Documente Academic
Documente Profesional
Documente Cultură
the road. In addition, he failed to slacken his speed, despite admitting that he had
already seen the jeep coming from the opposite direction when it was still half a
kilometer away. The CA further ruled that Calang demonstrated a reckless attitude
when he drove the bus, despite knowing that it was suffering from loose
compression, hence, not roadworthy.
The CA added that the RTC correctly held Philtranco jointly and severally
liable with petitioner Calang, for failing to prove that it had exercised the diligence
of a good father of the family to prevent the accident.
The petitioners filed with this Court a petition for review on certiorari.
In our Resolution dated February 17, 2010, we denied the petition for failure to
sufficiently show any reversible error in the assailed decision to warrant the
exercise of this Courts discretionary appellate jurisdiction.
Antecedent Facts
At around 2:00 p.m. of April 22, 1989, Rolito Calang was driving Philtranco
Bus No. 7001, owned by Philtranco along Daang Maharlika Highway in Barangay
Lambao, Sta. Margarita, Samar when its rear left side hit the front left portion of a
Sarao jeep coming from the opposite direction. As a result of the collision,
Cresencio Pinohermoso, the jeeps driver, lost control of the vehicle, and bumped
and killed Jose Mabansag, a bystander who was standing along the highways
shoulder. The jeep turned turtle three (3) times before finally stopping at about 25
meters from the point of impact. Two of the jeeps passengers, Armando Nablo and
an unidentified woman, were instantly killed, while the other passengers sustained
serious physical injuries.
We, however, hold that the RTC and the CA both erred in holding
Philtranco jointly and severally liable with Calang. We emphasize that Calang was
charged criminally before the RTC. Undisputedly, Philtranco was not a direct party
in this case. Since the cause of action against Calang was based on delict, both the
RTC and the CA erred in holding Philtranco jointly and severally liable with
Calang, based on quasi-delict under Articles 2176[1] and 2180[2] of the Civil Code.
Articles 2176 and 2180 of the Civil Code pertain to the vicarious liability of an
employer for quasi-delicts that an employee has committed. Such provision of law
does not apply to civil liability arising from delict.
If at all, Philtrancos liability may only be subsidiary. Article 102 of the
Revised Penal Code states the subsidiary civil liabilities of innkeepers,
tavernkeepers and proprietors of establishments, as follows:
In default of the persons criminally liable,
innkeepers, tavernkeepers, and any other persons or
corporations shall be civilly liable for crimes committed in
their establishments, in all cases where a violation of
municipal ordinances or some general or special police
regulations shall have been committed by them or their
employees.
Innkeepers are also subsidiary liable for the
restitution of goods taken by robbery or theft within their
houses from guests lodging therein, or for the payment of
the value thereof, provided that such guests shall have
notified in advance the innkeeper himself, or the person
representing him, of the deposit of such goods within the
inn; and shall furthermore have followed the directions
which such innkeeper or his representative may have given
them with respect to the care of and vigilance over such
goods. No liability shall attach in case of robbery with
violence against or intimidation of persons unless
committed by the innkeepers employees.
The foregoing subsidiary liability applies to employers, according to
Article 103 of the Revised Penal Code, which reads:
The subsidiary liability established in the next
preceding article shall also apply to employers, teachers,
persons, and corporations engaged in any kind of industry
for felonies committed by their servants, pupils, workmen,
apprentices, or employees in the discharge of their duties.
The provisions of the Revised Penal Code on subsidiary liability
Articles 102 and 103 are deemed written into the judgments in cases to which
they are applicable. Thus, in the dispositive portion of its decision, the trial court
need not expressly pronounce the subsidiary liability of the employer.[3]
Nonetheless, before the employers subsidiary liability is enforced, adequate
evidence must exist establishing that (1) they are indeed the employers of the
convicted employees; (2) they are engaged in some kind of industry; (3) the crime
was committed by the employees in the discharge of their duties; and (4) the
execution against the latter has not been satisfied due to insolvency. The
determination of these conditions may be done in the same criminal action in which
the employees liability, criminal and civil, has been pronounced, in a hearing set
for that precise purpose, with due notice to the employer, as part of the proceedings
for the execution of the judgment.[4]
WHEREFORE, we PARTLY GRANT the present motion. The Court
of Appeals decision that affirmed in toto the RTC decision, finding Rolito Calang
guilty beyond reasonable doubt of reckless imprudence resulting in multiple
homicide, multiple serious physical injuries and damage to property, is
AFFIRMED, with the MODIFICATION that Philtrancos liability should only be
subsidiary. No costs.
SO ORDERED.
During the hearing of the Motion for Execution and the Opposition thereto
on January 16, 1980, petitioner, as one of the four defendants, tendered the
amount of P13,750.00, as his prorata share in the P55,000.00 initial
payment. Another defendant, Pilar P. Tan, offered to pay the same amount.
Because private respondent refused to accept their payments, demanding
from them the full initial installment of P 55,000.00, petitioner and Pilar Tan
instead deposited the said amount with the Clerk of Court. The amount
3
deposited was subsequently withdrawn by private respondent.
On the same day, January 16, 1980, the lower court ordered the issuance of
a writ of execution for the balance of the initial amount payable, against the
4
other two defendants, Offshore Catertrade Inc. and Johnny Tan who did
not pay their shares.
On January 22, 1980, private respondent moved for the reconsideration
and/or modification of the aforesaid Order of execution and prayed instead
for the "execution of the decision in its entirety against all defendants, jointly
5
and severally." Petitioner opposed the said motion arguing that under the
decision of the lower court being executed which has already become final,
the liability of the four (4) defendants was not expressly declared to be
solidary, consequently each defendant is obliged to pay only his own prorata or 1/4 of the amount due and payable.
On March 17, 1980, the lower court issued an Order reading as follows:
ORDER
Regardless of whatever the compromise agreement has intended the
payment whether jointly or individually, or jointly and severally, the fact is
that only P27,500.00 has been paid. There appears to be a non-payment in
accordance with the compromise agreement of the amount of P27,500.00
on or before December 24, 1979. The parties are reminded that the
payment is condition sine qua non to the lifting of the preliminary attachment
and the execution of an affidavit of desistance.
reconsideration, which could have been favorable to the petitioner. The fact
that the hearing of the motion for reconsideration had been reset on the
same day the public sale was to take place is of no moment since the
motion for reconsideration of the Order of March 17, 1980 having been
seasonably filed, the scheduled public sale should be suspended.
Moreover, when the defendants, including herein petitioner, defaulted in
their obligation based on the compromise agreement, private respondent
had become entitled to move for an execution of the decision based on the
said agreement.
WHEREFORE, the instant petition for certiorari and prohibition with
preliminary injunction is hereby denied due course. The restraining order
issued in our resolution dated April 9, 1980 is hereby lifted without
pronouncement as to costs.
SO ORDERED.
Petitioner moved to reconsider the aforesaid Resolution alleging that on
April 2, 1980, the lower court had already denied the motion referred to and
consequently, the legal issues being raised in the petition were already
8
"ripe" for determination. The said motion was however denied by the Court
of Appeals in its Resolution dated August 20, 1980.
Hence, this petition for review, petitioner contending that the Court of
Appeals erred in
(a) declaring as premature, and in denying due course to the petition to
restrain implementation of a writ of execution issued at variance with the
final decision of the lower court filed barely four (4) days before the
scheduled public sale of the attached movable properties;
On June 30, 1980, the said court issued a Resolution, the pertinent portion
of which reads as follows:
(c) failing to resolve the legal issues raised in the petition and in not
declaring the liabilities of the defendants, under the final decision of the
lower court, to be only joint;
This Court, however, finds the present petition to have been filed
prematurely. The rule is that before a petition for certiorari can be brought
against an order of a lower court, all remedies available in that court must
first be exhausted. In the case at bar, herein petitioner filed a petition
without waiting for a resolution of the Court on the motion for
(d) not holding the lower court's order of execution dated March 17, 1980,
the writ of execution and the notice of sheriff's sale, executing the lower
court's decision against "all defendants, singly and jointly", to be at variance
with the lower court's final decision which did not provide for solidary
obligation; and
(e) not declaring as invalid and unlawful the threatened execution, as
against the properties of petitioner who had paid his pro-rata share of the
adjudged obligation, of the total unpaid amount payable by his joint codefendants.
The foregoing assigned errors maybe synthesized into the more important
issues of
1. Was the filing of a petition for certiorari before the then Court of Appeals
against the Order of Execution issued by the lower court, dated March 17,
1980, proper, despite the pendency of a motion for reconsideration of the
same questioned Order?
2. What is the nature of the liability of the defendants (including petitioner),
was it merely joint, or was it several or solidary?
Anent the first issue raised, suffice it to state that while as a general rule, a
motion for reconsideration should precede recourse to certiorari in order to
give the trial court an opportunity to correct the error that it may have
9
committed, the said rule is not absolutes and may be dispensed with in
instances where the filing of a motion for reconsideration would serve no
useful purpose, such as when the motion for reconsideration would raise the
same point stated in the motion 10 or where the error is patent for the order
is void 11 or where the relief is extremely urgent, as in cases where
execution had already been ordered 12 where the issue raised is one purely
of law. 13
In the case at bar, the records show that not only was a writ of execution
issued but petitioner's properties were already scheduled to be sold at
public auction on April 2, 1980 at 10:00 a.m. The records likewise show that
petitioner's motion for reconsideration of the questioned Order of Execution
was filed on March 17, 1980 and was set for hearing on March 25, 1980 at
8:30 a.m., but upon motion of private respondent, the hearing was reset to
April 2, 1980 at 8:30 a.m., the very same clay when petitioner's properties
were to be sold at public auction. Needless to state that under the
circumstances, petitioner was faced with imminent danger of his properties
being immediately sold the moment his motion for reconsideration is denied.
Plainly, urgency prompted recourse to the Court of Appeals and the
adequate and speedy remedy for petitioner under the situation was to file a
petition for certiorari with prayer for restraining order to stop the sale. For
him to wait until after the hearing of the motion for reconsideration on April
2, 1980 before taking recourse to the appellate court may already be too
late since without a restraining order, the public sale can proceed at 10:00
that morning. In fact, the said motion was already denied by the lower court
in its order dated April 2, 1980 and were it not for the pendency of the
petition with the Court of Appeals and the restraining order issued
thereafter, the public sale scheduled that very same morning could have
proceeded.
The other issue raised refers to the nature of the liability of petitioner, as one
of the defendants in Civil Case No. 33958, that is whether or not he is liable
jointly or solidarily.
In this regard, Article 1207 and 1208 of the Civil Code provides
Art. 1207. The concurrence of two or more debtors in one and the same
obligation does not imply that each one of the former has a right to demand,
or that each one of the latter is bound to render, entire compliance with the
prestation. Then is a solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation requires solidarity.
Art. 1208. If from the law,or the nature or the wording of the obligation to
which the preceding article refers the contrary does not appear, the credit or
debt shall be presumed to be divided into as many equal shares as there
are creditors and debtors, the credits or debts being considered distinct from
one another, subject to the Rules of Court governing the multiplicity of quits.
The decision of the lower court based on the parties' compromise
agreement, provides:
1. Plaintiff agrees to reduce its total claim of P117,498.95 to only
P110,000.00 and defendants agree to acknowledge the validity of such
claim and further bind themselves to initially pay out of the total
indebtedness of P110,000.00, the amount of P5,000.00 on or before
December 24, 1979, the balance of P55,000.00, defendants individually and
jointly agree to pay within a period of six months from January 1980 or
before June 30, 1980. (Emphasis supply)
Clearly then, by the express term of the compromise agreement and the
decision based upon it, the defendants obligated themselves to pay their
obligation "individually and jointly".
The term "individually" has the same meaning as "collectively", "separately",
"distinctively", respectively or "severally". An agreement to be "individually
liable" undoubtedly creates a several obligation, 14 and a "several obligation
is one by which one individual binds himself to perform the whole obligation.
15
In the case of Parot vs. Gemora 16 We therein ruled that "the phrase juntos
or separadamente or in the promissory note is an express statement making
each of the persons who signed it individually liable for the payment of the
fun amount of the obligation contained therein." Likewise in Un Pak Leung
vs. Negorra 17 We held that "in the absence of a finding of facts that the
defendants made themselves individually hable for the debt incurred they
are each liable only for one-half of said amount
The obligation in the case at bar being described as "individually and
jointly", the same is therefore enforceable against one of the numerous
obligors.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the instant petition is
hereby DISMISSED. Cost against petitioner.
SO ORDERED.
the jeep; and that it had observed the diligence of a good father of a family
to prevent damage, especially in the selection and supervision of its
employees and in the maintenance of its motor vehicles. It prayed that it be
absolved from any and all liability.
Defendant Sio Choy and the petitioner insurance company, in their answer,
also denied liability to the plaintiff, claiming that the fault in the accident was
solely imputable to the PANTRANCO.
Sio Choy, however, later filed a separate answer with a cross-claim against
the herein petitioner wherein he alleged that he had actually paid the
plaintiff, Martin C. Vallejos, the amount of P5,000.00 for hospitalization and
other expenses, and, in his cross-claim against the herein petitioner, he
alleged that the petitioner had issued in his favor a private car
comprehensive policy wherein the insurance company obligated itself to
indemnify Sio Choy, as insured, for the damage to his motor vehicle, as well
as for any liability to third persons arising out of any accident during the
effectivity of such insurance contract, which policy was in full force and
effect when the vehicular accident complained of occurred. He prayed that
he be reimbursed by the insurance company for the amount that he may be
ordered to pay.
Also later, the herein petitioner sought, and was granted, leave to file a
third-party complaint against the San Leon Rice Mill, Inc. for the reason that
the person driving the jeep of Sio Choy, at the time of the accident, was an
employee of the San Leon Rice Mill, Inc. performing his duties within the
scope of his assigned task, and not an employee of Sio Choy; and that, as
the San Leon Rice Mill, Inc. is the employer of the deceased driver, Juan P.
Campollo, it should be liable for the acts of its employee, pursuant to Art.
2180 of the Civil Code. The herein petitioner prayed that judgment be
rendered against the San Leon Rice Mill, Inc., making it liable for the
amounts claimed by the plaintiff and/or ordering said San Leon Rice Mill,
Inc. to reimburse and indemnify the petitioner for any sum that it may be
ordered to pay the plaintiff.
After trial, judgment was rendered as follows:
WHEREFORE, in view of the foregoing findings of this Court judgment is
hereby rendered in favor of the plaintiff and against Sio Choy and Malayan
Insurance Co., Inc., and third-party defendant San Leon Rice Mill, Inc., as
follows:
(a) P4,103 as actual damages;
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged ill any business or industry.
xxx xxx xxx
The responsibility treated in this article shall cease when the persons herein
mentioned proved that they observed all the diligence of a good father of a
family to prevent damage.
It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc. are
the principal tortfeasors who are primarily liable to respondent Vallejos. The
law states that the responsibility of two or more persons who are liable for a
4
quasi-delict is solidarily.
On the other hand, the basis of petitioner's liability is its insurance contract
with respondent Sio Choy. If petitioner is adjudged to pay respondent
Vallejos in the amount of not more than P20,000.00, this is on account of its
being the insurer of respondent Sio Choy under the third party liability
clause included in the private car comprehensive policy existing between
petitioner and respondent Sio Choy at the time of the complained vehicular
accident.
5
Rice Mill, Inc. are solidarily liable to the respondent Martin C. Vallejos for the
amount of P29,103.00. Vallejos may enforce the entire obligation on only
one of said solidary debtors. If Sio Choy as solidary debtor is made to pay
for the entire obligation (P29,103.00) and petitioner, as insurer of Sio Choy,
is compelled to pay P20,000.00 of said entire obligation, petitioner would be
entitled, as subrogee of Sio Choy as against San Leon Rice Mills, Inc., to be
reimbursed by the latter in the amount of P14,551.50 (which is 1/2 of
P29,103.00 )
WHEREFORE, the petition is GRANTED. The decision of the trial court, as
affirmed by the Court of Appeals, is hereby AFFIRMED, with the
modification above-mentioned. Without pronouncement as to costs.
SO ORDERED.
his solidary debtors, as he deems fit or convenient for the protection of his
interests; and if, after instituting a collection suit based on contract against
some or all of them and, during its pendency, one of the defendants dies,
the court retains jurisdiction to continue the proceedings and decide the
case in respect of the surviving defendants. Thus in Manila Surety & Fidelity
Co., Inc. vs. Villarama et al., 107 Phil. 891 at 897, this Court ruled:
Construing Section 698 of the Code of Civil Procedure from whence the
aforequoted provision (Sec. 6, Rule 86) was taken, this Court held that
where two persons are bound in solidum for the same debt and one of them
dies, the whole indebtedness can be proved against the estate of the latter,
the decedent's liability being absolute and primary; and if the claim is not
presented within the time provided by the rules, the same will be barred as
against the estate. It is evident from the foregoing that Section 6 of Rule 87
(now Rule 86) provides the procedure should the creditor desire to go
against the deceased debtor, but there is certainly nothing in the said
provision making compliance with such procedure a condition precedent
before an ordinary action against the surviving solidary debtors, should the
creditor choose to demand payment from the latter, could be entertained to
the extent that failure to observe the same would deprive the court
jurisdiction to take cognizance of the action against the surviving debtors.
Upon the other hand, the Civil Code expressly allows the creditor to proceed
against any one of the solidary debtors or some or all of them
simultaneously. There is, therefore, nothing improper in the creditor's filing
of an action against the surviving solidary debtors alone, instead of
instituting a proceeding for the settlement of the estate of the deceased
debtor wherein his claim could be filed.
Similarly, in PNB vs. Asuncion, 80 SCRA 321 at 323-324, this Court,
speaking thru Mr. Justice Makasiar, reiterated the doctrine.
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court
reveals that nothing therein prevents a creditor from proceeding against the
surviving solidary debtors. Said provision merely sets up the procedure in
enforcing collection in case a creditor chooses to pursue his claim against
the estate of the deceased solidary, debtor.
It is crystal clear that Article 1216 of the New Civil Code is the applicable
provision in this matter. Said provision gives the creditor the right to
'proceed against anyone of the solidary debtors or some or all of them
simultaneously.' The choice is undoubtedly left to the solidary, creditor to
determine against whom he will enforce collection. In case of the death of
one of the solidary debtors, he (the creditor) may, if he so chooses, proceed
against the surviving solidary debtors without necessity of filing a claim in
the estate of the deceased debtors. It is not mandatory for him to have the
case dismissed against the surviving debtors and file its claim in the estate
of the deceased solidary debtor . . .
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules
of Court were applied literally, Article 1216 of the New Civil Code would, in
effect, be repealed since under the Rules of Court, petitioner has no choice
but to proceed against the estate of Manuel Barredo only. Obviously, this
provision diminishes the Bank's right under the New Civil, Code to proceed
against any one, some or all of the solidary debtors. Such a construction is
not sanctioned by the principle, which is too well settled to require citation,
that a substantive law cannot be amended by a procedural rule. Otherwise
stared, Section 6, Rule 86 of the Revised Rules of Court cannot be made to
prevail over Article 1216 of the New Civil Code, the former being merely
procedural, while the latter, substantive.
WHEREFORE the appealed order of dismissal of the court a quo in its Civil
Case No. 46741 is hereby set aside in respect of the surviving defendants;
and the case is remanded to the corresponding Regional Trial Court for
proceedings. proceedings. No costs.
SO ORDERED.
November 6, 1928
November 6, 1928
Franville Subdivision.
Millan complied with her obligation under the contract and paid the
installments stipulated therein, the final payment having been made on
December 22, 1971. The vendee made a total payment of P5,193.63
3
including interests and expenses for registration of title.
Thereafter, Lolita Millan made repeated demands upon the corporation for
the execution of the final deed of sale and the issuance to her of the transfer
certificate of title over the lot. On March 2, 1973, the parties executed a
deed of absolute sale of the aforementioned parcel of land. The deed of
absolute sale contained, among others, this particular provision:
That the VENDOR further warrants that the transfer certificate of title of the
above-described parcel of land shall be transferred in the name of the
VENDEE within the period of six (6) months from the date of full payment
and in case the VENDOR fails to issue said transfer certificate of title, it
shall bear the obligation to refund to the VENDEE the total amount already
paid for, plus an interest at the rate of 4% per annum. (record on appeal, p.
9)
Notwithstanding the lapse of the above-mentioned stipulated period of six
(6) months, the corporation failed to cause the issuance of the
corresponding transfer certificate of title over the lot sold to Millan, hence,
the latter filed on August 14, 1974 a complaint for specific performance and
damages against Robes-Francisco Realty & Development Corporation in
the Court of First Instance of Rizal, Branch XXXIV, Caloocan City, docketed
4
therein as Civil Case No. C-3268.
The complaint prayed for judgment (1) ordering the reformation of the deed
of absolute sale; (2) ordering the defendant to deliver to plaintiff the
certificate of title over the lot free from any lien or encumbrance; or, should
this be not possible, to pay plaintiff the value of the lot which should not be
less than P27,600.00 (allegedly the present estimated value of the lot); and
(3) ordering the defendant to pay plaintiff damages, corrective and actual in
5
the sum of P15 000.00.
The corporation in its answer prayed that the complaint be dismissed
alleging that the deed of absolute sale was voluntarily executed between the
parties and the interest of the plaintiff was amply protected by the provision
in said contract for payment of interest at 4% per annum of the total amount
6
paid, for the delay in the issuance of the title.
At the pretrial conference the parties agreed to submit the case for decision
Finding that the realty corporation failed to cause the issuance of the
corresponding transfer certificate of title because the parcel of land
conveyed to Millan was included among other properties of the corporation
mortgaged to the GSIS to secure an obligation of P10 million and that the
owner's duplicate certificate of title of the subdivision was in the possession
of the Government Service Insurance System (GSIS), the trial court, on
February 11, 1975, rendered judgment the dispositive portion of which is
quoted in pages 1 and 2 of this Decision. We hold that the trial court did not
err in awarding nominal damages; however, the circumstances of the case
warrant a reduction of the amount of P20,000.00 granted to private
respondent Millan.
There can be no dispute in this case under the pleadings and the admitted
facts that petitioner corporation was guilty of delay, amounting to
nonperformance of its obligation, in issuing the transfer certificate of title to
vendee Millan who had fully paid up her installments on the lot bought by
her. Article 170 of the Civil Code expressly provides that those who in the
performance of their obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are liable for
damages.
Petitioner contends that the deed of absolute sale executed between the
parties stipulates that should the vendor fail to issue the transfer certificate
of title within six months from the date of full payment, it shall refund to the
vendee the total amount paid for with interest at the rate of 4% per annum,
hence, the vendee is bound by the terms of the provision and cannot
recover more than what is agreed upon. Presumably, petitioner in invoking
Article 1226 of the Civil Code which provides that in obligations with a penal
clause, the penalty shall substitute the indemnity for damages and the
payment of interests in case of noncompliance, if there is no stipulation to
the contrary.
The foregoing argument of petitioner is totally devoid of merit. We would
agree with petitioner if the clause in question were to be considered as a
penal clause. Nevertheless, for very obvious reasons, said clause does not
convey any penalty, for even without it, pursuant to Article 2209 of the Civil
Code, the vendee would be entitled to recover the amount paid by her with
legal rate of interest which is even more than the 4% provided for in the
7
clause. -A
It is therefore inconceivable that the aforecited provision in the deed of sale
is a penal clause which will preclude an award of damages to the vendee
nominal damages, the Court stating inter alia that the amount cannot, in
10
common sense, be demeed "nominal".
Here, respondent Millan did not submit below any evidence to prove that
14
she suffered actual or compensatory damages.
also, to sell it to Pamintuan. Sometime after the filing of said complaint and
of the answer thereto, the lower court issued, after due hearing, the writ of
preliminary injunction prayed for by Pamintuan.
In due course, subsequently, or on April 17, 1961, the court, then presided
over by Hon. Juan P. Enriquez, Judge, rendered judgment dismissing
Pamintuan's complaint and sentencing him to pay P500 to Valeriano as
attorney's fees and costs, and dissolving the writ of preliminary injunction
aforementioned, as well as sentencing Pamintuan and his surety to pay
Valeriano P500, as damages for the issuance of said writ. Copy of this
decision was served upon Pamintuan on April 22, 1961. Thirty (30) days
later, or on May 22, 1961, Pamintuan filed his notice of appeal, record on
appeal, and appeal bond, but the lower court, then presided by another
Judge, respondent, Hon. Manuel P. Barcelona, disapproved the record on
appeal, upon the ground that the decision sought to be appealed from had
become final and executory fifteen (15) days after notice of said decision,
the case being one of certiorari, not injunction, as contended by Pamintuan
and declared by Judge Enriquez.
Judge Barcelona having refused to reconsider its aforementioned view,
Pamintuan thereupon filed with the Court of Appeals a petition docketed
as CA-G.R. No. 30156-R for a writ of certiorari and mandamus against
Judge Barcelona as well as the Sheriff of Manila and Valeriano, to compel
approval of the aforementioned record on appeal, upon the ground that Civil
Case No. 44410 is an injunction case, not one for certiorari, and that
Pamintuan had, accordingly, thirty (30) days from notice, within which to
appeal from the decision therein rendered. However, on December 29,
1961, the Court of Appeals rendered a decision sustaining the view of
Judge Barcelona and, consequently, dismissing Pamintuan's petition for
certiorari and mandamus. A reconsideration of this decision of the Court of
Appeals having been denied, Pamintuan now seeks a review thereof by
certiorari.
The only question we are called upon to resolve is the nature of the cause
of action set forth in Pamintuan's complaint in said case No. 44410.
Respondent Judge and the Court of Appeals held that it was one for
certiorari because Pamintuan impugned therein the jurisdiction of the
municipal court of issue the aforementioned alias writ of execution. it is well
settled, however, that the nature of an action is determined by the
allegations of the pleadings therein. Pamintuan's complaint in case No.
44410 contained, however, no allegation, either express or implied,
assailing the jurisdiction of the municipal court to issue said alias writ of
execution. There are in the complaint none of the allegations required in
petitions for certiorari, namely, an act performed without jurisdiction or in
excess of jurisdiction or with the grave abuse of discretion, amounting to
On October 19, 1987, two armed men entered the pawnshop and took away
whatever cash and jewelry were found inside the pawnshop vault. The incident was
entered in the police blotter of the Southern Police District, Paraaque Police
Station as follows:
Investigation shows that at above TDPO, while victims
were inside the office, two (2) male unidentified persons
entered into the said office with guns drawn.
Suspects(sic) (1) went straight inside and poked his gun
toward Romeo Sicam and thereby tied him with an electric
wire while suspects (sic) (2) poked his gun toward Divina
Mata and Isabelita Rodriguez and ordered them to lay (sic)
face flat on the floor. Suspects asked forcibly the case and
assorted pawned jewelries items mentioned above.
Suspects after taking the money and jewelries fled on
board a Marson Toyota unidentified plate number.[3]
Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987
informing her of the loss of her jewelry due to the robbery incident in the
pawnshop. On November 2, 1987, respondent Lulu then wrote a letter[4] to
petitioner Sicam expressing disbelief stating that when the robbery happened, all
jewelry pawned were deposited with Far East Bank near the pawnshop since it had
been the practice that before they could withdraw, advance notice must be given to
the pawnshop so it could withdraw the jewelry from the bank. Respondent Lulu
then requested petitioner Sicam to prepare the pawned jewelry for withdrawal on
November 6, 1987 but petitioner Sicam failed to return the jewelry.
Anent the second error, petitioners point out that the CA finding on their
negligence is likewise an unedited reproduction of respondents brief which had the
following defects:
(1)
There were unrebutted evidence on record
that petitioners had observed the diligence required
of them, i.e, they wanted to open a vault with a nearby
bank for purposes of safekeeping the pawned articles but
was discouraged by the Central Bank (CB) since CB rules
provide that they can only store the pawned articles in a
vault inside the pawnshop premises and no other place;
(2)
Petitioners were adjudged negligent as they
did not take insurance against the loss of the pledged
jelweries, but it is judicial notice that due to high incidence
of crimes, insurance companies refused to cover
pawnshops and banks because of high probability of losses
due to robberies;
(3)
In Hernandez v. Chairman, Commission on
Audit (179 SCRA 39, 45-46), the victim of robbery was
exonerated from liability for the sum of money belonging to
others and lost by him to robbers.
correctly observed by the CA, in all the pawnshop receipts issued to respondent
Lulu in September 1987, all bear the words Agencia de R. C. Sicam,
notwithstanding that the pawnshop was allegedly incorporated in April 1987. The
receipts issued after such alleged incorporation were still in the name of Agencia
de R. C. Sicam, thus inevitably misleading, or at the very least, creating the wrong
impression to respondents and the public as well, that the pawnshop was owned
solely by petitioner Sicam and not by a corporation.
Even petitioners counsel, Atty. Marcial T. Balgos, in his letter[16] dated
October 15, 1987 addressed to the Central Bank, expressly referred to petitioner
Sicam as the proprietor of the pawnshop notwithstanding the alleged incorporation
in April 1987.
Sicam. In the pre-trial brief filed by petitioner Sicam, he submitted that as far as he
was concerned, the basic issue was whether he is the real party in interest against
whom the complaint should be directed.[20] In fact, he subsequently moved for the
dismissal of the complaint as to him but was not favorably acted upon by the trial
court. Moreover, the issue was squarely passed upon, although erroneously, by the
trial court in its Decision in this manner:
x x x The defendant Roberto Sicam, Jr likewise
denies liability as far as he is concerned for the reason that
he cannot be made personally liable for a claim arising
from a corporate transaction.
This Court sustains the contention of the defendant
Roberto C. Sicam, Jr. The amended complaint itself asserts
that plaintiff pawned assorted jewelries in defendant's
pawnshop. It has been held that as a consequence of the
separate juridical personality of a corporation, the corporate
debt or credit is not the debt or credit of the stockholder,
nor is the stockholder's debt or credit that of a
corporation.[21]
Clearly, in view of the alleged incorporation of the pawnshop, the issue of
whether petitioner Sicam is personally liable is inextricably connected with the
determination of the question whether the doctrine of piercing the corporate veil
should or should not apply to the case.
The next question is whether petitioners are liable for the loss of the
pawned articles in their possession.
Petitioners insist that they are not liable since robbery is a fortuitous event and
they are not negligent at all.
We are not persuaded.
to avoid. The mere difficulty to foresee the happening is not impossibility to foresee
the same. [22]
To constitute a fortuitous event, the following elements must concur: (a) the
cause of the unforeseen and unexpected occurrence or of the failure of the debtor to
comply with obligations must be independent of human will; (b) it must be
impossible to foresee the event that constitutes the caso fortuito or, if it can be
foreseen, it must be impossible to avoid; (c) the occurrence must be such as to
render it impossible for the debtor to fulfill obligations in a normal manner; and, (d)
the obligor must be free from any participation in the aggravation of the injury or
loss. [23]
The burden of proving that the loss was due to a fortuitous event rests on him
who invokes it.[24] And, in order for a fortuitous event to exempt one from
liability, it is necessary that one has committed no negligence or misconduct that
may have occasioned the loss. [25]
It has been held that an act of God cannot be invoked to protect a person who
has failed to take steps to forestall the possible adverse consequences of such a loss.
One's negligence may have concurred with an act of God in producing damage and
injury to another; nonetheless, showing that the immediate or proximate cause of
the damage or injury was a fortuitous event would not exempt one from liability.
When the effect is found to be partly the result of a person's participation -- whether
by active intervention, neglect or failure to act -- the whole occurrence is humanized
and removed from the rules applicable to acts of God. [26]
Petitioner Sicam had testified that there was a security guard in their
pawnshop at the time of the robbery. He likewise testified that when he started the
pawnshop business in 1983, he thought of opening a vault with the nearby bank for
the purpose of safekeeping the valuables but was discouraged by the Central Bank
since pawned articles should only be stored in a vault inside the pawnshop. The
very measures which petitioners had allegedly adopted show that to them the
possibility of robbery was not only foreseeable, but actually foreseen and
anticipated. Petitioner Sicams testimony, in effect, contradicts petitioners defense
of fortuitous event.
Moreover, petitioners failed to show that they were free from any negligence
by which the loss of the pawned jewelry may have been occasioned.
Robbery per se, just like carnapping, is not a fortuitous event. It does not
foreclose the possibility of negligence on the part of herein petitioners. In Co v.
Court of Appeals,[27] the Court held:
It is not a defense for a repair shop of motor
vehicles to escape liability simply because the damage or
loss of a thing lawfully placed in its possession was due to
Article 2123 of the Civil Code provides that with regard to pawnshops and
other establishments which are engaged in making loans secured by pledges, the
special laws and regulations concerning them shall be observed, and subsidiarily,
the provisions on pledge, mortgage and antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code, provides
that the creditor shall take care of the thing pledged with the diligence of a good
father of a family. This means that petitioners must take care of the pawns the way a
prudent person would as to his own property.
Q. It is clear now that at the time of the robbery the vault was
open the reason why the robbers were able to get all the
items pawned to you inside the vault.
A. Yes sir.[32]
Sec. 17. Insurance of Office Building and PawnsThe place of business of a pawnshop and the pawns pledged
to it must be insured against fire and against burglary as
well as for the latter(sic), by an insurance company
accredited by the Insurance Commissioner.
unforeseen event, the robbery, took place without any concurrent fault on the
debtors part, and this can be done by preponderance of evidence; that to be free
from liability for reason of fortuitous event, the debtor must, in addition to the casus
itself, be free of any concurrent or contributory fault or negligence.[38]
We found in Austria that under the circumstances prevailing at the time the
Decision was promulgated in 1971, the City of Manila and its suburbs had a high
incidence of crimes against persons and property that rendered travel after nightfall
a matter to be sedulously avoided without suitable precaution and protection; that
the conduct of Maria Abad in returning alone to her house in the evening carrying
jewelry of considerable value would have been negligence per se and would not
exempt her from responsibility in the case of robbery. However we did not hold
Abad liable for negligence since, the robbery happened ten years previously; i.e.,
1961, when criminality had not reached the level of incidence obtaining in 1971.
In contrast, the robbery in this case took place in 1987 when robbery was
already prevalent and petitioners in fact had already foreseen it as they wanted to
deposit the pawn with a nearby bank for safekeeping. Moreover, unlike in Austria,
where no negligence was committed, we found petitioners negligent in securing
their pawnshop as earlier discussed.
In Hernandez, Teodoro Hernandez was the OIC and special disbursing officer
of the Ternate Beach Project of the Philippine Tourism in Cavite. In the morning of
July 1, 1983, a Friday, he went to Manila to encash two checks covering the wages
of the employees and the operating expenses of the project. However for some
reason, the processing of the check was delayed and was completed at about 3 p.m.
Nevertheless, he decided to encash the check because the project employees would
be waiting for their pay the following day; otherwise, the workers would have to
wait until July 5, the earliest time, when the main office would open. At that
time, he had two choices: (1) return to Ternate, Cavite that same afternoon and
arrive early evening; or (2) take the money with him to his house in Marilao,
Bulacan, spend the night there, and leave for Ternate the following day. He chose
the second option, thinking it was the safer one. Thus, a little past 3 p.m., he took a
passenger jeep bound for Bulacan. While the jeep was on Epifanio de los Santos
Avenue, the jeep was held up and the money kept by Hernandez was taken, and the
robbers jumped out of the jeep and ran. Hernandez chased the robbers and caught
up with one robber who was subsequently charged with robbery and pleaded guilty.
The other robber who held the stolen money escaped. The Commission on Audit
found Hernandez negligent because he had not brought the cash proceeds of the
checks to his office in Ternate, Cavite for safekeeping, which is the normal
procedure in the handling of funds. We held that Hernandez was not negligent in
deciding to encash the check and bringing it home to Marilao, Bulacan instead of
Ternate, Cavite due to the lateness of the hour for the following reasons: (1) he was
moved by unselfish motive for his co-employees to collect their wages and salaries
the following day, a Saturday, a non-working, because to encash the check on July
5, the next working day after July 1, would have caused discomfort to laborers who
were dependent on their wages for sustenance; and (2) that choosing Marilao as a
safer destination, being nearer, and in view of the comparative hazards in the trips
to the two places, said decision seemed logical at that time. We further held that the
fact that two robbers attacked him in broad daylight in the jeep while it was on a
busy highway and in the presence of other passengers could not be said to be a
result of his imprudence and negligence.
March 4, 2008
to all establishments affected including plaintiffs Leoncio Ramoy (Exhs. 3, 3A to 3-C), Matilde Ramoy/Matilde Macabagdal (Exhibits 3-D to 3-E),
Rosemarie Ramoy (Exh. 3-F), Ofelia Durian (Exh. 3-G), Jose Valiza (Exh. 3H) and Cyrene S. Panado (Exh. 3-I).
In a letter dated August 17, 1990 Meralco requested NPC for a joint survey
to determine all the establishments which are considered under NPC
property in view of the fact that "the houses in the area are very close to
each other" (Exh. 12). Shortly thereafter, a joint survey was conducted and
the NPC personnel pointed out the electric meters to be disconnected (Exh.
13; TSN, October 8, 1993, p. 7; TSN, July 1994, p. 8).
In due time, the electric service connection of the plaintiffs [herein
respondents] was disconnected (Exhibits D to G, with submarkings, pp. 8687, Record).
Plaintiff Leoncio Ramoy testified that he and his wife are the registered
owners of a parcel of land covered by TCT No. 326346, a portion of which
was occupied by plaintiffs Rosemarie Ramoy, Ofelia Durian, Jose Valiza
and Cyrene S. Panado as lessees. When the Meralco employees were
disconnecting plaintiffs' power connection, plaintiff Leoncio Ramoy objected
by informing the Meralco foreman that his property was outside the NPC
property and pointing out the monuments showing the boundaries of his
property. However, he was threatened and told not to interfere by the armed
men who accompanied the Meralco employees. After the electric power in
Ramoy's apartment was cut off, the plaintiffs-lessees left the premises.
During the ocular inspection ordered by the Court and attended by the
parties, it was found out that the residence of plaintiffs-spouses Leoncio and
Matilde Ramoy was indeed outside the NPC property. This was confirmed
by defendant's witness R.P. Monsale III on cross-examination (TSN,
October 13, 1993, pp. 10 and 11). Monsale also admitted that he did not
inform his supervisor about this fact nor did he recommend re-connection of
plaintiffs' power supply (Ibid., p. 14).
The record also shows that at the request of NPC, defendant Meralco reconnected the electric service of four customers previously disconnected
4
none of whom was any of the plaintiffs (Exh. 14).
The RTC decided in favor of MERALCO by dismissing herein respondents'
claim for moral damages, exemplary damages and attorney's fees.
However, the RTC ordered MERALCO to restore the electric power supply
of respondents.
Respondents then appealed to the CA. In its Decision dated December 16,
2002, the CA faulted MERALCO for not requiring from National Power
Corporation (NPC) a writ of execution or demolition and in not coordinating
with the court sheriff or other proper officer before complying with the NPC's
request. Thus, the CA held MERALCO liable for moral and exemplary
damages and attorney's fees. MERALCO's motion for reconsideration of the
Decision was denied per Resolution dated July 1, 2003.
Hence, herein petition for review on certiorari on the following grounds:
I
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FOUND
MERALCO NEGLIGENT WHEN IT DISCONNECTED THE SUBJECT
ELECTRIC SERVICE OF RESPONDENTS.
II
THE COURT OF APPEALS GRAVELY ERRED WHEN IT AWARDED
MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES
AGAINST MERALCO UNDER THE CIRCUMSTANCES THAT THE
LATTER ACTED IN GOOD FAITH IN THE DISCONNECTION OF THE
5
ELECTRIC SERVICES OF THE RESPONDENTS.
The petition is partly meritorious.
Article 1173 also provides that the fault or negligence of the obligor consists
in the omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the
time and of the place. The Court emphasized in Ridjo Tape & Chemical
10
Corporation v. Court of Appeals that "as a public utility, MERALCO has the
11
obligation to discharge its functions with utmost care and diligence."
The Court agrees with the CA that under the factual milieu of the present
case, MERALCO failed to exercise the utmost degree of care and diligence
required of it. To repeat, it was not enough for MERALCO to merely rely on
the Decision of the MTC without ascertaining whether it had become final
and executory. Verily, only upon finality of said Decision can it be said with
conclusiveness that respondents have no right or proper interest over the
subject property, thus, are not entitled to the services of MERALCO.
Article 1170. Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene the
Although MERALCO insists that the MTC Decision is final and executory, it
never showed any documentary evidence to support this allegation.
Moreover, if it were true that the decision was final and executory, the most
prudent thing for MERALCO to have done was to coordinate with the proper
court officials in determining which structures are covered by said court
order. Likewise, there is no evidence on record to show that this was done
by MERALCO.
The utmost care and diligence required of MERALCO necessitates such
great degree of prudence on its part, and failure to exercise the diligence
required means that MERALCO was at fault and negligent in the
12
performance of its obligation. In Ridjo Tape, the Court explained:
[B]eing a public utility vested with vital public interest, MERALCO is
impressed with certain obligations towards its customers and any omission
on its part to perform such duties would be prejudicial to its interest. For in
the final analysis, the bottom line is that those who do not exercise such
prudence in the discharge of their duties shall be made to bear the
13
consequences of such oversight.
This being so, MERALCO is liable for damages under Article 1170 of the
Civil Code.
The next question is: Are respondents entitled to moral and exemplary
damages and attorney's fees?
Article 2220 of the Civil Code provides:
Article 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.
In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by
withholding from him and his tenants the supply of electricity to which they
were entitled under the Service Contract. This is contrary to public policy
because, as discussed above, MERALCO, being a vital public utility, is
expected to exercise utmost care and diligence in the performance of its
obligation. It was incumbent upon MERALCO to do everything within its
power to ensure that the improvements built by respondents are within the
NPCs right of way before disconnecting their power supply. The Court
14
emphasized in Samar II Electric Cooperative, Inc. v. Quijano that:
Electricity is a basic necessity the generation and distribution of which is
imbued with public interest, and its provider is a public utility subject to
strict regulation by the State in the exercise of police power. Failure to
comply with these regulations will give rise to the presumption of bad
15
faith or abuse of right. (Emphasis supplied)
Thus, by analogy, MERALCO's failure to exercise utmost care and diligence
in the performance of its obligation to Leoncio Ramoy, its customer, is
tantamount to bad faith. Leoncio Ramoy testified that he suffered wounded
16
feelings because of MERALCO's actions. Furthermore, due to the lack of
power supply, the lessees of his four apartments on subject lot left the
17
premises. Clearly, therefore, Leoncio Ramoy is entitled to moral damages
in the amount awarded by the CA.
Leoncio Ramoy, the lone witness for respondents, was the only one who
testified regarding the effects on him of MERALCO's electric service
disconnection. His co-respondents Matilde Ramoy, Rosemarie Ramoy,
Ofelia Durian and Cyrene Panado did not present any evidence of damages
they suffered.
It is a hornbook principle that damages may be awarded only if proven. In
18
Mahinay v. Velasquez, Jr., the Court held thus:
In order that moral damages may be awarded, there must be pleading
and proof of moral suffering, mental anguish, fright and the like. While
respondent alleged in his complaint that he suffered mental anguish, serious
anxiety, wounded feelings and moral shock, he failed to prove them during
the trial. Indeed, respondent should have taken the witness stand and
should have testified on the mental anguish, serious anxiety, wounded
feelings and other emotional and mental suffering he purportedly suffered to
sustain his claim for moral damages. Mere allegations do not suffice; they
must be substantiated by clear and convincing proof. No other person
could have proven such damages except the respondent himself as
they were extremely personal to him.
In Keirulf vs. Court of Appeals, we held:
"While no proof of pecuniary loss is necessary in order that moral damages
may be awarded, the amount of indemnity being left to the discretion of the
court, it is nevertheless essential that the claimant should satisfactorily show
the existence of the factual basis of damages and its causal connection to
defendants acts. This is so because moral damages, though incapable of
pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a
penalty on the wrongdoer. In Francisco vs. GSIS, the Court held that there
must be clear testimony on the anguish and other forms of mental
suffering. Thus, if the plaintiff fails to take the witness stand and testify as
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmens compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
The Court finds that MERALCO fell short of exercising the due diligence
required, but its actions cannot be considered wanton, fraudulent, reckless,
oppressive or malevolent. Records show that MERALCO did take some
measures, i.e., coordinating with NPC officials and conducting a joint survey
of the subject area, to verify which electric meters should be disconnected
although these measures are not sufficient, considering the degree of
diligence required of it. Thus, in this case, exemplary damages should not
be awarded.
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered.
Since the Court does not deem it proper to award exemplary damages in
this case, then the CA's award for attorney's fees should likewise be
deleted, as Article 2208 of the Civil Code states that in the absence of
stipulation, attorney's fees cannot be recovered except in cases
provided for in said Article, to wit:
SO ORDERED.
No costs.
were already there. He denied that petitioner made an additional order of 24,000
boxes. He explained that it took three years to refer the matter to counsel because
respondent promised to pay.[10]
For respondent, Bienvenido Estanislao (Estanislao) testified that he met Que
in Davao in October 1998 to inspect the boxes and that the latter got samples of
them. In February 2000, they inspected the boxes again and Que got more
samples. Estanislao said that petitioner did not pick up the boxes because the ship
did not arrive.[11] Jaime Tan (Tan), president of respondent, also testified that his
company finished production of the 36,500 boxes on April 3, 1998 and that
petitioner made a second order of 24,000 boxes. He said that the agreement was for
respondent to produce the boxes and for petitioner to pick them up from the
warehouse.[12] He also said that the reason why petitioner did not pick up the
boxes was that the ship that was to carry the bananas did not arrive.[13] According
to him, during the last visit of Que and Estanislao, he asked them to withdraw the
boxes immediately because they were occupying a big space in his plant, but they,
instead, told him to sell the cartons as rejects. He was able to sell 5,000 boxes at
P20.00 each for a total of P100,000.00. They then told him to apply the said amount
to the unpaid balance.
In its March 2, 2004 Decision, the Regional Trial Court (RTC) ruled that
respondent did not commit any breach of faith that would justify rescission of the
contract and the consequent reimbursement of the amount paid by petitioner. The
RTC said that respondent was able to produce the ordered boxes but petitioner
failed to obtain possession thereof because its ship did not arrive. It thus dismissed
the complaint and respondents counterclaims, disposing as follows:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of defendant and against the
plaintiff and, accordingly, plaintiffs complaint is hereby
ordered DISMISSED without pronouncement as to cost.
Defendants counterclaims are similarly dismissed for lack
of merit.
SO ORDERED.[14]
Petitioner moved for reconsideration,[17] but the motion was denied by the
CA in its Resolution of February 23, 2007.[18]
In this petition, petitioner insists that respondent did not completely
manufacture the boxes and that it was respondent which was obliged to deliver the
boxes to TADECO.
We find no reversible error in the assailed Decision that would justify the
grant of this petition.
Petitioners claim for reimbursement is actually one for rescission (or
resolution) of contract under Article 1191 of the Civil Code, which reads:
Art. 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter
should become impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the
rights of third persons who have acquired the thing, in
accordance with Articles 1385 and 1388 and the Mortgage
Law.
The right to rescind a contract arises once the other party defaults in the
performance of his obligation. In determining when default occurs, Art. 1191
should be taken in conjunction with Art. 1169 of the same law, which provides:
expressly so declares; or
(2)
When from the nature and the
circumstances of the obligation it appears that
the designation of the time when the thing is to
be delivered or the service is to be rendered was
a controlling motive for the establishment of the
contract; or
(3)
When demand would be useless, as
when the obligor has rendered it beyond his
power to perform.
In reciprocal obligations, neither party incurs in delay
if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by
the other begins.
In reciprocal obligations, as in a contract of sale, the general rule is that the
fulfillment of the parties respective obligations should be simultaneous. Hence, no
demand is generally necessary because, once a party fulfills his obligation and the
other party does not fulfill his, the latter automatically incurs in delay. But when
different dates for performance of the obligations are fixed, the default for each
obligation must be determined by the rules given in the first paragraph of the
present article,[19] that is, the other party would incur in delay only from the
moment the other party demands fulfillment of the formers obligation. Thus, even
in reciprocal obligations, if the period for the fulfillment of the obligation is fixed,
demand upon the obligee is still necessary before the obligor can be considered in
default and before a cause of action for rescission will accrue.
Evident from the records and even from the allegations in the complaint was
the lack of demand by petitioner upon respondent to fulfill its obligation to
manufacture and deliver the boxes. The Complaint only alleged that petitioner made
a follow-up upon respondent, which, however, would not qualify as a demand for
the fulfillment of the obligation. Petitioners witness also testified that they made a
follow-up of the boxes, but not a demand. Note is taken of the fact that, with
respect to their claim for reimbursement, the Complaint alleged and the witness
testified that a demand letter was sent to respondent. Without a previous demand
for the fulfillment of the obligation, petitioner would not have a cause of action for
rescission against respondent as the latter would not yet be considered in breach of
its contractual obligation.
Even assuming that a demand had been previously made before filing the
present case, petitioners claim for reimbursement would still fail, as the
circumstances would show that respondent was not guilty of breach of contract.
Q.
A.
Q.
So, your first statement that you were the one who
placed the order is not true?
Thats true. The Solar Harvest made a contact with
Mr. Tan and I deposited the money in the bank.
A.
You said a while ago [t]hat you were the one who
called Mr. Tan and placed the order for 36,500
boxes, isnt it?
First time it was Mr. Alfred Ong.
Q.
A.
Q.
A.
In sum, the Court finds that petitioner failed to establish a cause of action for
rescission, the evidence having shown that respondent did not commit any breach of
its contractual obligation. As previously stated, the subject boxes are still within
respondents premises. To put a rest to this dispute, we therefore relieve respondent
from the burden of having to keep the boxes within its premises and, consequently,
give it the right to dispose of them, after petitioner is given a period of time within
which to remove them from the premises.
WHEREFORE, premises considered, the petition is DENIED. The Court of
Appeals Decision dated September 21, 2006 and Resolution dated February 23,
2007 are AFFIRMED. In addition, petitioner is given a period
of 30 days from notice within which to cause the removal of the 36,500
boxes from respondents warehouse. After the lapse of said period and petitioner
fails to effect such removal, respondent shall have the right to dispose of the boxes
in any manner it may deem fit.
SO ORDERED.
Q.
A.
Q.
A.
Q.
A.
Surely, without such authority, TADECO would not have allowed respondent to
deposit the boxes within its premises.
May 8, 2009
Del Monte Produce; the latter then issued a subrogation receipt to Phoenix
and McGee.
onboard M/V Mistrau making it liable for damages; and, whether Phoenix
and McGee has a cause of action against Mindanao Terminal under Article
2176 of the Civil Code on quasi-delict. To resolve the petition, three
questions have to be answered: first, whether Phoenix and McGee have a
cause of action against Mindanao Terminal; second, whether Mindanao
Terminal, as a stevedoring company, is under obligation to observe the
same extraordinary degree of diligence in the conduct of its business as
15
16
required by law for common carriers and warehousemen; and third,
whether Mindanao Terminal observed the degree of diligence required by
law of a stevedoring company.
We agree with the Court of Appeals that the complaint filed by Phoenix and
McGee against Mindanao Terminal, from which the present case has
arisen, states a cause of action. The present action is based on quasi-delict,
arising from the negligent and careless loading and stowing of the cargoes
belonging to Del Monte Produce. Even assuming that both Phoenix and
McGee have only been subrogated in the rights of Del Monte Produce, who
is not a party to the contract of service between Mindanao Terminal and Del
Monte, still the insurance carriers may have a cause of action in light of the
Courts consistent ruling that the act that breaks the contract may be also a
17
tort. In fine, a liability for tort may arise even under a contract, where tort is
18
that which breaches the contract . In the present case, Phoenix and
McGee are not suing for damages for injuries arising from the breach of the
contract of service but from the alleged negligent manner by which
Mindanao Terminal handled the cargoes belonging to Del Monte Produce.
Despite the absence of contractual relationship between Del Monte Produce
and Mindanao Terminal, the allegation of negligence on the part of the
defendant should be sufficient to establish a cause of action arising from
19
quasi-delict.
The resolution of the two remaining issues is determinative of the ultimate
result of this case.
Article 1173 of the Civil Code is very clear that if the law or contract does
not state the degree of diligence which is to be observed in the performance
of an obligation then that which is expected of a good father of a family or
ordinary diligence shall be required. Mindanao Terminal, a stevedoring
company which was charged with the loading and stowing the cargoes of
Del Monte Produce aboard M/V Mistrau, had acted merely as a labor
provider in the case at bar. There is no specific provision of law that
imposes a higher degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with the loading and
stowing of cargoes. It was neither alleged nor proven by Phoenix and
McGee that Mindanao Terminal was bound by contractual stipulation to
observe a higher degree of diligence than that required of a good father of a
was only charged with the loading and stowing of the cargoes from the pier
to the ships cargo hold; it was never the custodian of the shipment of Del
Monte Produce. A stevedore is not a common carrier for it does not
transport goods or passengers; it is not akin to a warehouseman for it does
not store goods for profit. The loading and stowing of cargoes would not
have a far reaching public ramification as that of a common carrier and a
warehouseman; the public is adequately protected by our laws on contract
and on quasi-delict. The public policy considerations in legally imposing
upon a common carrier or a warehouseman a higher degree of diligence is
not present in a stevedoring outfit which mainly provides labor in loading
and stowing of cargoes for its clients.
In the third issue, Phoenix and McGee failed to prove by preponderance of
25
evidence that Mindanao Terminal had acted negligently. Where the
evidence on an issue of fact is in equipoise or there is any doubt on which
side the evidence preponderates the party having the burden of proof fails
upon that issue. That is to say, if the evidence touching a disputed fact is
equally balanced, or if it does not produce a just, rational belief of its
existence, or if it leaves the mind in a state of perplexity, the party holding
26
the affirmative as to such fact must fail. 1avvphi1
27
28
We adopt the findings of the RTC, which are not disputed by Phoenix
and McGee. The Court of Appeals did not make any new findings of fact
when it reversed the decision of the trial court. The only participation of
29
Mindanao Terminal was to load the cargoes on board M/V Mistrau. It was
not disputed by Phoenix and McGee that the materials, such as ropes,
pallets, and cardboards, used in lashing and rigging the cargoes were all
30
provided by M/V Mistrau and these materials meets industry standard.
It was further established that Mindanao Terminal loaded and stowed the
cargoes of Del Monte Produce aboard the M/V Mistrau in accordance with
the stowage plan, a guide for the area assignments of the goods in the
vessels hold, prepared by Del Monte Produce and the officers of M/V
31
Mistrau. The loading and stowing was done under the direction and
supervision of the ship officers. The vessels officer would order the closing
of the hatches only if the loading was done correctly after a final
32
inspection. The said ship officers would not have accepted the cargoes on
board the vessel if they were not properly arranged and tightly secured to
withstand the voyage in open seas. They would order the stevedore to
rectify any error in its loading and stowing. A foremans report, as proof of
work done on board the vessel, was prepared by the checkers of Mindanao
Terminal and concurred in by the Chief Officer of M/V Mistrau after they
33
were satisfied that the cargoes were properly loaded.
34
Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn
35
and on the survey report of the damage to the cargoes. Byeong, whose
36
testimony was refreshed by the survey report, found that the cause of the
37
damage was improper stowage due to the manner the cargoes were
arranged such that there were no spaces between cartons, the use of
cardboards as support system, and the use of small rope to tie the cartons
together but not by the negligent conduct of Mindanao Terminal in loading
and stowing the cargoes. As admitted by Phoenix and McGee in their
38
Comment before us, the latter is merely a stevedoring company which was
tasked by Del Monte to load and stow the shipments of fresh banana and
pineapple of Del Monte Produce aboard the M/V Mistrau. How and where it
should load and stow a shipment in a vessel is wholly dependent on the
shipper and the officers of the vessel. In other words, the work of the
stevedore was under the supervision of the shipper and officers of the
vessel. Even the materials used for stowage, such as ropes, pallets, and
cardboards, are provided for by the vessel. Even the survey report found
that it was because of the boisterous stormy weather due to the typhoon
Seth, as encountered by M/V Mistrau during its voyage, which caused the
shipments in the cargo hold to collapse, shift and bruise in extensive
39
extent. Even the deposition of Byeong was not supported by the
conclusion in the survey report that:
CAUSE OF DAMAGE
xxx
From the above facts and our survey results, we are of the opinion that
damage occurred aboard the carrying vessel during sea transit, being
caused by ships heavy rolling and pitching under boisterous weather while
proceeding from 1600 hrs on 7th October to 0700 hrs on 12th October,
40
1994 as described in the sea protest.
As it is clear that Mindanao Terminal had duly exercised the required
degree of diligence in loading and stowing the cargoes, which is the
ordinary diligence of a good father of a family, the grant of the petition is in
order.
However, the Court finds no basis for the award of attorneys fees in favor of
petitioner.lawphil.net None of the circumstances enumerated in Article 2208
of the Civil Code exists. The present case is clearly not an unfounded civil
action against the plaintiff as there is no showing that it was instituted for the
mere purpose of vexation or injury. It is not sound public policy to set a
premium to the right to litigate where such right is exercised in good faith,
41
even if erroneously. Likewise, the RTC erred in awarding P83,945.80
actual damages to Mindanao Terminal. Although actual expenses were
incurred by Mindanao Terminal in relation to the trial of this case in Davao
City, the lawyer of Mindanao Terminal incurred expenses for plane fare,
hotel accommodations and food, as well as other miscellaneous expenses,
as he attended the trials coming all the way from Manila. But there is no
showing that Phoenix and McGee made a false claim against Mindanao
Terminal resulting in the protracted trial of the case necessitating the
42
incurrence of expenditures.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals in CA-G.R. CV No. 66121 is SET ASIDE and the decision of the
Regional Trial Court of Davao City, Branch 12 in Civil Case No. 25,311.97 is
hereby REINSTATED MINUS the awards of P100,000.00 as attorneys fees
and P83,945.80 as actual damages.
SO ORDERED.
in possession,
the defendant
award and a
rental value of
Agcaoili's offer to buy from GSIS was contained in a printed form drawn up
by the latter, entitled "Application to Purchase a House and/or Lot." Agcaoili
12
filled up the form, signed it, and submitted it.
The acceptance of the
application was also set out in a form (mimeographed) also prepared by the
GSIS. As already mentioned, this form sent to Agcaoili, duly filled up,
advised him of the approval of his "application to purchase a house and lot
in our GSIS Housing Project at NANGKA, MARIKINA, RIZAL," and that "Lot
No. 26, Block No. (48) 2, together with the housing unit constructed thereon,
has been allocated to you." Neither the application form nor the acceptance
or approval form of the GSIS nor the notice to commence payment of a
monthly amortizations, which again refers to "the house and lot awarded"
contained any hint that the house was incomplete, and was being sold "as
is," i.e., in whatever state of completion it might be at the time. On the other
hand, the condition explicitly imposed on Agcaoili "to occupy the said
house immediately," or in any case within three (3) days from notice,
otherwise his "application shall be considered automatically disapproved
and the said house and lot will be awarded to another applicant" would
imply that construction of the house was more or less complete, and it was
by reasonable standards, habitable, and that indeed, the awardee should
stay and live in it; it could not be interpreted as meaning that the awardee
would occupy it in the sense of a pioneer or settler in a rude wilderness,
making do with whatever he found available in the envirornment.
There was then a perfected contract of sale between the parties; there had
been a meeting of the minds upon the purchase by Agcaoili of a
determinate house and lot in the GSIS Housing Project at Nangka Marikina,
Rizal at a definite price payable in amortizations at P31.56 per month, and
from that moment the parties acquired the right to reciprocally demand
13
performance. It was, to be sure, the duty of the GSIS, as seller, to deliver
the thing sold in a condition suitable for its enjoyment by the buyer for the
14
purpose contemplated , in other words, to deliver the house subject of the
contract in a reasonably livable state. This it failed to do.
It sold a house to Agcaoili, and required him to immediately occupy it under
pain of cancellation of the sale. Under the circumstances there can hardly
be any doubt that the house contemplated was one that could be occupied
for purposes of residence in reasonable comfort and convenience. There
would be no sense to require the awardee to immediately occupy and live in
a shell of a house, a structure consisting only of four walls with openings,
and a roof, and to theorize, as the GSIS does, that this was what was
intended by the parties, since the contract did not clearly impose upon it the
obligation to deliver a habitable house, is to advocate an absurdity, the
creation of an unfair situation. By any objective interpretation of its terms,
the contract can only be understood as imposing on the GSIS an obligation
to deliver to Agcaoili a reasonably habitable dwelling in return for his
undertaking to pay the stipulated price. Since GSIS did not fulfill that
obligation, and was not willing to put the house in habitable state, it cannot
invoke Agcaoili's suspension of payment of amortizations as cause to
cancel the contract between them. It is axiomatic that "(i)n reciprocal
obligations, neither party incurs in delay if the other does not comply or is
15
not ready to comply in a proper manner with what is incumbent upon him."
Nor may the GSIS succeed in justifying its cancellation of the award to
Agcaoili by the claim that the latter had not complied with the condition of
occupying the house within three (3) days. The record shows that Agcaoili
did try to fulfill the condition; he did try to occupy the house but found it to be
so uninhabitable that he had to leave it the following day. He did however
leave a friend in the structure, who being homeless and hence willing to
accept shelter even of the most rudimentary sort, agreed to stay therein and
look after it. Thus the argument that Agcaoili breached the agreement by
failing to occupy the house, and by allowing another person to stay in it
without the consent of the GSIS, must be rejected as devoid of merit.
Finally, the GSIS should not be heard to say that the agreement between it
and Agcaoili is silent, or imprecise as to its exact prestation Blame for the
imprecision cannot be imputed to Agcaoili; it was after all the GSIS which
caused the contract to come into being by its written acceptance of
Agcaoili's offer to purchase, that offer being contained in a printed form
supplied by the GSIS. Said appellant having caused the ambiguity of which
it would now make capital, the question of interpretation arising therefrom,
should be resolved against it.
It will not do, however, to dispose of the controversy by simply declaring that
the contract between the parties had not been validly cancelled and was
therefore still in force, and that Agcaoili could not be compelled by the GSIS
to pay the stipulated price of the house and lot subject of the contract until
and unless it had first completed construction of the house. This would
leave the contract hanging or in suspended animation, as it were, Agcaoili
unwilling to pay unless the house were first completed, and the GSIS averse
AFFIRMED as being in accord with the facts and the law. Said judgments is
however modified by deleting the requirement for respondent GSIS "to
complete the house in question so as to make the same habitable," and
instead it is hereby ORDERED that the contract between the parties relative
to the property above described be modified by adding to the cost of the
land, as of the time of perfection of the contract, the cost of the house in its
unfinished state also as of the time of perfection of the contract, and
correspondingly adjusting the amortizations to be paid by petitioner Agcaoili,
the modification to be effected after determination by the Court a quo of the
value of said house on the basis of the agreement of the parties, or if this is
not possible by such commissioner or commissioners as the Court may
appoint. No pronouncement as to costs.
SO ORDERED.
REGALA, J.:
This is an appeal of the defendant-appellant NARIC from the decision of the
trial court dated February 20, 1958, awarding to the plaintiffs-appellees the
amount of $286,000.00 as damages for breach of contract and dismissing
the counterclaim and third party complaint of the defendant-appellant
NARIC.
In accordance with Section 13 of Republic Act No. 3452, "the National Rice
and Corn Administration (NARIC) is hereby abolished and all its assets,
liabilities, functions, powers which are not inconsistent with the provisions of
this Act, and all personnel are transferred "to the Rice and Corn
Administration (RCA).
All references, therefore, to the NARIC in this decision must accordingly be
adjusted and read as RCA pursuant to the aforementioned law.
On May 19, 1952, plaintiff-appellee participated in the public bidding called
by the NARIC for the supply of 20,000 metric tons of Burmese rice. As her
bid of $203.00 per metric ton was the lowest, she was awarded the contract
for the same. Accordingly, on July 1, 1952, plaintiff-appellee Paz P. Arrieta
and the appellant corporation entered into a Contract of Sale of Rice, under
the terms of which the former obligated herself to deliver to the latter 20,000
metric tons of Burmess Rice at $203.00 per metric ton, CIF Manila. In turn,
the defendant corporation committed itself to pay for the imported rice "by
means of an irrevocable, confirmed and assignable letter of credit in U.S.
currency in favor of the plaintiff-appellee and/or supplier in Burma,
immediately." Despite the commitment to pay immediately "by means of an
irrevocable, confirmed and assignable Letter of Credit," however, it was only
on July 30, 1952, or a full month from the execution of the contract, that the
defendant corporation, thru its general manager, took the first to open a
letter of credit by forwarding to the Philippine National Bank its Application
for Commercial Letter Credit. The application was accompanied by a
transmittal letter, the relevant paragraphs of which read:
In view of the fact that we do not have sufficient deposit with your institution
with which to cover the amount required to be deposited as a condition for
the opening of letters of credit, we will appreciate it if this application could
On the same day, July 30, 1952, Mrs. Paz P. Arrieta thru counsel, advised
the appellant corporation of the extreme necessity for the immediate
opening of the letter credit since she had by then made a tender to her
supplier in Rangoon, Burma, "equivalent to 5% of the F.O.B. price of 20,000
tons at $180.70 and in compliance with the regulations in Rangoon this 5%
will be confiscated if the required letter of credit is not received by them
before August 4, 1952."
On August 4, 1952, the Philippine National Bank informed the appellant
corporation that its application, "for a letter of credit for $3,614,000.00 in
favor of Thiri Setkya has been approved by the Board of Directors with the
condition that marginal cash deposit be paid and that drafts are to be paid
upon presentment." (Exh. J-pl.; Exh. 10-def., p. 19, Folder of Exhibits).
Furthermore, the Bank represented that it "will hold your application in
abeyance pending compliance with the above stated requirement."
As it turned out, however, the appellant corporation not in any financial
position to meet the condition. As matter of fact, in a letter dated August 2,
1952, the NARIC bluntly confessed to the appellee its dilemma: "In this
connection, please be advised that our application for opening of the letter
of credit has been presented to the bank since July 30th but the latter
requires that we first deposit 50% of the value of the letter amounting to
aproximately $3,614,000.00 which we are not in a position to meet."
(Emphasis supplied. Exh. 9-Def.; Exh. 1-Pe., p. 18, Folder of Exhibits)
Consequently, the credit instrument applied for was opened only on
September 8, 1952 "in favor of Thiri Setkya, Rangoon, Burma, and/or
assignee for $3,614,000.00," (which is more than two months from the
execution of the contract) the party named by the appellee as beneficiary of
the letter of credit.1wph1.t
As a result of the delay, the allocation of appellee's supplier in Rangoon was
cancelled and the 5% deposit, amounting to 524,000 kyats or approximately
P200,000.00 was forfeited. In this connection, it must be made of record
that although the Burmese authorities had set August 4, 1952, as the
deadline for the remittance of the required letter of credit, the cancellation of
the allocation and the confiscation of the 5% deposit were not effected until
August 20, 1952, or, a full half month after the expiration of the deadline.
And yet, even with the 15-day grace, appellant corporation was unable to
make good its commitment to open the disputed letter of credit.
The appellee endeavored, but failed, to restore the cancelled Burmese rice
allocation. When the futility of reinstating the same became apparent, she
offered to substitute Thailand rice instead to the defendant NARIC,
communicating at the same time that the offer was "a solution which should
be beneficial to the NARIC and to us at the same time." (Exh. X-Pe., Exh.
25Def., p. 38, Folder of Exhibits). This offer for substitution, however, was
rejected by the appellant in a resolution dated November 15, 1952.
On the foregoing, the appellee sent a letter to the appellant, demanding
compensation for the damages caused her in the sum of $286,000.00, U.S.
currency, representing unrealized profit. The demand having been rejected
she instituted this case now on appeal.
At the instance of the NARIC, a counterclaim was filed and the Manila
Underwriters Insurance Company was brought to the suit as a third party
defendant to hold it liable on the performance bond it executed in favor of
the plaintiff-appellee.
We find for the appellee.
It is clear upon the records that the sole and principal reason for the
cancellation of the allocation contracted by the appellee herein in Rangoon,
Burma, was the failure of the letter of credit to be opened with the
contemplated period. This failure must, therefore, be taken as the
immediate cause for the consequent damage which resulted. As it is then,
the disposition of this case depends on a determination of who was
responsible for such failure. Stated differently, the issue is whether
appellant's failure to open immediately the letter of credit in dispute
amounted to a breach of the contract of July 1, 1952 for which it may be
held liable in damages.
Appellant corporation disclaims responsibility for the delay in the opening of
the letter of credit. On the contrary, it insists that the fault lies with the
appellee. Appellant contends that the disputed negotiable instrument was
not promptly secured because the appellee , failed to seasonably furnish
data necessary and required for opening the same, namely, "(1) the amount
of the letter of credit, (2) the person, company or corporation in whose favor
it is to be opened, and (3) the place and bank where it may be negotiated."
Appellant would have this Court believe, therefore, that had these
informations been forthwith furnished it, there would have been no delay in
appellant with the bank, a part of which letter was quoted earlier in this
decision. In the said accompanying correspondence, appellant admitted and
owned that it did "not have sufficient deposit with your institution (the PNB)
with which to cover the amount required to be deposited as a condition for
the opening of letters of credit. ... .
A number of logical inferences may be drawn from the aforementioned
admission. First, that the appellant knew the bank requirements for opening
letters of credit; second, that appellant also knew it could not meet those
requirement. When, therefore, despite this awareness that was financially
incompetent to open a letter of credit immediately, appellant agreed in
paragraph 8 of the contract to pay immediately "by means of an irrevocable,
confirm and assignable letter of credit," it must be similarly held to have
bound itself to answer for all and every consequences that would result from
the representation. aptly observed by the trial court:
... Having called for bids for the importation of rice involving millions,
$4,260,000.00 to be exact, it should have a certained its ability and capacity
to comply with the inevitably requirements in cash to pay for such
importation. Having announced the bid, it must be deemed to have impliedly
assured suppliers of its capacity and facility to finance the importation within
the required period, especially since it had imposed the supplier the 90-day
period within which the shipment of the rice must be brought into the
Philippines. Having entered in the contract, it should have taken steps
immediately to arrange for the letter of credit for the large amount involved
and inquired into the possibility of its issuance.
In relation to the aforequoted observation of the trial court, We would like to
make reference also to Article 11 of the Civil Code which provides:
Those who in the performance of their obligation are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor
thereof, are liable in damages.
Under this provision, not only debtors guilty of fraud, negligence or default in
the performance of obligations a decreed liable; in general, every debtor
who fails in performance of his obligations is bound to indemnify for the
losses and damages caused thereby (De la Cruz Seminary of Manila, 18
Phil. 330; Municipality of Moncada v. Cajuigan, 21 Phil. 184; De la Cavada
v. Diaz, 37 Phil. 982; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v.
Chong, 49 Phil. 1003; Pando v. Gimenez, 54 Phil. 459; Acme Films v.
Theaters Supply, 63 Phil. 657). The phrase "any manner contravene the
tenor" of the obligation includes any illicit act which impairs the strict and
faithful fulfillment of the obligation or every kind or defective performance.
(IV Tolentino, Civil Code of the Philippines, citing authorities, p. 103.)
The NARIC would also have this Court hold that the subsequent offer to
substitute Thailand rice for the originally contracted Burmese rice amounted
to a waiver by the appellee of whatever rights she might have derived from
the breach of the contract. We disagree. Waivers are not presumed, but
must be clearly and convincingly shown, either by express stipulation or
acts admitting no other reasonable explanation. (Ramirez v. Court of
Appeals, 52 O.G. 779.) In the case at bar, no such intent to waive has been
established.
We have carefully examined and studied the oral and documentary
evidence presented in this case and upon which the lower court based its
award. Under the contract, the NARIC bound itself to buy 20,000 metric tons
of Burmese rice at "$203.00 U.S. Dollars per metric ton, all net shipped
weight, and all in U.S. currency, C.I.F. Manila ..." On the other hand,
documentary and other evidence establish with equal certainty that the
plaintiff-appellee was able to secure the contracted commodity at the cost
price of $180.70 per metric ton from her supplier in Burma. Considering
freights, insurance and charges incident to its shipment here and the
forfeiture of the 5% deposit, the award granted by the lower court is fair and
equitable. For a clearer view of the equity of the damages awarded, We
reproduce below the testimony of the appellee, adequately supported by the
evidence and record:
Q. Will you please tell the court, how much is the damage you suffered?
A. Because the selling price of my rice is $203.00 per metric ton, and the
cost price of my rice is $180.00 We had to pay also $6.25 for shipping and
about $164 for insurance. So adding the cost of the rice, the freight, the
insurance, the total would be about $187.99 that would be $15.01 gross
profit per metric ton, multiply by 20,000 equals $300,200, that is my
supposed profit if I went through the contract.
The above testimony of the plaintiff was a general approximation of the
actual figures involved in the transaction. A precise and more exact
demonstration of the equity of the award herein is provided by Exhibit HH of
the plaintiff and Exhibit 34 of the defendant, hereunder quoted so far as
germane.
It is equally of record now that as shown in her request dated July 29, 1959,
and other communications subsequent thereto for the opening by your
corporation of the required letter of credit, Mrs. Arrieta was supposed to pay
her supplier in Burma at the rate of One Hundred Eighty Dollars and
Seventy Cents ($180.70) in U.S. Currency, per ton plus Eight Dollars
($8.00) in the same currency per ton for shipping and other handling
expenses, so that she is already assured of a net profit of Fourteen Dollars
and Thirty Cents ($14.30), U.S., Currency, per ton or a total of Two Hundred
and Eighty Six Thousand Dollars ($286,000.00), U.S. Currency, in the
aforesaid transaction. ...
Lastly, herein appellant filed a counterclaim asserting that it has suffered,
likewise by way of unrealized profit damages in the total sum of
$406,000.00 from the failure of the projected contract to materialize. This
counterclaim was supported by a cost study made and submitted by the
appellant itself and wherein it was illustrated how indeed had the importation
pushed thru, NARIC would have realized in profit the amount asserted in the
counterclaim. And yet, the said amount of P406,000.00 was realizable by
appellant despite a number of expenses which the appellee under the
contract, did not have to incur. Thus, under the cost study submitted by the
appellant, banking and unloading charges were to be shouldered by it,
including an Import License Fee of 2% and superintendence fee of $0.25
per metric ton. If the NARIC stood to profit over P400 000.00 from the
disputed transaction inspite of the extra expenditures from which the herein
appellee was exempt, we are convicted of the fairness of the judgment
presently under appeal.
In the premises, however, a minor modification must be effected in the
dispositive portion of the decision appeal from insofar as it expresses the
amount of damages in U.S. currency and not in Philippine Peso. Republic
Act 529 specifically requires the discharge of obligations only "in any coin or
currency which at the time of payment is legal tender for public and private
debts." In view of that law, therefore, the award should be converted into
and expressed in Philippine Peso.
This brings us to a consideration of what rate of exchange should apply in
the conversion here decreed. Should it be at the time of the breach, at the
time the obligation was incurred or at the rate of exchange prevailing on the
promulgation of this decision.
In the case of Engel v. Velasco & Co., 47 Phil. 115, We ruled that in an
action for recovery of damages for breach of contract, even if the obligation
assumed by the defendant was to pay the plaintiff a sum of money
expressed in American currency, the indemnity to be allowed should be
expressed in Philippine currency at the rate of exchange at the time of the
judgment rather than at the rate of exchange prevailing on the date of
defendant's breach. This ruling, however, can neither be applied nor
extended to the case at bar for the same was laid down when there was no
law against stipulating foreign currencies in Philippine contracts. But now we
have Republic Act No. 529 which expressly declares such stipulations as
contrary to public policy, void and of no effect. And, as We already
pronounced in the case of Eastboard Navigation, Ltd. v. Juan Ysmael & Co.,
Inc., G.R. No. L-9090, September 10, 1957, if there is any agreement to pay
an obligation in a currency other than Philippine legal tender, the same is
null and void as contrary to public policy (Republic Act 529), and the most
that could be demanded is to pay said obligation in Philippine currency "to
be measured in the prevailing rate of exchange at the time the obligation
was incurred (Sec. 1, idem)."
UPON ALL THE FOREGOING, the decision appealed from is hereby
affirmed, with the sole modification that the award should be converted into
the Philippine peso at the rate of exchange prevailing at the time the
obligation was incurred or on July 1, 1952 when the contract was executed.
The appellee insurance company, in the light of this judgment, is relieved of
any liability under this suit. No pronouncement as to costs.
In other words, under petitioner's theory, it can only be held liable for P
31.92, the fee or charges paid by Sofia C. Crouch for the telegram that was
never sent to the addressee thereof.
Petitioner's contention is without merit.
Art. 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 in
any manner contravene the tenor thereof, are liable for damages." Art. 2176
also provides that "whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done."
In the case at bar, petitioner and private respondent Sofia C. Crouch
entered into a contract whereby, for a fee, petitioner undertook to send said
private respondent's message overseas by telegram. This, petitioner did not
do, despite performance by said private respondent of her obligation by
paying the required charges. Petitioner was therefore guilty of contravening
its obligation to said private respondent and is thus liable for damages.
This liability is not limited to actual or quantified damages. To sustain
petitioner's contrary position in this regard would result in an inequitous
situation where petitioner will only be held liable for the actual cost of a
telegram fixed thirty (30) years ago.
We find Art. 2217 of the Civil Code applicable to the case at bar. It states:
"Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Though incapable of pecuniary computation,
moral damages may be recovered if they are the proximate results of the
defendant's wrongful act or omission." (Emphasis supplied).
Here, petitioner's act or omission, which amounted to gross negligence, was
precisely the cause of the suffering private respondents had to undergo.
As the appellate court properly observed:
[Who] can seriously dispute the shock, the mental anguish and the sorrow
that the overseas children must have suffered upon learning of the death of
their mother after she had already been interred, without being given the
opportunity to even make a choice on whether they wanted to pay her their
last respects? There is no doubt that these emotional sufferings were
proximately caused by appellant's omission and substantive law provides for
4
the justification for the award of moral damages.
major phase of the work, namely, the tunnel excavation work. Some
portions of the outworks at the Bicti site were still under construction. As
soon as the plaintiff corporation had finished the tunnel excavation work at
the Bicti site, all the equipment no longer needed there were transferred to
the Ipo site where some projects were yet to be completed.
The record shows that on November 4,1967, typhoon 'Welming' hit Central
Luzon, passing through defendant's Angat Hydro-electric Project and Dam
at lpo, Norzagaray, Bulacan. Strong winds struck the project area, and
heavy rains intermittently fell. Due to the heavy downpour, the water in the
reservoir of the Angat Dam was rising perilously at the rate of sixty (60)
centimeters per hour. To prevent an overflow of water from the dam, since
the water level had reached the danger height of 212 meters above sea
level, the defendant corporation caused the opening of the spillway gates."
(pp. 45-46, L-47379, Rollo)
The appellate court sustained the findings of the trial court that the evidence
preponlderantly established the fact that due to the negligent manner with
which the spillway gates of the Angat Dam were opened, an extraordinary
large volume of water rushed out of the gates, and hit the installations and
construction works of ECI at the lpo site with terrific impact, as a result of
which the latter's stockpile of materials and supplies, camp facilities and
permanent structures and accessories either washed away, lost or
destroyed.
The appellate court further found that:
It cannot be pretended that there was no negligence or that the appellant
exercised extraordinary care in the opening of the spillway gates of the
Angat Dam. Maintainers of the dam knew very well that it was far more safe
to open them gradually. But the spillway gates were opened only when
typhoon Welming was already at its height, in a vain effort to race against
time and prevent the overflow of water from the dam as it 'was rising
dangerously at the rate of sixty centimeters per hour. 'Action could have
been taken as early as November 3, 1967, when the water in the reservoir
was still low. At that time, the gates of the dam could have been opened in a
regulated manner. Let it be stressed that the appellant knew of the coming
of the typhoon four days before it actually hit the project area. (p. 53, L47379, Rollo)
As to the award of damages, the appellate court held:
We come now to the award of damages. The appellee submitted a list of
estimated losses and damages to the tunnel project (Ipo side) caused by
the instant flooding of the Angat River (Exh. J-1). The damages were
itemized in four categories, to wit: Camp Facilities P55,700.00; Equipment,
Parts and Plant P375,659.51; Materials P107,175.80; and Permanent
Structures and accessories P137,250.00, with an aggregate total amount
of P675,785.31. The list is supported by several vouchers which were all
submitted as Exhibits K to M-38 a, N to O, P to U-2 and V to X- 60-a (Vide:
Folders Nos. 1 to 4). The appellant did not submit proofs to traverse the
aforementioned documentary evidence. We hold that the lower court did not
commit any error in awarding P 675,785.31 as actual or compensatory
damages.
However, We cannot sustain the award of P333,200.00 as consequential
damages. This amount is broken down as follows: P213,200.00 as and for
the rentals of a crane to temporarily replace the one "destroyed beyond
repair," and P120,000.00 as one month bonus which the appellee failed to
realize in accordance with the contract which the appellee had with
NAWASA. Said rental of the crane allegedly covered the period of one year
at the rate of P40.00 an hour for 16 hours a day. The evidence, however,
shows that the appellee bought a crane also a crawler type, on November
10, 1967, six (6) days after the incident in question (Exh N) And according
to the lower court, which finding was never assailed, the appellee resumed
its normal construction work on the Ipo- Bicti Project after a stoppage of only
one month. There is no evidence when the appellee received the crane from
the seller, Asian Enterprise Limited. But there was an agreement that the
shipment of the goods would be effected within 60 days from the opening of
the letter of credit (Exh. N).<re||an1w> It appearing that the contract of
sale was consummated, We must conclude or at least assume that the
crane was delivered to the appellee within 60 days as stipulated. The
appellee then could have availed of the services of another crane for a
period of only one month (after a work stoppage of one month) at the rate of
P 40.00 an hour for 16 hours a day or a total of P 19,200.00 as rental.
But the value of the new crane cannot be included as part of actual
damages because the old was reactivated after it was repaired. The cost of
the repair was P 77,000.00 as shown in item No. 1 under the Equipment,
Parts and Plants category (Exh. J-1), which amount of repair was already
included in the actual or compensatory damages. (pp. 54-56, L-47379,
Rollo)
The appellate court likewise rejected the award of unrealized bonus from
NAWASA in the amount of P120,000.00 (computed at P4,000.00 a day in
case construction is finished before the specified time, i.e., within 800
calendar days), considering that the incident occurred after more than three
(3) years or one thousand one hundred seventy (1,170) days. The court
also eliminated the award of exemplary damages as there was no gross
negligence on the part of NPC and reduced the amount of attorney's fees
from P50,000.00 to P30,000.00.
In these consolidated petitions, NPC assails the appellate court's decision
as being erroneous on the ground that the destruction and loss of the ECI's
equipment and facilities were due to force majeure. It argues that the rapid
rise of the water level in the reservoir of its Angat Dam due to heavy rains
brought about by the typhoon was an extraordinary occurrence that could
not have been foreseen, and thus, the subsequent release of water through
the spillway gates and its resultant effect, if any, on ECI's equipment and
facilities may rightly be attributed to force majeure.
On the other hand, ECI assails the reduction of the consequential damages
from P333,200.00 to P19,000.00 on the grounds that the appellate court
had no basis in concluding that ECI acquired a new Crawler-type crane and
therefore, it only can claim rentals for the temporary use of the leased crane
for a period of one month; and that the award of P4,000.00 a day or
P120,000.00 a month bonus is justified since the period limitation on ECI's
contract with NAWASA had dual effects, i.e., bonus for earlier completion
and liquidated damages for delayed performance; and in either case at the
rate of P4,000.00 daily. Thus, since NPC's negligence compelled work
stoppage for a period of one month, the said award of P120,000.00 is
justified. ECI further assailes the reduction of attorney's fees and the total
elimination of exemplary damages.
Both petitions are without merit.
It is clear from the appellate court's decision that based on its findings of fact
and that of the trial court's, petitioner NPC was undoubtedly negligent
because it opened the spillway gates of the Angat Dam only at the height of
typhoon "Welming" when it knew very well that it was safer to have opened
the same gradually and earlier, as it was also undeniable that NPC knew of
the coming typhoon at least four days before it actually struck. And even
though the typhoon was an act of God or what we may call force majeure,
NPC cannot escape liability because its negligence was the proximate
cause of the loss and damage. As we have ruled in Juan F. Nakpil & Sons
v. Court of Appeals, (144 SCRA 596, 606-607):
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
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 was, 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 the 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).
Furthermore, the question of whether or not there was negligence on the
part of NPC is a question of fact which properly falls within the jurisdiction of
the Court of Appeals and will not be disturbed by this Court unless the same
is clearly unfounded. Thus, in Tolentino v. Court of appeals, (150 SCRA 26,
36) we ruled:
Moreover, the findings of fact of the Court of Appeals are generally final and
conclusive upon the Supreme Court (Leonardo v. Court of Appeals, 120
SCRA 890 [1983]. In fact it is settled that the Supreme Court is not
supposed to weigh evidence but only to determine its substantially (Nuez
v. Sandiganbayan, 100 SCRA 433 [1982] and will generally not disturb said
findings of fact when supported by substantial evidence (Aytona v. Court of
Appeals, 113 SCRA 575 [1985]; Collector of Customs of Manila v.
Intermediate Appellate Court, 137 SCRA 3 [1985]. On the other hand
substantial evidence is defined as such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion (Philippine Metal
Products, Inc. v. Court of Industrial Relations, 90 SCRA 135 [1979]; Police
Commission v. Lood, 127 SCRA 757 [1984]; Canete v. WCC, 136 SCRA
302 [1985])
Therefore, the respondent Court of Appeals did not err in holding the NPC
liable for damages.
Likewise, it did not err in reducing the consequential damages from
P333,200.00 to P19,000.00. As shown by the records, while there was no
categorical statement or admission on the part of ECI that it bought a new
crane to replace the damaged one, a sales contract was presented to the
effect that the new crane would be delivered to it by Asian Enterprises within
60 days from the opening of the letter of credit at the cost of P106,336.75.
The offer was made by Asian Enterprises a few days after the flood. As
compared to the amount of P106,336.75 for a brand new crane and paying
the alleged amount of P4,000.00 a day as rental for the use of a temporary
crane, which use petitioner ECI alleged to have lasted for a period of one
year, thus, totalling P120,000.00, plus the fact that there was already a
sales contract between it and Asian Enterprises, there is no reason why ECI
should opt to rent a temporary crane for a period of one year. The appellate
court also found that the damaged crane was subsequently repaired and
reactivated and the cost of repair was P77,000.00. Therefore, it included the
said amount in the award of of compensatory damages, but not the value of
the new crane. We do not find anything erroneous in the decision of the
appellate court that the consequential damages should represent only the
service of the temporary crane for one month. A contrary ruling would result
in the unjust enrichment of ECI.
The P120,000.00 bonus was also properly eliminated as the same was
granted by the trial court on the premise that it represented ECI's lost
opportunity "to earn the one month bonus from NAWASA ... ." As stated
earlier, the loss or damage to ECI's equipment and facilities occurred long
after the stipulated deadline to finish the construction. No bonus, therefore,
could have been possibly earned by ECI at that point in time. The supposed
liquidated damages for failure to finish the project within the stipulated
period or the opposite of the claim for bonus is not clearly presented in the
records of these petitions. It is not shown that NAWASA imposed them.
As to the question of exemplary damages, we sustain the appellate court in
eliminating the same since it found that there was no bad faith on the part of
NPC and that neither can the latter's negligence be considered gross. In
Dee Hua Liong Electrical Equipment Corp. v. Reyes, (145 SCRA 713, 719)
we ruled:
Neither may private respondent recover exemplary damages since he is not
entitled to moral or compensatory damages, and again because the
petitioner is not shown to have acted in a wanton, fraudulent, reckless or
oppressive manner (Art. 2234, Civil Code; Yutuk v. Manila Electric Co., 2
SCRA 377; Francisco v. Government Service Insurance System, 7 SCRA
577; Gutierrez v. Villegas, 8 SCRA 527; Air France v. Carrascoso, 18 SCRA
155; Pan Pacific (Phil.) v. Phil. Advertising Corp., 23 SCRA 977; Marchan v.
Mendoza, 24 SCRA 888).
We also affirm the reduction of attorney's fees from P50,000.00 to
P30,000.00. There are no compelling reasons why we should set aside the
appellate court's finding that the latter amount suffices for the services
Upon his discharge from the hospital, he had to walk around with crutches
for fifteen (15) days. His injury prevented him from attending to the school
buses he is operating. As a result, he had to engage the services of one
Bienvenido Valdez to supervise his business for an aggregate
compensation of nine hundred pesos (P900.00). (Decision, AC-G.R. CV No.
01387, Rollo, pp. 13-20).
PARAS, J.:
This is a petition for review on certiorari of: (1) the decision * of the
Intermediate Appellate Court in AC-G.R. No. 013887-CV Bernardino
Jimenez v. Asiatic Integrated Corporation and City of Manila, reversing the
decision ** of the Court of First Instance of Manila, Branch XXII in Civil Case
No. 96390 between the same parties, but only insofar as holding Asiatic
Integrated Corporation solely liable for damages and attorney's fees instead
of making the City of Manila jointly and solidarily liable with it as prayed for
by the petitioner and (2) the resolution of the same Appellate Court denying
his Partial Motion for Reconsideration (Rollo, p. 2).
The dispositive portion of the Intermediate Appellate Court's decision is as
follows:
WHEREFORE, the decision appealed from is hereby REVERSED. A new
one is hereby entered ordering the defendant Asiatic Integrated Corporation
to pay the plaintiff P221.90 actual medical expenses, P900.00 for the
amount paid for the operation and management of a school bus,
P20,000.00 as moral damages due to pains, sufferings and sleepless nights
and P l0,000.00 as attorney's fees.
Petitioner sued for damages the City of Manila and the Asiatic Integrated
Corporation under whose administration the Sta. Ana Public Market had
been placed by virtue of a Management and Operating Contract (Rollo, p.
47).
The lower court decided in favor of respondents, the dispositive portion of
the decision reading:
WHEREFORE, judgment is hereby rendered in favor of the defendants and
against the plaintiff dismissing the complaint with costs against the plaintiff.
For lack of sufficient evidence, the counterclaims of the defendants are
likewise dismissed. (Decision, Civil Case No. 96390, Rollo, p. 42).
As above stated, on appeal, the Intermediate Appellate Court held the
Asiatic Integrated Corporation liable for damages but absolved respondent
City of Manila.
Hence this petition.
The lone assignment of error raised in this petition is on whether or not the
Intermediate Appellate Court erred in not ruling that respondent City of
Manila should be jointly and severally liable with Asiatic Integrated
Corporation for the injuries petitioner suffered.
In compliance with the resolution of July 1, 1985 of the First Division of this
Court (Rollo, p. 29) respondent City of Manila filed its comment on August
13, 1985 (Rollo, p. 34) while petitioner filed its reply on August 21, 1985
(Reno, p. 51).
Thereafter, the Court in the resolution of September 11, 1985 (Rollo, p. 62)
gave due course to the petition and required both parties to submit
simultaneous memoranda
Petitioner filed his memorandum on October 1, 1985 (Rollo, p. 65) while
respondent filed its memorandum on October 24, 1985 (Rollo, p. 82).
In the resolution of October 13, 1986, this case was transferred to the
Second Division of this Court, the same having been assigned to a member
of said Division (Rollo, p. 92).
The petition is impressed with merit.
As correctly found by the Intermediate Appellate Court, there is no doubt
that the plaintiff suffered injuries when he fell into a drainage opening
without any cover in the Sta. Ana Public Market. Defendants do not deny
that plaintiff was in fact injured although the Asiatic Integrated Corporation
tries to minimize the extent of the injuries, claiming that it was only a small
puncture and that as a war veteran, plaintiff's hospitalization at the War
Veteran's Hospital was free. (Decision, AC-G.R. CV No. 01387, Rollo, p. 6).
Respondent City of Manila maintains that it cannot be held liable for the
injuries sustained by the petitioner because under the Management and
Operating Contract, Asiatic Integrated Corporation assumed all
responsibility for damages which may be suffered by third persons for any
cause attributable to it.
It has also been argued that the City of Manila cannot be held liable under
Article 1, Section 4 of Republic Act No. 409 as amended (Revised Charter
of Manila) which provides:
control or supervision.
constitutes a particular prescription making "provinces, cities and
municipalities ... liable for damages for the death of, or injury suffered by
any person by reason" specifically "of the defective condition of roads,
streets, bridges, public buildings, and other public works under their control
or supervision." In other words, Art. 1, sec. 4, R.A. No. 409 refers to liability
arising from negligence, in general, regardless of the object, thereof, while
Article 2189 of the Civil Code governs liability due to "defective streets,
public buildings and other public works" in particular and is therefore
decisive on this specific case.
In the same suit, the Supreme Court clarified further that under Article 2189
of the Civil Code, it is not necessary for the liability therein established to
attach, that the defective public works belong to the province, city or
municipality from which responsibility is exacted. What said article requires
is that the province, city or municipality has either "control or supervision"
over the public building in question.
In the case at bar, there is no question that the Sta. Ana Public Market,
despite the Management and Operating Contract between respondent City
and Asiatic Integrated Corporation remained under the control of the former.
For one thing, said contract is explicit in this regard, when it provides:
The City shall not be liable or held for damages or injuries to persons or
property arising from the failure of the Mayor, the Municipal Board, or any
other City Officer, to enforce the provisions of this chapter, or any other law
or ordinance, or from negligence of said Mayor, Municipal Board, or any
other officers while enforcing or attempting to enforce said provisions.
This issue has been laid to rest in the case of City of Manila v. Teotico (22
SCRA 269-272 [1968]) where the Supreme Court squarely ruled that
Republic Act No. 409 establishes a general rule regulating the liability of the
City of Manila for "damages or injury to persons or property arising from the
failure of city officers" to enforce the provisions of said Act, "or any other law
or ordinance or from negligence" of the City "Mayor, Municipal Board, or
other officers while enforcing or attempting to enforce said provisions."
Upon the other hand, Article 2189 of the Civil Code of the Philippines which
provides that:
Provinces, cities and municipalities shall be liable for damages for the death
of, or injuries suffered by any person by reason of defective conditions of
roads, streets, bridges, public buildings and other public works under their
II
That immediately after the execution of this contract, the SECOND PARTY
shall start the painting, cleaning, sanitizing and repair of the public markets
and talipapas and within ninety (90) days thereof, the SECOND PARTY
shall submit a program of improvement, development, rehabilitation and
reconstruction of the city public markets and talipapas subject to prior
approval of the FIRST PARTY. (Rollo, p. 44)
xxx xxx xxx
VI
That all present personnel of the City public markets and talipapas shall be
retained by the SECOND PARTY as long as their services remain
satisfactory and they shall be extended the same rights and privileges as
heretofore enjoyed by them. Provided, however, that the SECOND PARTY
shall have the right, subject to prior approval of the FIRST PARTY to
discharge any of the present employees for cause. (Rollo, p. 45).
VII
That the SECOND PARTY may from time to time be required by the FIRST
PARTY, or his duly authorized representative or representatives, to report,
on the activities and operation of the City public markets and talipapas and
the facilities and conveniences installed therein, particularly as to their cost
of construction, operation and maintenance in connection with the
stipulations contained in this Contract. (lbid)
The fact of supervision and control of the City over subject public market
was admitted by Mayor Ramon Bagatsing in his letter to Secretary of
Finance Cesar Virata which reads:
These cases arose from the controversy over the Management and
Operating Contract entered into on December 28, 1972 by and between the
City of Manila and the Asiatic Integrated Corporation, whereby in
consideration of a fixed service fee, the City hired the services of the said
corporation to undertake the physical management, maintenance,
rehabilitation and development of the City's public markets and' Talipapas'
subject to the control and supervision of the City.
xxx xxx xxx
It is believed that there is nothing incongruous in the exercise of these
powers vis-a-vis the existence of the contract, inasmuch as the City retains
the power of supervision and control over its public markets and talipapas
under the terms of the contract. (Exhibit "7-A") (Emphasis supplied.) (Rollo,
p. 75).
In fact, the City of Manila employed a market master for the Sta. Ana Public
Market whose primary duty is to take direct supervision and control of that
particular market, more specifically, to check the safety of the place for the
public.
Thus the Asst. Chief of the Market Division and Deputy Market
Administrator of the City of Manila testified as follows:
Court This market master is an employee of the City of Manila?
Mr. Ymson Yes, Your Honor.
Q What are his functions?
PARAS, J.:
These are petitions for review on certiorari of the November 28, 1977
decision of the Court of Appeals in CA-G.R. No. 51771-R modifying the
decision of the Court of First Instance of Manila, Branch V, in Civil Case No.
74958 dated September 21, 1971 as modified by the Order of the lower
court dated December 8, 1971. The Court of Appeals in modifying the
decision of the lower court included an award of an additional amount of
P200,000.00 to the Philippine Bar Association to be paid jointly and
severally by the defendant United Construction Co. and by the third-party
defendants Juan F. Nakpil and Sons and Juan F. Nakpil.
The dispositive portion of the modified decision of the lower court reads:
WHEREFORE, judgment is hereby rendered:
(a) Ordering defendant United Construction Co., Inc. and third-party
defendants (except Roman Ozaeta) to pay the plaintiff, jointly and severally,
the sum of P989,335.68 with interest at the legal rate from November 29,
1968, the date of the filing of the complaint until full payment;
(b) Dismissing the complaint with respect to defendant Juan J. Carlos;
(c) Dismissing the third-party complaint;
negligent or in any way jointly and solidarily liable with the defendants,
judgment may be rendered in whole or in part. as the case may be, against
Juan F. Nakpil & Sons and/or Juan F. Nakpil in favor of the plaintiff to all
intents and purposes as if plaintiff's complaint has been duly amended by
including the said Juan F. Nakpil & Sons and Juan F. Nakpil as parties
defendant and by alleging causes of action against them including, among
others, the defects or inadequacy of the plans, designs, and specifications
prepared by them and/or failure in the performance of their contract with
plaintiff.
3. Both parties hereby jointly petition this Honorable Court to approve this
stipulation. (Record on Appeal, pp. 274-275; Rollo, L-47851,p.169).
Upon the issues being joined, a pre-trial was conducted on March 7, 1969,
during which among others, the parties agreed to refer the technical issues
involved in the case to a Commissioner. Mr. Andres O. Hizon, who was
ultimately appointed by the trial court, assumed his office as Commissioner,
charged with the duty to try the following issues:
1. Whether the damage sustained by the PBA building during the August 2,
1968 earthquake had been caused, directly or indirectly, by:
(a) The inadequacies or defects in the plans and specifications prepared by
third-party defendants;
(b) The deviations, if any, made by the defendants from said plans and
specifications and how said deviations contributed to the damage sustained;
(c) The alleged failure of defendants to observe the requisite quality of
materials and workmanship in the construction of the building;
(d) The alleged failure to exercise the requisite degree of supervision
expected of the architect, the contractor and/or the owner of the building;
(e) An act of God or a fortuitous event; and
(f) Any other cause not herein above specified.
2. If the cause of the damage suffered by the building arose from a
combination of the above-enumerated factors, the degree or proportion in
which each individual factor contributed to the damage sustained;
3. Whether the building is now a total loss and should be completely
P13,661.28 while the Nakpils opposed the payment of damages jointly and
solidarity with UCCI.
The pivotal issue in this case is whether or not an act of God-an unusually
strong earthquake-which caused the failure of the building, exempts from
liability, parties who are otherwise liable because of their negligence.
The applicable law governing the rights and liabilities of the parties herein is
Article 1723 of the New Civil Code, which provides:
Art. 1723. The engineer or architect who drew up the plans and
specifications for a building is liable for damages if within fifteen years from
the completion of the structure the same should collapse by reason of a
defect in those plans and specifications, or due to the defects in the ground.
The contractor is likewise responsible for the damage if the edifice fags
within the same period on account of defects in the construction or the use
of materials of inferior quality furnished by him, or due to any violation of the
terms of the contract. If the engineer or architect supervises the
construction, he shall be solidarily liable with the contractor.
Acceptance of the building, after completion, does not imply waiver of any of
the causes of action by reason of any defect mentioned in the preceding
paragraph.
The action must be brought within ten years following the collapse of the
building.
On the other hand, the general rule is that no person shall be responsible
for events which could not be foreseen or which though foreseen, were
inevitable (Article 1174, New Civil Code).
An act of God has been defined as an accident, due directly and exclusively
to natural causes without human intervention, which by no amount of
foresight, pains or care, reasonably to have been expected, could have
been prevented. (1 Corpus Juris 1174).
There is no dispute that the earthquake of August 2, 1968 is a fortuitous
event or an act of God.
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 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 normal 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).
The negligence of the defendant and the third-party defendants petitioners
was established beyond dispute both in the lower court and in the
Intermediate Appellate Court. Defendant United Construction Co., Inc. was
found to have made substantial deviations from the plans and
specifications. and to have failed to observe the requisite workmanship in
the construction as well as to exercise the requisite degree of supervision;
while the third-party defendants were found to have inadequacies or defects
in the plans and specifications prepared by them. As correctly assessed by
both courts, the defects in the construction and in the plans and
specifications were the proximate causes that rendered the PBA building
unable to withstand the earthquake of August 2, 1968. For this reason the
defendant and third-party defendants cannot claim exemption from liability.
(Decision, Court of Appeals, pp. 30-31).
It is well settled that the findings of facts of the Court of Appeals are
conclusive on the parties and on this court (cases cited in Tolentino vs. de
Jesus, 56 SCRA 67; Cesar vs. Sandiganbayan, January 17, 1985, 134
SCRA 105, 121), unless (1) the conclusion is a finding grounded entirely on
speculation, surmise and conjectures; (2) the inference made is manifestly
mistaken; (3) there is grave abuse of discretion; (4) the judgment is based
on misapprehension of facts; (5) the findings of fact are conflicting , (6) the
Court of Appeals went beyond the issues of the case and its findings are
contrary to the admissions of both appellant and appellees (Ramos vs.
Pepsi-Cola Bottling Co., February 8, 1967, 19 SCRA 289, 291-292; Roque
vs. Buan, Oct. 31, 1967, 21 SCRA 648, 651); (7) the findings of facts of the
Court of Appeals are contrary to those of the trial court; (8) said findings of
facts are conclusions without citation of specific evidence on which they are
based; (9) the facts set forth in the petition as well as in the petitioner's main
and reply briefs are not disputed by the respondents (Garcia vs. CA, June
30, 1970, 33 SCRA 622; Alsua-Bett vs. Court of Appeals, July 30, 1979, 92
SCRA 322, 366); (10) the finding of fact of the Court of Appeals is premised
on the supposed absence of evidence and is contradicted by evidence on
record (Salazar vs. Gutierrez, May 29, 1970, 33 SCRA 243, 247; Cited in
G.R. No. 66497-98, Sacay v. Sandiganbayan, July 10, 1986).
It is evident that the case at bar does not fall under any of the exceptions
above-mentioned. On the contrary, the records show that the lower court
spared no effort in arriving at the correct appreciation of facts by the referral
of technical issues to a Commissioner chosen by the parties whose findings
and
conclusions
remained
convincingly
unrebutted
by
the
intervenors/amicus curiae who were allowed to intervene in the Supreme
Court.
In any event, the relevant and logical observations of the trial court as
affirmed by the Court of Appeals that "while it is not possible to state with
certainty that the building would not have collapsed were those defects not
present, the fact remains that several buildings in the same area withstood
the earthquake to which the building of the plaintiff was similarly subjected,"
cannot be ignored.
The next issue to be resolved is the amount of damages to be awarded to
the PBA for the partial collapse (and eventual complete collapse) of its
building.
The Court of Appeals affirmed the finding of the trial court based on the
report of the Commissioner that the total amount required to repair the PBA
building and to restore it to tenantable condition was P900,000.00 inasmuch
as it was not initially a total loss. However, while the trial court awarded the
PBA said amount as damages, plus unrealized rental income for one-half
year, the Court of Appeals modified the amount by awarding in favor of PBA
The findings of the lower Court on the cause of the collapse are more
rational and accurate. Instead of laying the blame solely on the motions and
forces generated by the earthquake, it also examined the ability of the PBA
building, as designed and constructed, to withstand and successfully
weather those forces.
The evidence sufficiently supports a conclusion that the negligence and fault
of both United and Nakpil and Sons, not a mysterious act of an inscrutable
God, were responsible for the damages. The Report of the Commissioner,
Plaintiff's Objections to the Report, Third Party Defendants' Objections to
the Report, Defendants' Objections to the Report, Commissioner's Answer
to the various Objections, Plaintiffs' Reply to the Commissioner's Answer,
Defendants' Reply to the Commissioner's Answer, Counter-Reply to
Defendants' Reply, and Third-Party Defendants' Reply to the
Commissioner's Report not to mention the exhibits and the testimonies
show that the main arguments raised on appeal were already raised during
the trial and fully considered by the lower Court. A reiteration of these same
arguments on appeal fails to convince us that we should reverse or disturb
the lower Court's factual findings and its conclusions drawn from the facts,
among them:
The Commissioner also found merit in the allegations of the defendants as
to the physical evidence before and after the earthquake showing the
inadequacy of design, to wit:
Physical evidence before the earthquake providing (sic) inadequacy of
design;
1. inadequate design was the cause of the failure of the building.
2. Sun-baffles on the two sides and in front of the building;
a. Increase the inertia forces that move the building laterally toward the
Manila Fire Department.
b. Create another stiffness imbalance.
3. The embedded 4" diameter cast iron down spout on all exterior columns
reduces the cross-sectional area of each of the columns and the strength
thereof.
4. Two front corners, A7 and D7 columns were very much less reinforced.
Physical Evidence After the Earthquake, Proving Inadequacy of design;
during the hearing that the resort to engineering references posterior to the
date of the preparation of the plans was induced by the third-party
defendants themselves who submitted computations of the third-party
defendants are erroneous.
The issue presently considered is admittedly a technical one of the highest
degree. It involves questions not within the ordinary competence of the
bench and the bar to resolve by themselves. Counsel for the third-party
defendants has aptly remarked that "engineering, although dealing in
mathematics, is not an exact science and that the present knowledge as to
the nature of earthquakes and the behaviour of forces generated by them
still leaves much to be desired; so much so "that the experts of the different
parties, who are all engineers, cannot agree on what equation to use, as to
what earthquake co-efficients are, on the codes to be used and even as to
the type of structure that the PBA building (is) was (p. 29, Memo, of thirdparty defendants before the Commissioner).
The difficulty expected by the Court if tills technical matter were to be tried
and inquired into by the Court itself, coupled with the intrinsic nature of the
questions involved therein, constituted the reason for the reference of the
said issues to a Commissioner whose qualifications and experience have
eminently qualified him for the task, and whose competence had not been
questioned by the parties until he submitted his report. Within the
pardonable limit of the Court's ability to comprehend the meaning of the
Commissioner's report on this issue, and the objections voiced to the same,
the Court sees no compelling reasons to disturb the findings of the
Commissioner that there were defects and deficiencies in the design, plans
and specifications prepared by third-party defendants, and that said defects
and deficiencies involved appreciable risks with respect to the accidental
forces which may result from earthquake shocks.
(2) (a) The deviations, if any, made by the defendants from the plans and
specifications, and how said deviations contributed to the damage sustained
by the building.
(b) The alleged failure of defendants to observe the requisite quality of
materials and workmanship in the construction of the building.
These two issues, being interrelated with each other, will be discussed
together.
The findings of the Commissioner on these issues were as follows:
We now turn to the construction of the PBA Building and the alleged
(5) Column C7 Absence of spiral to a height of 20" from the ground level,
Spirals are at 2" from the exterior column face and 6" from the inner column
face,
(6) Column B6 Lack of spiral on 2 feet below the floor beams,
(8) Column B7 Spirals not tied to vertical reinforcing bars, Spirals are
uneven 2" to 4",
(10) Column A4 Spirals cut off and welded to two separate clustered
vertical bars,
and ties in the columns were in many cases greater than those called for in
the plans and specifications resulting again in loss of earthquake-resistant
strength. The assertion of the engineering experts for the defendants that
the improper spacings and the cutting of the spirals did not result in loss of
strength in the column cannot be maintained and is certainly contrary to the
general principles of column design and construction. And even granting
that there be no loss in strength at the yield point (an assumption which is
very doubtful) the cutting or improper spacings of spirals will certainly result
in the loss of the plastic range or ductility in the column and it is precisely
this plastic range or ductility which is desirable and needed for earthquakeresistant strength.
There is no excuse for the cavity or hollow portion in the column A4, second
floor, and although this column did not fail, this is certainly an evidence on
the part of the contractor of poor construction.
The engineering experts for the defendants strongly assert and apparently
believe that the cutting of the spirals did not materially diminish the strength
of the column. This belief together with the difficulty of slipping the spirals on
the top of the column once the beam reinforcement is in place may be a
sufficient motivation for the cutting of the spirals themselves. The
defendants, therefore, should be held responsible for the consequences
arising from the loss of strength or ductility in column A5 which may have
contributed to the damages sustained by the building.
The lack of proper length of splicing of spirals was also proven in the visible
spirals of the columns where spalling of the concrete cover had taken place.
This lack of proper splicing contributed in a small measure to the loss of
strength.
The effects of all the other proven and visible defects although nor can
certainly be accumulated so that they can contribute to an appreciable loss
in earthquake-resistant strength. The engineering experts for the defendants
submitted an estimate on some of these defects in the amount of a few
percent. If accumulated, therefore, including the effect of eccentricity in the
column the loss in strength due to these minor defects may run to as much
as ten percent.
To recapitulate: the omission or lack of spirals and ties at the bottom and/or
at the top of some of the ground floor columns contributed greatly to the
collapse of the PBA building since it is at these points where the greater part
of the failure occurred. The liability for the cutting of the spirals in column
A5, ground floor, in the considered opinion of the Commissioner rests on the
shoulders of the defendants and the loss of strength in this column
contributed to the damage which occurred.
It is reasonable to conclude, therefore, that the proven defects, deficiencies
and violations of the plans and specifications of the PBA building
contributed to the damages which resulted during the earthquake of August
2, 1968 and the vice of these defects and deficiencies is that they not only
increase but also aggravate the weakness mentioned in the design of the
structure. In other words, these defects and deficiencies not only tend to
add but also to multiply the effects of the shortcomings in the design of the
building. We may say, therefore, that the defects and deficiencies in the
construction contributed greatly to the damage which occurred.
Since the execution and supervision of the construction work in the hands of
the contractor is direct and positive, the presence of existence of all the
major defects and deficiencies noted and proven manifests an element of
negligence which may amount to imprudence in the construction work. (pp.
42-49, Commissioners Report).
contractor of the building. The Commissioner further stated that the loss of
strength of the cut spirals and inelastic deflections of the supposed lattice
work defeated the purpose of the spiral containment in the column and
resulted in the loss of strength, as evidenced by the actual failure of this
column.
SO ORDERED.
JUAN F. NAKPIL & SONS and JUAN F. NAKPIL, petitioners, vs. THE
COURT OF APPEALS, UNITED CONSTRUCTION COMPANY, INC.,
JUAN J. CARLOS, and the PHILIPPINE BAR ASSOCIATION,
respondents.
G.R. No. L-47863 April 15, 1988
THE UNITED CONSTRUCTION CO., INC. and JUAN J. CARLOS,
petitioners, vs. THE COURT OF APPEALS, THE PHILIPPINE BAR
ASSOCIATION, JUAN F. NAKPIL & SONS, and JUAN F. NAKPIL,
respondents.
G.R. No. L-47896 April 15, 1988
PHILIPPINE BAR ASSOCIATION, petitioner, vs. THE COURT OF
APPEALS, UNITED CONSTRUCTION COMPANY, INC., and JUAN J.
CARLOS, and JUAN F. NAKPIL & SONS and JUAN F. NAKPIL,
respondents.
RESOLUTION
As already discussed, the destruction was not purely an act of God. Truth to
tell hundreds of ancient buildings in the vicinity were hardly affected by the
earthquake. Only one thing spells out the fatal difference; gross negligence
and evident bad faith, without which the damage would not have occurred.
PARAS, J.:
WHEREFORE, the decision appealed from is hereby MODIFIED and
considering the special and environmental circumstances of this case, We
deem it reasonable to render a decision imposing, as We do hereby impose,
upon the defendant and the third-party defendants (with the exception of
Roman Ozaeta) a solidary (Art. 1723, Civil Code, Supra, p. 10) indemnity in
favor of the Philippine Bar Association of FIVE MILLION (P5,000,000.00)
Pesos to cover all damages (with the exception of attorney's fees)
occasioned by the loss of the building (including interest charges and lost
rentals) and an additional ONE HUNDRED THOUSAND (P100,000.00)
Pesos as and for attorney's fees, the total sum being payable upon the
finality of this decision. Upon failure to pay on such finality, twelve (12%) per
lower court. The dispositive portion of the decision of the Court of Appeals,
reads:
SO ORDERED.
All the parties herein appealed the aforestated decision of the Court of
Appeals.
III
IV
THE FINDING OF BAD FAITH IS NOT WARRANTED IN FACT AND IS
WITHOUT BASIS IN LAW.
V
THE AWARD OF DAMAGES COUCHED IN GENERAL TERMS IS
DEFECTIVE; MOREOVER IT IS UNWARRANTED BY THE FACTS AND
THE LAW.
VI
THE AWARD OF ATTORNEYS FEES IN THE AMOUNT OF P100,000.00
IS UWARRANTED.
VII
II
UNITED argues that it is the legal duty of PBA to provide full-time and active
supervision in the co on of subject building. Failing to cite any provision of
law to support its arguments, UNITED insists on the inherent legal duty of
the owner, reinforced by practice, usage and custom, to exercise such
supervision. Apart from the fact that UNITED seems to have completely
contradicted its own view that this construction involves highly technical
matters and therefore beyond the ambit of ordinary understanding and
experience, the contrary appears to be more in accord with ordinary
practice, which is to avail oneself of the services of architects and engineers
whose training and expertise make them more qualified to provide effective
supervision of the construction. In fact, it was on the suggestion of Juan F.
Nakpil, one of the petitioners herein, that the construction was undertaken
on an administration basis (Decision, p. 3). Thus, the trial court did not err in
holding that charging the owner with fun time supervision of the construction
has no legal or contractual basis (Decision, p. 7).
It will be noted that not unlike the motion for reconsideration filed by
petitioner Juan F. Nakpil and Sons, which was denied in the resolution of
April 1, 1987, there is nothing in the motion for reconsideration filed by the
United Construction Co., Inc. that was not fully discussed in the assailed
decision of October 3, 1986.
I
United Construction Co., Inc. (UNITED for short), gave considerable
emphasis on the fact that the PBA building did not collapse as found by the
trial court and affirmed by the Court of Appeals. Otherwise stated, UNITED
wishes to stress that subject building did not disintegrate completely as the
term "collapse" is supposed to connote.
Be that as it may, it will be observed that in the assasiled decision, this
Court is in complete accord with the findings of the trial court and affirmed
by the Court of Appeals, that after the April 2, 1968 earthquake the building
in question was not totally lost, the collapse was only partial and the building
could still be restored at the expense of P900,000.00. But after the
subsequent earthquake on April 7, 9, and 12, 1970 there was no question
that further damage was caused to the property resulting in an eventual and
unavoidable collapse or demolition (compete collapse). In fact, on April 30,
1970 the building was authorized by the trial court to be demolished at the
expense of the plaintiff. Note that a needed demolition is in fact a form of
"collapse".
The bone of contention is therefore, not on the fact of collapse but on who
should shoulder the damages resulting from the partial and eventual
collapse. As ruled by this Court in said decision, there should be no
question that the NAKPILS and UNITED are liable for the damage.
Citing the case of Tucker v. Milan (49 O.G. 4379, 4380) as the case in point,
the pertinent portion of the decision reads:
One who negligently creates a dangerous condition cannot escape hability
for the natural and probable consequences thereof, although the act of a
third person, or an act of God for which he is not responsible, intervenes to
precipitate the loss.
III
UNITED points out that bad faith is a question of fact which was not
established. The Commissioner, the trial court and the Court of Appeals, all
of which are triers of fact, allegedly concede that there was negligence but
not bad faith.
A careful study of the decision will show that there is no contradiction
between the above finding of negligence by the trial court which was formed
by the Court of Appeals and the ruling of this Court. On the contrary, on the
basis of such finding, it was held that such wanton negligence of both the
defendant and the third-party defendants in effecting the plans, designs,
specifications, and construction of the PBA building is equivalent to bad faith
in the performance of their respective tasks (Decision, p. 28).
IV & V
UNITED takes exception to the five (5) fold increase in the award of
damages from P1,189,335.00 to P5 million pesos. It is claimed that the
report of the Commissioner speaks of only P1,100,000.00 so that there is no
basis for such award. It will be recalled that the estimate of the
Commissioner was limited to P1,100,000.00 for cost of repairs after the
partial collapse of the building on April 2, 1968 but not after its total collapse
reswting from the subsequent earthquakes. It is therefore evident that the
actual cost of total reconstruction of the building him question was not
considered by the commissioner in the computation. Considering further the
In addition, there is merit in the PBA claim that the unrealized rental income
awarded to it should not be limited to a period of one-half year but should be
computed on a continuing basis at the rate of P178,671.76 a year until
judgment for the principal amount shag have been satisfied. Thus, this
Court awarded an "indemnity in favor of the Philippine Bar Assodation of
FIVE MILLION (P5,000,000.00) Pesos to cover damages (with the
exception of attorney's fees) occasioned by the loss of the building
(including interest charges and lost rentals) ...
As for the award of attorney's fees, there is no question that the size of
attorney's fees as well as the amount of damages, is subject to the sound
discretion of the court (Magbanua v. IAC, 137 SCRA 332 [1985]). Earlier,
this Court has ruled that an award of 10% of the amount of total recovery,
for attomey's fees, is reasonable. (Central Bank of the Phil. v. Court of
Appeals, 63 SCRA 435 (1975]).
VI
There should be no dispute that the imposition of 12% interest pursuant to
Central Bank Circular No. 416 (passed pursuant to the authority granted to
the Central Bank by P.D. No. 116 which amended Act No. 2655, otherwise
known as the Usury Law) is applicable only in the following: (1) loans; (2)
forbearance of any money, goods or credit; and (3) rate allowed in
judgments (judgments spoken of refer to judgments involving loans or
forbearance of any money, goods or credits). (Philippine Rabbit Bus Lines
Inc. v. Cruz, 143 SCRA 160-161 [1986]; Reformina v. Tomol, Jr., 139 SCRA
260 (1985)). It is true that in the instant case, there is neither a loan or a
forbearance, but then no interest is actually being imposed provided the
sums referred to in the judgment are paid upon the finality of the judgment.
It is delay in the payment of such final judgment, that will cause the
imposition of the interest.
It will be noted that in the cases already adverted to, the rate of interest is
imposed on the total sum from the filing of the complaint until paid; in other
words, as part of the judgment for damages. Clearly they are not applicable
to the instant case.