When he presented his credit card to Caf
Adriatico for the bill amounting to P735.32, said card was dishonored. One of his guests, Mary Ellen
Ringler, paid the bill by using her own credit card, a Unibankard (Exhs. M, M-1 and M-2).

In a letter addressed to the defendant dated December 12, 1989, plaintiff requested that he be sent the
exact billing due him as of December 15, 1989, to withhold the deposit of his postdated check and that
said check be returned to him because he had already instructed his bank to stop the payment thereof as
the defendant violated their agreement that the plaintiff issue the check to the defendant to cover his
account amounting to only P8,987.84 on the condition that the defendant will not suspend the effectivity
of the card (Exh. D). A letter dated December 16, 1989 was sent by the plaintiff to the manager of
FEBTC, Ramada Branch, Manila requesting the bank to stop the payment of the check (Exhs. E, E-1).
No reply was received by plaintiff from the defendant to his letter dated December 12, 1989. Plaintiff sent
defendant another letter dated March 12, 1990 reminding the latter that he had long rescinded and
cancelled whatever arrangement he entered into with defendant and requesting for his correct billing, less
the improper charges and penalties, and for an explanation within five (5) days from receipt thereof why
his card was dishonored on December 8, 1989 despite assurance to the contrary by defendant's
personnel-in-charge, otherwise the necessary court action shall be filed to hold defendant responsible for
the humiliation and embarrassment suffered by him (Exh. F). Plaintiff alleged further that after a few
days, a certain Atty. Albano, representing himself to be working with office of Atty. Lopez, called him
inquiring as to how the matter can be threshed out extrajudicially but the latter said that such is a serious
matter which cannot be discussed over the phone. The defendant served its final demand to the plaintiff
dated March 21, 1990 requiring him to pay in full his overdue account, including stipulated fees and
charges, within 5 days from receipt thereof or face court action also to replace the postdated check with
cash within the same period or face criminal suit for violation of the Bouncing Check Law (Exh. G/Exh.
13). The plaintiff, in a reply letter dated April 5, 1990 (Exh. H), demanded defendant's compliance with
his request in his first letter dated March 12, 1990 within three (3) days from receipt, otherwise the plaintiff
will file a case against them, x x x.[2]

Thus, on May 7, 1990 private respondent filed a complaint for damages against petitioner before the
Regional Trial Court of Makati, Branch 150, docketed as Civil Case No. 90-1174.

After trial, the trial court ruled for private respondent, finding that herein petitioner abused its right in
contravention of Article 19 of the Civil Code.[3] The dispositive portion of the decision reads:

Wherefore, judgment is hereby rendered ordering the defendant to pay plaintiff the following:

1. P100,000.00 as moral damages;
2. P50,000.00 as exemplary damages; and
3. P20,000.00 by way of attorney's fees.

On the other hand, plaintiff is ordered to pay defendant its outstanding obligation in the amount of
P14,439.41, amount due as of December 15, 1989.[4]

The trial court's ruling was based on its findings and conclusions, to wit:

There is no question that plaintiff had been in default in the payment of his billings for more than two
months, prompting defendant to call him and reminded him of his obligation. Unable to personally talk
with him, this Court is convinced that somehow one or another employee of defendant called him up more
than once.

However, while it is true that, as indicated in the terms and conditions of the application for BPI credit
card, upon failure of the cardholder to pay his outstanding obligation for more than thirty (30) days, the
defendant can automatically suspend or cancel the credit card, that reserved right should not have been
abused, as it was in fact abused, in plaintiff's case. What is more peculiar here is that there have been
admitted communications between plaintiff and defendant prior to the suspension or cancellation of
plaintiff's credit card and his inclusion in the caution list. However, nowhere in any of these
communications was there ever a hint given to plaintiff that his card had already been suspended or
cancelled. In fact, the Court observed that while defendant was trying its best to persuade plaintiff to
update its account and pay its obligation, it had already taken steps to suspend/cancel plaintiff's card and
include him in the caution list. While the Court admires defendant's diplomacy in dealing with its clients, it
cannot help but frown upon the backhanded way defendant dealt with plaintiff's case. For despite Tess
Lorenzo's denial, there is reason to believe that plaintiff was indeed assured by defendant of the
continued honoring of his credit card so long as he pays his obligation of P15,000.00. Worst, upon
receipt of the postdated check, defendant kept the same until a few days before it became due and said
check was presented to the head of the collection department, Mr. Maniquiz, to take steps thereon,
resulting to the embarrassing situation plaintiff found himself in on December 8, 1989. Moreover, Mr.
Maniquiz himself admitted that his request for plaintiff to replace the check with cash was not because it
was a postdated check but merely to tally the payment with the account due.

Likewise, the Court is not persuaded by the sweeping denials made by Tess Lorenzo and her claim that
her only participation was to receive the subject check. Her immediate superior, Mr. Maniquiz testified
that he had instructed Lorenzo to communicate with plaintiff once or twice to request the latter to replace
the questioned check with cash, thus giving support to the testimony of plaintiff's witness, Dolores Quizon,
that it was one Tess Lorenzo who she had talked over the phone regarding plaintiff's account and
plaintiff's own statement that it was this woman who assured him that his card has not yet been and will
not be cancelled/suspended if he would pay defendant the sum of P15,000.00.

Now, on the issue of whether or not upon receipt of the subject check, defendant had agreed that the
card shall remain effective, the Court takes note of the following:

1. An employee of defendant corporation unconditionally accepted the subject check upon its delivery,
despite its being a postdated one; and the amount did not tally with plaintiff's obligation;

2. Defendant did not deny nor controvert plaintiff's claim that all his payments were made in checks;

3. Defendant's main witness, Mr. Maniquiz, categorically stated that the request for plaintiff to replace his
postdated check with cash was merely for the purpose of tallying plaintiff's outstanding obligation with his
payment and not to question the postdated check;

4. That the card was suspended almost a week after receipt of the postdated check;

5. That despite the many instances that defendant could have informed plaintiff over the phone of the
cancellation or suspension of his credit card, it did not do so, which could have prevented the incident of
December 8, 1989, the notice allegedly sent thru ordinary mail is not only unreliable but takes a long time.
Such action as suspension of credit card must be immediately relayed to the person affected so as to
avoid embarrassing situations.

6. And that the postdated check was deposited on December 20, 1989.

In view of the foregoing observations, it is needless to say that there was indeed an arrangement
between plaintiff and the defendant, as can be inferred from the acts of the defendant's employees, that
the subject credit card is still good and could still be used by the plaintiff as it would be honored by the
duly accredited establishment of defendant.[5]

Not satisfied with the Regional Trial Court's decision, petitioner appealed to the Court of Appeals, which,
in a decision promulgated on March 9, 1995 ruled in its dispositive portion:

WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED with the
MODIFICATION that the defendant-appellant shall pay the plaintiff-appellee the following: P50,000.00 as
moral damages; P25,000.00 as exemplary damages; and P10,000.00 by way of attorney's fees.

SO ORDERED.[6]

Hence, the present petition on the following assignment of errors:

I

THE LOWER COURT ERRED IN DECLARING THAT THERE WAS INDEED AN AGREEMENT OR
ARRANGEMENT ENTERED INTO BETWEEN THE PARTIES WHEREIN THE DEFENDANT REQUIRED
THE PLAINTIFF TO ISSUE A POSTDATED CHECK IN ITS FAVOR IN THE AMOUNT OF P15,000.00
AS PAYMENT FOR HIS OVERDUE ACCOUNTS, WITH THE CONDITION THAT THE PLAINTIFF'S
CREDIT CARD WILL NOT BE SUSPENDED OR CANCELLED.

II

THE LOWER COURT ERRED IN HOLDING DEFENDANT LIABLE FOR DAMAGES AND ATTORNEY'S
FEES ARISING OUT FROM THE DISHONOR OF THE PLAINTIFF'S CREDIT CARD.[7]

We find the petition meritorious.

The first issue to be resolved is whether petitioner had the right to suspend the credit card of the private
respondent.

Under the terms and conditions of the credit card, signed by the private respondent, any card with
outstanding balances after thirty (30) days from original billing/statement shall automatically be
suspended, thus:

PAYMENT OF CHARGES - BECC shall furnish the Cardholder a monthly statement of account made
through the use of the CARD and the Cardholder agrees that all charges made through the use of the
CARD shall be paid by the Cardholder on or before the last day for payments, which is twenty (20) days
from the date of the said statement of account, and such payment due date may be changed to an earlier
date if the Cardholder's account is considered overdue and/or with balances in excess of the approved
credit limit; or to such other date as may be deemed proper by the CARD issuer with notice to the
Cardholder on the same monthly statement of account. If the last day for payment falls on a Saturday,
Sunday or Holiday, the last day for payment automatically becomes the last working day prior to said
payment date. However, notwithstanding the absence or lack of proof of service of the statement of
charges to the Cardholder, the latter shall pay any or all charges made through the use of the CARD
within thirty (30) days from the date or dates thereof. Failure of Cardholder to pay any and all charges
made through the CARD within the payment period as stated in the statement of charges or within thirty
(30) days from actual date or dates whichever occur earlier, shall render him in default without the
necessity of demand from BECC, which the Cardholder expressly waives. These charges or balance
thereof remaining unpaid after the payment due date indicated on the monthly statement of account shall
bear interest at the rate of 3% per month and an additional penalty fee equivalent to another 3% of the
amount due for every month or a fraction of a month's delay. PROVIDED, that if there occurs any change
on the prevailing market rates. BECC shall have the option to adjust the rate of interest and/or penalty fee
due on the outstanding obligation with prior notice to the Cardholder.

xxx xxx xxx

Any CARD with outstanding balances unpaid after thirty (30) days from original billing/statement date
shall automatically be suspended, and those with accounts unpaid after sixty (60) days from said original
billing/statement date shall automatically be cancelled, without prejudice to BECC's right to suspend or
cancel any CARD any time and for whatever reason. In case of default in his obligation as provided for in
the preceding paragraph, Cardholder shall surrender his CARD to BECC and shall in addition to the
interest and penalty charges aforementioned, pay the following liquidated damages and/or fees (a) a
collection fee of 25% of the amount due if the account is referred to a collection agency or attorney; (b) a
service fee of P100 for every dishonored check issued by the Cardholder in payment of his account, with
prejudice, however, to BECC's right of considering Cardholder's obligation unpaid, cable cost for
demanding payment or advising cancellation of membership shall also be for Cardholder's account; and
(c) a final fee equivalent to 25% of the unpaid balance, exclusive of litigation expenses and judicial costs,
if the payment of the account is enforced through court action.[8]

The aforequoted provision of the credit card cannot be any clearer. By his own admission, private
respondent made no payment within thirty days for his original billing/statement dated 27 September
1989. Neither did he make payment for his original billing/statement dated 27 October 1989.
Consequently, as early as 28 October 1989, thirty days from the non-payment of his billing dated 27
September 1989, petitioner corporation could automatically suspend his credit card.

The next issue is whether prior to the suspension of private respondent's credit card on 28 November
1989, the parties entered into an agreement whereby the card could still be used and would be duly
honored by duly accredited establisments.

We agree with the findings of the respondent court, that there was an arrangement between the parties,
wherein the petitioner required the private respondent to issue a check worth P15,000 as payment for the
latter's billings. However, we find that the private respondent was not able to comply with his obligation.

As the testimony of private respondent himself bears out, the agreement was for the immediate payment
of the outstanding account:

Q In said statement of account that you are supposed to pay the P8,974.84 the charge of interest and
penalties, did you note that?

A Yes, sir. I noted the date.

Q When?

A When I returned from the Quezon province, sir.

Q When?

A I think November 22, sir.

Q So that before you used again the credit card you were not able to pay immediately this P8,987.84 in
cash?

A I paid P15,000.00, sir.

Q My question Mr. Witness is, did you pay this P8,987.84 in charge of interest and penalties
immediately in cash?

A In cash no, but in check, sir.

Q You said that you noted the word "immediately" in bold letters in your statement of account, why did
you not pay immediately?

A Because I received that late, sir.

Q Yes, on November 22 when you received from the secretary of the defendant telling you to pay the
principal amount of P8,987.84, why did you not pay?

A There was a communication between me and the defendant, I was required to pay P8,000.00 but I
paid in check for P15,000.00, sir.

Q Do you have any evidence to show that the defendant required you to pay in check for P15,000.00?

A Yes, sir.

Q Where is it?

A It was by telecommunication, sir.

Q So there is no written communication between you and the defendant?

A There was none, sir.

Q There is no written agreement which says that P8,987.84 should be paid for P15,000.00 in check,
there is none?

A Yes, no written agreement, sir.

Q And you as a lawyer you know that a check is not considered as cash specially when it is postdated
sent to the defendant?

A That is correct, sir.

Clearly, the purpose of the arrangement between the parties on November 22, 1989, was for the
immediate payment of the private respondent's outstanding account, in order that his credit card would
not be suspended.

As agreed upon by the parties, on the following day, private respondent did issue a check for P15,000.
However, the check was postdated 15 December 1989. Settled is the doctrine that a check is only a
substitute for money and not money, the delivery of such an instrument does not, by itself operate as
payment.[9] This is especially true in the case of a postdated check.

Thus, the issuance by the private respondent of the postdated check was not effective payment. It did
not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner corporation was
therefore justified in suspending his credit card.

Finally, we find no legal and factual basis for private respondent's assertion that in canceling the credit
card of the private respondent, petitioner abused its right under the terms and conditions of the contract.

To find the existence of an abuse of right under Article 19 the following elements must be present: (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.[10]

Time and again this Court has held that good faith is presumed and the burden of proving bad faith is on
the party alleging it.[11] This private respondent failed to do. In fact, the action of the petitioner belies the
existence of bad faith. As early as 28 October 1989, petitioner could have suspended private
respondent's card outright. Instead, petitioner allowed private respondent to use his card for several
weeks. Petitioner had even notified private respondent of the impending suspension of his credit card
and made special accommodations for him for settling his outstanding account. As such, petitioner cannot
be said to have capriciously and arbitrarily canceled the private respondent's credit card.

We do not dispute the findings of the lower court that private respondent suffered damages as a result of
the cancellation of his credit card. However, there is a material distinction between damages and injury.
Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury;
and damages are the recompense or compensation awarded for the damage suffered. Thus, there can
be damage without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty. In such cases, the consequences must be borne by the injured person alone, the law affords
no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These
situations are often called damnum absque injuria.[12]

In other words, in order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff -
a concurrence of injury to the plaintiff and legal responsibility by the person causing it. The underlying
basis for the award of tort damages is the premise that an individual was injured in contemplation of law.
Thus, there must first be a breach of some duty and the imposition of liability for that breach before
damages may be awarded;[13] and the breach of such duty should be the proximate cause of the injury.

We therefore disagree with the ruling of the respondent court that the dishonor of the credit card of the
private respondent by Caf Adriatico is attributable to petitioner for its willful or gross neglect to inform the
private respondent of the suspension of his credit card, the unfortunate consequence of which brought
social humiliation and embarrassment to the private respondent.[14]

It was petitioner's failure to settle his obligation which caused the suspension of his credit card and
subsequent dishonor at Caf Adriatico. He can not now pass the blame to the petitioner for not notifying
him of the suspension of his card. As quoted earlier, the application contained the stipulation that the
petitioner could automatically suspend a card whose billing has not been paid for more than thirty days.
Nowhere is it stated in the terms and conditions of the application that there is a need of notice before
suspension may be effected as private respondent claims.[15]

This notwithstanding, on November 28, 1989, the day of the suspension of private respondent's card,
petitioner sent a letter by ordinary mail notifying private respondent that his card had been temporarily
suspended. Under the Rules on Evidence, there is a disputable presumption that letters duly directed
and mailed were received on the regular course of mail.[16] Aside from the private respondent's bare
denial, he failed to present evidence to rebut the presumption that he received said notice. In fact upon
cross examination, private respondent admitted that he did received the letter notifying him of the
cancellation:

Q Now you were saying that there was a first letter sent to you by the defendant?

A Your letter, sir.

Q Was that the first letter that you received?

A Yes, sir.

Q Is it that there was a communication first between you and the defendant?

A There was none, sir. I received a cancellation notice but that was after November 27.[17]

As it was private respondent's own negligence which was the proximate cause of his embarrassing and
humiliating experience, we find the award of damages by the respondent court clearly unjustified. We
take note of the fact that private respondent has not yet paid his outstanding account with petitioner.

IN VIEW OF THE FOREGOING, the decision of the Court of Appeals ordering petitioner to pay private
respondent P100,000.00 as moral damages, P50,000.00 as exemplary damages and P20,000.00 as
attorney's fees, is SET ASIDE. Private respondent is DIRECTED to pay his outstanding obligation with
the petitioner in the amount of P14,439.41.

SO ORDERED.

Narvasa, C.J., (Chairman), and Romero, J., concur.
Purisima, J., no part, being signatory to CA decision.


BPI EXPRESS CARD CORPORATION,
petitioner, vs.
COURT OF APPEALS and RICARDO J. MARASIGAN,respondents.G.R. No. 120639. September 25,
1998FACTS:
Marasigan, a lawyer, is a BPI credit card holder. His contractual relationswith BPI went on smoothly until
October 1989, when his statement of accountamounting to P8,987.84 was not paid in due time. BPI
demanded immediatepayment, and required him to issue a check in favor of BPI, otherwise his card
willbe suspended. Marasigan issued a post-dated check (PDC) in favor of BPI.BPI, having been informed
of the PDC only a week after receipt, already sent a letterto Marasigan, informing him of the temporary
suspension of the privileges of hiscard. He was also told to refrain from using his card to avoid
anyinconvenience/embarrassment and that unless he settles his outstanding accountwithin 5 days from
receipt of the letter, his membership will be permanentlycancelled.On the other hand, confident that he
had settled his account with the issuance of the postdated check, Marasigan invited some guests at Caf
Adriatico (there isalso no showing that he received the letter from BPI before he went to CafAdriatico).
When he presented his credit card to paythe bill, the it wasdishonored and one of his guests paid the bill
by using her own credit card.Marasigan asked BPI to withhold the deposit of his postdated check and to
returnthe said check to him because according to him,
BPI violated theiragreement that once Marasigan issues the check to the to cover hisunpaid account, BPI
will not suspend the effectivity of the card
.Marasigan filed a complaint for damages against BPI before the trial court, and thetrial court ruled in
favor of him. The decision was affirmed by the CA.
ISSUE/S:
1.W/N BPI had the right to suspend the credit card of the Marasigan2.W/N the trial court and CA erred in
holding BPI liable for damages
HELD:
1.YES2.YES
RATIO:
Under the terms and conditions of the credit card, signed by Marasigan, any cardwith outstanding
balances after 30 days from original billing shall automatically besuspended. Marasigan admitted that he
did not pay within 30 days for his originalbilling. BPI could automatically suspend his credit card

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
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.
D E C I S I O N
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 Decision
1
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.
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, plaintiff-appellee the amount
ofP2,000,000.00 as moral damages;
2. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount
ofP1,000,000.00 as exemplary damages;
3. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee 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 Resolution
4
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";
(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 "Eligible-for-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-for-Membership 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.
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 By-Laws 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.
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 non-proprietary 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 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.
Puno, C.J., Chairperson, Corona, Azcuna, Leonardo-de Castro, JJ., concur.
CEBU COUNTRY CLUB, INC. (CCCI) VS ELIZAGAQUE GR 160273 1/182008TORTS/II-INTENTIONAL
TORTS/HUMAN RELATIONS/CATCH ALL PROVISIONS/ABUSE OFRIGHTS ART. 19FACTS
CCCI is a domestic corporation operating as a non-profit and non-stock privatemembership club. (In
1987, San Miguel Corp., a special company proprietary member designatedE (for short), its senir vice
president and operations manager for Visayas and Mindanao, as aspecial non-proprietary member.) In
1996, E filed with CCCI an application for proprietarymembership, endorsed by 2 members of CCCI.
Since it was required for a member to have aproprietary share the price of which was P 5M, the president
of CCCI offered respondent a shareof only P 3.5M. E however, purchased the share of a certain Dr.
Butalid for P 3M. However, hisapplication was deferred. Subsequently, his application was disapproved.
Three letters for reconsideration were sent to the BoD, however, no reply was sent by the latter. Hence, E
filedwith the RTC a complaint for damages. RTC ruled in favor of E. CA affirmed the RTC ruling.Hence,
this petition. (It should be mentioned that the By-Laws of the Corporation provided that hiseligibility as
member required a unanimous vote from the Board of Directors. This provision,however, was not
included in the application form. It was further revealed that among themembers of the BoD, only one
voted his disapproval of the application. This, however, was notmade known to E.)
ISSUE
- Should CCCI be held liable for damages despite the fact that it has the right to choose itsmembers?
HELD
- Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the rightto approve or
disapprove an application for proprietary membership. But such right should not beexercised arbitrarily.
Articles 19 and 21 of the Civil Code on the Chapter on Human Relationsprovide restrictions, thus:Article
19. Every person must, in the exercise of his rights and in the performance of hisduties, 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 iscontrary to morals, good customs or public policy shall
compensate the latter for thedamage.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'srights but also in the performance of one's duties. These standards are
the following: toact with justice; to give everyone his due; and to observe honesty and good faith. Thelaw,
therefore, recognizes a primordial limitation on all rights; that in their exercise, thenorms 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 neverthelessbecome the source of some
illegality. When a right is exercised in a manner whichdoes not conform with the norms enshrined in
Article 19 and results in damage toanother, a legal wrong is thereby committed for which the wrongdoer
must be heldresponsible
. 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 wouldbe proper. (Emphasis in the original)

In rejecting respondents application for proprietary membership, we find that petitioners violatedthe rules
governing human relations, the basic principles to be observed for the rightfulrelationship between human
beings and for the stability of social order. The trial court and theCourt of Appeals aptly held that
petitioners committed fraud and evident bad faith in disapprovingrespondents 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 By-Laws requiring theunanimous vote of the directors present at a special or regular
meeting was not printed on theapplication form respondent filled and submitted to CCCI. What was
printed thereon was theoriginal 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 toeconomic reasons. We find this excuse flimsy and
unconvincing. Such amendment, aside frombeing extremely significant, was introduced way back in 1978
or almost twenty (20) years beforerespondent 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 tocause the printing of an updated application form.It is thus clear that respondent was left
groping in the dark wondering why his application wasdisapproved. He was not even informed that a
unanimous vote of the Board members wasrequired. When he sent a letter for reconsideration and an
inquiry whether there was an objectionto his application, petitioners apparently ignored him. Certainly,
respondent did not deserve thiskind of treatment. Having been designated by San Miguel Corporation as
a special non-proprietary member of CCCI, he should have been treated by petitioners with courtesy
andcivility. 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 toanother, a legal wrong is
committed for which the wrongdoer must be held responsible.
6
It bearsreiterating 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 principledoes not apply when
there is an abuse of a persons right
, as in this case.

Cebu Country Club loses court case
(Sunstar CEBU)
The Supreme Court upheld the decision of the Court of Appeals ordering the CebuCountry Club, Inc. to
pay damages to a businessman whose membership application wasrejected.The court said the club
acted in bad faith in rejecting the applicant, an officer of San Miguel Corp.Chief Justice Reynato Puno,
who wrote the decision of the SC first division, however, modifiedthe decision of the appellate court and
reduced the amount of damages awarded to RicardoElizagaque.Elizagaque was then senior vice
president and operations manager of San Miguel Corp. for Visayas and Mindanao

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 150666 August 3, 2010
LUCIANO BRIONES and NELLY BRIONES, Petitioners,
vs.
JOSE MACABAGDAL, FE D. MACABAGDAL and VERGON REALTY INVESTMENTS
CORPORATION,Respondents.
D E C I S I O N
VILLARAMA, JR., J .:
On appeal under Rule 45 of the 1997 Rules of Civil Procedure, as amended, is the Decision
1
dated
December 11, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 48109 which affirmed the
September 29, 1993 Decision
2
of the Regional Trial Court (RTC) of Makati City, Branch 135, ordering
petitioners Luciano and Nelly Briones to remove the improvements they have made on the disputed
property or to pay respondent-spouses Jose and Fe Macabagdal the prevailing price of the land as
compensation.
The undisputed factual antecedents of the case are as follows:
Respondent-spouses purchased from Vergon Realty Investments Corporation (Vergon) Lot No. 2-R, a
325-square-meter land located in Vergonville Subdivision No. 10 at Las Pias City, Metro Manila and
covered by Transfer Certificate of Title No. 62181 of the Registry of Deeds of Pasay City. On the other
hand, petitioners are the owners of Lot No. 2-S, which is adjacent to Lot No. 2-R.
Sometime in 1984, after obtaining the necessary building permit and the approval of Vergon, petitioners
constructed a house on Lot No. 2-R which they thought was Lot No. 2-S. After being informed of the mix
up by Vergons manager, respondent-spouses immediately demanded petitioners to demolish the house
and vacate the property. Petitioners, however, refused to heed their demand. Thus, respondent-spouses
filed an action to recover ownership and possession of the said parcel of land with the RTC of Makati
City.
3

Petitioners insisted that the lot on which they constructed their house was the lot which was consistently
pointed to them as theirs by Vergons agents over the seven (7)-year period they were paying for the lot.
They interposed the defense of being buyers in good faith and impleaded Vergon as third-party defendant
claiming that because of the warranty against eviction, they were entitled to indemnity from Vergon in
case the suit is decided against them.
4

The RTC ruled in favor of respondent-spouses and found that petitioners house was undoubtedly built on
Lot No. 2-R. The dispositive portion of the trial courts decision reads as follows:
PREMISES CONSIDERED, let judgment be rendered declaring, to wit:
1. That plaintiffs are the owners of Lot No. 2-R of subdivision plan (LRC) Psd-147392 at
Vergonville Subdivision, No. 10, Las Pias, Metro Manila covered by TCT No. 62181 of the
Registry of Deeds of Pasay City on which defendants have constructed their house;
2. Defendants, jointly and severally, are ordered to demolish their house and vacate the premises
and return the possession of the portion of Lot No. 2-R as above-described to plaintiffs within
thirty (30) days from receipt of this decision, or in the alternative, plaintiffs should be
compensated by defendants, jointly and severally, by the payment of the prevailing price of the lot
involved as Lot No. 2-R with an area of 325 square meters which should not be less
than P1,500.00 per square meter, in consideration of the fact that prices of real estate properties
in the area concerned have increased rapidly;
3. Defendants, jointly and severally, pay to plaintiffs for moral damages with plaintiffs plans and
dreams of building their own house on their own lot being severely shattered and frustrated due
to defendants incursion as interlopers of Lot No. 2-R in the sum of P50,000.00;
4. Defendants, jointly and severally, to pay plaintiffs in the amount of P30,000.00 as attorneys
fees; and,
5. to pay the costs of the proceedings.
Defendants counterclaim against plaintiffs is dismissed for lack of merit and with no cause of action.
Defendants third-party complaint against third-party defendant Vergonville Realty and Investments
Corporation is likewise ordered dismissed for lack of cause of action and evidently without merit.
On the other hand, defendants, jointly and severally, are liable for the litigation expenses incurred by
Vergonville Realty by way of counterclaim, which is also proven by the latter with a mere preponderance
of evidence, and are hereby ordered to pay the sum of P20,000.00 as compensatory damage; and
attorneys fees in the sum ofP10,000.00
SO ORDERED.
5

On appeal, the CA affirmed the RTCs finding that the lot upon which petitioners built their house was not
the one (1) which Vergon sold to them. Based on the documentary evidence, such as the titles of the two
(2) lots, the contracts to sell, and the survey report made by the geodetic engineer, petitioners house was
built on the lot of the respondent-spouses.
6
There was no basis to presume that the error was Vergons
fault. Also the warranty against eviction under Article 1548 of the Civil Code was not applicable as there
was no deprivation of property: the lot on which petitioners built their house was not the lot sold to them
by Vergon, which remained vacant and ready for occupation.
7
The CA further ruled that petitioners cannot
use the defense of allegedly being a purchaser in good faith for wrongful occupation of land.
8

Aggrieved, petitioners filed a motion for reconsideration, but it was denied by the appellate court.
9
Hence,
this petition for review on certiorari.
Petitioners raise the following assignment of errors:
I.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE CONTRARY TO LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT IN AFFIRMING THE DECISION OF THE TRIAL
COURT ORDERING PETITIONERS TO DEMOLISH THEIR ONLY HOUSE AND VACATE THE LOT
AND TO PAY MORAL AND COMPENSATORY DAMAGES AS WELL AS ATTORNEYS FEE IN THE
TOTAL AMOUNT OF PS[P] 110,000; AND
II.
THE COURT OF APPEALS SANCTIONED THE DEPARTURE OF THE LOWER COURT FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE
OF THE POWER OF SUPERVISION.
10

In the main, it is petitioners position that they must not bear the damage alone. Petitioners insist that they
relied with full faith and confidence in the reputation of Vergons agents when they pointed the wrong
property to them. Even the President of Vergon, Felix Gonzales, consented to the construction of the
house when he signed the building permit.
11
Also, petitioners are builders in good faith.
12

The petition is partly meritorious.
At the outset, we note that petitioners raise factual issues, which are beyond the scope of a petition for
review on certiorari under Rule 45 of the Rules. Well settled is the rule that the jurisdiction of this Court in
cases brought to it from the CA via a petition for review on certiorari under Rule 45 is limited to the review
of errors of law. The Court is not bound to weigh all over again the evidence adduced by the parties,
particularly where the findings of both the trial court and the appellate court coincide. The resolution of
factual issues is a function of the trial court whose findings on these matters are, as a general rule,
binding on this Court, more so where these have been affirmed by the CA.
13
We note that the CA and
RTC did not overlook or fail to appreciate any material circumstance which, when properly considered,
would have altered the result of the case. Indeed, it is beyond cavil that petitioners mistakenly constructed
their house on Lot No. 2-R which they thought was Lot No. 2-S.
However, the conclusiveness of the factual findings notwithstanding, we find that the trial court
nonetheless erred in outrightly ordering petitioners to vacate the subject property or to pay respondent
spouses the prevailing price of the land as compensation. Article 527
14
of the Civil Code presumes good
faith, and since no proof exists to show that the mistake was done by petitioners in bad faith, the latter
should be presumed to have built the house in good faith.
When a person builds in good faith on the land of another, Article 448 of the Civil Code governs. Said
article provides,
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof. (Emphasis ours.)
The above-cited article covers cases in which the builders, sowers or planters believe themselves to be
owners of the land or, at least, to have a claim of title thereto.
15
The builder in good faith can compel the
landowner to make a choice between appropriating the building by paying the proper indemnity or
obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that
accords with the principle of accession, i.e., that the accessory follows the principal and not the other way
around. However, even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. He must choose one.
16
He cannot, for instance, compel the owner of the building to remove
the building from the land without first exercising either option. It is only if the owner chooses to sell his
land, and the builder or planter fails to purchase it where its value is not more than the value of the
improvements, that the owner may remove the improvements from the land. The owner is entitled to such
remotion only when, after having chosen to sell his land, the other party fails to pay for the same.
17

Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may
have made on the subject property. Articles 546 and 548 of the Civil Code provide,
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have acquired by reason thereof.
ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good
faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no
injury thereby, and if his successor in the possession does not prefer to refund the amount expended.
Consequently, the respondent-spouses have the option to appropriate the house on the subject land after
payment to petitioners of the appropriate indemnity or to oblige petitioners to pay the price of the land,
unless its value is considerably more than the value of the structures, in which case petitioners shall pay
reasonable rent.
In accordance with Depra v. Dumlao,
18
this case must be remanded to the RTC which shall conduct the
appropriate proceedings to assess the respective values of the improvement and of the land, as well as
the amounts of reasonable rentals and indemnity, fix the terms of the lease if the parties so agree, and to
determine other matters necessary for the proper application of Article 448, in relation to Articles 546 and
548, of the Civil Code.
As to the liability of Vergon, petitioners failed to present sufficient evidence to show negligence on
Vergons part. Petitioners claim is obviously one (1) for tort, governed by Article 2176 of the Civil Code,
which provides:
ART. 2176. 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 preexisting contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.
(Emphasis ours.)
Under this provision, it is the plaintiff who has to prove by a preponderance of evidence: (1) the damages
suffered by the plaintiff; (2) the fault or negligence of the defendant or some other person for whose act
he must respond; and (3) the connection of cause and effect between the fault or negligence and the
damages incurred.
19
This the petitioners failed to do. The President of Vergon signed the building permit
as a precondition for its approval by the local government, but it did not guarantee that petitioners were
constructing the structure within the metes and bounds of petitioners lot. The signature of the President
of Vergon on the building permit merely proved that petitioners were authorized to make constructions
within the subdivision project of Vergon. And while petitioners acted in good faith in building their house
on Lot No. 2-R, petitioners did not show by what authority the agents or employees of Vergon were acting
when they pointed to the lot where the construction was made nor was petitioners claim on this matter
corroborated by sufficient evidence.
One (1) last note on the award of damages. Considering that petitioners acted in good faith in building
their house on the subject property of the respondent-spouses, there is no basis for the award of moral
damages to respondent-spouses. Likewise, the Court deletes the award to Vergon of compensatory
damages and attorneys fees for the litigation expenses Vergon had incurred as such amounts were not
specifically prayed for in its Answer to petitioners third-party complaint. Under Article 2208
20
of the Civil
Code, attorneys fees and expenses of litigation are recoverable only in the concept of actual damages,
not as moral damages nor judicial costs. Hence, such must be specifically prayed foras was not done in
this caseand may not be deemed incorporated within a general prayer for "such other relief and remedy
as this court may deem just and equitable."
21
It must also be noted that aside from the following, the body
of the trial courts decision was devoid of any statement regarding attorneys fees. In Scott Consultants &
Resource Development Corporation, Inc. v. Court of Appeals,
22
we reiterated that attorneys fees are not
to be awarded every time a party wins a suit. The power of the court to award attorneys fees under
Article 2208 of the Civil Code demands factual, legal, and equitable justification; its basis cannot be left to
speculation or conjecture. Where granted, the court must explicitly state in the body of the decision, and
not only in the dispositive portion thereof, the legal reason for the award of attorneys fees.1avvphi1
WHEREFORE, the Decision dated December 11, 2000 of the Court of Appeals in CA-G.R. CV No. 48109
is AFFIRMED WITH MODIFICATION. The award of moral damages in favor of respondent-spouses Jose
and Fe Macabagdal and the award of compensatory damages and attorneys fees to respondent Vergon
Realty Investments Corporation are DELETED. The case is REMANDED to the Regional Trial Court of
Makati City, Branch 135, for further proceedings consistent with the proper application of Articles 448,
546 and 548 of the Civil Code, as follows:
1. The trial court shall determine:
a. the present fair price of the respondent-spouses lot;
b. the amount of the expenses spent by petitioners for the building of their house;
c. the increase in value ("plus value") which the said lot may have acquired by reason
thereof; and
d. whether the value of said land is considerably more than that of the house built
thereon.
2. After said amounts shall have been determined by competent evidence, the Regional Trial
Court shall render judgment, as follows:
a. The trial court shall grant the respondent-spouses a period of fifteen (15) days within
which to exercise their option under Article 448 of the Civil Code, whether to appropriate
the house as their own by paying to petitioners either the amount of the expenses spent
by petitioners for the building of the house, or the increase in value ("plus value") which
the said lot may have acquired by reason thereof, or to oblige petitioners to pay the price
of said land. The amounts to be respectively paid by the respondent-spouses and
petitioners, in accordance with the option thus exercised by written notice of the other
party and to the Court, shall be paid by the obligor within fifteen (15) days from such
notice of the option by tendering the amount to the Court in favor of the party entitled to
receive it;
b. The trial court shall further order that if the respondent-spouses exercises the option to
oblige petitioners to pay the price of the land but the latter rejects such purchase
because, as found by the trial court, the value of the land is considerably more than that
of the house, petitioners shall give written notice of such rejection to the respondent-
spouses and to the Court within fifteen (15) days from notice of the respondent-spouses
option to sell the land. In that event, the parties shall be given a period of fifteen (15) days
from such notice of rejection within which to agree upon the terms of the lease, and give
the Court formal written notice of such agreement and its provisos. If no agreement is
reached by the parties, the trial court, within fifteen (15) days from and after the
termination of the said period fixed for negotiation, shall then fix the terms of the lease,
payable within the first five (5) days of each calendar month. The period for the forced
lease shall not be more than two (2) years, counted from the finality of the judgment,
considering the long period of time since petitioners have occupied the subject area. The
rental thus fixed shall be increased by ten percent (10%) for the second year of the
forced lease. Petitioners shall not make any further constructions or improvements on the
house. Upon expiration of the two (2)-year period, or upon default by petitioners in the
payment of rentals for two (2) consecutive months, the respondent-spouses shall be
entitled to terminate the forced lease, to recover their land, and to have the house
removed by petitioners or at the latters expense. The rentals herein provided shall be
tendered by petitioners to the Court for payment to the respondent-spouses, and such
tender shall constitute evidence of whether or not compliance was made within the period
fixed by the Court.
c. In any event, petitioners shall pay the respondent-spouses reasonable compensation
for the occupancy of the respondent-spouses land for the period counted from the year
petitioners occupied the subject area, up to the commencement date of the forced lease
referred to in the preceding paragraph;
d. The periods to be fixed by the trial court in its Decision shall be inextendible, and upon
failure of the party obliged to tender to the trial court the amount due to the obligee, the
party entitled to such payment shall be entitled to an order of execution for the
enforcement of payment of the amount due and for compliance with such other acts as
may be required by the prestation due the obligee.
No costs.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice
WE CONCUR:
CONCHITA CARPIO MORALES
Associate Justice
Chairperson
ARTURO D. BRION
Associate Justice
LUCAS P. BERSAMIN
Associate Justice
ROBERTO A. ABAD
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
CONCHITA CARPIO MORALES
Associate Justice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairpersons Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

LUCIANO BRIONES and NELLY BRIONES v. JOSE MACABAGDAL, FE D. MACABAGDAL and
VERGON REALTY INVESTMENTS CORPORATION
G.R. No. 150666 VILLARAMA, JR.,
J
FACTS:

Respondent-spouses purchased from Vergon Realty Investments Corporation (Vergon) Lot No. 2-R, a
325-square-meter land

petitioners are the owners of Lot No. 2-S, which is adjacent to respondents land

After obtaining the necessary building permit and the approval of Vergon, petitioners constructed a
house on Lot 2-R

which they thought was Lot No. 2-S

Respondent-spouses immediately demanded petitioners to demolish the house and vacate the property

Respondent-spouses filed an action to recover ownership and possession


CA affirmed the RTCs finding


contracts to sell, and the survey report made by the geodetic engineer,
petitioners house was built on the lot of the respondent
-spouses.

CA further ruled that petitioners cannot use the defense of allegedly being a purchaser in good faith for
wrongful occupation of land ISSUE: Whether CA was correct in affirming the decision of the trial court
ordering the petitioner to demolish their only house and vacate the lot and pay damages HELD:

The petition is partly meritorious.

Trial court and ca erred

Article 527
[14]
of the Civil Code presumes good faith, and since no proof exists to show that the mistake was done by
petitioners in bad faith, the latter should be presumed to have built the house in good faith.

When a person builds in good faith on the land of another, Article 448 of the Civil Code governs

The builder in good faith can compel the landowner to make a choice between appropriating the building
by paying the proper indemnity or obliging the builder to pay the price of the land.

The choice belongs to the owner of the land, a rule that accords with the principle of accession,
i.e.
, that the accessory follows the principal and not the other way around.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21438 September 28, 1966
AIR FRANCE, petitioner,
vs.
RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Bengzon Villegas and Zarraga for respondent R. Carrascoso.

SANCHEZ, J .:
The Court of First Instance of Manila
1
sentenced petitioner to pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the
difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these
various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus
P3,000.00 for attorneys' fees; and the costs of suit.
On appeal,
2
the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane
ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with
costs against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:
Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for
Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air
Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From
Manila to Bangkok, plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant
airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words
of the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a
"better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be
expected, refused, and told defendant's Manager that his seat would be taken over his dead
body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino
passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having
a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and
pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of May 26,
1959); and plaintiff reluctantly gave his "first class" seat in the plane.
3

1. The trust of the relief petitioner now seeks is that we review "all the findings"
4
of respondent
Court of Appeals. Petitioner charges that respondent court failed to make complete findings of fact on all
the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to
overturn the appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of
record without expressing therein clearly and distinctly the facts and the law on which it is based".
5
This is
echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly and
distinctly the facts and the law on which it is based";
6
and that "Every decision of the Court of Appeals
shall contain complete findings of fact on all issues properly raised before it".
7

A decision with absolutely nothing to support it is a nullity. It is open to direct attack.
8
The law,
however, solely insists that a decision state the "essential ultimate facts" upon which the court's
conclusion is drawn.
9
A court of justice is not hidebound to write in its decision every bit and piece of
evidence
10
presented by one party and the other upon the issues raised. Neither is it to be burdened with
the obligation "to specify in the sentence the facts" which a party "considered as proved".
11
This is but a
part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be
so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the
Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to
withhold therefrom "any specific finding of facts with respect to the evidence for the defense". Because as
this Court well observed, "There is no law that so requires".
12
Indeed, "the mere failure to specify (in the
decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to
hold the same contrary to the requirements of the provisions of law and the Constitution". It is in this
setting that in Manigque, it was held that the mere fact that the findings "were based entirely on the
evidence for the prosecution without taking into consideration or even mentioning the appellant's side in
the controversy as shown by his own testimony", would not vitiate the judgment.
13
If the court did not
recite in the decision the testimony of each witness for, or each item of evidence presented by, the
defeated party, it does not mean that the court has overlooked such testimony or such item of
evidence.
14
At any rate, the legal presumptions are that official duty has been regularly performed, and
that all the matters within an issue in a case were laid before the court and passed upon by it.
15

Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written
statement of the ultimate facts as found by the court ... and essential to support the decision and
judgment rendered thereon".
16
They consist of the court's "conclusions" with respect to the determinative
facts in issue".
17
A question of law, upon the other hand, has been declared as "one which does not call
for an examination of the probative value of the evidence presented by the parties."
18

2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of
the Court of Appeals.
19
That judgment is conclusive as to the facts. It is not appropriately the business of
this Court to alter the facts or to review the questions of fact.
20

With these guideposts, we now face the problem of whether the findings of fact of the Court of
Appeals support its judgment.
3. Was Carrascoso entitled to the first class seat he claims?
It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first
class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and
agreement of the parties; that said respondent knew that he did not have confirmed reservations for first
class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a
first class ticket was no guarantee that he would have a first class ride, but that such would depend upon
the availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in its brief before the
Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding that
plaintiff had confirmed reservations for, and a right to, first class seats on the "definite" segments of his
journey, particularly that from Saigon to Beirut".
21

And, the Court of Appeals disposed of this contention thus:
Defendant seems to capitalize on the argument that the issuance of a first-class ticket was
no guarantee that the passenger to whom the same had been issued, would be accommodated
in the first-class compartment, for as in the case of plaintiff he had yet to make arrangements
upon arrival at every station for the necessary first-class reservation. We are not impressed by
such a reasoning. We cannot understand how a reputable firm like defendant airplane company
could have the indiscretion to give out tickets it never meant to honor at all. It received the
corresponding amount in payment of first-class tickets and yet it allowed the passenger to be at
the mercy of its employees. It is more in keeping with the ordinary course of business that the
company should know whether or riot the tickets it issues are to be honored or not.
22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention,
thus:
On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question.
Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and
defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows:
Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?
A. That the space is confirmed.
Q. Confirmed for first class?
A. Yes, "first class". (Transcript, p. 169)
x x x x x x x x x
Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that
although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject to
confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence
cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the
testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket
without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the
reservation for a "first class" accommodation for the plaintiff was confirmed. The court cannot believe that
after such confirmation defendant had a verbal understanding with plaintiff that the "first class" ticket
issued to him by defendant would be subject to confirmation in Hongkong.
23

We have heretofore adverted to the fact that except for a slight difference of a few pesos in the
amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the
Court of Appeals in all other respects. We hold the view that such a judgment of affirmance has merged
the judgment of the lower court.
24
Implicit in that affirmance is a determination by the Court of Appeals
that the proceeding in the Court of First Instance was free from prejudicial error and "all questions raised
by the assignments of error and all questions that might have been raised are to be regarded as finally
adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all
error".
25
We reached this policy construction because nothing in the decision of the Court of Appeals on
this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor was
said affirmance by the Court of Appeals upon a ground or grounds different from those which were made
the basis of the conclusions of the trial court.
26

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat,
notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger
is placed in the hollow of the hands of an airline. What security then can a passenger have? It will always
be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and
say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We
have long learned that, as a rule, a written document speaks a uniform language; that spoken word could
be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier,
adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe
the oral evidence intended to defeat the covenants in the ticket.
The foregoing are the considerations which point to the conclusion that there are facts upon which
the Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was
entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight.
27
We
perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as
charged by petitioner.
28
Nor do we subscribe to petitioner's accusation that respondent Carrascoso
"surreptitiously took a first class seat to provoke an issue".
29
And this because, as petitioner states,
Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because from
Saigon I was told again to see the Manager".
30
Why, then, was he allowed to take a first class seat in the
plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?
4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that
Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages
there must be an averment of fraud or bad faith;
31
and that the decision of the Court of Appeals fails to
make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:
3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable
consideration, the latter acting as general agents for and in behalf of the defendant, under which
said contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage
on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as
starting point up to and until plaintiff's return trip to Manila, ... .
4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok,
defendant furnished to the plaintiff First Class accommodation but only after protestations,
arguments and/or insistence were made by the plaintiff with defendant's employees.
5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff
only TouristClass accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff
has been compelled by defendant's employees to leave the First Class accommodation berths at
Bangkok after he was already seated.
6. That consequently, the plaintiff, desiring no repetition of the inconvenience and
embarrassments brought by defendant's breach of contract was forced to take a Pan American
World Airways plane on his return trip from Madrid to Manila.
32

x x x x x x x x x
2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid,
plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental
anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral
damages in the amount of P30,000.00.
33

x x x x x x x x x
The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff
a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract
was breached when petitioner failed to furnish first class transportation at Bangkok; and Third, that there
was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation
berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he suffered
inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety,
wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific
mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn
from the facts and circumstances set forth therein.
34
The contract was averred to establish the relation
between the parties. But the stress of the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed
petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok,
Carrascoso wasousted by petitioner's manager who gave his seat to a white man;
35
and (b) evidence of
bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner. It
is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to
justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An
amendment thereof to conform to the evidence is not even required.
36
On the question of bad faith, the
Court of Appeals declared:
That the plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class
not only without his consent but against his will, has been sufficiently established by plaintiff in his
testimony before the court, corroborated by the corresponding entry made by the purser of the
plane in his notebook which notation reads as follows:
"First-class passenger was forced to go to the tourist class against his will, and that
the captain refused to intervene",
and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The
captain of the plane who was asked by the manager of defendant company at Bangkok to
intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever
contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to
present its manager at Bangkok to testify at the trial of the case, or yet to secure his disposition;
but defendant did neither.
37

The Court of appeals further stated
Neither is there evidence as to whether or not a prior reservation was made by the white
man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all
the seats had already been taken, surely the plaintiff should not have been picked out as the one
to suffer the consequences and to be subjected to the humiliation and indignity of being ejected
from his seat in the presence of others. Instead of explaining to the white man the improvidence
committed by defendant's employees, the manager adopted the more drastic step of ousting the
plaintiff who was then safely ensconsced in his rightful seat. We are strengthened in our belief
that this probably was what happened there, by the testimony of defendant's witness Rafael
Altonaga who, when asked to explain the meaning of the letters "O.K." appearing on the tickets of
plaintiff, said "that the space is confirmed for first class. Likewise, Zenaida Faustino, another
witness for defendant, who was the chief of the Reservation Office of defendant, testified as
follows:
"Q How does the person in the ticket-issuing office know what reservation the passenger
has arranged with you?
A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959)
In this connection, we quote with approval what the trial Judge has said on this point:
Why did the, using the words of witness Ernesto G. Cuento, "white man" have a
"better right" to the seat occupied by Mr. Carrascoso? The record is silent. The defendant
airline did not prove "any better", nay, any right on the part of the "white man" to the "First
class" seat that the plaintiff was occupying and for which he paid and was issued a
corresponding "first class" ticket.
If there was a justified reason for the action of the defendant's Manager in
Bangkok, the defendant could have easily proven it by having taken the testimony of the
said Manager by deposition, but defendant did not do so; the presumption is that
evidence willfully suppressed would be adverse if produced [Sec. 69, par (e), Rules of
Court]; and, under the circumstances, the Court is constrained to find, as it does find, that
the Manager of the defendant airline in Bangkok not merely asked but threatened the
plaintiff to throw him out of the plane if he did not give up his "first class" seat because
the said Manager wanted to accommodate, using the words of the witness Ernesto G.
Cuento, the "white man".
38

It is really correct to say that the Court of Appeals in the quoted portion first transcribed did
not use the term "bad faith". But can it be doubted that the recital of facts therein points to bad
faith? The manager not only prevented Carrascoso from enjoying his right to a first class seat;
worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the
humiliation of having to go to the tourist class compartment - just to give way to another
passenger whose right thereto has not been established. Certainly, this is bad faith. Unless, of
course, bad faith has assumed a meaning different from what is understood in law. For, "bad
faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive
of self-interest or will or for ulterior purpose."
39

And if the foregoing were not yet sufficient, there is the express finding of bad faith in the
judgment of the Court of First Instance, thus:
The evidence shows that the defendant violated its contract of transportation with
plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in
Bangkok went to the extent of threatening the plaintiff in the presence of many
passengers to have him thrown out of the airplane to give the "first class" seat that he
was occupying to, again using the words of the witness Ernesto G. Cuento, a "white man"
whom he (defendant's Manager) wished to accommodate, and the defendant has not
proven that this "white man" had any "better right" to occupy the "first class" seat that the
plaintiff was occupying, duly paid for, and for which the corresponding "first class" ticket
was issued by the defendant to him.
40

5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is
well settled in law.
41
For the willful malevolent act of petitioner's manager, petitioner, his employer, must
answer. Article 21 of the Civil Code says:
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.
In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the
provisions of Article 2219 (10), Civil Code, moral damages are recoverable.
42

6. A contract to transport passengers is quite different in kind and degree from any other
contractual relation.
43
And this, because of the relation which an air-carrier sustains with the public. Its
business is mainly with the travelling public. It invites people to avail of the comforts and advantages it
offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or
malfeasance of the carrier's employees, naturally, could give ground for an action for damages.
Passengers do not contract merely for transportation. They have a right to be treated by the
carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be
protected against personal misconduct, injurious language, indignities and abuses from such employees.
So it is, that any rule or discourteous conduct on the part of employees towards a passenger gives the
latter an action for damages against the carrier.
44

Thus, "Where a steamship company
45
had accepted a passenger's check, it was a breach of
contract and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her
that the check was worthless and demand payment under threat of ejection, though the language used
was not insulting and she was not ejected."
46
And this, because, although the relation of passenger and
carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract may be also
a tort".
47
And in another case, "Where a passenger on a railroad train, when the conductor came to
collect his fare tendered him the cash fare to a point where the train was scheduled not to stop, and told
him that as soon as the train reached such point he would pay the cash fare from that point to destination,
there was nothing in the conduct of the passenger which justified the conductor in using insulting
language to him, as by calling him a lunatic,"
48
and the Supreme Court of South Carolina there held the
carrier liable for the mental suffering of said passenger.1awphl.nt
Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's
action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the
petitioner air carrier a case of quasi-delict. Damages are proper.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus
Q You mentioned about an attendant. Who is that attendant and purser?
A When we left already that was already in the trip I could not help it. So one of the flight
attendants approached me and requested from me my ticket and I said, What for? and she said,
"We will note that you transferred to the tourist class". I said, "Nothing of that kind. That is
tantamount to accepting my transfer." And I also said, "You are not going to note anything there
because I am protesting to this transfer".
Q Was she able to note it?
A No, because I did not give my ticket.
Q About that purser?
A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg
room, I stood up and I went to the pantry that was next to me and the purser was there. He told
me, "I have recorded the incident in my notebook." He read it and translated it to me because
it was recorded in French "First class passenger was forced to go to the tourist class against
his will, and that the captain refused to intervene."
Mr. VALTE
I move to strike out the last part of the testimony of the witness because the best evidence would
be the notes. Your Honor.
COURT
I will allow that as part of his testimony.
49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his
notebook reading "First class passenger was forced to go to the tourist class against his will, and that the
captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is
incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony
on the entry does not come within the proscription of the best evidence rule. Such testimony is
admissible.
49a

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of
the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down.
Statements then, in this environment, are admissible as part of the res gestae.
50
For, they grow "out of
the nervous excitement and mental and physical condition of the declarant".
51
The utterance of the purser
regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster
incident. Its trustworthiness has been guaranteed.
52
It thus escapes the operation of the hearsay rule. It
forms part of the res gestae.
At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It
would have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were
really true that no such entry was made, the deposition of the purser could have cleared up the matter.
We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.
8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant
exemplary damages in contracts and quasi- contracts. The only condition is that defendant should
have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner."
53
The manner of
ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in
addition to moral damages.
54

9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a
similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but
just and equitable that attorneys' fees be given.
55
We do not intend to break faith with the tradition that
discretion well exercised as it was here should not be disturbed.
10. Questioned as excessive are the amounts decreed by both the trial court and the Court of
Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and
P3,000.00 as attorneys' fees. The task of fixing these amounts is primarily with the trial court.
56
The Court
of Appeals did not interfere with the same. The dictates of good sense suggest that we give our
imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof.
57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error.
We accordingly vote to affirm the same. Costs against petitioner. So ordered.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro, JJ., concur.
Bengzon, J.P., J., took no part.
Air France v. Carrascoso
Tags: air france, air france v. carrascoso, carrascoso, damages, digest, quasi-delict, torts

Air France v. Rafael Carrascoso + CA (1966) / Sanchez

Facts
Rafael Carrascoso was part of a group of pilgrims leaving for Lourdes. Air France, through PAL, issued to
Carrascoso a first class round trip ticket. From Manila to Bangkok, he traveled in first class but at
Bangkok, the manager of Air France forced him to vacate his seat, because a "white man" had a "better
right" to it. He refused and even had a heated discussion with the manager but after being pacified by
fellow passengers, he reluctantly gave up the seat.
Air France asserts that the ticket does not represent the true and complete intent and agreement of
the parties, and that the issuance of a first class ticket did not guarantee a first class ride (depends upon
the availability of seats). CFI and CA disposed of this contention.

Issue and Holding
WON Carrascoso was entitled to the first class seat he claims. YES

Ratio
On CA's decision
Air France charges that CA failed to make complete findings of fact on all issues presented. SC says that
so long as CA's decision contains the facts necessary to warrant its conclusions, there is nothing wrong in
withholding any specific finding of facts with respect to the evidence for the defense.

On the seat issue
If a first-class ticket holder is not entitled to a corresponding seat, what security can a passenger have?
It's very easy to strike out the stipulations in the ticket and say that there was a contrary verbal
agreement. There was no explanation as to why he was allowed to take a first class seat before coming
to Bangkok if indeed he had no seat or if someone had a better right to it.

On contract to transport, QD, etc.
This is different in kind and degree from any other contractual obligation because of the relation which an
air carrier sustains with the public. Passengers do not contract merely for transportation as they have a
right to be treated by the employees with kindness, respect, courtesy, consideration. What happened was
a violation of public duty by Air France--a case of QD, so damages are proper. A case was cited wherein
it was said that although the relation of passenger and carrier is contractual in origin and nature, the act
that breaks the K may be also a tort.

On the issue of award of damages
Air France assails CA's award of moral damages, claiming that since Carrascoso's action is based on
breach of contract, there must be an averment of fraud or bad faith in order to avail of said award. While
there was no specific mention of "bad faith," it may be drawn from the facts and circumstances set forth.
Deficiency in the complaint, if any, was cured by evidence.

Allegations in the complaint on this issue:
There was a K to furnish plaintiff a first class passage covering the Bangkok-Teheran leg
This K was breached when Air France failed to furnish first class transpo at Bangkok
There was bad faith when the manager compelled Carrascoso to leave his seat after he was already
seated and to transfer to the tourist class, thereby making him suffer inconvenience, embarrassment,
humiliation, etc.
bad faith - state of mind affirmatively operating with furtive design or with some motive of self-interest or ill
will or for ulterior purposes

See NCC 21. Upon the provisions of NCC 2219 (10), moral damages are recoverable. Exemplary
damages are well awarded also, since NCC gives the court power to grant such in K and QK, with the
condition that the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 100957 January 27, 1994
COCA-COLA BOTTLERS PHILIPPINES, INC., petitioner,
vs.
THE COURT OF APPEALS, CESAR BAUTISTA AND THE HEIRS OF PACIANO B.
BAUTISTA, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Manuel O. Chan Law Offices for private respondents.

ROMERO, J .:
This is a petition for review on certiorari of the decision
1
of the Court of Appeals in CA-GR No. 15858
which affirmed the decision of the Regional Trial Court, Malabon, Metro Manila, Branch 169 in Civil Case
No. 452-MN, entitled "Bautista v. Coca-Cola," an action for specific performance and damages, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendant, ordering the latter:
1. To pay P43,861.48, representing the amount owing the plaintiff's for rentals and
arrears, 1st and 2nd quarters of 1984;
2. To pay P986.88, representing interest at 1 % a month from January 5, 1984 to March
31, 1984, and which interest rate should run up to the time the full amount is paid;
3. To comply with the provisions of the lease contract respecting the period thereof, or in
the alternative;
4. Should defendant refuse to honor the lease contract specifically the provisions
concerning the 10-year period, to pay plaintiffs the amount of P789,606.64, representing
unrealized rental income for the duration of the lease contract;
5. To pay P50,000.00 by way of attorney's fees; and
6. To pay the cost of litigation.
SO ORDERED.
The fact are as follows:
Sometime in 1981, herein petitioner Coca-Cola Bottlers Philippines, Inc. (Coca-Cola for
brevity), through its Sales Supervisor in Malabon, metro Manila, approached private
respondent Cesar B. Bautista to inform him that the company was interested in leasing a
parcel of land belonging to him and his brother, the late Paciano Bautista. A certain
Manaloto, Coca-Cola Sales Supervisor, negotiated the lease of the premises with
respondent Bautista, who wanted the term of the lease to be limited to five (5) years.
However, Coca-Cola insisted on a ten-year period as it planned to put up a warehouse &
sales office in the said place. The result of the negotiations was a contract of lease
executed between the Bautistas as lessors and Coca-Cola as lessee for a period of ten
(10) years from October 1, 1982 to September 30, 1992, renewable for a five-year term
subject to the mutual agreement of the parties.
Since the land leased was partially under water, Coca-Cola filled it up the with ten (10) trucks of filling
materials before constructing a warehouse and sales office. In addition, it installed a water tank and a
gasoline tank. The Malabon Sales Office had 14 route trucks, 7 haulers, and 10 private vehicles to deliver
their goods to its customers. It also had a forklift in handling their products at the warehouse.
Upon the onset of the rainy season in the latter part of June 1983,
Jesus Solis Calderon, Operations Manger of Coca-Cola, received a report from the supervisor of the
Malabon branch that the sales office and the warehouse were sinking, mud was coming up from the
ground and that asphalt pavement was being wiped out. As a result, their trucks were stuck to the ground.
To remedy the situation, Coca-Cola filled up the place with escombro but to no avail because the silt still
continued to seep out of the ground. Calderon then prepared a memorandum addressed to their General
Manager recommending corrective measures to solve the problem. Coca-Cola engaged the services of
San Agustin Construction Corp. and spent the sum of P143,725.00 to arrest the rapid deterioration of the
premises. Despite the steps taken, the site continued to sink. Coca-Cola then consulted another firm,
Industrial Inspection (International), Inc. (IIII) which conducted a test of the soil in the land area. The firm's
report was submitted to the Civil Engineering Office of San Miguel Corporation and the latter estimated
the cost for site development of the area to amount to P904,970.00 a sum far exceeding the allocated
budget.
However, IIII could not assure San Miguel that even if its recommendations were followed and the repairs
undertaken, the ground would stop sinking. San Miguel decided to leave and vacate the place and to
return its stocks back to its Quezon City plant.
Sometime in December 1983, private respondents received a letter from Coca-Cola informing of the
company's intention to terminate the lease agreement. After he met with the managers of Coca-Cola and
with the heirs of Paciano Bautista, Cesar Bautista wrote Coca-Cola that its proposal of terminating the
contract was not acceptable. This was also reiterated in a subsequent letter sent by private respondents'
counsel.
Coca-Cola, however, insisted on turning over the leased premises to private respondents. For failure of
Coca-Cola to pay the rentals on the leased property after December 1983, the Bautistas filed a complaint
against it with the lower court for specific performance and damages.
The trial court ordered Coca-Cola to pay back rentals plus interest. In the event that Coca-Cola did not
wish to comply with the terms of the lease contract, the court ordered it to pay the amount of P789,606.64
representing unrealized rental income for the duration of the lease contract.
Coca-Cola elevated the case to the Court of Appeals, praying for reimbursement of the cost of
improvements and the expenses it had incurred to keep the site from sinking.
The Court of Appeals held that there was no duty on the part of private respondents to fill up the place so
that petitioner could properly use it for the purpose intended. That was the obligation of the petitioner.
It further negated bad faith on the part of the Bautistas and held that their refusal to accede to Coca-
Cola's request for the pre-termination of the lease was justified. The Court of Appeals affirmed the
Regional Trial Court's decision with costs against Coca-Cola. Petitioner filed a Motion for Reconsideration
but the same was denied in a resolution
2
by the Court of Appeals.
Hence, this petition.
Petitioner contends that as lessee, it had been denied its rights to the enjoyment or use of the thing
leased under Art. 1643 of the Civil Code, thereby unjustly exempting respondents from their obligation to
render the same fit for the use intended.
3

Petitioner avers that the ruling of the Court of Appeals exempts, without justification, respondents from
their warranty against hidden defects,
4
and is not in accord with the ruling in Alburo
v. Villanueva
5
wherein this Court held that the lessor has the obligation to make the necessary repairs to
render the premises fit for the use intended.
Lastly, petitioner argues that relevant evidence was ignored by the trial and appellate courts when these
tribunals held that the leased premises had originally been a fishpond and, therefore, it could not possibly
have been unaware of the instability of the leased area's subsurface.
We find petitioner's contentions to be unmeritorious.
Central to the resolution of the issue of whether or not petitioner was justified the pre-terminating the
contract of lease is the determination of the fact of private respondents' alleged bad faith in not informing
petitioner that the land had originally been a fish pond. In its resolution denying petitioner's Motion for
Reconsideration, the Court of Appeals quoted extensively from the testimony on direct examination of
Jesus Solis Calderon, Operations Manager of Coca-Cola, wherein he categorically stated that petitioner
had filled up the premises with ten (10) truck loads of materials.
The appellate court also reproduced the testimony of respondent Cesar Bautista on cross-examination
who stated that during negotiations with
Jose Palma, sales manager of Coca-Cola, the latter advised him against setting a high price for the lease
of the land because it was under water.
The Appellate Court, having found that petitioner was fully aware of the nature and condition of the land
as it, in fact, had even filled it up and sought a lower rental price from private respondents, held that the
latter were not in bad faith when they entered into the contract of lease with petitioner.
We see no reason to disturb this finding of fact by the Court of Appeals, sufficiently supported as it is, by
the evidence on record. It is axiomatic that factual findings of the Court of Appeals are conclusive on the
parties and reviewable us only when the case falls within any of the recognized exceptions, which is not
the situation obtaining in this petition.
6

Petitioner insists that private respondents, as lessors, have the obligation to render the subject premises
fit for the use intended, and in the face of their denial to comply with their duty to make the necessary
repairs, their refusal to accede to petitioner's demand to pre-terminate the contract of lease was
unjustified.
Article 1654, par. 1, of the Civil Code provides that the lessor has the obligation to deliver the leased
premises "in such a condition to render it fit for the use intended." The facts as found by the Court of
Appeals in the present case reveal that petitioner initiated the negotiation to lease the subject land for its
Malabon office. Further, in the contract of lease entered into by the parties, it is expressly stipulated that a
warehouse worth not less than P300,000.00 would be constructed and that "all improvements constructed
by lessee on the leased premises shall belong in full ownership to the lessors at expiration hereof of its
termination for any and all causes whatsoever."
Petitioner's authorized representatives made ocular inspections of the land in 1981 and several times
thereafter until the contract of lease was executed on October 11, 1982. After satisfying themselves that
the subject land would serve their purpose, or, put differently, that the land was indeed fit for the use
intended, petitioner entered into the aforesaid contract of lease. It constructed a warehouse and other
structures worth at least P430,000.00 and used a number of route trucks, haulers and other vehicles,
including a forklift. At the start of the rainy season in June 1983, when the vehicles were getting stuck in
the mud, the warehouse floorings sinking and silt coming out of the sales office floors, petitioner took
steps to remedy the situation and did not make any demand on respondents to make the "necessary
repairs" thereon. This shows that the petitioner did not consider it the duty of respondents at the time, to
solve the problem. Evidently, it tried to do everything it could to continue the lease until it became
financially prohibitive to do so.
It was clearly the intention of the parties, upon entering into the contract of lease, for petitioner to simply
obtain a site, "a flat surface," for the establishment of a Malabon sales office. This was understood and
agreed upon by private respondents. Thus, in accordance with the said contract, petitioner constructed on
the subject land its sales office, warehouse, water tank and gasoline tank. Under these circumstances,
private respondents were under no obligation to make the necessary repairs in order to keep the land
suitable for the purpose for which it had been intended.
Had it been private respondents who constructed the structures on their land and leased the same to
petitioner, the situation would have been different. They would have then the obligation to deliver the said
structures in such a condition as to render them fit for the use intended. However, as lessee/builder,
petitioner had the responsibility to make sure that the foundations of its buildings and the structures were
firm and secure. It should have tested the underground soil before and not after the construction.
Petitioner also argues that the Court of Appeals misapplied the ruling in Alburo v. Villanueva. In this case,
we said:
In support of her claim for reimbursement for expenses in filling in and leveling the lot,
defendant relies on the provisions of paragraph 2 of article 1554 of the Civil Code,
wherein its is provided that the landlord is obliged "during the lease to make all necessary
repairs in order to preserve the thing rented in condition to serve for the purpose to which
it was destined." But, as Manresa points out, this article is strictly limited in its effect to
repairs necessary to preserve the thing rented in a condition suitable to the use agreed
upon (para el uso pactado). A repair implies the putting of something back into the
condition in which it was originally and not an improvement in the condition thereof by
adding something new thereto, unless the new thing be in substitution of something
formerly in existence and is added to preserve the original status of the subject-matter of
the repairs; the filling in of a vacant lot can not be regarded as a repair as the word is
used in this article. (Emphasis supplied)
Petitioner avers that its case is different from Alburo, since what was leased there was a vacant lot
needing filling up, and which was later filled up by the lessee. In the present case, it claims, the lot was
already filled up by private respondents.
The facts show, however, that petitioner filled up the land with 10 trucks of filling materials prior to the
construction of its structures. Thus, we find no logic in petitioner's argument.
Petitioner wants private respondents held liable for their warranty against hidden defects under Articles
1561
7
and 1653
8
of the Civil Code.
Considering that the representatives of the petitioner were given every opportunity to visit and inspect the
premises prior to the execution of the contract of lease, we cannot impute bad faith on the part of
respondents for having allegedly withheld the information that the leased land was a former fishpond.
Furthermore, as found by both the trial court and the Court of Appeals, when petitioner was furnished a
copy of the tax declaration of the property for purposes of registration of the lease contract, it was aware
that the property was described therein as a former fishpond.
This fact was never controverted by petitioner.
It was clearly petitioner's duty to examine and determine the suitability of the land for the use to which it
was to be devoted. Since it is in the business of bottling, manufacturing and marketing soft drinks, nobody
could be in a better position to determine the condition of the site and the facilities needed to operate
such an enterprise. It is late in the day for it to shift this responsibility to the private respondents who
merely provided the site therefor.
Accordingly, private respondents cannot be held liable for the alleged warranty against hidden defects
under Art. 1561 of the Civil Code.
Under the circumstances, the refusal of respondents to accede to petitioner's request for the pre-
termination of the lease being justified, they are entitled to demand from the latter compliance with the
terms and conditions of the contract of lease. Although sound business practice dictates the necessity of
abandoning the Malabon sales office, rather than continuing with the contract of lease which would entail
more losses, such is not a valid ground to justify breach of the lease contract, private respondents not
having committed any actionable wrong.
In Vales v. Villa, 35 Phil. 769, 788, this Court held:
. . . Courts cannot constitute themselves guardians of persons who are not legally
incompetent. Courts operate not because one person has been defeated or overcome by
another, but because he has been defeated or overcome illegally. Men may do foolish
things, use miserable judgment, and lose money by them indeed, all they have in the
world; but not for that alone can the law intervene and restore. There must be, in addition,
a violation of law, the commission of what the law knows as an actionable wrong, before
the courts are authorized to lay hold of the situation and remedy it.
While one may commiserate with the petitioner for the losses it has incurred, it has no one else to blame
but itself for the exercise of poor judgment by its representatives.
Lastly, while we agree with the decision of the Court of Appeals , we find the award of P50,000.00 as
attorney's fees excessive. P30,000.00 is a more reasonable award.
WHEREFORE, except for the modification of the award of attorney's fees to private respondents Cesar
Bautista and the heirs of Paciano Bautista, the decision of the Court of Appeals in CA-G.R. CV No.
15858, is hereby AFFIRMED in all other respects. No costs.
SO ORDERED.
Feliciano, Bidin, Melo and Vitug, JJ., concur.