G.R. No.

L-21438

September 28, 1966

AIR
vs.
RAFAEL
CARRASCOSO
APPEALS, respondents

FRANCE, petitioner,
and

the

HONORABLE

COURT

OF

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

TORTS | Aug 5| 1
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". 16They 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)
xxx

xxx

xxx

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. 24Implicit 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

TORTS | Aug 5| 2
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.

TORTS | Aug 5| 3
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
xxx

xxx

xxx

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
xxx

xxx

xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to
furnish plaintiff a first class passage covering, amongst others, the BangkokTeheran 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 was oustedby 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 copassenger. 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

TORTS | Aug 5| 4
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."

6. A contract to transport passengers is quite different in kind and degree from any
other contractual relation. 43And 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.

Mr. VALTE

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

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

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

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

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

TORTS | Aug 5| 5
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.

TORTS | Aug 5| 6
When private respondents came home from their honeymoon, however, they found
out that the tape had been erased by petitioners and therefore, could no longer be
delivered.
Furious at the loss of the tape which was supposed to be the only record of their
wedding, private respondents filed on September 23, 1981 a complaint for specific
performance and damages against petitioners before the Regional Trial Court, 7th
Judicial District, Branch 33, Dumaguete City. After a protracted trial, the court a
quorendered a decision, to wit:
WHEREFORE, judgment is hereby granted:
1. Ordering the rescission of the agreement entered into between plaintiff Hermogenes
Ong and defendant Nancy Go;
2. Declaring defendants Alex Go and Nancy Go jointly and severally liable to plaintiffs
Hermogenes Ong and Jane C. Ong for the following sums:
a) P450.00 , the down payment made at contract time;
b) P75,000.00, as moral damages;
c) P20,000.00, as exemplary damages;
d) P5,000.00, as attorney's fees; and
e) P2,000.00, as litigation expenses;
Defendants are also ordered to pay the costs.
SO ORDERED.
G.R. No. 114791 May 29, 1997
NANCY
GO
AND
ALEX
GO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, HERMOGENES ONG and JANE C.
ONG, respondents.

ROMERO, J.:
No less than the Constitution commands us to protect marriage as an inviolable
social institution and the foundation of the family. 1 In our society, the importance
of a wedding ceremony cannot be underestimated as it is the matrix of the family
and, therefore, an occasion worth reliving in the succeeding years.
It is in this light that we narrate the following undisputed facts:
Private respondents spouses Hermogenes and Jane Ong were married on June 7,
1981, in Dumaguete City. The video coverage of the wedding was provided by
petitioners at a contract price of P1,650.00. Three times thereafter, the newlyweds
tried to claim the video tape of their wedding, which they planned to show to their
relatives in the United States where they were to spend their honeymoon, and
thrice they failed because the tape was apparently not yet processed. The parties
then agreed that the tape would be ready upon private respondents' return.

Dissatisfied with the decision, petitioners elevated the case to the Court of Appeals
which, on September 14, 1993, dismissed the appeal and affirmed the trial court's
decision.
Hence, this petition.
Petitioners contend that the Court of Appeals erred in not appreciating the evidence
they presented to prove that they acted only as agents of a certain Pablo Lim and, as
such, should not have been held liable. In addition, they aver that there is no evidence
to show that the erasure of the tape was done in bad faith so as to justify the award of
damages. 2
The petition is not meritorious.
Petitioners claim that for the video coverage, the cameraman was employed by Pablo
Lim who also owned the video equipment used. They further assert that they merely
get a commission for all customers solicited for their principal. 3
This contention is primarily premised on Article 1883 of the Civil Code which states
thus:
Art. 1883. If an agent acts in his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither have such persons
against the principal.
In such case the agent is the one directly bound in favor of the person with whom he
has contracted, as if the transaction were his own, except when the contract involves
things belonging to the principal.

xxx xxx xxx

Petitioners' argument that since the video equipment used belonged to Lim and
thus the contract was actually entered into between private respondents and Lim is
not deserving of any serious consideration. In the instant case, the contract
entered into is one of service, that is, for the video coverage of the wedding.
Consequently, it can hardly be said that the object of the contract was the video
equipment used. The use by petitioners of the video equipment of another person
is of no consequence.
It must also be noted that in the course of the protracted trial below, petitioners
did not even present Lim to corroborate their contention that they were mere
agents of the latter. It would not be unwarranted to assume that their failure to
present such a vital witness would have had an adverse result on the case. 4
As regards the award of damages, petitioners would impress upon this Court their
lack of malice or fraudulent intent in the erasure of the tape. They insist that since
private respondents did not claim the tape after the lapse of thirty days, as agreed
upon in their contract, the erasure was done in consonance with consistent
business practice to minimize losses. 5
We are not persuaded.
As correctly observed by the Court of Appeals, it is contrary to human nature for
any newlywed couple to neglect to claim the video coverage of their wedding; the
fact that private respondents filed a case against petitioners belies such assertion.
Clearly, petitioners are guilty of actionable delay for having failed to process the
video tape. Considering that private respondents were about to leave for the United
States, they took care to inform petitioners that they would just claim the tape
upon their return two months later. Thus, the erasure of the tape after the lapse of
thirty days was unjustified.
In this regard, Article 1170 of the Civil Code provides that "those who in the
performance of their obligations are guilty of fraud, negligence or delay, and those
who is any manner contravene the tenor thereof, are liable for damages."
In the instant case, petitioners and private respondents entered into a contract
whereby, for a fee, the former undertook to cover the latter's wedding and deliver
to them a video copy of said event. For whatever reason, petitioners failed to
provide private respondents with their tape. Clearly, petitioners are guilty of
contravening their obligation to said private respondents and are thus liable for
damages.
The grant of actual or compensatory damages in the amount of P450.00 is
justified, as reimbursement of the downpayment paid by private respondents to
petitioners. 6
Generally, moral damages cannot be recovered in an action for breach of contract
because this case is not among those enumerated in Article 2219 of the Civil Code.
However, it is also accepted in this jurisdiction that liability for a quasi-delict may
still exist despite the presence of contractual relations, that is, the act which
violates the contract may also constitute a quasi-delict. 7 Consequently, moral
damages
are
recoverable
for
the
breach
of
contract
which was palpably wanton, reckless, malicious or in bad faith, oppressive or
abusive. 8

TORTS | Aug 5| 7
Petitioners' act or omission in recklessly erasing the video coverage of private
respondents' wedding was precisely the cause of the suffering private respondents had
to undergo.
As the appellate court aptly observed:
Considering the sentimental value of the tapes and the fact that the event therein
recorded a wedding which in our culture is a significant milestone to be cherished
and remembered could no longer be reenacted and was lost forever, the trial court
was correct in awarding the appellees moral damages albeit in the amount of
P75,000.00, which was a great reduction from plaintiffs' demand in the complaint in
compensation for the mental anguish, tortured feelings, sleepless nights and
humiliation that the appellees suffered and which under the circumstances could be
awarded as allowed under Articles 2217 and 2218 of the Civil Code. 9
Considering the attendant wanton negligence committed by petitioners in the case at
bar, the award of exemplary damages by the trial court is justified 10 to serve as a
warning to all entities engaged in the same business to observe due diligence in the
conduct of their affairs.
The award of attorney' s fees and litigation expenses are likewise proper, consistent
with Article 2208 11 of the Civil Code.
Finally, petitioner Alex Go questions the finding of the trial and appellate courts
holding him jointly and severally liable with his wife Nancy regarding the pecuniary
liabilities imposed. He argues that when his wife entered into the contract with private
respondent, she was acting alone for her sole interest. 12
We find merit in this contention. Under Article 117 of the Civil Code (now Article 73 of
the Family Code), the wife may exercise any profession, occupation or engage in
business without the consent of the husband. In the instant case, we are convinced
that it was only petitioner Nancy Go who entered into the contract with private
respondent. Consequently, we rule that she is solely liable to private respondents for
the damages awarded below, pursuant to the principle that contracts produce effect
only as between the parties who execute them. 13
WHEREFORE, the assailed decision dated September 14, 1993 is hereby AFFIRMED
with the MODIFICATION that petitioner Alex Go is absolved from any liability to private
respondents and that petitioner Nancy Go is solely liable to said private respondents
for the judgment award. Costs against petitioners.
SO ORDERED.

TORTS | Aug 5| 8
CONCEPCION, C.J.:
Appeal by plaintiffs, Julian Singson and his wife, Ramona del Castillo, from a decision
of the Court of First Instance of Manila dismissing their complaint against defendants
herein, the Bank of the Philippine Islands and Santiago Freixas.
It appears that Singson, was one of the defendants in civil case No. 23906 of the
Court of First Instance, Manila, in which judgment had been rendered sentencing him
and his co-defendants therein, namely, Celso Lobregat and Villa-Abrille & Co., to pay
the sum of P105,539.56 to the plaintiff therein, Philippine Milling Co. Singson and
Lobregat had seasonably appealed from said judgment, but not Villa-Abrille & Co., as
against which said judgment, accordingly, became final and executory. In due course,
a writ of garnishment was subsequently served upon the Bank of the Philippine Islands
in which the Singsons had a current account insofar as Villa-Abrille's credits
against the Bank were concerned. What happened thereafter is set forth in the
decision appealed from, from which we quote:
Upon receipt of the said Writ of Garnishment, a clerk of the bank in charge of all
matters of execution and garnishment, upon reading the name of the plaintiff herein in
the title of the Writ of Garnishment as a party defendants, without further reading the
body of the said garnishment and informing himself that said garnishment was merely
intended for the deposits of defendant Villa-Abrille & Co., Valentin Teus, Fernando F. de
Villa-Abrille and Joaquin Bona, prepared a letter for the signature of the President of
the Bank informing the plaintiff Julian C. Singson of the garnishment of his deposits by
the plaintiff in that case. Another letter was also prepared and signed by the said
President of the Bank for the Special Sheriff dated April 17, 1963.

G.R. No. L-24837

June 27, 1968

JULIAN
C.
SINGSON
and
RAMONA
DEL
CASTILLO, plaintiffs,
vs.
BANK OF THE PHILIPPINE ISLANDS and SANTIAGO FREIXAS, in his
capacity as President of the said Bank, defendants.
Gil
B.
Galang
Aviado and Aranda for defendants.

for

plaintiffs.

Subsequently, two checks issued by the plaintiff Julian C. Singson, one for the amount
of P383 in favor of B. M. Glass Service dated April 16, 1963 and bearing No. C424852, and check No. C-394996 for the amount of P100 in favor of the Lega
Corporation, and drawn against the said Bank, were deposited by the said drawers
with the said bank. Believing that the plaintiff Singson, the drawer of the check, had
no more control over the balance of his deposits in the said bank, the checks were
dishonored and were refused payment by the said bank. After the first check was
returned by the bank to the B. M. Glass Service, the latter wrote plaintiff Julian C.
Singson a letter, dated April 19, 1963, advising him that his check for P383.00 bearing
No. C-424852 was not honored by the bank for the reason that his account therein
had already been garnished. The said B. M. Glass Service further stated in the said
letter that they were constrained to close his credit account with them. In view
thereof, plaintiff Julian C. Singson wrote the defendant bank a letter on April 19, 1963,
claiming that his name was not included in the Writ of Execution and Notice of
Garnishment, which was served upon the bank. The defendant President Santiago
Freixas of the said bank took steps to verify this information and after having
confirmed the same, apologized to the plaintiff Julian C. Singson and wrote him a
letter dated April 22, 1963, requesting him to disregard their letter of April 17, 1963,
and that the action of garnishment from his account had already been removed. A
similar letter was written by the said official of the bank on April 22, 1963 to the
Special Sheriff informing him that his letter dated April 17, 1963 to the said Special
Sheriff was considered cancelled and that they had already removed the Notice of
Garnishment from plaintiff Singson's account. Thus, the defendants lost no time to
rectify the mistake that had been inadvertently committed, resulting in the temporary
freezing of the account of the plaintiff with the said bank for a short time.
xxx

xxx

xxx

On May 8, 1963, the Singsong commenced the present action against the Bank and
its president, Santiago Freixas, for damages 1 in consequence of said illegal freezing
of plaintiffs' account.1wph1.t
After appropriate proceedings, the Court of First Instance of Manila rendered
judgment dismissing the complaint upon the ground that plaintiffs cannot recover
from the defendants upon the basis of a quasi-delict, because the relation between
the parties is contractual in nature; because this case does not fall under Article
2219 of our Civil Code, upon which plaintiffs rely; and because plaintiffs have not
established the amount of damages allegedly sustained by them.
The lower court held that plaintiffs' claim for damages cannot be based upon a tort
or quasi-delict, their relation with the defendants being contractual in nature. We
have repeatedly held, however, that the existence of a contract between the parties
does not bar the commission of a tort by the one against the order and the
consequent recovery of damages therefor.2 Indeed, this view has been, in effect,
reiterated in a comparatively recent case. Thus, in Air France vs.
Carrascoso,3 involving an airplane passenger who, despite his first-class ticket, had
been illegally ousted from his first-class accommodation and compelled to take a
seat in the tourist compartment, was held entitled to recover damages from the
air-carrier, upon the ground of tort on the latter's part, for, although the relation
between a passenger and a carrier is "contractual both in origin and nature ... the
act that breaks the contract may also be a tort".
In view, however, of the facts obtaining in the case at bar, and considering,
particularly, the circumstance, that the wrong done to the plaintiff was remedied as
soon as the President of the bank realized the mistake he and his subordinate
employee had committed, the Court finds that an award of nominal damages the
amount of which need not be proven 4 in the sum of P1,000, in addition to
attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights. 5
WHEREFORE, the judgment appealed from is hereby reversed, and another one
shall be entered sentencing the defendant Bank of the Philippine Islands to pay to
the plaintiffs said sums of P1,000, as nominal damages, and P500, as attorney's
fees, apart from the costs. It is so ordered.

TORTS | Aug 5| 9
DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER CORPORATION
and CONNELL BROS. CO. (PHIL.), defendants-appellants.
Angel
S.
Gamboa
Laurel Law Offices for plaintiffs-appellants.

for

defendants-appellants.

DIZON, J.:
On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia
corporation licensed to do business in the Philippines hereinafter referred to as
ATLANTIC sold and assigned all its rights in the Dahican Lumber concession to
Dahican Lumber Company hereinafter referred to as DALCO for the total sum of
$500,000.00, of which only the amount of $50,000.00 was paid. Thereafter, to
develop the concession, DALCO obtained various loans from the People's Bank & Trust
Company hereinafter referred to as the BANK amounting, as of July 13, 1950, to
P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00
from the Export-Import Bank of Washington D.C., evidenced by five promissory notes
of $50,000.00 each, maturing on different dates, executed by both DALCO and the
Dahican America Lumber Corporation, a foreign corporation and a stockholder of
DALCO, hereinafter referred to as DAMCO, all payable to the BANK or its order.
As security for the payment of the abovementioned loans, on July 13, 1950 DALCO
executed in favor of the BANK the latter acting for itself and as trustee for the
Export-Import Bank of Washington D.C. a deed of mortgage covering five parcels of
land situated in the province of Camarines Norte together with all the buildings and
other improvements existing thereon and all the personal properties of the mortgagor
located in its place of business in the municipalities of Mambulao and Capalonga,
Camarines Norte (Exhibit D). On the same date, DALCO executed a second mortgage
on the same properties in favor of ATLANTIC to secure payment of the unpaid balance
of the sale price of the lumber concession amounting to the sum of $450,000.00
(Exhibit G). Both deeds contained the following provision extending the mortgage lien
to properties to be subsequently acquired referred to hereafter as "after acquired
properties" by the mortgagor:
All property of every nature and description taken in exchange or replacement, and all
buildings, machinery, fixtures, tools equipment and other property which the
Mortgagor may hereafter acquire, construct, install, attach, or use in, to, upon, or in
connection with the premises, shall immediately be and become subject to the lien of
this mortgage in the same manner and to the same extent as if now included therein,
and the Mortgagor shall from time to time during the existence of this mortgage
furnish the Mortgagee with an accurate inventory of such substituted and
subsequently acquired property.
Both mortgages were registered in the Office of the Register of Deeds of Camarines
Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of
stock of DALCO and 9,286 shares of DAMCO to secure the same obligations.

G.R. No. L-17500

May 16, 1967

PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF
MANILA, plaintiffs-appellants,
vs.

Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity,
the BANK paid the same to the Export-Import Bank of Washington D.C., and the latter
assigned to the former its credit and the first mortgage securing it. Subsequently, the
BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory
note.
After July 13, 1950 the date of execution of the mortgages mentioned above
DALCO purchased various machineries, equipment, spare parts and supplies in
addition to, or in replacement of some of those already owned and used by it on the

date aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore
regarding "after acquired properties," the BANK requested DALCO to submit
complete lists of said properties but the latter failed to do so. In connection with
these purchases, there appeared in the books of DALCO as due to Connell Bros.
Company (Philippines) a domestic corporation who was acting as the general
purchasing agent of DALCO thereinafter called CONNELL the sum of
P452,860.55 and to DAMCO, the sum of P2,151,678.34.
On December 16, 1952, the Board of Directors of DALCO, in a special meeting
called for the purpose, passed a resolution agreeing to rescind the alleged sales of
equipment, spare parts and supplies by CONNELL and DAMCO to it. Thereafter, the
corresponding agreements of rescission of sale were executed between DALCO and
DAMCO, on the one hand and between DALCO and CONNELL, on the other.
On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded
that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a
result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure
proceedings in the Court of First Instance of Camarines Norte against DALCO and
DAMCO. On the same date they filed an ex-parte application for the appointment of
a Receiver and/or for the issuance of a writ of preliminary injunction to restrain
DALCO from removing its properties. The court granted both remedies and
appointed George H. Evans as Receiver. Upon defendants' motion, however, the
court, in its order of February 21, 1953, discharged the Receiver.
On March 2, 1953, defendants filed their answer denying the material allegations of
the complaint and alleging several affirmative defenses and a counterclaim.
On March 4 of the same year, CONNELL, filed a motion for intervention alleging
that it was the owner and possessor of some of the equipments, spare parts and
supplies which DALCO had acquired subsequent to the execution of the mortgages
sought to be foreclosed and which plaintiffs claimed were covered by the lien. In its
order of March 18,1953 the Court granted the motion, as well as plaintiffs' motion
to set aside the order discharging the Receiver. Consequently, Evans was
reinstated.
On April 1, 1953, CONNELL filed its answer denying the material averment of the
complaint, and asserting affirmative defenses and a counterclaim.
Upon motion of the parties the Court, on September 30, 1953, issued an order
transferring the venue of the action to the Court of First Instance of Manila where it
was docketed as Civil Case No. 20987.
On August 30, 1958, upon motion of all the parties, the Court ordered the sale of
all the machineries, equipment and supplies of DALCO, and the same were
subsequently sold for a total consideration of P175,000.00 which was deposited in
court pending final determination of the action. By a similar agreement one-half
(P87,500.00) of this amount was considered as representing the proceeds obtained
from the sale of the "undebated properties" (those not claimed by DAMCO and
CONNELL), and the other half as representing those obtained from the sale of the
"after acquired properties".
After due trial, the Court, on July 15, 1960, rendered judgment as follows:
IN VIEW WHEREFORE, the Court:
1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of
P200,000,00 with 7% interest per annum from July 13, 1950, Plus another sum of

TORTS | Aug 5| 10
P100,000.00 with 5% interest per annum from July 13, 1950; plus 10% on both
principal sums as attorney's fees;
2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of P900,000.00
with 4% interest per annum from July 3, 1950, plus 10% on both principal as
attorney's fees;
3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of P425,860.55,
and to pay unto Dahican American Lumber Co. the sum of P2,151,678.24 both with
legal interest from the date of the filing of the respective answers of those parties,
10% of the principals as attorney's fees;
4. Orders that of the sum realized from the sale of the properties of P175,000.00,
after deducting the recognized expenses, one-half thereof be adjudicated unto
plaintiffs, the court no longer specifying the share of each because of that announced
intention under the stipulation of facts to "pool their resources"; as to the other onehalf, the same should be adjudicated unto both plaintiffs, and defendant Dahican
American and Connell Bros. in the proportion already set forth on page 9, lines 21, 22
and 23 of the body of this decision; but with the understanding that whatever plaintiffs
and Dahican American and Connell Bros. should receive from the P175,000.00
deposited in the Court shall be applied to the judgments particularly rendered in favor
of each;
5. No other pronouncement as to costs; but the costs of the receivership as to the
debated properties shall be borne by People's Bank, Atlantic Gulf, Connell Bros., and
Dahican American Lumber Co., pro-rata.
On the following day, the Court issued the following supplementary decision:
IN VIEW WHEREOF, the dispositive part of the decision is hereby amended in order to
add the following paragraph 6:
6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety (90) days,
the Court orders the sale at public auction of the lands object of the mortgages to
satisfy the said mortgages and costs of foreclosure.
From the above-quoted decision, all the parties appealed.
Main contentions of plaintiffs as appellants are the following: that the "after acquired
properties" were subject to the deeds of mortgage mentioned heretofore; that said
properties were acquired from suppliers other than DAMCO and CONNELL; that even
granting that DAMCO and CONNELL were the real suppliers, the rescission of the sales
to DALCO could not prejudice the mortgage lien in favor of plaintiffs; that considering
the foregoing, the proceeds obtained from the sale of the "after acquired properties"
as well as those obtained from the sale of the "undebated properties" in the total sum
of P175,000.00 should have been awarded exclusively to plaintiffs by reason of the
mortgage lien they had thereon; that damages should have been awarded to plaintiffs
against defendants, all of them being guilty of an attempt to defraud the former when
they sought to rescind the sales already mentioned for the purpose of defeating their
mortgage lien, and finally, that defendants should have been made to bear all the
expenses of the receivership, costs and attorney's fees.
On the other hand, defendants-appellants contend that the trial court erred: firstly, in
not holding that plaintiffs had no cause of action against them because the promissory
note sued upon was not yet due when the action to foreclose the mortgages was
commenced; secondly, in not holding that the mortgages aforesaid were null and void
as regards the "after acquired properties" of DALCO because they were not registered

in accordance with the Chattel Mortgage Law, the court erring, as a consequence,
in holding that said properties were subject to the mortgage lien in favor of
plaintiffs; thirdly, in not holding that the provision of the fourth paragraph of each
of said mortgages did not automatically make subject to such mortgages the "after
acquired properties", the only meaning thereof being that the mortgagor was
willing to constitute a lien over such properties; fourthly, in not ruling that said
stipulation was void as against DAMCO and CONNELL and in not awarding the
proceeds obtained from the sale of the "after acquired properties" to the latter
exclusively; fifthly, in appointing a Receiver and in holding that the damages
suffered by DAMCO and CONNELL by reason of the depreciation or loss in value of
the "after acquired properties" placed under receivership was damnum absque
injuria and, consequently, in not awarding, to said parties the corresponding
damages claimed in their counterclaim; lastly, in sentencing DALCO and DAMCO to
pay attorney's fees and in requiring DAMCO and CONNELL to pay the costs of the
Receivership, instead of sentencing plaintiffs to pay attorney's fees.
Plaintiffs' brief as appellants submit six assignments of error, while that of
defendants also as appellants submit a total of seventeen. However, the
multifarious issues thus before Us may be resolved, directly or indirectly, by
deciding the following issues:
Firstly, are the so-called "after acquired properties" covered by and subject to the
deeds of mortgage subject of foreclosure?; secondly, assuming that they are
subject thereto, are the mortgages valid and binding on the properties aforesaid
inspite of the fact that they were not registered in accordance with the provisions
of the Chattel Mortgage Law?; thirdly, assuming again that the mortgages are valid
and binding upon the "after acquired properties", what is the effect thereon, if any,
of the rescission of sales entered into, on the one hand, between DAMCO and
DALCO, and between DALCO and CONNELL, on the other?; and lastly, was the
action to foreclose the mortgages premature?
A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all
property of every nature and description taken in exchange or replacement, as well
as all buildings, machineries, fixtures, tools, equipments, and other property that
the mortgagor may acquire, construct, install, attach; or use in, to upon, or in
connection with the premises that is, its lumber concession "shall immediately
be and become subject to the lien" of both mortgages in the same manner and to
the same extent as if already included therein at the time of their execution. As the
language thus used leaves no room for doubt as to the intention of the parties, We
see no useful purpose in discussing the matter extensively. Suffice it to say that the
stipulation referred to is common, and We might say logical, in all cases where the
properties given as collateral are perishable or subject to inevitable wear and tear
or were intended to be sold, or to be used thus becoming subject to the
inevitable wear and tear but with the understanding express or implied that
they shall be replaced with others to be thereafter acquired by the mortgagor. Such
stipulation is neither unlawful nor immoral, its obvious purpose being to maintain,
to the extent allowed by circumstances, the original value of the properties given
as security. Indeed, if such properties were of the nature already referred to, it
would be poor judgment on the part of the creditor who does not see to it that a
similar provision is included in the contract.
B. But defendants contend that, granting without admitting, that the deeds of
mortgage in question cover the "after acquired properties" of DALCO, the same are
void and ineffectual because they were not registered in accordance with the

TORTS | Aug 5| 11
Chattel Mortgage Law. In support of this and of the proposition that, even if said
mortgages were valid, they should not prejudice them, the defendants argue (1) that
the deeds do not describe the mortgaged chattels specifically, nor were they registered
in accordance with the Chattel Mortgage Law; (2) that the stipulation contained in the
fourth paragraph thereof constitutes "mere executory agreements to give a lien" over
the "after acquired properties" upon their acquisition; and (3) that any mortgage
stipulation concerning "after acquired properties" should not prejudice creditors and
other third persons such as DAMCO and CONNELL.
The stipulation under consideration strongly belies defendants contention. As adverted
to hereinbefore, it states that all property of every nature, building, machinery etc.
taken in exchange or replacement by the mortgagor "shall immediately be and
become subject to the lien of this mortgage in the same manner and to the same
extent as if now included therein". No clearer language could have been chosen.
Conceding, on the other hand, that it is the law in this jurisdiction that, to affect third
persons, a chattel mortgage must be registered and must describe the mortgaged
chattels or personal properties sufficiently to enable the parties and any other person
to identify them, We say that such law does not apply to this case.
As the mortgages in question were executed on July 13, 1950 with the old Civil Code
still in force, there can be no doubt that the provisions of said code must govern their
interpretation and the question of their validity. It happens however, that Articles 334
and 1877 of the old Civil Code are substantially reproduced in Articles 415 and 2127,
respectively, of the new Civil Code. It is, therefore, immaterial in this case whether we
take the former or the latter as guide in deciding the point under consideration.
Article 415 does not define real property but enumerates what are considered as such,
among them being machinery, receptacles, instruments or replacements intended by
owner of the tenement for an industry or works which may be carried on in a building
or on a piece of land, and shall tend directly to meet the needs of the said industry or
works.
On the strength of the above-quoted legal provisions, the lower court held that
inasmuch as "the chattels were placed in the real properties mortgaged to plaintiffs,
they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil
Code".
We find the above ruling in agreement with our decisions on the subject:
(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph
5 of the Civil Code (old) gives the character of real property to machinery, liquid
containers, instruments or replacements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which are
expressly adapted to meet the requirements of such trade or industry.
(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a
mortgage constituted on a sugar central includes not only the land on which it is built
but also the buildings, machinery and accessories installed at the time the mortgage
was constituted as well as the buildings, machinery and accessories belonging to the
mortgagor, installed after the constitution thereof .
It is not disputed in the case at bar that the "after acquired properties" were
purchased by DALCO in connection with, and for use in the development of its lumber
concession and that they were purchased in addition to, or in replacement of those
already existing in the premises on July 13, 1950. In Law, therefore, they must be

deemed to have been immobilized, with the result that the real estate mortgages
involved herein which were registered as such did not have to be registered a
second time as chattel mortgages in order to bind the "after acquired properties"
and affect third parties.
But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil.
709, claim that the "after acquired properties" did not become immobilized because
DALCO did not own the whole area of its lumber concession all over which said
properties were scattered.
The facts in the Davao Sawmill case, however, are not on all fours with the ones
obtaining in the present. In the former, the Davao Sawmill Company, Inc., had
repeatedly treated the machinery therein involved as personal property by
executing chattel mortgages thereon in favor of third parties, while in the present
case the parties had treated the "after acquired properties" as real properties by
expressly and unequivocally agreeing that they shall automatically become subject
to the lien of the real estate mortgages executed by them. In the Davao Sawmill
decision it was, in fact, stated that "the characterization of the property as chattels
by the appellant is indicative of intention and impresses upon the property the
character determined by the parties" (61 Phil. 112, emphasis supplied). In the
present case, the characterization of the "after acquired properties" as real
property was made not only by one but by both interested parties. There is,
therefore, more reason to hold that such consensus impresses upon the properties
the character determined by the parties who must now be held in estoppel to
question it.
Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central
Altagracia, Inc. (225 U.S. 58) where it was held that while under the general law of
Puerto Rico, machinery placed on property by a tenant does not become
immobilized, yet, when the tenant places it there pursuant to contract that it shall
belong to the owner, it then becomes immobilized as to that tenant and even as
against his assignees and creditors who had sufficient notice of such stipulation. In
the case at bar it is not disputed that DALCO purchased the "after acquired
properties" to be placed on, and be used in the development of its lumber
concession, and agreed further that the same shall become immediately subject to
the lien constituted by the questioned mortgages. There is also abundant evidence
in the record that DAMCO and CONNELL had full notice of such stipulation and had
never thought of disputed validity until the present case was filed. Consequently all
of them must be deemed barred from denying that the properties in question had
become immobilized.
What We have said heretofore sufficiently disposes all the arguments adduced by
defendants in support their contention that the mortgages under foreclosure are
void, and, that, even if valid, are ineffectual as against DAMCO and CONNELL.
Now to the question of whether or not DAMCO CONNELL have rights over the "after
acquired properties" superior to the mortgage lien constituted thereon in favor of
plaintiffs. It is defendants' contention that in relation to said properties they are
"unpaid sellers"; that as such they had not only a superior lien on the "after
acquired properties" but also the right to rescind the sales thereof to DALCO.
This contention it is obvious would have validity only if it were true that
DAMCO and CONNELL were the suppliers or vendors of the "after acquired
properties". According to the record, plaintiffs did not know their exact identity and
description prior to the filing of the case bar because DALCO, in violation of its

TORTS | Aug 5| 12
obligation under the mortgages, had failed and refused theretofore to submit a
complete list thereof. In the course of the proceedings, however, when defendants
moved to dissolve the order of receivership and the writ of preliminary injunction
issued by the lower court, they attached to their motion the lists marked as Exhibits 1,
2 and 3 describing the properties aforesaid. Later on, the parties agreed to consider
said lists as identifying and describing the "after acquire properties," and engaged the
services of auditors to examine the books of DALCO so as to bring out the details
thereof. The report of the auditors and its annexes (Exhibits V, V-1 V4) show that
neither DAMCO nor CONNELL had supplied any of the goods of which they respective
claimed to be the unpaid seller; that all items were supplied by different parties,
neither of whom appeared to be DAMCO or CONNELL that, in fact, CONNELL collected
a 5% service charge on the net value of all items it claims to have sold to DALCO and
which, in truth, it had purchased for DALCO as the latter's general agent; that
CONNELL had to issue its own invoices in addition to those o f the real suppliers in
order to collect and justify such service charge.
Taking into account the above circumstances together with the fact that DAMCO was a
stockholder and CONNELL was not only a stockholder but the general agent of DALCO,
their claim to be the suppliers of the "after acquired required properties" would seem
to be preposterous. The most that can be claimed on the basis of the evidence is that
DAMCO and CONNELL probably financed some of the purchases. But if DALCO still
owes them any amount in this connection, it is clear that, as financiers, they can not
claim any right over the "after acquired properties" superior to the lien constituted
thereon by virtue of the deeds of mortgage under foreclosure. Indeed, the execution
of the rescission of sales mentioned heretofore appears to be but a desperate attempt
to better or improve DAMCO and CONNELL's position by enabling them to assume the
role of "unpaid suppliers" and thus claim a vendor's lien over the "after acquired
properties". The attempt, of course, is utterly ineffectual, not only because they are
not the "unpaid sellers" they claim to be but also because there is abundant evidence
in the record showing that both DAMCO and CONNELL had known and admitted from
the beginning that the "after acquired properties" of DALCO were meant to be included
in the first and second mortgages under foreclosure.
The claim that Belden, of ATLANTIC, had given his consent to the rescission, expressly
or otherwise, is of no consequence and does not make the rescission valid and legally
effective. It must be stated clearly, however, in justice to Belden, that, as a member of
the Board of Directors of DALCO, he opposed the resolution of December 15, 1952
passed by said Board and the subsequent rescission of the sales.
Finally, defendants claim that the action to foreclose the mortgages filed on February
12, 1953 was premature because the promissory note sued upon did not fall due until
April 1 of the same year, concluding from this that, when the action was commenced,
the plaintiffs had no cause of action. Upon this question the lower court says the
following in the appealed judgment;
The other is the defense of prematurity of the causes of action in that plaintiffs, as a
matter of grace, conceded an extension of time to pay up to 1 April, 1953 while the
action was filed on 12 February, 1953, but, as to this, the Court taking it that there is
absolutely no debate that Dahican Lumber Co., was insolvent as of the date of the
filing of the complaint, it should follow that the debtor thereby lost the benefit to the
period.
x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New Civil
Code);

and as the guaranty was plainly inadequate since the claim of plaintiffs reached in
the aggregate, P1,200,000 excluding interest while the aggregate price of the
"after-acquired" chattels claimed by Connell under the rescission contracts was
P1,614,675.94, Exh. 1, Exh. V, report of auditors, and as a matter of fact, almost
all the properties were sold afterwards for only P175,000.00, page 47, Vol. IV, and
the Court understanding that when the law permits the debtor to enjoy the benefits
of the period notwithstanding that he is insolvent by his giving a guaranty for the
debt, that must mean a new and efficient guaranty, must concede that the causes
of action for collection of the notes were not premature.
Very little need be added to the above. Defendants, however, contend that the
lower court had no basis for finding that, when the action was commenced, DALCO
was insolvent for purposes related to Article 1198, paragraph 1 of the Civil Code.
We find, however, that the finding of the trial court is sufficiently supported by the
evidence particularly the resolution marked as Exhibit K, which shows that on
December 16, 1952 in the words of the Chairman of the Board DALCO was
"without funds, neither does it expect to have any funds in the foreseeable future."
(p. 64, record on appeal).
The remaining issues, namely, whether or not the proceeds obtained from the sale
of the "after acquired properties" should have been awarded exclusively to the
plaintiffs or to DAMCO and CONNELL, and if in law they should be distributed
among said parties, whether or not the distribution should be pro-rata or
otherwise; whether or not plaintiffs are entitled to damages; and, lastly, whether or
not the expenses incidental to the Receivership should be borne by all the parties
on a pro-rata basis or exclusively by one or some of them are of a secondary
nature as they are already impliedly resolved by what has been said heretofore.
As regard the proceeds obtained from the sale of the of after acquired properties"
and the "undebated properties", it is clear, in view of our opinion sustaining the
validity of the mortgages in relation thereto, that said proceeds should be awarded
exclusively to the plaintiffs in payment of the money obligations secured by the
mortgages under foreclosure.
On the question of plaintiffs' right to recover damages from the defendants, the law
(Articles 1313 and 1314 of the New Civil Code) provides that creditors are
protected in cases of contracts intended to defraud them; and that any third person
who induces another to violate his contract shall be liable for damages to the other
contracting party. Similar liability is demandable under Arts. 20 and 21 which
may be given retroactive effect (Arts. 225253) or under Arts. 1902 and 2176 of
the Old Civil Code.
The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO,
after failing to pay the fifth promissory note upon its maturity, conspired jointly
with CONNELL to violate the provisions of the fourth paragraph of the mortgages
under foreclosure by attempting to defeat plaintiffs' mortgage lien on the "after
acquired properties". As a result, the plaintiffs had to go to court to protect their
rights thus jeopardized. Defendants' liability for damages is therefore clear.
However, the measure of the damages suffered by the plaintiffs is not what the
latter claim, namely, the difference between the alleged total obligation secured by
the mortgages amounting to around P1,200,000.00, plus the stipulated interest
and attorney's fees, on the one hand, and the proceeds obtained from the sale of
"after acquired properties", and of those that were not claimed neither by DAMCO
nor CONNELL, on the other. Considering that the sale of the real properties subject

TORTS | Aug 5| 13
to the mortgages under foreclosure has not been effected, and considering further the
lack of evidence showing that the true value of all the properties already sold was not
realized because their sale was under stress, We feel that We do not have before Us
the true elements or factors that should determine the amount of damages that
plaintiffs are entitled recover from defendants. It is, however, our considered opinion
that, upon the facts established, all the expenses of the Receivership, which was
deemed necessary to safeguard the rights of the plaintiffs, should be borne by the
defendants, jointly and severally, in the same manner that all of them should pay to
the plaintiffs, jointly a severally, attorney's fees awarded in the appealed judgment.
In consonance with the portion of this decision concerning the damages that the
plaintiffs are entitled to recover from the defendants, the record of this case shall be
remanded below for the corresponding proceedings.
Modified as above indicated, the appealed judgment is affirmed in all other respects.
With costs.

TORTS | Aug 5| 14

G.R. No. L-20442 October 4, 1971

CIRIACO
vs.
YAP WING, defendant-appellee.

ROBLES, plaintiff-appellant,

Gerardo P. Moreno, Jr. for plaintiff-appellant.

Pauline Manongdo for defendant-appellee.

MAKALINTAL, J.:
Appeal in forma pauperis taken by the plaintiff from the order of the Court of First
Instance of Manila dated September 12, 1962, dismissing the complaint on the ground
of lack of jurisdiction.
The allegations of the complaint, which for purposes of the motion to dismiss were
deemed admitted, are as follows: that the plaintiff was employee by defendant in its
contracting business; that on July 6, 1961 at about 1:30 p.m. while plaintiff was
dismantling lumber brace in the construction of a bodega which defendant undertook
to construct, defendant negligently failed to provide safety measures within the
construction premises, as a result of which a piece of lumber fell and hit plaintiff on
the head, causing him physical injuries; that immediately thereafter plaintiff was taken
to a medical clinic, where he remained unconscious for several hours; that defendant
defrayed Plaintiff's medical expenses; that since then plaintiff was unable to work,
thereby losing his expected earning at an average of P39.00 a week or a total of
P2,340.00, more or less, up to the filing of the complaint; that because of the physical
injuries sustained by plaintiff due to defendant's negligence, he suffered mental
anguish, anxiety, fright and pain; and that because he was compelled to hire the
services of a lawyer he is entitled to recover attorney's fees.
In his answer defendant alleged by way of affirmative defense that plaintiff's claim is
one for disability resulting from an accident arising out of and in the course of his
employment and thus pertains to the exclusive jurisdiction of the Workmen's
Compensation Commission. Upon defendant's motion for a preliminary hearing on the
alleged lack of jurisdiction of the lower court (which was actually a motion to dismiss)
and after plaintiff had filed its opposition thereto, the lower court dismissed plaintiff's
complaint. Plaintiff moved to reconsider alleging that his claim was for actual damages
under Articles 1711 and 1712 of the New Civil Code and not a claim for compensation

under Act No. 3428, otherwise known as the Workmen's Compensation Act. The
motion to reconsider was denied; hence, this appeal.
The lone issue before us for resolution is whether or not the trial court erred in
dismissing plaintiff's complaint on the ground of lack of jurisdiction.
Before the enactment of Republic Act No. 772 (amending Act No. 3428), which
took effect on June 20, 1952, claims for compensation under the Workmen's
Compensation Act were cognizable by the regular courts but since then, as
provided in Section 46 therefore as amended, "the Workmen's Compensation
Commission shall have jurisdiction to hear and decide claims for compensation
under the Compensation Act, subject to appeal to the Supreme court ..." In relation
to this, Section 5 of the Act provides that "the rights and remedies granted by this
Act to an employee by reason of a personal injury entitling him to compensation
shall exclude all other rights and, remedies accruing to an employee, his personal
representation dependents or nearest of kin against the employer under the Civil
Code or other laws, because of said injury ..." .
In the case of Manalo vs. Foster Wheeler Corporation, et al., 98 Phil. 856, in
sustaining the order of the trial court dismissing an employee's claim for damages
against the employer for injuries suffered in an accident which happened in the
course of his employment this Court said that "the Legislature evidently deemed it
best, in the interest of expediency and uniformity, that all claims of workmen
against their employees for damages due to accidents suffered in the course of
employment shall be investigated and adjudicated by the Workmen's Compensation
Commission subject to the appeal in the law provided." This was reiterated in at
least two subsequent cases, namely, Vda. de Mallari vs. National Development
Company, G.R. No. L-17914, October 31, 1962; and Hudencial vs. S. P. Marcelo &
Co., Inc., G.R. No. L-23969, February 27, 1971.
We are not unmindful of our rulings in the class of Pacaa vs. Cebu Autobus Co., 32
SCRA 442, and Valencia vs. Manila Yacht Club, Inc., G.R. No. L-27346, June 30,
1969. In the Pacaa case the plaintiff had several other money claims such as for
separation pay, sick leave pay, vacation leave pay, overtime pay, moral damages
and attorney's fees aside from permanent disability compensation benefits. In
reversing the trial court's order of dismissal, we held that the plaintiff had the
choice of instituting the action in the regular courts under Article 1711 of the Civil
Code. We said:
... Of course, the plaintiff thus foregoes the far more expeditious procedures for
recovery as provided in the Workmen's Compensation Act, which practically
foreclose the employer from controverting the claim upon failure to file a report of
disability with notice of controversion (section 45) and the liberal presumptions in
favor of the employees, inter alia, that the claim comes within the provision of the
Act (section 44). But there may be cases where, as in the case at bar, the plaintiff
is constrained to invoke the provision of Article 1711 of the Civil Code and files his
suit in the regular courts due to his prosecution of various other money claims,
such as separation pay, accrued sick and vacation leave pay, and overtime pay
during his employment, which do not fall under the purview of the Workmen's
Compensation Act.
The validity of upholding the lower court's jurisdiction to hear and decide the
various claims of plaintiff in the single case filed by him may readily be seen from
the tenuous jurisdictional arguments raised by defendant, where it would have the
plaintiff shuttle to four different courts and agencies to prosecute his claims,

TORTS | Aug 5| 15
namely, Workmen's Compensation Commission and Social Security Commission for
disability compensation benefits and sick leave pay, the Court of Industrial Relations
for overtime pay and the Municipal Court for separation pay. Courts do not look with
favor on split jurisdiction and piecemeal litigation. ... (emphasis supplied) .
It must be noted that in the above case we upheld the jurisdiction of the trial court in
view of the plaintiff's various other claims which did not fall under the purview of the
Workmen's Compensation Act, and also to avoid multiplicity of suits. Obviously that
case does not apply to the one at bar.
Similarly, the Valencia ruling is not applicable here. In that case the only issue was
"whether claimant's acceptance from the Social Security System of sickness and
disability benefits, which are available to him as a member of the System, precludes
further collection from the employer of compensation allowed under the law
(Workmen's Compensation Act) for the same sickness or injury." We there said:
... To deny payment of social security benefits because the death or injury or
confinement is compensable under the Workmen's Compensation Act would be to
deprive the employees members of the System of the statutory benefits bought and
paid for by them, since they contribute their money to the general common fund out
of which benefits are paid. In other words, the benefits provided for in the Workmen's
Compensation Act accrues to the employees concerned due to the hazards involved in
their employment and is made a burden on the employment itself. However, social
security benefits are paid to the System's members, by reason of their membership
therein for which they contribute their money to a general common fund.
It may be added that whereas social security benefits are intended to provide
insurance or protection against the hazards or risks for which they are established,
e.g., disability sickness, old age or death, irrespective of whether they arose from or in
the course of the employment or not, the compensation receivable under the
Workmen's Compensation law is in the nature of indemnity for the injury or damage
suffered by the employee or his dependents on account of the employment.
The Workmen's Compensation Act provides for two exceptions. The first is in section 6,
which gives the injured employee the option to claim compensation benefits against
his employer under the Act or to sue the third person who caused the injury for
damages in the regular courts. The other exception is in Section 42, which refers to
small private employers, in which case claims for compensation by reason of accident
or injury shall be governed by the provisions of Act No. 1874 or by those of the Civil
Code. The instant case does not fall under any of the exceptions.
Appellant contends that his claim is not for compensation under the Workmen's
Corporation Law but one for damages under Article 1711 of the New Civil Code. The
contention is without merit. Article 1711 provides for the payment by employers of
compensation for the death of or injuries to their employees as well as for illness or
disease arising out of and in the course of the employment, which provision is
essentially the same as that of Section 2 of the Workmen's Compensation Act. The fact
that Article 1711 of the Civil Code appears to cover appellant's claim is not decisive of
the question: it should still be prosecuted in accordance with the Workmen's
Compensation Act by virtue of Section 5 thereof which makes the rights and remedies
granted by said Act exclusive, as well as by virtue of Article 2196 of the Civil Code
itself, which provides: .
ART. 2196. The rules under this Title are without prejudice to special provisions on
damages formulated elsewhere in this Code. Compensation for workmen and other

employees in case of death, injury or illness is regulated by special laws ...

(emphasis supplied) .
Our Workmen's Compensation Act is patterned after the statutes of Hawaii, New
York and Minnesota (Labor Standards and Welfare Legislation by Fernandez and
Quiazon, Vol. 2, p. 401). American decisions and authorities are therefore relevant
in the interpretation of our local law on the subject, thus:
The Compensation remedy is exclusive of all other remedies for the same injury, if
the injury falls within the coverage formula of the act. If it does not, as in the case
where occupational diseases are deemed omitted because not within the concept of
accidental injury, the compensation act does not disturb any existing remedy.
However, if the injury itself comes within the coverage formula, common-law action
is barred although the particular element of damage is not compensated for, as in
the case of disfigurement in some states, impotency, or pain and suffering.
(Larson's Workmen's Compensation Law, Vol. 2, p. 135).
The Workmen's Compensation Act supersedes common-law redress in tort and
substitutes a strictly statutory formula for paying compensation without regard to
the fault of the employer or the contributory negligence or assumption of risk of
the employee. (Dudley vs. Victor Lynn Lines, Inc. (N.J.)161 A. (2) 479 (1960) ).
The Workmen's Compensation Act are sui generis and create rights, remedies and
procedure which are exclusive; (that) they are in derogation of the common law
and are not controlled or affected by our rules of procedure in suits at law or
actions in equity, except as provided therein. (Hudson v. Herschback Drilling Co.,
46 N.M. 330, 128 P. (2) 1044 (1942) ).
The Workmen's Compensation statute regulates the relation not between the
workmen and the world at large, but between the workman and employer. ... As
between them the remedies provided therein are exclusive. (Caulfield vs. Elmhurst
Contracting Co., A.D. 53 N.Y.S. (2) 25 (1945) ).
The Workmen's Compensation Act which gives exclusive rights and remedies, was
enacted to exclude common law actions for injury or death caused by accident
arising out of and in the course of employment. The legislature intended to leave
unimpaired common law right of action for damages for injury or death not so
arising; in other words to the extent that the field is not touched by the act, the
employee's common law right of action is preserved inviolate. (Griffith v. Raven
Red, etc., Coal., Va. , 20 S.E. (2) 530, 1. c. 533 (1942) ).
To say that compensation as provided for in Article 1711 of the Civil Code is
recoverable by action in the ordinary courts, at the option of the claimant, just
because the Workmen's Compensation Act is not expressly invoked is to ignore the
fact that the grounds upon which compensation may be claimed are practically
identical in both statutes and to ignore likewise the exclusive character of "the
rights and remedies granted by this Act" as stated in Section 6 thereof, as well as
the provision of Article 2196 of the Civil Code.
The suggestion has been made that there is in this case a claim for moral damages
suffered by the plaintiff as a result of the negligence of the defendant and that such
damages do not come within the purview of the Workmen's Compensation Act. It
should be pointed out first, that the negligence alleged in the complaint consists of
the defendant's failure "to provide safety measures within the construction
premises," the nature of which negligence is precisely covered by Section 4-A of
the same Act, which makes the employer liable to pay additional compensation (of

TORTS | Aug 5| 16
50%) to the claimant-employee for failure "to install and maintain safety appliances,
or take other precautions for the prevention of accident or occupational disease."
Secondly, the alleged negligence was not a quasi-delict inasmuch as there was a preexisting contractual relation of employer and employee between the parties (Art.
2176, Civil Code); and in breaches of contract moral damages may be recovered only
where the defendant acted fraudulently or in bad faith (Art. 2220), and neither fraud
nor bad faith is alleged in the complaint here. In any event, whether or not such an
allegation, in relation to the breach of a contract of employment by the employer,
resulting in injury to an employee or laborer, would justify a claim for moral damages
and place it within the jurisdiction of ordinary courts is a question which we do not
decide in this case, not being the issue involved.
In view of all the foregoing, the order appealed from is affirmed, without costs. Dizon,
Zaldivar and Barredo, JJ., concur.

G.R. No. L-12163

March 4, 1959

PAZ
vs.
IRENEO MIRANDA, respondent.
Alberto
O.
Villaraza
Almazan and Ereneta for respondent.

FORES, petitioner,

for

petitioner.

REYES, J.B.L., J.:

Defendant-petitioner Paz Fores brings this petition for review of the decision of the
Court of Appeals (C.A. Case No. 1437-R) awarding to the plaintiff-respondent Ireneo
Miranda the sums of P5,000 by way of actual damages and counsel fees, and P10,000
as moral damages, with costs.
Respondent was one of the passengers on a jeepney driven by Eugenio Luga. While
the vehicle was descending the Sta. Mesa bridge at an excessive rate of speed, the
driver lost control thereof, causing it to swerve and to his the bridge wall. The accident
occurred on the morning of March 22, 1953. Five of the passengers were injured,
including the respondent who suffered a fracture of the upper right humerus. He was
taken to the National Orthopedic Hospital for treatment, and later was subjected to a
series of operations; the first on May 23, 1953, when wire loops were wound around
the broken bones and screwed into place; a second, effected to insert a metal splint,
and a third one to remove such splint. At the time of the trial, it appears that
respondent had not yet recovered the use of his right arm.
The driver was charged with serious physical injuries through reckless imprudence,
and upon interposing a plea of guilty was sentenced accordingly.
The contention that the evidence did not sufficiently establish the identity of the
vehicle as the belonging to the petitioner was rejected by the appellate court which
found, among other things, that is carried plate No. TPU-1163, SERIES OF 1952,
Quezon City, registered in the name of Paz Fores, (appellant herein) and that the
vehicle even had the name of "Doa Paz" painted below its wind shield. No evidence to
the contrary was introduced by the petitioner, who relied on an attack upon the
credibility of the two policemen who went to the scene of the incident.

A point to be further remarked is petitioner's contention that on March 21, 1953, or

one day before the accident happened, she allegedly sold the passenger jeep that
was involved therein to a certain Carmen Sackerman.
The initial problem raised by the petitioner in this appeal may be formulated thus
"Is the approval of the Public Service Commission necessary for the sale of
a public service vehicle even without conveying therewith the authority to operate
the same?" Assuming the dubious sale to be a fact, the court of Appeals answered
the query in the affirmative. The ruling should be upheld.
Section 20 of the Public Service Act (Commonwealth Act No. 146) provides:
Sec. 20. Subject to established limitations and exceptions and saving provisions to
the contrary, it shall be unlawful for any public service or for the owner, lessee or
operator thereof, without the previous approval and authority of the Commission
previously had
xxx

xxx

xxx

(g) To sell, alienate, mortgage, encumber or lease its property, franchises,

certificates, privileges, or rights, or any part thereof; or merge or consolidate its
property, franchises, privileges or rights, or any part thereof, with those of any
other public service. The approval herein required shall be given, after notice to the
public and after hearing the persons interested at a public hearing, if it be shown
that there are just and reasonable grounds for making the mortgage or
encumbrance, for liabilities of more than one year maturity, or the sale, alienation,
lease, merger, or consolidation to be approved and that the same are not
detrimental to the public interest, and in case of a sale, the date on which the
same
is
to
be
consummated
shall
be
fixed
in
the
order
of
approval: Provided, however, That nothing herein contained shall be construed to
prevent the transaction from being negotiated or completed before its approval or
to prevent the sale, alienation, or lease by any public service of any of its property
in the ordinary course of its business.
Interpreting the effects of this particular provision of law, we have held in the
recent cases of Montoya vs. Ignacio,* 50 Off. Gaz. No. 1, p. 108; Timbol vs. Osias,
et al., G. R. No. L-7547, April 30, 1955, and Medina vs. Cresencia, 99 Phil., 506; 52
Off. Gaz. No. 10, p. 4606, that a transfer contemplated by the law, if made without
the requisite approval of the Public Service Commission, is not effective and
binding in so far as the responsibility of the grantee under the franchise in relation
to the public is concerned. Petitioner assails, however, the applicability of these
rulings to the instant case, contending that in those cases, the operator did not
convey, by lease or by sale, the vehicle independently of his rights under the
franchise. This line of reasoning does not find support in the law. The provisions of
the statute are clear and prohibit the sale, alienation, lease, or encumbrance of the
property, franchise, certificate, privileges or rights, or any part thereof of the owner
or operator of the public service Commission. The law was designed primarily for
the protection of the public interest; and until the approval of the public Service
Commission is obtained the vehicle is, in contemplation of law, still under the
service of the owner or operator standing in the records of the Commission which
the public has a right to rely upon.
The proviso contained in the aforequoted law, to the effect that nothing therein
shall be construed "to prevent the transaction from being negotiated or complete
before its approval", means only that the sale without the required approval is still

TORTS | Aug 5| 17
valid and binding between the parties (Montoya vs. Ignacio, supra). The phrase "in the
ordinary course of its business" found in the other proviso" or to prevent the sale,
alienation, or lease by any public service of any of its property". As correctly observed
by the lower court, could not have been intended to include the sale of the vehicle
itself, but at most may refer only to such property that may be conceivably disposed
or by the carrier in the ordinary course of its business, like junked equipment or spare
parts.
The case of Indalecio de Torres vs. Vicente Ona (63 Phil., 594, 597) is enlightening;
and there, it was held:
Under the law, the Public Service Commission has not only general supervision and
regulation of, but also full jurisdiction and control over all public utilities including the
property, equipment and facilities used, and the property rights and franchise enjoyed
by every individual and company engaged i the performance of a public service in the
sense this phrase is used in the Public Service Act or Act No. 3108). By virtue of the
provisions of said Act, motor vehicles used in the performance of a service, as the
transportation of freightfrom one point to another, have to this date been considered
and they cannot but be so considered-public service property; and, by reason of its
own nature, a TH truck, which means that the operator thereof places it at the
disposal of anybody who is willing to pay a rental of its use, when he desires to
transfer or carry his effects, merchandise or any other cargo from one place to
another, is necessarily a public service property. (Emphasis supplied)
Of course, this court has held in the case of Bachrach Motor co. vs. Zamboanga
Transportation Co., 52 Phil., 244, that there may be a nunc pro tunc authorization
which has the effect of having the approval retroact to the date of the transfer; but
such outcome cannot prejudice rights intervening in the meantime. It appears that no
such approval was given by the Commission before the accident occurred.
The P10,000 actual damages awarded by the Court of First Instance of Manila were
reduced by the Court of Appeals to only P2,000, on the ground that a review of the
records failed to disclose a sufficient basis for the trial court's appraisal, since the only
evidence presented on this point consisted of respondent's bare statement that his
expenses and loss of income amounted to P20,000. On the other hand, "it cannot be
denied," the lower court said, "that appellee (respondent) did incur expenses"' It is
well to note further that respondent was a painter by profession and a professor of
Fine Arts, so that the amount of P2,000 awarded cannot be said to be excessive (see
Arts. 2224 and 2225, Civil Code of the Philippines). The attorney's fees in the sum of
P3,000 also awarded to the respondent are assailed on the ground that the Court of
First Instance did not provided for the same, and since no appeal was interposed by
said respondent, it was allegedly error for the Court of Appeals to award themmotu
proprio. Petitioner fails to note that attorney's fees are included in the concept of
actual damages under the Civil Code and may be awarded whenever the court deems
it is just and equitable (Art. 2208, Civil Code of the Philippines). We see no reason to
alter these awards.
Anent the moral damages ordered to be paid to the respondent, the same must be
discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., 101
Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs. Paras, 104 Phil., 75; 56 Off.
Gaz., [23] 4023, that moral damages are not recoverable in damage actions predicted
on a breach of the contract of transportation, in view of Articles 2219 and 2220 of the
new Civil Code, which provide as follows:
Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;
xxx

xxx

xxx

Art. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under circumstances, such damages are
justify due. The same rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith.
By contrasting the provisions of these two article it immediately becomes apparent
that:
(a) In case of breach of contract (including one of transportation) proof of bad faith
or fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to justify
an award of moral damages; and
(b) That a breach of contract can not be considered included in the descriptive term
"analogous cases" used in Art. 2219; not only because Art. 2220 specifically
provides for the damages that are caused by contractual breach, but because the
definition of quasi-delict in Art. 2176 of the Code expressly excludes the cases
where there is a "preexisting contractual relation between the parties."
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage dome. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter.
The exception to the basic rule of damages now under consideration is a mishap
resulting in the death of a passenger, in which case Article 1764 makes the
common carrier expressly subject to the rule of Art. 2206, that entitles the
deceased passenger to "demand moral damages for mental anguish by reason of
the death of the deceased" (Necesito vs. Paras, 104 Phil., 84, Resolution on motion
to reconsider, September 11, 1958). But the exceptional rule of Art. 1764 makes it
all the more evident that where the injured passenger does not die, moral damages
are not recoverable unless it is proved that the carrier was guilty of malice or bad
faith. We think it is clear that the mere carelessness of the carrier's driver does
not per se constitute of justify an inference of malice or bad faith on the part of the
carrier; and in the case at bar there is no other evidence of such malice to support
the award of moral damages by the Court of Appeals. To award moral damages for
breach of contract, therefore, without proof of bad faith or malice on the part of the
defendant, as required by Art. 220, would be to violate the clear provisions of the
law, and constitute unwarranted judicial legislation.
The Court of Appeals has invoked our rulings in Castro vs. Acro Taxicab Co., G.R.
No. 49155, December 14, 1948 and Layda vs. Court of Appeals, 90 Phil., 724; but
these doctrines were predicated upon our former law of damages, before judicial
discretion in fixing them became limited by the express provisions of the new Civil
Code (previously quoted). Hence, the aforesaid rulings are now inapplicable.
Upon the other hand, the advantageous position of a party suing a carrier for
breach of the contract of transportations explains, to some extent, the limitations
imposed by the new Code on the amount of the recovery. The action for breach of
contract imposes on the defendant carrier a presumption of liability upon mere
proof of injury to the passenger; that latter is relieved from the duty to established
the fault of the carrier, or of his employees, and the burden is placed on the carrier

TORTS | Aug 5| 18
to prove that it was due to an unforseen event or to force majeure (Cangco vs. Manila
Railroad Co., 38 Phil., 768, 777). Moreover, the carrier, unlike in suits for quasi-delict,
may not escape liability by proving that it has exercised due diligence in the selection
and supervision of its employees (Art. 1759, new civil code; Cangco vs. Manila
Railroad Co., supra; Prado vs. Manila Electric Co., 51 Phil., 900).
The difference in conditions, defenses and proof, as well as the codal concept of quasidelict as essentially extracontractual negligence, compel us to differentiate between
action ex contractu, and actions quasi ex delicto, and prevent us from viewing the
action for breach of contract as simultaneously embodying an action on tort. Neither
can this action be taken as one to enforce on employee's liability under Art. 103 of the
Revised Penal Code, since the responsibility is not alleged to be subsidiary, nor is there
on record any averment or proof that the driver of appellant was insolvent. In fact, he
is not even made a party to the suit.
It is also suggested that a carrier's violation of its engagement to safety transport the
passenger involves a breach of the passenger's confidence, and therefore should be
regarded as a breach of contract in bad faith, justifying recovery of moral damages
under Art. 2220. This theory is untenable, for under it the carrier would always be
deemed in bad faith, in every case its obligation to the passenger is infringed, and it
would be never accountable for simple negligence; while under the law (Art. 1756).
the presumption is that common carriers acted negligently(and not maliciously), and
Art. 1762 speaks of negligence of the common carrier.
ART. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in article 1733 and 1755.
ART. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence of
the common carrier, but the amount of damages shall be equitably reduced.
The distinction between fraud, bad faith or malice in the sense of deliberate or wanton
wrong doing and negligence (as mere carelessness) is too fundamental in our law to
be ignored (Arts. 1170-1172); their consequences being clearly differentiated by the
Code.
ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation.
It is to be presumed, in the absence of statutory provision to the contrary, that this
difference was in the mind of the lawmakers when in Art. 2220 they limited recovery
of moral damages to breaches of contract in bad faith. It is true that negligence may
be occasionally so gross as to amount to malice; but that fact must be shown in
evidence, and a carrier's bad faith is not to be lightly inferred from a mere finding that
the contract was breached through negligence of the carrier's employees.
In view of the foregoing considerations, the decision of the Court of Appeals is
modified by eliminating the award of P5,000.00 by way of moral damages. (Court of

TORTS | Aug 5| 19
Appeals Resolution of May 5, 1957). In all other respects, the judgment is affirmed.
No costs in this instance. So ordered.

G.R. No. 22063

September 30, 1924

LUCIO
vs.
CRISPULO ONRUBIA, defendant-appellee.
Raymundo
B.
Ferrer
Paredes, Buencamino & Yulo for appellee.

FRANCISCO, plaintiff-appellant,

for

appellant.

VILLAMOR, J.:
The plaintiff prays for judgment against the defendant, sentencing him to pay the sum
of P4,500 as damages for the death of his son Anselmo Francisco, with the costs of the
action. It is alleged as the cause of action that on or about November 25, 1922, in the
City of Manila, P. I., the said defendant, being the chauffeur and person in charge of
automobile No. 6674, drove and operated said automobile on Calle Azcarraga in a
careless and negligent manner and in violation of the traffic regulation, causing it to
run at an unusual speed, thereby overrunning on said Calle Azcarraga a child 9 years

old by the name of Anselmo Francisco, as a result of which, the said Anselmo
Francisco received wounds on several parts of his body, which caused his death
almost instantaneously; that the aforesaid child Anselmo Francisco is a son of the
herein plaintiff, was living under his custody, and assisted him in his work and
labor, and was, also rendering not less valuable services to his mother; and that by
reason of the death of the aforesaid child Anselmo Francisco, caused by the
defendant, the herein plaintiff, as well as his wife, was deprived of the services that
said child was rendering up to the date of his death, and of those he may render in
the future, which must be considered as doubly important, thus having suffered
damages in the sum of four thousand five hundred pesos (P4,500).
The defendant filed a general and specific denial of the facts alleged in the
complaint, and as a special defense, alleged:
1. That prior to the date of the complaint, said defendant was prosecuted in this
same court for homicide through reckless imprudence, criminal case No. 24994,
"The People of the Philippine Islands vs. Crispulo Onrubia y Julian," upon the same
facts that are now alleged as a cause of action of the complaint, as evidenced by a
copy of the information presented in that action, which is attached hereto and
made a part hereof marked Exhibit 1.
2. That the information mentioned in the preceding paragraph was presented upon
a complaint and at the instance of the herein plaintiff and of the heirs of the
deceased Anselmo Francisco, none of whom has reserved the right to bring later
such civil action as may arise from the facts set forth in the information, nor
stated, or indicated in any manner his desire not to be understood as bringing the
proper civil action together with said criminal case.
3. That after the proper proceedings, and the court having full jurisdiction over the
subject-matter and the person of the defendant, accused therein, a judgment of
acquittal was rendered, a copy of which is attached hereto and made a part hereof
as Exhibit 2, holding that the said accused did not deprive the automobile he was
operating at an exaggerated or unreasonable speed, was not responsible for any
imprudence, fault, carelessness or negligence whatsoever, and did not violate any
regulation in connection with said death.
At the trial of this case, the attorney for the defendant proposed a stipulation of
facts, which was accepted by the attorney for the plaintiff and is as follows:
(a) That prior to the date of the complaint said defendant was prosecuted in this
same court for homicide thru reckless imprudence, criminal case No. 24994,
entitled "The People of the Philippine Islands vs.Crispulo Onrubia y Julina," upon
the same facts now alleged as the cause of action of the plaintiff's complaint, a
copy of the information therein filed being attached to the answer as Exhibit 1.
(b) That the information mentioned in the preceding paragraph was presented
upon a complain and at the instance of the herein plaintiff and the heirs of the
deceased Anselmo Francisco.
(c) That after the proper proceedings, and the court having full jurisdiction over the
subject-matter and the person of the defendant, accused therein, a judgment of
acquittal was rendered, a copy of which is attached to the answer as Exhibit 2.
Upon the facts agreed upon by the parties, the trial judge rendered judgment,
dismissing the case without costs, on the ground that, the defendant having been
acquitted in the criminal case for not having been guilty of any fault, negligence, or

TORTS | Aug 5| 20
carelessness, no judgment can be rendered against him for the damages arising from
the same facts.
This is the judgment sought by the appellant to be reversed.
This court has oftentimes discussed the procedure prescribed by the Spanish Law of
Criminal Procedure for determining the civil liability arising from a crime. In the case
of Springer vs. Odlin (3 Phil., 344); it was said:
By General Orders, No. 58, section 107, the privileges secured by the Spanish law to
persons claiming to be injured by the commission of an offense to take part in the
prosecution of the offense and to recover damages for the injury sustained by reason
of the same, are preserved and remain in force, and it is therein expressly provided
that the court, upon conviction of the accused, may enter judgment in favor of the
injured person against the defendant in the criminal case for the damages occasioned
by the wrongful act.
In Rakes vs. Atlantic Gulf and Pacific Company (7 Phil., 359), it was held:
According to article 112, the penal action once started, the civil remedy should be
sought therewith, unless it had been waived by the party injured or been expressly
reserved by him for civil proceedings for the future. If the civil action alone was
prosecuted, arising out of a crime that could be enforced only on private complaint,
the penal action thereunder should be extinguished.
In the case of United States vs. Guy-Sayco (13 Phil., 292), this court, construing
articles 17, 121 and 122 of the Penal Code, held:
In deciding a cause, the civil responsibility incurred by the accused, consequent upon
his criminal liability, must be declared, because every person criminally responsible for
a crime or misdemeanor is also civilly liable, and the courts are obliged to fix the
amount of indemnity for damages in the terms prescribed for the operation of
damages caused by the crime. (Arts. 17, 121 and 122, Penal Code.)
The same doctrine as maintained in United States vs. Bernardo (19 Phil., 265).
There is not doubt that under the criminal procedure now in force in this jurisdiction,
he who alleges having been prejudiced by the commission of a crime or fault may
bring a civil action independently from the criminal; but once the criminal action is
instituted, the civil is deemed also to have been brought, unless the person injured or
prejudiced has waived the same or made an express reservation for bringing the same
after the termination of the criminal case, should he have any right thereto. (Art. 122
of the Law of Criminal Procedure.) And the civil action reserved by the party injured
will be allowed after the termination of the criminal proceeding only when he has as
right thereto, that is to say, when the judgment rendered is one of conviction, or, in
case the accused is acquitted, the complaint is based on some other fact or ground
different from the criminal act. But an action based on the same facts that were the
subject-matter of the criminal case cannot be maintained when by a final judgment it
was declared that the fact from which the civil action could have arisen did not exist,
according to article 116 of the said Law of Criminal Procedure, which provides that the
extinction of the penal action does not carry with it the extinction of the civil one,
unless the extinction is caused by a declaration in a final judgment that the fact upon
which the civil action could have arisen did not exist.
And this logically follows from the provision of article 17 of the Penal Code: "Every
person criminally liable for a felony or misdemeanor, is also civilly liable." That is to

say, if the criminal liability carries with it the civil one, the exemption from criminal
liability implies exemption from civil liability.
The supreme court of Spain in a judgment rendered January 3, 1887, laid down
this doctrine: "In order to establish the civil liability in a criminal case, it is
necessary that the same spring from, or be a consequence of, the criminal liability,
and, therefore, if the defendant is acquitted of a crime, a judgment, sentencing
him to pay a determinate indemnity by reason of the same crime, violates this
article." (The article cited is art. 17 of the Penal Code.)
In another judgment rendered December 20, 1882, that high court says: "That a
person not criminally liable for a crime or misdemeanor cannot be civilly liable,
under the provision of article 18 of the Penal Code (17 of the Philippine) and the
trial court not having held so had violated said articles 18 and 21 and committed
the error of law mentioned in article 849, case No. 4, of the Revised Compilation."
In a relatively recent judgment, namely, of February 25, 1891, the same supreme
court held: "That a judgment acquitting the defendants on the ground that neither
the crime charged, nor the guilt of the accused, was proven decides all the points
of the prosecution and the defense, and their criminal liability not having been
established, it is impossible to make any finding of civil liability which is accessory
to the criminal."
The question raised in this appeal is the same as that put in issue and decided in
the case of Almeida Chan Tanco vs. Abaroa (8 Phil., 178). In that case, the act
complained of in the civil action brought by the plaintiffs was the same one
imputed by one of them to the defendant, to wit, that of having set fire to, or
burnt, a store with the goods therein contained, which belonged to them, and
which was the subject of a criminal prosecution for the crime of incendiarism
against the said defendant Abaroa, although the latter was acquitted by a
judgment of the trial court, affirmed by this court, for lack of sufficient evidence to
show his participation in the criminal act. This court in a decision rendered per
curiam, held:
The full and complete acquittal of an accused necessarily implies his innocence of,
and freedom from responsibility for, the crime of which he was accused. (Rule 51 of
the Provincial Law for the application of the Penal Code.)
The judgment which fully acquits the accused persons, settles in an explicit manner
all the points in question, not only in the accusation but those of the defense, in
accordance with the established jurisprudence of the supreme tribunal of Spain,
the provisions of article 742 of the Law of Criminal Procedure of 1882, and article
839 of the Compilation.
Those persons not criminally responsible for an offense or misdemeanor cannot be
made civilly responsible (art. 17 of the Penal Code); from which precept it is a
logical consequence that exemption from criminal responsibility carries with it
exemption from civil responsibility. (Decisions of the supreme court of Spain,
January 3, 1877, and December 20, 1882.)
The accused once found by the court not to have been the author of an offense and
being acquitted of the accusation, under no condition can be made civilly
responsible for the harm caused and for the damages and losses suffered by
reason of the criminal act.

TORTS | Aug 5| 21
In that decision this court says: "It is not possible to conceived, if it is not permitted to
find against an accused acquitted of civil responsibility in a criminal case, how he can
be held responsible for the same in a civil case in the absence of any law authorizing
the same, and this is an inexplicable counter-course.
It cannot be conceived legally that an act of setting fire executed intentionally is not
constitutive of the crime of arson, and that its author, without being found personally
responsible according to the penal law, is to be only civilly responsible therefor.
That case was brought by a writ of error to the Supreme Court of the United States,
which in affirming the judgment appealed from (218 U. S., 476; 54 L. ed., 1116; 40
Phil., 1056), laid the following doctrine:
A civil action for indemnification for the damages resulting from the malicious or
unlawful burning of a storehouse and its contents may not be maintained in the
Philippine courts, where there has been a judgment of acquittal against he same
defendant for the same malicious and unlawful burning, in view of the positive
legislation in the Philippine codes, civil and criminal, drawing a distinction between a
civil liability which results from the mere negligence of the defendant, and a liability
for the civil consequences of a crime by which another has sustained loss or injury,
and of the plain inference from article 17 of the Penal Code, that civil liability springs
out of and is dependent upon facts which, if true, would constitute a crime or
misdemeanor, and of the provisions of Code of Criminal Procedure sections 108, 112,
742, which plainly contemplate that the civil liability of the defendant shall be
ascertained and declared in the criminal proceedings.
In Wise & Co. vs. Larion (45 Phil., 314), the same doctrine was maintained:
While it is true that a civil action may be maintained by an employer to recover money
misappropriated by his employee without the prior institution of a criminal proceeding,
nevertheless if a criminal prosecution based upon the same misappropriation is in fact
instituted against the employee and he is acquitted, such acquittal operates as a bar
to any subsequent civil action.
Thus it is seen that the constant jurisprudence of this court upheld by the Supreme
Court of the United States, sustains and supports the judgment appealed from. But
the appellants insists that under article 1902 of the Civil Code, he has the right to
institute this action, notwithstanding the judgment of acquittal rendered in the
criminal case against the defendant upon the same cause of action. We are of the
opinion, and so hold, that said article 1902 has no application in the instant case, first,
because said article presupposes the existence of fault or negligence upon which the
action is based, and second, it refers to a fault or negligence not punishable by law.
Article 1902, says:
Any person who by an act or omission causes damages to another by his fault or
negligence shall be liable for the damage so done.
This statutory provision, however, must be understood as subordinated to article 1093
of the same code, which provides:
Those arising from wrongful or negligent acts or omissions not punishable by law shall
be subject to the provisions of chapter second of title sixteen of this book.
Article 1902 is found precisely in chapter 2, title 16, book 4, of the Civil Code, so that
in order that said article 1902 may be applied, it is necessary that the negligence or
fault in question be not punished by law. And this is so because if the fault or

TORTS | Aug 5| 22
negligence is punished by the law, it ceases to be the quasi crime of negligence
having purely civil effects, and becomes a crime or misdemeanor, according to the
gravity of the penalty imposed by the law, and in that case it comes within the
purview of article 1092 of the Civil Code, which provides:
Civil obligations arising from crimes or misdemeanors shall be governed by the
provisions of the Penal Code.
Under the facts set forth in the complaint, if there was any faulty or negligence on
the part of the defendant, it must necessarily be a fault punishable by law (arts.
568, 590 and 604 of the Penal Code), for through said fault he caused the death of
the plaintiff's son. Homicide through reckless imprudence is punished as a crime,
and therefore the provisions applicable would be those of the Penal Code and the
Law of Criminal Procedure above cited.
For all of the foregoing the judgment appealed from must be, as is hereby, affirmed
with costs against the appellant. So ordered.

TORTS | Aug 5| 23
un animal cause perjuicio para que nasca la responsibilidad del dueno, aun no
imputandose a este ninguna clase de culpa o negligencia, habida,sin duda, cuenta por
el lgislador de que tal concepto de dueno es suficiente para que arrastre las
consecuencias favorables o adversas de esta clase de propiedad, salvo la exception en
el mismo contenida. (12 Manresa, Commentaries on the Spanish CivilCode, 573.)

G.R. No. L-2075

November 29, 1949

MARGARITA
AFIALDA, plaintiff-appellant,
vs.
BASILIO HISOLE and FRANCISCO HISOLE, defendants-appellees.
Nicolas
P.
Nonato
Gellada, Mirasol and Ravena for appellees.

for

appellant.

REYES, J.:
This is an action for damages arising from injury caused by an animal. The
complaint alleges that the now deceased, Loreto Afialda, was employed by the
defendant spouses as caretaker of their carabaos at a fixed compensation; that
while tending the animals he was, on March 21, 1947, gored by one of them and
later died as a consequence of his injuries; that the mishap was due neither to his
own fault nor to force majeure; and that plaintiff is his elder sister and heir
depending upon him for support.
Before filing their answer, defendants moved for the dismissal of the complaint for
lack of a cause of action, and the motion having been granted by the lower court,
plaintiff has taken this appeal.
Plaintiff seeks to hold defendants liable under article 1905 of the Civil Code, which
reads:
The possessor of an animal, or the one who uses the same, is liable for any
damages it may cause, even if such animal should escape from him or stray away.
This liability shall cease only in case, the damage should arise from force
majeure or from the fault of the person who may have suffered it.
The question presented is whether the owner of the animal is liable when damage
is caused to its caretaker.
The lower court took the view that under the above-quoted provision of the Civil
Code, the owner of an animal is answerable only for damages caused to a stranger,
and that for damage caused to the caretaker of the animal the owner would be
liable only if he had been negligent or at fault under article 1902 of the same code.
Claiming that the lower court was in error, counsel for plaintiff contends that the
article 1905 does not distinguish between damage caused to the caretaker and
makes the owner liable whether or not he has been negligent or at fault. For
authority counsel cites the following opinion which Manresa quotes from a decision
of the Spanish Supreme Court:
El articulo 1905 del codigo Civil no consienta otra interpretacion que la que, clara y
evidentemente, se deriva de sus terminos literales, bastando, segun el mismo, que

This opinion, however, appears to have been rendered in a case where an animal
caused injury to a stranger or third person. It is therefore no authority for a case like
the present where the person injured was the caretaker of the animal. The distinction
is important. For the statute names the possessor or user of the animal as the person
liable for "any damages it may cause," and this for the obvious reason that the
possessor or user has the custody and control of the animal and is therefore the one in
a position to prevent it from causing damage.
In the present case, the animal was in custody and under the control of the caretaker,
who was paid for his work as such. Obviously, it was the caretaker's business to try to
prevent the animal from causing injury or damage to anyone, including himself. And
being injured by the animal under those circumstances, was one of the risks of the
occupation which he had voluntarily assumed and for which he must take the
consequences.
In a decision of the Spanish Supreme Court, cited by Manresa in his Commentaries
(Vol. 12, p. 578), the death of an employee who was bitten by a feline which his
master had asked him to take to his establishment was by said tribunal declared to be
"a veritable accident of labor" which should come under the labor laws rather than
under article 1905 of the Civil Code. The present action, however, is not brought under
the Workmen's Compensation Act, there being no allegation that, among other things,
defendant's business, whatever that might be, had a gross income of P20,000. As
already stated, defendant's liability is made to rest on article 1905 of the Civil Code.
but action under that article is not tenable for the reasons already stated. On the other
hand, if action is to be based on article 1902 of the Civil Code, it is essential that there
be fault or negligence on the part of the defendants as owners of the animal that
caused the damage. But the complaint contains no allegation on those points.
There being no reversible error in the order appealed from, the same is hereby
affirmed, but without costs in view of the financial situation of the appellant.

TORTS | Aug 5| 24
spillways, thereby releasing a large amount of water which inundated the banks of the
Angat River; and 5) as a consequence, members of the household of the plaintiffs,
together with their animals, drowned, and their properties were washed away in the
evening of 26 October and the early hours of 27 October 1978. 3
In their Answers, the defendants, now petitioners, alleged that: 1) the NPC exercised
due care, diligence and prudence in the operation and maintenance of the
hydroelectric plant; 2) the NPC exercised the diligence of a good father in the selection
of its employees; 3) written notices were sent to the different municipalities of Bulacan
warning the residents therein about the impending release of a large volume of water
with the onset of typhoon "Kading" and advise them to take the necessary
precautions; 4) the water released during the typhoon was needed to prevent the
collapse of the dam and avoid greater damage to people and property; 5) in spite of
the precautions undertaken and the diligence exercised, they could still not contain or
control the flood that resulted and; 6) the damages incurred by the private
respondents were caused by a fortuitous event or force majeure and are in the nature
and character of damnum absque injuria. By way of special affirmative defense, the
defendants averred that the NPC cannot be sued because it performs a purely
governmental function. 4

G.R. Nos. 103442-45 May 21, 1993

NATIONAL
POWER
CORPORATION,
ET
AL., petitioners,
vs.
THE COURT OF APPEALS, GAUDENCIO C. RAYO, ET AL., respondents.
The Solicitor General for plaintiff-appellee.
Ponciano G. Hernandez for private respondents.

Upon motion of the defendants, a preliminary hearing on the special defense was
conducted. As a result thereof, the trial court dismissed the complaints as against the
NPC on the ground that the provision of its charter allowing it to sue and be sued does
not contemplate actions based on tort. The parties do not, however, dispute the fact
that this Court overruled the trial court and ordered the reinstatement of the
complaints as against the NPC. 5
Being closely interrelated, the cases were consolidated and trial thereafter ensued.

DAVIDE, JR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court urging this Court to set aside the 19 August 1991 consolidated Decision of
the Court of Appeals in CA.-G.R. CV Nos. 27290-93 1 which reversed the Decision of
Branch 5 of the then Court of First Instance (now Regional Trial Court) of Bulacan,
and held petitioners National Power Corporation (NPC) and Benjamin Chavez jointly
and severally liable to the private respondents for actual and moral damages,
litigation expenses and attorney's fees.
This present controversy traces its beginnings to four (4) separate complaints for
damages filed against the NPC and Benjamin Chavez before the trial court. The
plaintiffs therein, now private respondents, sought to recover actual and other
damages for the loss of lives and the destruction to property caused by the
inundation of the town of Norzagaray, Bulacan on 26-27 October 1978. The
flooding was purportedly caused by the negligent release by the defendants of
water through the spillways of the Angat Dam (Hydroelectric Plant). In said
complaints, the plaintiffs alleged, inter alia, that: 1) defendant NPC operated and
maintained a multi-purpose hydroelectric plant in the Angat River at Hilltop,
Norzagaray, Bulacan; 2) defendant Benjamin Chavez was the plant supervisor at
the time of the incident in question; 3) despite the defendants' knowledge, as early
as 24 October 1978, of the impending entry of typhoon "Kading," they failed to
exercise due diligence in monitoring the water level at the dam; 4) when the said
water level went beyond the maximum allowable limit at the height of the typhoon,
the defendants suddenly, negligently and recklessly opened three (3) of the dam's
2

The lower court rendered its decision on 30 April 1990 dismissing the complaints "for
lack of sufficient and credible evidence." 6 Consequently, the private respondents
seasonably appealed therefrom to the respondent Court which then docketed the
cases as CA-G.R. CV Nos. 27290-93.
In its joint decision promulgated on 19 August 1991, the Court of Appeals reversed
the appealed decision and awarded damages in favor of the private respondents. The
dispositive portion of the decision reads:
CONFORMABLY TO THE FOREGOING, the joint decision appealed from is hereby
REVERSED and SET ASIDE, and a new one is hereby rendered:
1. In Civil Case No. SM-950, ordering defendants-appellees to pay, jointly and
severally, plaintiffs-appellants, with legal interest from the date when this decision
shall become final and executory, the following:
A. Actual damages, to wit:
1) Gaudencio C. Rayo, Two Hundred Thirty One Thousand Two Hundred Sixty Pesos
(P231,260.00);
2) Bienvenido P. Pascual,
(P204.500.00);

Two

Hundred Four Thousand Five

Hundred Pesos

3) Tomas Manuel, One Hundred Fifty Five Thousand Pesos (P155,000.00);

4) Pedro C. Bartolome, One Hundred Forty Seven Thousand Pesos (P147,000.00);.

5) Bernardino Cruz, One Hundred Forty Three Thousand Five Hundred Fifty Two
Pesos and Fifty Centavos (P143,552.50);
6) Jose Palad, Fifty Seven Thousand Five Hundred Pesos (P57,500.00);
7) Mariano S. Cruz, Forty Thousand Pesos (P40,000.00);
8) Lucio Fajardo, Twenty nine Thousand Eighty Pesos (P29,080.00); and
B. Litigation expenses of Ten Thousand Pesos (P10,000.00);
2. In Civil case No. SM-951, ordering defendants-appellees to pay jointly and
severally, plaintiff-appellant, with legal interest from the date when this decision
shall have become final and executory, the following :
A. Actual damages of Five Hundred Twenty Thousand Pesos (P520,000.00);.
B. Moral damages of five hundred Thousand Pesos (P500,000.00); and.
C. Litigation expenses of Ten Thousand Pesos (P10,000.00);.
3. In Civil Case No. SM-953, ordering defendants-appellees to pay, jointly and
severally, with legal interest from the date when this decision shall have become
final and executory;
A. Plaintiff-appellant Angel C. Torres:
1) Actual damages of One Hundred Ninety Nine Thousand One Hundred Twenty
Pesos (P199,120.00);
2) Moral Damages of One Hundred Fifty Thousand Pesos (P150,000.00);
B. Plaintiff-appellant Norberto Torres:
1) Actual damages of Fifty Thousand Pesos (P50,000.00);
2) Moral damages of Fifty Thousand Pesos (P50,000.00);
C. Plaintiff-appellant Rodelio Joaquin:
1) Actual damages of One Hundred Thousand Pesos (P100,000.00);
2) Moral damages of One Hundred Thousand Pesos (P100,000.00); and
D. Plaintifsf-appellants litigation expenses of Ten Thousand Pesos (P10,000.00);
4. In Civil case No. SM-1247, ordering defendants-appellees to pay, jointly and
severally, with legal interest from the date when this decision shall have become
final and executory :
A. Plaintiffs-appellants Presentacion Lorenzo and Clodualdo Lorenzo:
1) Actual damages of Two Hundred Fifty Six Thousand Six Hundred Pesos
(P256,600.00);
2) Moral damages of Fifty Thousand Pesos (P50,000.00);
B. Plaintiff-appellant Consolacion Guzman :
1) Actual damages of One Hundred forty Thousand Pesos (P140,000.00);
2) Moral damages of Fifty Thousand Pesos (P50,000.00);
C. Plaintiff-appellant Virginia Guzman :

TORTS | Aug 5| 25
1) Actual damages of Two Hundred Five Hundred Twenty Pesos (205,520.00); and
D. Plaintiffs-appellants litigation expenses of Ten Thousand Pesos (10,000.00).
In addition, in all the four (4) instant cases, ordering defendants-appellees to pay,
jointly and severally, plaintiffs-appellants attorney fees in an amount equivalent to
15% of the total amount awarded.
No pronouncement as to costs. 7
The foregoing judgment is based on the public respondent's conclusion that the
petitioners were guilty of:
. . . a patent gross and evident lack of foresight, imprudence and negligence . . . in
the management and operation of Angat Dam. The unholiness of the hour, the extent
of the opening of the spillways, And the magnitude of the water released, are all but
products of defendants-appellees' headlessness, slovenliness, and carelessness. The
resulting flash flood and inundation of even areas (sic) one (1) kilometer away from
the Angat River bank would have been avoided had defendants-appellees prepared the
Angat Dam by maintaining in the first place, a water elevation which would allow room
for the expected torrential rains. 8
This conclusion, in turn, is anchored on its findings of fact, to wit:
As early as October 21, 1978, defendants-appellees knew of the impending onslaught
of and imminent danger posed by typhoon "Kading". For as alleged by defendantsappellees themselves, the coming of said super typhoon was bannered by Bulletin
Today, a newspaper of national circulation, on October 25, 1978, as "Super Howler to
hit R.P." The next day, October 26, 1978, said typhoon once again merited a headline
in said newspaper as "Kading's Big Blow expected this afternoon" (Appellee's Brief, p.
6). Apart from the newspapers, defendants-appellees learned of typhoon "Kading'
through radio announcements (Civil Case No. SM-950, TSN, Benjamin Chavez,
December 4, 1984, pp. 7-9).
Defendants-appellees doubly knew that the Angat Dam can safely hold a normal
maximum headwater elevation of 217 meters (Appellee's brief, p. 12; Civil Case No.
SM-951, Exhibit "I-6"; Civil Case No. SM-953, Exhibit "J-6"; Civil Case No. SM-1247,
Exhibit "G-6").
Yet, despite such knowledge, defendants-appellees maintained a reservoir water
elevation even beyond its maximum and safe level, thereby giving no sufficient
allowance for the reservoir to contain the rain water that will inevitably be brought by
the coming typhoon.
On October 24, 1978, before typhoon "Kading" entered the Philippine area of
responsibility, water elevation ranged from 217.61 to 217.53, with very little opening
of the spillways, ranging from 1/2 to 1 meter. On October 25, 1978, when typhoon
"Kading" entered the Philippine area of responsibility, and public storm signal number
one was hoisted over Bulacan at 10:45 a.m., later raised to number two at 4:45 p.m.,
and then to number three at 10:45 p.m., water elevation ranged from 217.47 to
217.57, with very little opening of the spillways, ranging from 1/2 to 1 meter. On
October 26, 1978, when public storm signal number three remained hoisted over
Bulacan, the water elevation still remained at its maximum level of 217.00 to 218.00
with very little opening of the spillways ranging from 1/2 to 2 meters, until at or about
midnight, the spillways were suddenly opened at 5 meters, then increasing swiftly to
8, 10, 12, 12.5, 13, 13.5, 14, 14.5 in the early morning hours of October 27, 1978,
releasing water at the rate of 4,500 cubic meters per second, more or less. On

October 27, 1978, water elevation remained at a range of 218.30 to 217.05 (Civil
Case No. SM-950, Exhibits "D" and series, "L", "M", "N", and "O" and Exhibits "3"
and "4"; Civil Case No. SM-951, Exhibits "H" and "H-1"; Civil Case No. SM-953,
Exhibits "I" and "I-1"; Civil Case No. SM 1247, Exhibits "F" and "F-1").
xxx xxx xxx
From the mass of evidence extant in the record, We are convinced, and so hold
that the flash flood on October 27, 1978, was caused not by rain waters (sic), but
by stored waters (sic) suddenly and simultaneously released from the Angat Dam
by defendants-appellees, particularly from midnight of October 26, 1978 up to the
morning
hours
of
October
27,
1978. 9
The appellate court rejected the petitioners' defense that they had sent "early
warning written notices" to the towns of Norzagaray, Angat, Bustos, Plaridel,
Baliwag and Calumpit dated 24 October 1978 which read:

Petitioners thus filed the instant petition on 21 February 1992.

After the Comment to the petition was filed by the private respondents and the Reply
thereto was filed by the petitioners, We gave due course to the petition on 17 June
1992 and directed the parties to submit their respective Memoranda, 15 which they
subsequently complied with.
The petitioners raised the following errors allegedly committed by the respondent
Court :
I. THE COURT OF APPEALS ERRED IN APPLYING THE RULING OF NAKPIL & SONS V.
COURT OF APPEALS AND HOLDING THAT PETITIONERS WERE GUILTY OF
NEGLIGENCE.
II. THE COURT OF APPEALS ERRED IN HOLDING THAT THE WRITTEN NOTICES OF
WARNING ISSUED BY PETITIONERS WERE INSUFFICIENT.

TO ALL CONCERN (sic):

Please be informed that at present our reservoir (dam) is full and that we have
been releasing water intermittently for the past several days.
With the coming of typhoon "Rita" (Kading) we expect to release greater (sic)
volume of water, if it pass (sic) over our place.
In view of this kindly advise people residing along Angat River to keep alert and
stay in safe places.
BENJAMIN
Power Plant Superintendent 10

TORTS | Aug 5| 26
The motion for reconsideration filed by the petitioners, as well as the motion to modify
judgment filed by the public respondents, 13 were denied by the public respondent in
its Resolution of 27 December 1991. 14

L.

CHAVEZ

because:
Said notice was delivered to the "towns of Bulacan" on October 26, 1978 by
defendants-appellees driver, Leonardo Nepomuceno (Civil Case No. SM-950, TSN,
Benjamin Chavez, December 4, 1984, pp. 7-11 and TSN, Leonardo Nepomuceno,
March 7, 1985, pp. 10-12).
Said notice is ineffectual, insufficient and inadequate for purposes of the opening of
the spillway gates at midnight of October 26, 1978 and on October 27, 1978. It did
not prepare or warn the persons so served, for the volume of water to be released,
which turned out to be of such magnitude, that residents near or along the Angat
River, even those one (1) kilometer away, should have been advised to evacuate.
Said notice, addressed "TO ALL CONCERN (sic)," was delivered to a policeman
(Civil Case No. SM-950, pp. 10-12 and Exhibit "2-A") for the municipality of
Norzagaray. Said notice was not thus addressed and delivered to the proper and
responsible officials who could have disseminated the warning to the residents
directly affected. As for the municipality of Sta. Maria, where plaintiffs-appellants in
Civil Case No. SM-1246 reside, said notice does not appear to have been served. 11
Relying on Juan F. Nakpil & Sons vs. Court of Appeals, 12 public respondent rejected
the petitioners' plea that the incident in question was caused by force majeure and
that they are, therefore, not liable to the private respondents for any kind of
damage such damage being in the nature of damnum absque injuria.

III. THE COURT OF APPEALS ERRED IN HOLDING THAT THE DAMAGE SUFFERED BY
PRIVATE RESPONDENTS WAS NOT DAMNUM ABSQUE INJURIA.
IV. THE COURT OF APPEALS ERRED IN NOT AWARDING THE COUNTERCLAIM OF
PETITIONERS FOR ATTORNEY'S FEES AND EXPENSES OF LITIGATION. 16
These same errors were raised by herein petitioners in G.R. No. 96410,
entitled National Power Corporation, et al., vs. Court of Appeals, et al., 17 which this
Court decided on 3 July 1992. The said case involved the very same incident subject of
the instant petition. In no uncertain terms, We declared therein that the proximate
cause of the loss and damage sustained by the plaintiffs therein who were similarly
situated as the private respondents herein was the negligence of the petitioners,
and that the 24 October 1978 "early warning notice" supposedly sent to the affected
municipalities, the same notice involved in the case at bar, was insufficient. We thus
cannot now rule otherwise not only because such a decision binds this Court with
respect to the cause of the inundation of the town of Norzagaray, Bulacan on 26-27
October 1978 which resulted in the loss of lives and the destruction to property in both
cases, but also because of the fact that on the basis of its meticulous analysis and
evaluation of the evidence adduced by the parties in the cases subject of CA-G.R. CV
Nos. 27290-93, public respondent found as conclusively established that indeed, the
petitioners were guilty of "patent gross and evident lack of foresight, imprudence and
negligence in the management and operation of Angat Dam," and that "the extent of
the opening of the spillways, and the magnitude of the water released, are all but
products of defendants-appellees' headlessness, slovenliness, and carelessness." 18 Its
findings and conclusions are biding upon Us, there being no showing of the existence
of any of the exceptions to the general rule that findings of fact of the Court of
Appeals are conclusive upon this Court. 19 Elsewise stated, the challenged decision can
stand on its own merits independently of Our decision in G.R. No. 96410. In any
event, We reiterate here in Our pronouncement in the latter case that Juan F. Nakpil &
Sons vs. Court of Appeals 20 is still good law as far as the concurrent liability of an
obligor in the case of force majeure is concerned. In the Nakpil case, We held:
To exempt the obligor from liability under Article 1174 of the Civil Code, for a breach
of an obligation due to an "act of God," the following must concur: (a) the cause of the
breach of the obligation must be independent of the will of the debtor; (b) the event

TORTS | Aug 5| 27
must be either unforseeable or unavoidable; (c) the event must be such as to
render it impossible for the debtor to fulfill his obligation in a moral manner; and
(d) the debtor must be free from any participation in, or aggravation of the injury
to the creditor. (Vasquez v. Court of Appeals, 138 SCRA 553; Estrada v.
Consolacion, 71 SCRA 423; Austria v. Court of Appeals, 39 SCRA 527; Republic of
the Phil. v. Luzon Stevedoring Corp., 21 SCRA 279; Lasam v. Smith, 45 Phil. 657).
Thus, if upon the happening of a fortuitous event or an act of God, there concurs a
corresponding fraud, negligence, delay or violation or contravention in any manner
of the tenor of the obligation as provided for in Article 1170 of the Civil Code, which
results in loss or damage, the obligor cannot escape liability.
The principle embodied in the act of God doctrine strictly requires that the act must
be one occasioned exclusively by the violence of nature and all human agencies are
to be excluded from creating or entering into the cause of the mischief. When the
effect, the cause of which is to be considered, is found to be in part the result of
the participation of man, whether it be from active intervention or neglect, or
failure to act, the whole occurrence is thereby humanized, as it were, and removed
from the rules applicable to the acts of God. (1 Corpus Juris, pp. 1174-1175).
Thus it has been held that when the negligence of a person concurs with an act of
God in producing a loss, such person is not exempt from liability by showing that
the immediate cause of the damage was the act of God. To be exempt from liability
for loss because of an act of God, he must be free from any previous negligence or
misconduct by which that loss or damage may have been occasioned. (Fish &
Elective Co. v. Phil. Motors, 55 Phil. 129; Tucker v. Milan, 49 O.G. 4379; Limpangco
& Sons v. Yangco Steamship Co., 34 Phil. 594, 604; Lasam v. Smith, 45 Phil.
657). 21
Accordingly, petitioners cannot be heard to invoke the act of God or force
majeure to escape liability for the loss or damage sustained by private respondents
since they, the petitioners, were guilty of negligence. The event then was not
occasioned exclusively by an act of God or force majeure; a human factor
negligence or imprudence had intervened. The effect then of the force
majeure in question may be deemed to have, even if only partly, resulted from the
participation of man. Thus, the whole occurrence was thereby humanized, as it
were, and removed from the laws applicable to acts of God.
WHEREFORE, for want of merit, the instant petition is hereby DISMISSED and the
Consolidated Decision of the Court of Appeals in CA-G.R. CV Nos. 27290-93 is
AFFIRMED, with costs against the petitioners.
SO ORDERED.

Jose
Erquiaga
DeWitt, Perkins and Brady for appellee.

for

TORTS | Aug 5| 28
appellant.

VILLAMOR, J.:
On August 30, 1926, the steamer Helen C, belonging to the defendant, the
Cadwallader Gibson Lumber Co., under the command of Captain Miguel Lasal, in the
course of its maneuvers to moor at the plaintiff's wharf in the port of Olutanga,
Zamboanga, struck said wharf, partially demolishing it and throwing the timber piled
thereon into the water. Whereupon the plaintiff brought the instant action to recover of
the defendant the sum of P9,705.83 as damages for the partial demolition of the
wharf and for the loss of the timber piled thereon.
The defendant denied the plaintiff's causes of action, and in defense alleged that the
demolition of the wharf was due to the excessive weight of thousands of board feet of
timber piled upon it by the plaintiff to be loaded and shipped on the steamer Helen
C and to the bad condition of the piles supporting said wharf.
In view of the evidence adduced by both parties, the trial court held that the
defendant was not liable for the partial collapse of the plaintiff's wharf, and for the loss
of the timber piled thereon, dismissing the complaint with costs against the plaintiff.
The judge who took cognizance of this cause held:
The evidence shows that said wharf was built in 1921 and repaired in 1925. The
repairs, according to the deposition of Wilson C. Smith, a witness for the plaintiff,
consisted in replacing 6 bents of piles leaving more than 9 old bents of piles without
being replaced. Therefore, the wharf of the plaintiff was old. The court is inclined to
believe that the steamer Helen C slightly struck the dock but not with force, for it was
difficult for her to strike it with force, as hereinbefore stated, and due to the bad
condition of the dock the slight impact was sufficient to destroy it. The bent of the
piles toward the east side of the dock, as may be seen from the pictures Exhibits E
and F, after its destruction, does not necessarily mean that the destruction of the
wharf was caused by a strong impact, as the weight of the 60,000 board feet of
lumber piled thereon, after such slight impact by the steamer against the dock, might
have caused said piles to lean toward that side.
We are of opinion that this finding is supported by the evidence. In this connection, it
is to be noted that the witness, Dionisio Pascua (for the plaintiff) testified that the
60,000 board feet occupied one-fourth of the wharf. In other words, by the testimony
of the plaintiff's witnesses it has been proved that the plaintiff company piled up on
the wharf a quantity of timber which exceeded its capacity of resistance, because if
the whole wharf had a capacity of 100,000 board feet of timber, one-fourth of it could
sustain one-fourth of that amount, or, about 25,000 board feet of timber. But it
appears that the plaintiff company loaded 60,000 board feet, weighing over 100 tons,
within a space capable of supporting only 25,000 board feet. This must have helped to
bring about the collapse of the wharf on the eastern side and the consequent sliding
down of the timber piled up on one side.
G.R. No. L-32640

December 29, 1930

WALTER
A.
SMITH
&
CO.,
INC., plaintiff-appellant,
vs.
CADWALLADER GIBSON LUMBER COMPANY, defendant-appellee.

The court below did not make any definite finding as to the negligence of the captain,
but the plaintiff apparently infers that there was negligence on his part, considering
the testimony of its witness Venancio Ignacio to the effect that the impact of the ship
with the wharf was due to the excessive force with which the captain, ordered the
winches to work. This was denied by the captain, testifying for the defendant. If, to

TORTS | Aug 5| 29
this denial, we add the facts found by the trial court that said captain dropped two
anchors from the prow and the kedge-anchor from the poop, and besides, fastened
two lines of cables to the piles ordinarily used by vessels in docking at that wharf,
as preliminary to drawing the vessel alongside the wharf, it will be seen that said
winches must have been carefully operated, and if any force was employed in
working them, it was doubtless due to the fact that the vessel had already dropped
anchor and could not move rapidly and the drawing of the vessel up to the wharf
was against the stream which flowed from east to west. We do not believe that the
mere statement of the witness Ignacio who has not been shown to possess
technical knowledge of the maneuvers for docking vessels, is sufficient to justify a
holding that the force employed by the winches on that occasion was excessive
under the circumstances of the case, especially so if the captain's testimony is to
be considered, that the winches were carefully operated.
The witnesses for the plaintiff state that the steamer Helen C struck the wharf
twice, but the trial court, after examining the evidence, found said testimony to be
exaggerated.
As has been stated, the plaintiff seeks to recover against the owner of the
steamer Helen C, with whom it had not contractual relations basing its action on
the acts of Captain Lasa who was in command of the vessel when docking at the
plaintiff's wharf in Olutanga, Zamboanga. In support of its contention, the plaintiff
cites the doctrine laid down in the case of Ohta Development Co. vs. Steamship
Pompey (49 Phil., 117), wherein it was held that the defendant company, as shipowner, was liable for the indemnities arising from the lack of skill or from
negligence of the captain.
In the case cited, the steamship Pompey, under the command of Captain Alfredo
Galvez, was carrying cargo consisting principally of flour and rice for the plaintiff.
The ship docked with her bow facing the land and fastened her cables to the posts
on the pier. The evidence shows that heretofore other ships docking alongside said
pier had the bow facing the land and fastened a cable to a tree situated farther
west on the beach, a precaution taken to avoid the ship getting too close to the
pier. When the Pompey docked, at the time in question, she did not fasten the
cable to the tree on the shore, nor drop her kedge-anchors from the prow. After
being docked, they proceeded to unload the flour and rice which were first
deposited on the pier and later transported to the plaintiff's warehouse on land,
where it was officially receipted for. The work of discharging and hauling the cargo
to the plaintiff's warehouse was accomplished without any intervention on the part
of the plaintiff and exclusively by laborers and the crew of the ship. The unloading
of the cargo on to the pier was hastily done and there being but fifteen or twenty
laborers engaged in hauling it to the plaintiff's warehouse, a large amount of cargo
accumulated on the dock. At 11:10 that morning, the pier sank with all the
merchandise.
As may be noted, the facts in that case were different from those in the case in
question. In the former a contract of marine transportation existed between the
plaintiff and the defendant, whereas in the latter no previous contractual relation
existed between the parties. For this reason, the case of Ohta Development Co.
was decided upon articles 587 and 618 of the Code of Commerce. But the instant
case, dealing, as it does, with an obligation arising from culpa aquiliana or
negligence, must be decided in accordance with articles 1902 and 1903 of the Civil
Code.

Article 1902 of the Civil Code prescribes:

Any person who by an act or omission causes damage to another by his fault or
negligence shall be liable for the damage so done.
And article 1903 of the said Code states:
The obligation imposed by the next preceding article is enforcible, not only for
personal acts and omissions, but also for those of persons for whom another is
responsible.
The father, or in case of his death, or incapacity, the mother, is liable for any damages
caused by the minor children who live with them.
Guardians are liable for damages done by minors or incapacitated persons subject to
their authority and living with them.
Owners or directors of any establishment or business are, in the same way, liable for
any damages caused by their employees while engaged in the branch of the service in
which employed, or on occasion of the performance of their duties.
The State is subject to the same liability when it acts through a special agent, but not
if the damage shall have been caused by the official upon whom properly devolved the
duty of doing the act performed, in which case the provisions of the next preceding
article shall be applicable.
Finally, teachers or directors of arts and trades are liable for any damages caused by
their pupils or apprentices while they are under their custody.
The liability imposed by this article shall cease in case the persons subject thereto
prove that they exercised all the diligence of a good father of a family to prevent the
damaged.
In the case of Maryland Casualty Co. vs. Matson Nav. Co. (177 Cal., 610, 612), in an
action similar to the present, the court held:
. . . the plaintiff could only recover, if at all, upon a sufficient showing of negligence on
the part of the defendants in the handling of their ship, as a result of which the injury
complained of arose; and if the finding of the trial court, to the effect that there was
no negligence in respect to the matter complained of on the part of the defendants, is
sustained by sufficient evidence, there is an end to the plaintiff's case.
The same doctrine was upheld by the Supreme Court of Spain in its judgment of June
23, 1900, in deciding a case similar to the one at bar, where the plaintiff was a third
person without any contractual relation with the defendant before the acts were
committed which gave rise to the complaint. In that judgment, the court said:
. . . the action for damages caused by an act or omission arising from fault or
negligence, requires an allegation of one or the other of said causes, which is the basis
of said action, according to articles 1089, 1093, 1902, and 1903 of the Civil Code; and
such proof must be made by the plaintiff in accordance with the general principle of
evidence regarding obligations as laid down in article 1214; and it is not sufficient
merely to suggest what at any rate cannot be admitted that from the mere
existence of damage, liability must be presumed and that the defendant must rebut
such a presumption.
And Manresa, committing on article 1902 of the Civil Code, among other things, says
the following:

Among the questions most frequently raised and upon which the majority of cases
have been decided with respect to the application of this liability, are those
referring to the determination of the damage or prejudice, and to the fault or
negligence of the person responsible therefor.
These are the two indispensable factors in the obligations under discussion, for
without damage or prejudice there can be no liability, and although this element is
present no indemnity ca be awarded unless arising from some person's fault or
negligence.
With respect to the determination of damages, it must be definite and the injury
must not be occasioned by the performance of an obligation or by acts or
omissions of the injured party himself; and for the proof of the fault or negligence,
mere suggestions or inadmissible presumptions will not suffice, but such evidence
must be adduced as to exclude all doubt regarding their existence and relation to
the injury, for, in order to give rise to an obligation, there must be between the
fault or negligence and the evil resulting therefrom a casual relations. (12 Manresa,
601,602.).
In Cangco vs. Manila Railroad Co. (38 Phil., 768), this court held that article 1903
of the Civil Code is not applicable to obligations arising from contracts, but only to
obligations arising without any agreement; or, to employ technical language, that
article refers only to culpa aquiliana and not to culpa contractual.
Manresa (vol. VIII, page 67) in his commentaries on articles 1103 and 1104 of the
Civil Code clearly sets forth this distinction, which was also recognized by this court
in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil., 359). In commenting
upon article 1093 (Vol. VIII, page 30) Manresa points out the difference between
"culpa substantive and independent, which, by itself, gives rise to an obligation
between persons not formerly bound by any other obligation" and culpa considered
as an "incident in the performance of an obligation which already existed. . . .
In the Rakes case (supra), this court based its decision expressly on the principle
that article 1903 of the Civil Code is not applicable to a culpa not arising from a
contract.
On this point the court said:
The acts to which these articles (1902 and 1903 of the Civil Code) are applicable
are understood to be those not growing out or preexisting duties of the parties to
one another. But where relations already formed give rise to duties, whether
springing from contract or quasi contract, then breaches of those duties are subject
to articles 1101, 1103, and 1104 of the same Code. (Rakes vs. Atlantic, Gulf and
Pacific Co., 7 Phil., 359, 365.).
It is not true that proof of due diligence and care in the selection of and
instructions to a servant relieves the master of liability for the former's acts; on the
contrary, such proof shows that the liability never existed. As Manresa (vol. VIII,
page 68) says, the liability arising from an extra-contractual wrong is always based
upon avoluntary act or omission, which, while free from any wrongful intent, and
due to mere negligence or carelessness, causes damaged to another. A master who
takes all possible precaution in selecting his servants or employees, bearing in
mind the qualifications necessary for the performance of the duties to be entrusted
to them, and instructs them with equal care, complies with his duty to all third
parties to whom he is not bound under contract, and incurs no liability if, by reason
of the negligence of such servants though it be during the performance of their

TORTS | Aug 5| 30
duties as such, third parties should suffer damages. It is true that under article 1903
of the Civil Code, the law presumes that the master, if regarded as an establishment,
has been negligent in the selection of, or instruction to, its servants, but that is a
mere juris tantum presumption and is destroyed by the evidence of due care and
diligence in this respect.
The Supreme court of Porto Rico, construing identical provisions in the Civil Code of
Porto Rico, held that these articles are applicable only to cases of extra-contractual
wrong. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)
This distinction was clearly stated by this court in Bahia vs. Litonjua and Leynes (930
Phil., 624), wherein the action was based on the defendant's extra-contractual liability
for damages occasioned by the carelessness of an employee of his, in the performance
of his duty as such. This court, after citing the last paragraph of article 1903 of the
Civil Code, held:
From this article two things are apparent: (1) That when an injury is caused by the
negligence of a servant or 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 the selection, or both; and
(2) that the presumption is juris tantum and not juris et de jure, and consequently,
may be rebutted. it follows necessarily that if the employer shows to the satisfaction of
the court that in selection and supervision he has exercised the care and diligence of a
good father of a family, the presumption is overcome and he is relieved from
liability.lawphi1>net
This theory bases the responsibility of the master ultimately on his own negligence
and not on that of his servant. This is the notable peculiarity of the Spanish law of
negligence. It is, of course, in striking contrast to the American doctrine that, in
relations with strangers, the negligence of the servant is conclusively the negligence of
the master.
The opinion of this court is thus expressed, to the effect that in case of extracontractual wrong, some fault personally imputable to the defendant must exist, and
that the last paragraph of article 1903 only establishes a rebuttable presumption and
is on all fours with Manresa's authoritative opinion (Vol. XII, page 611), that the
liability created by article 1903 is enforced by reason of non-performance of duties
inherent in the special relations of authority or superiority existing between the person
liable for the damage done and the person who by his act or omission has caused it.
The defendant contends in its answer that the captain and all the officers of the
steamer Helen C were duly licensed and authorized to hold their respective positions
at the time when the wharf in question collapsed, and that said captain, officers, and
all the members of the crew of the steamer had been chosen for their reputed skill in
directing and navigating the steamer Helen C, safely, carefully, and efficiently. The
evidence shows that Captain Lasa at the time the plaintiff's wharf collapse was a duly
licensed captain, authorized to navigate and direct a vessel of any tonnage, and that
the appellee contracted his services because of his reputation as a captain, according
to F. C. Cadwallader. This being so, we are of opinion that the presumption of liability
against the defendant has been overcome by the exercise of the care and diligence of
a good father of a family in selecting Captain Lasa, in accordance with the doctrines
laid down by this court in the cases cited above, and the defendant is therefore
absolved from all liability.lawphi1>net

TORTS | Aug 5| 31
By virtue of the foregoing, the judgment appealed from must be as it is hereby,
affirmed, with costs against the appellant. So ordered.

G.R. No. 161730

January 28, 2005

JAPAN
AIRLINES, petitioner,
vs.
MICHAEL ASUNCION and JEANETTE ASUNCION, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse and set aside the October 9, 2002 decision 1 of
the Court of Appeals and its January 12, 2004 resolution, 2 which affirmed in toto the
June 10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil
Case No. 92-3635.3
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board
Japan Airlines (JAL) Flight 742 bound for Los Angeles. Their itinerary included a stopover in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs.
Noriko Etou-Higuchi of JAL endorsed their applications for shore pass and directed
them to the Japanese immigration official. 4 A shore pass is required of a foreigner
aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call
for not more than 72 hours.
During their interview, the Japanese immigration official noted that Michael appeared
shorter than his height as indicated in his passport. Because of this inconsistency,
respondents were denied shore pass entries and were brought instead to the Narita
Airport Rest House where they were billeted overnight.
The immigration official also handed Mrs. Higuchi a Notice 5 where it was stated that
respondents were to be "watched so as not to escape".
Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by
Japans Immigration Department to handle passengers who were denied shore pass
entries, brought respondents to the Narita Airport Rest House where they stayed
overnight until their departure the following day for Los Angeles. Respondents were
charged US$400.00 each for their accommodation, security service and meals.

On December 12, 1992, respondents filed a complaint for damages 6 claiming that
JAL did not fully apprise them of their travel requirements and that they were
rudely and forcibly detained at Narita Airport.
JAL denied the allegations of respondents. It maintained that the refusal of the
Japanese immigration authorities to issue shore passes to respondents is an act of
state which JAL cannot interfere with or prevail upon. Consequently, it cannot
impose upon the immigration authorities that respondents be billeted at Hotel
Nikko instead of the airport resthouse. 7
On June 10, 1997, the trial court rendered its decision, the dispositive portion of
which reads:
WHEREFORE PREMISES CONSIDERED, judgment is hereby rendered in favor of
plaintiffs ordering defendant JAL to pay plaintiffs as follows:
1. the sum of US$800.00 representing the expenses incurred at the Narita Airport
with interest at 12% per annum from March 27, 1992 until the sum is fully paid;
2. the sum of P200,000.00 for each plaintiff as moral damages;
3. the amount of P100,000.00 for each plaintiff as exemplary damages;
4. the amount of P100,000.00 as attorneys fees; and
5. costs of suit.
SO ORDERED.8
The trial court dismissed JALs counterclaim for litigation expenses, exemplary
damages and attorneys fees.
On October 9, 2002, the Court of Appeals affirmed in toto the decision of the trial
court. Its motion for reconsideration having been denied, 9 JAL now files the instant
petition.
The basic issue for resolution is whether JAL is guilty of breach of contract.
Under Article 1755 of the Civil Code, a common carrier such as JAL is bound to
carry its passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with due regard for all the
circumstances. When an airline issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of carriage arises. The passenger has
every right to expect that he be transported on that flight and on that date and it
becomes the carriers obligation to carry him and his luggage safely to the agreed
destination.10 If the passenger is not so transported or if in the process of
transporting he dies or is injured, the carrier may be held liable for a breach of
contract of carriage.11
We find that JAL did not breach its contract of carriage with respondents. It may be
true that JAL has the duty to inspect whether its passengers have the necessary
travel documents, however, such duty does not extend to checking the veracity of
every entry in these documents. JAL could not vouch for the authenticity of a
passport and the correctness of the entries therein. The power to admit or not an
alien into the country is a sovereign act which cannot be interfered with even by
JAL. This is not within the ambit of the contract of carriage entered into by JAL and
herein respondents. As such, JAL should not be faulted for the denial of
respondents shore pass applications.

TORTS | Aug 5| 32
Prior to their departure, respondents were aware that upon arrival in Narita, they must
secure shore pass entries for their overnight stay. Respondents mother, Mrs. Imelda
Asuncion, insisted though that Ms. Linda Villavicencio of JAL assured her that her
children would be granted the passes.12 This assertion was satisfactorily refuted by Ms.
Villavicencios testimony during the cross examination, to wit:
ATTY. GONZAGA:
Q I will show to you Exh. 9 which is the TIM and on page 184 hereof, particularly
number 10, and I quote, "Those holding tickets with confirmed seats and other
documents for their onward journey and continuing their journey to a third country
provided that they obtain an indorsement with an application of shore pass or transit
pass from the airline ground personnel before clearing the immigration formality?"
WITNESS:
A Yes, Sir.
Q Did you tell this provision to Mrs. Asuncion?
A Yes, Sir. I did.
Q Are you sure?
A Yes, Sir.
Q Did you give a copy?
A No, Sir, I did not give a copy but verbally I explained to her the procedure they have
to undergo when they get to narita airport.
.
Q And you read the contents of this [TIM]?
A No, Sir, I did not read it to her but I explained to her the procedure that each
passenger has to go through before when they get to narita airport before they line up
in the immigration counter.
Q In other words, you told Mrs. Asuncion the responsibility of securing shore passes
bears solely on the passengers only?
A Yes, Sir.
Q That the airline has no responsibility whatsoever with regards (sic) to the application
for shore passes?
A Yes, Sir.13
Next, respondents claimed that petitioner breached its contract of carriage when it
failed to explain to the immigration authorities that they had overnight vouchers at the
Hotel Nikko Narita. They imputed that JAL did not exhaust all means to prevent the
denial of their shore pass entry applications.
To reiterate, JAL or any of its representatives have no authority to interfere with or
influence the immigration authorities. The most that could be expected of JAL is to
endorse respondents applications, which Mrs. Higuchi did immediately upon their
arrival in Narita.
As Mrs. Higuchi stated during her deposition:

ATTY. QUIMBO
Q: Madam Witness, what assistance did you give, if any, to the plaintiffs during this
interview?
A: No, I was not present during their interview. I cannot assist.
Q: Why not?
A: It is forbidden for a civilian personnel to interfere with the Immigration agents
duties.14
.
Q: During the time that you were in that room and you were given this notice for
you to sign, did you tell the immigration agent that Michael and Jeanette Asuncion
should be allowed to stay at the Hotel Nikko Narita because, as passengers of JAL,
and according to the plaintiff, they had vouchers to stay in that hotel that night?
A: No, I couldnt do so.
Q: Why not?
A: This notice is evidence which shows the decision of immigration authorities. It
shows there that the immigration inspector also designated Room 304 of the Narita
Airport Resthouse as the place where the passengers were going to wait for their
outbound flight.1awphi1.nt I cannot interfere with that decision.15
Mrs. Higuchi did all she could to assist the respondents. Upon being notified of the
denial of respondents applications, Mrs. Higuchi immediately made reservations for
respondents at the Narita Airport Rest House which is really more a hotel than a
detention house as claimed by respondents.16
More importantly, nowhere in respondent Michaels testimony did he state
categorically that Mrs. Higuchi or any other employee of JAL treated them rudely or
exhibited improper behavior throughout their stay. We therefore find JAL not remiss
in its obligations as a common carrier.1awphi1.nt
Moral damages may be recovered in cases where one willfully causes injury to
property, or in cases of breach of contract where the other party acts fraudulently
or in bad faith. Exemplary damages are imposed by way of example or correction
for the public good, when the party to a contract acts in wanton, fraudulent,
oppressive or malevolent manner. Attorneys fees are allowed when exemplary
damages are awarded and when the party to a suit is compelled to incur expenses
to protect his interest.17 There being no breach of contract nor proof that JAL acted
in wanton, fraudulent or malevolent manner, there is no basis for the award of any
form of damages.
Neither should JAL be held liable to reimburse respondents the amount of
US$800.00. It has been sufficiently proven that the amount pertained to ISC, an
agency separate and distinct from JAL, in payment for the accommodations
provided to respondents. The payments did not in any manner accrue to the
benefit of JAL.
However, we find that the Court of Appeals correctly dismissed JALs counterclaim
for litigation expenses, exemplary damages and attorneys fees. The action was
filed by respondents in utmost good faith and not manifestly frivolous. Respondents
honestly believed that JAL breached its contract. A persons right to litigate should

TORTS | Aug 5| 33
not be penalized by holding him liable for damages. This is especially true when the
filing of the case is to enforce what he believes to be his rightful claim against another
although found to be erroneous.18
WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The
October 9, 2002 decision of the Court of Appeals and its January 12, 2004 resolution
in CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of
breach on the part of petitioner and the award of damages, attorneys fees and costs
of the suit in favor of respondents is concerned. Accordingly, there being no breach of
contract on the part of petitioner, the award of actual, moral and exemplary damages,
as well as attorneys fees and costs of the suit in favor of respondents Michael and
Jeanette Asuncion, is DELETED for lack of basis. However, the dismissal for lack of
merit of petitioners counterclaim for litigation expenses, exemplary damages and
attorneys fees, is SUSTAINED. No pronouncement as to costs.
SO ORDERED.