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CHAPTER III the dog bites and not for causes independent thereof as submitted by the
STRICT LIABILITY
A. Meaning of Strict Liability
B. Policy Behind the Imposition of Strict Liability
C. Application
a. Animals
1. Possessor and user of an animal
Vestil vs. IAC
FACTS:
Little Theness Tan Uy was dead at the age of three. Her parents said she
died because she was bitten by a dog of the petitioners, but the latter denied
this, claiming they had nothing to do with the dog. The Uys sued the Vestils,
who were sustained by the trial court. On appeal, the decision of the court a
quo was reversed in favor of the Uys. The Vestils are now before us. They
ask us to set aside the judgment of the respondent court and to reinstate that
of the trial court.
On July 29, 1915, Theness was bitten by a dog while she was playing with a
child of the petitioners in the house of the late Vicente Miranda, the father of
Purita Vestil, at F. Ramos Street in Cebu City. She was rushed to the Cebu
General Hospital, where she was treated for "multiple lacerated wounds on
the forehead" 1 and administered an anti-rabies vaccine by Dr. Antonio
Tautjo. She was discharged after nine days but was readmitted one week
later due to "vomiting of saliva." 2 The following day, on August 15, 1975, the
child died. The cause of death was certified as broncho-pneumonia.
Seven months later, the Uys sued for damages, alleging that the Vestils were
liable to them as the possessors of "Andoy," the dog that bit and eventually
killed their daughter. The Vestils rejected the charge, insisting that the dog
belonged to the deceased Vicente Miranda, that it was a tame animal, and
that in any case no one had witnessed it bite Theness. After trial, Judge Jose
R. Ramolete of the Court of First Instance of Cebu sustained the defendants
and dismissed the complaint.
The respondent court arrived at a different conclusion when the case was
appealed. 5 It found that the Vestils were in possession of the house and the
dog and so should be responsible under Article 2183 of the Civil Code for the
injuries caused by the dog. It also held that the child had died as a result of
1
appellees. Accordingly, the Vestils were ordered to pay the Uys damages in
the amount of P30,000.00 for the death of Theness, P12,000.00 for medical
and hospitalization expenses, and P2,000.00 as attorney's fees.
Vestil contended that she was not the owner of the house or of the dog left
by her father as his estate has not yet been partitioned and there are other
heirs to the property, hence, even her sister living in Canada should be held
responsible for the acts of the dog simply because she is one of Miranda’s
heirs.
ISSUE:
Whether or not Vestil, a possessor of the dog (or of the house) should be
held liable for the death Theness Uy.
HELD:
YES. Article 2183 of the Civil Code provides,
The possessor of an animal or whoever may make use of the same is
responsible for the damage which it may cause, although it may escape or
be lost. ‘This responsibility shall cease only in case the damages should
come from force majeure from the fault of the person who has suffered
damage.
While it is true that she is not really the owner of the house, which was still
part of Vicente Miranda's estate, there is no doubt that she and her husband
were its possessors at the time of the incident in question. She was the only
heir residing in Cebu City and the most logical person to take care of the
property, which was only six kilometers from her own house. Moreover,
there is evidence showing that she and her family regularly went to the
house, once or twice weekly, according to at least one witness, and used it
virtually as a second house. Interestingly, her own daughter was playing in
the house with Theness when the little girl was bitten by the dog. The dog
itself remained in the house even after the death of Vicente Miranda in 1973
and until 1975, when the incident in question occurred. It is also noteworthy
that the petitioners offered to assist the Uys with their hospitalization
expenses although Purita said she knew them only casually.
Although the death certificate declared that she died of broncho-pneumonia,
it is deemed to note that first, Theness developed hydrophobia, a symptom of
rabies, as a result of the dog bites, and second, that asphyxia broncho-
pneumonia, which ultimately caused her death, was a complication of rabies.
Indeed, the evidence of the child's hydrophobia is sufficient to convince us
that she died because she was bitten by the dog even if the death certificate
stated a different cause of death. The petitioner's contention that they could
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
not be expected to exercise remote control of the dog is not acceptable. In
fact, Article 2183 of the Civil Code holds the possessor liable even if the
animal should "escape or be lost" and so be removed from his control. And it
does not matter either that, as the petitioners also contend, the dog was
tame and was merely provoked by the child into biting her. The law does not
speak only of vicious animals but covers even tame ones as long as they
cause injury. As for the alleged provocation, the petitioners forget that
Theness was only three years old at the time she was attacked and can
hardly be faulted for whatever she might have done to the animal.
According to Manresa the obligation imposed by Article 2183 of the Civil
Code is not based on the negligence or on the presumed lack of vigilance of
the possessor or user of the animal causing the damage. It is based on
natural equity and on the principle of social interest that he who possesses
animals for his utility, pleasure or service must answer for the damage which
such animal may cause.
We sustain the findings of the Court of Appeals and approve the monetary
awards except only as to the medical and hospitalization expenses, which
are reduced to P2,026.69, as prayed for in the complaint. While there is no
recompense that can bring back to the private respondents the child they
have lost, their pain should at least be assuaged by the civil damages to
which they are entitled.
WHEREFORE, the challenged decision is AFFIRMED as above modified.
The petition is DENIED, with costs against the petitioners. It is so ordered.
Afialde vs. Hisole
FACTS:
This is an action for damages arising from injury caused by an animal. The
complaint alleges that the deceased, Loreto Afialda (Afialda), was employed
by the defendant spouses (Hisole), as caretaker of their carabaos at a fixed
compensation. On March 21, 1947, while Afialda was tending the animals he
was gored by one of them resulting to his injuries and death. The mishap
was due neither to his own fault nor to force majeur. The plaintiff is Afialda’s
elder sister who is his heir depending upon him for support.
Before filing their answer, Hisole moved for the dismissal of the complaint for
lack of a cause of action, and the motion having been granted by the lower
court, plaintiff has taken this appeal.
2
Plaintiff seeks to hold Hisole liable under article 1905 of the Civil Code, which
reads:
The possessor of an animal, or the one who uses the same, is liable for any
damages it may cause, even if such animal should escape from him or stray
away. This liability shall cease only in case, the damage should arise from
force majeure or from the fault of the person who may have suffered it.
ISSUE:
Whether or not Hisole, the owner of the animal is liable to the damage it
caused to its caretaker.
HELD:
NO. It was the caretaker's duty to prevent the carabao from causing injury to
any one, including himself.
Claiming that the lower court was in error, counsel for plaintiff contends that
the article 1905 does not distinguish between damage caused to the
caretaker and makes the owner liable whether or not he has been negligent
or at fault. This opinion, however, appears to have been rendered in a case
where an animal caused injury to a stranger or third person. It is therefore no
authority for a case like the present where the person injured was the
caretaker of the animal. The distinction is important. For the statute names
the possessor or user of the animal as the person liable for "any damages it
may cause," and this for the obvious reason that the possessor or user has
the custody and control of the animal and is therefore the one in a position to
prevent it from causing damage.
In the present case, the animal was in custody and under the control of the
caretaker, who was paid for his work as such. Obviously, it was the
caretaker's business to try to prevent the animal from causing injury or
damage to anyone, including himself. And being injured by the animal under
those circumstances, was one of the risks of the occupation which he had
voluntarily assumed and for which he must take the consequences.
D. Abnormally Dangerous Instrumentalities
1. Four elements to determine whether an activity is abnormally
dangerous
2. Commentaries
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E. Nuisance
1. Concept
Ayala vs. Barreto
FACTS:
This is a suit for a permanent injunction against the erection and operation of
a combined brewery and ice plant on Calle General Solano in the city of
Manila, on the ground that it will be a nuisance. From a judgment denying the
relief prayed for, the plaintiffs have appealed. The twenty-two plaintiffs are
either residents of property owners on Calle General Solano. Twelve of them
are actual resident of the street and of these twelve, six are lessees of
property owned by other plaintiffs.
This street connects Echague and Aviles Streets. All three parallel the Pasig
River. Echague is almost wholly given over to industrial enterprises, and
Aviles also has some factories, etc., upon it, including the San Miguel
Brewery. This latter brewery is a long established business, is adjacent to
many residences, and is, in fact, closer to some of the plaintiffs than is the
proposed brewery. General Solano has long been a fashionable residence
street and the dwellings located upon it are large and expensive. At the
present day, however, some of these residence are being used for other
purposes. There are now upon this street a coal yard, a warehouse, and a
cigarette factory, all very near the proposed location of the defendant's
brewery, and there are also a public school and a club on the street. Just
across the river is located the large power plant of the electric railroad and
light company, consuming about 50 tons of coal per day. To the north of this
street are located some sawmills and lumberyards and to the west, across
the river, are located large warehouses and a large tobacco factory. The
street is used by all kinds of freight vehicles and a double street-car track
traverses its entire length. Launches, tugs and lighters are continually
navigating the Pasig River, which lies to the rear of the south side of the
street. In 1914 the assessed valuation of the property on the south side of
the street was raised P2 per square meter over that on the north side of the
street because of its increasing value for manufacturing and industrial
enterprises. There was testimony by one of the plaintiffs' witnesses, a real
estate expert, that in his opinion the whole of this space would eventually be
devoted to manufacturing and other business use. It is attractive for such
purposes by reason of its transportation facilities by both land and water.
ISSUE:
Whether or not the erection and operation of a combined brewery and ice
plant will create a nuisance.
3
HELD:
NO. Under these facts, the street in question is not strictly a residential street
since there are numerous businesses near it in nearly every direction. There
is no doubt that the appropriateness of the locality selected by the
defendants as the site of their proposed plant as the locality in question is
gradually being transformed from a fashionable residence district into an
industrial center.
After a careful consideration of all the evidence of record, we have come to
the conclusion that the locality surrounding the site of the proposed plant has
not sufficiently the impress of a residential district as to justify us in holding
that the plant will be incongruous with its surroundings. This conclusion is
made easier in view of the fact that another brewery is in fact closer to
several of the plaintiffs than that of the defendants will be. The fact that this
latter brewery is not on the same street is immaterial. Distance is what
counts in a matter of this kind. Noise, smells, and smoke are no respecters of
streets.
Is there evidence of record that the proposed plant will be operated so
carelessly as to materially increase the noise, smells, and smoke emanating
therefrom? We think not. On the contrary, the evidence is that a brewery,
properly run, is not an unbearable neighbor and that the defendants are
installing modern machinery in every respect.
For the defense, there is evidence of engineers and others that there will be
no noise, vibrations, or smells, and but little, if any, smoke which will
materially affect nearby residents. We think that the preponderating weight of
the evidence is to the effect that the new brewery will be operated with a
minimum of offense to nearby residents, and that in view of the semi-
industrial character of the locality, what noise, etc., is produced, cannot be
held to be unreasonable.
It is possible that plaintiffs, or some of them, might prove damages by reason
of property depreciation. But all events, this is not a proper case for the
issuance of the extra-ordinary remedy of injunction.
The judgment appealed from is affirmed, with costs against the appellants.
So ordered.
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Velasco vs. Manila Electric Co.
FACTS:
This is a case regarding abatement of the sub-station as a nuisance and for
damages to appellant’s (Velasco) health and business.
In 1948, Velasco bought from the People's Homesite and Housing
Corporation three (3) adjoining lots situated at the corner of South D and
South 6 Streets, Diliman, Quezon City. These lots are within an area zoned
out as a "first residence" district by the City Council of Quezon City.
Subsequently, Velasco sold two (2) lots to the Meralco, but retained the third
lot, which was farthest from the street-corner, whereon he built his house.
In September, 1953, the appellee company (Meralco) started the
construction of the sub-station in question and finished it the following
November, without prior building permit or authority from the Public Service
Commission. The facility reduces high voltage electricity to a current suitable
for distribution to the company's consumers, numbering not less than 8,500
residential homes, over 300 commercial establishments and about 30
industries.The substation has a rated capacity of "2 transformers at 5000 Kva
each or a total of 10,000 Kva without fan cooling; or 6250 Kva each or a total
of 12,500 Kva with fan cooling". It was constructed at a distance of 10 to 20
meters from the appellant's house. The company built a stone and cement
wall at the sides along the streets but along the side adjoining the appellant's
property it put up a sawale wall but later changed it to an interlink wire fence.
Velasco contended that the sound constitutes an actionable nuisance under
Article 694 of the Civil Code. He further alleged that the subjection to the
sound since 1954 had disturbed his concentration and sleep, impaired his
health and lowered the value of his property. With this, he sought a judicial
decree for the abatement of the nuisance and asked that he be declared
entitled to recover compensatory, moral and other damages under Article
2202 of the Civil Code. After trial, the court below dismissed Velasco’s claim,
finding that the sound of substation was unavoidable and did not constitute
nuisance; that it could not have caused the diseases of anxiety neurosis,
pyelonephritis, ureteritis, lumbago and anemia; and that the items of damage
claimed by him were not adequate proved. Veleasco then appealed to this
Court.
ISSUE:
Whether or not noise or sound from the Meralco’s sub-station constitutes an
actionable nuisance.
4
HELD:
YES. Under Article 694 of the Civil Code of the Philippines, reading as
follows:
A nuisance is any act, omission, establishment, business condition of
property or anything else which:
(1) Injuries or endangers the health or safety of others; or
(2) Annoys or offends the senses;
The general rule is that everyone is bound to bear the habitual or customary
inconveniences that result from the proximity of others, and so long as this
level is not surpassed, he may not complain against them. But if the
prejudice exceeds the inconveniences that such proximity habitually brings,
the neighbor who causes such disturbance is held responsible for the
resulting damage, 1 being guilty of causing nuisance.
In our jurisdiction, the rule to be is that the causing or maintenance of
disturbing noise or sound may constitute an actionable nuisance. The basic
principles are laid down in Tortorella vs. Traiser & Co., Inc., 90 ALR 1206:
A noise may constitute an actionable nuisance but it must be a noise which
affects injuriously the health or comfort of ordinary people in the vicinity to an
unreasonable extent. Injury to a particular person in a peculiar position or of
specially sensitive characteristics will not render the noise an actionable
nuisance.. The test is whether rights of property of health or of comfort are so
injuriously affected by the noise in question that the sufferer is subjected to a
loss which goes beyond the reasonable limit imposed upon him by the
condition of living, or of holding property, in a particular locality in fact
devoted to uses which involve the emission of noise although ordinary care is
taken to confine it within reasonable bounds; or in the vicinity of property of
another owner who though creating a noise is acting with reasonable regard
for the rights of those affected by it.
Under instructions from the Director of Health, samplings of the sound
intensity were taken by Dr. Jesus Almonte using a sound level meter and
other instruments. Within the compound of the plaintiff-appellant, near the
wire fence serving as property line between him and the appellee, on 27
August 1957 at 11:45 a.m., the sound level under the sampaloc tree was 46-
48 decibels, while behind Velasco's kitchen, the meter registered 49-50; at
the same places on 29 August 1957, at 6:00 a.m., the readings were 56-59
and 61-62 decibels, respectively; on 7 September 1957, at 9:30 a.m., the
sound level under the sampaloc tree was 74-76 decibels; and on 8
September 1957 at 3:35 in the morning, the reading under the same tree was
70 decibels, while near the kitchen it was 79-80 decibels. Several
measurements were also taken inside and outside the house. The ambient
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sound of the locality, or that sound level characteristic of it or that sound
predominating minus the sound of the sub-station is from 28 to 32 decibels.
Thus the impartial and objective evidence points to the sound emitted by the
appellee's substation transformers being of much higher level than the
ambient sound of the locality. The measurements taken by Dr. Almonte, who
is not connected with either party, and is a physician to boot (unlike
appellee's electrical superintendent Buenafe), appear more reliable. The
conclusion must be that, contrary to the finding of the trial court, the noise
continuously emitted, day and night, constitutes an actionable nuisance for
which the appellant is entitled to relief, by requiring the appellee company to
adopt the necessary measures to deaden or reduce the sound at the
plaintiff's house, by replacing the interlink wire fence with a partition made of
sound absorbent material, since the relocation of the substation is manifestly
impracticable and would be prejudicial to the customers of the Electric
Company who are being serviced from the substation.
As to the damages caused by the noise, appellant Velasco, himself a
physician, claimed that the noise, as a precipitating factor, has caused him
anxiety neurosis, which, in turn, predisposed him to, or is concomitant with,
the other ailments which he was suffering at the time of the trial, namely,
pyelonephritis, ureteritis and others; that these resulted in the loss of his
professional income and reduced his life expectancy. Thus the evidence of
the latter was to a large extent conjectural. That appellant's physical ailments
should be due to infectious organisms does not alter the fact that the loss of
sleep, irritation and tension due to excessive noise weakened his constitution
and made him easy prey to the infection.
Regarding the amount of damages claimed by appellant, it is plain that the
same are exaggerated. As to the demand for exemplary or punitive
damages, there appears no adequate basis for their award. Moreover,
several factors that mitigate defendant's liability in damages. The first is that
the noise from the substation does not appear to be an exclusive causative
factor of plaintiff-appellant's illnesses. This is proved by the circumstance that
no other person in Velasco's own household nor in his immediate
neighborhood was shown to have become sick despite the noise complained
of. There is also evidence that at the time the plaintiff-appellant appears to
have been largely indebted to various credit institutions, as a result of his
unsuccessful gubernatorial campaign, and this court can take judicial
cognizance of the fact that financial worries can affect unfavorably the
debtor's disposition and mentality.
The other factor militating against full recovery by the petitioner Velasco in
his passivity in the face of the damage caused to him by the noise of the
5
substation. Realizing as a physician that the latter was disturbing or depriving
him of sleep and affecting both his physical and mental well being, he did not
take any steps to bring action to abate the nuisance or remove himself from
the affected area as soon as the deleterious effects became noticeable. The
law in this jurisdiction is clear. Article 2203 prescribes that "The party
suffering loss or injury must exercise the diligence of a good father of a family
to minimize the damages resulting from the act or omission in question". This
codal rule, which embodies the previous jurisprudence on the point, 3 clearly
obligates the injured party to undertake measures that will alleviate and not
aggravate his condition after the infliction of the injury, and places upon him
the burden of explaining why he could not do so. This was not done.
FOR THE FOREGOING REASONS, the appealed decision is hereby
reversed in part and affirmed in part. The defendant-appellee Manila Electric
Company is hereby ordered to either transfer its substation at South D and
South 6 Streets, Diliman, Quezon City, or take appropriate measures to
reduce its noise at the property line between the defendant company's
compound and that of the plaintiff-appellant to an average of forty (40) to fifty
(50) decibels within 90 days from finality of this decision; and to pay the said
plaintiff-appellant P20,000.00 in damages and P5,000.00 for attorney's fees.
In all other respects, the appealed decision is affirmed. No costs.
Velasco vs. Manila Electric Co. (MR)
In this case, both the appellant Velasco and the appellee Manila Electric
have filed their respective motions to reconsider the decision of this Court.
A — APPELLANT'S MOTION FOR RECONSIDERATION
The thrust of this motion is that the decision has incorrectly assessed
appellant's damages and unreasonably reduced their amount. It is first
argued that the decision erred in not taking into account, in computing
appellant's loss of income, the appellant's undeclared income of P8,338.20,
assessed by the Bureau of Internal Revenue for the year 1954, in addition to
his declared income for that year (P10,975), it being argued that appellant
never claim any other source of income besides his professional earnings.
Appellant Velasco urges that the damages awarded him are inadequate
considering the present high cost of living, and calls attention to Article 1250
of the present Civil Code, and to the doctrines laid down in People vs.
Pantoja G.R. No. L-18793, 11 October 1968, 25 SCRA 468.
We do not deem the rules invoked to be applicable. Article 1250 of the Civil
Code is to the effect that:
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ART. 1250. In case an extraordinary inflation or deflation of the currency
stipulated should supervene, the value of the currency at the time of the
establishment of the obligation shall be the basis of payment, unless there is
an agreement to the contrary.
It can be seen from the employment of the words "extraordinary inflation or
deflation of the currency stipulated" that the legal rule envisages contractual
obligations where a specific currency is selected by the parties as the
medium of payment; hence it is inapplicable to obligations arising from tort
and not from contract, as in the case at bar, besides there being no showing
that the factual assumption of the article has come into existence. As to the
Pantoja ruling, the regard paid to the decreasing purchase of the peso was
considered a factor in estimating the indemnity due for loss of life, which in
itself is not susceptible of accurate estimation. It should not be forgotten that
the damages awarded to herein appellant were by no means full
compensatory damages, since the decision makes clear that appellant, by
his failure to minimize his damages by means easily within his reach, was
declared entitled only to a reduced award for the nuisance sued upon (Steel
vs. Rail & River Coal Co., 43 Ohio App. 228,182 N.E. 552); and the amount
granted him had already taken into account the changed economic
circumstances.
Nor is the fact that appellant lost a chance to sell his house for P95,000 to
Jose Valencia constitute a ground for an award of damages in that amount.
As remarked in the main decision, there is no adequate proof of loss, since
there is no evidence of the depreciation in the market value of the house in
question caused by the acts of defendant Meralco The house, after all, has
remained with appellant and he admits in his motion for reconsideration
(page 48) that properties have increased in value by 200% since then.
For the foregoing reasons, the motion for reconsideration is denied.
B — APPELLEE'S MOTION TO RECONSIDER
Appellee Manila Electric Company argues that in case the noise emitted by
its substation cannot be brought down to the 50 decibel level imposed by our
decision in chief, the remedy of the appellant would be to compel appellee
Company to acquire and pay for the value of the house, under the so-called
doctrine of "inverse condemnation and cites in support our doctrines in
Bengzon vs. Province of Pangasinan, 62 Phil. 816, and Republic vs.
Philippine Long Distance Telephone Co., L-18841, 27 January 1969, 26
SCRA 620-634. But as pointed out by appellant in his opposition, this issue
was not raised, nor was the inverse condemnation doctrine invoked in the
trial court, so that it would be improper to consider it on appeal, and worse
6
still, on a motion for reconsideration of the decision on the merits.
Furthermore, there is no showing that it is impossible to reduce the
substation noise to the level decreed by this Court in the main decision. On
the contrary, appellee's own evidence is that the noise can be reduced by
erecting a wall barrier on the line separating the substation lot and the
property of appellant.
The version that appellee did not erect the wall because of the objections of
appellant's wife was denied by her, and there is no preponderance of
evidence in favor of appellee on this point. Moreover, since it was appellant
Dr. Velasco who complained, his wife's objection would not suffice to
constitute a waiver of his claim.
As to the petition to increase the sound level prescribed by his Court from 50
to 55 decibels on the ground that present "ambient sound already ranges
from 44 to 55 decibels in the mornings", the same can not be granted. As
shown by the evidence at the trial, the intensity of the noise emitted by
appellee's transformers are most objectionable at night, when people are
endeavoring to rest and sleep in compensation for the fatigue and tensions
accumulated during daytime.
WHEREFORE, appellee's motion to reconsider is likewise denied.
2. Classes
a. Nuisance Per Se and Nuisance Per Accidens
The Iloilo Ice and Cold Storage Company vs. Municipal Council of Iloilo
FACTS:
The plaintiff, upon authority granted by the defendant, constructed an ice and
cold storage plant in the city of Iloilo. Some time after the plant had been
completed and was in operation, nearby residents made complaints to the
defendant that the smoke from the plant was very injurious to their health and
comfort. Thereupon the defendant appointed a committee to investigate and
report upon the matters contained in said complaints. The committee
reported that the complaints were well-founded. The defendant counsel then
passed a resolution which reads in part as follows:
That after the approval by the honorable provincial board of this resolution, a
period of one month will be granted to the said entity. The Iloilo Ice and Cold
Storage Company, in which to proceed with the elevation of said
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
smokestacks, and if not done, the municipal president will execute the order
requiring the closing or suspension of operations of said establishment.
Upon receipt of this resolution and order, the plaintiff commenced this action
in the Court of First Instance to enjoin the defendant from carrying into effect
the said resolution. The fifth paragraph of the complaint is as follows:
That the defendants intend and threaten to require compliance with said
resolution administratively and without the intervention of the court, and by
force to compel the closing and suspension of operations of the plaintiff's
machinery and consequently of the entire plant, should the plaintiff not
proceed with the elevation of the smokestacks to one hundred feet, which the
plaintiff maintains it is not obliged to do and will not do.
Upon notice and after hearing, a preliminary injunction was issued. The
defendant then posed the following special defenses:
“1. xxx xxx xxx.
2. That the factory of the plaintiff company stands in a central and populated
district of the municipality;
3. That the quantity of smoke discharged from the smokestacks of said
factory is so great and so dense that it penetrates into the dwelling houses
situated near it and causes great annoyance to the residents and prejudice to
their health;
4. That the municipal board of health of the city has reported that the smoke
discharged from the smokestacks of said factory is prejudicial and injurious
to the public health;
5. That the plaintiff company has no right to maintain and operate machinery
in its factory under the conditions which it is at present operating the same,
without complying with the regulations which were imposed upon it when the
license for its installation was granted, because it thereby violates the
ordinances of the city now in force upon the matter.”
With this, the defendant prays that the plaintiff be declared to have no right to
the remedy asked, and that the preliminary injunction issued in this case be
set aside, with the costs against the plaintiff.
But the plaintiff file a demurrer which was later sustained. The demurrer is
based on the following grounds:
1. That the facts alleged in the answer do not constitute a defense; and
2. That the answer is vague and ambiguous and contains arguments and
conclusions of law instead of facts.
7
ISSUE:
Whether or not the Municipal Council has the power to declare the Iloilo Cold
Storage’s plant a nuisance.
HELD:
Under section 39 (j) of the Municipal Code, the municipal council is
specifically empowered "to declare and abate nuisances." A nuisance is,
according to Blackstone, "Any thing that worketh hurt, inconvenience, or
damages." They arise from pursuing particular trades or industries in
populous neighborhoods; from acts of public indecency, keeping disorderly
houses, and houses of ill fame, gambling houses, etc. Nuisances have been
divided into two classes: Nuisances per se, and nuisances per accidens. To
the first belong those which are unquestionably and under all circumstances
nuisances, such as gambling houses, houses of ill fame, etc. The number of
such nuisances is necessarily limited, and by far the greater number of
nuisances are such because of particular facts and circumstances
surrounding the otherwise harmless cause of the nuisance. For this reason, it
will readily be seen that whether a particular thing is a nuisance is generally a
question of fact, to be determined in the first instance before the term
nuisance can be applied to it. This is certainly true of a legitimate calling,
trade, or business such as an ice plant.
In Rutton vs. City of Camden, The right to abate public nuisances, whether
we regard it as existing in the municipalities, or in the community, or in the
land of the individual, is a common law right, and is derived, in every instance
of its exercise, from the same source — that of necessity. It is akin to the
right of destroying property for the public safety, in case of the prevalence of
a devastating fire or other controlling exigency. But the necessity must be
present to justify the exercise of the right, and whether present or not, must
be submitted to a jury under the guidance of a court.
It is clear that municipal councils have, under the code, the power to declare
and abate nuisances, but it is equally clear that they do not have the power
to find as a fact that a particular thing is a nuisance when such thing is not a
nuisance per se; nor can they authorize the extrajudicial condemnation and
destruction of that as a nuisance which in its nature, situation, or use is not
such. These things must be determined in the ordinary courts of law.
In the present case it is certain that the ice factory of the plaintiff is not a
nuisance per se. It is a legitimate industry, beneficial to the people, and
conducive to their health and comfort. If it be in fact a nuisance due to the
manner of its operation, that question cannot determined by a mere
resolution of the board. The petitioner is entitled to a fair and impartial
hearing before a judicial tribunal.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
It is said that the plaintiff cannot be compelled to build its smokestack higher
if said stack is in fact a nuisance, for the reason that the stack was built
under authority granted by the defendant, and in accordance with the
prescribed requirements. If the charter or license does not expressly subject
the business or industry to the exercise of the police power by the State, it is
conceded by the great preponderance of authority that such a reservation is
implied to the extent that may be reasonably necessary for the public
welfare.
For the foregoing reasons, the order sustaining the plaintiff's demurrer to the
defendant's answer is reversed. The record will be returned to the court
whence it came with instructions to proceed with the trial of the cause in
accordance with this opinion. No costs will be allowed in this instance. So
ordered.
Technology Developers Inc. vs. CA
FACTS:
Technology Developers Inc. is engaged in manufacturing and exporting
charcoal briquette. On February 16, 1989, they received a letter from
respondent Acting Mayor Pablo Cruz, ordering the full cessation of the
operation of the petitioner’s plant in Sta. Maria, Bulacan. The letter also
requested the company to show to the office of the mayor some documents,
including the Building permit, mayor’s permit, and Region III-Pollution of
Environmental and Natural Resources Anti-Pollution Permit.
Since the company failed to comply in bringing the required documents,
respondent Acting Mayor, without notice, caused the padlock of company’s
plant premises, effectively causing stoppage of its operation.
Technology Developers then instituted an action for certiorari, prohiition,
mandamus with preliminary injuction against respondents, alleging that the
closure order was issued in grave abuse of discretion. The lower court ruled
against the company. The CA affirmed the lower court’s ruling.
ISSUE:
Whether of not the mayor has authority to order the closure of the plant.
YES.
Whether or not the closure order was done with grave abuse of discretion.
NO.
8
HELD:
No mayor's permit had been secured. While it is true that the matter of
determining whether there is a pollution of the environment that requires
control if not prohibition of the operation of a business is essentially
addressed to the then National Pollution Control Commission of the Ministry
of Human Settlements, now the Environmental Management Bureau of the
Department of Environment and Natural Resources, it must be recognized
that the mayor of a town has as much responsibility to protect its inhabitants
from pollution, and by virture of his police power, he may deny the application
for a permit to operate a business or otherwise close the same unless
appropriate measures are taken to control and/or avoid injury to the health of
the residents of the community from the emissions in the operation of the
business.
The Acting Mayor, in the letter, called the attention of petitioner to the
pollution emitted by the fumes of its plant whose offensive odor "not only
pollute the air in the locality but also affect the health of the residents in the
area," so that petitioner was ordered to stop its operation until further orders
and it was required to bring the following:
a. Building permit;
b. Mayor's permit; and
c. Region III-Department of Environment and Natural Resources Anti-
Pollution permit.
This action of the Acting Mayor was in response to the complaint of the
residents of Barangay Guyong, Sta. Maria, Bulacan, directed to the
Provincial Governor through channels.
The closure order of the Acting Mayor was issued only after an investigation
was made. It found that the fumes emitted by the plant of petitioner goes
directly to the surrounding houses and that no proper air pollution device has
been installed.
Petitioner failed to produce a building permit from the municipality of Sta.
Maria, but instead presented a building permit issued by an official of Makati.
While petitioner was able to present a temporary permit to operate by the
then National Pollution Control Commission on December 15, 1987, the
permit was good only up to May 25, 1988. Petitioner had not exerted any
effort to extend or validate its permit much less to install any device to control
the pollution and prevent any hazard to the health of the residents of the
community.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Petitioner takes note of the plea of petitioner focusing on its huge investment
in this dollar-earning industry. It must be stressed however, that concomitant
with the need to promote investment and contribute to the growth of the
economy is the equally essential imperative of protecting the health, nay the
very lives of the people, from the deleterious effect of the pollution of the
environment.
Ramcar Inc. vs. Millar
FACTS:
Ramcar, Inc. operated and maintained an auto repair and ‘body building
shop at General Luna St., Ermita, Manila. Millar and six others resided near
or around the shop. Millar and his companions brought an action to abate the
establishment of Ram-car, Inc., as a nuisance. Ramcar, Inc., contended that
it had a license from the city authorities to operate a “garage.”
HELD:
(a) Body building shop is not within the purview of “garage”; (b) Whether a
particular thing is or is not a nuisance is a question of fact and is properly
within the jurisdiction of the court to determine; (c) While Sec. 18 of Rep. Act
409 grants legislative powers to the municipal board to declare, prevent, and
provide for the abatement of nuisances, inaction by the board does not
preclude the ultimate power of courts to determine the existence of a
nuisance in a particular case tried before them; (d) The award of damage
arising from a nuisance is authorized under Arts. 679 and 219 of the Civil
Code. Ramcar, Inc. was permanently enjoined from operating its body
building operation in its present location.
City of Manila vs. Garcia et al.
FACTS:
Plaintiff is the owner of certain parcels of land. Without the knowledge and
consent of plaintiff, defendants occupied the property and built their
houses.2.Having discovered, plaintiff through its mayor gave each defendant
written permits, each labeled as “lease contract” to occupy specific areas.
For their occupancy, defendants were charged nominal rentals.
After sometime, plaintiff, through its treasurer, demanded payment of their
rentals and vacate the premises for the Epifanio de los Santos Elementary
School’s expansion.4.Despite the demand, defendants refused to vacate the
said property. Hence, this case was filed for recovery of possession.5.The
trial court ruled in favor of plaintiff taking judicial notice of Ordinance 4566 –
appropriating P100k for the construction of additional building of Epifanio De
Los Santos Elementary School.6.Defendants appealed.
9
ISSUE:
WoN the trial court properly found that the city needs the premises for school
purposes
HELD:
YES. The trial court ruled out the admissibility of the documentary evidence
presented by plaintiff
Certification of the Chairman, Committee on Appropriations of the Municipal
Board which recites the amount of P100k had been set aside in Ordinance
4566 for the construction of additional building of the said school.
But then the decision under review, the trial court revised his views. He then
declared that there was a need for defendants to vacate the premises for
school expansion; he cited the very document. Because of the court’s
contradictory stance, defendants brought this case on appeal. However, the
elimination of the certification as evidence would not profit defendants. For, in
reversing his stand, the trial judge could well have taken — because he was
duty bound to take — judicial notice of Ordinance 4566 . The reason being
that the city charter of Manila requires all courts sitting therein to take judicial
notice of all ordinances passed by the municipal board of Manila.
And, Ordinance 4566 itself confirms the certification aforesaid that an
appropriation of P100,000.00 was set aside for the “construction of additional
building” of the Epifanio de los Santos Elementary School.
Further defendants’ entry to the said property is illegal. Their constructions
are as illegal, without permits. The city mayor doesn’t have the authority to
issue permits. The permits issued are null and void.
Estate of Georgia Francisco vs. CA
FACTS:
Basilan Municipal Mayor Benjamin Valencia summarily ordered the
demolition of an antiquated and dilapidated quonset warehouse situated in
Port Area, Strong Boulevard, Isabela, Basilan, outside the zone for
warehouses. The legal possessor of the quonset sought the prohibition of the
Order but was denied by the RTC. The CA originally overturned the RTC but
subsequently reversed itself. In question in this case is the validity of such
order by the Municipal Mayor, which was in effect an abatement of nuisance,
without prior judicial authority.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
ISSUE:
Whether or not Respondent Mayor could summarily and extra-judicially order
the demolition of petitioner's quonset building.
HELD:
NO. Ordinance No. 147 relied upon by Respondents should not be
interpreted as authorizing the summary removal of a non-conforming building
by the municipal government. For if it does, it must be struck down for being
in contravention of the requirements of due process, as originally held by the
Court of Appeals.
Moreover, the enforcement and administration of the provisions of the
Ordinance resides with the Zoning Administrator. It is said official who may
call upon the City Fiscal to institute the necessary legal proceedings to
enforce the provisions of the Ordinance. And any person aggrieved by the
decision of the Zoning Administrator regarding the enforcement of the
Ordinance may appeal to the Board of Zoning Appeals.
Violation of a municipal ordinance neither empowers the Municipal Mayor to
avail of extra-judicial remedies. On the contrary, the Local Government Code
imposes upon him the duty "to cause to be instituted judicial proceedings in
connection with the violation of ordinances" (Local Government Code, Sec.
141 [2] [t]).
Respondents cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings, which
applies only to a nuisance per se or one which affects the immediate safety
of persons and property and may be summarily abated under the undefined
law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage
of copra in the quonset building is a legitimate business. By its nature, it
cannot be said to be injurious to rights of property, of health or of comfort of
the community. If it be a nuisance per accidens it may be so proven in a
hearing conducted for that purpose. It is not per se a nuisance warranting its
summary abatement without judicial intervention.
The provincial governor, district engineer or district health officer is not
authorized to destroy private property consisting of dams and fishponds
summarily and without any judicial proceedings whatever under the pretense
that such private property constitutes a nuisance. A dam or a fishery
constructed in navigable rivers is not a nuisance per se. A dam or fishpond
may be a nuisance per accidens where it endangers or impairs the health or
depreciates property by causing water to become stagnant. (Monteverde v.
Generoso, supra).
10
While the Sangguniang Bayan may provide for the abatement of a nuisance
(Local Government Code, Sec. 149 [ee]), it can not declare a particular thing
as a nuisance per se and order its condemnation. The nuisance can only be
so adjudged by judicial determination.
[Municipal councils] do not have the power to find as a fact that a particular
thing is a nuisance when such thing is not a nuisance per se nor can they
authorize the extra judicial condemnation and destruction of that as a
nuisance which, in its nature, situation or use is not such. These things must
be determined in the ordinary courts of law. In the present case, . . . the ice
factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . .
If it be in fact a nuisance due to the manner of its operation, that question
cannot be determined by a mere resolution of the board. The petitioner is
entitled to a fair and impartial heating before a judicial tribunal. (Iloilo Cold
Storage v. Municipal Council, 24 Phil. 47 [1913]).
Petitioner was in lawful possession of the lot and quonset building by virtue
of a permit from the Philippine Ports Authority (Port of Zamboanga) when
demolition was effected. It was not squatting on public land. Its property was
not of trifling value. It was entitled to an impartial hearing before a tribunal
authorized to decide whether the quonset building did constitute a nuisance
in law. There was no compelling necessity for precipitate action. It follows
then that respondent public officials of the Municipality of Isabela, Basilan,
transcended their authority in abating summarily petitioner's quonset building.
They had deprived petitioner of its property without due process of law. The
fact that petitioner filed a suit for prohibition and was subsequently heard
thereon will not cure the defect, as opined by the Court of Appeals, the
demolition having been a fait accompli prior to hearing and the authority to
demolish without a judicial order being a prejudicial issue.
NOTES:
“Nuisances are of two classes: Nuisances per se and per accidens. As to the
first, since they affect the immediate safety of persons and property, they
may be summarily abated under the undefined law of necessity. But if the
nuisance be of the second class, even the municipal authorities, under their
power to declare and abate nuisances, would not have the right to compel
the abatement of a particular thing or act as a nuisance without reasonable
notice to the person alleged to be maintaining or doing the same of the time
and place of hearing before a tribunal authorized to decide whether such a
thing or act does in law constitute a nuisance.” (Monteverde v. Generoso, 52
Phil. 123 (1982), citing Iloilo Ice and Cold Storage Co. vs. Municipal Council
of Iloilo [{1913}, 24 Phil., 471])
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
“Petitioner's business could not be considered a nuisance which respondent
municipality could summarily abate in the guise of exercising its police
powers. The abatement of a nuisance without judicial proceedings is possible
only if it is a nuisance per se. A gas station is not a nuisance per se or one
affecting the immediate safety of persons and property,17 hence, it cannot
be closed down or transferred summarily to another location.” (PARAYNO v.
JOVELLANOS, G.R. No. 148408, 14 July 2006 citing Monteverde v.
Generoso, 52 Phil. 123 (1982)
Lucena Grand Terminal Inc. vs. JAC Liner Inc.
FACTS:
Respondent, JAC Liner, Inc., a common carrier operating buses which ply
various routes to and from Lucena City, assailed, via a petition for prohibition
and injunction1 against the City of Lucena, its Mayor, and the Sangguniang
Panlungsod of Lucena before the Regional Trial Court (RTC) of Lucena City,
City Ordinance Nos. 1631 and 1778 as unconstitutional on the ground that,
inter alia, the same constituted an invalid exercise of police power, an undue
taking of private property, and a violation of the constitutional prohibition
against monopolies. The salient provisions of the ordinances are:
Ordinance No. 16312
AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL
TERMINAL, INC., A FRANCHISE TO CONSTRUCT, FINANCE,
ESTABLISH, OPERATE AND MAINTAIN A COMMON BUS-JEEPNEY
TERMINAL FACILITY IN THE CITY OF LUCENA
Ordinance No. 1778
AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF
LUCENA OF ALL BUSES, MINI-BUSES AND OUT-OF-TOWN PASSENGER
JEEPNEYS AND FOR THIS PURPOSE, AMENDING ORDINACE NO. 1420,
SERIES OF 1993, AND ORDINANCE NO. 1557, SERIES OF 1995
xxx
SECTION 1. – The entrance to the City of Lucena of all buses, mini-buses
and out-of-town passenger jeepneys is hereby regulated as follows:
(a) All buses, mini-buses and out-of-town passenger jeepneys shall be
prohibited from entering the city and are hereby directed to proceed to the
common terminal, for picking-up and/or dropping of their passengers.
(b) All temporary terminals in the City of Lucena are hereby declared
inoperable starting from the effectivity of this ordinance.
The Lucena Grand Central Terminal is the permanent common terminal as
this is the entitywhich was given the exclusive franchise by the Sangguniang
Panglungsod under OrdinanceNo. 1631;
11
These ordinances, by granting an exclusive franchise for twenty five years,
renewable for another twenty five years, to one entity for the construction and
operation of one common bus and jeepney terminal facility in Lucena City, to
be located outside the city proper, were professedly aimed towards
alleviating the traffic congestion alleged to have been caused by the
existence of various bus and jeepney terminals within the city.
Respondent, who had maintained a terminal within the city, was one of those
affected by the ordinances.
ISSUE:
Whether the City of Lucena properly exercised its police power when it
enacted the subject ordinances.
HELD:
As with the State, the local government may be considered as having
properly exercised its police power only if the following requisites are met: (1)
the interests of the public generally, as distinguished from those of a
particular class, require the interference of the State, and (2) the means
employed are reasonably necessary for the attainment of the object sought
to be accomplished and not unduly oppressive upon individuals. Otherwise
stated, there must be a concurrence of a lawful subject and lawful method.
In enacting said law, therefore, the National Assembly was prompted by
considerations of public convenience and welfare. It was inspired by a desire
to relieve congestion of traffic, which is, to say the least, a menace to public
safety. Public welfare, then, lies at the bottom of the enactment of said law,
and the state in order to promote the general welfare may interfere with
personal liberty, with property, and with business and occupations.
The questioned ordinances having been enacted with the objective of
relieving traffic congestion in the City of Lucena, they involve public interest
warranting the interference of the State. The first requisite for the proper
exercise of police power is thus present.
This leaves for determination the issue of whether the means employed by
the Lucena Sangguniang Panlungsod to attain its professed objective were
reasonably necessary and not unduly oppressive upon individuals.
With the aim of localizing the source of traffic congestion in the city to a
single location, the subject ordinances prohibit the operation of all bus and
jeepney terminals within Lucena, including those already existing, and allow
the operation of only one common terminal located outside the city proper,
the franchise for which was granted to petitioner. The common carriers plying
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
routes to and from Lucena City are thus compelled to close down their
existing terminals and use the facilities of petitioner.
Bus terminals per se do not, however, impede or help impede the flow of
traffic. How the outright proscription against the existence of all terminals,
apart from that franchised to petitioner, can be considered as reasonably
necessary to solve the traffic problem, this Court has not been enlightened. If
terminals lack adequate space such that bus drivers are compelled to load
and unload passengers on the streets instead of inside the terminals, then
reasonable specifications for the size of terminals could be instituted, with
permits to operate the same denied those which are unable to meet the
specifications.
In the subject ordinances, however, the scope of the proscription against the
maintenance of terminals is so broad that even entities which might be able
to provide facilities better than the franchised terminal are barred from
operating at all.
Neither are terminals public nuisances as petitioner argues. For their
operation is a legitimate business which, by itself, cannot be said to be
injurious to the rights of property, health, or comfort of the community.
On the issue of NUISANCE:
Neither are terminals public nuisances as petitioner argues, for their
operation is a legitimate business which, by itself, cannot be said to be
injurious to the rights of property, health, or comfort of the community.
But even assuming that terminals are nuisances due to their alleged indirect
effects upon the flow of traffic, at most they are nuisance per accidens, not
per se.
Unless a thing is nuisance per se, however, it may not be abated via an
ordinance, without judicial proceedings, as was done in the case at bar.
In Estate of Gregoria Francisco v. Court of Appeals,37 this Court held:
Respondents can not seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That
tenet applies to a nuisance per se, or one which affects the immediate safety
of persons and property and may be summarily abated under the undefined
law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage
of copra in the quonset building is a legitimate business. By its nature, it can
not be said to be injurious to rights of property, of health or of comfort of the
community. If it be a nuisance per accidens it may be so proven in a hearing
conducted for that purpose. It is not per se a nuisance warranting its
summary abatement without judicial intervention.l^vvphi1.net (Underscoring
supplied)381awphi1.nét
In Pampanga Bus Co., Inc. v. Municipality of Tarlac39 where the appellant-
municipality similarly argued that the terminal involved therein is a nuisance
12
that may be abated by the Municipal Council via an ordinance, this Court
held: "Suffice it to say that in the abatement of nuisances the provisions of
the Civil Code (Articles 694-707) must be observed and followed. This
appellant failed to do."
Cruz vs. Pandacan Hiker’s Club Inc. (2016)
FACTS:
Herein petitioner, Natividad Cruz, was the Punong Barangay or Chairperson
of Barangay 848, Zone 2, City of Manila. In one occasion, she approached
person playing basketball in the basketball court, saying:
“Bakit nakabukas ang (basketball) court? Wala kayong karapatang maglaro
sa court na 'to, barangay namin ito! xxx xxx xxx Wala kayong magagawa.
Ako ang chairman dito. Mga walanghiya kayo, patay gutom! Hindi ako
natatakot! Kaya kong panagutan lahat!”
She gave an order to the other petitioner, Barangay Tanod Benjamin dela
Cruz, to destroy the basketball ring by cutting it up with a hacksaw which
Dela Cruz promptly complied with. The acts of petitioners prompted the filing
of a Complaint (for Malicious Mischief, Grave Misconduct, Conduct
Prejudicial to the Best Interest of the Service and Abuse of Authority) before
the Prosecutor's Office and the Office of the Ombudsman by the group that
claims to be the basketball court's owners, herein respondents Pandacan
Hiker's Club, Inc. and its president Priscila Ilao.
Cruz alleged that the basketball court affected the peace in the barangay and
was the subject of many complaints from residents asking for its closure. She
alleged that the playing court blocked jeepneys from passing through and
was the site of rampant bettings and fights involving persons from within and
outside the barangays. She claimed that innocent persons have been hurt
and property had been damaged by such armed confrontations, which often
involved the throwing of rocks and improvised “molotov” bombs. She also
averred that noise from the games caused lack of sleep among some
residents and that the place's frequent visitors used the community's fences
as places to urinate.
The Office of the Ombudsman dismissed the complaint filed by Ilao, et al.
finding that the act of destroying the basketball ring was only motivated by
Cruz and Dela Cruz performing their sworn duty, as defined in the Local
Government Code. It found the act to be a mere response to the clamor of
constituents. The office found that though the cutting of the ring was “drastic,”
it was done by the barangay officials within their lawful duties, as the act was
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
only the result of the unauthorized removal of and failure to return the steel
bar and padlock that were earlier placed thereon.
The appellate court reversed the Ombudsman’s Decision stating that Cruz
and Dela Cruz performed an abatement of what they thought was a public
nuisance but did the same without following the proper legal procedure, thus
making them liable for said acts. Moreover, it held Cruz to be without the
power to declare a thing a nuisance unless it is a nuisance per se. It declared
the subject basketball ring as not such a nuisance and, thus, not subject to
summary abatement. The court added that even if the same was to be
considered a nuisance per accidens, the only way to establish it as such is
after a hearing conducted for that purpose. Thus, this petition.
ISSUE:
Whether or not there is a nuisance which the Barangay Chairperson may
summarily abate.
HELD:
There is a nuisance when there is “any act, omission, establishment,
business, condition of property, or anything else which: (1) injures or
endangers the health or safety of others; or (2) annoys or offends the
senses; or (3) shocks, defies or disregards decency or morality; or (4)
obstructs or interferes with the free passage of any public highway or street,
or any body of water; or (5) hinders or impairs the use of property.” But other
than the statutory definition, jurisprudence recognizes that the term
“nuisance” is so comprehensive that it has been applied to almost all ways
which have interfered with the rights of the citizens, either in person,
property, the enjoyment of his property, or his comfort.
A nuisance is classified in two ways: (1) according to the object it affects; or
(2) according to its susceptibility to summary abatement. As for a nuisance
classified according to the object or objects that it affects, a nuisance may
either be: (a) a public nuisance, i.e., one which “affects a community or
neighborhood or any considerable number of persons, although the extent of
the annoyance, danger or damage upon individuals may be unequal”; or (b)
a private nuisance, or one “that is not included in the foregoing definition”
which, in jurisprudence, is one which “violates only private rights and
produces damages to but one or a few persons.”
A nuisance may also be classified as to whether it is susceptible to a legal
summary abatement, in which case, it may either be: (a) a nuisance per se,
when it affects the immediate safety of persons and property, which may be
summarily abated under the undefined law of necessity; or, (b) a nuisance
per accidens, which “depends upon certain conditions and circumstances,
13
and its existence being a question of fact, it cannot be abated without due
hearing thereon in a tribunal authorized to decide whether such a thing does
in law constitute a nuisance;” it may only be so proven in a hearing
conducted for that purpose and may not be summarily abated without judicial
intervention.
In the case at bar, none of the tribunals below made a factual finding that the
basketball ring was a nuisance per se that is susceptible to a summary
abatement. And based on what appears in the records, it can be held, at
most, as a mere nuisance per accidens, for it does not pose an immediate
effect upon the safety of persons and property, the definition of a nuisance
per se. Culling from examples cited in jurisprudence, it is unlike a mad dog
on the loose, which may be killed on sight because of the immediate danger
it poses to the safety and lives of the people; nor is it like pornographic
materials, contaminated meat and narcotic drugs which are inherently
pernicious and which may be summarily destroyed; nor is it similar to a filthy
restaurant which may be summarily padlocked in the interest of the public
health. A basketball ring, by itself, poses no immediate harm or danger to
anyone but is merely an object of recreation. Neither is it, by its nature,
injurious to rights of property, of health or of comfort of the community and,
thus, it may not be abated as a nuisance without the benefit of a judicial
hearing. But even if it is assumed, ex gratia argumenti, that the basketball
ring was a nuisance per se, but without posing any immediate harm or threat
that required instantaneous action, the destruction or abatement performed
by petitioners failed to observe the proper procedure for such an action which
puts the said act into legal question.
b. Two Fields of Liability: Public Nuisance and Private Nuisance
b.1. Public and Private Nuisance defined
b.2. Cases:
Halili vs. Lacson (1956)
FACTS:
Petitioners allege that they built their houses inside said compound was back
in 1945, 1946 and 1947 and as soon as the City of Manila learned of this
fact, it allowed them to occupy the land either by entering into a contract of
lease with them or by allowing them to pay rentals for the portions occupied,
and that on May 5, 1952, in line with the policy to restore the lawful use by
the public of streets, parks, plazas, esteros and other public lands,
respondents ordered the removal of said houses on the ground that they
constitute a public nuisance. They claim this action to be arbitrary and illegal.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Respondents, on the other hand, claim that petitioners, occupied the
premises in question without any authority from the City of Manila although
subsequently two of them Alfredo R. Halili and Tomas B. Jacob, succeeded
in securing from the city mayor a written permit to occupy them subject to
certain conditions, among others; (a) that the permission may be revoked by
the city mayor at will after thirty days' notice; (b) that if the proposed city
planning for Greater Manila would in any way affect the structures, the same
would be removed within such reasonable by the city engineer, without any
obligation or cost to the Government; (c) that all expenses for removing the
structures would be for their account and if they fail to remove them with the
period specified, the Government may undertake the removal charging the
expenses against them; (d) that no permanent structures should be erected
on the property; and (c) that they shall abide by whatever future action the
city might take on the property.
Petitioners in their behalf and other occupants of portions of the land known
as Palomar Compound situated in Tondo, Manila, filed this petition for
certiorari with the Court of First Instance of Manila seeking to enjoin
respondents from carrying out their order of demolition of the houses they
had erected inside said compound. CFI dismissed the petition and ordered
petitioners to vacate the premises occupied buy them and remove the
structures they may have of the order with the warning that, upon failure on
their part to do so, the city engineer may order their demolition at their cost
pursuant to the Revised Ordinance of the City of Manila.
ISSUE:
Whether the petitioners’ houses constitute a public nuisance
HELD:
Yes. It is undisputed that Petitioners occupied the premises inside the
Palomar Compound without the knowledge, authority or consent of the City
of Manila, although later two of them succeeded in securing from the city
mayor a sort of written permission wherein they agreed to occupy the
premises under certain specified conditions. This was allowed by the City of
Manila simply upon tolerance in view of the fact that they lost their homes
and their properties as a result of the battle for the liberation of said city, and
one of the conditions upon which their occupancy was allowed is that they
will remove the structures they had erected and vacate the premises within
such time as may be specified in a notice to be issued by the city engineer;
cost of the removal to be charged against them. And this condition is with
more reason demandable from the rest who had entered the premises
without authority and were merely allowed to continue therein upon
sufferance. And considering that said structures constitute an obstruction to
14
the use by the public of the parks, plazas, streets, and sidewalks that are
affected by them, they constitute a public nuisance within the meaning of the
law (articles 694 and 695, new Civil Code), which can be ordered demolished
by the city authorities pursuant to section 1122 of the Revised Ordinance of
the City of Manila (No. 1600; Sitchon, et al, vs. Aquino, supra, p. 458). The
Respondents, therefore, acted within the scope of their authority when they
ordered the demolition of the structures belonging to Petitioners upon their
refusal to heed the advice given to them by the city engineer.
Farrales vs. City Mayor of Baguio (1972)
FACTS:
Plaintiff was the holder of a municipal license to sell liquor and sari-sari
goods. When the temporary building where she had her stall was demolished
in order that the city might construct a permanent building, Plaintiff was
ordered to move her goods to another temporary place until the permanent
building was completed. Instead, Plaintiff built a temporary shack at one end
of the Rice Section, Baguio City Market without seeking prior permit from any
city official. When the police threatened to demolish the shack, Plaintiff
sought an injunction before the CFI which asked her that she present proper
permit. Upon failure of petitioner to comply with the order, the CFI denied the
petition for injunction, and the police then demolished the shack.
ISSUES:
(1) WON the shack or temporary stall was a nuisance;
(2) WON the police officers are liable for damages in extrajudicially abating
the nuisance.
HELD:
Judgment Affirmed.
(1) The SC held that the shack was a nuisance. In the first place she had no
permit to put up the temporary stall in question in the precise place where
she did so. In the second place, its location on the cement passageway at
the end of the Rice Section building was such that it constituted an
obstruction to the free movement of people.
(2) According to Article 707 of the CC, a public official extrajudicially abating
a nuisance shall be liable for damages in only two cases: (a) if he causes
unnecessary injury; or (b) if an alleged nuisance is later declared by the
courts to be not a real nuisance.
In the case at bar, no unnecessary injury was caused to the appellant, and
not only was there no judicial declaration that the alleged nuisance was not
really so but the trial court found that it was in fact a nuisance. Indeed it may
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
be said that the abatement thereof was not summary, but through a judicial
proceeding. The denial of petitioner’s petition for injunction was in effect an
authority for the police to carry out the act which was sought to be enjoined.
Mead vs. Argel (1982)
FACTS:
Petitioner Donald Mead and a certain Isaac Arivas were charged by the
Provincial Fiscal of Rizal with a violation of Section 9, in relation to Section
10 of Republic Act No. 3931. That on or about the 23rd day of August, 1972,
and for some time prior and subsequent thereto, in the municipality of
Malabon, province of Rizal, Philippines, Mead, being then the president and
the general manager, respectively, of the Insular Oil Refinery Co. conspiring
and confederating together and mutually helping and aiding one another, did
then and there willfully, unlawfully and feloniously drain or otherwise dispose
into the highway canal and/or cause, permit, suffer to be drained or allow to
seep into such waterway the industrial and other waste matters discharged
due to the operation of the said Insular Oil Refinery Co. so managed and
operated by them, thereby causing pollution of such waterway with the
resulting damage and/or destruction to the living plants in the vicinity and
providing hazard to health and property in the same vicinity. The case was
assigned to CFI Caloocan and presided by respondent Judge.
Mead filed a motion to quash on the ground that fiscal has no legal
personality to file the information. CFI denied the motion.
ISSUE:
Whether the Provincial Fiscal has the authority to file an information for a
violation of Republic Act No. 3931, entitled "An Act Creating a National Water
and Air Pollution Control Commission."
HELD:
It is our considered view that the Provincial Fiscal of Rizal lacked the
authority to file the information charging the petitioner with a violation of the
provisions of Republic Act No. 3931 there being no prior finding or
determination by the Commission that the act of the petitioner had caused
pollution in any water or atmospheric air of the Philippines. It is not to be
understood, however, that a fiscal or public prosecutor may not file an
information for a violation of the said law at all. He may do so if the
Commission had made a finding or determination that the law or any of its
orders had been violated. In the criminal case presently considered, there
had been no prior determination by the Commission that the supposed acts
of the petitioner had caused pollution to any water of the Philippines. The
15
filing of the information for the violation of Section 9 of the law is, therefore,
premature and unauthorized. Concommittantly, the respondent Judge is
without jurisdiction to take cognizance of the offense charged therein.
The filing by the Provincial Fiscal of the case was premature sans the
findings of the Commission on the matter.
Petitioner was being sued for the offense of allegedly causing pollution of a
waterway (highway canal)
SEC. 9. Prohibitions. — No person shall throw, run, drain, or otherwise
dispose into any of the water and/or atmospheric air of the Philippines, or
cause, permit, suffer to be thrown, run, drain, allow to see or otherwise
dispose into such waters or atmospheric air, any organic or inorganic matter
or any substance in gaseous or liquid form that shall cause pollution of such
waters or atmospheric air.
The Court held that the exclusive authority to determine whether or not
‘pollution’ did exist is vested in the Commission, who is in better position to
determine the same for such requires specialized knowledge of technical and
scientific matters which are not ordinarily within the competence of Fiscals or
of those sitting in a court of justice.
SEC. 8. Proceedings before the Commission . — The Commission may, on
its own motion, or upon the request of any person, investigate or may inquire,
in a manner to be determined by it, as to any alleged act of pollution or the
omission or failure to comply with any provisions of this Act or any order of
this Commission.
Whenever it appears to the Commission, after investigation, that there has
been a violation of any of the provisions of this Act or any order of the
Commission, it may order whoever causes such violation to show cause
before said Commission why such discharge of industrial wastes or any
waste should not be discontinued. A notice shall be served on the offending
party directing him or it to show cause before the Commission, on a date
specified in such notice, why an order should not be made directing the
discontinuance of such violation. Such notice shall specify the time and the
place where a public hearing will be held by the Commission or its authorized
representatives, and notice of such hearing shall be served personally or by
registered mail, at least ten days before said hearing; and in the case of a
municipality or corporation such notice shall be served upon the major or
president thereof. The Commission shall take evidence with reference to said
matter and may issue an order to the party responsible for such violation,
directing that within a specified period of time thereafter, such violation be
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
discontinued unless adequate sewage works or industrial wastes disposal
system be properly operated to prevent further damage or pollution.
No investigation being conducted or ruling made by the Commission shall
prejudice any action which may be filed in court by any person in accordance
with the provisions of the New Civil Code on nuisance. On matters, however,
not related to nuisance, no court action shall be initiated until the
Commission shall have finally ruled thereon and no order of the Commission
discontinuing the discharge of waste shall be stayed by the filing of said court
action, unless the court issues an injunction as provided for in the Rules of
Court.
Unless the case involves that of nuisance under the Civil Code or until there
is a ruling by the Commission on the alleged act of pollution, no court action
shall be initiated (Sec8).
Without a prior determination or finding by the Commission that the
provisions of the subject law had been violated, the provincial Fiscal lacked
the authority to file the case against petitioner.
Jarco Marketing Corp. vs. CA (1999)
FACTS:
May 9 1983: Criselda and her 6 year-old daughter Zhieneth were at the 2nd
floor of Syvel's Department Store, Makati City.
While Criselda was signing her credit card slip at the counter, she felt a
sudden gust of wind and heard a loud thud. As she looked behind her, she
saw Zhieneth's body pinned by the bulk of the store's gift-wrapping
counter/structure. Zhieneth was crying and screaming for help. Although
shocked, Criselda was quick to ask the assistance of the people around in
lifting the counter and retrieving Zhieneth from the floor. Zhieneth was
quickly rushed to the Makati Medical Center where she was operated on.
Next day: Zhieneth lost her speech and communicated by writing on a magic
slate.
14 days after: She died on the hospital bed. The cause of her death was
attributed to the injuries she sustained.
After the burial of their daughter, Criselda demanded upon Jarco Marketing
the reimbursement of the hospitalization, medical bills and wake and funeral
expenses which they had incurred. But, they refused to pay.
16
Criselda filed a complaint for damages
Jarco Marketing: answered with counterclaim and denied any liability.
Criselda was negligent in exercising care and diligence over her daughter by
allowing her to freely roam around in a store filled with glassware and
appliances. Zhieneth too, was guilty of contributory negligence since she
climbed the counter, triggering its eventual collapse on her. Petitioners also
emphasized that the counter was made of sturdy wood with a strong support;
it never fell nor collapsed for the past fifteen years since its construction.
maintained that it observed the diligence of a good father of a family in the
selection, supervision and control of its employees.
Trial court dismissed the complaint and counterclaim proximate cause of the
fall of the counter on Zhieneth was her act of clinging to it.
CA: favored Criselda judgment. It found that petitioners were negligent in
maintaining a structurally dangerous counter. The counter was shaped like
an inverted "L" with a top wider than the base. It was top heavy and the
weight of the upper portion was neither evenly distributed nor supported by
its narrow base. Thus, the counter was defective, unstable and dangerous; a
downward pressure on the overhanging portion or a push from the front
could cause the counter to fall. Two former employees of petitioners had
already previously brought to the attention of the management the danger
the counter could cause. But the latter ignored their concern.
ISSUE:
Whether Jarco marketing was negligent or it was an accident
HELD:
ACCIDENT pertains to an unforeseen event in which no fault or negligence
attaches to defendant (or if it happens wholly or partly through human
agency, it is an event which under the circumstances is unusual or
unexpected by the person to whom it happens); there is exercise of ordinary
care here.
NEGLIGENCE is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of
human affairs, would do, or the doing of something which a prudent and
reasonable man would not do.
Alternatively, it is the failure to observe, for the protection of another person’s
interest, that degree of care, precaution and vigilance which the
circumstances justly demand, whereby such other person suffers injury.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Picart v. Smith lays down the test to determine WON negligence exists: Did
the defendant in doing the alleged negligent act use that reasonable care
and caution which an ordinary prudent person would have used in the same
situation? If not, he is guilty of negligence.
SC found that Zhieneth performed no act that facilitated her death. Basis is
her statement to the doctor as related by former employee Gonzales. It was
made part of the res gestae since she made the statement immediately
subsequent to the startling occurrence. It is axiomatic that matters relating to
declarations of pain or suffering and statements made to a physician are
generally considered declarations and admissions. Also, the court
considered the fact that Zhieneth was of a tender age (and in so much pain!),
so it would be unthinkable that she would lie.
Petitioners were informed of the danger posed by the unstable counter, yet
they did not act on the matter, so they failed to discharge the due diligence
required of a good father of a family.
They failed to establish that the testimonies of former employees were
biased. Conclusive presumption that children below 9 are incapable of
contributory negligence is applied.
Judge Sangco [book author] says that children below 9 is conclusively
presumed to have acted without discernment, and are exempt from criminal
liability. Since negligence may be a felony and a QD, it required discernment
as a condition of liability, so therefore, said children are presumed to be
incapable of negligence.
Even if contributory negligence would be attributed to Zhieneth, no injury
should have occurred if petitioners’ theory that the counter is stable and
sturdy is to be believed.
Criselda is absolved from any contributory negligence, since it was
reasonable for her to let go of her child to sign a slip.
Zhieneth was just a foot away from her mother, and the counter was just four
meters away from Criselda (contrary to statements that Zhieneth was
loitering at that time).
Hidalgo Enterprises Inc. vs. Guillermo Balandan, Anselma Anila and CA
FACTS:
17
Hidalgo Enterprises was the owner of an ice-plant factory in San Pablo,
Laguna. In the factory, there were two tanks full of water, both 9-ft deep, for
cooling purposes of its engine. There was no fence or top cover; the edges of
the tanks were barely a foot high from the surface of the ground. The factory
itself was surrounded with a fence. However, the wide gate entrance was
continually open, and anyone could easily enter the factory. There was no
guard assigned on the gate.
Around noon on April 16, 1948, Mario Balandan, a boy barely 3 years old,
was playing with other boys his age when he entered the factory premises
through the gate. Mario Balandan then took a bath in one of the tanks of
water and, later on, sank to the bottom of the tank. He died of “asphyxia
secondary to drowning.” The CFI and CA ruled that Hidalgo Enterprises
maintained an attractive nuisance and neglected to adopt the necessary
precautions to avoid accident to person entering its premises.
ISSUE:
Whether or not a water tank is an attractive nuisance.
HELD:
No. Hidalgo Enterprises Inc.’s water tanks are not classified as attractive
nuisance. Other issues such as whether it exercised reasonable precautions,
and if the parents were guilty of contributory negligence are immaterial.
Appealed decision reversed. Hidalgo Enterprises is absolved from liability.
One who maintains on his premises dangerous instrumentalities or
appliances of a character likely to attract children in play, and who fails to
exercise ordinary care to prevent children from playing therewith or resorting
thereto, is liable to a child of tender years who is injured thereby, even if the
child is technically a trespasser in the premises. This is the doctrine of
attractive nuisance. The principal reason for the doctrine is that the condition
or appliance in question although its danger is apparent to those of age, is so
enticing or alluring to children of tender years as to induce them to approach,
get on or use it, and this' attractiveness is an implied invitation to such
children.
The majority of American jurisprudence posits that the doctrine of attractive
nuisance is generally not applicable to bodies of water, whether artificial or
natural. The exception to this is if there is some unusual condition or artificial
feature other than mere water and its location. Furthermore, in Anderson v.
Reith-Riley Const. Co., the Indiana Appellate Court explained why bodies of
water are not considered as attractive nuisance. It ruled that children have
been instructed early on to exercise caution around bodies of water and are
presumed to know the danger.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Dissent of J. Pablo: Children are naturally curious and do not have perfect
knowledge of things. They are amazed by the natural attraction of the waters
and shall explore where their curiosity leads them unless there is something
that prevents them. As such, petitioners should have placed fences around
the ponds as an ordinary precaution. (Note: translated and paraphrased from
Spanish text)
3. Abatement
Timoner vs. People
FACTS:
Jose Timoner, the petitioner, was convicted by the Municipal Court of Daet
with the crime of Grave Coercion, as penalized under Art. 286 of the Revised
Penal Code, because of the complaint by Pascual Dayaon, Lourdes
Rabustillos and others. Timoner, then Mayor of Daet, together with two
uniformed policemen, Samuel Morena and Ernesto Quibral, and six laborers,
was acting on the recommendation of Dra. Allegre, the Municipal Health
Officer, to close among other structures that were along the sidewalk, the
barbershop of Dayaon and store of Rabustillos. Timoner filed a complaint in
the CFI of Camarines Norte against Rebustillos and others for judicial
abatement of their stalls, alleged that the stalls constituted public nuisances
as well as per se. The petitioner appealed to the Court of Appeals, which was
the Intermediate Appellate Court then, however, the CA affirmed in full the
judgment of the trial court.
The Court of Appeals found the petitioner guilty beyond reasonable doubt of
the crime of Grave Coercion penalized under Art. 286 of the Revised Penal
Code. The petitioner was the mayor of a town and by the recommendation of
the Municipal Health Officer, he barricaded some establishments and stalls
which protruded into the sidewalk of the Maharlika highway and who were
not complying with certain health and sanitation requirement. The petitioner
then filed a complaint against the owners of the stalls saying that these stalls
constituted public nuisance as well as nuisance per se. The owners of the
stalls charged the petitioner with the offense of grave coercion.
ISSUE:
W/N the conviction of the court of appeals that the petitioner committed grave
coercion is correct the complainants were public nuisance.
HELD:
The petitioner was acquitted of the crime charged. He did not commit Grave
Coercon as the elements of Grave Coercion required that he acted not under
18
the authority of the law. As the then Mayor of the City, Timoner had the
authority to act on behalf of the recommendation and his constituents’ right to
public order and safety, and that such stalls along the sidewalk affected the
community and general public, as it is in a public place, and was annoying to
all who come within its sphere.
The court is in agreement that the complainants were public nuisance for
affecting a considerable number of persons in their neighbourhood.
Petitioner, as mayor of the town, merely implemented the aforesaid
recommendation of the Municipal Health Officer. Having then acted in good
faith in the performance of his duty, petitioner incurred no criminal liability.
Grave coercion is committed when "a person who, without authority of law,
shall by means of violence, prevent another from doing something not
prohibited by law or compel to do something against his will, either it be right
or wrong." The third element being absent in the case at bar, petitioner
cannot be held guilty of grave coercion.
Art 699 authorizes the abatement of a public nuisance without judicial
proceedings.
Mayor fenced public nuisance. Abatement of public nuisance without judicial
proceedings, municipal mayor not criminally liable when he acted in good
faith in authorizing the fencing of a barbershop for being a public nuisance
because it occupied a portion of the sidewalk.
Grave coercion is committed when a person who without authority of law,
shall by means of violence, prevent another from doing something not
prohibited by law or compel to do something against his will either it be right
or wrong.
Elements:
a. That any person be prevented by another from doing something not
prohibited by law, or compelled to do something against his will, be it right or
wrong.
b. That the prevention or compulsion be effected by violence, either by
material forceor such display of it as would produceintimidation and control
the will of the offended party
c. That the person who restrained the will and liberty of another had no right
to do so, or, in other words, that the restraint was not made under authority of
law or in the exercise of a lawful right.
4. Easement Against Nuisance
F. Strict Liability For Oil Pollution Damage
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
IRR of R.A. 9483
RULE III
STRICT LIABILITY FOR OIL POLLUTION DAMAGE
Section 1. Liability on Pollution Damage - The Owner of the Ship at the time
of an incident, or, where the incident consists of a series of occurrences, at
the time of the first such occurrence, shall be liable for any Pollution Damage
caused by the Ship as a result of the Incident.
Section 2. Liability of tile Owner - The liability of the Owner of a ship for
pollution damage shall include, but not limited to:
2.1 Reasonable expenses actually incurred in clean-up operations at sea or
on shore;
2.2 Reasonable expenses of Preventive Measures;
2.3 Consequential loss or loss of earnings suffered by Owners or users of
property contaminated or damaged as a result of an Incident;
2.4 Pure economic loss or loss of earnings sustained by persons although
the property contaminated or damaged as a direct result of an incident does
not belong to them;
2.5 Damage to human health or loss of life as a direct result of the Incident,
including expenses for rehabilitation and recuperation: Provided, That costs
of studies or diagnoses to determine the long-term damage shall also be
included; and
2.6 Environmental damages and other reasonable measures of environment
restoration.
Section 3. Exempting Circumstances - No liability as stated in the
immediately preceding section shall attach to the Owner or his insurer if he
proves that the damage:
3.1 Resulted from an act of war, hostilities, civil war, insurrection or a natural
phenomenon of an exceptional, inevitable and irresistible character; or
3.2 Was wholly caused by an act or omission done with intent to cause
damage by a third party; or
19
3.3 Was wholly caused by the negligence or other wrongful act of the
government or other enforcement agencies responsible for the maintenance
of lights or other navigational aids in the exercise of that function, however,
the owner may be exonerated from liability, whether wholly or partially, if he
proves that the pollution damage resulted wholly or partially either from an
act or omission done with intent to cause damage by the person who
suffered the damage or from the negligence of that person.
Section 4. Persons Exempted from Claims for Compensation for Pollution
Damage -- No claim for compensation for Pollution Damage under the Act
and this IRR may be made against:
4.1 The servants or agents of the Owner or the members of the crew;
4.2 The pilot or any other person who, without being a member of the crew,
performs services for the Ship;
4.3 Any charterer, howsoever described, including a bareboat charterer,
manager or operator of the Ship;
4.4 Any person performing salvage operations with the consent of the Owner
or on the instructions of a competent public authority;
4.5 Any person taking Preventive Measures; and
4.6 All servants or agents of persons mentioned in paragraphs 4.3, 4.4 and
4.5 hereof, unless the damage resulted from their personal act or omission,
committed with the intent to cause such damage, or committed recklessly
and wilh knowledge that such damage would probably result: Provided, That
nothing in this IRR shall prejudice any right of recourse of the Owner against
third parties.
Section 5. Joint and Several Liability - When an Incident involving two or
more Ships occurs and Pollution Damage results therefrom, the Owners. of
all the Ships concerned, unless exonerated under Section 3, Rule III hereof,
shall be jointly and severally liable for all such damage which is not
reasonably separable, without prejudice, however, to the right of recourse of
any such Owners to proceed against each other or third parties
G. Products Liability
1. Products Liability defined
2. Four General Theories of Liability under Products Liability
3. Laws and Illustrative Case
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
ARTICLE 92. Exemptions. — If the concerned department finds that for good
or sufficient reasons, full compliance with the labeling requirements
otherwise applicable under this Act is impracticable or is not necessary for
the adequate protection of public health and safety, it shall promulgate
regulations exempting such substances from these requirements to the
extent it deems consistent with the objective of adequately safeguarding
public health and safety, and any hazardous substance which does not bear
a label in accordance with such regulations shall be deemed mislabeled
hazardous substance.
ARTICLE 93. Grounds for Seizure and Condemnation of Mislabeled
Hazardous Substances. — a) Any mislabeled hazardous substance when
introduced into commerce or while held for sale shall be liable to be
proceeded against and condemned upon order of the concerned department
in accordance with existing procedure for seizure and condemnation of
articles in commerce: Provided, That this Article shall not apply to a
hazardous substance intended for export to any foreign country if:
1) it is in a package labeled in accordance with the specifications of the
foreign purchaser;
2) it is labeled in accordance with the laws of the foreign country;
3) it is labeled on the outside of the shipping package to show that it is
intended for export; and
4) it is so exported,
b) any hazardous substance condemned under this Article shall after entry of
order of condemnation be disposed of by destruction or sale as the
concerned department may direct, and the proceeds thereof, if sold, less the
legal cost and charges, shall be paid into the treasury of the Philippines; but
such hazardous substance shall not be sold under any order which is
contrary to the provisions of this Act: Provided, That, after entry of the order
and upon the payment of the costs of such proceedings and the execution of
a good and sufficient bond conditioned that such hazardous substance shall
not be sold or disposed of contrary to the provisions of this Act, the
concerned department may direct that such hazardous substance be
delivered to or retained by the owner thereof for destruction or for alteration
to comply with the provisions of this Act under the supervision of an officer or
employee duly designated by the concerned department. The expenses for
such supervision shall be paid by the person obtaining release of the
hazardous substance under bond.
20
c) all expenses in connection with the destruction provided for in paragraphs
(a) and (b) of this Article and all expenses in connection with the storage and
labor with respect to such hazardous substance shall be paid by the owner or
consignee, and default in such payment shall constitute a lien against any
importation by such owner or consignee.
ARTICLE 94. Labeling Requirements of Cigarettes. — All cigarettes for sale
or distribution within the country shall be contained in a package which shall
bear the following statement or its equivalent in Filipino: “Warning” Cigarette
Smoking is Dangerous to Your Health”. Such statement shall be located in
conspicuous place on every cigarette package and shall appear in
conspicuous and legible type in contrast by typography, layout or color with
other printed matter on the package. Any advertisement of cigarette shall
contain the name warning as indicated in the label.
ARTICLE 95. Penalties. — a) Any person who shall violate the provisions of
Title III, Chapter IV of this Act, or its implementing rules and regulations,
except Articles 81 to 83 of the same Chapter, shall be subject to a fine of not
less than Five hundred pesos (P500.00) but not more than Twenty thousand
pesos (P20,000.00) or imprisonment of not less than three (3) months but not
more than two (2) years or both, at the discretion of the court: Provided, That,
if the consumer product is one which is not a food, cosmetic, drug, device or
hazardous substance, the penalty shall be a fine of not less than Two
hundred pesos (P200.00) but not more than Five thousand pesos
(P5,000.00) or imprisonment of not less than one (1) month but not more
than one (1) year or both, at the discretion of the court.
b) Any person who violates the provisions of Article 81 to 83 for the first time
shall be subject to a fine of not less than Two hundred pesos (P200.00) but
not more than Five thousand pesos (P5,000.00) or by imprisonment of not
less than one (1) month but not more than six (6) months or both, at the
discretion of the court. A second conviction under this paragraph shall also
carry with it the penalty of revocation of business permit and license.
CHAPTER V
Liability for Product and Service
ARTICLE 96. Implementing Agency. — The Department of Trade and
Industry shall enforce the provisions of this Chapter and its implementing
rules and regulations.
ARTICLE 97. Liability for the Defective Products. — Any Filipino or foreign
manufacturer, producer, and any importer, shall be liable for redress,
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
independently of fault, for damages caused to consumers by defects
resulting from design, manufacture, construction, assembly and erection,
formulas and handling and making up, presentation or packing of their
products, as well as for the insufficient or inadequate information on the use
and hazards thereof.
A product is defective when it does not offer the safety rightfully expected of
it, taking relevant circumstances into consideration, including but not limited
to:
a) presentation of product;
b) use and hazards reasonably expected of it;
c) the time it was put into circulation.
A product is not considered defective because another better quality product
has been placed in the market.
The manufacturer, builder, producer or importer shall not be held liable when
it evidences:
a) that it did not place the product on the market;
b) that although it did place the product on the market such product has no
defect;
c) that the consumer or a third party is solely at fault.
ARTICLE 98. Liability of Tradesman or Seller. — The tradesman/seller is
likewise liable, pursuant to the preceding article when:
a) it is not possible to identify the manufacturer, builder, producer or importer;
b) the product is supplied, without clear identification of the manufacturer,
producer, builder or importer;
c) he does not adequately preserve perishable goods. The party making
payment to the damaged party may exercise the right to recover a part of the
whole of the payment made against the other responsible parties, in
accordance with their part or responsibility in the cause of the damage
effected.
21
ARTICLE 99. Liability for Defective Services. — The service supplier is liable
for redress, independently of fault, for damages caused to consumers by
defects relating to the rendering of the services, as well as for insufficient or
inadequate information on the fruition and hazards thereof.
The service is defective when it does not provide the safety the consumer
may rightfully expect of it, taking the relevant circumstances into
consideration, including but not limited to:
a) the manner in which it is provided;
b) the result of hazards which may reasonably be expected of it;
c) the time when it was provided.
A service is not considered defective because of the use or introduction of
new techniques.
The supplier of the services shall not be held liable when it is proven:
a) that there is no defect in the service rendered;
b) that the consumer or third party is solely at fault.
ARTICLE 100. Liability for Product and Service Imperfection. — The
suppliers of durable or non-durable consumer products are jointly liable for
imperfections in quality that render the products unfit or inadequate for
consumption for which they are designed or decrease their value, and for
those resulting from inconsistency with the information provided on the
container, packaging, labels or publicity messages/advertisement, with due
regard to the variations resulting from their nature, the consumer being able
to demand replacement to the imperfect parts.
If the imperfection is not corrected within thirty (30) days, the consumer may
alternatively demand at his option:
a) the replacement of the product by another of the same kind, in a perfect
state of use;
b) the immediate reimbursement of the amount paid, with monetary updating,
without prejudice to any losses and damages;
c) a proportionate price reduction.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
The parties may agree to reduce or increase the term specified in the
immediately preceding paragraph; but such shall not be less than seven (7)
nor more than one hundred and eighty (180) days.
The consumer may make immediate use of the alternatives under the
second paragraph of this Article when by virtue of the extent of the
imperfection, the replacement of the imperfect parts may jeopardize the
product quality or characteristics, thus decreasing its value.
If the consumer opts for the alternative under sub-paragraph (a) of the
second paragraph of this Article, and replacement of the product is not
possible, it may be replaced by another of a different kind, mark or model:
Provided, That any difference in price may result thereof shall be
supplemented or reimbursed by the party which caused the damage, without
prejudice to the provisions of the second, third and fourth paragraphs of this
Article.
ARTICLE 101. Liability for Product Quantity Imperfection. — Suppliers are
jointly liable for imperfections in the quantity of the product when, in due
regard for variations inherent thereto, their net content is less than that
indicated on the container, packaging, labeling or advertisement, the
consumer having powers to demand, alternatively, at his own option:
a) the proportionate price
b) the supplementing of weight or measure differential;
c) the replacement of the product by another of the same kind, mark or
model, without said imperfections;
d) the immediate reimbursement of the amount paid, with monetary updating
without prejudice to losses and damages if any.
The provisions of the fifth paragraph of Article 99 shall apply to this Article.
The immediate supplier shall be liable if the instrument used for weighing or
measuring is not gauged in accordance with official standards.
ARTICLE 102. Liability for Service Quality Imperfection. — The service
supplier is liable for any quality imperfections that render the services
improper for consumption or decrease their value, and for those resulting
from inconsistency with the information contained in the offer or
advertisement, the consumer being entitled to demand alternatively at his
option:
22
a) the performance of the services, without any additional cost and when
applicable;
b) the immediate reimbursement of the amount paid, with monetary updating
without prejudice to losses and damages, if any;
c) a proportionate price reduction.
Reperformance of services may be entrusted to duly qualified third parties, at
the supplier’s risk and cost.
Improper services are those which prove to be inadequate for purposes
reasonably expected of them and those that fail to meet the provisions of this
Act regulating service rendering.
ARTICLE 103. Repair Service Obligation. — When services are provided for
the repair of any product, the supplier shall be considered implicitly bound to
use adequate, new, original replacement parts, or those that maintain the
manufacturer’s technical specifications unless, otherwise authorized, as
regards to the latter by the consumer.
ARTICLE 104. Ignorance of Quality Imperfection. — The supplier’s
ignorance of the quality imperfections due to inadequacy of the products and
services does not exempt him from any liability.
ARTICLE 105. Legal Guarantee of Adequacy. — The legal guarantee of
product or service adequacy does not require an express instrument or
contractual exoneration of the supplier being forbidden.
ARTICLE 106. Prohibition in Contractual Stipulation. — The stipulation in a
contract of a clause preventing, exonerating or reducing the obligation to
indemnify for damages effected, as provided for in this and in the preceding
Articles, is hereby prohibited, if there is more than one person responsible for
the cause of the damage, they shall be jointly liable for the redress
established in the pertinent provisions of this Act. However, if the damage is
caused by a component or part incorporated in the product or service, its
manufacturer, builder or importer and the person who incorporated the
component or part are jointly liable.
ARTICLE 107. Penalties. — Any person who shall violate any provision of
this Chapter or its implementing rules and regulations with respect to any
consumer product which is not food, cosmetic, or hazardous substance shall
upon conviction, be subject to a fine of not less than Five thousand pesos
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
(P5,000.00) and by imprisonment of not more than one (1) year or both upon
the discretion of the court.
R.A. 10642 (Philippine Lemon Law)
SEC. 4. Coverage. – This Act shall cover brand new motor vehicles
purchased in the Philippines reported by a consumer to be in nonconformity
with the vehicle’s manufacturer or distributor’s standards or specifications
within twelve (12) months from the date of .original delivery to the consumer,
or up to twenty thousand (20,000) kilometers of operation after such delivery,
whichever comes first. The following causes of nonconformity shall be
excluded:
(a) Noncompliance by the consumer of the obligations under the warranty;
(b) Modifications not authorized by the manufacturer, distributor, authorized
dealer or retailer;
(c) Abuse or neglect of the brand new motor vehicle; and
(d) Damage to the vehicle due to accident or force majeure.
SEC. 5. Repair Attempts. – At any time within the Lemon Law rights period,
and after at least four (4) separate repair attempts by the same
manufacturer, distributor, authorized dealer or retailer for the same
complaint, and the nonconformity issue remains unresolved, the consumer
may invoke his or her rights under this Act.
The repair may include replacement of parts components, or assemblies.
SEC. 6. Notice of Availment of Lemon Law Rights. – Before availing of any
remedy under this Act and subject to compliance with the provisions of
Section 5 hereof, the consumer shall, in writing, notify the manufacturer,
distributor, authorized dealer or retailer of the unresolved complaint, and the
consumer’s intention to invoke his or her rights under this Act within the
Lemon Law rights period.
The warranty booklet issued by the manufacturer, distributor, authorized
dealer or retailer shall clearly state the manner and form of such notice to
constitute a valid and legal notice to the manufacturer, distributor, authorized
dealer or retailer. It shall also clearly state the responsibility of the consumer
under this section.
23
SEC. 7. Availment of Lemon Law Rights. – Subsequent to filing the notice of
availment referred to in the preceding section, the consumer shall bring the
vehicle to the manufacturer, distributor, authorized dealer or retailer from
where the vehicle was purchased for a final attempt to address the complaint
of the consumer to his or her satisfaction.
It shall be the duty of the manufacturer, distributor, authorized dealer or
retailer, upon receipt of the motor vehicle and the notice of nonconformity
required under Section 6 hereof, to attend to the complaints of the consumer
including, as may be necessary, making the repairs and undertaking such
actions to make the vehicle conform to the standards or specifications of the
manufacturer, distributor, authorized dealer or retailer for such vehicle.
In case the nonconformity issue remains unresolved despite the
manufacturer, distributor, authorized dealer or retailer’s efforts to repair the
vehicle, pursuant to the consumer’s availment of his or her Lemon Law
rights, the consumer may file a complaint before the DTI as provided for
under this Act: Provided, however, That if the vehicle is not returned for
repair, based on the same complaint, within thirty (30) calendar days from
the date of notice of release of the motor vehicle to the consumer following
this repair attempt within the Lemon Law rights period, the repair is deemed
successful: Provided, finally, That, in the event that the nonconformity issue
still exists or persists after the thirty (30)-day period but still within the Lemon
Law rights period, the consumer may be allowed to avail of the same
remedies under Sections 5 and 6 hereof.
To compensate for the non-usage of the vehicle while under repair and
during the period of availment of the Lemon Law rights, the consumer shall
be provided a reasonable daily transportation allowance, an amount which
covers the transportation of the consumer from his or her residence to his or
her regular workplace or destination and vice versa, equivalent to air-
conditioned taxi fare, as evidenced by official receipt, or in such amount to be
agreed upon by the parties, or a service vehicle at the option of the
manufacturer, distributor, authorized dealer or retailer. Any disagreement on
this matter shall be resolved by the DTI.
Nothing herein shall be construed to limit or impair the rights and remedies of
a consumer under any other law.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Nutrimix Feed Corp. vs. CA (2004)
FACTS:
In 1993, private respondent spouses Evangelista procured various animal
feeds from petitioner Nutrimix Feeds Corp. the petitioner gave the
respondents a credit period of 30-45 days to postdate checks to be issued as
payment for the feeds. The accommodation was made apparently because
the company’s president was a close friend of Evangelista. The various
animal feeds were paid and covered by checks with due dates from July
1993-September 1993.
Initially, the spouses were good paying customers. However, there were
instances when they failed to issue checks despite the delivery of goods.
Consequently, the respondents incurred an aggregate unsettled account with
Nutrimix amounting to P766,151.
When the checks were deposited by the petitioner, the same were
dishonored (closed account). Despite several demands from the petitioner,
the spouses refused to pay the remaining balance. Thereafter, Nutrimix filed
a complaint against Evangelista for collection of money with damages.
The respondents admitted their unpaid obligation but impugned their liability.
The nine checks issued 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.
The respondents also lodged a complaint for damages against the petitioner,
for the untimely and unforeseen death of their animals supposedly effected
by the adulterated animal feeds the petitioner sold to them.
Nutrimix alleged 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.
The trial court held in favor of petitioner on the ground that it cannot be held
liable under Articles 1561 and 1566 of the Civil Code governing “hidden
defects” of commodities sold. The trial court is predisposed to believe that
24
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.
CA modified the decision of the trial court, citing that 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.
ISSUE:
WON Nutrimix is guilty of breach of warranty due to hidden defects
HELD:
NO. The provisions on warranty against hidden defects are found in Articles
1561 and 1566 of the New Civil Code of the Philippines. A hidden defect is
one which is unknown or could not have been known to the vendee. 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
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.
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 left the hands of the petitioner. 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. The defect must be present upon the delivery or
manufacture of the product; or when the product left the seller’s or
manufacturer’s control; or when the product was sold to the purchaser; 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
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
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. 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.
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.
H. Doctrine of Limited Liability
Central Shipping Company, Inc vs. Insurance Company of North
America (2004)
FACTS:
On July 25, 1990 at Puerto Princesa, Palawan, Central Shipping Company
received on board its vessel, the M/V ‘Central Bohol’, 376 pieces [of]
Philippine Apitong Round Logs and undertook to transport said shipment to
Manila for delivery to Alaska Lumber Co., Inc.
“The cargo was insured for P3,000,000.00 against total loss under Insurance
Company of North America’s Marine Cargo Policy No. MCPB- 00170. The
vessel completely sank. Due to the sinking of the vessel, the cargo was
totally lost. The consignee, Alaska Lumber Co. Inc., presented a claim for the
value of the shipment to Central Shipping but the latter failed and refused to
settle the claim, hence Insurance company, being the insurer, paid said claim
and now seeks to be subrogated to all the rights and actions of the
consignee as against Central Shipping. Central Shipping raised as its main
defense that the proximate and only cause of the sinking of its vessel and the
loss of its cargo was a natural disaster, a tropical storm which neither Central
Shipping nor the captain of its vessel could have foreseen.
25
DECISION OF LOWER COURTS:
(1) RTC: Central Shipping Liable. RTC was unconvinced that the sinking of
M/V Central Bohol had been caused by the weather or any other caso
fortuito. It noted that monsoons, which were common occurrences during the
months of July to December, could have been foreseen and provided for by
an ocean-going vessel.
(2) CA: affirmed RTC. Given the season of rains and monsoons, the ship
captain and his crew should have anticipated the perils of the sea. The CA
found no merit in petitioner’s assertion of the vessel’s seaworthiness. It held
that the Certificates of Inspection and Drydocking were not conclusive proofs
thereof. In order to consider a vessel to be seaworthy, it must be fit to meet
the perils of the sea.
ISSUES:
(1) Whether the carrier is liable for the loss of the cargo; and
(2) Whether the doctrine of limited liability is applicable
HELD:
1. Yes. A common carrier is presumed to be at fault or negligent. It shall be
liable for the loss, destruction or deterioration of its cargo, unless it can prove
that the sole and proximate cause of such event is one of the causes
enumerated in Article 1734 of the Civil Code, or that it exercised
extraordinary diligence to prevent or minimize the loss. In the present case,
the weather condition encountered by petitioner’s vessel was not a “storm” or
a natural disaster comprehended in the law. Given the known weather
condition prevailing during the voyage, the manner of stowage employed by
the carrier was insufficient to secure the cargo from the rolling action of the
sea. The carrier took a calculated risk in improperly securing the cargo.
Having lost that risk, it cannot now disclaim any liability for the loss.
Established is the fact that between 10:00 p.m. on July 25, 1990 and 1:25
a.m. on July 26, 1990, M/V Central Bohol encountered a southwestern
monsoon in the course of its voyage. Having made such factual
representation in its Note of Marine Protest, petitioner cannot now be allowed
to retreat and claim that the southwestern monsoon was a “storm.” Normally
expected on sea voyages, however, were such monsoons, during which
strong winds were not unusual.
According to PAGASA, a storm has a wind force of 48 to 55 knots, equivalent
to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second
mate of the vessel stated that the wind was blowing around force 7 to 8 on
the Beaufort Scale. Consequently, the strong winds accompanying the
southwestern monsoon could not be classified as a “storm.” Such winds are
the ordinary vicissitudes of a sea voyage.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Also, even if it were a storm, it was not the proximate and only cause of the
loss. The loss of the vessel was caused not only by the southwestern
monsoon, but also by the shifting of the logs in the hold. Such shifting could
have been due only to improper stowage.
2. No. The doctrine of limited liability under Article 587 of the Code of
Commerce is not applicable to the present case. This rule does not apply to
situations in which the loss or the injury is due to the concurrent negligence
of the shipowner and the captain.
Edgar Cokaliong Shipping Lines vs. UCPB General Insurance
FACTS:
December 11, 1991: Nestor Angelia (shipper and consignee) delivered to the
petitioner Edgar Cokaliong Shipping Lines, Inc. (now Cokaliong Shipping
Lines), a cargo consisting of one (1) carton of Christmas decor and two (2)
sacks of plastic toys, to be transported on board the M/V Tandag from Cebu
City for Tandag, Surigao del Sur. This cargo is under Bill of Lading No. 58, in
the amount of P6,500.00.
Zosimo Mercado (another shipper and consignee) likewise delivered cargo to
petitioner consisting of two (2) cartons of plastic toys and Christmas decor,
one (1) roll of floor mat and one (1) bundle of various or assorted goods. This
is under Bill of Lading No. 59, valued in the amount of P14,000.00
Feliciana Legaspi (owner of the goods) insured the cargo, covered by BOL
Nos. 59 and No. 58, with the UCPB General Insurance Co., Inc.,
[respondent]. No. 59 was insured for P100,000 while No. 58 for P50,000.
[*Note that both amounts are far from the actual and declared value in the
BOLs issued by Cokaliong]
After the vessel had passed by the Mandaue-Mactan Bridge, fire ensued in
the engine room, and, despite earnest efforts of the officers and crew of the
vessel, the fire engulfed and destroyed the entire vessel resulting in the loss
of the vessel and the cargoes therein.
Feliciana Legaspi filed a claim, with [respondent], for the value of the cargos
insured. The latter approved the claim. For Bill of Lading No. 59, Legaspi
received from UCPB P99,000.00 while for No. 58, P60,338.00.
UCPB as subrogee of Legaspi, filed a complaint anchored on torts against
petitioner, with the RTC of Makati City, for the collection of the total principal
26
amount of P148,500.00. Respondent alleged that the loss of the cargo was
due to the negligence of the petitioner
Petitioner alleged that: (a) It was cleared by the Board of Marine Inquiry of
any negligence in the burning of the vessel; and (b) it cannot be held liable
for the loss of the cargo beyond the value thereof declared in the Bill of
Lading.
ISSUES:
(1) Is petitioner liable for the loss of the goods? YES
(2) If it is liable, what is the extent of its liability? According to what was
reflected in the Bill of Lading
HELD:
(1) Petitioner’s argument: the cause of the loss of the goods, subject of this
case, was force majeure. It adds that its exercise of due diligence was
adequately proven by the findings of the Philippine Coast Guard.
SC: We are not convinced. The uncontroverted findings of the Philippine
Coast Guard show that the M/V Tandag sank due to a fire, which resulted
from a crack in the auxiliary engine fuel oil service tank. The crack was
located on the side of the fuel oil tank, which had a mere two-inch gap from
the engine room walling, thus precluding constant inspection and care by the
crew
Having originated from an unchecked crack in the fuel oil service tank, the
fire could not have been caused by force majeure. Broadly speaking, force
majeure generally applies to a natural accident, such as that caused by a
lightning, an earthquake, a tempest or a public enemy.
Hence, fire is not considered a natural disaster or calamity. It does not fall
within the category of an act of God unless caused by lighting or by other
natural disaster or calamity. It may even be caused by the actual fault or
privity of the carrier.
Peril of fire is not comprehended within the exceptions in Article 1734; Article
1735 applies (please see provision)
Where loss of cargo results from the failure of the officers of a vessel to
inspect their ship frequently so as to discover the existence of cracked parts,
that loss cannot be attributed to force majeure, but to the negligence of those
officials.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Ensuring the seaworthiness of the vessel is the first step in exercising the
required vigilance. Petitioner did not present sufficient evidence showing
what measures or acts it had undertaken to ensure the seaworthiness of the
vessel.
It failed to show when the last inspection and care of the auxiliary engine fuel
oil service tank was made, or some other evidence to establish that it had
exercised extraordinary diligence.
It merely stated that constant inspection and care were not possible, and that
the last time the vessel was dry-docked was in November 1990.
(2) Respondent’s contention: petitioner’s liability should be based on the
actual insured value of the goods, subject of this case.
Petitioner’s: its liability should be limited to the value declared by the
shipper/consignee in the Bill of Lading.
SC: Petitioner should not be held liable for more than what was declared by
the shippers/consignees as the value of the goods in the bills of lading.
Ratio: The records show that the Bills of Lading covering the lost goods
contain the stipulation that in case of claim for loss or for damage to the
shipped merchandise or property, [t]he liability of the common carrier x x x
shall not exceed the value of the goods as appearing in the bill of lading.
A stipulation that limits liability is valid as long as it is not against public
policy. Following provisions apply in the present case:
Art. 1749. A stipulation that the common carriers liability is limited to the
value of the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has been freely and fairly
agreed upon.
Pursuant to the afore-quoted provisions of law, it is required that the
stipulation limiting the common carriers liability for loss must be reasonable
and just under the circumstances, and has been freely and fairly agreed
upon.
In the present case, the stipulation limiting petitioner’s liability is not contrary
to public policy.
27
The shippers/consignees may recover the full value of the goods by the
simple expedient of declaring the true value of the shipment in the Bill of
Lading. Other than the payment of a higher freight, there was nothing to stop
them (Legaspi, et.al) from placing the actual value of the goods therein.
In fact, they committed fraud against the common carrier by deliberately
undervaluing the goods in their Bill of Lading, thus depriving the carrier of its
proper and just transport fare.
Concededly, the purpose of the limiting stipulation in the Bill of Lading is to
protect the common carrier. Such stipulation obliges the shipper/consignee to
notify the common carrier of the amount that the latter may be liable for in
case of loss of the goods. The common carrier can then take appropriate
measures -- getting insurance, if needed, to cover or protect itself. This
precaution on the part of the carrier is reasonable and prudent.
I. Violation of Constitutional Rights
Zulueta vs. Nicolas
FACTS:
This is an appeal taken by plaintiff from a decision of the Court of First
Instance of Manila, dismissing his complaint for damages on the ground of
lack of cause of action. Plaintiff instituted the present action on May 19, 1954
against the defendant provincial fiscal of Rizal to recover moral and
pecuniary damages in the sum of P10,000. The complaint in substance
alleges that on May 6, 1954, the defendant fiscal conducted an investigation
of a complaint for libel filed by herein plaintiff against the provincial governor
of Rizal and the staff members of the Philippine Free Press; that after said
investigation the fiscal "rendered an opinion" that there was no prima facie
case; that the alleged libelous statements were made in good faith and for
the sole purpose of serving the best interests of the public; and that in
consequence the fiscal absolved the said governor and the Free Press staff
from the crime of libel.
ISSUE:
Whether plaintiff's complaint states a cause of action.
HELD:
No. The present action is based on article 27 of the new Civil Code, which
provides that "any person suffering material or moral loss because a public
servant or employee refuses or neglects without just cause, to perform his
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
official duty may file an action for damages and other relief against the latter."
But as we said in Bagalay vs. Ursal, this article "contemplates a refusal or
neglect without just cause by a public servant or employee to perform his
official duty." Refusal of the fiscal to prosecute when after an investigation he
finds no sufficient evidence to establish a prima facie case is not a refusal,
without just cause, to perform an official duty. The fiscal has for sure the legal
duty to prosecute crimes where there is enough evidence to justify such
action. But it is equally his duty not to prosecute when after an investigation
he has become convinced that the evidence available is not enough to
establish a prima facie case. The fiscal is not bound to accept the opinion of
the complainant in a criminal case as to whether or not a prima facie case
exists. Vested with authority and discretion to determine whether there is
sufficient evidence to justify the filing of the corresponding information and,
having control of the prosecution of a criminal case, the fiscal cannot be
subjected to dictation from the offended party. Having legal cause to refrain
from filing an information against the persons whom the herein plaintiff wants
him to charge with libel, the defendant fiscal cannot be said to have refused
or neglected without just cause to perform his official duty. On the contrary, it
would appear that he performed it.
It may not be amiss to state here that, as a general rule, a public prosecutor,
being a quasi-judicial officer empowered to exercise discretion or judgment,
is not personally liable for resulting injuries when acting within the scope of
his authority, and in the line of his official duty. As was said in the case of
Mendoza vs. De Leon: "Nor are officers or agents of the Government
charged with the performance of governmental duties which are in their
nature legislative, or quasi judicial, liable for the consequences of their official
acts, unless it be shown that they act willfully and maliciously, and with the
express purpose of inflicting injury upon the plaintiff."
Ateneo de Manila University vs. CA
FACTS:
A waitress in the cafeteria of Cervini Hall inside the university campus
charged Juan Ramon Guanzon, son of private respondents Romeo Guanzon
and Teresita Regalado, and a boarder and first year student of the university
with unbecoming conduct for striking her at her left temple. The incident
came about when Juan Guanzon was asking for siopao at the counter,
however he was asked to wait which made him madder.
The university conducted an investigation of the slapping incident. On the
basis of the investigation results, Juan Ramon was dismissed from the
university.The dismissal of Juan Ramon triggered off the filing of a complaint
28
for damages by his parents against the university in the then Court of First
Instance of Negros Occidental at Bacolod City. The complaint states that
Juan Ramon was expelled from school without giving him a fair trial in
violation of his right to due process and that they are entitled to actual, moral,
and exemplary damages as well as attorney's fees.
In its answer, the university denied the material allegations of the complaint
and justified the dismissal of Juan Ramon on the ground that his unbecoming
behavior is contrary to good morals, proper decorum, and civility, that such
behavior subjected him as a student to the university's disciplinary
regulations' action and sanction and that the university has the sole
prerogative and authority at any time to drop from the school a student found
to be undesirable in order to preserve and maintain its integrity and discipline
so indispensable for its existence as an institution of learning.
After due trial, the lower court found for the Guanzons. Upon appeal to the
Court of Appeals by the university, the trial court's decision was initially
reversed and set aside. The complaint was dismissed. However, upon
motion for reconsideration filed by the Guanzons, the appellate court
reversed its decision and set it aside through a special division of five. In the
resolution issued by the appellate court, the lower court's decision was
reinstated. The motion for reconsideration had to be referred to a special
division of five in view of the failure to reach unanimity on the resolution of
the motion, the vote of the regular division having become 2 to 1.The
petitioner now asks us to review and reverse the resolution of the division of
five.
ISSUE:
Whether or not the Supreme Court may decline to review the said Board’s
findings
HELD:
Yes. By reason of their special knowledge and expertise gained from the
handling of specific matters falling under their respective jurisdictions, we
ordinarily accord respect if not finality to factual findings of administrative
tribunals. However, there are exceptions to this rule and judicial power
asserts itself whenever the factual findings are not supported by evidence;
where the findings are vitiated by fraud, imposition, or collusion; where the
procedure which led to the factual findings is irregular; when palpable errors
are committed; or when a grave abuse of discretion, arbitrariness, or
capriciousness is manifest.
The Board of Discipline was made up of distinguished members of the
faculty-Fr. Francisco Perez, Biology Department Chairman; Dr. Amando
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Capawan, a Chemistry professor; Assistant Dean Piccio of the College; and
Dr. Reyes of the same College. There is nothing in the records to cast any
doubt on their competence and impartiality insofar as this disciplinary
investigation is concerned.
Moreover, notwithstanding the non-participation of the private respondents,
the university, as stated earlier, undertook a fair and objective investigation of
the slapping incident. Due process in administrative proceedings also
requires consideration of the evidence presented and the existence of
evidence to support the decision.
Cojuangco Jr. vs. CA,
FACTS:
Petitioner Eduardo Cojuangco Jr. filed a Petition for Review under Rule 45 of
the ROC seeking to set aside CA’s decision, after it reversed a favorable
decision of the RTC that ordered the private respondents to pay him moral
and exemplary damages, attorney’s fees and costs of the suit, and denied
his Motion for Reconsideration.
Cojuangco, a known businessman-sportsman owned several racehorses
which he entered in sweepstakes races. Several of his horses won the races
on various dates, and won prizes together with the 30% due for
trainer/grooms. He sent letters of demand for the collection of the prizes due
him but private respondents PCSO and its then chairman Fernando
Carrascoso Jr. consistently replied that the demanded prizes are being
withheld on advice of PCGG. Consequently, Cojuangco filed this case before
the Manila RTC but before the receipt summons, PCGG advised private
respondents that “it poses no more objection to its remittance of the prized
winnings”. This was immediately communicated to petitioner’s counsel
Estelito Mendoza by Carrascoso but the former refused to accept the prizes
at this point, reasoning that the matter had already been brought to court.
The trial court ruled that the private respondents had no authority to withhold
the subject racehorse winnings since no writ of sequestration was issued by
PCGG. Ordering the private respondents to pay in solidum the claimed
winnings, the trial court further held that, by not paying the winnings,
Carrascoso had acted in bad faith amounting to the persecution and
harassment of petitioner and his family. While the case was pending with the
CA, the petitioner moved for partial execution pending appeal to which the
private respondents posed no objection to.
29
CA reversed the trial court’s finding of bad faith, holding that the former
PCSO chairman was merely carrying out the instruction of the PCGG. It
likewise noted that Carrascoso’s acts of promptly replying to demands and
not objecting to partial execution negated bad faith.
ISSUE:
W/N the award for damages against respondent Carrascoso is warranted by
evidence the law
HELD:
YES AND NO. Petitioner is only entitled to nominal damages.
Bad faith does not simply connote bad judgment or simple negligence. It
imports a dishonest purpose or some moral obliquity and conscious doing of
a wrong, a breach of a known duty due to some motive or interest of ill will
that partakes of the nature of fraud. There is sufficient evidence on record to
support Respondent Court’s conclusion that Carrascoso did not act in bad
faith. His letters to PCGG indicated his uncertainties as to the extent of the
sequestration against the properties of the plaintiff. There is also denying that
plaintiff is a very close political and business associate of the former
President Marcos. Sequestration was also a novel remedy. Under these
equivocalities, Carrascoso could not be faulted in asking further instructions
from the PCGG, on what to do and more so, to obey the instructions given.
Besides, EO2 has just been issued by President Aquino, “freezing all assets
and properties in the Philippines (of) former President Marcos and/or his
wife…their close friends, subordinates, business associates…”
The extant rule is that public officers shall not be liable by way of moral and
exemplary damages for acts done in the performance of official duties,
unless there is a clear showing of bad faith, malice or gross negligence.
Attorney’s fees and expenses of litigation cannot be imposed either, in the
absence of clear showing of any of the grounds provided therefor under the
Civil Code. The trial court’s award of these kinds of damages must perforce
be deleted.
Nevertheless, this Court agrees with the petitioner and the trial that
Respondent Carrascoso may still be held liable under Article 32 of the Civil
Code, which provides:
Art. 32. Any public officer or employee, or any private individual, who directly
or indirectly obstruct, defeats, violates or in any manner impedes or impairs
any of the following rights and liberties of another person shall be liable to the
latter for damages:
xxx xxx xxx
(6) The rights against deprivation of property without due process of law;
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Under the aforecited article, it is not necessary that the public officer acted
with malice or bad faith. To be liable, it is enough that there was a violation of
the constitutional rights of petitioner, even on the pretext of justifiable motives
or good faith in the performance of one’s duties.
We hold that petitioner’s right to the use of his property was unduly impeded.
While Respondent Carrascoso may have relied upon the PCGG’s
instructions, he could have further sought the specific legal basis therefor. A
little exercise of prudence would have disclosed that there was no writ issued
specifically for the sequestration of the racehorse winnings of petitioner.
There was apparently no record of any such writ covering his racehorses
either. The issuance of a sequestration order requires the showing of a prima
facie case and due regard for the requirements of due process. The
withholding of the prize winnings of petitioner without a properly issued
sequestration order clearly spoke of a violation of his property rights without
due process of law.
Art. 2221 of the Civil Code authorizes the award of nominal damages to a
plaintiff whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, not for indemnifying the
plaintiff for any loss suffered.
BOOK II – DAMAGES
CHAPTER I
GENERAL PROVISIONS
A. Concept
MEA Builders, Inc. vs. CA
FACTS:
MEA entered into a contract with Capital Resources Corporation (CRC) for
the construction of housing units for CRCs residential subdivision in
Multinational Village, Paranaque, Metro Manila in consideration of
P39,256,880, payable in cash and negotiable securities. Under the contract
the cash portion shall be payable in 90-day stand-by letters of credit from a
bank.
MEA, CRC and private respondent Metropolitan Bank and Trust Company
(Metrobank) entered into a tripartite agreement whereby stand-by letters of
credit would be issued to cover the cash portion of the payments on
30
completed housing units in the MEA and CRC July 15, 1982 contract, subject
to the following conditions:
i) The houses, townhouses, and duplexes shall have already been completed, as attested to by
the Certificate of Completion duly signed by the Contractor and accepted by the owner or the
owners representative, Metrobank representative, and the Home Financing Corporation;
ii) That the letters of credit shall be in amounts not less than P2,000,000.00 for each letter of
credit, in other words, the aggregate total of the contracted price of the completed units should
not fall below P2,000,000.00 per letter of credit;
iii) That the letter of credit shall be a domestic, assignable, divisible, and irrevocable letter of
credit payable ninety (90) days from date of issuance and/or opening of the letter of credit and
the drawdown date can be advanced to the date of receipt of payment by Metrobank from the
National Home Mortgage Finance Corporation/other entities for units covered by the particular of
credit; and,
iv) That the owner shall secure an HFC Guarantee in favor of Metrobank to cover the amounts of
these letters of credit which are fully secured by real estate mortgages as provided for in the
agreement.
On the same day, MEA and CRC amended the July 15, 1982 construction
agreement by increasing the contract price to P45,552,950. In a letter to
Home Financing Corporation (HFC), Metrobank expressed its willingness to
finance the construction of the CRC Multinational Village project up to the
amount of P190 million thru letters of credit.
MEA wrote Metrobank asking if it could obtain the desired stand-by letters of
credit even without the HFC guarantee. In its reply, Metrobank advised MEA
that the letters of credit could be issued only upon submission of the HFC
guarantee and only for completed houses/townhouses/duplex units.
With the construction work under the tripartite agreement already in
progress, MEA and CRC executed another contract, this time for the
horizontal development of another parcel of land also in Multinational Village.
Under the contract, MEA was to perform landfill and other stipulated
infrastructural work for P7,755,000, excluding the cost of filling materials
which MEA would advance chargeable to CRC.
CRC submitted to HFC a Progress Report of work accomplished by MEA
stating its accomplishment to be worth P2,691,685.45.
HFC issued an official resolution approving the P120,000,000 cash
guarantee.
In order to increase its capital, MEA secured from Metrobank an advance of
P3,000,000 from the amount which may become due to it under the tripartite
agreement. Metrobank advanced the amount on condition that it would
nominally be covered by a promissory note and by a suretyship agreement
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
executed by petitioners Llave, Yu and Yuanlian. The suretyship agreement
was executed on March 3, 1983.
The promissory note was twice extended. When MEA completed
construction of several housing units entitling it to P3,330,277.60 from
Metrobank, the amount was applied as follows:
a. partial liquidation of the P3,000,000.00 advance made by MEA in the
amount of P1,5000,000.00;
b. various other accounts payable by MEA to or assumed by it in favor of
Metrobank in the amount of P1,253,511.14;
c. balance received by or credited to the account of MEA in the amount of
P576,716.45.
As a result of the partial liquidation, petitioners executed a new promissory
note in favor of Metrobank for the remaining P1,500,000 balance out of the
original P3,000,000. By May 10, 1983, MEA finished 45 single detached
units, evidenced by certificates of completion authenticated by CRC, MEA,
Metrobank and HFC. On November 4, 1983 MEA informed Metrobank of the
suspension of its operations and that it would resume operations after
arrangements regarding the letter of credit were finalized. Metrobank paid
P3,274,263.22 for the 45 finished detached houses ― P1,830,227.60 in
irrevocable domestic letter of credit and P1,444,035.62 in cash evidenced by
a certificate of full payment. On January 31, 1984 MEA informed Metrobank
and CRC of its work resumption. In its February 9, 1984 reply, Metrobank
advised MEA to hold off construction work until after CRC would have sold a
substantial number of the completed units. It was to their mutual benefit to
reduce their exposure to the project. MEA objected to the indefinite
suspension and demanded payment for their work accomplishments, plus
interest and charges. In the meantime, MEA defaulted on the P1.5 million
promissory note which matured February 6, 1984. Hence, on September 25,
1984, Metrobank instituted Civil Case No. 8532 for the recovery of the
amount covered by the promissory note plus interest in the sum of
P1,800,840.
In their answer, MEA and other petitioners admitted the execution of the
promissory note as well as the continuing suretyship. However, they denied
any liability to Metrobank on the ground that the promissory note and
continuing suretyship failed to reflect the true intent and agreement of the
parties. They contended that the real agreement of the parties was not a
straight or simple loan payable within a fixed period of time but an advance
payment scheme tied up with the agreements relative to the execution of
construction work in the CRC-Multinational Village Project, to be liquidated
from payments expected to become due to MEA. In support thereof, they
also invoked the tripartite agreement among CRC, MEA and Metrobank.
31
On July 18, 1991, the trial court decided in favor of MEA and found that the
promissory note covering the P1.5 million was not really a straight or simple
loan.
ISSUE:
Whether the petitioners are entitled to actual and compensatory damages
HELD:
No. On the award of damages, the appellate court also correctly deleted the
award of P9,000,000 actual compensatory damages. In legal contemplation,
the term damages is the sum of money which the law awards or imposes as
a pecuniary compensation, a recompense or satisfaction for an injury done or
a wrong sustained as a consequence either of a breach of a contractual
obligation or a tortuous act. Here, aside from the fact that we find neither
breach of contractual obligation nor bad faith on the part of Metrobank when
it suggested the suspension of construction work for the protection of the
parties mutual interests, petitioners failed to establish actual or compensatory
damages with a reasonable degree of certainty. The trial courts sole basis for
the award of compensatory damages was the testimony of petitioner Llave
who made a sweeping statement that the P9,000,000 represented unrealized
profits plus 3% monthly interest. This was not sufficient. The award of actual
or compensatory damages could not be sustained without any document any
proof to support such claim.
Regarding the award of attorneys fees, suffice it to state that we find no
sufficient justification for such an award. The grant of attorneys fees is the
exception rather than the rule, hence, it is necessary for the trial court to
make findings of fact and law which bring the case within the exception and
justify the grant of the award.
B. Applicable Rules
M – E – N – T – A – L (Moral, Exemplary, Nominal, Temperate, Actual
and Liquidated)
C. Damages can only be paid with MONEY, not “palay”
Heirs of Simeon Borlado, vs. CA
FACTS:
On April 15, 1942: Serapio Borlado sold the lot to Francisco Bacero. His
widow Amparo Dionisio Vda. de Bacero, as legal guardian of her minor
children,later on sold the lot on February 1948 to the Spouses Bienvenido
Bulan and Salvacion Borbon and they declared the lot in the name of Bulan
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
for Tax Declaration purposes and obtained the continuous, peaceful,
uninterrupted, adverse and exclusive possession of the lot until November 4,
1972 when heirs of Simeon Borlado forcibly entered and wrested physical
possession from them. The spouses filed with the MTC a complaint for
ejectment. The MTC ruled in favor of the spouses. The heirs were ordered to
vacated the lot and pay 100 cavans of palay annually from 1972 until they
vacate the premises and P5K for attorney’s fees and cost of suit
ISSUE:
W/N the 100 cavans of palay is an acceptable form of damages
HELD:
NO. Affirm with modification. Deleting the 100 cavans of palay for lack of
basis. “Palay” is not legal tender currency in the Philippines.
CHAPTER II
ACTUAL AND COMPENSATORY DAMAGES
A. Concept
Premiere Development Bank vs. CA
FACTS:
In October 1994, herein respondent Panacor Marketing Corporation
(Panacor), acquired an exclusive distributorship agreement with Colgate-
Palmolive Philippines, Inc. (Colgate) to sell its products. The exclusive
distributorship agreement however, required that Panacor have an inventory
level of 7.5 million. To meet such requirement, Panacor applied for a P4.1
million loan with Premiere Development Bank (Premiere), but the latter
rejected the application. Instead, it suggested that Panacor’s affiliate
company, respondent Arizona Transport Corporation (Arizona), an existing
loan client of the bank, apply for the loan; with the condition that the
proceeds thereof shall be made available to Panacor. Eventually, Panacor
was granted a P4.1 million credit line agreement. Thereafter, Arizona
applied for a P6.1 million loan, proceeds of which would be made available to
Panacor. However, when the bank approved the loan, the proceeds were
divided in such a way thatP3.4 million of which would be granted to Arizona
to pay off its existing obligations, while the remaining P2.7 million served as
Panacor’s credit line. The loan was secured by a real estate mortgage over
a parcel of land signed by Arizona’s officers. Since the P2.7 million credit line
of Panacor was insufficient to meet the capital requirements needed for the
distributorship agreement, it decided to apply for a loan with another bank,
Iba-Finance Corporation (Iba-Finance) worth P10 million, P7.5 of which
32
would be released as payment for the first loan, while the remaining P2.5
million would be released to Panacor after Premiere orders the cancellation
of the real estate mortgage over the earlier loan and turns over the title to
Iba-Finance, referred to as the take-out agreement.
Eventually, Iba-Finance released P6.2 million representing the total balance
of Arizona’s obligations to Premiere, with the request that the real estate
mortgage issued over the first loan be cancelled upon payment of the said
amount. Premiere, despite full payment by Iba-Finance of the loan, refused
to cancel the real estate mortgage issued. When Panacor requested for the
release of the remaining P2.5 million from Iba-Finance, the latter refused,
stating that Premiere had not complied with its obligation of canceling the
real estate mortgage. As a result thereof, Panacor was unable to meet the
capital requirements of the exclusive distributorship agreement and Colgate
subsequently terminated the said agreement. On March 13, 1996, Panacor
filed a complaint for specific performance and damages against Premiere
Bank. Iba-Finance filed a complaint-in-intervention praying that
Premiere Bank pay damages in its favor. The trial court ruled in favor of
Panacor and Iba-Finance, ordering Premiere Bank to pay both entities
damages as well as ordering Premiere to cancel the real estate mortgage
and deliver the title to Iba-Finance. Premiere Bank appealed the said
decision, arguing that it did not exercise bad faith in downgrading Panacor’s
credit line to warrant an award of moral damages, that there was no basis in
awarding the amount of P4.5 million in actual damages. Meanwhile,
Premiere entered into a compromise agreement with Iba-Finance by
agreeing to return the amount Iba-Finance forwarded to Premiere as
payment for Arizona’s loans.
ISSUES:
1. W/N the award of exemplary damages justified on the ground that Premier
Bank acted in bad faith when it downgraded the amount stated in Panacor’s
credit line agreement?
2. W/N Premiere Bank’s officer-in-charge, Ms. Arlene Martillano had the
authority to execute the Credit Line Agreement which would sanction its
validity?
3. W/N there was sufficient evidence presented to warrant the awarding of
actual damages in the amount of P4, 520,000.00.
HELD:
1. YES. Under the Credit Line Agreement dated September 1995, Premiere
Bank agreed to extend a loan of P4.1 million to Arizona to be used by its
affiliate, Panacor, in its operations. Eventually, Premiere approved in favor of
Arizona a loan equivalent to P6.1 million, P3.4 million of which was allotted
for the payment of Arizona’s existing loan obligations and P2.7 million as
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
credit line of Panacor. Since only P2.7 million was made available to
Panacor, instead of P4.1 million as previously approved, Panacor applied for
a P2.5 loan from Iba-Finance, which, as earlier mentioned, was not released
because of Premiere Bank’s refusal to issue the mortgage cancellation. It is
clear that Premiere Bank deviated from the terms of the credit line agreement
when it unilaterally and arbitrarily downgraded the credit line of Panacor from
P4.1 million to P2.7 million. Having entered into a well-defined contractual
relationship, it is imperative that the parties should honor and adhere to their
respective rights and obligations thereunder. Law and jurisprudence dictate
that obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. The appellate
court correctly observed, and we agree, that:
“Appellant’s actuations, considering the actual knowledge of its officers of the
tight financial situation of appellee PANACOR brought about primarily
by the appellant bank’s considerable reduction of the credit line portion
of the loan, in relation to the “bail-out” efforts of IBA Finance, whose payment
of the outstanding loan account of appellee ARIZONA with appellant was
readily accepted by the appellant, were truly marked by bad faith and lack of
due regard to the urgency of its compliance by immediately releasing the
mortgage cancellation document and delivery of the title to IBA Finance. That
time is of the essence in the requested release of the mortgage cancellation
and delivery of the subject title was only too well-known to appellant, having
only belatedly invoked the cross-default provision in the Real Estate
Mortgage executed in its favor by appellee ARIZONA to resist the plain valid
and just demand of IBA Finance for such compliance by appellant bank.”
Premiere Bank cannot justify its arbitrary act of downgrading the credit line
on the alleged finding by its project analyst that the distributorship was not
financially feasible. Notwithstanding the alleged forewarning, Premiere
Bank still extended Arizona the loan of P6.1 million, albeit in
contravention of the credit line agreement. This indubitably indicates
that Premiere Bank had deliberately and voluntarily granted the said loan
despite its claim that the distributorship contract was not viable. Neither can
Premiere Bank rely on the puerile excuse that it was the bank’s policy not to
release the mortgage cancellation prior to the settlement of outstanding loan
obligations. Needless to say, the Final Statement of Account dated October
17, 1995 showing in no uncertain terms Arizona’s outstanding indebtedness,
which was subsequently paid by Iba-Finance, was the full payment of
Arizona’s loan obligations. Equity demands that a party cannot disown it
previous declaration to the prejudice of the other party who relied reasonably
and justifiably on such declaration.
2. YES. As found by the lower court, there are sufficient indicia that
demonstrate that the alleged unjust pressure exerted on Martillano was
33
more imagined than real. In her testimony, Martillano claims that she was
persuaded and coaxed by Caday of Iba-Finance and Panaligan of Panacor
to sign the letter. It was she who provided Iba-Finance with the Final
Statement of Account and accepted its payment without objection or
qualification. These acts show that she was vested by Premiere Bank with
sufficient authority to enter into the said transactions. If a private corporation
intentionally or negligently clothes its officers or agents with apparent power
to perform acts for it, the corporation will be estopped to deny that the
apparent authority is real as to innocent third persons dealing in good faith
with such officers or agents. As testified to by Martillano, after she received a
copy of the credit line agreement and affixed her signature inconformity
thereto, she forwarded the same to the legal department of the Bank at its
Head Office. Despite its knowledge, Premiere Bank failed to disaffirm the
contract. When the officers or agents of a corporation exceed their powers in
entering into contracts or doing other acts, the corporation, when it has
knowledge thereof, must promptly disaffirm the contract or act and allow the
other party or third persons to act in the belief that it was authorized or has
been ratified. If it acquiesces, with knowledge of the facts, or fails to
disaffirm, ratification will be implied or else it will be estopped to deny
ratification.
3. YES. To justify an award for actual damages, there must be competent
proof of the actual amount of loss. Credence can be given only to claims,
which are duly supported by receipts. The burden of proof is on the party
who will be defeated if no evidence is presented on either side. He must
establish his case by a preponderance of evidence which means that the
evidence, as a whole, adduced by one side is superior to that of the other. In
other words, damages cannot be presumed and courts, in making an award,
must point out specific facts that can afford a basis for measuring whatever
compensatory or actual damages are borne. Under Article 2199 of the
Civil Code, actual or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury sustained. They proceed
from a sense of natural justice and are designed to repair the wrong that has
been done, to compensate for the injury inflicted and not to impose a penalty.
In the instant case, the actual damages were proven through the
sole testimony of Themistocles Ruguero, the vice president for administration
of Panacor. In his testimony, the witness affirmed that Panacor incurred
losses, specifically, in terms of training and seminars, lease hold acquisition,
procurement of vehicles and office equipment without, however, adducing
receipts to substantiate the same. The documentary evidence marked as
exhibit “W”, which was an ordinary private writing allegedly itemizing the
capital expenditures and losses from the failed operation of Panacor, was not
testified to by any witness to ascertain the veracity of its contents. Although
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
the lower court fixed the sum of P4, 520,000.00 as the total expenditures
incurred by Panacor, it failed to show how and in what manner the claimant
substantiated the same with reasonable certainty. Hence, the claim for actual
damages should be admitted with extreme caution since it is only based on
bare assertion without support from independent evidence. Premiere’s failure
to prove actual expenditure consequently conduces to a failure of its claim. In
determining actual damages, the court cannot rely on mere assertions,
speculations, conjectures or guesswork but must depend on competent proof
and on the best evidence obtainable regarding the actual amount of loss.
Even if not recoverable as compensatory damages, Panacor may still be
awarded damages in the concept of temperate or moderate damages. When
the court finds that some pecuniary loss has been suffered but the amount
cannot, from the nature of the case, be proved with certainty, temperate
damages may be recovered. Temperate damages may be allowed in cases
where from the nature of the case, definite proof of pecuniary loss cannot
be adduced, although the court is convinced that the aggrieved party
suffered some pecuniary loss. It is obvious that the wrongful acts of Premiere
Bank adversely affected, in one way or another, the commercial credit of
Panacor, greatly contributed to, if not, decisively caused the premature
stoppage of its business operations and the consequent loss of business
opportunity. Since these losses are not susceptible to pecuniary estimation,
temperate damages may be awarded.
Article 2216 of the Civil Code: No proof of pecuniary loss is necessary in
order that moral, nominal, temperate, liquidated or exemplary damages may
be adjudicated. The assessment of such damages, except liquidated ones, is
left to the discretion of the Court, according to the circumstances of each
case. Under the circumstances, the sum of P200, 000.00 as temperate
damages is reasonable.
B. Kinds of Actual Damages
G.Q. Garments, Inc. vs. Angel Miranda
FACTS:
Angel Miranda is the registered owner of a 9,646 square meters parcel of
land located at Niog, Bacoor, Cavite (Property). In 1984, Angelito Miranda,
the son of Angel Miranda, owner of the Executive Machineries and
Equipment Corporation (EMECO), entered into entered into a verbal
contract of lease with his father over the Property and was allowed to build a
factory thereon. The agreement was on a month-to-month basis, at the rate
of P8,000 per month. EMECO constructed its factory on the property. At the
outset, EMECO paid the monthly rentals. However, after Angelito died
34
on June 21, 1988, EMECO failed to pay the rentals but still continued
possessing the leased premises.
On November 19, 1989, the factory of EMECO was totally razed by fire. In a
letter to EMECO dated June 3, 1991, Angel demanded the payment of
accrued rentals in the amount of P280,000.00 as of May 1991. EMECO was
also informed that the oral contract of lease would be terminated
effective June 30, 1991. However, EMECO failed to pay the accrued rentals
and to vacate the property. It vacated the leased premises, but the accrued
rentals remained unpaid.
Sometime in November 1991, Florenda, the wife of Angelito Miranda, went to
GQ Garments and offered to sublease the property to Wilson Kho, the
Officer-in Charge of the corporation. Florenda showed Kho a purported copy
of a contract of lease over the said property allegedly executed by Angel in
favor of EMECO. After visiting and viewing the property, Kho agreed to rent
the area upon the condition that its true and registered owner would
personally sign the lease contract in his presence. When Florenda failed to
present Angel for said purpose, Kho turned down her proposal.
Later, Kho was able to locate Angel at Noveleta, Cavite and offered, in behalf
of petitioner, to lease the property, as to which Angel agreed. On December
23, 1991, Angel and the corporation, represented by its Executive Vice-
President, Davy John Barlin, executed a contract of lease over the subject
property. As lessee, it was authorized to introduce improvements, structures,
and buildings on the property as it may deem necessary and for the purpose
for which it was leased.
Consequently, petitioner secured the following documents: mayors permit,
sanitary permit, business sticker, and an application for municipal license.
Thereafter, it moved into the property with its equipment, machinery,
appliances, supplies, and other construction materials. The construction of a
building and factory in the leased premises commenced.
However, on January 27, 1992, Florenda, together with several armed men
who identified themselves as policemen, forcibly evicted petitioner from the
leased premises, claiming that she was the owner and that the place was
already covered by another existing contract of lease. During the encounter,
Florenda and her men took some equipment, machinery and other properties
belonging to petitioner, thereby causing loss and damage to said properties.
In the meantime, Angel secured a copy of the purported contract of lease he
allegedly executed in favor of EMECO. On March 12, 1992, he forthwith filed
a complaint for declaration of nullity of the contract of lease before the
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Regional Trial Court (RTC) of Makati, Branch 66, docketed as Civil Case No.
92-699. Angel alleged therein that his signature as lessor in the purported
contract was a forgery. The RTC rendered judgment in favor of Angel and
declared the contract of lease purportedly executed by him and EMECO
void.
On April 20, 1992, petitioner instituted an action for damages and recovery of
possession of the property before the RTC of Cavite City, Branch 17, with
Angel, EMECO and Florenda, as alternative defendants.
On June 25, 1992, Angel and petitioner, as plaintiffs, filed a separate
complaint for ejectment against Florenda before the Municipal Trial Court
(MTC) of Bacoor, Cavite, docketed as Civil Case No. 1265. After due
proceedings, the court rendered judgment on July 2, 1993, ordering the
eviction of Florenda and all those claiming the property in her behalf. The
decision was appealed to the RTC. However, for failure to pay
a supersedeas bond, the decision was executed and Florenda was evicted
from the property.
On November 26, 1993, the RTC rendered judgment in Civil Case No. N-
5573, dismissing the complaint against all the alternative defendants without
prejudice. It declared that plaintiff was entitled to damages, but it had to
dismiss the complaint because of the pendency of Civil Case Nos. 92-699
and 92-1265.
However, the RTC resolved to deny the motion of petitioner prompting it to
appeal to the Court of Appeals. Angel Miranda also appealed the decision,
which was docketed as CA-G.R. CV No. 45567.
For his part, Angel averred that the trial court should have dismissed the
complaint against him with prejudice for the reason that there is no allegation
in the complaint that he participated, directly or indirectly, in the forcible
ejectment of petitioner from the property, and in the looting and taking of its
properties. He insisted that it was Florenda who forcibly evicted the
corporation and took its properties. Thus, he cannot be held responsible for
the tortious and wrongful acts of third persons, as there is no law to that
effect. Under Article 1664 of the New Civil Code, he is not obliged to answer
for a mere act of trespass, and the lessee has a direct action against the
intruder. He pointed out that the law unconditionally and unequivocally
absolves the lessor from any liability arising from an act of trespass by a third
person. The duty to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the duration of the contract is merely a warranty
by the lessor that the lessee shall not be disturbed in his legal, not physical,
possession.
35
On October 29, 2002, the CA rendered judgment reversing the decision of
the RTC. The fallo reads:
WHEREFORE, the judgment appealed from is hereby REVERSED and SET
ASIDE and a new one entered dismissing the complaint with prejudice
against Angel Miranda and ordering Florenda Miranda to pay G.Q.
Garments, Inc. the amount of:
1. P300,000.00 as and for nominal damages;
2. P200,000.00 as and for attorneys fees; and
3. To pay the costs of suit.
The appellate court absolved Angel of any liability due to the absence of
evidence showing that he had participated, directly or indirectly, in the looting
of GQ Garments properties and in forcibly ejecting the latter from the
premises in question. While under Article 1654, paragraph 3, of the New Civil
Code, a lessor is obliged to maintain the lessee in peaceful and adequate
enjoyment of the lease for the entire duration of the contract, the law,
however, does not apply to him since the unlawful acts were caused by a
third person or an intruder. Under Article 1664, he is not obliged to answer
for a mere act of trespass which a third person may cause on the use of the
thing leased, but the lessee shall have a direct action against the intruder.
Moreover, the appellate court declared that the warranty of a lessor under
Article 1654 of the New Civil Code extends only to non-disturbance of legal
possession and not of physical possession. As ruled in the case of Bohol, Sr.
v. Torres, the duty to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the duration of the contract is merely a warranty
that the lessee shall not be disturbed in his legal, not physical possession.
According to the CA, the evidence on record clearly showed that Florenda
disturbed only the physical possession of the leased premises, and not legal
possession. Thus, the complaint with respect to Angel Miranda should be
dismissed with prejudice for lack of cause of action.
Petitioner filed a motion for the reconsideration of the decision, claiming that
it adduced proof that it sustained actual damages. It claimed that Angel was
liable for damages against it for disturbance in law.
Petitioner averred that Angel was liable for damages under Article 1654(3) of
the New Civil Code, under which, as lessor, he was obliged to maintain the
lessee in the peaceful and adequate enjoyment of the lease for the entire
duration of the contract.
The CA denied the motion.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Petitioner asserts that it adduced preponderant evidence that it sustained
actual damages when its equipment and machineries were destroyed, and
that such damaged property is valued at P10,000,000.00. It points out that
aside from respondent Florenda Mirandas testimony, it also adduced in
evidence photographs of the damaged property. Respondent Angel Miranda
failed to adduce any evidence to rebut the same. Petitioner also avers that
the damages it suffered was not merely an act of trespass but a disturbance
in law for which respondent Angel Miranda is liable. He violated its right, as
lessee; hence, he is liable for damages under Article 1654(3) of the New Civil
Code. To buttress its claim, petitioner cites the ruling of this Court in De la
Cruz vs. Seminary of Manila. It insists that respondent Angel Miranda should
pay actual damages of P10,000,000.00 and P360,000.00 it had paid to him
by way of reimbursement.
Respondents did not file any comment on the petition, and were thus
considered to have waived their right to do so.
ISSUES:
(1) whether respondents are liable to petitioner for the amount
of P10,000,000.00 by way of actual damages;
(2) whether respondent Angel Miranda is liable to reimburse to petitioner
the P360,000.00 paid as rentals.
HELD:
1. No. Petitioner asserts that the P10,000,000.00 in actual damages was
specifically alleged in its complaint and that evidence was adduced to prove
the same, consisting of the testimonies of respondent Florenda Miranda and
her witnesses to determine the extent of petitioners damages.
We agree with the ruling of the appellate court that petitioners claim for
actual damages was not properly substantiated by evidence. The CA
correctly ruled as follows:
Considering the above provisions of the law, there is no question that
defendant-appellee Florenda Miranda and/or EMECO should be held
accountable for the damage sustained by plaintiff-appellant due to their willful
and wanton disregard of the lease rights of plaintiff-appellant over the
property in question. However, we find that the alleged loss of articles,
machinery and equipment in the total sum of P9,960,000.00 was not proven
by clear and convincing evidence. Other than the bare testimony of Mr.
Wilson Kho and the witnesses he presented, there was no poof as to the
existence of these items prior to the taking over of Florenda over the property
in question. The listing of lost items contained in plaintiff-appellants Exhibits I
and I-1 is self-serving considering that no inventory was made on the said
36
items prior to its delivery to the premises in question and that no receipt or
proof of acquisition of these listed items were presented during the trial of the
case.
Under Article 2199 of the New Civil Code, actual damages include all the
natural and probable consequences of the act or omission complained of,
classified as one (1) for the loss of what a person already possesses (dao
emergente) and the other, for the failure to receive, as a benefit, that which
would have pertained to him (lucro cesante). As expostulated by the Court:
Under Article 2199 of the Civil Code, actual or compensatory damages are
those awarded in satisfaction of, or in recompense for, loss or injury
sustained. They proceed from a sense of natural justice and are designed to
repair the wrong that has been done, to compensate for the injury inflicted
and not to impose a penalty. In actions based on torts or quasi-delicts, actual
damages include all the natural and probable consequences of the act or
omission complained of. There are two kinds of actual or compensatory
damages: one is the loss of what a person already possesses, (dao
emergente), and the other is the failure to receive as a benefit that which
would have pertained to him (lucro cesante).
The burden of proof is on the party who will be defeated if no evidence is
presented on either side. His burden is to establish his case by
preponderance of evidence which means that the evidence, as whole,
adduced by one side, is superior to that of the other. Actual damages are not
presumed. The claimant must prove the actual amount of loss with a
reasonable degree of certainty premised upon competent proof and on the
best evidence obtainable.
The claimants are not, however, mandated to prove damages in any specific
or certain amount in order to recover damages for a substantial
amount. When the existence of a loss is established, absolute certainty as to
its amount is not required.
To be entitled to an award of actual damages, it is necessary to prove the
precise amount of the loss with a reasonable degree of certainty, premised
upon competent proof and on the best evidence obtainable by the injured
party to justify such award. The award of actual damages cannot be simply
based on the mere allegation of a witness without any tangible claim, such as
receipts or other documentary proofs to support such claim. Failing to satisfy
the court that petitioner certainly suffered actual damages, its claim must now
fail.
In this case, there is no question that, indeed, petitioner sustained damages
because its equipment, machineries, and other valuables were taken, and its
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
building was destroyed by respondent Florenda Miranda and
her cohorts. Respondent Angel Miranda did not cause the damages
sustained by petitioners property. However, the only evidence adduced by
the petitioner to prove the value of said property is the testimony of Kho,
which is not sufficient to prove for actual damages.
2. No. Under the provision, a lessor is obliged to maintain petitioners
peaceful and adequate enjoyment of the premises for the entire duration of
the lease. In case of noncompliance with these obligations, the lessee may
ask for the rescission of the lease contract and indemnification for damages
or only the latter, allowing the contract to remain in force.
The trespass referred to in Article 1654, paragraph 3, of the New Civil Code,
is legal trespass or perturbacion de mero derecho. The lessor is not liable for
the mere fact of a trespass or trespass in fact (perturbacion de mero
hecho) made by a third person of the leased property. The lessee shall have
a direct action against the trespasser and not against the lessor. As
explained by the Court, if the act of trespass is not accompanied or preceded
by anything which reveals a really juridic intention on the part of the
trespasser, in such wise that the lessee can only distinguish the material fact,
such a trespass is merely a trespass in fact.
The duty of the lessor to maintain the lessee in the peaceful and adequate
enjoyment of the leased property for the entire duration of the contract is
merely a warranty that the lessee shall not be disturbed in having legal and
not physical possession of the property.
In this case, the trespass perpetrated by respondent Florenda Miranda and
her confederates was merely trespass in fact. They forcibly entered the
property and caused damage to the equipment and building of petitioner,
because the latter refused to enter into a contract of lease with EMECO over
the property upon respondent Florenda Mirandas failure to present
respondent Angel Miranda to sign the contract of lease. It turned out that
respondent Florenda Miranda attempted to hoodwink petitioner and forged
respondent Angel Mirandas signature on the contract of lease she showed to
petitioner. It appears that respondent Florenda Miranda tried to coerce the
petitioner into executing a contract of lease with EMECO over the property,
only to be rebuffed by the petitioner.
It bears stressing that respondent Angel Miranda was not content in adopting
a mere passive stance in the face of respondent Florenda Mirandas act of
trespass. He and the petitioner filed a case for forcible entry against Florenda
Miranda; he also succeeded in having the RTC, in Civil Case No. 92-699,
declare the contract of lease which respondent Florenda Miranda showed
37
petitioner as null and void, with the courts ruling that his signature on the
contract was a forgery.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Cost against
the petitioner.
C. Nature and Proof of Compensatory Damages
Francisco Perfecto vs. Hon Feliciano Gonzales
FACTS:
Private respondent Juliana C. Vista, a public school teacher of San Andres,
Catanduanes was appointed poll clerk by the Commission on Elections in
Precinct No. 25 of San Andres in the general elections of November 9, 1965.
Petitioner Francisco A. Perfecto, a retired public service commissioner, was
a candidate for congressman of the lone district of Catanduanes. He lost in
that election.
In August 1967, petitioner filed with the Commission on Elections an
administrative complaint against the members of the board of election
inspectors of Precinct No. 25 of San Andres, namely: Roberto Reyes,
Chairman; Felicidad Garcia, Nacionalista Party inspector; Jorge Primo,
Liberal Party inspector; and herein private respondent Juliana C. Vista, poll
clerk of said precinct. The complaint charged that the said members of the
board of election inspectors were guilty of non-feasance, malfeasance and
misfeasance for wilfull failure to comply with the instructions, orders,
decisions and rulings of the Commission in connection with the performance
of their duties relative to the conduct of the elections of 1965.
As a consequence, private respondent Juliana Vista, assisted by her
husband Vicente Vista, filed an action for damages alleging that the above
charges were false and without basis and had been instituted maliciously in
order to harass, annoy, demean, degrade and expose her to public ridicule
and because of which she suffered "mental torture, anguish, sleepless
nights, besmirched reputation, wounded feelings, mental shock and social
humiliation which may be assessed as moral damages in the amount of
P120,000.00." Further, she "claims the further sum of P15,000.00 as
exemplary damages, and P10,000.00 for attorney’s fees and expenses in the
prosecution of the suit."
Answering the complaint for damages, herein petitioner Francisco A.
Perfecto avers that the filing of the administrative complaint against private
respondent Vista and the members of the board of election inspectors of
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
Precinct No. 25 was done in good faith with the highest motive of bringing to
justice persons who have violated the laws of the land; that he never had any
personal grudge or ill-feeling against private respondent previously and his
only purpose in filing the administrative complaint was to deter the
commission of the acts charged for the sake of democracy; that he even
asked for the dismissal of all administrative cases he had filed against many
teachers in their conduct of the 1965 elections because he had no intention
of demeaning and degrading them and because he was satisfied with the
action taken by the Commission in connection with the election cases in the
provinces of Batanes and Cotabato.
Evidence shows that private respondent Vista was the poll clerk of Precinct
No. 25 of San Andres during the elections of 1965. However, it had been
shown successfully that she did not act as poll clerk on electionday,
November 9, 1965 because she was ill and had been running with fever for
several days prior to the election. In fact, she was substituted by Nazaria B.
Reyes, another public school teacher as poll clerk on that day.
The trial court on this point said:
". . . The best and most reliable proof showing the identities of the officials of
Precinct No. 25 who reported for duty on November 9, 1965, is the minutes
of voting which is supposed to be the authentic record of the proceedings in
the precinct during election day and the election return showing the result of
the canvass of the votes in the precinct which are all required to be
accomplished and signed by the chairman and members of the board of
election inspectors including the poll clerk. In both documents it appears that
Mrs. Nazaria B. Reyes, the substitute poll clerk, acted as poll clerk on
election day in place of the regular poll clerk, the plaintiff, who was absent
and did not report for duty
However, the lower court "failed to find sufficient proof to sustain the charge
that in filing the administrative complaint with the Commission on Elections
the defendant was acting with malice and for the sole purpose of degrading
or besmirching the reputation of the plaintiff and exposing her to public
ridicule. The very complaint itself shows upon itself that it was not directed
solely at the plaintiff but was in fact against all the members of the board of
election inspectors of Precinct No. 25 of which the plaintiff was only the poll
clerk. In fact it would appear from a fair and impartial appraisal of the charges
that the major responsibility is lodged against the chairman and the two other
inspectors who by law control the proceedings in the board. The poll clerk is
comparatively a minor official in the board and there is nothing in the
complaint which will show that it was directed solely for the purpose of
harassing and injuring the reputation of the plaintiff. The chairman and the
two other election inspectors who were made respondents have not taken
38
offense and their conduct induces the impression that they either did not feel
aggrieved or felt that the dismissal of the complaint was enough vindication
of their honor if in one way or another it became involved as a result of the
charges. . . . Under the circumstances, the action taken by the defendant can
hardly be construed as motivated by malice and intended to harass and
injure her reputation." Notwithstanding, the lower court rendered judgment
ordering herein petitioner to indemnify private respondent the sum of
P2,000.00 as compensatory damages.
Hence, the filing of this petition for review by way of certiorari to set aside the
order of respondent judge in awarding private respondent compensatory
damages in the amount of P2,000.00.
ISSUE:
W/N the award of compensatory damages is proper
HELD:
NO. Respondent judge found no basis for actual or compensatory damages
and exemplary damages when it said that "to slap a heavy damage upon the
defendant would be tantamount to imposing a prohibitive premium upon the
filing of complaints against public officials for misconduct in office, a policy
that is neither sound nor conducive to a healthy development of civic courage
and public interest so necessary and indispensable in the conduct of the
affairs of the government. Besides, actual or compensatory damages are
those recoverable because of pecuniary loss — in business, trade, property,
profession, job, or occupation, and the same must be proved; otherwise, if
the proof is flimsy and non-substantial, no damages will be given. In the case
of Malonzo v. Galang, the Court, speaking through Justice J.B.L. Reyes, held
that with respect to compensatory damages assuming that they are
recoverable under the theory that petitioner had filed a clearly unfounded suit
against respondent, the same constitutes a tort against the latter that makes
the former liable for all damages which are the natural and probable
consequences of the act or omissions complained of. These damages,
cannot, however, be presumed and must be duly proved (Article 2199, New
Civil Code). Well settled is the rule that even if the complaint filed by one
against the other is clearly unfounded this does not necessarily mean, in the
absence of specific facts proving damages, that said defendant really
suffered actual damage over and above attorney’s fees and costs. The Court
cannot rely on its speculations as to the fact and amount of damages. It must
depend on actual proof of the damages alleged to have been suffered.
WHEREFORE, the petition is GRANTED and the order of respondent judge
condemning petitioner Francisco A. Perfecto to pay compensatory damages
of P2,000.00 is hereby SET ASIDE.
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA
D. Requisites: Must be alleged and proved with certainty
G.A. Machineries Inc. vs. Yaptinchay (1983)
FACTS:
"Sometime early in January, 1962 appellant GAMI, thru a duly authorized
agent, offered to sell a brand-new Fordson Diesel Engine to appellee Horacio
Yaptinchay, owner of the freight hauling business styled 'Hi-Way Express'.
Relying on the representations of appellant's representative that the engine
offered for sale was brand-new, appellee agreed to purchase the same at the
price of P7, 590.00.
Pursuant to the contract of sale thus entered into, appellant delivered to
appellee, on January 27, 1962, one (1) Fordson Diesel Engine assembly,
Model 6-D, with Engine Serial No. A-212193, at 1500 RPM, with fly wheel, fly
wheel housing, fuel injection assembly, exhauster, fuel filter, oil filter, fuel lift
pump, plus conversion kit for F-500, subject to the standard warranties,
particularly the representation, relied upon by appellee, that the same was
brand-new. Said engine was installed by appellant in Unit No. 6 of the Hi-
Way Express. "Within the week after its delivery, however, the engine in
question started to have a series of malfunctions which necessitated
successive trips to appellant's repair shop. Thus, it sprang an oil leak such as
thereafter, the malfunctioning persisted and, on ins-pection, appellee's
mechanic noticed a worn out screw which made appellee suspicious about
the age of the engine. This prompted to protest that the engine was not
brand-new. "In its defense, appellant interposed prescription of the action,
denied the imputation of misrepresenta-tion, and disputed the propriety and
amount of damages claimed."
The trial court ruled in favor of plaintiff Yaptinchay. The CA affirmed the
decision in favor to Yaptinchay. Gami appealed to the SC.
ISSUE:
Whether or not G.A. Machineries Inc. should pay the plaintiff, Horacio
Yaptinchay, actual damages sustained in the sum of P54,000.48; to
reimburse the purchase price of the Fordson diesel engine in the amount of
P7,590.00; and to pay attorney's fees to plaintiff's counsel on the sum of
P2,000.00 and costs.
WON the plaintiff likewise, oblige to return the Fordson diesel engine with to
the defendant.
HELD:
The first issue is premised on the petitioner's proposition that the
respondent's cause of action was for breach of warranty against hidden
39
defects as pro-vided under Articles 1561 and 1566 of the Civil Code. Article
1571 of the Civil Code provides for a six-month prescriptive period from the
delivery of the thing sold for the filing of an action for breach of warranty
against hidden defects. According to petitioner GAMI when respondent
Yaptinchay filed the case with the trial court, more than six months had
already lapsed from the time the alleged defective engine was delivered and,
therefore, the action had prescribed. The petitioner contends that
Yaptinchay's asserted cause of action was premised and anchored on the
delivery by the defendant of a DEFECTIVE ENGINE and that the allegations
in the complaint that the engine was not brand new are clearly mere
specifica-tions of the precise nature of the hidden defects. A cursory reading
of the complaint shows that the petitioner's arguments are not well-taken.
The main thrust of the complaint is the conten-tion that the Fordson diesel
engine delivered by the petitioner to the respondent was not brand-new
contrary to the representations of the former and the expectations of the
latter. The complaint was couched in a manner which shows that instead of
the brand-new Fordson diesel engine which was bought by the respondent
from the petitioner, another engine which was not brand new was delivered
resulting in the damages sought to be recovered. It is evident therefore; that
the complaint was for a breach of a contract of sale rather than a breach of
warranty against hidden defects.
This is so because an action for breach of warranty against hidden defects
presupposes that the thing sold is the same thing delivered but with hidden
defects. Consequently, the six-month prescrip-tive period under Article 1571
of the Civil Code is not applicable. Applying the foregoing test to the instant
case, we find the evidence of the respondent insufficient to be considered
within the purview of "best evidence". The bare assertion of the respondent
that he lost about P54, 000.00 and the accompanying documentary evidence
presented to prove the amounts lost are inadequate if not speculative. The
document itself merely shows that every time a truck travels, Mr. Yaptinchay
earns P369.88. This amount is then multiplied by the number of trips which
the truck was allegedly unable to make. The estimates were prepared by a
certain Dionisio M. Macasieb whose identity was not even revealed by the
respondent. Mr. Yaptinchay was in the freight truck business. He had several
freight trucks among them the truck with the subject Fordson diesel engine,
covering the route from Manila to Baguio. To prove actual damages, it would
have been easy to present the average actual profits realized by the other
freight trucks plying the Manila-Baguio route. With the presentation of such
actual income the court could have arrived with reason-able certainty at the
amount of actual damages suffered by the respondent. We rule that the
award of actual damages in the amount of P54,000.08 is not warranted by
the evidence on record. The decision appealed to the SC was modified. The
award of actual damages in the amount of P54,000.48 is deleted. The
 ALLORDE | BALTAZAR | CASTRO | CO | JORE | NAJERA

petitioner shall also pay six (6%) percent interest per annum on the
P7,590.00 purchase price from January 27, 1962 to July 29, 1974 and twelve
(12%) percent interest per annum from July 30, 1974 until the purchase price
is reimbursed.
Carpio vs. Valmonte (2004)
standard or principle of law is impermissible. Petitioner had willfully caused
injury to respondent in a manner which is contrary to morals and good
customs. She did not act with justice and good faith for apparently; she had
no other purpose in mind but to. Certainly, petitioner transgressed the
provisions of Article 19 in relation to Article 21 for which she should be held
accountable

FACTS:
Respondent Valmonte is a wedding coordinator. Michelle del Rosario and
Jon Sierra engaged her services for their church wedding. On that day,
Valmonte went to the Manila Hotel to where the bride and her family were
billeted. When she arrived at the Suite, several persons were already there
including the petitioner Soledad Carpio, an aunt of the bride who was
preparing to dress up for the occasion. After reporting to the bride, Valmonte
went out of the suite carrying the items needed for the wedding rites and the
gifts from the principal sponsors. She proceeded to the Maynila Restaurant
where the reception was to be held. She went back to the suite after, and
found several people staring at her when she entered. . It was at this juncture
that petitioner allegedly uttered the following words to Valmonte:

“Ikaw lang ang lumabas ng kwarto, nasaan ang dala mong bag? Saan ka
pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha.”

Petitioner then ordered one of the ladies to search Valmonte’s bag. It turned
out that after Valmonte left the room to attend to her duties, petitioner
discovered that the pieces of jewelry which she placed inside the comfort
room in a paper bag were lost. A few days after the incident, petitioner
received a letter from Valmonte demanding a formal letter of apology which
she wanted to be circulated to the newlyweds ’relatives and guests to
redeem her smeared reputation as a result of petitioner’s imputations against
her. Petitioner did not respond to the letter. Thus, on 20February 1997,
Valmonte filed a suit for damages against petitioner.

ISSUE:
W/N respondent Valmonte is entitled to damages

HELD:
Valmonte is entitled to damages. In the case at bar, petitioner’s verbal
reproach against respondent was certainly uncalled for considering that by
her own account nobody knew that she brought such kind and amount of
jewelry inside the paper bag. True, petitioner had the right o ascertain the
identity of the malefactor, but to malign respondent without an iota of proof
that she was the one who actually stole the jewelry is an act which, by any
40