CONSUMER – PRODUCT LIABILITY
G.R. No. 164349 January 31, 2006
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC.
(RCPI),Petitioner,
vs.
ALFONSO VERCHEZ, GRACE VERCHEZ-INFANTE,
MARDONIO INFANTE, ZENAIDA VERCHEZ-CATIBOG,
AND FORTUNATO CATIBOG, Respondents.
DECISION
CARPIO MORALES, J.:
On January 21, 1991, Editha Hebron Verchez (Editha) was
confined at the Sorsogon Provincial Hospital due to an
ailment. On even date, her daughter Grace Verchez-
Infante (Grace) immediately hied to the Sorsogon Branch
of the Radio Communications of the Philippines, Inc.
(RCPI) whose services she engaged to send a telegram to
her sister Zenaida Verchez-Catibog (Zenaida) who was
residing at 18 Legal St., GSIS Village, Quezon
City1 reading: "Send check money Mommy hospital." For
RCPI’s services, Grace paid P10.502 for which she was
issued a receipt.3
As three days after RCPI was engaged to send the
telegram to Zenaida no response was received from her,
Grace sent a letter to Zenaida, this time thru JRS Delivery
Service, reprimanding her for not sending any financial aid.
Immediately after she received Grace’s letter, Zenaida,
along with her husband Fortunato Catibog, left on January
26, 1991 for Sorsogon. On her arrival at Sorsogon, she
disclaimed having received any telegram.
In the meantime, Zenaida and her husband, together with
her mother Editha left for Quezon City on January 28,
1991 and brought Editha to the Veterans Memorial
Hospital in Quezon City where she was confined from
January 30, 1991 to March 21, 1991.
The telegram was finally delivered to Zenaida 25 days
later or on February 15, 1991.4 On inquiry from RCPI why
it took that long to deliver it, a messenger of RCPI replied
that he had nothing to do with the delivery thereof as it was
another messenger who previously was assigned to
deliver the same but the address could not be located,
hence, the telegram was resent on February 2, 1991, and
the second messenger finally found the address on
February 15, 1991.
Editha’s husband Alfonso Verchez (Verchez), by letter of
March 5, 1991,5 demanded an explanation from the
manager of the Service Quality Control Department of the
RCPI, Mrs. Lorna D. Fabian, who replied, by letter of
March 13, 1991,6 as follows:
Our investigation on this matter disclosed that subject
telegram was duly processed in accordance with our
standard operating procedure. However, delivery was not
immediately effected due to the occurrence of
circumstances which were beyond the control and
foresight of RCPI. Among others, during the transmission
process, the radio link connecting the points of
communication involved encountered radio noise and
interferences such that subject telegram did not initially
registered (sic) in the receiving teleprinter machine.
Our internal message monitoring led to the discovery of
the above. Thus, a repeat transmission was made and
subsequent delivery was effected. (Underscoring supplied)
Verchez’s lawyer thereupon wrote RCPI’s manager
Fabian, by letter of July 23, 1991,7 requesting for a
conference on a specified date and time, but no
representative of RCPI showed up at said date and time.
On April 17, 1992, Editha died.
On September 8, 1993, Verchez, along with his daughters
Grace and Zenaida and their respective spouses, filed a
complaint against RCPI before the Regional Trial Court
(RTC) of Sorsogon for damages. In their complaint, the
plaintiffs alleged that, inter alia, the delay in delivering the
telegram contributed to the early demise of the late Editha
to their damage and prejudice,8 for which they prayed for
the award of moral and exemplary damages9 and
attorney’s fees.10
After its motion to dismiss the complaint for improper
venue11 was denied12 by Branch 5 of the RTC of
Sorsogon, RCPI filed its answer, alleging that except with
respect to Grace,13 the other plaintiffs had no privity of
contract with it; any delay in the sending of the telegram
was due to force majeure, "specifically, but not limited to,
radio noise and interferences which adversely affected the
transmission and/or reception of the telegraphic
message";14 the clause in the Telegram Transmission
Form signed by Grace absolved it from liability for any
damage arising from the transmission other than the
refund of telegram tolls;15 it observed due diligence in the
selection and supervision of its employees; and at all
events, any cause of action had been barred by laches.16
The trial court, observing that "although the delayed
delivery of the questioned telegram was not apparently the
proximate cause of the death of Editha," ruled out the
presence of force majeure. Respecting the clause in the
telegram relied upon by RCPI, the trial court held that it
partakes of the nature of a contract of adhesion.
Finding that the nature of RCPI’s business obligated it to
dispatch the telegram to the addressee at the earliest
possible time but that it did not in view of the negligence of
its employees to repair its radio transmitter and the
concomitant delay in delivering the telegram on time, the
trial court, upon the following provisions of the Civil Code,
to wit:
CONSUMER – PRODUCT LIABILITY
Article 2176 – Whoever by act or omission causes damage
to another, there being at fault or negligence, is obliged to
pay for the damage done. Such fault or negligence if there
is no pre-existing contractual relation between the parties,
is called quasi-delict and is governed by the provisions of
this Chapter.
Article 1173 defines the fault of (sic) negligence of the
obligor as the "omission of the diligence which is required
by the nature of the obligation and corresponds with the
circumstances of the person, of the time, or the place."
In the instant case, the obligation of the defendant to
deliver the telegram to the addressee is of an urgent
nature. Its essence is the early delivery of the telegram to
the concerned person. Yet, due to the negligence of its
employees, the defendant failed to discharge of its
obligation on time making it liable for damages under
Article 2176.
The negligence on the part of the employees gives rise to
the presumption of negligence on the part of the
employer.17 (Underscoring supplied),
rendered judgment against RCPI. Accordingly, it disposed:
WHEREFORE, in the light of the foregoing premises,
judgment is hereby rendered in favor of the plaintiffs and
against the defendant, to wit:
Ordering the defendant to pay the plaintiffs the following
amount:
1. The amount of One Hundred Thousand
(P100,000.00) Pesos as moral damages;
2. The amount of Twenty Thousand (P20,000.00)
Pesos as attorney’s fees; and
3. To pay the costs.
SO ORDERED.18
On appeal, the Court of Appeals, by Decision of February
27, 2004,19 affirmed the trial court’s decision.
Hence, RCPI’s present petition for review on certiorari, it
raising the following questions: (1) "Is the award of moral
damages proper even if the trial court found that there was
no direct connection between the injury and the alleged
negligent acts?"20 and (2) "Are the stipulations in the
‘Telegram Transmission Form,’ in the nature "contracts of
adhesion" (sic)?21
RCPI insists that respondents failed to prove any causal
connection between its delay in transmitting the telegram
and Editha’s death.22
RCPI’s stand fails. It bears noting that its liability is
anchored on culpa contractual or breach of contract with
regard to Grace, and on tort with regard to her co-plaintiffs-
herein-co-respondents.
Article 1170 of the Civil Code provides:
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. (Underscoring supplied)
Passing on this codal provision, this Court explained:
In culpa contractual x x x the mere proof of the existence
of the contract and the failure of its compliance
justify, prima facie, a corresponding right of relief. The law,
recognizing the obligatory force of contracts, will not permit
a party to be set free from liability for any kind of
misperformance of the contractual undertaking or a
contravention of the tenor thereof. A breach upon the
contract confers upon the injured party a valid cause for
recovering that which may have been lost or suffered. The
remedy serves to preserve the interests of the promissee
that may include his "expectation interest," which is his
interest in having the benefit of his bargain by being put in
as good a position as he would have been in had the
contract been performed, or his "reliance interest," which
is his interest in being reimbursed for loss caused by
reliance on the contract by being put in as good a position
as he would have been in had the contract not been made;
or his "restitution interest," which is his interest in having
restored to him any benefit that he has conferred on the
other party. Indeed, agreements can accomplish little,
either for their makers or for society, unless they are made
the basis for action. The effect of every infraction is to
create a new duty, that is, to make recompense to the one
who has been injured by the failure of another to observe
his contractual obligation unless he can show extenuating
circumstances, like proof of his exercise of due
diligence x x x or of the attendance of fortuitous
event, to excuse him from his ensuing
liability.23 (Emphasis and underscoring supplied)
In the case at bar, RCPI bound itself to deliver the
telegram within the shortest possible time. It took 25 days,
however, for RCPI to deliver it.
RCPI invokes force majeure, specifically, the alleged radio
noise and interferences which adversely affected the
transmission and/or reception of the telegraphic message.
Additionally, its messenger claimed he could not locate the
address of Zenaida and it was only on the third attempt
that he was able to deliver the telegram.
For the defense of force majeure to prosper,
x x x it is necessary that one has committed no negligence
or misconduct that may have occasioned the loss. An act
CONSUMER – PRODUCT LIABILITY
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.
xxxx
Article 1174 of the Civil Code states that no person shall
be responsible for a fortuitous event that could not be
foreseen or, though foreseen, was inevitable. In other
words, there must be an exclusion of human
intervention from the cause of injury or
loss.24 (Emphasis and underscoring supplied)
Assuming arguendo that fortuitous circumstances
prevented RCPI from delivering the telegram at the
soonest possible time, it should have at least informed
Grace of the non-transmission and the non-delivery so that
she could have taken steps to remedy the situation. But it
did not. There lies the fault or negligence.
In an earlier case also involving RCPI, this Court held:
Considering the public utility of RCPI’s business and its
contractual obligation to transmit messages, it should
exercise due diligence to ascertain that messages are
delivered to the persons at the given address and
should provide a system whereby in cases of undelivered
messages the sender is given notice of non-delivery.
Messages sent by cable or wireless means are
usually more important and urgent than those which can
wait for the mail.25
xxxx
People depend on telecommunications companies in
times of deep emotional stress or pressing financial
needs. Knowing that messages about the illnesses or
deaths of loved ones, births or marriages in a family,
important business transactions, and notices of
conferences or meetings as in this case, are coursed
through the petitioner and similar corporations, it is
incumbent upon them to exercise a greater amount of care
and concern than that shown in this case. Every
reasonable effort to inform senders of the non-delivery of
messages should be undertaken.26
(Emphasis and underscoring supplied)
RCPI argues, however, against the presence of urgency in
the delivery of the telegram, as well as the basis for the
award of moral damages, thus:27
The request to send check as written in the telegraphic
text negates the existence of urgency that private
respondents’ allegations that ‘time was of the essence’
imports. A check drawn against a Manila Bank and
transmitted to Sorsogon, Sorsogon will have to be
deposited in a bank in Sorsogon and pass thru a minimum
clearing period of 5 days before it may be encashed or
withdrawn. If the transmittal of the requested check to
Sorsogon took 1 day – private respondents could therefore
still wait for 6 days before the same may be withdrawn.
Requesting a check that would take 6 days before it could
be withdrawn therefore contradicts plaintiff’s claim of
urgency or need.28
At any rate, any sense of urgency of the situation was met
when Grace Verchez was able to communicate to Manila
via a letter that she sent to the same addressee in Manila
thru JRS.29
xxxx
As far as the respondent court’s award for moral damages
is concerned, the same has no basis whatsoever since
private respondent Alfonso Verchez did not accompany his
late wife when the latter went to Manila by bus. He stayed
behind in Sorsogon for almost 1 week before he
proceeded to Manila. 30
When pressed on cross-examination, private respondent
Alfonso Verchez could not give any plausible reason as to
the reason why he did not accompany his ailing wife to
Manila.31
xxxx
It is also important to consider in resolving private
respondents’ claim for moral damages that
private respondent Grace Verchez did not accompany her
ailing mother to Manila.32
xxxx
It is the common reaction of a husband to be at his ailing
wife’s side as much as possible. The fact that private
respondent Alfonso Verchez stayed behind in Sorsogon
for almost 1 week convincingly demonstrates that he
himself knew that his wife was not in critical condition.33
(Emphasis and underscoring supplied)
RCPI’s arguments fail. For it is its breach of contract upon
which its liability is, it bears repeating, anchored. Since
RCPI breached its contract, the presumption is that it was
at fault or negligent. It, however, failed to rebut this
presumption.
For breach of contract then, RCPI is liable to Grace for
damages.
CONSUMER – PRODUCT LIABILITY
And for quasi-delict, RCPI is liable to Grace’s co-
respondents following Article 2176 of the Civil Code which
provides:
Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this
Chapter. (Underscoring supplied)
RCPI’s liability as an employer could of course be avoided
if it could prove that it observed the diligence of a good
father of a family to prevent damage. Article 2180 of the
Civil Code so provides:
The obligation imposed by Article 2176 is demandable not
only for one’s own acts or omissions, but also for those of
persons for whom one is responsible.
xxxx
The owners and managers of an establishment or
enterprise are likewise responsible for damages caused by
their employees in the service of the branches in which the
latter are employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope
of their assigned tasks, even though the former are not
engaged in any business or industry.
xxxx
The responsibility treated of in this article shall cease when
the persons herein mentioned prove that they observed all
the diligence of a good father of a family to prevent
damage. (Underscoring supplied)
RCPI failed, however, to prove that it observed all the
diligence of a good father of a family to prevent damage.
Respecting the assailed award of moral damages, a
determination of the presence of the following requisites to
justify the award is in order:
x x x firstly, evidence of besmirched reputation or physical,
mental or psychological suffering sustained by the
claimant; secondly, a culpable act or omission factually
established; thirdly, proof that the wrongful act or omission
of the defendant is the proximate cause of damages
sustained by the claimant; and fourthly, that the case is
predicated on any of the instances expressed or
envisioned by Article 2219 and Article 2220 of the Civil
Code.34
Respecting the first requisite, evidence of suffering by the
plaintiffs-herein respondents was correctly appreciated by
the CA in this wise:
The failure of RCPI to deliver the telegram containing the
message of appellees on time, disturbed their filial
tranquillity. Family members blamed each other for failing
to respond swiftly to an emergency that involved the life of
the late Mrs. Verchez, who suffered from diabetes.35
As reflected in the foregoing discussions, the second and
third requisites are present.
On the fourth requisite, Article 2220 of the Civil Code
provides:
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. (Emphasis and underscoring supplied)
After RCPI’s first attempt to deliver the telegram failed, it
did not inform Grace of the non-delivery thereof and waited
for 12 days before trying to deliver it again, knowing – as it
should know – that time is of the essence in the delivery of
telegrams. When its second long-delayed attempt to
deliver the telegram again failed, it, again, waited for
another 12 days before making a third attempt. Such
nonchalance in performing its urgent obligation indicates
gross negligence amounting to bad faith. The fourth
requisite is thus also present.
In applying the above-quoted Article 2220, this Court has
awarded moral damages in cases of breach of contract
where the defendant was guilty of gross negligence
amounting to bad faith, or in wanton disregard of his
contractual obligation.36
As for RCPI’s tort-based liability, Article 2219 of the Civil
Code provides:
Moral damages may be recovered in the following
and analogous cases:
xxxx
(10) Acts and actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34, and 35. (Emphasis supplied)
Article 26 of the Civil Code, in turn, provides:
Every person shall respect the dignity, personality, privacy
and peace of mind of his neighbors and other persons.
The following and similar acts, though they may not
constitute a criminal offense, shall produce a cause of
action for damages, prevention, and other relief:
CONSUMER – PRODUCT LIABILITY
xxxx
(2) Meddling with or disturbing the private life or family
relations of another. (Emphasis supplied)
RCPI’s negligence in not promptly performing its obligation
undoubtedly disturbed the peace of mind not only of Grace
but also her co-respondents. As observed by the appellate
court, it disrupted the "filial tranquillity" among them as
they blamed each other "for failing to respond swiftly to an
emergency." The tortious acts and/or omissions
complained of in this case are, therefore, analogous to
acts mentioned under Article 26 of the Civil Code, which
are among the instances of quasi-delict when courts may
award moral damages under Article 2219 of the Civil
Code.
In fine, the award to the plaintiffs-herein respondents of
moral damages is in order, as is the award of attorney’s
fees, respondents having been compelled to litigate to
protect their rights.
Clutching at straws, RCPI insists that the limited liability
clause in the "Telegram Transmission Form" is not a
contract of adhesion. Thus it argues:
Neither can the Telegram Transmission Form be
considered a contract of adhesion as held by the
respondent court. The said stipulations were all written in
bold letters right in front of the Telegram Transmission
Form. As a matter of fact they were beside the space
where the telegram senders write their telegraphic
messages. It would have been different if the stipulations
were written at the back for surely there is no way the
sender will easily notice them. The fact that the stipulations
were located in a particular space where they can easily
be seen, is sufficient notice to any sender (like Grace
Verchez-Infante) where she could manifest her
disapproval, leave the RCPI station and avail of the
services of the other telegram operators.37 (Underscoring
supplied)
RCPI misunderstands the nature of a contract of adhesion.
Neither the readability of the stipulations nor their physical
location in the contract determines whether it is one of
adhesion.
A contract of adhesion is defined as one in which one of
the parties imposes a ready-made form of contract, which
the other party may accept or reject, but which the latter
cannot modify. One party prepares the stipulation in the
contract, while the other party merely affixes his signature
or his "adhesion" thereto, giving no room for negotiation
and depriving the latter of the opportunity to bargain
on equal footing.38 (Emphasis and underscoring
supplied)
While a contract of adhesion is not necessarily void and
unenforceable, since it is construed strictly against the
party who drafted it or gave rise to any ambiguity therein, it
is stricken down as void and unenforceable or subversive
of public policy when the weaker party is imposed upon in
dealing with the dominant bargaining party and is reduced
to the alternative of taking it or leaving it, completely
deprived of the opportunity to bargain on equal footing. 39
This Court holds that the Court of Appeals’ finding that the
parties’ contract is one of adhesion which is void is, given
the facts and circumstances of the case, thus well-taken.
WHEREFORE, the petition is DENIED, and the challenged
decision of the Court of Appeals is AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 110295 October 18, 1993
COCA-COLA BOTTLERS PHILIPPINES, INC.,
vs.
THE HONORABLE COURT OF APPEALS (Fifth Division)
and MS. LYDIA GERONIMO, respondents.
Angara, Abello, Concepcion, Regala & Cruz Law Offices
for petitioner.
Alejandro M. Villamil for private respondent.
DAVIDE, JR., J.:
This case concerns the proprietress of a school canteen
which had to close down as a consequence of the big drop
in its sales of soft drinks triggered by the discovery of
foreign substances in certain beverages sold by it. The
interesting issue posed is whether the subsequent action
for damages by the proprietress against the soft drinks
manufacturer should be treated as one for breach of
implied warranty against hidden defects or merchantability,
as claimed by the manufacturer, the petitioner herein
which must therefore be filed within six months from the
delivery of the thing sold pursuant to Article 1571 of the
Civil Code, or one for quasi-delict, as held by the public
respondent, which can be filed within four years pursuant
to Article 1146 of the same Code.
On 7 May 1990, Lydia L. Geronimo, the herein private
respondent, filed a complaint for damages against
petitioner with the Regional Trial Court (RTC) of Dagupan
City. 1 The case was docketed as Civil Case No. D-9629.
She alleges in her complaint that she was the proprietress
of Kindergarten Wonderland Canteen docketed as located
in Dagupan City, an enterprise engaged in the sale of soft
drinks (including Coke and Sprite) and other goods to the
students of Kindergarten Wonderland and to the public; on
or about 12 August 1989, some parents of the students
CONSUMER – PRODUCT LIABILITY
complained to her that the Coke and Sprite soft drinks sold
by her contained fiber-like matter and other foreign
substances or particles; he then went over her stock of
softdrinks and discovered the presence of some fiber-like
substances in the contents of some unopened Coke
bottles and a plastic matter in the contents of an unopened
Sprite bottle; she brought the said bottles to the Regional
Health Office of the Department of Health at San
Fernando, La Union, for examination; subsequently, she
received a letter from the Department of Health informing
her that the samples she submitted "are adulterated;" as a
consequence of the discovery of the foreign substances in
the beverages, her sales of soft drinks severely
plummeted from the usual 10 cases per day to as low as 2
to 3 cases per day resulting in losses of from P200.00 to
P300.00 per day, and not long after that she had to lose
shop on 12 December 1989; she became jobless and
destitute; she demanded from the petitioner the payment
of damages but was rebuffed by it. She prayed for
judgment ordering the petitioner to pay her P5,000.00 as
actual damages, P72,000.00 as compensatory damages,
P500,000.00 as moral damages, P10,000.00 as exemplary
damages, the amount equal to 30% of the damages
awarded as attorney's fees, and the costs. 2
The petitioner moved to dismiss 3 the complaint on the
grounds of failure to exhaust administrative remedies and
prescription. Anent the latter ground, the petitioner argued
that since the complaint is for breach of warranty under
Article 1561 of the said Code. In her Comment 4 thereto,
private respondent alleged that the complaint is one for
damages which does not involve an administrative action
and that her cause of action is based on an injury to
plaintiff's right which can be brought within four years
pursuant to Article 1146 of the Civil Code; hence, the
complaint was seasonably filed. Subsequent related
pleadings were thereafter filed by the parties. 5
In its Order of 23 January 1991, 6 the trial court granted the
motion to dismiss. It ruled that the doctrine of exhaustion
of administrative remedies does not apply as the existing
administrative remedy is not adequate. It also stated that
the complaint is based on a contract, and not on quasi-
delict, as there exists pre-existing contractual relation
between the parties; thus, on the basis of Article 1571, in
relation to Article 1562, the complaint should have been
filed within six months from the delivery of the thing sold.
Her motion for the reconsideration of the order having
been denied by the trial court in its Order of 17 April
1991, 7the private respondent came to this Court via a
petition for review on certiorari which we referred to the
public respondent "for proper determination and
disposition. 8 The public respondent docketed the case as
CA-G.R. SP No. 25391.
In a decision promulgated on 28 January 1992, 9 the public
respondent annulled the questioned orders of the RTC and
directed it to conduct further proceedings in Civil Case No.
D-9629. In holding for the private respondent, it ruled that:
Petitioner's complaint being one for quasi-
delict, and not for breach of warranty as
respondent contends, the applicable
prescriptive period is four years.
It should be stressed that the allegations
in the complaint plainly show that it is an
action or damages arising from
respondent's act of "recklessly and
negligently manufacturing adulterated
food items intended to be sold or public
consumption" (p. 25, rollo). It is truism in
legal procedure that what determines the
nature of an action are the facts alleged in
the complaint and those averred as a
defense in the defendant's answer (I
Moran 126; Calo v. Roldan, 76 Phil. 445;
Alger Electric, Inc. v. CA, 135 SCRA 340).
Secondly, despite the literal wording of
Article 2176 of the Civil code, the
existence of contractual relations between
the parties does not absolutely preclude
an action by one against the other
for quasi-delict arising from negligence in
the performance of a contract.
In Singson v. Court of Appeals (23 SCRA 1117), the
Supreme Court ruled:
It has been repeatedly
held: that the existence of
a contract between the
parties does not bar the
commission of a tort by
the one against the other
and the consequent
recovery of damages
therefor
. . . . Thus in Air France
vs. Carrascoso, . . . (it
was held that) although
the relation between a
passenger and a carrier is
"contractual both in origin
and in nature the act that
breaks the contract may
also be a tort.
Significantly, in American jurisprudence,
from which Our law on Sales was taken,
the authorities are one in saying that he
availability of an action or breach of
warranty does not bar an action for torts in
a sale of defective goods. 10
Its motion for the reconsideration of the decision having
been denied by the public respondent in its Resolution of
14 May 1993, 11 the petitioner took his recourse under Rule
CONSUMER – PRODUCT LIABILITY
45 of the Revised Rules of Court. It alleges in its petition
that:
I.
THE HONORABLE COURT OF APPEALS
COMMITTED A GRAVE AND
REVERSIBLE ERROR IN RULING THAT
ARTICLE 2176, THE GENERAL
PROVISION ON QUASI-DELICTS, IS
APPLICABLE IN THIS CASE WHEN THE
ALLEGATIONS OF THE COMPLAINT
CLEARLY SHOW THAT PRIVATE
RESPONDENT'S CAUSE OF ACTION IS
BASEDON BREACH OF A SELLER'S
IMPLIED WARRANTIES UNDER OUR
LAW ON SALES.
II.
CORROLARILY, THE HONORABLE
COURT OF APPEALS COMMITTED A
GRAVE AND REVERSIBLE ERROR IN
OVERRULING PETITIONER'S
ARGUMENT THAT PRIVATE
RESPONDENT'S CAUSE OF ACTION
HAD PRESCRIBED UNDER ARTICLE
1571 OF THE CIVIL CODE. 12
The petitioner insists that a cursory reading of the
complaint will reveal that the primary legal basis for private
respondent's cause of action is not Article 2176 of the Civil
Code on quasi-delict — for the complaint does not ascribe
any tortious or wrongful conduct on its part — but Articles
1561 and 1562 thereof on breach of a seller's implied
warranties under the law on sales. It contends the
existence of a contractual relation between the parties
(arising from the contract of sale) bars the application of
the law on quasi-delicts and that since private
respondent's cause of action arose from the breach of
implied warranties, the complaint should have been filed
within six months room delivery of the soft drinks pursuant
to Article 171 of the Civil Code.
In her Comment the private respondent argues that in
case of breach of the seller's implied warranties, the
vendee may, under Article 1567 of the Civil Code, elect
between withdrawing from the contract or demanding a
proportionate reduction of the price, with damages in either
case. She asserts that Civil Case No. D-9629 is neither an
action for rescission nor for proportionate reduction of the
price, but for damages arising from a quasi-delict and that
the public respondent was correct in ruling that the
existence of a contract did not preclude the action
for quasi-delict. As to the issue of prescription, the private
respondent insists that since her cause of action is based
on quasi-delict, the prescriptive period therefore is four (4)
years in accordance with Article 1144 of the Civil Code
and thus the filing of the complaint was well within the said
period.
We find no merit in the petition. The public respondent's
conclusion that the cause of action in Civil Case No. D-
9629 is found on quasi-delict and that, therefore, pursuant
to Article 1146 of the Civil Code, it prescribes in four (4)
years is supported by the allegations in the complaint,
more particularly paragraph 12 thereof, which makes
reference to the reckless and negligent manufacture of
"adulterated food items intended to be sold for public
consumption."
The vendee's remedies against a vendor with respect to
the warranties against hidden defects of or encumbrances
upon the thing sold are not limited to those prescribed in
Article 1567 of the Civil Code which provides:
Art. 1567. In the case of Articles 1561,
1562, 1564, 1565 and 1566, the vendee
may elect between withdrawing from the
contract and demanding a proportionate
reduction of the price, with damages either
case. 13
The vendee may also ask for the annulment of the contract
upon proof of error or fraud, in which case the ordinary rule
on obligations shall be applicable. 14 Under the law on
obligations, responsibility arising from fraud is demandable
in all obligations and any waiver of an action for future
fraud is void. Responsibility arising from negligence is also
demandable in any obligation, but such liability may be
regulated by the courts, according to the
circumstances. 15 Those guilty of fraud, negligence, or
delay in the performance of their obligations and those
who in any manner contravene the tenor thereof are liable
for damages. 16
The vendor could likewise be liable for quasi-delict under
Article 2176 of the Civil Code, and an action based
thereon may be brought by the vendee. While it may be
true that the pre-existing contract between the parties may,
as a general rule, bar the applicability of the law on quasi-
delict, the liability may itself be deemed to arise fromquasi-
delict, i.e., the acts which breaks the contract may also be
a quasi-delict. Thus, in Singson vs. Bank of the Philippine
Islands, 17 this Court stated:
We have repeatedly held, however, that
the existence of a contract between the
parties does not bar the commission of a
tort by the one against the other and the
consequent recovery of damages
therefor. 18 Indeed, this view has been, in
effect, reiterated in a comparatively recent
case. Thus, in Air France
vs. Carrascoso, 19 involving an airplane
passenger who, despite hi first-class
ticket, had been illegally ousted from his
first-class accommodation and compelled
to take a seat in the tourist compartment,
was held entitled to recover damages from
the air-carrier, upon the ground of tort on
CONSUMER – PRODUCT LIABILITY
the latter's part, for, although the relation
between the passenger and a carrier is
"contractual both in origin and nature . . .
the act that breaks the contract may also
be a tort.
Otherwise put, liability for quasi-delict may still
exist despite the presence of contractual
relations. 20
Under American law, the liabilities of a
manufacturer or seller of injury-causing products
may be based on negligence, 21 breach of
warranty, 22 tort, 23 or other grounds such as fraud,
deceit, or misrepresentation. 24Quasi-delict, as
defined in Article 2176 of the Civil Code, (which is
known in Spanish legal treaties as culpa aquiliana,
culpa extra-contractual or cuasi-delitos) 25 is
homologous but not identical to tort under the
common law, 26 which includes not only
negligence, but also intentional criminal acts, such
as assault and battery, false imprisonment and
deceit. 27
It must be made clear that our affirmance of the decision of
the public respondent should by no means be understood
as suggesting that the private respondent's claims for
moral damages have sufficient factual and legal basis.
IN VIEW OF ALL THE FOREGOING, the instant petition is
hereby DENIED for lack of merit, with costs against the
petitioner.
SO ORDERED.
NAVIDA ET. AL., VS. HON. TEODORO DIZON, JR
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on
Certiorari under Rule 45 of the Rules of Court, which arose
out of two civil cases that were filed in different courts but
whose factual background and issues are closely
intertwined.
The petitions in G.R. Nos. 1250781 and 1255982 both
assail the Order3 dated May 20, 1996 of the Regional Trial
Court (RTC) of General Santos City, Branch 37, in Civil
Case No. 5617. The said Order decreed the dismissal of
the case in view of the perceived lack of jurisdiction of the
RTC over the subject matter of the complaint. The petition
in G.R. No. 125598 also challenges the Orders dated June
4, 19964 and July 9, 1996,5 which held that the RTC of
General Santos City no longer had jurisdiction to proceed
with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos.
126654,6 127856,7 and 1283988 seek the reversal of the
Order9 dated October 1, 1996 of the RTC of Davao City,
Branch 16, in Civil Case No. 24,251-96, which also
dismissed the case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398
were consolidated in the Resolutions dated February 10,
1997,10 April 28, 199711 and March 10, 1999.12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were
filed in different Texas state courts by citizens of twelve
foreign countries, including the Philippines. The thousands
of plaintiffs sought damages for injuries they allegedly
sustained from their exposure to dibromochloropropane
(DBCP), a chemical used to kill nematodes (worms), while
working on farms in 23 foreign countries. The cases were
eventually transferred to, and consolidated in, the Federal
District Court for the Southern District of Texas, Houston
Division. The cases therein that involved plaintiffs from the
Philippines were "Jorge Colindres Carcamo, et al. v. Shell
Oil Co., et al.," which was docketed as Civil Action No. H-
94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil Co.,
et al.," which was docketed as Civil Action No. H-95-1356.
The defendants in the consolidated cases prayed for the
dismissal of all the actions under the doctrine of forum non
conveniens.
In a Memorandum and Order dated July 11, 1995, the
Federal District Court conditionally granted the defendants’
motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will
be dismissed 90 days after the entry of this Memorandum
and Order provided that defendants and third- and fourth-
party defendants have:
(1) participated in expedited discovery in the
United States xxx;
(2) either waived or accepted service of process
and waived any other jurisdictional defense within
40 days after the entry of this Memorandum and
Order in any action commenced by a plaintiff in
these actions in his home country or the country in
which his injury occurred. Any plaintiff desiring to
bring such an action will do so within 30 days after
the entry of this Memorandum and Order;
(3) waived within 40 days after the entry of this
Memorandum and Order any limitations-based
defense that has matured since the
commencement of these actions in the courts of
Texas;
CONSUMER – PRODUCT LIABILITY
(4) stipulated within 40 days after the entry of this
Memorandum and Order that any discovery
conducted during the pendency of these actions
may be used in any foreign proceeding to the
same extent as if it had been conducted in
proceedings initiated there; and
(5) submitted within 40 days after the entry of this
Memorandum and Order an agreement binding
them to satisfy any final judgment rendered in
favor of plaintiffs by a foreign court.
xxxx
Notwithstanding the dismissals that may result from this
Memorandum and Order, in the event that the highest
court of any foreign country finally affirms the dismissal for
lack of jurisdiction of an action commenced by a plaintiff in
these actions in his home country or the country in which
he was injured, that plaintiff may return to this court and,
upon proper motion, the court will resume jurisdiction over
the action as if the case had never been dismissed for
[forum non conveniens].13
Civil Case No. 5617 before the RTC of General Santos
City and G.R. Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a
total of 336 plaintiffs from General Santos City (the
petitioners in G.R. No. 125078, hereinafter referred to as
NAVIDA, et al.) filed a Joint Complaint14 in the RTC of
General Santos City on August 10, 1995. The case was
docketed as Civil Case No. 5617. Named as defendants
therein were: Shell Oil Co. (SHELL); Dow Chemical Co.
(DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole
Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co.,
Standard Fruit and Steamship Co. (hereinafter collectively
referred to as DOLE); Chiquita Brands, Inc. and Chiquita
Brands International, Inc. (CHIQUITA); Del Monte Fresh
Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter
collectively referred to as DEL MONTE); Dead Sea
Bromine Co., Ltd.; Ameribrom, Inc.; Bromine Compounds,
Ltd.; and Amvac Chemical Corp. (The aforementioned
defendants are hereinafter collectively referred to as
defendant companies.)
Navida, et al., prayed for the payment of damages in view
of the illnesses and injuries to the reproductive systems
which they allegedly suffered because of their exposure to
DBCP. They claimed, among others, that they were
exposed to this chemical during the early 1970’s up to the
early 1980’s when they used the same in the banana
plantations where they worked at; and/or when they
resided within the agricultural area where such chemical
was used. Navida, et al., claimed that their illnesses and
injuries were due to the fault or negligence of each of the
defendant companies in that they produced, sold and/or
otherwise put into the stream of commerce DBCP-
containing products. According to NAVIDA, et al., they
were allowed to be exposed to the said products, which
the defendant companies knew, or ought to have known,
were highly injurious to the former’s health and well-being.
Instead of answering the complaint, most of the defendant
companies respectively filed their Motions for Bill of
Particulars.15 During the pendency of the motions, on
March 13, 1996, NAVIDA, et al., filed an Amended Joint
Complaint,16 excluding Dead Sea Bromine Co., Ltd.,
Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac
Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their
various Motions for Bill of Particulars.17 On May 15, 1996,
DOW filed an Answer with Counterclaim.18
On May 20, 1996, without resolving the motions filed by
the parties, the RTC of General Santos City issued an
Order dismissing the complaint. First, the trial court
determined that it did not have jurisdiction to hear the
case, to wit:
THE COMPLAINT FOR DAMAGES FILED WITH THE
REGIONAL TRIAL COURT SHOULD BE DISMISSED
FOR LACK OF JURISDICTION
xxxx
The substance of the cause of action as stated in the
complaint against the defendant foreign companies cites
activity on their part which took place abroad and had
occurred outside and beyond the territorial domain of the
Philippines. These acts of defendants cited in the
complaint included the manufacture of pesticides, their
packaging in containers, their distribution through sale or
other disposition, resulting in their becoming part of the
stream of commerce.
Accordingly, the subject matter stated in the complaint and
which is uniquely particular to the present case, consisted
of activity or course of conduct engaged in by foreign
defendants outside Philippine territory, hence, outside and
beyond the jurisdiction of Philippine Courts, including the
present Regional Trial Court.19
Second, the RTC of General Santos City declared that the
tort alleged by Navida, et al., in their complaint is a tort
category that is not recognized in Philippine laws. Said the
trial court:
THE TORT ASSERTED IN THE PRESENT COMPLAINT
AGAINST DEFENDANT FOREIGN COMPANIES IS NOT
WITHIN THE SUBJECT MATTER JURISDICTION OF
THE REGIONAL TRIAL COURT, BECAUSE IT IS NOT A
TORT CATEGORY WITHIN THE PURVIEW OF THE
PHILIPPINE LAW
The specific tort asserted against defendant foreign
companies in the present complaint is product liability tort.
When the averments in the present complaint are
CONSUMER – PRODUCT LIABILITY
examined in terms of the particular categories of tort
recognized in the Philippine Civil Code, it becomes stark
clear that such averments describe and identify the
category of specific tort known as product liability tort. This
is necessarily so, because it is the product manufactured
by defendant foreign companies, which is asserted to be
the proximate cause of the damages sustained by the
plaintiff workers, and the liability of the defendant foreign
companies, is premised on being the manufacturer of the
pesticides.
It is clear, therefore, that the Regional Trial Court has
jurisdiction over the present case, if and only if the Civil
Code of the Philippines, or a suppletory special law
prescribes a product liability tort, inclusive of and
comprehending the specific tort described in the complaint
of the plaintiff workers.20
Third, the RTC of General Santos City adjudged that
Navida, et al., were coerced into submitting their case to
the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES - COERCED
AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to
file the instant action, but rather were coerced to do so,
merely to comply with the U.S. District Court’s Order dated
July 11, 1995, and in order to keep open to the plaintiffs
the opportunity to return to the U.S. District Court.21
Fourth, the trial court ascribed little significance to the
voluntary appearance of the defendant companies therein,
thus:
THE DEFENDANTS’ SUBMISSION TO JURISDICTION IS
CONDITIONAL AS IT IS ILLUSORY
Defendants have appointed their agents authorized to
accept service of summons/processes in the Philippines
pursuant to the agreement in the U.S. court that
defendants will voluntarily submit to the jurisdiction of this
court. While it is true that this court acquires jurisdiction
over persons of the defendants through their voluntary
appearance, it appears that such voluntary appearance of
the defendants in this case is conditional. Thus in the
"Defendants’ Amended Agreement Regarding Conditions
of Dismissal for Forum Non Conveniens" (Annex to the
Complaint) filed with the U.S. District Court, defendants
declared that "(t)he authority of each designated
representative to accept service of process will become
effective upon final dismissal of these actions by the
Court". The decision of the U.S. District Court dismissing
the case is not yet final and executory since both the
plaintiffs and defendants appealed therefrom (par. 3(h),
3(i), Amended Complaint). Consequently, since the
authority of the agent of the defendants in the Philippines
is conditioned on the final adjudication of the case pending
with the U.S. courts, the acquisition of jurisdiction by this
court over the persons of the defendants is also
conditional. x x x.
The appointment of agents by the defendants, being
subject to a suspensive condition, thus produces no legal
effect and is ineffective at the moment.22
Fifth, the RTC of General Santos City ruled that the act of
NAVIDA, et al., of filing the case in the Philippine courts
violated the rules on forum shopping and litis pendencia.
The trial court expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS
FORUM SHOPPING
This court frowns upon the fact that the parties herein are
both vigorously pursuing their appeal of the decision of the
U.S. District court dismissing the case filed thereat. To
allow the parties to litigate in this court when they are
actively pursuing the same cases in another forum,
violates the rule on ‘forum shopping’ so abhorred in this
jurisdiction. x x x.
xxxx
THE FILING OF THE CASE IN U.S. DIVESTED THIS
COURT OF ITS OWN JURISDICTION
Moreover, the filing of the case in the U.S. courts divested
this court of its own jurisdiction. This court takes note that
the U.S. District Court did not decline jurisdiction over the
cause of action. The case was dismissed on the ground
of forum non conveniens, which is really a matter of venue.
By taking cognizance of the case, the U.S. District Court
has, in essence, concurrent jurisdiction with this court over
the subject matter of this case. It is settled that initial
acquisition of jurisdiction divests another of its own
jurisdiction. x x x.
xxxx
THIS CASE IS BARRED BY THE RULE OF "LITIS
PENDENCIA"
Furthermore, the case filed in the U.S. court involves the
same parties, same rights and interests, as in this case.
There exists litis pendencia since there are two cases
involving the same parties and interests. The court would
like to emphasize that in accordance with the rule on litis
pendencia x x x; the subsequent case must be dismissed.
Applying the foregoing [precept] to the case-at-bar, this
court concludes that since the case between the parties in
the U.S. is still pending, then this case is barred by the rule
on "litis pendencia."23
In fine, the trial court held that:
CONSUMER – PRODUCT LIABILITY
It behooves this Court, then to dismiss this case. For to
continue with these proceedings, would be violative of the
constitutional provision on the Bill of Rights guaranteeing
speedy disposition of cases (Ref. Sec. 16, Article III,
Constitution). The court has no other choice. To insist on
further proceedings with this case, as it is now presented,
might accord this court a charming appearance. But the
same insistence would actually thwart the very ends of
justice which it seeks to achieve.
This evaluation and action is made not on account of but
rather with due consideration to the fact that the dismissal
of this case does not necessarily deprive the parties –
especially the plaintiffs – of their possible remedies. The
court is cognizant that the Federal Court may resume
proceedings of that earlier case between the herein parties
involving the same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations,
this case is now considered DISMISSED.24
On June 4, 1996, the RTC of General Santos City likewise
issued an Order,25 dismissing DOW’s Answer with
Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion
for reconsideration26 of the RTC Order dated May 20,
1996, while DOW filed a motion for reconsideration27 of the
RTC Order dated June 4, 1996. Subsequently, DOW and
OCCIDENTAL also filed a Joint Motion for
Reconsideration28 of the RTC Order dated May 20, 1996.
In an Order29 dated July 9, 1996, the RTC of General
Santos City declared that it had already lost its jurisdiction
over the case as it took into consideration the
Manifestation of the counsel of NAVIDA, et al., which
stated that the latter had already filed a petition for review
on certiorari before this Court.
CHIQUITA and SHELL filed their motions for
reconsideration30 of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for
Review on Certiorari in order to assail the RTC Order
dated May 20, 1996, which was docketed as G.R. No.
125078.
The RTC of General Santos City then issued an
Order31 dated August 14, 1996, which merely noted the
incidents still pending in Civil Case No. 5617 and
reiterated that it no longer had any jurisdiction over the
case.
On August 30, 1996, DOW and OCCIDENTAL filed their
Petition for Review on Certiorari,32 challenging the orders
of the RTC of General Santos City dated May 20, 1996,
June 4, 1996 and July 9, 1996. Their petition was
docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the
RTC of General Santos City erred in ruling that it has no
jurisdiction over the subject matter of the case as well as
the persons of the defendant companies.
In a Resolution33 dated October 7, 1996, this Court
resolved to consolidate G.R. No. 125598 with G.R. No.
125078.
CHIQUITA filed a Petition for Review on Certiorari,34 which
sought the reversal of the RTC Orders dated May 20,
1996, July 9, 1996 and August 14, 1996. The petition was
docketed as G.R. No. 126018. In a Resolution35 dated
November 13, 1996, the Court dismissed the aforesaid
petition for failure of CHIQUITA to show that the RTC
committed grave abuse of discretion. CHIQUITA filed a
Motion for Reconsideration,36 but the same was denied
through a Resolution37 dated January 27, 1997.
Civil Case No. 24,251-96 before the RTC of Davao City
and G.R. Nos. 126654, 127856, and 128398
Another joint complaint for damages against SHELL,
DOW, OCCIDENTAL, DOLE, DEL MONTE, and
CHIQUITA was filed before Branch 16 of the RTC of
Davao City by 155 plaintiffs from Davao City. This case
was docketed as Civil Case No. 24,251-96. These
plaintiffs (the petitioners in G.R. No. 126654, hereinafter
referred to as ABELLA, et al.) amended their Joint-
Complaint on May 21, 1996.38
Similar to the complaint of NAVIDA, et al., ABELLA, et al.,
alleged that, as workers in the banana plantation and/or as
residents near the said plantation, they were made to use
and/or were exposed to nematocides, which contained the
chemical DBCP. According to ABELLA, et al., such
exposure resulted in "serious and permanent injuries to
their health, including, but not limited to, sterility and
severe injuries to their reproductive capacities."39 ABELLA,
et al., claimed that the defendant companies
manufactured, produced, sold, distributed, used, and/or
made available in commerce, DBCP without warning the
users of its hazardous effects on health, and without
providing instructions on its proper use and application,
which the defendant companies knew or ought to have
known, had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their
respective motions for bill of particulars to which ABELLA,
et al., filed their opposition. DOW and DEL MONTE filed
their respective Answers dated May 17, 1996 and June 24,
1996.
The RTC of Davao City, however, junked Civil Case No.
24,251-96 in its Order dated October 1, 1996, which, in its
entirety, reads:
Upon a thorough review of the Complaint and Amended
Complaint For: Damages filed by the plaintiffs against the
CONSUMER – PRODUCT LIABILITY
defendants Shell Oil Company, DOW Chemicals
Company, Occidental Chemical Corporation, Standard
Fruit Company, Standard Fruit and Steamship, DOLE
Food Company, DOLE Fresh Fruit Company, Chiquita
Brands, Inc., Chiquita Brands International, Del Monte
Fresh Produce, N.A. and Del Monte Tropical Fruits Co., all
foreign corporations with Philippine Representatives, the
Court, as correctly pointed out by one of the defendants, is
convinced that plaintiffs "would have this Honorable Court
dismiss the case to pave the way for their getting an
affirmance by the Supreme Court" (#10 of Defendants’ Del
Monte Fresh Produce, N.A. and Del Monte Tropical Fruit
Co., Reply to Opposition dated July 22, 1996). Consider
these:
1) In the original Joint Complaint, plaintiffs state that:
defendants have no properties in the Philippines; they
have no agents as well (par. 18); plaintiffs are suing the
defendants for tortuous acts committed by these foreign
corporations on their respective countries, as plaintiffs,
after having elected to sue in the place of defendants’
residence, are now compelled by a decision of a Texas
District Court to file cases under torts in this jurisdiction
for causes of actions which occurred abroad (par. 19); a
petition was filed by same plaintiffs against same
defendants in the Courts of Texas, USA, plaintiffs seeking
for payment of damages based on negligence, strict
liability, conspiracy and international tort theories (par. 27);
upon defendants’ Motion to Dismiss on Forum non
[conveniens], said petition was provisionally dismissed on
condition that these cases be filed in the Philippines or
before 11 August 1995 (Philippine date; Should the
Philippine Courts refuse or deny jurisdiction, the U. S.
Courts will reassume jurisdiction.)
11. In the Amended Joint Complaint, plaintiffs aver that: on
11 July 1995, the Federal District Court issued a
Memorandum and Order conditionally dismissing several
of the consolidated actions including those filed by the
Filipino complainants. One of the conditions imposed was
for the plaintiffs to file actions in their home countries or
the countries in which they were injured x x x.
Notwithstanding, the Memorandum and [O]rder further
provided that should the highest court of any foreign
country affirm the dismissal for lack of jurisdictions over
these actions filed by the plaintiffs in their home countries
[or] the countries where they were injured, the said
plaintiffs may return to that court and, upon proper motion,
the Court will resume jurisdiction as if the case had never
been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at
bar not solely on the basis of the above but because it
shares the opinion of legal experts given in the interview
made by the Inquirer in its Special report "Pesticide Cause
Mass Sterility," to wit:
1. Former Justice Secretary Demetrio Demetria in
a May 1995 opinion said: The Philippines should
be an inconvenient forum to file this kind of
damage suit against foreign companies since the
causes of action alleged in the petition do not exist
under Philippine laws. There has been no decided
case in Philippine Jurisprudence awarding to
those adversely affected by DBCP. This means
there is no available evidence which will prove and
disprove the relation between sterility and DBCP.
2. Retired Supreme Court Justice Abraham
Sarmiento opined that while a class suit is allowed
in the Philippines the device has been employed
strictly. Mass sterility will not qualify as a class suit
injury within the contemplation of Philippine
statute.
3. Retired High Court Justice Rodolfo Nocom
stated that there is simply an absence of doctrine
here that permits these causes to be heard. No
product liability ever filed or tried here.
Case ordered dismissed.40
Docketed as G.R. No. 126654, the petition for review, filed
on November 12, 1996 by ABELLA, et al., assails before
this Court the above-quoted order of the RTC of Davao
City.
ABELLA, et al., claim that the RTC of Davao City erred in
dismissing Civil Case No. 24,251-96 on the ground of lack
of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has
jurisdiction over the subject matter of the case since
Articles 2176 and 2187 of the Civil Code are broad enough
to cover the acts complained of and to support their claims
for damages.
ABELLA, et al., further aver that the dismissal of the case,
based on the opinions of legal luminaries reported in a
newspaper, by the RTC of Davao City is bereft of basis.
According to them, their cause of action is based on quasi-
delict under Article 2176 of the Civil Code. They also
maintain that the absence of jurisprudence regarding the
award of damages in favor of those adversely affected by
the DBCP does not preclude them from presenting
evidence to prove their allegations that their exposure to
DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective
motions for reconsideration of the Order dated October 1,
1996 of the RTC of Davao City. DEL MONTE also filed its
motion for reconsideration, which contained an additional
motion for the inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an
Order41 dated December 2, 1996, voluntarily inhibiting
himself from trying the case. Thus, the case was re-raffled
to Branch 13 of the RTC of Davao City.
CONSUMER – PRODUCT LIABILITY
In an Order42 dated December 16, 1996, the RTC of
Davao City affirmed the Order dated October 1, 1996, and
denied the respective motions for reconsideration filed by
defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated
March 5, 1997, questioning the Orders dated October 1,
1996 and December 16, 1996 of the RTC of Davao City.
This case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao
City erred in dismissing the case motu proprio as it
acquired jurisdiction over the subject matter of the case as
well as over the persons of the defendant companies
which voluntarily appeared before it. CHIQUITA also
claims that the RTC of Davao City cannot dismiss the case
simply on the basis of opinions of alleged legal experts
appearing in a newspaper article.
Initially, this Court in its Resolution43 dated July 28, 1997,
dismissed the petition filed by CHIQUITA for submitting a
defective certificate against forum shopping. CHIQUITA,
however, filed a motion for reconsideration, which was
granted by this Court in the Resolution44 dated October 8,
1997.
On March 7, 1997, DEL MONTE also filed its petition for
review on certiorari before this Court assailing the above-
mentioned orders of the RTC of Davao City. Its petition
was docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has
jurisdiction over Civil Case No. 24,251-96, as defined
under the law and that the said court already obtained
jurisdiction over its person by its voluntary appearance and
the filing of a motion for bill of particulars and, later, an
answer to the complaint. According to DEL MONTE, the
RTC of Davao City, therefore, acted beyond its authority
when it dismissed the case motu proprio or without any
motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28,
1997, and March 10, 1999, this Court consolidated G.R.
Nos. 125078, 125598, 126654, 127856, and 128398.
The Consolidated Motion to Drop DOW, OCCIDENTAL,
and SHELL as Party-Respondents filed by NAVIDA, et al.
and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et
al., filed before this Court a Consolidated Motion (to Drop
Party-Respondents).45 The plaintiff claimants alleged that
they had amicably settled their cases with DOW,
OCCIDENTAL, and SHELL sometime in July 1997. This
settlement agreement was evidenced by facsimiles of the
"Compromise Settlement, Indemnity, and Hold Harmless
Agreement," which were attached to the said motion.
Pursuant to said agreement, the plaintiff claimants sought
to withdraw their petitions as against DOW,
OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed
the motion, as well as the settlement entered into between
the plaintiff claimants and DOW, OCCIDENTAL, and
SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments
adduced by the parties, this Court, in a Resolution dated
June 22, 1998,46 required all the parties to submit their
respective memoranda.
CHIQUITA filed its Memorandum on August 28,
1998;47 SHELL asked to be excused from the filing of a
memorandum alleging that it had already executed a
compromise agreement with the plaintiff
claimants.48 DOLE filed its Memorandum on October 12,
199849 while DEL MONTE filed on October 13,
1998.50 NAVIDA, et al., and ABELLA, et al., filed their
Consolidated Memorandum on February 3, 1999;51 and
DOW and OCCIDENTAL jointly filed a Memorandum on
December 23, 1999.52
The Motion to Withdraw Petition for Review in G.R. No.
125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion
to Withdraw Petition for Review in G.R. No.
125598, 53explaining that the said petition "is already moot
and academic and no longer presents a justiciable
controversy" since they have already entered into an
amicable settlement with NAVIDA, et al. DOW and
OCCIDENTAL added that they have fully complied with
their obligations set forth in the 1997 Compromise
Agreements.
DOLE filed its Manifestation dated September 6,
2004,54 interposing no objection to the withdrawal of the
petition, and further stating that they maintain their position
that DOW and OCCIDENTAL, as well as other settling
defendant companies, should be retained as defendants
for purposes of prosecuting the cross-claims of DOLE, in
the event that the complaint below is reinstated.
NAVIDA, et al., also filed their Comment dated September
14, 2004,55 stating that they agree with the view of DOW
and OCCIDENTAL that the petition in G.R. No. 125598
has become moot and academic because Civil Case No.
5617 had already been amicably settled by the parties in
1997.
On September 27, 2004, DEL MONTE filed its Comment
on Motion to Withdraw Petition for Review Filed by
Petitioners in G.R. No. 125598,56 stating that it has no
objections to the withdrawal of the petition filed by DOW
and OCCIDENTAL in G.R. No. 125598.
CONSUMER – PRODUCT LIABILITY
In a Resolution57 dated October 11, 2004, this Court
granted, among others, the motion to withdraw petition for
review filed by DOW and OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and
ABELLA, et al., presented the following issues for our
consideration:
IN REFUTATION
I. THE COURT DISMISSED THE CASE DUE TO LACK
OF JURISDICTION.
a) The court did not simply dismiss the case
because it was filed in bad faith with petitioners
intending to have the same dismissed and
returned to the Texas court.
b) The court dismissed the case because it was
convinced that it did not have jurisdiction.
IN SUPPORT OF THE PETITION
II. THE TRIAL COURT HAS JURISDICTION OVER THE
SUBJECT MATTER OF THE CASE.
a. The acts complained of occurred within
Philippine territory.
b. Art. 2176 of the Civil Code of the Philippines is
broad enough to cover the acts complained of.
c. Assumption of jurisdiction by the U.S. District
Court over petitioner[s’] claims did not divest
Philippine [c]ourts of jurisdiction over the same.
d. The Compromise Agreement and the
subsequent Consolidated Motion to Drop Party
Respondents Dow, Occidental and Shell does not
unjustifiably prejudice remaining respondents
Dole, Del Monte and Chiquita.58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at
bar is whether the RTC of General Santos City and the
RTC of Davao City erred in dismissing Civil Case Nos.
5617 and 24,251-96, respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that
the courts a quo are bereft of jurisdiction to determine and
resolve the above-stated cases. All parties contend that
the RTC of General Santos City and the RTC of Davao
City have jurisdiction over the action for damages,
specifically for approximately ₱2.7 million for each of the
plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the
allegedly tortious acts and/or omissions of defendant
companies occurred within Philippine territory. Specifically,
the use of and exposure to DBCP that was manufactured,
distributed or otherwise put into the stream of commerce
by defendant companies happened in the Philippines. Said
fact allegedly constitutes reasonable basis for our courts to
assume jurisdiction over the case. Furthermore, NAVIDA,
et al., and ABELLA, et al., assert that the provisions of
Chapter 2 of the Preliminary Title of the Civil Code, as well
as Article 2176 thereof, are broad enough to cover their
claim for damages. Thus, NAVIDA, et al., and ABELLA, et
al., pray that the respective rulings of the RTC of General
Santos City and the RTC of Davao City in Civil Case Nos.
5617 and 24,251-96 be reversed and that the said cases
be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to
defendant companies constitute a quasi-delict, which falls
under Article 2176 of the Civil Code. In addition, DOLE
states that if there were no actionable wrongs committed
under Philippine law, the courts a quo should have
dismissed the civil cases on the ground that the Amended
Joint-Complaints of NAVIDA, et al., and ABELLA, et al.,
stated no cause of action against the defendant
companies. DOLE also argues that if indeed there is no
positive law defining the alleged acts of defendant
companies as actionable wrong, Article 9 of the Civil Code
dictates that a judge may not refuse to render a decision
on the ground of insufficiency of the law. The court may
still resolve the case, applying the customs of the place
and, in the absence thereof, the general principles of law.
DOLE posits that the Philippines is the situs of the tortious
acts allegedly committed by defendant companies as
NAVIDA, et al., and ABELLA, et al., point to their alleged
exposure to DBCP which occurred in the Philippines, as
the cause of the sterility and other reproductive system
problems that they allegedly suffered. Finally, DOLE adds
that the RTC of Davao City gravely erred in relying upon
newspaper reports in dismissing Civil Case No. 24,251-96
given that newspaper articles are hearsay and without any
evidentiary value. Likewise, the alleged legal opinions
cited in the newspaper reports were taken judicial notice
of, without any notice to the parties. DOLE, however,
opines that the dismissal of Civil Case Nos. 5617 and
24,251-96 was proper, given that plaintiff claimants merely
prosecuted the cases with the sole intent of securing a
dismissal of the actions for the purpose of convincing the
U.S. Federal District Court to re-assume jurisdiction over
the cases.
In a similar vein, CHIQUITA argues that the courts a quo
had jurisdiction over the subject matter of the cases filed
before them. The Amended Joint-Complaints sought
approximately ₱2.7 million in damages for each plaintiff
claimant, which amount falls within the jurisdiction of the
CONSUMER – PRODUCT LIABILITY
RTC. CHIQUITA avers that the pertinent matter is the
place of the alleged exposure to DBCP, not the place of
manufacture, packaging, distribution, sale, etc., of the said
chemical. This is in consonance with the lex loci delicti
commisi theory in determining the situs of a tort, which
states that the law of the place where the alleged wrong
was committed will govern the action. CHIQUITA and the
other defendant companies also submitted themselves to
the jurisdiction of the RTC by making voluntary
appearances and seeking for affirmative reliefs during the
course of the proceedings. None of the defendant
companies ever objected to the exercise of jurisdiction by
the courts a quo over their persons. CHIQUITA, thus,
prays for the remand of Civil Case Nos. 5617 and 24,251-
96 to the RTC of General Santos City and the RTC of
Davao City, respectively.
The RTC of General Santos City and the RTC of Davao
City have jurisdiction over Civil Case Nos. 5617 and
24,251-96, respectively
The rule is settled that jurisdiction over the subject matter
of a case is conferred by law and is determined by the
allegations in the complaint and the character of the relief
sought, irrespective of whether the plaintiffs are entitled to
all or some of the claims asserted therein.59 Once vested
by law, on a particular court or body, the jurisdiction over
the subject matter or nature of the action cannot be
dislodged by anybody other than by the legislature through
the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of
the RTC in civil cases under Batas Pambansa Blg. 129, as
amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts
shall exercise exclusive original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of
interest, damages of whatever kind, attorney’s fees,
litigation expenses, and costs or the value of the property
in controversy exceeds One hundred thousand pesos
(₱100,000.00) or, in such other cases in Metro Manila,
where the demand, exclusive of the abovementioned items
exceeds Two hundred thousand pesos (₱200,000.00). 60
Corollary thereto, Supreme Court Administrative Circular
No. 09-94, states:
2. The exclusion of the term "damages of whatever kind" in
determining the jurisdictional amount under Section 19 (8)
and Section 33 (1) of B.P. Blg. 129, as amended by R.A.
No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action.
However, in cases where the claim for damages is the
main cause of action, or one of the causes of action, the
amount of such claim shall be considered in determining
the jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their
similarly-worded Amended Joint-Complaints filed before
the courts a quo, the following prayer:
PRAYER
WHEREFORE, premises considered, it is most
respectfully prayed that after hearing, judgment be
rendered in favor of the plaintiffs ordering the defendants:
a) TO PAY EACH PLAINTIFF moral damages in
the amount of One Million Five Hundred Thousand
Pesos (₱1,500,00.00);
b) TO PAY EACH PLAINTIFF nominal damages in
the amount of Four Hundred Thousand Pesos
(₱400,000.00) each;
c) TO PAY EACH PLAINTIFF exemplary damages
in the amount of Six Hundred Thousand Pesos
(₱600,000.00);
d) TO PAY EACH PLAINTIFF attorneys fees of
Two Hundred Thousand Pesos (₱200,000.00);
and
e) TO PAY THE COSTS of the suit.61
From the foregoing, it is clear that the claim for damages is
the main cause of action and that the total amount sought
in the complaints is approximately ₱2.7 million for each of
the plaintiff claimants. The RTCs unmistakably have
jurisdiction over the cases filed in General Santos City and
Davao City, as both claims by NAVIDA, et al., and
ABELLA, et al., fall within the purview of the definition of
the jurisdiction of the RTC under Batas Pambansa Blg.
129.
Moreover, the allegations in both Amended Joint-
Complaints narrate that:
THE CAUSES OF ACTION
4. The Defendants manufactured, sold, distributed, used,
AND/OR MADE AVAILABLE IN COMMERCE
nematocides containing the chemical
dibromochloropropane, commonly known as DBCP. THE
CHEMICAL WAS USED AGAINST the parasite known as
the nematode, which plagued banana plantations,
INCLUDING THOSE in the Philippines. AS IT TURNED
OUT, DBCP not only destroyed nematodes. IT ALSO
CAUSED ILL-EFFECTS ON THE HEALTH OF PERSONS
EXPOSED TO IT AFFECTING the human reproductive
system as well.
CONSUMER – PRODUCT LIABILITY
5. The plaintiffs were exposed to DBCP in the 1970s up to
the early 1980s WHILE (a) they used this product in the
banana plantations WHERE they were employed, and/or
(b) they resided within the agricultural area WHERE IT
WAS USED. As a result of such exposure, the plaintiffs
suffered serious and permanent injuries TO THEIR
HEALTH, including, but not limited to, STERILITY and
severe injuries to their reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE
NEGLIGENT IN THAT THEY MANUFACTURED,
produced, sold, and/or USED DBCP and/or otherwise,
PUT THE SAME into the stream of commerce, WITHOUT
INFORMING THE USERS OF ITS HAZARDOUS
EFFECTS ON HEALTH AND/OR WITHOUT
INSTRUCTIONS ON ITS PROPER USE AND
APPLICATION. THEY allowed Plaintiffs to be exposed to,
DBCP-containing materials which THEY knew, or in the
exercise of ordinary care and prudence ought to have
known, were highly harmful and injurious to the Plaintiffs’
health and well-being.
7. The Defendants WHO MANUFACTURED,
PRODUCED, SOLD, DISTRIBUTED, MADE AVAILABLE
OR PUT DBCP INTO THE STREAM OF COMMERCE
were negligent OR AT FAULT in that they, AMONG
OTHERS:
a. Failed to adequately warn Plaintiffs of the
dangerous characteristics of DBCP, or to cause
their subsidiaries or affiliates to so warn plaintiffs;
b. Failed to provide plaintiffs with information as to
what should be reasonably safe and sufficient
clothing and proper protective equipment and
appliances, if any, to protect plaintiffs from the
harmful effects of exposure to DBCP, or to cause
their subsidiaries or affiliates to do so;
c. Failed to place adequate warnings, in a
language understandable to the worker, on
containers of DBCP-containing materials to warn
of the dangers to health of coming into contact
with DBCP, or to cause their subsidiaries or
affiliates to do so;
d. Failed to take reasonable precaution or to
exercise reasonable care to publish, adopt and
enforce a safety plan and a safe method of
handling and applying DBCP, or to cause their
subsidiaries or affiliates to do so;
e. Failed to test DBCP prior to releasing these
products for sale, or to cause their subsidiaries or
affiliates to do so; and
f. Failed to reveal the results of tests conducted on
DBCP to each plaintiff, governmental agencies
and the public, or to cause their subsidiaries or
affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due
to the FAULT or negligence of defendants Standard Fruit
Company, Dole Fresh Fruit Company, Dole Food
Company, Inc., Chiquita Brands, Inc. and Chiquita Brands
International, Inc. in that they failed to exercise reasonable
care to prevent each plaintiff’s harmful exposure to DBCP-
containing products which defendants knew or should
have known were hazardous to each plaintiff in that they,
AMONG OTHERS:
a. Failed to adequately supervise and instruct
Plaintiffs in the safe and proper application of
DBCP-containing products;
b. Failed to implement proper methods and
techniques of application of said products, or to
cause such to be implemented;
c. Failed to warn Plaintiffs of the hazards of
exposure to said products or to cause them to be
so warned;
d. Failed to test said products for adverse health
effects, or to cause said products to be tested;
e. Concealed from Plaintiffs information
concerning the observed effects of said products
on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed
to said products;
g. Failed to place adequate labels on containers of
said products to warn them of the damages of said
products; and
h. Failed to use substitute nematocides for said
products or to cause such substitutes to [be]
used.62 (Emphasis supplied and words in brackets
ours.)
Quite evidently, the allegations in the Amended Joint-
Complaints of NAVIDA, et al., and ABELLA, et al., attribute
to defendant companies certain acts and/or omissions
which led to their exposure to nematocides containing the
chemical DBCP. According to NAVIDA, et al., and
ABELLA, et al., such exposure to the said chemical
caused ill effects, injuries and illnesses, specifically to their
reproductive system.
Thus, these allegations in the complaints constitute the
cause of action of plaintiff claimants – a quasi-delict, which
under the Civil Code is defined as an act, or omission
which causes damage to another, there being fault or
negligence. To be precise, Article 2176 of the Civil Code
provides:
CONSUMER – PRODUCT LIABILITY
Article 2176. Whoever by act or omission causes damage
to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of
this Chapter.
As specifically enumerated in the amended complaints,
NAVIDA, et al., and ABELLA, et al., point to the acts
and/or omissions of the defendant companies in
manufacturing, producing, selling, using, and/or otherwise
putting into the stream of commerce, nematocides which
contain DBCP, "without informing the users of its
hazardous effects on health and/or without instructions on
its proper use and application." 63
Verily, in Citibank, N.A. v. Court of Appeals,64 this Court
has always reminded that jurisdiction of the court over the
subject matter of the action is determined by the
allegations of the complaint, irrespective of whether or not
the plaintiffs are entitled to recover upon all or some of the
claims asserted therein. The jurisdiction of the court
cannot be made to depend upon the defenses set up in
the answer or upon the motion to dismiss, for otherwise,
the question of jurisdiction would almost entirely depend
upon the defendants. What determines the jurisdiction of
the court is the nature of the action pleaded as appearing
from the allegations in the complaint. The averments
therein and the character of the relief sought are the ones
to be consulted.
Clearly then, the acts and/or omissions attributed to the
defendant companies constitute a quasi-delict which is the
basis for the claim for damages filed by NAVIDA, et al.,
and ABELLA, et al., with individual claims of approximately
₱2.7 million for each plaintiff claimant, which obviously
falls within the purview of the civil action jurisdiction of the
RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al.,
and ABELLA, et al., allegedly suffered resulted from their
exposure to DBCP while they were employed in the
banana plantations located in the Philippines or while they
were residing within the agricultural areas also located in
the Philippines. The factual allegations in the Amended
Joint-Complaints all point to their cause of action, which
undeniably occurred in the Philippines. The RTC of
General Santos City and the RTC of Davao City obviously
have reasonable basis to assume jurisdiction over the
cases.
It is, therefore, error on the part of the courts a quo when
they dismissed the cases on the ground of lack of
jurisdiction on the mistaken assumption that the cause of
action narrated by NAVIDA, et al., and ABELLA, et al.,
took place abroad and had occurred outside and beyond
the territorial boundaries of the Philippines, i.e., "the
manufacture of the pesticides, their packaging in
containers, their distribution through sale or other
disposition, resulting in their becoming part of the stream
of commerce,"65 and, hence, outside the jurisdiction of the
RTCs.
Certainly, the cases below are not criminal cases where
territoriality, or the situs of the act complained of, would be
determinative of jurisdiction and venue for trial of cases. In
personal civil actions, such as claims for payment of
damages, the Rules of Court allow the action to be
commenced and tried in the appropriate court, where any
of the plaintiffs or defendants resides, or in the case of a
non-resident defendant, where he may be found, at the
election of the plaintiff.66
In a very real sense, most of the evidence required to
prove the claims of NAVIDA, et al., and ABELLA, et al.,
are available only in the Philippines. First, plaintiff
claimants are all residents of the Philippines, either in
General Santos City or in Davao City. Second, the specific
areas where they were allegedly exposed to the chemical
DBCP are within the territorial jurisdiction of the courts a
quo wherein NAVIDA, et al., and ABELLA, et al., initially
filed their claims for damages. Third, the testimonial and
documentary evidence from important witnesses, such as
doctors, co-workers, family members and other members
of the community, would be easier to gather in the
Philippines. Considering the great number of plaintiff
claimants involved in this case, it is not far-fetched to
assume that voluminous records are involved in the
presentation of evidence to support the claim of plaintiff
claimants. Thus, these additional factors, coupled with the
fact that the alleged cause of action of NAVIDA, et al., and
ABELLA, et al., against the defendant companies for
damages occurred in the Philippines, demonstrate that,
apart from the RTC of General Santos City and the RTC of
Davao City having jurisdiction over the subject matter in
the instant civil cases, they are, indeed, the convenient
fora for trying these cases.67
The RTC of General Santos City and the RTC of Davao
City validly acquired jurisdiction over the persons of all the
defendant companies
It is well to stress again that none of the parties claims that
the courts a quo lack jurisdiction over the cases filed
before them. All parties are one in asserting that the RTC
of General Santos City and the RTC of Davao City have
validly acquired jurisdiction over the persons of the
defendant companies in the action below. All parties
voluntarily, unconditionally and knowingly appeared and
submitted themselves to the jurisdiction of the courts a
quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure
provides that "[t]he defendant’s voluntary appearance in
the action shall be equivalent to service of summons." In
this connection, all the defendant companies designated
and authorized representatives to receive summons and to
represent them in the proceedings before the courts a quo.
All the defendant companies submitted themselves to the
jurisdiction of the courts a quo by making several voluntary
CONSUMER – PRODUCT LIABILITY
appearances, by praying for various affirmative reliefs, and
by actively participating during the course of the
proceedings below.
In line herewith, this Court, in Meat Packing Corporation of
the Philippines v. Sandiganbayan,68 held that jurisdiction
over the person of the defendant in civil cases is acquired
either by his voluntary appearance in court and his
submission to its authority or by service of summons.
Furthermore, the active participation of a party in the
proceedings is tantamount to an invocation of the court’s
jurisdiction and a willingness to abide by the resolution of
the case, and will bar said party from later on impugning
the court or body’s jurisdiction.69
Thus, the RTC of General Santos City and the RTC of
Davao City have validly acquired jurisdiction over the
persons of the defendant companies, as well as over the
subject matter of the instant case. What is more, this
jurisdiction, which has been acquired and has been vested
on the courts a quo, continues until the termination of the
proceedings.
It may also be pertinently stressed that "jurisdiction" is
different from the "exercise of jurisdiction." Jurisdiction
refers to the authority to decide a case, not the orders or
the decision rendered therein. Accordingly, where a court
has jurisdiction over the persons of the defendants and the
subject matter, as in the case of the courts a quo, the
decision on all questions arising therefrom is but an
exercise of such jurisdiction. Any error that the court may
commit in the exercise of its jurisdiction is merely an error
of judgment, which does not affect its authority to decide
the case, much less divest the court of the jurisdiction over
the case.70
Plaintiffs’ purported bad faith in filing the subject civil cases
in Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants
filed their cases in bad faith merely to procure a dismissal
of the same and to allow them to return to the forum of
their choice, this Court finds such argument much too
speculative to deserve any merit.
It must be remembered that this Court does not rule on
allegations that are unsupported by evidence on record.
This Court does not rule on allegations which are
manifestly conjectural, as these may not exist at all. This
Court deals with facts, not fancies; on realities, not
appearances. When this Court acts on appearances
instead of realities, justice and law will be short-
lived.71 This is especially true with respect to allegations of
bad faith, in line with the basic rule that good faith is
always presumed and bad faith must be proved.72
In sum, considering the fact that the RTC of General
Santos City and the RTC of Davao City have jurisdiction
over the subject matter of the amended complaints filed by
NAVIDA, et al., and ABELLA, et al., and that the courts a
quo have also acquired jurisdiction over the persons of all
the defendant companies, it therefore, behooves this Court
to order the remand of Civil Case Nos. 5617 and 24,251-
96 to the RTC of General Santos City and the RTC of
Davao City, respectively.
On the issue of the dropping of DOW, OCCIDENTAL and
SHELL as respondents in view of their amicable
settlement with NAVIDA, et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying
that DOW, OCCIDENTAL and SHELL be dropped as
respondents in G.R. Nos. 125078 and 126654, as well as
in Civil Case Nos. 5617 and 24,251-96. The non-settling
defendants allegedly manifested that they intended to file
their cross-claims against their co-defendants who entered
into compromise agreements. NAVIDA, et al., and
ABELLA, et al., argue that the non-settling defendants did
not aver any cross-claim in their answers to the complaint
and that they subsequently sought to amend their answers
to plead their cross-claims only after the settlement
between the plaintiff claimants and DOW, OCCIDENTAL,
and SHELL were executed. NAVIDA, et al., and ABELLA,
et al., therefore, assert that the cross-claims are already
barred.
In their Memoranda, CHIQUITA and DOLE are opposing
the above motion of NAVIDA, et al., and ABELLA, et al.,
since the latter’s Amended Complaints cited several
instances of tortious conduct that were allegedly
committed jointly and severally by the defendant
companies. This solidary obligation on the part of all the
defendants allegedly gives any co-defendant the statutory
right to proceed against the other co-defendants for the
payment of their respective shares. Should the subject
motion of NAVIDA, et al., and ABELLA, et al., be granted,
and the Court subsequently orders the remand of the
action to the trial court for continuance, CHIQUITA and
DOLE would allegedly be deprived of their right to
prosecute their cross-claims against their other co-
defendants. Moreover, a third party complaint or a
separate trial, according to CHIQUITA, would only unduly
delay and complicate the proceedings. CHIQUITA and
DOLE similarly insist that the motion of NAVIDA, et al.,
and ABELLA, et al., to drop DOW, SHELL and
OCCIDENTAL as respondents in G.R. Nos. 125078 and
126654, as well as in Civil Case Nos. 5617 and 24,251-96,
be denied.
Incidentally, on April 2, 2007, after the parties have
submitted their respective memoranda, DEL MONTE filed
a Manifestation and Motion73 before the Court, stating that
similar settlement agreements were allegedly executed by
the plaintiff claimants with DEL MONTE and CHIQUITA
sometime in 1999. Purportedly included in the agreements
were Civil Case Nos. 5617 and 24,251-96. Attached to the
said manifestation were copies of the Compromise
Settlement, Indemnity, and Hold Harmless Agreement
between DEL MONTE and the settling plaintiffs, as well as
CONSUMER – PRODUCT LIABILITY
the Release in Full executed by the latter.74 DEL MONTE
specified therein that there were "only four (4) plaintiffs in
Civil Case No. 5617 who are claiming against the Del
Monte parties"75 and that the latter have executed
amicable settlements which completely satisfied any
claims against DEL MONTE. In accordance with the
alleged compromise agreements with the four plaintiffs in
Civil Case No. 5617, DEL MONTE sought the dismissal of
the Amended Joint-Complaint in the said civil case.
Furthermore, in view of the above settlement agreements
with ABELLA, et al., in Civil Case No. 24,251-96, DEL
MONTE stated that it no longer wished to pursue its
petition in G.R. No. 127856 and accordingly prayed that it
be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96
should be remanded to the RTC of General Santos City
and the RTC of Davao City, respectively, the Court deems
that the Consolidated Motions (to Drop Party-
Respondents) filed by NAVIDA, et al., and ABELLA, et al.,
should likewise be referred to the said trial courts for
appropriate disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a
contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already
commenced." Like any other contract, an extrajudicial
compromise agreement is not excepted from rules and
principles of a contract. It is a consensual contract,
perfected by mere consent, the latter being manifested by
the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the
contract.76 Judicial approval is not required for its
perfection.77 A compromise has upon the parties the effect
and authority of res judicata78 and this holds true even if
the agreement has not been judicially approved.79 In
addition, as a binding contract, a compromise agreement
determines the rights and obligations of only the parties to
it.80
In light of the foregoing legal precepts, the RTC of General
Santos City and the RTC of Davao City should first receive
in evidence and examine all of the alleged compromise
settlements involved in the cases at bar to determine the
propriety of dropping any party as a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop
Party-Respondents) that was filed by NAVIDA, et al., and
ABELLA, et al., only pertained to DOW, OCCIDENTAL
and SHELL in view of the latter companies’ alleged
compromise agreements with the plaintiff claimants.
However, in subsequent developments, DEL MONTE and
CHIQUITA supposedly reached their own amicable
settlements with the plaintiff claimants, but DEL MONTE
qualified that it entered into a settlement agreement with
only four of the plaintiff claimants in Civil Case No. 5617.
These four plaintiff claimants were allegedly the only ones
who were asserting claims against DEL MONTE.
However, the said allegation of DEL MONTE was simply
stipulated in their Compromise Settlement, Indemnity, and
Hold Harmless Agreement and its truth could not be
verified with certainty based on the records elevated to this
Court. Significantly, the 336 plaintiff claimants in Civil Case
No. 5617 jointly filed a complaint without individually
specifying their claims against DEL MONTE or any of the
other defendant companies. Furthermore, not one plaintiff
claimant filed a motion for the removal of either DEL
MONTE or CHIQUITA as defendants in Civil Case Nos.
5617 and 24,251-96.
There is, thus, a primary need to establish who the specific
parties to the alleged compromise agreements are, as well
as their corresponding rights and obligations therein. For
this purpose, the courts a quo may require the
presentation of additional evidence from the parties.
Thereafter, on the basis of the records of the cases at bar
and the additional evidence submitted by the parties, if
any, the trial courts can then determine who among the
defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the
responsibility of two or more persons who are liable for the
same quasi-delict is solidary. A solidary obligation is one in
which each of the debtors is liable for the entire obligation,
and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the
debtors.81
In solidary obligations, the paying debtor’s right of
reimbursement is provided for under Article 1217 of the
Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors
extinguishes the obligation. If two or more solidary debtors
offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors
only the share which corresponds to each, with the interest
for the payment already made. If the payment is made
before the debt is due, no interest for the intervening
period may be demanded.
When one of the solidary debtors cannot, because of his
insolvency, reimburse his share to the debtor paying the
obligation, such share shall be borne by all his co-debtors,
in proportion to the debt of each.1avvphil
The above right of reimbursement of a paying debtor, and
the corresponding liability of the co-debtors to reimburse,
will only arise, however, if a solidary debtor who is made to
answer for an obligation actually delivers payment to the
creditor. As succinctly held in Lapanday Agricultural
Development Corporation v. Court of
Appeals,82 "[p]ayment, which means not only the delivery
of money but also the performance, in any other manner,
of the obligation, is the operative fact which will entitle
either of the solidary debtors to seek reimbursement for
the share which corresponds to each of the [other]
debtors."83
CONSUMER – PRODUCT LIABILITY
In the cases at bar, there is no right of reimbursement to
speak of as yet. A trial on the merits must necessarily be
conducted first in order to establish whether or not
defendant companies are liable for the claims for damages
filed by the plaintiff claimants, which would necessarily
give rise to an obligation to pay on the part of the
defendants.
At the point in time where the proceedings below were
prematurely halted, no cross-claims have been interposed
by any defendant against another defendant. If and when
such a cross-claim is made by a non-settling defendant
against a settling defendant, it is within the discretion of
the trial court to determine the propriety of allowing such a
cross-claim and if the settling defendant must remain a
party to the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit
Association, Inc. v. Court of Appeals,84 the Court had the
occasion to state that "where there are, along with the
parties to the compromise, other persons involved in the
litigation who have not taken part in concluding the
compromise agreement but are adversely affected or feel
prejudiced thereby, should not be precluded from invoking
in the same proceedings an adequate relief therefor."85
Relevantly, in Philippine International Surety Co., Inc. v.
Gonzales,86 the Court upheld the ruling of the trial court
that, in a joint and solidary obligation, the paying debtor
may file a third-party complaint and/or a cross-claim to
enforce his right to seek contribution from his co-debtors.
Hence, the right of the remaining defendant(s) to seek
reimbursement in the above situation, if proper, is not
affected by the compromise agreements allegedly entered
into by NAVIDA, et al., and ABELLA, et al., with some of
the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for
review on certiorari in G.R. Nos. 125078, 126654, and
128398. We REVERSE and SET ASIDE the Order dated
May 20, 1996 of the Regional Trial Court of General
Santos City, Branch 37, in Civil Case No. 5617, and the
Order dated October 1, 1996 of the Regional Trial Court of
Davao City, Branch 16, and its subsequent Order dated
December 16, 1996 denying reconsideration in Civil Case
No. 24,251-96, and REMAND the records of this case to
the respective Regional Trial Courts of origin for further
and appropriate proceedings in line with the ruling herein
that said courts have jurisdiction over the subject matter of
the amended complaints in Civil Case Nos. 5617 and
24,251-96.
The Court likewise GRANTS the motion filed by Del Monte
to withdraw its petition in G.R. No. 127856. In view of the
previous grant of the motion to withdraw the petition in
G.R. No. 125598, both G.R. Nos. 127856 and 125598 are
considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 192957 September 29, 2014
EMMANUEL B. MORAN, JR., (Deceased), substituted
by his widow, CONCORDIA V. MORAN, Petitioner,
vs.
OFFICE OF THE PRESIDENT OF THE PHILIPPINES, AS
REPRESENTED BY THE HONORABLE EXECUTIVE
SECRETARY EDUARDO R. ERMITA and PGA CARS,
INC., Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a petition . for review on certiorari assailing
the Resolutions dated March 13, 20091 and June 25,
2010,2of the Court of Appeals (CA) in CA-G.R. SP No.
107059. In the Resolution dated March 13, 2009, the CA
outrightly struck down the petition for certiorari that the
petitioner had filed to annul and set aside the
Decision3 dated April 3, 2007, and Order4 dated October
22, 2008 of the Office of the President (OP) in O.P. Case
No. 06-E-195. Meanwhile, in the Resolution dated June
25, 2010, the CA denied the petitioner's. motion for
reconsideration.
From the records, the following facts emerge:
On February 2, 2004, the late Emmanuel B. Moran, Jr.
filed with the Consumer Arbitration Office (CAO) a verified
complaint against private respondent PGA Cars, Inc.
pursuant tothe relevant provisions of Republic Act No.
7394 (RA 7394), otherwise known as the Consumer Act of
the Philippines. Docketed as DTI Administrative Case No.
04-17, the complaint alleged that the private respondent
should be held liable for the product imperfections of a
BMW car which it sold to complainant.
On September 23, 2005, the CAO rendered a Decision5 in
favor of complainant and ordered the private respondent to
refund the purchase price of the BMW car in addition to
the payment of costs of litigation and administrative fines:
WHEREFORE, in view of the foregoing, the respondent is
hereby found guilty for violation of the aforequoted
provisions and [is] hereby ordered to perform the following:
1. To refund the purchase price ofthe subject
vehicle in the amount of three million three
hundred seventy five thousand pesos
(₱3,375,000.00);
2. To pay complainant the amount of five thousand
pesos (₱5,000.00) as costs of litigation;
CONSUMER – PRODUCT LIABILITY
3. To pay an administrative finein the amount of
₱10,000.00 payable at 4th flr., DTI Cashier, 361
Sen. Gil Puyat Ave., Makati City.
SO ORDERED.6
On October 19, 2005, the private respondent sought
reconsideration of the Decision but the CAO denied the
motion in an Order7 dated January 19, 2006. Thus, the
private respondent appealed to the Secretary of the
Department of Trade and Industry (DTI), the quasi-judicial
agency designated by Article 1658 of RA 7394 to entertain
appeals from the adverse decisions and orders of the
CAO. However, in a Resolution9 dated April 28, 2006, the
DTI Secretary dismissed the appeal of the private
respondent who then filed an appeal with the herein public
respondent OP.
On April 3, 2007, the OP granted the appeal, reversed the
DTI Secretary’s Resolution, and dismissed the complaint.
The OP ruled that the DTI erred in holding the private
respondent liable for product defects which issue was
never raised by the complainant and because the private
respondent was not the manufacturer, builder, producer or
importer of the subject BMW car but only its seller.
Assuch, it could not be held liable especially since none of
the circumstances under Article 9810 of RA 7394 were
present in the case. The OP further ruled that the private
respondent could also not be held liable for product
imperfections because the product was never proven to be
unfit or inadequate under the conditions laid down by law.
Neither was there any inconsistency in the information
provided in the container or product
advertisements/messages. More, it was only after the
lapse of a considerabletime (nearly 10 months) since the
purchase of the car and after it had been driven for 12,518
kilometers, that the complainant first complained about it.
The vehicle never once broke down before then and the
complainant could not, in fact, point to any specific part
that is defective.
Complainant filed a motion for reconsideration with the
OP, but the OP denied said motion in an Order dated
October 22, 2008. On November 25, 2008, complainant
received a copy of the Order denying his motion for
reconsideration.
On January 23, 2009, complainant filed a petition for
certiorari with the CA and alleged lack of jurisdiction on the
part of the OP for ruling on cases involving a violation of
RA 7394. On March 13, 2009, the CA dismissed the
petition for certiorari on the ground that it was a wrong
mode of appeal and for the failure of the petitioner to state
material dates. On June 25, 2010, the CA likewise denied
the motion for reconsideration filed by the petitioner.
Since the original complainant Emmanuel B. Moran, Jr.
passed away on May 17, 2010, his widow, Concordia V.
Moran filed the present petition for review on certiorari on
August 9, 2010. Petitioner argues that the CA erred in
denying the petition for certiorari which alleged error of
jurisdiction on the part of the OP. She contends that in
cases alleging error ofjurisdiction on the part of the OP, the
proper remedy is to file a petition for certiorari with the CA
because appeal is not available to correct lack of
jurisdiction. Moreover, even though appeal is available, it
is not considered as the plain, speedy, and adequate legal
remedy.
Further, the petitioner claims that the OP lacked appellate
jurisdiction to review decisions of the DTI in cases
involving a violation of RA 7394 based on Article
16611 thereof, which expressly confers appellate
jurisdiction to review such decisions of the DTI to the
proper court through a petition for certiorari. Hence, the
OP cannot be deemed as the "proper court" within the
purview of Article 166.
On the other hand, private respondentargues that the CA
was correct in denying the petition for certiorari since this
was an improper remedy in view of the availability of an
appeal from the OP. Furthermore, the private respondent
confirms the appellate jurisdiction of the OP over the DTI
based on the constitutional power of control of the OP over
Executive Departments and the well-entrenched doctrine
of exhaustion of administrative remedies.
Meanwhile, the public respondent, through the Office of
the Solicitor General (OSG), claims that the availability of
an appeal from the OP precluded the petitioner from
availing of the extraordinary remedy of certiorari. Even
though there is an allegation of error of jurisdiction, the
OSG avers that appeal still takes precedence over a
petition for certiorari as long as the same is at the disposal
ofthe petitioner. However, in the present case, the OSG
claims that the OP acted within its jurisdiction in deciding
the case on appeal from the DTI Secretary as Article 166
of RA 7394 must yield to the constitutional power of control
of the OP over Executive Departments. The OSG also
cites the doctrine of exhaustion of administrative remedies
to support the appellate jurisdiction of the OP over the DTI.
Is the CA correct in dismissing the petition for certiorari on
the ground that petitioner resorted to a wrong mode of
appeal?
We rule in the negative.
Under the Consumer Act (RA 7394), the DTI has the
authority and the mandate to act upon complaints filed by
consumers pursuant to the State policy of protecting the
consumeragainst deceptive, unfair and unconscionable
sales, acts or practices.12 Said law provided for an
arbitration procedure whereby consumer complaints are
heard and investigated by consumer arbitration officers
whose decisions are appealable to the DTI
Secretary.13 Article 166 thereof provides:
CONSUMER – PRODUCT LIABILITY
ART. 166. Decision on Appeal.– The Secretary shall
decide the appeal within thirty (30) days fromreceipt
thereof.1âwphi1The decision becomes final after fifteen
(15) days from receipt thereof unless a petition for
certiorari is filed with the proper court. (Emphasis
supplied.)
In his motion for reconsideration from the OP’s Decision
dated April 3, 2007 which reversed and set aside the
resolution dated April 28, 2006 of the DTI Secretary,
complainant EmmanuelB. Moran, Jr. raised the issue of
lack of jurisdiction of the OP, not being the proper court
referred to in Article 166 of R.A. 7394. The OP, however,
denied his motion on the ground that the President’spower
of control over the executive department grants him the
power to amend, modify, alter or repeal decisions of the
department secretaries. On the other hand, the CA, in
dismissing outright the petition for certiorari filed by Moran,
Jr., implicitly sustained such reasoning when it held that
the proper remedy from an adverse order or judgment of
the OP is a petition for review under Rule 43 of the 1997
Rules of Civil Procedure, as amended.
We reverse the CA.
The procedure for appeals to the OP is governed by
Administrative Order No. 18,14 Series of 1987. Section 1
thereof provides:
SECTION 1. Unless otherwise governed by special laws,
an appeal to the Office of the President shall be taken
within thirty (30) days from receipt by the aggrieved party
of the decision/resolution/order complained of or appealed
from… (Emphasis supplied.)
In Phillips Seafood (Philippines) Corporation v. The Board
of Investments,15 we interpreted the above provision and
declared that "a decision or order issued by a department
or agency need notbe appealed to the Office of the
President when there is a speciallaw that provides for a
different mode of appeal." Thus:
Petitioner further contends that from the decision of
respondent BOI, appeal to the Office of the President
should be allowed; otherwise, the constitutional power of
the President to review acts of department secretaries will
be rendered illusory by mere rules of procedure.
The executive power of control over the acts of department
secretaries is laid down in Section 17, Article VII of the
1987 Constitution. The power of control has been defined
as the "power of an officer to alter or modify or nullify orset
aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of
the former for that of the latter."
Such "executive control" is not absolute. The definition of
the structure of the executive branch of government, and
the corresponding degrees of administrative control and
supervision is not the exclusive preserve of the executive.
It may be effectively limited by the Constitution, by law, or
by judicial decisions. All the more in the matter of appellate
procedure as in the instant case.Appeals are remedial in
nature; hence, constitutionally subject to this Court’s
rulemaking power. The Rules of Procedure was issued by
the Court pursuant to Section 5, Article VIII of the
Constitution, which expressly empowers the Supreme
Court to promulgate rules concerning the procedure in all
courts.
Parenthetically, Administrative Order (A.O.) No. 18
expressly recognizes an exception to the remedyof appeal
to the Office of the President from the decisions of
executive departments and agencies. Under Section 1
thereof, a decision or order issued by a department or
agency need not be appealed to the Office of the
President when there is a special law that provides for a
different mode of appeal. In the instant case, the enabling
law of respondent BOI, E.O. No. 226, explicitly allows for
immediate judicial relieffrom the decision of respondent
BOI involving petitioner’s application for an ITH. E.O. No.
226 is a law of special nature and should prevail over A.O.
No. 18.16 (Emphasis supplied.)
In this case, a special law, RA 7394,likewise expressly
provided for immediate judicial relief from decisionsof the
DTI Secretary by filing a petition for certiorari with the
"proper court." Hence, private respondent should have
elevated the case directly to the CA through a petition for
certiorari.
In filing a petition for certiorari beforethe CA raising the
issue of the OP’s lack of jurisdiction, complainant Moran,
Jr. thus availed of the proper remedy.
Certiorariis an extraordinary remedy available in
extraordinary cases where a tribunal, board or officer,
among others, completely acted without
jurisdiction.1âwphi1 Ineluctably, a judgment rendered
without jurisdiction over the subject matter is void.17 While
errors of judgmentare correctible by appeal, errors of
jurisdiction are reviewable by certiorari. 18 Considering that
the OP had no jurisdiction to entertain private respondent’s
appeal, certiorari lies to correct such jurisdictional error.
The CA thus erred in dismissing the petition for certiorari
on the ground of being an improper remedy.
Further, we hold that the Resolution dated April 28, 2006
of the DTI Secretary had become FINAL and
EXECUTORY with private respondent’s failure to appeal
the same withinthe 15-day reglementary period.
WHEREFORE, the petition for review on certiorari is
GRANTED. The Resolutions dated March 13, 2009 and
June 25, 2010 in CA-G.R. SP No. 107059 are REVERSED
and SET ASIDE. The Decision dated April 3, 2007 and
Order dated October 22, 2008 of the Office of the
President are hereby declared NULL and VOID.
CONSUMER – PRODUCT LIABILITY
Consequently, the Resolution dated April 28, 2006 of the 21420 June 26, 1993 6,990.00
DTI Secretary is hereby REINSTATED and UPHELD. 21437 June 28, 1993 41,510.00
21722 July 12, 1993 45,185.00
No pronouncement as to costs. 22048 July 26, 1993 44,540.00
22054 July 27, 1993 45,246.00
22186 August 2, 1993 84,900.00
SO ORDERED.
Total: P2
75,631.00
=
=
[G.R. No. 152219. October 25, 2004] =
=
=
=
NUTRIMIX FEEDS CORPORATION, petitioner, vs. =
COURT OF APPEALS and SPOUSES EFREN =
AND MAURA EVANGELISTA, respondents. =
Bank Check Number Due Date Amount
DECISION United Coconut
Planters Bank BTS052084 July 30,
CALLEJO, SR., J.: 1993 P 47,760.00
-do- BTS052087 July 30, 1993 131,340.00
For review on certiorari is the Decision[1] of the Court -do- BTS052091 July 30, 1993 59,700.00
of Appeals in CA-G.R. CV No. 59615 modifying, on -do- BTS062721 August 4, 1993 47,860.00
appeal, the Joint Decision[2] of the Regional Trial Court of -do- BTS062720 August 5, 1993 43,780.00
Malolos, Bulacan, Branch 9, in Civil Case No. 1026-M- -do- BTS062774 August 6, 1993 15,000.00
93[3] for sum of money and damages with prayer for -do- BTS062748 September 11, 1993 47,180.00
issuance of writ of preliminary attachment, and Civil Case -do- BTS062763 September 11, 1993 48,440.00
No. 49-M-94[4] for damages. The trial court dismissed the -do- BTS062766 September 18, 1993 49,460.00
complaint of the respondents, ordering them to pay the T
petitioner the unpaid value of the assorted animal feeds ot
delivered to the former by the latter, with legal interest al
thereon from the filing of the complaint, including attorneys :
fees. P
4
9
0,
The Factual Antecedents
5
2
On April 5, 1993, the Spouses Efren and Maura 0.
Evangelista, the respondents herein, started to directly 0
procure various kinds of animal feeds from petitioner 0
Nutrimix Feeds Corporation. The petitioner gave the
respondents a credit period of thirty to forty-five days to
postdate checks to be issued in payment for the delivery of
the feeds. The accommodation was made apparently
because of the company presidents close friendship with
Eugenio Evangelista, the brother of respondent Efren
Evangelista. The various animal feeds were paid and
covered by checks with due dates from July 1993 to
September 1993. Initially, the respondents were good
paying customers. In some instances, however, they failed When the above-mentioned checks were deposited at
to issue checks despite the deliveries of animal feeds the petitioners depository bank, the same were,
which were appropriately covered by sales invoices. consequently, dishonored because respondent Maura
Consequently, the respondents incurred an aggregate Evangelista had already closed her account. The petitioner
unsettled account with the petitioner in the amount made several demands for the respondents to settle their
of P766,151.00. The breakdown of the unpaid obligation is unpaid obligation, but the latter failed and refused to pay
as follows: their remaining balance with the petitioner.
Sales Invoice Number Date Amount On December 15, 1993, the petitioner filed with the
21334 June 23, 1993 P 7,260.00 Regional Trial Court of Malolos, Bulacan, a complaint,
CONSUMER – PRODUCT LIABILITY
docketed as Civil Case No. 1026-M-93, against the
respondents for sum of money and damages with a prayer
for issuance of writ of preliminary attachment. In their
answer with counterclaim, the respondents admitted their
unpaid obligation but impugned their liability to the
petitioner. They asserted that the nine checks issued by
respondent Maura Evangelista were made to guarantee
the payment of the purchases, which was previously
determined to be procured from the expected proceeds in
the sale of their broilers and hogs. They contended that
inasmuch as the sudden and massive death of their
animals was caused by the contaminated products of the
petitioner, the nonpayment of their obligation was based
on a just and legal ground.
On January 19, 1994, the respondents also lodged a
complaint for damages against the petitioner, docketed as
Civil Case No. 49-M-94, for the untimely and unforeseen
death of their animals supposedly effected by the
adulterated animal feeds the petitioner sold to them. Within
the period to file an answer, the petitioner moved to
dismiss the respondents complaint on the ground of litis
pendentia. The trial court denied the same in a
Resolution[5] dated April 26, 1994, and ordered the
consolidation of the case with Civil Case No. 1026-M-93.
On May 13, 1994, the petitioner filed its Answer with
Counterclaim, alleging that the death of the respondents
animals was due to the widespread pestilence in their
farm. The petitioner, likewise, maintained that it received
information that the respondents were in an unstable
financial condition and even sold their animals to settle
their obligations from other enraged and insistent creditors.
It, moreover, theorized that it was the respondents who
mixed poison to its feeds to make it appear that the feeds
were contaminated.
A joint trial thereafter ensued.
During the hearing, the petitioner presented Rufino
Arenas, Nutrimix Assistant Manager, as its lone witness.
He testified that on the first week of August 1993, Nutrimix
President Efren Bartolome met the respondents to discuss
the possible settlement of their unpaid account. The said
respondents still pleaded to the petitioner to continue to
supply them with animal feeds because their livestock
were supposedly suffering from a disease.[6]
For her part, respondent Maura Evangelista testified
that as direct buyers of animal feeds from the petitioner,
Mr. Bartolome, the company president, gave them a
discount of P12.00 per bag and a credit term of forty-five to
seventy-five days.[7] For the operation of the respondents
poultry and piggery farm, the assorted animal feeds sold
by the petitioner were delivered in their residence and
stored in an adjacent bodega made of concrete wall and
galvanized iron sheet roofing with monolithic flooring.[8]
It appears that in the morning of July 26, 1993, three
various kinds of animal feeds, numbering 130 bags, were
delivered to the residence of the respondents in Sta. Rosa,
Marilao, Bulacan. The deliveries came at about 10:00 a.m.
and were fed to the animals at approximately 1:30 p.m. at
the respondents farm in Balasing, Sta. Maria, Bulacan. At
about 8:30 p.m., respondent Maura Evangelista received a
radio message from a worker in her farm, warning her that
the chickens were dying at rapid intervals. When the
respondents arrived at their farm, they witnessed the death
of 18,000 broilers, averaging 1.7 kilos in weight,
approximately forty-one to forty-five days old. The broilers
then had a prevailing market price of P46.00 per kilo.[9]
On July 27, 1993, the respondents received another
delivery of 160 bags of animal feeds from the petitioner,
some of which were distributed to the contract growers of
the respondents. At that time, respondent Maura
Evangelista requested the representative of the petitioner
to notify Mr. Bartolome of the fact that their broilers died
after having been fed with the animal feeds delivered by
the petitioner the previous day. She, likewise, asked that a
technician or veterinarian be sent to oversee the untoward
occurrence. Nevertheless, the various feeds delivered on
that day were still fed to the animals. On July 27, 1993, the
witness recounted that all of the chickens and hogs
died.[10] Efren Evangelista suffered from a heart attack and
was hospitalized as a consequence of the massive death
of their animals in the farm. On August 2, 1993, another
set of animal feeds were delivered to the respondents, but
the same were not returned as the latter were not yet
cognizant of the fact that the cause of the death of their
animals was the polluted feeds of the petitioner.[11]
When respondent Maura Evangelista eventually met
with Mr. Bartolome on an undisclosed date, she attributed
the improbable incident to the animal feeds supplied by the
petitioner, and asked Mr. Bartolome for indemnity for the
massive death of her livestock. Mr. Bartolome disavowed
liability thereon and, thereafter, filed a case against the
respondents.[12]
After the meeting with Mr. Bartolome, respondent
Maura Evangelista requested Dr. Rolando Sanchez, a
veterinarian, to conduct an inspection in the respondents
poultry. On October 20, 1993, the respondents took ample
amounts remaining from the feeds sold by the petitioner
and furnished the same to various government agencies
for laboratory examination.
Dr. Juliana G. Garcia, a doctor of veterinary medicine
and the Supervising Agriculturist of the Bureau of Animal
Industry, testified that on October 20, 1993, sample feeds
for chickens contained in a pail were presented to her for
examination by respondent Efren Evangelista and a
certain veterinarian.[13] The Clinical Laboratory Report
revealed that the feeds were negative of salmonella[14] and
that the very high aflatoxin level[15] found therein would not
cause instantaneous death if taken orally by birds.
Dr. Rodrigo Diaz, the veterinarian who accompanied
Efren at the Bureau of Animal Industry, testified that
sometime in October 1993, Efren sought for his advice
regarding the death of the respondents chickens. He
suggested that the remaining feeds from their warehouse
be brought to a laboratory for examination. The witness
claimed that the feeds brought to the laboratory came from
one bag of sealed Nutrimix feeds which was covered with
a sack.
CONSUMER – PRODUCT LIABILITY
Dr. Florencio Isagani S. Medina III, Chief Scientist
Research Specialist of the Philippine Nuclear Research
Institute, informed the trial court that respondent Maura
Evangelista and Dr. Garcia brought sample feeds and four
live and healthy chickens to him for laboratory
examination. In his Cytogenetic Analysis,[16] Dr. Medina
reported that he divided the chickens into two categories,
which he separately fed at 6:00 a.m. with the animal feeds
of a different commercial brand and with the sample feeds
supposedly supplied by the petitioner. At noon of the same
day, one of the chickens which had been fed with the
Nutrimix feeds died, and a second chicken died at 5:45
p.m. of the same day. Samples of blood and bone marrow
were taken for chromosome analysis, which showed
pulverized chromosomes both from bone marrow and
blood chromosomes. On cross-examination, the witness
admitted that the feeds brought to him were merely placed
in a small unmarked plastic bag and that he had no way of
ascertaining whether the feeds were indeed manufactured
by the petitioner.
Another witness for the respondents, Aida Viloria
Magsipoc, Forensic Chemist III of the Forensic Chemist
Division of the National Bureau of Investigation, affirmed
that she performed a chemical analysis[17] of the animal
feeds, submitted to her by respondent Maura Evangelista
and Dr. Garcia in a sealed plastic bag, to determine the
presence of poison in the said specimen. The witness
verified that the sample feeds yielded positive results to
the tests for COUMATETRALYL Compound,[18] the active
component of RACUMIN, a brand name for a
commercially known rat poison.[19] According to the
witness, the presence of the compound in the chicken
feeds would be fatal to internal organs of the chickens, as
it would give a delayed blood clotting effect and eventually
lead to internal hemorrhage, culminating in their inevitable
death.
Paz Austria, the Chief of the Pesticide Analytical
Section of the Bureau of Plants Industry, conducted a
laboratory examination to determine the presence of
pesticide residue in the animal feeds submitted by
respondent Maura Evangelista and Dr. Garcia. The tests
disclosed that no pesticide residue was detected in the
samples received[20] but it was discovered that the animal
feeds were positive for Warfarin, a rodenticide
(anticoagulant), which is the chemical family of
Coumarin.[21]
After due consideration of the evidence presented,
the trial court ruled in favor of the petitioner. The
dispositive portion of the decision reads:
WHEREFORE, in light of the evidence on record and the
laws/jurisprudence applicable thereon, judgment is hereby
rendered:
1) in Civil Case No. 1026-M-93, ordering
defendant spouses Efren and Maura
Evangelista to pay unto plaintiff Nutrimix
Feeds Corporation the amount
of P766,151.00 representing the unpaid value
of assorted animal feeds delivered by the
latter to and received by the former, with legal
interest thereon from the filing of the
complaint on December 15, 1993 until the
same shall have been paid in full, and the
amount of P50,000.00 as attorneys fees.
Costs against the aforenamed defendants;
and
2) dismissing the complaint as well as
counterclaims in Civil Case No. 49-M-94 for
inadequacy of evidence to sustain the same.
No pronouncement as to costs.
SO ORDERED.[22]
In finding for the petitioner, the trial court ratiocinated
as follows:
On the strength of the foregoing disquisition, the Court
cannot sustain the Evangelistas contention that Nutrimix is
liable under Articles 1561 and 1566 of the Civil Code
governing hidden defects of commodities sold. As already
explained, the Court is predisposed to believe that the
subject feeds were contaminated sometime between their
storage at the bodega of the Evangelistas and their
consumption by the poultry and hogs fed therewith, and
that the contamination was perpetrated by unidentified or
unidentifiable ill-meaning mischief-maker(s) over whom
Nutrimix had no control in whichever way.
All told, the Court finds and so holds that for inadequacy of
proof to the contrary, Nutrimix was not responsible at all
for the contamination or poisoning of the feeds supplied by
it to the Evangelistas which precipitated the mass death of
the latters chickens and hogs. By no means and under no
circumstance, therefore, may Nutrimix be held liable for
the sundry damages prayed for by the Evangelistas in their
complaint in Civil Case No. 49-M-94 and answer in Civil
Case No. 1026-M-93. In fine, Civil Case No. 49-M-94
deserves dismissal.
Parenthetically, vis--vis the fulminations of the
Evangelistas in this specific regard, the Court does not
perceive any act or omission on the part of Nutrimix
constitutive of abuse of rights as would render said
corporation liable for damages under Arts. 19 and 21 of
the Civil Code. The alleged callous attitude and lack of
concern of Nutrimix have not been established with more
definitiveness.
As regards Civil Case No. 1026-M-93, on the other hand,
the Court is perfectly convinced that the deliveries of
animal feeds by Nutrimix to the Evangelistas constituted a
simple contract of sale, albeit on a continuing basis and on
terms or installment payments.[23]
Undaunted, the respondents sought a review of the
trial courts decision to the Court of Appeals (CA),
principally arguing that the trial court erred in holding that
CONSUMER – PRODUCT LIABILITY
they failed to prove that their broilers and hogs died as a
result of consuming the petitioners feeds.
On February 12, 2002, the CA modified the decision
of the trial court. The fallo of the decision reads:
WHEREFORE, premises considered, the appealed
decision is hereby MODIFIED such that the complaint in
Civil Case No. 1026-M-93 is DISMISSED for lack of merit.
SO ORDERED.[24]
In dismissing the complaint in Civil Case No. 1026-M-
93, the CA ruled that the respondents were not obligated
to pay their outstanding obligation to the petitioner in view
of its breach of warranty against hidden defects. The CA
gave much credence to the testimony of Dr. Rodrigo Diaz,
who attested that the sample feeds distributed to the
various governmental agencies for laboratory examination
were taken from a sealed sack bearing the brand name
Nutrimix. The CA further argued that the declarations of
Dr. Diaz were not effectively impugned during cross-
examination, nor was there any contrary evidence
adduced to destroy his damning allegations.
On March 7, 2002, the petitioner filed with this Court
the instant petition for review on the sole ground that
THE HONORABLE COURT OF APPEALS ERRED IN
CONCLUDING THAT THE CLAIMS OF HEREIN
PETITIONER FOR COLLECTION OF SUM OF MONEY
AGAINST PRIVATE RESPONDENTS MUST BE DENIED
BECAUSE OF HIDDEN DEFECTS.
The Present Petition
The petitioner resolutely avers that the testimony of
Dr. Diaz can hardly be considered as conclusive evidence
of hidden defects that can be attributed to the petitioner.
Parenthetically, the petitioner asserts, assuming that the
sample feeds were taken from a sealed sack bearing the
brand name Nutrimix, it cannot decisively be presumed
that these were the same feeds brought to the
respondents farm and given to their chickens and hogs for
consumption.
It is the contention of the respondents that the
appellate court correctly ordered the dismissal of the
complaint in Civil Case No. 1026-M-93. They further add
that there was sufficient basis for the CA to hold the
petitioner guilty of breach of warranty thereby releasing the
respondents from paying their outstanding obligation.
The Ruling of the Court
Oft repeated is the rule that the Supreme Court
reviews only errors of law in petitions for review on
certiorari under Rule 45. However, this rule is not absolute.
The Court may review the factual findings of the CA should
they be contrary to those of the trial court. Conformably,
this Court may review findings of facts when the judgment
of the CA is premised on a misapprehension of facts.[25]
The threshold issue is whether or not there is
sufficient evidence to hold the petitioner guilty of breach of
warranty due to hidden defects.
The petition is meritorious.
The provisions on warranty against hidden defects
are found in Articles 1561 and 1566 of the New Civil Code
of the Philippines, which read as follows:
Art. 1561. The vendor shall be responsible for warranty
against hidden defects which the thing sold may have,
should they render it unfit for the use for which it is
intended, or should they diminish its fitness for such use to
such an extent that, had the vendee been aware thereof,
he would not have acquired it or would have given a lower
price for it; but said vendor shall not be answerable for
patent defects or those which may be visible, or for those
which are not visible if the vendee is an expert who, by
reason of his trade or profession, should have known
them.
Art. 1566. The vendor is responsible to the vendee for any
hidden faults or defects in the thing sold, even though he
was not aware thereof.
This provision shall not apply if the contrary has been
stipulated, and the vendor was not aware of the hidden
faults or defects in the thing sold.
A hidden defect is one which is unknown or could not
have been known to the vendee.[26] Under the law, the
requisites to recover on account of hidden defects are as
follows:
(a) the defect must be hidden;
(b) the defect must exist at the time the sale
was made;
(c) the defect must ordinarily have been
excluded from the contract;
(d) the defect, must be important (renders thing
UNFIT or considerably decreases FITNESS);
(e) the action must be instituted within the statute
of limitations.[27]
In the sale of animal feeds, there is an implied
warranty that it is reasonably fit and suitable to be used for
the purpose which both parties contemplated.[28] To be
able to prove liability on the basis of breach of implied
warranty, three things must be established by the
respondents. The first is that they sustained injury because
of the product; the second is that the injury occurred
because the product was defective or unreasonably
unsafe; and finally, the defect existed when the product
CONSUMER – PRODUCT LIABILITY
left the hands of the petitioner.[29] A manufacturer or
seller of a product cannot be held liable for any damage
allegedly caused by the product in the absence of any
proof that the product in question was defective.[30] The
defect must be present upon the delivery or manufacture
of the product;[31] or when the product left the sellers or
manufacturers control;[32] or when the product was sold to
the purchaser;[33] or the product must have reached the
user or consumer without substantial change in the
condition it was sold. Tracing the defect to the petitioner
requires some evidence that there was no tampering with,
or changing of the animal feeds. The nature of the animal
feeds makes it necessarily difficult for the respondents to
prove that the defect was existing when the product left the
premises of the petitioner.
A review of the facts of the case would reveal that the
petitioner delivered the animal feeds, allegedly containing
rat poison, on July 26, 1993; but it is astonishing that the
respondents had the animal feeds examined only on
October 20, 1993, or barely three months after their
broilers and hogs had died. On cross-examination,
respondent Maura Evangelista testified in this manner:
Atty. Cruz:
Q Madam Witness, you said in the last hearing
that believing that the 250 bags of feeds
delivered to (sic) the Nutrimix Feeds
Corporation on August 2, 1993 were poison
(sic), allegedly your husband Efren
Evangelista burned the same with the
chicken[s], is that right?
A Yes, Sir. Some, Sir.
Q And is it not a fact, Madam Witness, that you
did not, as according to you, used (sic) any
of these deliveries made on August 2,
1993?
A We were able to feed (sic) some of those
deliveries because we did not know yet
during that time that it is the cause of the
death of our chicks (sic), Sir.
Q But according to you, the previous deliveries
were not used by you because you believe
(sic) that they were poison (sic)?
A Which previous deliveries, Sir[?]
Q Those delivered on July 26 and 22 (sic),
1993?
A Those were fed to the chickens, Sir. This is the
cause of the death of the chickens.
Q And you stated that this last delivery on
August 2 were poison (sic) also and you did
not use them, is that right?
Atty. Roxas:
That is misleading.
Atty. Cruz:
She stated that.
Atty. Roxas:
She said some were fed because they did not
know yet of the poisoning.
Court:
And when the chickens died, they stopped
naturally feeding it to the chickens.
Atty. Cruz:
Q You mean to say, Madam Witness, that
although you believe (sic) that the chickens
were allegedly poisoned, you used the
same for feeding your animals?
A We did not know yet during that time that the
feeds contained poison, only during that
time when we learned about the same after
the analysis.
Q Therefore you have known only of the alleged
poison in the Nutrimix Feeds only after you
have caused the analysis of the same?
A Yes, Sir.
Q When was that, Madam Witness?
A I cannot be sure about the exact time but it is
within the months of October to
November, Sir.
Q So, before this analysis of about October and
November, you were not aware that the
feeds of Nutrimix Feeds Corporation were,
according to you, with poison?
A We did not know yet that it contained poison
but we were sure that the feeds were the
cause of the death of our animals.[34]
We find it difficult to believe that the feeds delivered
on July 26 and 27, 1993 and fed to the broilers and hogs
contained poison at the time they reached the
respondents. A difference of approximately three months
enfeebles the respondents theory that the petitioner is
guilty of breach of warranty by virtue of hidden defects. In
a span of three months, the feeds could have already been
contaminated by outside factors and subjected to many
conditions unquestionably beyond the control of the
petitioner. In fact, Dr. Garcia, one of the witnesses for the
respondents, testified that the animal feeds submitted to
her for laboratory examination contained very high level of
aflatoxin, possibly caused by mold (aspergillus
flavus).[35] We agree with the contention of the petitioner
that there is no evidence on record to prove that the
animal feeds taken to the various governmental agencies
for laboratory examination were the same animal feeds
given to the respondents broilers and hogs for their
consumption. Moreover, Dr. Diaz even admitted that the
feeds that were submitted for analysis came from a sealed
CONSUMER – PRODUCT LIABILITY
bag. There is simply no evidence to show that the feeds
given to the animals on July 26 and 27, 1993
were identical to those submitted to the expert witnesses
in October 1993.
It bears stressing, too, that the chickens brought to
the Philippine Nuclear Research Institute for laboratory
tests were healthy animals, and were not the ones that
were ostensibly poisoned. There was even no attempt to
have the dead fowls examined. Neither was there any
analysis of the stomach of the dead chickens to determine
whether the petitioners feeds really caused their sudden
death. Mere sickness and death of the chickens is not
satisfactory evidence in itself to establish a prima
facie case of breach of warranty.[36]
Likewise, there was evidence tending to show that the
respondents combined different kinds of animal feeds and
that the mixture was given to the animals. Respondent
Maura Evangelista testified that it was common practice
among chicken and hog raisers to mix animal feeds. The
testimonies of respondent Maura Evangelista may be thus
summarized:
Cross-Examination
Atty. Cruz:
Q Because, Madam Witness, you ordered
chicken booster mash from Nutrimix Feeds
Corporation because in July 1993 you were
taking care of many chickens, as a matter of
fact, majority of the chickens you were
taking care [of] were chicks and not
chickens which are marketable?
A What I can remember was that I ordered
chicken booster mash on that month of July
1993 because we have some chicks which
have to be fed with chicken booster mash
and I now remember that on the particular
month of July 1993 we ordered several
bags of chicken booster mash for the
consumption also of our chicken in our
other poultry and at the same time they
were also used to be mixed with the feeds
that were given to the hogs.
Q You mean to say [that], as a practice, you are
mixing chicken booster mash which is
specifically made for chick feeds you are
feeding the same to the hogs, is that what
you want the Court to believe?
A Yes, Sir, because when you mix chicken
booster mash in the feeds of hogs there
is a better result, Sir, in raising hogs.[37]
Re-Direct Examination
Atty. Roxas:
Q Now, you mentioned that shortly before July
26 and 27, 1993, various types of Nutrimix
feeds were delivered to you like chicks
booster mash, broiler starter mash and hog
finisher or hog grower mash. What is the
reason for simultaneous deliveries of
various types of feeds?
A Because we used to mix all those together in
one feeding, Sir.
Q And what is the reason for mixing the chick
booster mash with broiler starter mash?
A So that the chickens will get fat, Sir.
Re-Cross Examination
Atty. Cruz:
Q Madam Witness, is it not a fact that the mixing
of these feeds by you is your own
concuction (sic) and without the advice of a
veterinarian expert to do so?
A That is common practice among raisers to mix
two feeds, Sir.
Q By yourself, Madam Witness, who advised you
to do the mixing of these two types of feeds
for feeding your chickens?
A That is common practice of chicken raisers,
Sir.[38]
Even more surprising is the fact that during the
meeting with Nutrimix President Mr. Bartolome, the
respondents claimed that their animals were plagued by
disease, and that they needed more time to settle their
obligations with the petitioner. It was only after a few
months that the respondents changed their justification for
not paying their unsettled accounts, claiming anew that
their animals were poisoned with the animal feeds
supplied by the petitioner. The volte-face of the
respondents deserves scant consideration for having been
conjured as a mere afterthought.
In essence, we hold that the respondents failed to
prove that the petitioner is guilty of breach of warranty due
to hidden defects. It is, likewise, rudimentary that common
law places upon the buyer of the product the burden of
proving that the seller of the product breached its
warranty.[39] The bevy of expert evidence adduced by the
respondents is too shaky and utterly insufficient to prove
that the Nutrimix feeds caused the death of their animals.
For these reasons, the expert testimonies lack probative
weight. The respondents case of breach of implied
warranty was fundamentally based upon the circumstantial
evidence that the chickens and hogs sickened, stunted,
and died after eating Nutrimix feeds; but this was not
enough to raise a reasonable supposition that the
unwholesome feeds were the proximate cause of the
death with that degree of certainty and probability
required.[40] The rule is well-settled that if there be no
evidence, or if evidence be so slight as not reasonably to
warrant inference of the fact in issue or furnish more than
materials for a mere conjecture, the court will not hesitate
to strike down the evidence and rule in favor of the other
CONSUMER – PRODUCT LIABILITY
party.[41] This rule is both fair and sound. Any other
interpretation of the law would unloose the courts to T/R Date Maturit Principal Description of
meander aimlessly in the arena of speculation.[42] Nos Grante y Date Goods
. d
It must be stressed, however, that the remedy against
violations of warranty against hidden defects is either to 184 12-05- 03-05- P1,596,470. 79.9425 M/T
withdraw from the contract (accion redhibitoria) or to 5 80 81 05 "SDK" Brand
demand a proportionate reduction of the price (accion Synthetic
quanti minoris), with damages in either case.[43] In any Graphite
case, the respondents have already admitted, both in their Electrode
testimonies and pleadings submitted, that they are indeed
indebted to the petitioner for the unpaid animal feeds 185 12-08- 03-06- P198,150.67 3,000 pcs. (15
delivered to them. For this reason alone, they should be 3 80 81 bundles)
held liable for their unsettled obligations to the petitioner. Calorized Lance
Pipes
WHEREFORE, in light of all the foregoing, the petition
is GRANTED. The assailed Decision of the Court of 182 11-28- 02-26- P707,879.71 One Lot High
Appeals, dated February 12, 2002, is REVERSED and 4 80 81 Fired Refractory
SET ASIDE. The Decision of the Regional Trial Court of Tundish Bricks
Malolos, Bulacan, Branch 9, dated January 12, 1998, is
REINSTATED. No costs. 179 11-21- 02-19- P835,526.25 5 cases spare
8 80 81 parts for CCM
SO ORDERED.
180 11-21- 02-19- P370,332.52 200 pcs. ingot
G. R. No. 164317 February 6, 2006 8 80 81 moulds

ALFREDO CHING, Petitioner, 204 01-30- 04-30- P469,669.29 High Fired

vs. 2 81 81 Refractory
THE SECRETARY OF JUSTICE, ASST. CITY Nozzle Bricks
PROSECUTOR ECILYN BURGOS-VILLAVERT, JUDGE
180 11-21- 02-19- P2,001,715. Synthetic
EDGARDO SUDIAM of the Regional Trial Court,
1 80 81 17 Graphite
Manila, Branch 52; RIZAL COMMERCIAL BANKING
Electrode [with]
CORP. and THE PEOPLE OF THE
tapered pitch
PHILIPPINES, Respondents.
filed nipples
DECISION 185 12-09- 03-09- P197,843.61 3,000 pcs. (15
7 80 81 bundles
CALLEJO, SR., J.: calorized lance
pipes [)]
Before the Court is a petition for review on certiorari of the
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 189 12-17- 03-17- P67,652.04 Spare parts for
57169 dismissing the petition for certiorari, prohibition and 5 80 81 Spectrophotomet
mandamus filed by petitioner Alfredo Ching, and its er
Resolution2 dated June 28, 2004 denying the motion for
reconsideration thereof. 191 12-22- 03-20- P91,497.85 50 pcs. Ingot
1 80 81 moulds
Petitioner was the Senior Vice-President of Philippine 204 01-30- 04-30- P91,456.97 50 pcs. Ingot
Blooming Mills, Inc. (PBMI). Sometime in September to 1 81 81 moulds
October 1980, PBMI, through petitioner, applied with the
Rizal Commercial Banking Corporation (respondent bank) 209 02-10- 05-11- P66,162.26 8 pcs. Kubota
for the issuance of commercial letters of credit to finance 9 81 81 Rolls for rolling
its importation of assorted goods.3 mills

Respondent bank approved the application, and 210 02-10- 05-12- P210,748.00 Spare parts for
irrevocable letters of credit were issued in favor of 0 81 81 Lacolaboratory
petitioner. The goods were purchased and delivered in Equipment5
trust to PBMI. Petitioner signed 13 trust receipts4 as
surety, acknowledging delivery of the following goods:
Under the receipts, petitioner agreed to hold the goods in
trust for the said bank, with authority to sell but not by way
of conditional sale, pledge or otherwise; and in case such
CONSUMER – PRODUCT LIABILITY
goods were sold, to turn over the proceeds thereof as
soon as received, to apply against the relative
acceptances and payment of other indebtedness to
respondent bank. In case the goods remained unsold
within the specified period, the goods were to be returned
to respondent bank without any need of demand. Thus,
said "goods, manufactured products or proceeds thereof,
whether in the form of money or bills, receivables, or
accounts separate and capable of identification" were
respondent bank’s property.
When the trust receipts matured, petitioner failed to return
the goods to respondent bank, or to return their value
amounting to ₱6,940,280.66 despite demands. Thus, the
bank filed a criminal complaint for estafa6 against petitioner
in the Office of the City Prosecutor of Manila.
After the requisite preliminary investigation, the City
Prosecutor found probable cause estafa under Article 315,
paragraph 1(b) of the Revised Penal Code, in relation to
Presidential Decree (P.D.) No. 115, otherwise known as
the Trust Receipts Law. Thirteen (13) Informations were
filed against the petitioner before the Regional Trial Court
(RTC) of Manila. The cases were docketed as Criminal
Cases No. 86-42169 to 86-42181, raffled to Branch 31 of
said court.
Petitioner appealed the resolution of the City Prosecutor to
the then Minister of Justice. The appeal was dismissed in
a Resolution7 dated March 17, 1987, and petitioner moved
for its reconsideration. On December 23, 1987, the
Minister of Justice granted the motion, thus reversing the
previous resolution finding probable cause against
petitioner.8 The City Prosecutor was ordered to move for
the withdrawal of the Informations.
This time, respondent bank filed a motion for
reconsideration, which, however, was denied on February
24, 1988.9The RTC, for its part, granted the Motion to
Quash the Informations filed by petitioner on the ground
that the material allegations therein did not amount to
estafa.10
In the meantime, the Court rendered judgment in Allied
Banking Corporation v. Ordoñez,11 holding that the penal
provision of P.D. No. 115 encompasses any act violative of
an obligation covered by the trust receipt; it is not limited to
transactions involving goods which are to be sold
(retailed), reshipped, stored or processed as a component
of a product ultimately sold. The Court also ruled that "the
non-payment of the amount covered by a trust receipt is
an act violative of the obligation of the entrustee to pay." 12
On February 27, 1995, respondent bank re-filed the
criminal complaint for estafa against petitioner before the
Office of the City Prosecutor of Manila. The case was
docketed as I.S. No. 95B-07614.
Preliminary investigation ensued. On December 8, 1995,
the City Prosecutor ruled that there was no probable cause
to charge petitioner with violating P.D. No. 115, as
petitioner’s liability was only civil, not criminal, having
signed the trust receipts as surety.13 Respondent bank
appealed the resolution to the Department of Justice
(DOJ) via petition for review, alleging that the City
Prosecutor erred in ruling:
1. That there is no evidence to show that
respondent participated in the misappropriation of
the goods subject of the trust receipts;
2. That the respondent is a mere surety of the trust
receipts; and
3. That the liability of the respondent is only civil in
nature.14
On July 13, 1999, the Secretary of Justice issued
Resolution No. 25015 granting the petition and reversing
the assailed resolution of the City Prosecutor. According to
the Justice Secretary, the petitioner, as Senior Vice-
President of PBMI, executed the 13 trust receipts and as
such, was the one responsible for the offense. Thus, the
execution of said receipts is enough to indict the petitioner
as the official responsible for violation of P.D. No. 115. The
Justice Secretary also declared that petitioner could not
contend that P.D. No. 115 covers only goods ultimately
destined for sale, as this issue had already been settled in
Allied Banking Corporation v. Ordoñez,16 where the Court
ruled that P.D. No. 115 is "not limited to transactions in
goods which are to be sold (retailed), reshipped, stored or
processed as a component of a product ultimately sold but
covers failure to turn over the proceeds of the sale of
entrusted goods, or to return said goods if unsold or not
otherwise disposed of in accordance with the terms of the
trust receipts."
The Justice Secretary further stated that the respondent
bound himself under the terms of the trust receipts not only
as a corporate official of PBMI but also as its surety;
hence, he could be proceeded against in two (2) ways:
first, as surety as determined by the Supreme Court in its
decision in Rizal Commercial Banking Corporation v. Court
of Appeals;17 and second, as the corporate official
responsible for the offense under P.D. No. 115, via
criminal prosecution. Moreover, P.D. No. 115 explicitly
allows the prosecution of corporate officers "without
prejudice to the civil liabilities arising from the criminal
offense." Thus, according to the Justice Secretary,
following Rizal Commercial Banking Corporation, the civil
liability imposed is clearly separate and distinct from the
criminal liability of the accused under P.D. No. 115.
Conformably with the Resolution of the Secretary of
Justice, the City Prosecutor filed 13 Informations against
petitioner for violation of P.D. No. 115 before the RTC of
Manila. The cases were docketed as Criminal Cases No.
99-178596 to 99-178608 and consolidated for trial before
CONSUMER – PRODUCT LIABILITY
Branch 52 of said court. Petitioner filed a motion for
reconsideration, which the Secretary of Justice denied in a
Resolution18 dated January 17, 2000.
Petitioner then filed a petition for certiorari, prohibition and
mandamus with the CA, assailing the resolutions of the
Secretary of Justice on the following grounds:
1. THE RESPONDENTS ARE ACTING WITH AN
UNEVEN HAND AND IN FACT, ARE ACTING
OPPRESSIVELY AGAINST ALFREDO CHING
WHEN THEY ALLOWED HIS PROSECUTION
DESPITE THE FACT THAT NO EVIDENCE HAD
BEEN PRESENTED TO PROVE HIS
PARTICIPATION IN THE ALLEGED
TRANSACTIONS.
2. THE RESPONDENT SECRETARY OF
JUSTICE COMMITTED AN ACT IN GRAVE
ABUSE OF DISCRETION AND IN EXCESS OF
HIS JURISDICTION WHEN THEY CONTINUED
PROSECUTION OF THE PETITIONER DESPITE
THE LENGTH OF TIME INCURRED IN THE
TERMINATION OF THE PRELIMINARY
INVESTIGATION THAT SHOULD JUSTIFY THE
DISMISSAL OF THE INSTANT CASE.
3. THE RESPONDENT SECRETARY OF
JUSTICE AND ASSISTANT CITY PROSECUTOR
ACTED IN GRAVE ABUSE OF DISCRETION
AMOUNTING TO AN EXCESS OF
JURISDICTION WHEN THEY CONTINUED THE
PROSECUTION OF THE PETITIONER DESPITE
LACK OF SUFFICIENT BASIS.19
In his petition, petitioner incorporated a certification stating
that "as far as this Petition is concerned, no action or
proceeding in the Supreme Court, the Court of Appeals or
different divisions thereof, or any tribunal or agency. It is
finally certified that if the affiant should learn that a similar
action or proceeding has been filed or is pending before
the Supreme Court, the Court of Appeals, or different
divisions thereof, of any other tribunal or agency, it hereby
undertakes to notify this Honorable Court within five (5)
days from such notice."20
In its Comment on the petition, the Office of the Solicitor
General alleged that -
A.
THE HONORABLE SECRETARY OF JUSTICE
CORRECTLY RULED THAT PETITIONER
ALFREDO CHING IS THE OFFICER
RESPONSIBLE FOR THE OFFENSE CHARGED
AND THAT THE ACTS OF PETITIONER FALL
WITHIN THE AMBIT OF VIOLATION OF P.D.
[No.] 115 IN RELATION TO ARTICLE 315, PAR.
1(B) OF THE REVISED PENAL CODE.
B.
THERE IS NO MERIT IN PETITIONER’S
CONTENTION THAT EXCESSIVE DELAY HAS
MARRED THE CONDUCT OF THE
PRELIMINARY INVESTIGATION OF THE CASE,
JUSTIFYING ITS DISMISSAL.
C.
THE PRESENT SPECIAL CIVIL ACTION FOR
CERTIORARI, PROHIBITION AND MANDAMUS
IS NOT THE PROPER MODE OF REVIEW
FROM THE RESOLUTION OF THE
DEPARTMENT OF JUSTICE. THE PRESENT
PETITION MUST THEREFORE BE
DISMISSED.21
On April 22, 2004, the CA rendered judgment dismissing
the petition for lack of merit, and on procedural grounds.
On the procedural issue, it ruled that (a) the certification of
non-forum shopping executed by petitioner and
incorporated in the petition was defective for failure to
comply with the first two of the three-fold undertakings
prescribed in Rule 7, Section 5 of the Revised Rules of
Civil Procedure; and (b) the petition for certiorari,
prohibition and mandamus was not the proper remedy of
the petitioner.
On the merits of the petition, the CA ruled that the assailed
resolutions of the Secretary of Justice were correctly
issued for the following reasons: (a) petitioner, being the
Senior Vice-President of PBMI and the signatory to the
trust receipts, is criminally liable for violation of P.D. No.
115; (b) the issue raised by the petitioner, on whether he
violated P.D. No. 115 by his actuations, had already been
resolved and laid to rest in Allied Bank Corporation v.
Ordoñez;22 and (c) petitioner was estopped from raising
the
City Prosecutor’s delay in the final disposition of the
preliminary investigation because he failed to do so in the
DOJ.
Thus, petitioner filed the instant petition, alleging that:
I
THE COURT OF APPEALS ERRED WHEN IT
DISMISSED THE PETITION ON THE GROUND
THAT THE CERTIFICATION OF NON-FORUM
SHOPPING INCORPORATED THEREIN WAS
DEFECTIVE.
II
THE COURT OF APPEALS ERRED WHEN IT
RULED THAT NO GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR
CONSUMER – PRODUCT LIABILITY
EXCESS OF JURISDICTION WAS COMMITTED
BY THE SECRETARY OF JUSTICE IN COMING
OUT WITH THE ASSAILED RESOLUTIONS.23
The Court will delve into and resolve the issues seriatim.
The petitioner avers that the CA erred in dismissing his
petition on a mere technicality. He claims that the rules of
procedure should be used to promote, not frustrate,
substantial justice. He insists that the Rules of Court
should be construed liberally especially when, as in this
case, his substantial rights are adversely affected; hence,
the deficiency in his certification of non-forum shopping
should not result in the dismissal of his petition.
The Office of the Solicitor General (OSG) takes the
opposite view, and asserts that indubitably, the certificate
of non-forum shopping incorporated in the petition before
the CA is defective because it failed to disclose essential
facts about pending actions concerning similar issues and
parties. It asserts that petitioner’s failure to comply with the
Rules of Court is fatal to his petition. The OSG cited
Section 2, Rule 42, as well as the ruling of this Court in
Melo v. Court of Appeals.24
We agree with the ruling of the CA that the certification of
non-forum shopping petitioner incorporated in his petition
before the appellate court is defective. The certification
reads:
It is further certified that as far as this Petition is
concerned, no action or proceeding in the Supreme Court,
the Court of Appeals or different divisions thereof, or any
tribunal or agency.
It is finally certified that if the affiant should learn that a
similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or
different divisions thereof, of any other tribunal or agency,
it hereby undertakes to notify this Honorable Court within
five (5) days from such notice.25
Under Section 1, second paragraph of Rule 65 of the
Revised Rules of Court, the petition should be
accompanied by a sworn certification of non-forum
shopping, as provided in the third paragraph of Section 3,
Rule 46 of said Rules. The latter provision reads in part:
SEC. 3. Contents and filing of petition; effect of non-
compliance with requirements. — The petition shall
contain the full names and actual addresses of all the
petitioners and respondents, a concise statement of the
matters involved, the factual background of the case and
the grounds relied upon for the relief prayed for.
xxx
The petitioner shall also submit together with the petition a
sworn certification that he has not theretofore commenced
any other action involving the same issues in the Supreme
Court, the Court of Appeals or different divisions thereof,
or any other tribunal or agency; if there is such other action
or proceeding, he must state the status of the same; and if
he should thereafter learn that a similar action or
proceeding has been filed or is pending before the
Supreme Court, the Court of Appeals, or different divisions
thereof, or any other tribunal or agency, he undertakes to
promptly inform the aforesaid courts and other tribunal or
agency thereof within five (5) days therefrom. xxx
Compliance with the certification against forum shopping is
separate from and independent of the avoidance of forum
shopping itself. The requirement is mandatory. The failure
of the petitioner to comply with the foregoing requirement
shall be sufficient ground for the dismissal of the petition
without prejudice, unless otherwise provided.26
Indubitably, the first paragraph of petitioner’s certification is
incomplete and unintelligible. Petitioner failed to certify that
he "had not heretofore commenced any other action
involving the same issues in the Supreme Court, the Court
of Appeals or the different divisions thereof or any other
tribunal or agency" as required by paragraph 4, Section 3,
Rule 46 of the Revised Rules of Court.
We agree with petitioner’s contention that the certification
is designed to promote and facilitate the orderly
administration of justice, and therefore, should not be
interpreted with absolute literalness. In his works on the
Revised Rules of Civil Procedure, former Supreme Court
Justice Florenz Regalado states that, with respect to the
contents of the certification which the pleader may
prepare, the rule of substantial compliance may be availed
of.27However, there must be a special circumstance or
compelling reason which makes the strict application of the
requirement clearly unjustified. The instant petition has not
alleged any such extraneous circumstance. Moreover, as
worded, the certification cannot even be regarded as
substantial compliance with the procedural requirement.
Thus, the CA was not informed whether, aside from the
petition before it, petitioner had commenced any other
action involving the same issues in other tribunals.
On the merits of the petition, the CA ruled that the
petitioner failed to establish that the Secretary of Justice
committed grave abuse of discretion in finding probable
cause against the petitioner for violation of estafa under
Article 315, paragraph 1(b) of the Revised Penal Code, in
relation to P.D. No. 115. Thus, the appellate court
ratiocinated:
Be that as it may, even on the merits, the arguments
advanced in support of the petition are not persuasive
enough to justify the desired conclusion that respondent
Secretary of Justice gravely abused its discretion in
coming out with his assailed Resolutions. Petitioner posits
that, except for his being the Senior Vice-President of the
PBMI, there is no iota of evidence that he was a participes
crimines in violating the trust receipts sued upon; and that
CONSUMER – PRODUCT LIABILITY
his liability, if at all, is purely civil because he signed the
said trust receipts merely as a xxx surety and not as the
entrustee. These assertions are, however, too dull that
they cannot even just dent the findings of the respondent
Secretary, viz:
"x x x it is apropos to quote section 13 of PD 115 which
states in part, viz:
‘xxx If the violation or offense is committed by a
corporation, partnership, association or other judicial
entities, the penalty provided for in this Decree shall be
imposed upon the directors, officers, employees or other
officials or persons therein responsible for the offense,
without prejudice to the civil liabilities arising from the
criminal offense.’
"There is no dispute that it was the respondent, who as
senior vice-president of PBM, executed the thirteen (13)
trust receipts. As such, the law points to him as the official
responsible for the offense. Since a corporation cannot be
proceeded against criminally because it cannot commit
crime in which personal violence or malicious intent is
required, criminal action is limited to the corporate agents
guilty of an act amounting to a crime and never against the
corporation itself (West Coast Life Ins. Co. vs. Hurd, 27
Phil. 401; Times, [I]nc. v. Reyes, 39 SCRA 303). Thus, the
execution by respondent of said receipts is enough to
indict him as the official responsible for violation of PD
115.
"Parenthetically, respondent is estopped to still contend
that PD 115 covers only goods which are ultimately
destined for sale and not goods, like those imported by
PBM, for use in manufacture. This issue has already been
settled in the Allied Banking Corporation case, supra,
where he was also a party, when the Supreme Court ruled
that PD 115 is ‘not limited to transactions in goods which
are to be sold (retailed), reshipped, stored or processed as
a component or a product ultimately sold’ but ‘covers
failure to turn over the proceeds of the sale of entrusted
goods, or to return said goods if unsold or disposed of in
accordance with the terms of the trust receipts.’
"In regard to the other assigned errors, we note that the
respondent bound himself under the terms of the trust
receipts not only as a corporate official of PBM but also as
its surety. It is evident that these are two (2) capacities
which do not exclude the other. Logically, he can be
proceeded against in two (2) ways: first, as surety as
determined by the Supreme Court in its decision in RCBC
vs. Court of Appeals, 178 SCRA 739; and, secondly, as
the corporate official responsible for the offense under PD
115, the present case is an appropriate remedy under our
penal law.
"Moreover, PD 115 explicitly allows the prosecution of
corporate officers ‘without prejudice to the civil liabilities
arising from the criminal offense’ thus, the civil liability
imposed on respondent in RCBC vs. Court of Appeals
case is clearly separate and distinct from his criminal
liability under PD 115.’"28
Petitioner asserts that the appellate court’s ruling is
erroneous because (a) the transaction between PBMI and
respondent bank is not a trust receipt transaction; (b) he
entered into the transaction and was sued in his capacity
as PBMI Senior Vice-President; (c) he never received the
goods as an entrustee for PBMI, hence, could not have
committed any dishonesty or abused the confidence of
respondent bank; and (d) PBMI acquired the goods and
used the same in operating its machineries and equipment
and not for resale.
The OSG, for its part, submits a contrary view, to wit:
34. Petitioner further claims that he is not a person
responsible for the offense allegedly because "[b]eing
charged as the Senior Vice-President of Philippine
Blooming Mills (PBM), petitioner cannot be held criminally
liable as the transactions sued upon were clearly entered
into in his capacity as an officer of the corporation" and
that [h]e never received the goods as an entrustee for
PBM as he never had or took possession of the goods nor
did he commit dishonesty nor "abuse of confidence in
transacting with RCBC." Such argument is bereft of merit.
35. Petitioner’s being a Senior Vice-President of the
Philippine Blooming Mills does not exculpate him from any
liability. Petitioner’s responsibility as the corporate official
of PBM who received the goods in trust is premised on
Section 13 of P.D. No. 115, which provides:
Section 13. Penalty Clause. The failure of an entrustee to
turn over the proceeds of the sale of the goods,
documents or instruments covered by a trust receipt to the
extent of the amount owing to the entruster or as appears
in the trust receipt or to return said goods, documents or
instruments if they were not sold or disposed of in
accordance with the terms of the trust receipt shall
constitute the crime of estafa, punishable under the
provisions of Article Three hundred and fifteen, paragraph
one (b) of Act Numbered Three thousand eight hundred
and fifteen, as amended, otherwise known as the Revised
Penal Code. If the violation or offense is committed by a
corporation, partnership, association or other juridical
entities, the penalty provided for in this Decree shall be
imposed upon the directors, officers, employees or other
officials or persons therein responsible for the offense,
without prejudice to the civil liabilities arising from the
criminal offense. (Emphasis supplied)
36. Petitioner having participated in the negotiations for the
trust receipts and having received the goods for PBM, it
was inevitable that the petitioner is the proper corporate
officer to be proceeded against by virtue of the PBM’s
violation of P.D. No. 115.29
The ruling of the CA is correct.
CONSUMER – PRODUCT LIABILITY
In Mendoza-Arce v. Office of the Ombudsman
(Visayas),30 this Court held that the acts of a quasi-judicial
officer may be assailed by the aggrieved party via a
petition for certiorari and enjoined (a) when necessary to
afford adequate protection to the constitutional rights of the
accused; (b) when necessary for the orderly administration
of justice; (c) when the acts of the officer are without or in
excess of authority; (d) where the charges are manifestly
false and motivated by the lust for vengeance; and (e)
when there is clearly no prima facie case against the
accused.31 The Court also declared that, if the officer
conducting a preliminary investigation (in that case, the
Office of the Ombudsman) acts without or in excess of his
authority and resolves to file an Information despite the
absence of probable cause, such act may be nullified by a
writ of certiorari.32
Indeed, under Section 4, Rule 112 of the 2000 Rules of
Criminal Procedure,33 the Information shall be prepared by
the Investigating Prosecutor against the respondent only if
he or she finds probable cause to hold such respondent for
trial. The Investigating Prosecutor acts without or in excess
of his authority under the Rule if the Information is filed
against the respondent despite absence of evidence
showing probable cause therefor.34 If the Secretary of
Justice reverses the Resolution of the Investigating
Prosecutor who found no probable cause to hold the
respondent for trial, and orders such prosecutor to file the
Information despite the absence of probable cause, the
Secretary of Justice acts contrary to law, without authority
and/or in excess of authority. Such resolution may likewise
be nullified in a petition for certiorari under Rule 65 of the
Revised Rules of Civil Procedure.35
A preliminary investigation, designed to secure the
respondent against hasty, malicious and oppressive
prosecution, is an inquiry to determine whether (a) a crime
has been committed; and (b) whether there is probable
cause to believe that the accused is guilty thereof. It is a
means of discovering the person or persons who may be
reasonably charged with a crime. Probable cause need not
be based on clear and convincing evidence of guilt, as the
investigating officer acts upon probable cause of
reasonable belief. Probable cause implies probability of
guilt and requires more than bare suspicion but less than
evidence which would justify a conviction. A finding of
probable cause needs only to rest on evidence showing
that more likely than not, a crime has been committed by
the suspect.36
However, while probable cause should be determined in a
summary manner, there is a need to examine the evidence
with care to prevent material damage to a potential
accused’s constitutional right to liberty and the guarantees
of freedom and fair play37 and to protect the State from the
burden of unnecessary expenses in prosecuting alleged
offenses and holding trials arising from false, fraudulent or
groundless charges.38
In this case, petitioner failed to establish that the Secretary
of Justice committed grave abuse of discretion in issuing
the assailed resolutions. Indeed, he acted in accord with
law and the evidence.
Section 4 of P.D. No. 115 defines a trust receipt
transaction, thus:
Section 4. What constitutes a trust receipt transaction. A
trust receipt transaction, within the meaning of this Decree,
is any transaction by and between a person referred to in
this Decree as the entruster, and another person referred
to in this Decree as entrustee, whereby the entruster, who
owns or holds absolute title or security interests over
certain specified goods, documents or instruments,
releases the same to the possession of the entrustee upon
the latter’s execution and delivery to the entruster of a
signed document called a "trust receipt" wherein the
entrustee binds himself to hold the designated goods,
documents or instruments in trust for the entruster and to
sell or otherwise dispose of the goods, documents or
instruments with the obligation to turn over to the entruster
the proceeds thereof to the extent of the amount owing to
the entruster or as appears in the trust receipt or the
goods, documents or instruments themselves if they are
unsold or not otherwise disposed of, in accordance with
the terms and conditions specified in the trust receipt, or
for other purposes substantially equivalent to any of the
following:
1. In case of goods or documents, (a) to sell the
goods or procure their sale; or (b) to manufacture
or process the goods with the purpose of ultimate
sale; Provided, That, in the case of goods
delivered under trust receipt for the purpose of
manufacturing or processing before its ultimate
sale, the entruster shall retain its title over the
goods whether in its original or processed form
until the entrustee has complied fully with his
obligation under the trust receipt; or (c) to load,
unload, ship or otherwise deal with them in a
manner preliminary or necessary to their sale; or
2. In the case of instruments a) to sell or procure
their sale or exchange; or b) to deliver them to a
principal; or c) to effect the consummation of some
transactions involving delivery to a depository or
register; or d) to effect their presentation,
collection or renewal.
The sale of goods, documents or instruments by a person
in the business of selling goods, documents or instruments
for profit who, at the outset of the transaction, has, as
against the buyer, general property rights in such goods,
documents or instruments, or who sells the same to the
buyer on credit, retaining title or other interest as security
for the payment of the purchase price, does not constitute
a trust receipt transaction and is outside the purview and
coverage of this Decree.
CONSUMER – PRODUCT LIABILITY
An entrustee is one having or taking possession of goods,
documents or instruments under a trust receipt
transaction, and any successor in interest of such person
for the purpose of payment specified in the trust receipt
agreement.39 The entrustee is obliged to: (1) hold the
goods, documents or instruments in trust for the entruster
and shall dispose of them strictly in accordance with the
terms and conditions of the trust receipt; (2) receive the
proceeds in trust for the entruster and turn over the same
to the entruster to the extent of the amount owing to the
entruster or as appears on the trust receipt; (3) insure the
goods for their total value against loss from fire, theft,
pilferage or other casualties; (4) keep said goods or
proceeds thereof whether in money or whatever form,
separate and capable of identification as property of the
entruster; (5) return the goods, documents or instruments
in the event of non-sale or upon demand of the entruster;
and (6) observe all other terms and conditions of the trust
receipt not contrary to the provisions of the decree.40
The entruster shall be entitled to the proceeds from the
sale of the goods, documents or instruments released
under a trust receipt to the entrustee to the extent of the
amount owing to the entruster or as appears in the trust
receipt, or to the return of the goods, documents or
instruments in case of non-sale, and to the enforcement of
all other rights conferred on him in the trust receipt;
provided, such are not contrary to the provisions of the
document.41
In the case at bar, the transaction between petitioner and
respondent bank falls under the trust receipt transactions
envisaged in P.D. No. 115. Respondent bank imported the
goods and entrusted the same to PBMI under the trust
receipts signed by petitioner, as entrustee, with the bank
as entruster. The agreement was as follows:
And in consideration thereof, I/we hereby agree to hold
said goods in trust for the said BANK as its property with
liberty to sell the same within ____days from the date of
the execution of this Trust Receipt and for the Bank’s
account, but without authority to make any other
disposition whatsoever of the said goods or any part
thereof (or the proceeds) either by way of conditional sale,
pledge or otherwise.
I/we agree to keep the said goods insured to their full
value against loss from fire, theft, pilferage or other
casualties as directed by the BANK, the sum insured to be
payable in case of loss to the BANK, with the
understanding that the BANK is, not to be chargeable with
the storage premium or insurance or any other expenses
incurred on said goods.
In case of sale, I/we further agree to turn over the
proceeds thereof as soon as received to the BANK, to
apply against the relative acceptances (as described
above) and for the payment of any other indebtedness of
mine/ours to the BANK. In case of non-sale within the
period specified herein, I/we agree to return the goods
under this Trust Receipt to the BANK without any need of
demand.
I/we agree to keep the said goods, manufactured products
or proceeds thereof, whether in the form of money or bills,
receivables, or accounts separate and capable of
identification as property of the BANK.42
It must be stressed that P.D. No. 115 is a declaration by
legislative authority that, as a matter of public policy, the
failure of person to turn over the proceeds of the sale of
the goods covered by a trust receipt or to return said
goods, if not sold, is a public nuisance to be abated by the
imposition of penal sanctions.43
The Court likewise rules that the issue of whether P.D. No.
115 encompasses transactions involving goods procured
as a component of a product ultimately sold has been
resolved in the affirmative in Allied Banking Corporation v.
Ordoñez.44 The law applies to goods used by the entrustee
in the operation of its machineries and equipment. The
non-payment of the amount covered by the trust receipts
or the non-return of the goods covered by the receipts, if
not sold or otherwise not disposed of, violate the
entrustee’s obligation to pay the amount or to return the
goods to the entruster.
In Colinares v. Court of Appeals,45 the Court declared that
there are two possible situations in a trust receipt
transaction. The first is covered by the provision which
refers to money received under the obligation involving the
duty to deliver it (entregarla) to the owner of the
merchandise sold. The second is covered by the provision
which refers to merchandise received under the obligation
to return it (devolvera) to the owner.46 Thus, failure of the
entrustee to turn over the proceeds of the sale of the
goods covered by the trust receipts to the entruster or to
return said goods if they were not disposed of in
accordance with the terms of the trust receipt is a crime
under P.D. No. 115, without need of proving intent to
defraud. The law punishes dishonesty and abuse of
confidence in the handling of money or goods to the
prejudice of the entruster, regardless of whether the latter
is the owner or not. A mere failure to deliver the proceeds
of the sale of the goods, if not sold, constitutes a criminal
offense that causes prejudice, not only to another, but
more to the public interest.47
The Court rules that although petitioner signed the trust
receipts merely as Senior Vice-President of PBMI and had
no physical possession of the goods, he cannot avoid
prosecution for violation of P.D. No. 115.
The penalty clause of the law, Section 13 of P.D. No. 115
reads:
Section 13. Penalty Clause. The failure of an entrustee to
turn over the proceeds of the sale of the goods,
documents or instruments covered by a trust receipt to the
CONSUMER – PRODUCT LIABILITY
extent of the amount owing to the entruster or as appears
in the trust receipt or to return said goods, documents or
instruments if they were not sold or disposed of in
accordance with the terms of the trust receipt shall
constitute the crime of estafa, punishable under the
provisions of Article Three hundred and fifteen, paragraph
one (b) of Act Numbered Three thousand eight hundred
and fifteen, as amended, otherwise known as the Revised
Penal Code.1âwphi1 If the violation or offense is
committed by a corporation, partnership, association or
other juridical entities, the penalty provided for in this
Decree shall be imposed upon the directors, officers,
employees or other officials or persons therein responsible
for the offense, without prejudice to the civil liabilities
arising from the criminal offense.
The crime defined in P.D. No. 115 is malum prohibitum but
is classified as estafa under paragraph 1(b), Article 315 of
the Revised Penal Code, or estafa with abuse of
confidence. It may be committed by a corporation or other
juridical entity or by natural persons. However, the penalty
for the crime is imprisonment for the periods provided in
said Article 315, which reads:
ARTICLE 315. Swindling (estafa). – Any person who shall
defraud another by any of the means mentioned
hereinbelow shall be punished by:
1st. The penalty of prision correccional in its
maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000
pesos but does not exceed 22,000 pesos; and if
such amount exceeds the latter sum, the penalty
provided in this paragraph shall be imposed in its
maximum period, adding one year for each
additional 10,000 pesos; but the total penalty
which may be imposed shall not exceed twenty
years. In such cases, and in connection with the
accessory penalties which may be imposed and
for the purpose of the other provisions of this
Code, the penalty shall be termed prision mayor or
reclusion temporal, as the case may be;
2nd. The penalty of prision correccional in its
minimum and medium periods, if the amount of
the fraud is over 6,000 pesos but does not exceed
12,000 pesos;
3rd. The penalty of arresto mayor in its maximum
period to prision correccional in its minimum
period, if such amount is over 200 pesos but does
not exceed 6,000 pesos; and
4th. By arresto mayor in its medium and maximum
periods, if such amount does not exceed 200 pesos,
provided that in the four cases mentioned, the fraud be
committed by any of the following means; xxx
Though the entrustee is a corporation, nevertheless, the
law specifically makes the officers, employees or other
officers or persons responsible for the offense, without
prejudice to the civil liabilities of such corporation and/or
board of directors, officers, or other officials or employees
responsible for the offense. The rationale is that such
officers or employees are vested with the authority and
responsibility to devise means necessary to ensure
compliance with the law and, if they fail to do so, are held
criminally accountable; thus, they have a responsible
share in the violations of the law.48
If the crime is committed by a corporation or other juridical
entity, the directors, officers, employees or other officers
thereof responsible for the offense shall be charged and
penalized for the crime, precisely because of the nature of
the crime and the penalty therefor. A corporation cannot
be arrested and imprisoned; hence, cannot be penalized
for a crime punishable by imprisonment.49 However, a
corporation may be charged and prosecuted for a crime if
the imposable penalty is fine. Even if the statute prescribes
both fine and imprisonment as penalty, a corporation may
be prosecuted and, if found guilty, may be fined.50
A crime is the doing of that which the penal code forbids to
be done, or omitting to do what it commands. A necessary
part of the definition of every crime is the designation of
the author of the crime upon whom the penalty is to be
inflicted. When a criminal statute designates an act of a
corporation or a crime and prescribes punishment therefor,
it creates a criminal offense which, otherwise, would not
exist and such can be committed only by the corporation.
But when a penal statute does not expressly apply to
corporations, it does not create an offense for which a
corporation may be punished. On the other hand, if the
State, by statute, defines a crime that may be committed
by a corporation but prescribes the penalty therefor to be
suffered by the officers, directors, or employees of such
corporation or other persons responsible for the offense,
only such individuals will suffer such penalty. 51Corporate
officers or employees, through whose act, default or
omission the corporation commits a crime, are themselves
individually guilty of the crime.52
The principle applies whether or not the crime requires the
consciousness of wrongdoing. It applies to those corporate
agents who themselves commit the crime and to those,
who, by virtue of their managerial positions or other similar
relation to the corporation, could be deemed responsible
for its commission, if by virtue of their relationship to the
corporation, they had the power to prevent the
act.53 Moreover, all parties active in promoting a crime,
whether agents or not, are principals.54 Whether such
officers or employees are benefited by their delictual acts
is not a touchstone of their criminal liability. Benefit is not
an operative fact.
In this case, petitioner signed the trust receipts in question.
He cannot, thus, hide behind the cloak of the separate
corporate personality of PBMI. In the words of Chief
CONSUMER – PRODUCT LIABILITY
Justice Earl Warren, a corporate officer cannot protect
himself behind a corporation where he is the actual,
present and efficient actor.55
IN LIGHT OF ALL THE FOREGOING, the petition is
DENIED for lack of merit. Costs against the petitioner.
SO ORDERED.
G.R. No. 201927
VICENTE D. CABANTING and LALAINE V.
CABANTING, Petitioners,
vs.
BPI FAMILY SAVINGS BANK, INC., Respondent.
DECISION
PERALTA, J.:
This deals with the Petition for Review on Certiorari under
Rule 45 of the Rules of Court praying that the Decision1of
the Court of Appeals (CA), promulgated on September 28,
2011, and the Resolution2 dated May 16, 2012, denying
petitioner's motion for reconsideration thereof, be reversed
and set aside.
The antecedent facts are as follows:
On January 14, 2003, petitioners bought on installment
basis from Diamond Motors Corporation a 2002 Mitsubishi
Adventure SS MT and for value received, petitioners also
signed, executed and delivered to Diamond Motors a
Promissory Note with Chattel Mortgage. Therein,
petitioners jointly and severally obligated themselves to
pay Diamond Motors the sum of P836,032.00, payable in
monthly installments in accordance with the schedule of
payment indicated therein, and which obligation is secured
by a chattel mortgage on the aforementioned motor
vehicle. On the day of the execution of the document,
Diamond Motors, with notice to petitioners, executed a
Deed of Assignment, thereby assigning to BPI Family
Savings Bank, Inc. (BPI Family) all its rights, title and
interest to the Promissory Note with Chattel Mortgage.
Come October 16, 2003, however, a Complaint was filed
by BPI Family against petitioners for Replevin and
damages before the Regional Trial Court of
Manila (RTC), praying that petitioners be ordered to pay
the unpaid portion of the vehicle's purchase price, accrued
interest thereon at the rate of 36% per annum as of August
26, 2003, 25% attorney's fees and 25% liquidated
damages, as stipulated on the Promissory Note with
Chattel Mortgage. BPI Family likewise prayed for the
issuance of a writ of replevin but it failed to file a bond
therefor, hence, the writ was never issued. BPI Family
alleged that petitioners failed to pay three (3) consecutive
installments and despite written demand sent to petitioners
through registered mail, petitioners failed to comply with
said demand to pay or to surrender possession of the
vehicle to BPI Family.
In their Answer, petitioners alleged that they sold the
subject vehicle to one Victor S. Abalos, with the agreement
that the latter shall assume the obligation to pay the
remaining monthly installments. It was then Abalos who
made payments to BPI Family through his personal
checks, and BPI Family accepted the post-dated checks
delivered to it by Abalos. The checks issued by Abalos for
the months of May 2003 to October 2003 were made
good, but subsequent checks were dishonored and not
paid. Petitioners pointed out that BPI Family should have
sued Abalos instead of them.
Trial ensued, where BPI Family dispensed with the
testimony of its sole witness and formally offered its
documentary evidence. When it was petitioners' tum to
present its defense, several hearing dates were cancelled,
sometimes due to failure of either or both the petitioners'
and/or respondent's counsels to appear. What is clear,
though, is that despite numerous opportunities given to
petitioners to present evidence, they were never able to
present their witness, Jacobina T. Alcantara, despite the
court's issuance of a subpoena duces tecum ad
testificandum. Said failure to present evidence on several
hearing dates and petitioners' absence at the hearing on
February 13, 2008 prompted BPI Family to move that
petitioners' right to present evidence be deemed waived.
On the same date, the R TC granted said motion and the
case was submitted for decision. There is nothing on
record to show that petitioners ever moved for
reconsideration of the Order dated February 13, 2008.
On April 14, 2008, the RTC rendered a Decision, the
dispositive portion of which reads as follows:
WHEREFORE, and in the view of the foregoing
considerations, judgment is hereby rendered in favor of the
plaintiff BPI Family Savings Bank, Inc. and against the
defendants VICENTE D. CABANTING and LALAINE V.
CABANTING, by ordering the latter to pay the plaintiff
Bank the sum of Php742,022.92, with interest at the rate of
24% per annum from the filing of the Complaint, until its
full satisfaction, as well as the amount of P20,000.00 for
and as attorney's fees.
With costs against the defendants.
SO ORDERED.3
Aggrieved by the RTC's Decision, herein petitioners
appealed to the CA. However, in its Decision dated
September 28, 2011, the appellate court affirmed with
modification the judgment of the trial court, to wit:
WHEREFORE, premises considered, the appeal
is DISMISSED. The Decision of the Regional Trial Court
dated April 14, 2008 is AFFIRMED but with
CONSUMER – PRODUCT LIABILITY
MODIFICATION. The defendants-appellants are ordered
to pay the plaintiff-appellee the sum of Seven Hundred
Forty Thousand One Hundred Fifty-Five Pesos and
Eighteen Centavos (P740,155.18), in Philippine
currency, with legal interest of 12% per annum from the
filing of the Complaint, until its full satisfaction. The award
of Twenty Thousand Pesos (P20,000.00) as attorney's
fees is DELETED.
Costs against the defendants-appellants.
SO ORDERED.4
The CA ruled that a preponderance of evidence was in
favor of respondent, as the evidence, coupled with
petitioners' admission in their Answer, established that
petitioners indeed executed a Promissory Note with
Chattel Mortgage and then failed to pay the forty-three (43)
monthly amortizations. Moreover, since petitioners were
deemed to have waived their right to present evidence,
there is nothing on record to prove their claim that there
was a valid assumption of obligation by one Victor S.
Abalos. Petitioners' motion for reconsideration of the CA
Decision was denied per Resolution dated May 16, 2012.
Elevating the matter to this Court via a petition for review
on certiorari, petitioners now raise the following issues:
1. Whether or not respondent bank may be held entitled to
the possession of the motor vehicle subject of the instant
case for replevin, or the payment of its value and
damages, without proof of prior demand;
2. Whether or not petitioners were deprived of their right to
due process when they were deemed to have waived their
right to present evidence in their behalf.5
The petition is devoid of merit.
The CA is correct that no prior demand was necessary to
make petitioners' obligation due and payable. The
Promissory Note with Chattel Mortgage clearly stipulated
that "[i]n case of my/our [petitioners'] failure to pay when
due and payable, any sum which I/We x x x or any of us
may now or in the future owe to the holder of this note x x
x then the entire sum outstanding under this note shall
immediately become due and payable without the
necessity of notice or demand which I/We hereby
waive."6 Petitioners argue that such stipulation should be
deemed invalid as the document they executed was a
contract of adhesion. It is impmiant to stress the Court's
ruling in Dia v. St. Ferdinand Memorial Park, Inc., 7 to wit:
A contract of adhesion, wherein one party imposes a
ready-made form of contract on the other, is not strictly
against the law. A contract of adhesion is as binding as
ordinary contracts, the reason being that the party
who adheres to the contract is free to reject it
entirely. Contrary to petitioner's contention, not every
contract of adhesion is an invalid agreement. As we had
the occasion to state in Development Bank of the
Philippines v. Perez:
x x x In discussing the consequences of a contract of
adhesion, we held in Rizal Commercial Banking
Corporation v. Court of Appeals:
It bears stressing that a contract of adhesion is just as
binding as ordinary contracts. It is true that we have, on
occasion, struck down such contracts as void when the
weaker party is imposed upon in dealing with the dominant
bargaining party and is reduced to the alternative of taking
it or leaving it, completely deprived of the opportunity to
bargain on equal footing, Nevertheless, contracts of
adhesion are not invalid per se; they are not entirely
prohibited. The one who adhe.rcs to the contract is in
reality free to reject it entirely; if he adheres, he gives
his consent.
The validity or enforceability of the impugned
contracts will have to be determined by the peculiar
circumstances obtaining in each case and the
situation of the parties concerned.Indeed, Article 24 of
the New Civil Code provides that "[in] all contractual,
property or other relations, when one of the·parties is at a
disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age, or
other handicap, the courts must be vigilant for his
protection." x x x8
Here, there is no proof that petitioners were
disadvantaged, uneducated or utterly inexperienced in
dealing with financial institutions; thus, there is no reason
for the court to step in and protect the interest of the
supposed weaker party.
Verily, petitioners are bound by the aforementioned
stipulation in the Promissory Note with Chattel Mortgage
waiving the necessity of notice and demand to make the
obligation due and payable. Agner v. BPI Family Savings
Bank, Inc.,9 which is closely similar to the present case, is
squarely applicable. Petitioners therein also executed a
Promissory Note with Chattel Mortgage containing the
stipulation waiving the need for notice and demand. The
Court ruled:
x x x Even assuming, for argument's sake, that no demand
letter was sent by respondent, there is really no need for it
because petitioners legally waived the necessity of notice
or demand in the Promissory Note with Chattel Mortgage,
which they voluntarily and knowingly signed in favor of
respondent's predecessor-in-interest. Said contract
expressly stipulates:
In case of my/our failure to pay when due and payable,
any sum which I/We are obliged to pay under this note
and/or any other obligation which I/We or any of us may
now or in the future owe to the holder of this note or to any
CONSUMER – PRODUCT LIABILITY
other party whether as principal or guarantor x x x then the
entire sum outstanding under this note shall, without prior
notice or demand, immediately become due and payable.
(Emphasis and underscoring supplied)
A provision on waiver of notice or demand has been
recognized as legal and valid in Bank of the Philippine
Islands v. Court of Appeals, wherein We held:
The Civil Code in Article 1169 provides that one incurs in
delay or is in default from the time the obligor demands the
fulfillment of the obligation from the obligee. However, the
law expressly provides that demand is not necessary
under ce1iain circumstances, and one of these
circumstances is when the parties expressly waive
demand. Hence, since the co-signors expressly waived
demand in the promissory notes, demand was
unnecessary for them to be in default.
Further, the Court even ruled in Navarro v. Escobido that
prior demand is not a condition precedent to an action for
a writ of replevin, since there is nothing in Section 2, Rule
60 of the Rules of Court that requires the applicant to
make a demand on the possessor of the property before
an action for a writ of replevin could be filed.10
Clearly, as stated above, Article 1169 (1) of the Civil Code
allows a party to waive the need for notice and demand.
Petitioners' argument that their liability cannot be deemed
due and payable for lack of proof of demand must be
struck down.
There is likewise no merit to petitioners' claim that they
were deprived of due process when they were deemed to
have waived their right to present evidence. Time and
again, the Court has stressed that there is no deprivation
of due process when a party is given an opportunity to be
heard, not only through hearings but even through
pleadings, so that one may explain one's side or
arguments; or an opportunity to seek reconsideration of
the action or ruling being assailed.11 The records bear out
that herein petitioners were given several opportunities to
present evidence, but said opportunities were frittered
away. We stress the fact that petitioners did not even
bother to move for reconsideration of the Order dated
February 13, 2008, deeming petitioners to have waived
their right to present evidence. Such is glaring proof of
their propensity to waste the opportunities granted them to
present their evidence.
Lastly, the CA is correct that the interest rate being
charged by respondent under the Promissory Note with
Chattel Mortgage is quite unreasonable.1âwphi1 In New
Sampaguita Builders Construction, Inc. (NSBCI) v.
Philippine National Bank,12the Court ruled that "the
interest ranging from 26 percent to 35 percent in the
statements of account - 'must be equitably reduced for
being iniquitous, unconscionable and exorbitant.'
Rates found to be iniquitous or unconscionable are
void, as if it there were no express contract
thereon. Above all, it is undoubtedly against public policy
to charge excessively for the use of money." However,
pursuant to prevailing jurisprudence and banking
regulations, the Court must modify the lower court's award
of legal interest. In Nacar v. Gallery Frames,13 the Court
held, thus:
x x x the guidelines laid down in the case of Eastern
Shipping Lines are accordingly modified to embody
BSP-MB Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable
damages.
II. With regard particularly to an award of interest in the
concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated
claims or damages, except when or until the demand can
be established with reasonable certainty. Accordingly,
where the demand is established with reasonable
certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages
may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall,
in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such
finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of
credit.14
CONSUMER – PRODUCT LIABILITY
Thus, legal interest, effective July 1, 2013, was set at six
percent (6%) per annum in accordance with Bangko
Sentral ng Pilipinas – Monetary Board Circular No. 799,
Series of 2013.

WHEREFORE, the petition is DENIED. The Decision of

the Court of Appeals, promulgated on September 28,
2011, and the Resolution dated May 16, 2012 in CA-G.R.
CV No. 91814 are AFFIRMED with MODIFICATION by
ordering payment of legal interest at the rate of twelve
percent (12%) per annum from the time of filing of the
complaint up to June 30, 2013, and thereafter, at the lower
rate of six percent (6%) per annum from July 1, 2013 until
full satisfaction, pursuant to Bangko Sentral ng Pilipinas -
Monetary Board Circular No. 799, Series of 2013 and
applicable jurisprudence.

SO ORDERED.