Sales: Oral Warranty, Prescription

PHILIPPINE STEEL COATING CORP., PETITIONER, VS. EDUARD QUIONES,

RESPONDENT.
G.R. No. 194533, April 19, 2017
Issues:
1. Whether vague oral statements made by seller on the characteristics of a generic good can
be considered warranties that may be invoked to warrant payment of damages;

2. Whether general warranties on the suitability of products sold prescribe in six (6) months
under Article 1571 of the Civil Code xxx

Facts:
This case arose from a Complaint for damages filed by respondent Quiones (owner of Amianan
Motors) against petitioner PhilSteel. The Complaint alleged that in early 1994, Richard Lopez, a sales
engineer of PhilSteel, offered Quiones their new product: primer-coated, long-span, rolled
galvanized iron (G.I.) sheets. The latter showed interest, but asked Lopez if the primer-coated sheets
were compatible with the Guilder acrylic paint process used by Amianan Motors in the finishing of
its assembled buses. Uncertain, Lopez referred the query to his immediate superior, Ferdinand
Angbengco, PhilSteel's sales manager.

Angbengco assured Quiones that the quality of their new product was superior to that of the non-
primer coated G.I. sheets being used by the latter in his business. Quiones expressed reservations,
as the new product might not be compatible with the paint process used by Amianan Motors.

Angbengco further guaranteed that a laboratory test had in fact been conducted by PhilSteel, and
that the results proved that the two products were compatible; hence, Quiones was induced to
purchase the product and use it in the manufacture of bus units.

However, sometime in 1995, Quiones received several complaints from customers who had
bought bus units, claiming that the paint or finish used on the purchased vehicles was breaking and
peeling off. Quiones then sent a letter-complaint to PhilSteel invoking the warranties given by the
latter. According to respondent, the damage to the vehicles was attributable to the hidden defects of
the primer-coated sheets and/or their incompatibility with the Guilder acrylic paint process used by
Amianan Motors, contrary to the prior evaluations and assurances of PhilSteel. Because of the
barrage of complaints, Quiones was forced to repair the damaged buses.

PhilSteel counters that Quifiones himself offered to purchase the subject product directly from the
former without being induced by any of PhilSteel's representatives. According to its own
investigation, PhilSteel discovered that the breaking and peeling off of the paint was caused by the
erroneous painting application done by Quiones.

1
The RTC rendered a Decision in favor of Quiones and ordered PhilSteel to pay damages. The trial
court found that Lopez's testimony was damaging to PhilSteel's position that the latter had not
induced Quiones or given him assurance that his painting system was compatible with PhilSteel's
primer-coated G.I. sheets. The trial court concluded that the paint blistering and peeling off were
due to the incompatibility of the painting process with the primer-coated G.I. sheets. The RTC also
found that the assurance made by Angbengco constituted an express warranty under Article 1546 of
the Civil Code. Quiones incurred damages from the repair of the buses and suffered business
reverses. In view thereof, PhilSteel was held liable for damages.
The CA affirmed the ruling of the RTC in toto.
Ruling:
An express warranty can be oral when it is a positive affirmation of a fact that the buyer
relied on.
Petitioner argues that the purported warranties by mere "vague oral statements" cannot be
invoked to warrant the payment of damages.

A warranty is a statement or representation made by the seller of goods - contemporaneously

and as part of the contract of sale that has reference to the character, quality or title of the
goods; and is issued to promise or undertake to insure that certain facts are or shall be as the
seller represents them. A warranty is not necessarily written. It may be oral as long as it is not
given as a mere opinion or judgment. Rather, it is a positive affirmation of a fact that buyers
rely upon, and that influences or induces them to purchase the product
Quiones had reservations about the compatibility of his acrylic paint primer with the primer-
coated G.I. sheets of PhilSteel. But he later surrendered his doubts about the product after 4 to
5 meetings with Angbengco, together with the latter's subordinate Lopez. Only after several
meetings was Quiones persuaded to buy their G.I. sheets. On 15 April 1994, he placed an
initial order for petitioner's product and, following Angbengco's instructions, had a bus painted
with acrylic paint. The results of the painting test turned out to be successful. Satisfied with the
initial success of that test, respondent made subsequent orders of the primer-coated product
and used it in Amianan Motors' mass production of bus bodies
Thus, it was not accurate for petitioner to state that they had made no warranties. It insisted
that at best, they only gave "assurances" of possible savings Quiones might have if he relied
on PhilSteel's primer-coated G.I. sheets and eliminated the need to apply an additional primer.
The prescription period of the express warranty applies to the instant case.

Neither the CA nor the RTC ruled on the prescription period applicable to this case. There being an
express warranty, this Court holds that the prescription period applicable to the instant case is that
prescribed for breach of an express warranty. The applicable prescription period is therefore that

2
which is specified in the contract; in its absence, that period shall be based on the general rule on the
rescission of contracts: four years (see Article 1389, Civil Code). In this case, no prescription period
specified in the contract between the parties has been put forward. Quiones filed the instant case
on 6 September 1996[19] or several months after the last delivery of the thing sold. His filing of the
suit was well within the prescriptive period of four years; hence, his action has not prescribed.

3
Meeting of the Minds.
FEDERAL BUILDERS, INC., PETITIONER, VS. POWER FACTORS, INC.,
RESPONDENT.
G.R. No. 211504, March 08, 2017
Issues:
Whether or not an agreement to submit to voluntary arbitration for purposes of vesting jurisdiction
over a construction dispute in the Construction Industry Arbitration Commission (CIAC) need not
be contained in the construction contract, or be signed by the parties.
Whether or not it is enough that the agreement be in writing.

Facts:
Federal Builders Inc. (Federal) appeals to reverse the decision promulgated on August 12, 2013,
whereby the Court of Appeals (CA) affirmed the adverse decision rendered on May 12, 2010 by the
Construction Industry Arbitration Commission (CIAC) with modification of the total amount
awarded.
Federal was the general contractor of the Bullion Mall under a construction agreement with Bullion
Investment and Development Corporation (BIDC). In 2004, Federal engaged respondent Power
Factors Inc. (Power) as its subcontractor for the electric works at the Bullion Mall and the Precinct
Building for P18,000,000.00.

On February 19, 2008, Power sent a demand letter to Federal claiming the unpaid amount of
P11,444,658.97 for work done by Power for the Bullion Mall and the Precinct Building. Federal
replied that its outstanding balance under the original contract only amounted to P1,641,513.94, and
that the demand for payment for work done by Power after June 21, 2005 should be addressed
directly to BIDC. Nonetheless, Power made several demands on Federal to no avail.

On October 29, 2009, Power filed a request for arbitration in the CIAC invoking the arbitration
clause of the Contract of Service reading as follows:
15. ARBITRATION COMMITTEE - All disputes, controversies or differences, which may arise between the
parties herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled by the
Construction Industry Arbitration Commission (CIAC) which shall have original and exclusive jurisdiction over the
aforementioned disputes.
On November 20, 2009, Atty. Vivencio Albano, the counsel of Federal, submitted a letter to
the CIAC manifesting that Federal agreed to arbitration and sought an extension of 15 days
to file its answer, which request the CIAC granted.

4
On December 16, 2009, Atty. Albano filed his withdrawal of appearance stating that Federal had
meanwhile engaged another counsel.

Federal, represented by new counsel (Domingo, Dizon, Leonardo and Rodillas Law Office), moved
to dismiss the case on the ground that CIAC had no jurisdiction over the case inasmuch as the
Contract of Service between Federal and Power had been a mere draft that was never finalized or
signed by the parties. Federal contended that in the absence of the agreement for arbitration, the
CIAC had no jurisdiction to hear and decide the case.
xxx

In summary: Respondent Federal Builders, Inc. is hereby ordered to pay claimant

Power Factors, Inc. the following sums: xxx

P9,369,238.87

Federal appealed the award to the CA insisting that the CIAC had no jurisdiction to hear
and decide the case; and that the amounts thereby awarded to Power lacked legal and
factual bases.

On August 12, 2013, the CA affirmed the CIAC's decision with modification as to the amounts due
to Power
Ruling:
The parties had an effective agreement to submit to voluntary arbitration; hence, the CIAC
had jurisdiction
Federal contends that there was no mutual consent and no meeting of the minds between it and
Power as to the operation and binding effect of the arbitration clause because they had rejected the
draft service contract.

The contention of Federal deserves no consideration.

Under Article 1318 of the Civil Code, a valid contract should have the following essential
elements, namely:
(a) consent of the contracting parties;
(b) object certain that is the subject matter of the contract; and
(c) cause or consideration. Moreover, a contract does not need to be in writing in order to be
obligatory and effective unless the law specifically requires so.

Pursuant to Article 1356 and Article 1357 of the Civil Code, contracts shall be obligatory in whatever
5
form they may have been entered into, provided that all the essential requisites for their validity are
present. Indeed, there was a contract between Federal and Power even if the Contract of Service was
unsigned. Such contract was obligatory and binding between them by virtue of all the essential
elements for a valid contract being present.

6
Meeting of the Minds, Sale of Land
DASMARIAS T. ARCAINA AND MAGNANI T. BANTA, PETITIONERS, VS. NOEMI
L. INGRAM, REPRESENTED BY MA. NENETTE L. ARCHINUE, RESPONDENT.
G.R. No. 196444, February 15, 2017
Issue:
Whether or not the sale of the lot is for a lump sum or per unit price.
Facts:
Arcaina is the owner of Lot No. 3230 (property) located at Salvacion, Sto. Domingo, Albay.
Sometime in 2004, her attorney-in-fact, Banta, entered into a contract with Ingram for the sale of
the property. Banta showed Ingram and the latter's attorney-in-fact, respondent Ma. Nenette L.
Archinue (Archinue), the metes and bounds of the properly and represented that Lot No. 3230 has
an area of more or less 6,200 square meters (sq. m.) per the tax declaration covering it. The contract
price was P1,860,000.00 with Ingram making installment payments for the property froni May 5,
2004 to February 10, 2005 totaling P1,715,000.00.[6] Banta and Ingram thereafter executed a
Memorandum of Agreement acknowledging the previous payments and that Ingram still had an
obligation to pay the remaining balance in the amount of P145,000.00.[7] They also separately
executed deeds of absolute sale over the property in Ingram's favor. Both deeds described the
property to wit:
DESCRIPTION

A parcel of land Lot No. 3230, situated at Salvacion, Sto. Domingo, Albay, Bounded on the
NE-by Lot 3184 on the SE-by Seashore on the SW-Lot No. 3914 and on the NW-by Road
with an area of SIX THOUSAND TWO HUNDRED (6,200) sq. meters more or less.
Subsequently, Ingram caused the property to be surveyed and discovered that Lot No. 3230 has an
area of 12,000 sq. m. Upon learning of the actual area of the property, Banta allegedly insisted that
the difference of 5,800 sq. m. remains unsold. This was opposed by Ingram who claims that she
owns the whole lot by virtue of the sale.[9] Thus, Archinue, on behalf of Ingram, instituted the
recovery case, docketed as Civil Case No. S-241, against petitioners before the MCTC.
Ingram further maintained that she is ready to pay the balance of P145,000.00 as soon as petitioners
recognize her ownership of the whole property. After all, the sale contemplated the entire property
as in fact the boundaries of the lot were clearly stated in the deeds of sale.
The MCTC declared that the survey showed that the property was 12,000 sq. m. or more than what
was stated in the deeds of sale. For Ingram to be awarded the excess 5,800 sq. m. portion of the
property, she should have presented evidence that she paid for the surplus area consistent with
Article 1540 of the Civil Code
On appeal, the RTC reversed and set aside the Order of the MCTC. RTC held that Article 1542,
which covers sale of real estate in lump sum, applies in this case.

7
Ruling:
We find that the difference of 5,800 sq. m. is too substantial to be considered reasonable. We
note that only 6,200 sq. m. was agreed upon between petitioners and Ingram. Declaring Ingram as
the owner of the whole 12,000 sq. m. on the premise that this is the actual area included in the
boundaries would be ordering the delivery of almost twice the area stated in the deeds of sale.
Surely, Article 1542 does not contemplate such an unfair situation to befall a vendor-that he/she
would be compelled to deliver double the amount that he/she originally sold without a
corresponding increase in price. In Asiain v. Jalandoni, we explained that "[a] vendee of a land when it
is sold in gross or with the description 'more or less' does not thereby ipso facto take all risk of
quantity in the land. The use of 'more or less' or similar words in designating quantity covers only a
reasonable excess or deficiency." Therefore, we rule that Ingram is entitled only to 6,200 sq. m. of
the property. An area of 5,800 sq. m. more than the area intended to be sold is not a reasonable
excess that can be deemed included in the sale.

Further, at the time of the sale, Ingram and petitioners did not have knowledge of the actual area of
the land within the boundaries of the property. It is undisputed that before the survey, the parties
relied on the tax declaration covering the lot, which merely stated that it measures more or less 6,200
sq. m. Thus, when petitioners offered the property for sale and when Ingram accepted the
offer, the object of their consent or meeting of the minds is only a 6,200 sq. m. property. The
deeds of sale merely put into writing what was agreed upon by the parties. In this regard, we quote
with approval the ruling of the MCTC:
In this case, the Deed of Absolute Sale (Exhibit "M") dated April 13, 2005 is clear and unequivocal
as to the area sold being up to only 6,200 square meters. The agreement of the parties were clear and
unambiguous, hence, the inconsistent and impossible testimonies of N[e]nette [Archinue] and the
Spouses Ingram. No amount of extrinsic aids are required and no further extraneous sources are
necessary in order to ascertain the parties' intent, determinable as it is, from the document itself. The
court is thus convinced that the deed expresses truly the parties' intent as against the oral testimonies
of Nenette, and the Spouses Ingram.
The contract of sale is the law between Ingram and petitioners; it must be complied with in good
faith. Petitioners have already performed their obligation by delivering the 6,200 sq. m. property.
Since Ingram has yet to fulfill her end of the bargain, she must pay petitioners the remaining balance
of the contract price amounting to P145,000.00.

8
Meeting of the Minds.
KABISIG REAL WEALTH DEV., INC. AND FERNANDO C. TIO, PETITIONERS, VS.
YOUNG CORPORATION, BUILDERS RESPONDENT.
G.R. No. 212375, January 25, 2017
Issue: Whether or not contracts needs to be in writing to be enforceable
Facts: Sometime in April 2001, Kabisig Real Wealth Dev., Inc. (Kabisig), through Ferdinand Tio (Tio),
contracted the services of Young Builders Corporation (Young Builders) to supply labor, tools,
equipment, and materials for the renovation of its building in Cebu City. Young Builders then
finished the work in September 2001 and billed Kabisig for P4,123,320.95. However, despite
numerous demands, Kabisig failed to pay. It contended that no written contract was ever entered
into between the parties and it was never informed of the estimated cost of the renovation. Thus,
Young Builders filed an action for Collection of Sum of Money against Kabisig.
On July 31, 2008, the RTC of Cebu City rendered a Decision finding for Young Builders, thus:
WHEREFORE, judgment is hereby rendered ordering the defendants to pay plaintiff P4,123,320.95
representing the value of services rendered and materials used in the renovation of the building of
defendant Kabisig Real Wealth Dev., Inc. into a restaurant of defendant Ferdinand Tio, by way of
actual damages, plus 12% per annum from September 11, 2001 until it is fully paid. Costs against
defendants.
Therefore, Kabisig elevated the case to the CA. On June 28, 2013, the appellate court affirmed the
RTC Decision, with modification, viz.:
WHEREFORE, foregoing premises considered, the Decision dated July 31, 2008 rendered by the
Regional Trial Court of Cebu City, Branch 12 in Civil Case No. CEB-27950 is hereby AFFIRMED
with MODIFICATION, deleting the award for actual damages. As modified, the defendants
Kabisig Real Wealth Dev., Inc. and Ferdinand Tio are ordered to jointly pay the plaintiff Young
Builders Corporation Two Million Four Hundred Thousand (P2,400,000.00) Pesos as
TEMPERATE DAMAGES for the value of services, rendered and materials used in the
renovation of defendants-appellants building. In addition, the total amount adjudged shall earn
interest at the rate of 12% per annum from September 11, 2001, until it is fully paid. Costs against
defendants
Held:
Under the Civil Code, a contract is a meeting of minds, with respect to the other, to give something
or to render some service. Article 1318 reads:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract; and
(3) Cause of the obligation which is established.

Accordingly, for a contract to be valid, it must have the following essential elements: (1) consent of

9
the contracting parties; (2) object certain, which is the subject matter of the contract; and (3) cause
of the obligation which is established. Consent must exist, otherwise, the contract is non-existent.
Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause,
which are to constitute the contract. By law, a contract of sale, is perfected at the moment there is a
meeting of the minds upon the thing that is the object of the contract and upon the price. Indeed, it
is a consensual contract which is perfected by mere consent.

Through the testimonies of both Young Builders' and Kabisig's witnesses, Tio commissioned the
company of his friend, Nelson Yu, to supply labor, tools, equipment, and materials for the
renovation of Kabisig's building into a restaurant. While Tio argues that the renovation was actually
for the benefit of his partners, Fernando Congmon, Gold En Burst Foods Co., and Sunburst Fried
Chicken, Inc., and therefore, they should be the ones who must shoulder the cost of the renovation,
said persons were never impleaded in the instant case. Moreover, all the documents pertaining to the
project, such as official receipts of payment for the building permit application, are under the names
of Kabisig and Tio.

Further, Kabisig's claim as to the absence of a written contract between it and Young Builders
simply does not hold water. It is settled that once perfected, a contract is generally binding in
whatever form, whether written or oral, it may have been entered into, provided the aforementioned
essential requisites for its validity are present.[7] Article 1356 of the Civil Code provides:

Art. 1356. Contracts shall be obligatory in whatever form they may have been entered into, provided
all the essential requisites for their validity are present.

There is nothing in the law that requires a written contract for the agreement in question to be valid
and enforceable. Also, the Court notes that neither Kabisig nor Tio had objected to the renovation
work, until it was already time to settle the bill.
The principle of quantum meruit justifies the payment of the reasonable value of the services rendered
and should apply in the absence of an express agreement on the fees. It is notable that the issue
revolves around the parties' inability to agree on the fees that Young Builders should receive.
Considering the absence of an agreement, and in view of the completion of the renovation, the
Court has to apply the principle of quantum meruit in determining how much is due to Young
Builders. Under the established circumstances, the total amount of P2,400,000.00 which the CA
awarded is deemed to be a reasonable compensation under the principle of quantum meruit since the
renovation of Kabisig's building had already been completed in 2001
Finally, the rate of interest should be modified. When the obligation is breached, and it consists in
the payment of a sum of money, as in this case, the interest due should be that which may have been
stipulated in writing. In the absence of stipulation, the rate of interest shall be 12%, later reduced to
6%,[13] per annum to be computed from default, i.e., from judicial or extrajudicial demand, subject to
the provisions of Article 1169[14] of the Civil Code. Here, the records would show that Young
Builders made the demand on September 11, 2001. Also, the rate of legal interest for a judgment
awarding a sum of money shall be 6% per annum from the time such judgment becomes final and
executory until its satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.

10
TORTS: Proximate Cause
OUR LADY OF LOURDES HOSPITAL, PETITIONER, VS. SPOUSES ROMEO AND
REGINA CAPANZANA, RESPONDENTS.

G.R. No. 189218, March 22, 2017

Facts:
Regina Capanzana (Regina), a 40-year-old nurse and clinical instructor pregnant with her third child,
was scheduled for her third caesarean section (C-section) on 2 January 1998. However, a week
earlier, on 26 December 1997, she went into active labor and was brought to petitioner hospital for
an emergency C-section. She first underwent a pre-operative physical examination by Dr. Miriam
Ramos[4] (Dr. Ramos) and Dr. Milagros Joyce Santos,[5] (Dr. Santos) the same attending physicians in
her prior childbirths. She was found fit for anesthesia after she responded negatively to questions
about tuberculosis, rheumatic fever, and cardiac diseases. On that same day, she gave birth to a baby
boy. When her condition stabilized, she was discharged from the recovery room and transferred to a
regular hospital room.[6]

At 2:30 a.m. the following day, or 13 hours after her operation, Regina who was then under watch
by her niece, Katherine L. Balad (Balad), complained of a headache, a chilly sensation, restlessness,
and shortness of breath. She asked for oxygen and later became cyanotic. After undergoing an x-ray,
she was found to be suffering from pulmonary edema. She was eventually transferred to the
Intensive Care Unit, where she was hooked to a mechanical ventilator. The impression then was that
she was showing signs of amniotic fluid embolism.[7]

On 2 January 1998, when her condition still showed no improvement, Regina was transferred to the
Cardinal Santos Hospital. The doctors thereat found that she was suffering from rheumatic heart
disease mitral stenosis with mild pulmonary hypertension, which contributed to the onset of fluid in
her lung tissue (pulmonary edema). This development resulted in cardio-pulmonary arrest and,
subsequently, brain damage. Regina lost the use of her speech, eyesight, hearing and limbs. She was
discharged, still in a vegetative state, on 19 January 1998.[8]

Respondent spouses Capanzana filed a complaint for damages[9] against petitioner hospital, along
with co-defendants: Dr. Miriam Ramos, an obstetrician/gynecologist; Dr. Milagros Joyce Santos, an
anesthesiologist; and Jane Does, the nurses on duty stationed on the second floor of petitioner
hospital on 26-27 December 1997.[10]

Respondents imputed negligence to Drs. Ramos and Santos for the latter's failure to detect the heart
disease of Regina, resulting in failure not only to refer her to a cardiologist for cardiac clearance, but
also to provide the appropriate medical management before, during, and after the operation. They
further stated that the nurses were negligent for not having promptly given oxygen, and that the
hospital was equally negligent for not making available and accessible the oxygen unit on that same
hospital floor at the time.[11]

11
RTC RULING: On 29 December 2006, the RTC rendered judgment, finding no negligence on the
part of Dr. Ramos or Dr. Santos. It found that the medical community's recognized standard
practices in attending to a patient in connection with a C-section had been duly observed by the
doctors.

The RTC also found that the primary cause of Regina's vegetative state was amniotic fluid
embolism, an unfortunate condition that was not within the control of any doctor to anticipate or
prevent. This condition was the root cause of the pulmonary edema that led to hypoxic
encephalopathy, brain damage and, ultimately, Regina's vegetative state. On the other hand, the trial
court noted that hypoxic encephalopathy was manageable. It could have been prevented, or at least
minimized, had there been a timely administration of oxygen.[24]

On the strength of the testimony of Balad, the RTC found that negligence on the part of the
nurses contributed to the injury of Regina. It found that they failed to respond immediately
when Regina was experiencing shortness of breath. It took the nurses more or less 10
minutes after being informed of the condition of Regina before they checked on her, called
for the resident doctor, and requested oxygen. While the trial court acknowledged that the
immediate administration of oxygen was not a guarantee that Regina's condition would
improve, it gave credence to the testimony of the expert witness. The latter opined that the
delay contributed to the onset of hypoxic encephalopathy or diffuse brain damage due to
lack of oxygen in Regina's brain. The expert witness also said that had there been a timely
administration of oxygen the risk of brain damage would have been lessened, if not avoided,
and the onset of hypoxic encephalopathy reduced. The RTC therefore found the nurses
liable for contributory negligence.
The RTC absolve the hospital for exercising due diligence on its selection of nurses.
However, the CA ruled that petitioner hospital should be held liable based on the doctrine
of corporate responsibility. It was found that while there was evidence to prove that
petitioner hospital showed diligence in its selection and hiring processes, there was no
evidence to prove that it exercised the required diligence in the supervision of its nurses.
Also, the appellate court ruled that the non-availability of an oxygen unit on the hospital
floor, a fact that was admitted, constituted gross negligence on the part of petitioner
hospital. The CA stressed that, as borne out by the records, there was only one tank in the
ward section of 27 beds. It said that petitioner hospital should have devised an effective way
for the staff to properly and timely respond to a need for an oxygen tank in a situation of
acute distress.

Ruling:
We affirm the findings of the courts below that the negligent delay on the part of the nurses was
the proximate cause of the brain damage suffered by Regina. In Ramos, the Court defines
proximate cause as follows:

12
Proximate cause has been defined as that which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces injury, and without which the result would not have
occurred. An injury or damage is proximately caused by an act or a failure to act, whenever it
appears from the evidence in the case, that the act or omission played a substantial part in
bringing about or actually causing the injury or damage; and that the injury or damage was either
a direct result or a reasonably probable consequence of the act or omission. It is the dominant,
moving or producing cause. (Underscoring supplied; citations omitted).
Thus, a failure to act may be the proximate cause if it plays a substantial part in bringing about
an injury. Note also that the omission to perform a duty may also constitute the proximate cause
of an injury, but only where the omission would have prevented the injury. The Court also
emphasizes that the injury need only be a reasonably probable consequence of the failure to act.
In other words, there is no need for absolute certainty that the injury is a consequence of the
omission.

Applying the above definition to the facts in the present case, the omission of the nurses - their
failure to check on Regina and to refer her to the resident doctor and, thereafter, to immediately
provide oxygen - was clearly the proximate cause that led to the brain damage suffered by the
patient. As the trial court and the CA both held, had the nurses promptly responded, oxygen
would have been immediately administered to her and the risk of brain damage lessened, if not
avoided.

For the negligence of its nurses, petitioner is thus liable under Article 2180 in relation to Article
2176 of the Civil Code. Under Article 2180, an employer like petitioner hospital may be held
liable for the negligence of its employees based on its responsibility under a relationship of patria
potestas. The liability of the employer under this provision is "direct and immediate; it is not
conditioned upon a prior recourse against the negligent employee or a prior showing of the
insolvency of that employee." The employer may only be relieved of responsibility upon a
showing that it exercised the diligence of a good father of a family in the selection and
supervision of its employees. The rule is that once negligence of the employee is shown, the
burden is on the employer to overcome the presumption of negligence on the latter's part by
proving observance of the required diligence.

xxx

On this point, the rulings of the RTC and the CA diverge. While the trial court found due
diligence in both the selection and the supervision of the nurses, the appellate court found that
petitioner proved due diligence only in the selection, but not in the supervision, of the nurses.

13
JESSIE M. DOROTEO (DECEASED), REPRESENTED BY HIS SISTER, LUCIDA D.
HERMIS, PETITIONER, V. PHILIMARE INCORPORATED, BONIFACIO GOMEZ,
AND/OR FIL CARGO SHIPPING CORP., RESPONDENTS.
G. R. No. 184917, March 13, 2017
Facts:
Philimare is a local manning agency that hired Doroteo as an engineer on behalf of Fil-Cargo
Shipping Corporation.
As the vessel passed through the coast of Spain between 25 March 2004 to 30 March 2004,
petitioner claimed that he felt the engine room's temperature rising, and he drank cold water to
cool himself.[9] On 30 March 2004 in Haiti, Doroteo felt pain in his throat and took antibiotics
for five days on his own initiative to ease the pain.[10] Upon arrival at the Caribbean, he allegedly
requested for a medical check-up at the hospital but was refused by the ship master.[11]
On 4 April 2004, he forced the ship master to allow him a medical check-up due to worsening
pain and experiencing difficulty swallowing and breathing.[12] On 26 April 2004 he claimed to
have been brought to a government hospital in Las Palmas in Europe, where he was only given
antibiotics and a pain reliever since there were no specialists to attend to his needs.[13]
The vessel arrived in Denmark on 2 May 2004 and he again requested for a medical check-up.[14]
A biopsy was conducted due to the presence of lymph nodes in his voice box.[15] On 3 May 2004,
his condition deteriorated and a request for medicine with the ship master was denied due to a
lack of antibiotics.[16] On 5 May 2004, Doroteo was subject to medical repatriation on order of
Philimare and he arrived in the Philippines on 16 June 2004.
Doroteo was examined by Philimare's physician, Dr. Emmanuel Cruz of Supercare Medical
Services, Inc., on 23 June 2004, and was advised to undergo direct laryngoscopy and biopsy with
possible tracheotomy due to possible laryngeal cancer, but did not come back to the company
physician.[18]
Subsequently, Doroteo filed a Complaint on 3 November 2004 before the NLRC for non-
payment of sick leave pay and disability/medical benefits.[19]
In his Position Paper dated 23 May 2005, Doroteo claimed that the company-designated
physician refused to accord him the proper medication if he would not pay the amount of
P200,000.[20] Thus, he shouldered the cost of his major surgery which consisted of a total
laryngectomy and pectoralis major myocutaneous flap on 4 October 2004.[21] On 7 October
2004, he underwent tomography at St. Luke's Medical Center which showed that he had
"laryngeal mass probably malignant."[22] St. Luke's issued a medical certificate finding him
physically unfit for work.
Philimare contested the claim, asserting that Dorotea's illness is not a compensable occupational
disease because cancer of the larynx or voice box was primarily cause by excessive and repeated
exposure to tobacco, either smoked or chewed, as well as alcohol consumption.[24] Hence,
Philimare contended that the illness was not work-related and that the disease was present even
14
before Dorotea's employment.[25] Moreover, Philimare decried Dorotea's failure to disclose his
condition as a violation of his contract and equivalent to fraudulent misrepresentation.[26]
Before the resolution of the dispute, Doroteo died of cancer on 29 May 2005, and was substituted
by his sister, Lucida Heramis
The Labor Arbiter decided on 7 September 2005 that Dorotea's cancer was not work-related
and was a pre-existing illness.
The NLRC upheld the Labor Arbiter upon appeal and motion for reconsideration, essentially
reiterating the decision of the Labor Arbiter on the same grounds.
The CA Ruled: Philimare did not extend any help to its dying seaman both in the immediate
time of need while he was still under its employ, and in the throes of his final moments. This is
a clear case of gross negligence, tantamount to bad faith.
Ruling:
We affirm the appellate court's finding that petitioners are guilty of negligence in failing to
provide immediate medical attention to private respondent. It has been sufficiently established
that, while the M/V T.A. VOYAGER was docked at the port of New Zealand, private respondent
was taken ill, causing him to lose his memory and rendering him incapable of performing his
work as radio officer of the vessel. The crew immediately notified the master of the vessel of
private respondent's worsening condition. However, instead of disembarking private respondent
so that he may receive immediate medical attention at a hospital in New Zealand or at a nearby
port, the master of the vessel proceeded with the voyage, in total disregard of the urgency of
private respondent's condition. Private respondent was kept on board without any medical
attention whatsoever for the entire duration of the trip from New Zealand to the Philippines, a
voyage of ten days. To make matters worse, when the vessel finally arrived in Manila, petitioners
failed to directly disembark private respondent for immediate hospitalization. Private respondent
was made to suffer a wait of several more hours until a vacant slot was available at the pier for
the vessel to dock. It was only upon the insistence of private respondent's relatives that
petitioners were compelled to disembark private respondent and finally commit him to a hospital.
There is no doubt that the failure of petitioners to provide private respondent with the necessary
medical care caused the rapid deterioration and inevitable worsening of the latter's condition,
which eventually resulted in his sustaining a permanent disability.[79]
Moreover, exemplary damages are also proper.[80] In the same case, we awarded exemplary
damages to the employee whose treatment was delayed by the ship captain without a valid
ground:
Meanwhile, exemplary damages are imposed by way of example or correction for the public
good, pursuant to Article 2229 of the Civil Code. They are imposed not to enrich one party or
impoverish another but to serve as a deterrent against or as a negative incentive to curb socially
deleterious actions. While exemplary damages cannot be recovered as a matter of right, they
need not be proved, although plaintiff must show that he is entitled to moral, temperate, or

15
compensatory damages before the court may consider the question of whether or not exemplary
damages should be awarded. In quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence

16
MUTUUM: VERBAL LOAN
GEORGIA OSMEA-JALANDONI, PETITIONER, VS. CARMEN A. ENCOMIENDA,
RESPONDENT.

G.R. No. 205578, March 01, 2017

Facts: Encomienda narrated that she met petitioner Georgia Osmea-Jalandoni in Cebu on
October 24, 1995, when the former was purchasing a condominium unit and the latter was the
real estate broker. Thereafter, Encomienda and Jalandoni became close friends. On March 2,
1997, Jalandoni called Encomienda to ask if she could borrow money for the search and rescue
operation of her children in Manila, who were allegedly taken by their father, Luis Jalandoni.
Encomienda then went to Jalandoni's house and handed P100,000.00 in a sealed envelope to the
latter's security guard. While in Manila, Jalandoni again borrowed money for the following
errands: x x x

On April 1, 1997, Jalandoni borrowed P1 Million from Encomienda and promised that she would
pay the same when her money in the bank matured. Thereafter, Encomienda went to Manila to
attend the hearing of Jalandoni's habeas corpus case before the CA where P100,000.00 more was
requested. On May 26, 1997, now crying, Jalandoni asked if Encomienda could lend her an
additional P900,000.00. Encomienda still acceded, albeit already feeling annoyed. All in all,
Encomienda spent around P3,245,836.02 and $6,638.20 for Jalandoni.

When Jalandoni came back to Cebu on July 14, 1997, she never informed Encomienda. Encomienda
then later gave Jalandoni six (6) weeks to settle her debts. Despite several demands, no payment was
made. Jalandoni insisted that the amounts given were not in the form of loans. When they had to
appear before the Barangay for conciliation, no settlement was reached. But a member of the Lupong
Tagapamayapa of Barangay Kasambagan, Laureano Rogero, attested that Jalandoni admitted having
borrowed money from Encomienda and that she was willing to return it. Jalandoni said she would
talk to her lawyer first, but she never came back. Hence, Encomienda filed a complaint. She
impleaded Luis as a necessary party, being Georgia's husband.

For her defense, Jalandoni claimed that there was never a discussion or even just an allusion about a
loan. She confirmed that Encomienda would indeed deposit money in her bank account and pay her
bills in Cebu. But when asked, Encomienda would tell her that she just wanted to extend some help
and that it was not a loan. When Jalandoni returned to Cebu, Encomienda wanted to fetch her at the
airport but the former refused. This allegedly made Encomienda upset, causing her to eventually
demand payment for the amounts originally intended to be gratuitous.

On January 9, 2006, the RTC of Cebu City dismissed Encomienda complaint

Encomienda brought the case to the CA. On March 29, 2012, the appellate court granted the appeal
and reversed the RTC Decision

17
The sole issue in this case is whether or not Encomienda is entitled to be reimbursed for the amounts
she defrayed for Jalandoni.

Ruling:

The appellate court aptly pointed out that when Encomienda gave a Barbie doll to Jalandoni's
daughter, she was quick to send a letter acknowledging receipt and thanking Encomienda for the
simple gift. However, not once did Jalandoni ever send a simple note or letter, let alone a card,
expressing her gratitude towards Encomienda for the countless instances she received various
amounts of money supposedly given to her as gifts.

Jalandoni also contends that the amounts she received from Encomienda were mostly provided and
paid without her prior knowledge and thus she could not have consented to any loan agreement. She
relies oh the trial court's finding that Encomienda's claims were not supported by any documentary
evidence. It must be stressed, however, that the trial court merely found that no documentary
evidence was offered showing, Jalandoni's authorization or undertaking to pay the expenses. But the
second paragraph of Article 1236 of the Civil Code provides:
xxxx

Whoever pays for another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.[8]
xxxxx

Truly, Jalandoni herself admitted that she received the aforementioned amounts from
Encomienda and is merely using her lack of authorization over the payments as her defence.
In fact, Lupong Tagapamayapa member Rogero, a disinterested third party, confirmed this, saying that
during the barangay conciliation, Jalandoni indeed admitted having borrowed money from
Encomienda and that she would return it. Jalandoni, however, reneged on said promise.

The principle of unjust enrichment finds application in this case. Unjust enrichment exists when a
person unfairly retains a benefit to the loss of another, or when a person retains money or property
of another against the fundamental principles of justice, equity, and good conscience. There is unjust
enrichment under Article 22 of the Civil Code when (1) a person is unjustly benefited, and (2) such
benefit is derived at the expense of or with damages to another. The principle of unjust enrichment
essentially contemplates payment when there is no duty to pay, and the person who receives the
payment has no right to receive it.[12] The CA is then correct when it ruled that allowing Jalandoni to
keep the amounts received from Encomienda will certainly cause an unjust enrichment on
Jalandoni's part and to Encomienda's damage and prejudice.

18
Sales: Warranties
ATTY. REYES G. GEROMO, FLORENCIO BUENTIPO, JR., ERNALDO YAMBOT
AND LYDIA BUSTAMANTE, PETITIONERS, V. LA PAZ HOUSING AND
DEVELOPMENT CORPORATION AND GOVERNMENT SERVICE INSURANCE
SYSTEM, RESPONDENTS.
G.R. No. 211175, January 18, 2017
Facts:
Petitioners Atty. Reyes G. Geromo (Geromo), Florencio Buentipo, Jr. (Buentipo), Ernaldo Yambot
(Yambot), and Lydia Bustamante (Bustamante) acquired individual housing units of Adelina 1-A
Subdivision (Adelina) in San Pedro, Laguna from La Paz, through GSIS financing, as evidenced by
their deeds of conditional sale.[4] The properties were all situated along the old Litlit Creek.
In 1987, Geromo, Bustamante and Yambot started occupying their respective residential dwellings,
which were all located along Block 2 (Pearl Street) of the said subdivision. Buentipo, on the other
hand, opted to demolish the turned-over unit and build a new structure thereon. After more than
two (2) years of occupation, cracks started to appear on the floor and walls of their houses. The
petitioners, through the President of the Adelina 1-A Homeowners Association, requested La Paz,
being the owner/developer, to take remedial action. They collectively decided to construct a
riprap/retaining wall along the old creek believing that water could be seeping underneath the soil
and weakening the foundation of their houses. Although La Paz was of the view that it was not
required to build a retaining wall, it decided to give the petitioners P3,000.00 each for expenses
incurred in the construction of the said riprap/retaining wall. The petitioners claimed that despite
the retaining wall, the condition of their housing units worsened as the years passed. When they
asked La Paz to shoulder the repairs, it denied their request, explaining that the structural defects
could have been caused by the 1990 earthquake and the renovations/improvements introduced to
the units that overloaded the foundation of the original structures.
In 1998, the petitioners decided to leave their housing units in Adelina
On the basis thereof, Geromo filed a complaint for breach of contract with damages against La Paz and
GSIS before the HLURB.

The HLURB Arbiter found La Paz liable for the structural damage on the petitioners' housing units

The OP finally rendered a decision dismissing the appeal for lack of merit.

The CA sustained the OP.

Ruling:
Considering the nature of the damage sustained by the structures, even without the findings of the local
governmental agency and the MGB-DENR, La Paz is still liable under the doctrine of res ipsa loquitur.

19
Under the said doctrine, expert testimony may be dispensed with to sustain an allegation, of negligence
if the following requisites obtain: a) the event is of a kind which does not ordinarily occur unless
someone is negligent; b) the cause of the injury was under the exclusive control of the person in charge;
and c) the injury suffered must not have been due to any voluntary action or contribution on the part of
the person injured.

In this case, the subdivision plan/layout was prepared and approved by La Paz. The actual
excavation, filling and levelling of the subdivision grounds were exclusively done under its
supervision and control. There being no contributory fault on the part of the petitioner, there can be
no other conclusion except that it was the fault of La Paz for not properly compacting the soil,
which used to be an old creek.
It should have taken adequate measures to ensure the structural stability of the land before they
started building the houses thereon. The uneven street pavements and visible cracks on the houses
were readily apparent yet La Paz did not undertake any corrective or rehabilitative work.
La Paz's argument that the damage could have been sustained because of the 1990 earthquake or
through the various enhancements undertaken by the petitioners on their respective structures was
not substantiated. Records undeniably show that the petitioners had raised their concerns as early as
1988 - before the earthquake occurred in 1990.

GSIS not liable

As to the petitioners' prayer to make GSIS jointly and severally liable with La Paz, the Court
finds that there is no legal basis to juridically bind GSIS because it was never a party in the
contracts between La Paz and the petitioners. The housing loan agreements that the petitioners
entered into with GSIS were separate and distinct from the purchase contracts they executed with
La Paz. GSIS merely agreed to pay the purchase price of the housing unit that each petitioner
purchased from La Paz. It was merely the lender, not the developer.

20