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Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-35615 February 17, 1977
FRANCISCA GATCHALIAN, petitioner,
vs.
HON. JESUS P. ARLEGUI, Judge, Court of First Instance, Branch I, Bayombong, Nueva
Vizcaya; MIGUEL GUEVARA, Provincial Sheriff, Nueva Vizcaya and PAZ
TANWANGCO, respondents.
G.R. No. L-41360 February 17, 1977
TANG TEE and TIU TIK CHAY, petitioners,
vs.
HON. JESUS P. ARLEQUI in his capacity as Presiding Judge of the Court of First Instance of
Nueva Vizcaya, Branch I, and FLORANTE TUPASI represented by his grandfather. VICENTE
M. TUPASIrespondents.
Dominador S. la Madrid for petitioner Francisca Gatchalian.
Jesus E. Mendoza for petitioners Tang Tee and Tiu Tik Chay.
Eleodoro M. Benitez for respondent Paz Tanwangco.
Delano V. Europa for respondent Florante Tupasi.

AQUINO, J.:
These two related cases have a common factual background.
L-35615. Before the war Francisca Gatchalian (Aling Kikay) and Paz Tanwangco (who are now
both over eighty-seven years old) were good friends who lived together in the same house located at
Solano, Nueva Vizcaya. Whether they were partners and acquired properties with common funds is
a matter of controversy. They were separated because of the war. Paz Tanwangco evacuated to
Pangasinan. Francisca Gatchalian presumably remained at Solano.
In 1965 Paz Tanwangco sued Francisca Gatchalian in the Court of First Instance of Nueva Vizcaya
for the recovery of her alleged share in Lots 25 and 28 which were registered in Francisca's name
(Civil Case No. 1454).
Judge Jose D. Parayno in a decision dated August 30, 1969 ordered Francisca Gatchalian (1) to
reconvey and deliver the possession to Paz Tanwangco of "one-half undivided portion of Lots 25 and
28 of the Solano cadastre" and the improvements thereon and (2) to pay her the sum of P18,895 as
one-half of the accrued rentals up to July, 1967 and P145 monthly until the possession is delivered

to Paz, with legal rate of interest from the date of the finality of the judgment, plus -P2,000 as
attorney's fees.
Francisca Gatchalian appealed to the Court of Appeals. Her appeal was dismissed because she did
not file her brief on time (Tanwangco vs. Gatchalian, CA-G.R. No. 45054-R, Resolutions of October
16, 1970 and August 31, 1971).
She filed in this Court a petition for certiorari to annul those resolutions. Her petition was dismissed
for lack of merit (Gatchalian vs. Tanwangco, L-34138, Resolution of October 26, 1971. Entry of
judgment therein was made on November 16, 1971).
After the remand of the record, the lower court, upon motion of Paz Tanwangco, issued an order of
execution dated January 25, 1972. On that same date, the clerk of court under the direction of Judge
Vicente M. Tupasi, instead of issuing only a writ of execution, issued also a "writ of possession",
commanding the provincial sheriff "to require" Francisca Gatchalian "to reconvey one-half
(1/2) undivided portion of Lots 25 and 28" and "to place" Paz Tanwangco "in possession of said onehalf (1/2) undivided share" ' (Lot 25 appears to belong to a third person. See p. 2 of Request for Oral
Argument dated November 17,1971 in L-34138).
The deed of reconveyance in favor of Paz Tanwangco was executed by the clerk of court on
February 8, 1972. On that same day it was registered. A title was issued to Paz Tanwangco for Lot
28-A, with an area of 1,925 square meters, as her one-half share.
The sheriff levied upon the other half of Lot 28, or Francisca Gatchalian's share, in order to satisfy
the judgment in favor of Paz Tanwangco for the accrued rentals, attorney's fees and costs that had
already reached the sum of P35,853.60. He scheduled the auction sale on May 2, 1972.
Meanwhile, on March 7, 1972 Francisca Gatchalian sued Judge Parayno, Paz Tanwangco and the
provincial sheriff also in the Court of First Instance of Nueva Vizcaya in order to annul the 1969
judgment in Civil Case No. 1454 and the execution and levy on one-half of Lot No. 28. The second
case was docketed as Civil Case No. 1944. lt was predicated on the theory that Paz Tanwangco's
action in Civil Case No. 1454 had already prescribed under the Code of Civil Procedure, the
provisions of which were allegedly not applied by the trial court.
Paz Tanwangco filed a motion to dismiss the complaint on the ground of res judicata. Judge Gabriel
Dunuan in his order of March 27, 1972 dismissed it.
Francisca Gatchalian then filed in Civil Case No. 1454 a motion dated April 18, 1972 for stay of
execution. She asked the court to "take cognizance" of the parties' compromise agreement and to
terminate the two cases.
In that motion Francisca Gatchalian quoted and annexed Paz Tanwangco's letter of March 20, 1972
to her counsel, Dominador S. La Madrid, wherein Paz offered to compromise the judgment in Civil
Case No. 1454 by waiving her claim to the rentals and cancelling the auction sale if Francisca would
withdraw her complaint in Civil Case No. 1944, cancel her notice of lis pendens on the title of Lot 28A and agree that they would simply divide that lot equally as adjudged in Civil Case No. 1454. Said
letter reads as follows:
923 R.
Papa
St.

Sampal
oc
Manila
March
20,
1972
TRANSLATION
Dr. Dominador S. La Madrid.
Abogado ni Francisca Gatchalian
Caso Civil No, 1454 at Caso Civil No. 1944
Juzgado de Primera Instancia Nueva Vizcaya
No. 266 E. Rodriguez, Sr. Blvd., Q.C.
Dear Dr. La Madrid:
I am thanking you for your goodness and kindness when I went to your house
yesterday with my nephew Oscar Tanwangco.
I received a copy of the new complaint of Francisca Gatchalian against me, Judge
Parayno and the Sheriff of Nueva Vizcaya (Civil Case No. l944 of the Court of First
Instance of Nueva Vizcaya), which you signed as her lawyer.
Because I want our case with Francisca Gatchalian terminated so that this new Civil
Case No. 1944 will not continue any more, both of us are already old with Aling
Kikay, I have decided to amicably settle with Francisca Gatchalian in the following
manner:
1. She will withdraw from the Court her case and not continue the same against me,
what I mean is that she will have the case dismissed in Court;
2. Francisca Gatchalian will no longer complain against me with respect to damages
because of our first case, Civil Case No. 1454;
3. That Francisca Gatchalian will no longer come to court and go after one-half
portion of the land already transferred to me and registered in my name in the
Register of Deeds of Nueva Vizcaya;
4. That Francisca Gatchalian do away or have cancelled or erased the Notice of lis
Pendens which she filed against me in the Register of Deeds of Nueva Vizcaya and
for her to allow free the new title now in my name with respect to the one-half portion
of the land subject of our controversy in Civil Case No. 1454;
5. As for me, I will no longer run against Francisca Gatchalian with respect to the
one-half rental of the land and the other properties mentioned in the Decision of
Judge Jose D. Parayno In Civil Case No. 1454, dated August 31, 1969 against
Francisca Gatchalian in Civil case No. 1454, including others which she should pay
according to the said Decision, like the attorney's fee and the costs;

6. That I will have discontinued the public auction sale under the direction of the
Sheriff of Nueva Vizcaya with respect to the one-hill portion of the land under the
sole ownership of Francisca Gatchalian TCT No. 4398 (RT-563), Solano Cadastre,
so that the said public auction sale will not continue;
Dr. La Madrid, if these conditions here are accepted by Francisca Gatchalian and
she signs hereon, this is the amicable settlement which we can present to the Court
in order to end the cases. Just have this signed and inform me.
Respectfully
(SGD.) OSCAR F. TANWANGCO (SGD.) PAZ TANWANGCO
(Nephew)
Francisca Gatchalian alleged in her motion that she had accepted Paz Tanwangco's offer of
compromise and that her counsel in a letter dated March 25, 1972 notified Paz of her acceptance.
Francisca prayed that the two cases be terminated and that the court "take cognizance" of the
amicable settlement.
Pursuant to that amicable settlement and in consonance with section 1, Rule 17 of the Rules of
Court, Francisca Gatchalian filed in the lower court on April 25, 1972 a notice for the dismissal of her
action in civil Case No. 1944. The defendants therein had not yet answered her complaint.
(However, as already stated, the lower court upon Paz Tanwangco's motion, dismissed Civil Case
No. 1944 in its order of March 27, 1972).
Also pursuant to the amicable settlement, Francisca Gatchalian's counsel wrote a letter to the
register of deeds of Nueva Vizcaya cancelling her notice of lis pendens on Tanwangco's title to lot
28-.,A. The notice of lis pendenswas cancelled on April 28, 1972 (See back of TCT No. T-32210, p.
134 Rollo).
Paz Tanwangco lawyer opposed Francisca Gatchalian's motion to stay execution and for the taking
cognizance of the compromise the cancellation of the auction sale and the termination of the two
cases. He alleged that the signature of the eighty-six year old Paz Tanwangco in the compromise
agreement, which was drafted by Francisca Gatchalian's counsel, was secured by said counsel
through trickery, deceit and intimidation.
Paz Tanwangco's counsel further observed that Francisca Gatchalian's counsel violated Canon No.
9 of the Code of Legal Ethics that "a lawyer should not in any way communicate upon the subject of
the controversy with a party represented by counsel; much less should he undertake to negotiate or
compromise the matter with him, but should deal only with his counsel."
Paz Tanwangco's lawyer also contended that Francisca Gatchalian's notice of dismissal and
cancellation of the notice of lis pendens were unnecessary because of the lower court's order of
dismissal dated March 27, 1972.
The opposition of Paz Tangwangco's counsel to Francisca Gatchalian's motion to stay execution
provoked Francisca to file in the lower court on June 3, 1972 another case against Paz Tanwangco
to enforce the compromise agreement and to claim damages in the sum of P90,000. Tanwangco's
counsel, Eleodoro Benitez, was impleaded as a co-defendant. The case was docketed as Civil Case
No. 1974. (It was later dismissed in Judge Dunuan's order of August 1, 1973 because of the
pendency in Civil Case No. 1454 of the motion for approval of the compromise.)

On August 22, 1972, the last time Francisca Gatchalian's motion to stay execution was set for
hearing, she and her counsel did not appear. In view of their non-appearance, Judge Jesus P.
Arlegui denied the motion. He directed that the auction sale should be held.
Francisca Gatchalian moved for the reconsideration of the order of denial. She alleged that she and
her counsel never received any notice setting their motion for hearing on August 22,1972.
Judge Arlegui denied the motion in his order of September 28, 1972. He reasoned out that the
auction sale could no longer be suspended because the writ of execution had already been
enforced. He intimated that the effect of the compromise on the judgment should have been raised
in Civil Case No. 1944.
On October 12, 1972, Francisca Gatchalian filed the instant special civil actions of certiorari and
prohibition in order to annul Judge Arlegui's orders of August 22 and September 28, 1972.
A temporary restraining order was issued. The auction sale was suspended. The respondents
answered the petition.
Ruling The issue is whether the judgment in Civil Case No. 1454 was novated and superseded by
the alleged compromise.
Should Lot 28 be divided equally between the two octogenarian female adversaries, as originally
intended by the trial court? Should Paz Tanwangco's claim for P35,853.60 as rentals be deemed
waived or extinguished because of the compromise?
We have set forth all the relevant facts so that the case can be viewed in proper perspective and the
merits of the two antagonists' contentions can be justly evaluated. It is lamentable that due to the
fault of Francisco Gatchalian's counsel she was deprived of her right to a review of Judge Parayno's
1969 decision.
After a scrupulous and painstaking study of the facts and equities of the case, we have reached the
conclusion that the compromise already mentioned should be enforced but subject to the condition
that Francisca Gatchalian should pay the attorney's fees of P2,000 adjudged in Judge Parayno's
decision.
The lower court refused to enforce the compromise because in Its opinion the judgment had already
been executed and could been executed by novated by the parties. That stand is not well-taken. The
undeniable fact is that the judgment has not yet been fully satisfied because the monetary liability of
Francisca Gatchalian, under the lower court's judgment, in the sum of P35,853.60, has no yet been
paid. (See sec. 47, Rule 39, Rules of Court as to the entry of satisfaction of judgment).
On the other hand, the lower court did not find that the offer of compromise made by Paz Tanwangco
was vitiated by duress or undue influence.
Hence, the lower court's orders, which authorize the auction sale should be set aside. It is to the
interest of the two octogenarians (now nearing ninety years) that this long-drawn out litigation be
terminated as soon as possible. We believe that the- ruling already announced is a judicious and
equitable solution of the case.
L-41360 Contempt incident. As stated in our discussion of' the lower court in its judgment of
August 30, 1969 ordered Francisca Gatchalian "to reconvey and deliver Possession" of an undivided

one-half portion of Lot 28 of the Solano cadastre (with an area of 3,851 square meters) and to pay
rentals and attorney's fees. That judgment became final. We have already stated that on January 25,
1972 Judge Vicente M. Tupasi issued an order of execution, writ of execution and a writ of
possession to enforce that judgment. In the writ of possession the sheriff was commanded to eject
all adverse occupants of Lot 28.
As also noted in L-35615, that judgment was enforced by conveying to Paz Tanwangco not merely
the proindivisoone-half portion of Lot 28 but a segregated one-half share, Identified as Lot 28-A (with
an area of 1,925 square meters) and covered by TCT No. T-32210, and by the issuance of a "writ of
possession" whereby Paz Tanwangco was given not merely the juridical or civil possession of a onehalf portion but was placed in physical possessionof Lot 28 and the improvements thereon. (See
sheriff's return of March 14, 1972, p. 45, Rollo).
It appears that Lot 28 was later subdivided into Lots 28-A and 28-B. The records shows that Florante
Tupasi, the sixteen-year old grandson of former Judge Vicente Tupasi, bought on November 8, 1973
from Paz Tanwangco for P30,000 and other valuable considerations two-thirds of Lot 28-A (which
2/3 portion has an area of 1,283 square meters). TCT No. 37091 (T-38958) was issued to Florante
Tupasi (pp. 69 and 292, Rollo).
Note that Judge Tupasi, who retired on July 19, 1973, was the same Judge who on January 25,
1972 issued the order of execution and the writs of execution and possession. (See art. 1491, Civil
Code).
The other one-third portion of Lot 28-A appears to have been sold by Paz Tanwangco to the spouses
Ricardo Tiongson and Anita Angeles and to Atty. Eleodoro M. Benitez (pp. 46 and 279, Rollo).
Former Judge Tupasi, as guardian ad litem of his minor grandson, Florante, filed in Civil Case No.
1454 a petition dated January 21, 1974 to declare Tan Chiao Chay, Tang Tee and Tiu Tik Chay, as
alleged occupants of Lot 28-A, in contempt of court for having disobeyed the writ of possession (the
same writ that Judge Tupasi issued on January 25, 1972). He prayed that an order be issued for
the demolition of respondents' improvements.
Tang Tee and Tiu Tik Chay, in their answer to the petition to declare them in contempt of court,
alleged that the parents of the minor, Florante Tupasi, should act as his guardians and not Judge
Tupasi; that the lower court had no jurisdiction over them, and that the building on the lot sold to
Florante Tupasi belongs to Solodonia Ramos and Rogelio Tiu and not to Tang Tee and Tiu Tik Chay
and, therefore, they (Tang Tee and Tiu Tik Chay) did not disobey any court process and were not
guilty of contempt of court.
Tang Tee and Tiu Tik Chay further contended that the motion for contempt is not in order because
they, as well as Florante Tupasi are strangers in Civil case No. 1454.
The lower court in its order of December 4, 1974 held that Tang Tee and Tiu Tik Chay, as heads of
the families occupying the buildings constructed on Lot 28-A, were bound to obey the writ of
possession. It found them guilty of contempt of court and sentenced each of them to pay a fine of
two hundred pesos, with subsidiary imprisonment in case of insolvency.
It required them to vacate Lot 28-A, to remove or demolish their improvements within sixty days from
the finality of the order, and, in case they fail to do so, the sheriff was directed to eject them and to
demolish their buildings at their expense.

The issues are whether Tang Tee and Tiu Tik Chay could be adjudged in contempt of court in Civil
Case No. 1454, although they were not parties therein, and whether the lower court could order
them to vacate the portions of Lot 28-A allegedly occupied by their families and compel the
demolition of their alleged improvements.
We hold that in civil Case No. 1454 the lower court has no jurisdiction to adjudge petitioners Tang
Tee and Tiu Tik Chay in contempt of court and to eject them from Lot 28-A.
The 1969 judgment of Judge Parayno is a judgment in personam, requiring Francisca Gatchalian to
deliver to Paz Tanwangco the possession of "one-half undivided portion of" Lot 28. It is not a
judgment in rem It is conclusive, not against the whole world, but only "between the parties and their
succesors in interest by title subsequent to the commencement of the action", litigating for the same
thing and under the same title and in the same capacity" (Sec. 49, Rule 39, Rules of Court; Lopez
vs. Director of Lands, 47 Phil. 23, 30).
Since the judgment orders the delivery of the possession of the one-half proindiviso portion of Lot
28, it is evident that what it contemplates is the symbolical or constructive delivery of the civil or
juridical possession and not the natural or material possession (possession de facto) which has
been actually held for Francisca Gatchalian by other persons (See arts. 523, 525 and 531, Civil
Code).
It should be noted that in co-ownership "each co-owner owns the whole, and over it he exercises
rights of dominion, but at the same time he is the owner of a share which is really abstract because
until the division is effected, such share is not concretely determined" (Lopez vs. Gonzaga Vda. de
Cuaycong, 74 Phil. 601, 604-605). While there is co-ownership, a co-owner's possession of his
share is co-possession which is linked to the possession of the other co-owners.
Under the judgment, Paz Tanwangco was entitled to a writ of execution but not specifically to a socalled "writ of possession". commanding the sheriff "to eject all adverse occupants" of Lot 28.
The law specifies the instances when a "writ of possession" may be issued. Thus, a writ of
possession is available in a land registration proceeding, a proceeding in rem (Sec. 17, Act 496;
Estipona vs. Navarro, L-41825, January 30, 1976, 69 SCRA 285, 291) and in case of extrajudicial
foreclosure of a realty mortgage (Sec. 7, Act No. 3135), and even in judicial foreclosure (a quasi in
rem proceeding) provided that the debtor is in possession of the mortaged realty and no third
person, not a party to the foreclosure suit, had intervened (Rivera vs. Court of First Instance of
Nueva Ecija and Rupac 61 Phil. 201; Ramos vs. Manalac and Lopez, 89 Phil. 270, 275).
The judgment in Civil Case No. 1454 did not authorize the issuance of a writ of possession or the
ejectment of the occupants of Lot 28. The issuance of such writ varied the terms of the judgment.
The writ was void. Hence, Tang Tee and Tiu Tik Chay could not be adjudged in contempt for having
allegedly disobeyed the void writ.
Even in execution sales, the possession of the property sold cannot be given to the purchaser or last
redemptioner if "a third party is actually holding the property adversely to the judgment debtor (See.
35, last par., Rule 39, Rules of Court).
Moreover, there is merit in petitioners' contention that the judgment in Civil Case No. 1454 is not
binding on them since they (like respondent Florante Tupasi, the movant in this contempt incident)
were not parties thereto. Generally, it is axiomatic "that no man shall be affected by proceedings to
which he is a stranger" (Ed. A Keller & Co. vs. Ellerman & Bucknall Steamship Co., 38 Phil. 514,
520).

As a general rule, persons who are not parties to an action or proceeding are not subject to the
jurisdiction of a court trying a case, are not supposed to be aware of the court's order and cannot,
therefore, be declared guilty of contempt for violating its orders (Ferrer vs. Rodriguez, 116 Phil. 1.5).
The "writ of possession" was addressed to the sheriff, not to pang Tee and Tiu Tik Chay. It was a
process intended to enforce a judgment "for the delivery of the possession of real or personal
property as contemplated insection 8[d], Rule 39 of the Rules of Court. The "writ of possession" was
not intended to enforce a special judgment for the delivery of real property as contemplated in
section 9 of Rule 39. It is that disobedience to the execution of a special judgment which may be
punished as contempt.'
In this case, the sheriff did not execute the mandate in the "writ of possession" to eject the adverse
occupants. Mere disobedience to the writ of possession, which was addressed to the sheriff and not
to the adverse occupants, did not render the adverse occupants guilty of contempt of court Goyena
de Quizon vs. Philippine National Bank, 85 Phil. 459; U. S. vs. Ramayrat 22 Phil. 183; Mendoza vs.
Alano and Salceda, 112 Phil. 40),
In adjudging the petitioners in contempt of court. the trial court relied on Heirs of ft. A. Crumb vs.
Court of Appeals26167, January 30, 1970, 31 SCRA 271. That case, wherein it was held that a
contempt order is appealable (here, petitioners' appeal from the contempt order was not allowed), is
different from the instant case.
Paz Tanwangco herself could not have ejected Tang Tee and Tiu Tik Chay by means of a writ of
possession. Francisco Gatchalian. as their lessor, could not forcibly drive them away from the leased
premises if they refused to vacate it. She has to resort to an ejectment action.
In Omnas vs. Rivera, 67 Phil. 419, which involves an execution sale, it was noted that "the writ of
possession is nothing more than a complement of the writ of execution which, without the former, is
ineffective; for it would be useless to order a sheriff to sell a real property of a judgment debtor if
after the sale is made In the manner provided by law the purchaser, after the expiration of the period
of redemption, may not enter upon the possession of the property thus purchaser That ruling in
the Omnas case has no application to this because here there was no execution sale.
The lower court. in sanctioning the summary procedure or shortcut resorted to by Florante Tupasi in
order to get possession of the portions of Lot 28, held by the lessees of Francisco Gatchalian, acted
in excess of jurisdiction and with grave abuse of discretion. Its order declaring Tang Tee and Tiu Tik
Chay in contempt of court and ordering the demolition of the improvements is arbitrary and
oppressive.
The issue of whether Florante Tupasi could recover, possession of the portions occupied by Tang
Tee and Tiu Tik Chay should be litigated in a separate action. He cannot recover possession by
means of a writ of execution or "writ of possession" (See Roman Catholic Archbishop of Caceres vs.
De la Cruz, L-25496, December 27, 1969, 39 SCRA 881; Olego vs. Rebueno, L-39350. October 29,
1975, 67 SCRA 446, 456).
The cases relied upon by Tupasi (p. 276 of Rollo) refers to land registration cases or to the recovery
of possession "from the losing party" and not from third persons who were not parties to the case.
Tupasi's contention that, to require him to file an accion publiciana against Tang Tee and Tiu Tik
Chay would only result in multiplicity of suits, is not tenable. Due process requires the filing of such
an action.

WHEREFORE, in L-35615, the lower court's orders of August 22 and September 28,1972 are set
aside.
The compromise agreement, whereby Paz Tanwangco and Francisca Gatchalian agreed to divide
equally Lot 28 (Lot 28-A as Paz Tanwangco's share and Lot 28-B as Francisco Gatchalian share)
and Paz Tanwangco waived her claim to the rentals, is hereby approved subject to the condition that
Francisca Gatchalian should pay to Paz Tanwangco the attorney's fees amounting to P2,000, as
adjudged in the final and executory judgment in Civil Case No. 1454. No costs.
In L-41360, the contempt incident, the lower Court's orders of December 4, 1974 and March 12,
1975. which were issued in excess of jurisdiction and with grave abuse of discretion, are also set
aside without prejudice to litigating in a separate action the issue of whether Florante Tupasi can
recover possession of the portions of Lot 28-A allegedly occupied by petitioners Tang Tee and Tiu Tik
Chay No costs.
SO ORDERED.
Fernando (Chairman), Barredo, Antonio, and Concepcion Jr., JJ., concur.

EN BANC

[G.R. No. 117359. July 23, 1998]

DAVAO GULF LUMBER


CORPORATION, petitioner,
vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF
APPEALS, respondents.
DECISION
PANGANIBAN, J.:

Because taxes are the lifeblood of the nation, statutes that allow exemptions are
construed strictly against the grantee and liberally in favor of the government. Otherwise
stated, any exemption from the payment of a tax must be clearly stated in the language
of the law; it cannot be merely implied therefrom.
Statement of the Case
This principium is applied by the Court in resolving this petition for review under
Rule 45 of the Rules of Court, assailing the Decision of Respondent Court of
Appeals in CA-GR SP No. 34581 dated September 26, 1994, which affirmed the June
21, 1994 Decision of the Court of Tax Appeals in CTA Case No. 3574. The dispositive
portion of the CTA Decision affirmed by Respondent Court reads:
[1]

[2]

[3]

[4]

WHEREFORE, judgment is hereby rendered ordering the respondent to


refund to the petitioner the amount of P2,923.15 representing the partial
refund of specific taxes paid on manufactured oils and fuels.
[5]

The Antecedent Facts


The facts are undisputed. Petitioner is a licensed forest concessionaire possessing
a Timber License Agreement granted by the Ministry of Natural Resources (now
Department of Environment and Natural Resources). From July 1, 1980 to January 31,
1982 petitioner purchased, from various oil companies, refined and manufactured
mineral oils as well as motor and diesel fuels, which it used exclusively for the
exploitation and operation of its forest concession. Said oil companies paid the specific
taxes imposed, under Sections 153 and 156 of the 1977 National Internal Revenue
Code (NIRC), on the sale of said products. Being included in the purchase price of the
oil products, the specific taxes paid by the oil companies were eventually passed on to
the user, the petitioner in this case.
[6]

[7]

On December 13, 1982, petitioner filed before Respondent Commissioner of


Internal
Revenue
(CIR)
a
claim
for
refund
in
the
amount
ofP120,825.11, representing 25% of the specific taxes actually paid on the abovementioned fuels and oils that were used by petitioner in its operations as forest
concessionaire. The claim was based on Insular Lumber Co. vs. Court of Tax
Appeals and Section 5 of RA 1435 which reads:
[8]

Section 5. The proceeds of the additional tax on manufactured oils shall


accrue to the road and bridge funds of the political subdivision for whose
benefit the tax is collected: Provided, however, That whenever any oils
mentioned above are used by miners or forest concessionaires in their
operations, twenty-five per centum of the specific tax paid thereon shall be
refunded by the Collector of Internal Revenue upon submission of proof of
actual use of oils and under similar conditions enumerated in subparagraphs
one and two of section one hereof, amending section one hundred forty-two of
the Internal Revenue Code: Provided, further, That no new road shall be
constructed unless the routes or location thereof shall have been approved by
the Commissioner of Public Highways after a determination that such road
can be made part of an integral and articulated route in the Philippine
Highway System, as required in section twenty-six of the Philippine Highway
Act of 1953.
It is an unquestioned fact that petitioner complied with the procedure for refund,
including the submission of proof of the actual use of the aforementioned oils in its
forest concession as required by the above-quoted law. Petitioner, in support of its
claim for refund, submitted to the CIR the affidavits of its general manager, the president

of the Philippine Wood Products Association, and three disinterested persons, all
attesting that the said manufactured diesel and fuel oils were actually used in the
exploitation and operation of its forest concession.
On January 20, 1983, petitioner filed at the CTA a petition for review docketed as
CTA Case No. 3574. On June 21, 1994, the CTA rendered its decision finding petitioner
entitled to a partial refund of specific taxes the latter had paid in the reduced amount
of P2,923.15. The CTA ruled that the claim on purchases of lubricating oil (from July 1,
1980 to January 19, 1981), and on manufactured oils other than lubricating oils (from
July 1, 1980 to January 4, 1981) had prescribed. Disallowed on the ground that they
were not included in the original claim filed before the CIR were the claims for refund on
purchases of manufactured oils from January 1, 1980 to June 30, 1980 and from
February 1, 1982 to June 30, 1982. In regard to the other purchases, the CTA granted
the claim, but it computed the refund based on rates deemed paid under RA 1435, and
not on the higher rates actually paid by petitioner under the NIRC.
Insisting that the basis for computing the refund should be the increased rates
prescribed by Sections 153 and 156 of the NIRC, petitioner elevated the matter to the
Court of Appeals. As noted earlier, the Court of Appeals affirmed the CTA
Decision. Hence, this petition for review.
[9]

Public Respondents Ruling


In its petition before the Court of Appeals, petitioner raised the following arguments:

I.
The respondent Court of Tax Appeals failed to apply the Supreme
Courts Decision in Insular Lumber Co. v. Court of Tax Appeals which granted
the claim for partial refund of specific taxes paid by the claimant, without
qualification or limitation.
II.
The respondent Court of Tax Appeals ignored the increase in rates
imposed by succeeding amendatory laws, under which the petitioner paid the
specific taxes on manufactured and diesel fuels.
III. In its decision, the respondent Court of Tax Appeals ruled contrary to
established tenets of law when it lent itself to interpreting Section 5 of R.A.
1435, when the construction of said law is not necessary.
IV. Sections 1 and 2 of R.A. 1435 are not the operative provisions to be
applied but rather, Sections 153 and 156 of the National Internal Revenue
Code, as amended.
V. To rule that the basis for computation of the refunded taxes should be
Sections 1 and 2 of R.A. 1435 rather than Section 153 and 156 of the National

Internal Revenue Code is unfair, erroneous, arbitrary, inequitable and


oppressive.
[10]

The Court of Appeals held that the claim for refund should indeed be computed on
the basis of the amounts deemed paid under Sections 1 and 2 of RA 1435. In so ruling,
it cited our pronouncement in Commissioner of Internal Revenue v. Rio Tuba Nickel
Mining Corporation and our subsequent Resolution dated June 15, 1992 clarifying the
said Decision. Respondent Court further ruled that the claims for refund which
prescribed and those which were not filed at the administrative level must be excluded.
[11]

The Issue
In its Memorandum, petitioner raises one critical issue:
Whether or not petitioner is entitled under Republic Act No. 1435 to the

refund of 25% of the amount of specific taxes it actually paid on various


refined and manufactured mineral oils and other oil products taxed under Sec.
153 and Sec. 156 of the 1977 (Sec. 142 and Sec. 145 of the 1939) National
Internal Revenue Code.
[12]

In the main, the question before us pertains only to the computation of the tax
refund. Petitioner argues that the refund should be based on the increased rates of
specific taxes which it actually paid, as prescribed in Sections 153 and 156 of the
NIRC. Public respondent, on the other hand, contends that it should be based on
specific taxes deemed paid under Sections 1 and 2 of RA 1435.
The Courts Ruling
The petition is not meritorious.
Petitioner Entitled to Refund
Under Sec. 5 of RA 1435
At the outset, it must be stressed that petitioner is entitled to a partial refund under
Section 5 of RA 1435, which was enacted to provide means for increasing the Highway
Special Fund.
The rationale for this grant of partial refund of specific taxes paid on purchases of
manufactured diesel and fuel oils rests on the character of the Highway Special
Fund. The specific taxes collected on gasoline and fuel accrue to the Fund, which is to
be used for the construction and maintenance of the highway system. But because the

gasoline and fuel purchased by mining and lumber concessionaires are used within
their own compounds and roads, and their vehicles seldom use the national highways,
they do not directly benefit from the Fund and its use. Hence, the tax refund gives the
mining and the logging companies a measure of relief in light of their peculiar situation.
When the Highway Special Fund was abolished in 1985, the reason for the refund
likewise ceased to exist. Since petitioner purchased the subject manufactured diesel
and fuel oils from July 1, 1980 to January 31, 1982 and submitted the required proof
that these were actually used in operating its forest concession, it is entitled to claim
the refund under Section 5 of RA 1435.
[13]

[14]

Tax Refund Strictly Construed


Against the Grantee
Petitioner submits that it is entitled to the refund of 25 percent of the specific taxes it
had actually paid for the petroleum products used in its operations. In other words, it
claims a refund based on the increased rates under Sections 153 and 156 of the NIRC.
Petitioner argues that the statutory grant of the refund privilege, specifically the
phrase twenty-five per centum of the specific tax paid thereon shall be refunded by
the Collector of Internal Revenue, is clear and unambiguous enough to require
construction or qualification thereof. In addition, it cites our pronouncement in Insular
Lumber vs. Court of Tax Appeals:
[15]

[16]

[17]

x x x Section 5 [of RA 1435] makes reference to subparagraphs 1 and 2 of


Section 1 only for the purpose of prescribing the procedure for refund. This
express reference cannot be expanded in scope to include the limitation of the
period of refund. If the limitation of the period of refund of specific taxes paid
on oils used in aviation and agriculture is intended to cover similar taxes paid
on oil used by miners and forest concessionaires, there would have been no
need of dealing with oil used by miners and forest concessions separately and
Section 5 would very well have been included in Section 1 of Republic Act No.
1435, notwithstanding the different rate of exemption.
Petitioner then reasons that the express mention of Section 1 of RA 1435 in
Section 5 cannot be expanded to include a limitation on the tax rates to be applied x x x
[otherwise,] Section 5 should very well have been included in Section 1 x x x.
[18]

The Court is not persuaded. The relevant statutory provisions do not clearly
support petitioners claim for refund. RA 1435 provides:

SECTION 1.
Section one hundred and forty-two of the National
Internal Revenue Code, as amended, is further amended to read as follows:

SEC. 142. Specific tax on manufactured oils and other fuels. -- On refined
and manufactured mineral oils and motor fuels, there shall be collected the
following taxes:
(a) Kerosene or petroleum, per liter of volume capacity, two and one-half
centavos;
(b) Lubricating oils, per liter of volume capacity, seven centavos;
(c) Naptha, gasoline, and all other similar products of distillation, per liter of
volume capacity, eight centavos; and
(d) On denatured alcohol to be used for motive power, per liter of volume
capacity, one centavo: Provided, That if the denatured alcohol is mixed with
gasoline, the specific tax on which has already been paid, only the alcohol
content shall be subject to the tax herein prescribed. For the purpose of this
subsection, the removal of denatured alcohol of not less than one hundred
eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to
have been removed for motive power, unless shown to the contrary.
Whenever any of the oils mentioned above are, during the five years from
June eighteen, nineteen hundred and fifty two, used in agriculture and
aviation, fifty per centum of the specific tax paid thereon shall be refunded by
the Collector of Internal Revenue upon the submission of the following:
(1)
A sworn affidavit of the producer and two disinterested persons
proving that the said oils were actually used in agriculture, or in lieu thereof
(2)
Should the producer belong to any producers association or
federation, duly registered with the Securities and Exchange Commission, the
affidavit of the president of the association or federation, attesting to the fact
that the oils were actually used in agriculture.
(3)
In the case of aviation oils, a sworn certificate satisfactory to the
Collector proving that the said oils were actually used in
aviation: Provided, That no such refunds shall be granted in respect to the oils
used in aviation by citizens and corporations of foreign countries which do not
grant equivalent refunds or exemptions in respect to similar oils used in
aviation by citizens and corporations of the Philippines.
SEC. 2. Section one hundred and forty-five of the National Internal Revenue
Code, as amended, is further amended to read as follows:

SEC. 145. Specific Tax on Diesel fuel oil. -- On fuel oil, commercially known
as diesel fuel oil, and on all similar fuel oils, having more or less the same
generating power, there shall be collected, per metric ton, one peso.
xxx

xxx

xxx

Section 5. The proceeds of the additional tax on manufactured oils shall


accrue to the road and bridge funds of the political subdivision for whose
benefit the tax is collected: Provided, however, That whenever any oils
mentioned above are used by miners or forest concessionaires in their
operations, twenty-five per centum of the specific tax paid thereon shall be
refunded by the Collector of Internal Revenue upon submission of proof of
actual use of oils and under similar conditions enumerated in subparagraphs
one and two of section one hereof, amending section one hundred forty-two of
the Internal Revenue Code: Provided, further, That no new road shall be
constructed unless the route or location thereof shall have been approved by
the Commissioner of Public Highways after a determination that such road
can be made part of an integral and articulated route in the Philippine
Highway System, as required in section twenty-six of the Philippine Highway
Act of 1953.
Subsequently, the 1977 NIRC, PD 1672 and EO 672 amended the first two
provisions, renumbering them and prescribing higher rates. Accordingly, petitioner paid
specific taxes on petroleum products purchased from July 1, 1980 to January 31, 1982
under the following statutory provisions.
From February 8, 1980 to March 20, 1981, Sections 153 and 156 provided as
follows:

SEC. 153. Specific tax on manufactured oils and other fuels. -- On refined
and manufactured mineral oils and motor fuels, there shall be collected the
following taxes which shall attach to the articles hereunder enumerated as
soon as they are in existence as such:
(a)

Kerosene, per liter of volume capacity, seven centavos;

(b)

Lubricating oils, per liter of volume capacity, eighty centavos;

(c)
Naphtha, gasoline and all other similar products of distillation, per
liter of volume capacity, ninety-one centavos: Provided, That, on premium and
aviation gasoline, the tax shall be one peso per liter of volume capacity;

(d)
On denatured alcohol to be used for motive power, per liter of
volume capacity, one centavo: Provided, That, unless otherwise provided for
by special laws, if the denatured alcohol is mixed with gasoline, the specific
tax on which has already been paid, only the alcohol content shall be subject
to the tax herein prescribed. For the purposes of this subsection, the removal
of denatured alcohol of not less than one hundred eighty degrees proof
(ninety per centum absolute alcohol) shall be deemed to have been removed
for motive power, unless shown to the contrary;
(e)

Processed gas, per liter of volume capacity, three centavos;

(f)
Thinners and solvents, per liter of volume capacity, fifty-seven
centavos;
(g)
Liquefied petroleum gas, per kilogram, fourteen centavos: Provided,
That, liquefied petroleum gas used for motive power shall be taxed at the
equivalent rate as the specific tax on diesel fuel oil;
(h)

Asphalts, per kilogram, eight centavos;

(i)

Greases, waxes and petrolatum, per kilogram, fifty centavos;

(j)
Aviation turbo jet fuel, per liter of volume capacity, fifty-five centavos.
(As amended by Sec. 1, P.D. No. 1672.)
xxx

xxx

xxx

SEC. 156. Specific tax on diesel fuel oil. -- On fuel oil, commercially known
as diesel fuel oil, and on all similar fuel oils, having more or less the same
generating power, per liter of volume capacity, seventeen and one-half
centavos, which tax shall attach to this fuel oil as soon as it is in existence as
such."
Then on March 21, 1981, these provisions were amended by EO 672 to read:

SEC. 153. Specific tax on manufactured oils and other fuels. -- On refined
and manufactured mineral oils and motor fuels, there shall be collected the
following taxes which shall attach to the articles hereunder enumerated as
soon as they are in existence as such:
(a)

Kerosene, per liter of volume capacity, nine centavos;

(b)

Lubricating oils, per liter of volume capacity, eighty centavos;

(c)
Naphtha, gasoline and all other similar products of distillation, per
liter of volume capacity, one peso and six centavos: Provided, That on
premium and aviation gasoline, the tax shall be one peso and ten centavos
and one peso, respectively, per liter of volume capacity;
(d)
On denatured alcohol to be used for motive power, per liter of
volume capacity, one centavo; Provided, That unless otherwise provided for
by special laws, if the denatured alcohol is mixed with gasoline, the specific
tax on which has already been paid, only the alcohol content shall be subject
to the tax herein prescribed. For the purpose of this subsection, the removal
of denatured alcohol of not less than one hundred eighty degrees proof
(ninety per centum absolute alcohol) shall be deemed to have been removed
for motive power, unless shown to the contrary;
(e)

Processed gas, per liter of volume capacity, three centavos;

(f)
Thinners and solvents, per liter of volume capacity, sixty-one
centavos;
(g)
Liquefied petroleum gas, per kilogram, twenty-one
centavos: Provided, That, liquified petroleum gas used for motive power shall
be taxed at the equivalent rate as the specific tax on diesel fuel oil;
(h)

Asphalts, per kilogram, twelve centavos;

(i)

Greases, waxes and petrolatum, per kilogram, fifty centavos;

(j)
Aviation turbo-jet fuel, per liter of volume capacity, sixty-four
centavos.
xxx

xxx

xxx

SEC. 156. Specific tax on diesel fuel oil. -- On fuel oil, commercially known
as diesel fuel oil, and all similar fuel oils, having more or less the same
generating power, per liter of volume capacity, twenty-five and one-half
centavos, which tax shall attach to this fuel oil as soon as it is in existence as
such.
A tax cannot be imposed unless it is supported by the clear and express language
of a statute; on the other hand, once the tax is unquestionably imposed, [a] claim of
exemption from tax payments must be clearly shown and based on language in the law
too plain to be mistaken. Since the partial refund authorized under Section 5, RA
1435, is in the nature of a tax exemption, it must be construed strictissimi juris against
[19]

[20]

[21]

the grantee. Hence, petitioners claim of refund on the basis of the specific taxes it
actually paid must expressly be granted in a statute stated in a language too clear to be
mistaken.
We have carefully scrutinized RA 1435 and the subsequent pertinent statutes and
found no expression of a legislative will authorizing a refund based on the higher rates
claimed by petitioner. The mere fact that the privilege of refund was included in Section
5, and not in Section 1, is insufficient to support petitioners claim. When the law itself
does not explicitly provide that a refund under RA 1435 may be based on higher rates
which were nonexistent at the time of its enactment, this Court cannot presume
otherwise. A legislative lacuna cannot be filled by judicial fiat.
[22]

The issue is not really novel. In Commissioner of Internal Revenue vs. Court of
Appeals and Atlas Consolidated Mining and Development Corporation (the second
Atlas case), the CIR contended that the refund should be based on Sections 1 and 2 of
RA 1435, not Sections 153 and 156 of the NIRC of 1977. In categorically ruling that
Private Respondent Atlas Consolidated Mining and Development Corporation was
entitled to a refund based on Sections 1 and 2 of RA 1435, the Court, through Mr.
Justice Hilario G. Davide, Jr., reiterated our pronouncement in Commissioner of Internal
Revenue vs. Rio Tuba Nickel and Mining Corporation:
[23]

Our Resolution of 25 March 1992 modifying our 30 September 1991 Decision


in the Rio Tuba case sets forth the controlling doctrine. In that Resolution, we
stated:
Since the private respondents claim for refund covers specific taxes paid
from 1980 to July 1983 then we find that the private respondent is entitled to a
refund. It should be made clear, however, that Rio Tuba is not entitled to the
whole amount it claims as refund.
The specific taxes on oils which Rio Tuba paid for the aforesaid period were
no longer based on the rates specified by Sections 1 and 2 of R.A. No. 1435
but on the increased rates mandated under Sections 153 and 156 of the
National Internal Revenue Code of 1977. We note however, that the latter law
does not specifically provide for a refund to these mining and lumber
companies of specific taxes paid on manufactured and diesel fuel oils.
In Insular Lumber Co. v. Court of Tax Appeals, (104 SCRA 710 [1981]), the
Court held that the authorized partial refund under Section 5 of R.A. No. 1435
partakes of the nature of a tax exemption and therefore cannot be allowed
unless granted in the most explicit and categorical language. Since the grant
of refund privileges must be strictly construed against the taxpayer, the basis
for the refund shall be the amounts deemed paid under Sections 1 and 2 of
R.A. No. 1435.

ACCORDINGLY, the decision in G.R. Nos. 83583-84 is hereby


MODIFIED. The private respondents CLAIM for REFUND is GRANTED,
computed on the basis of the amounts deemed paid under Sections 1 and 2
of R.A. NO. 1435, without interest.
[24]

We rule, therefore, that since Atlass claims for refund cover specific taxes
paid before 1985, it should be granted the refund based on the rates specified
by Sections 1 and 2 of R.A. No. 1435 and not on the increased rates under
Sections 153 and 156 of the Tax Code of 1977, provided the claims are not
yet barred by prescription. (Underscoring supplied.)
Insular Lumber Co. and First Atlas Case Not
Inconsistent With Rio Tuba
and Second Atlas Case
Petitioner argues that the applicable jurisprudence in this case should
be Commissioner of Internal Revenue vs. Atlas Consolidated and Mining Corp. (the first
Atlas case), an unsigned resolution, and Insular Lumber Co. vs. Court of Tax
Appeals, an en banc decision. Petitioner also asks the Court to take a second look
at Rio Tuba and the second Atlas case, both decided by Divisions, in view
of Insular which was decided en banc. Petitioner posits that [I]n view of the similarity of
the situation of herein petitioner with Insular Lumber Company (claimant inInsular
Lumber) and Rio Tuba Nickel Mining Corporation (claimant in Rio Tuba), a dilemma has
been created as to whether or not Insular Lumber, which has been decided by the
Honorable Court en banc, or Rio Tuba, which was decided only [by] the Third Division of
the Honorable Court, should apply.
[25]

[26]

We find no conflict between these two pairs of cases. Neither Insular Lumber
Co. nor the first Atlas case ruled on the issue of whether the
refund privilege under Section 5 should be computed based on the specific tax
deemed paid under Sections 1 and 2 of RA 1435, regardless of what was actually paid
under the increased rates. Rio Tuba and the second Atlas case did.
Insular Lumber Co. decided a claim for refund on specific tax paid on petroleum
products purchased in the year 1963, when the increased rates under the NIRC of 1977
were not yet in effect. Thus, the issue now before us did not exist at the time, since the
applicable rates were still those prescribed under Sections 1 and 2 of RA 1435.
On the other hand, the issue raised in the first Atlas case was whether the claimant
was entitled to the refund under Section 5, notwithstanding its failure to pay any
additional tax under a municipal or city ordinance. Although Atlas purchased petroleum
products in the years 1976 to 1978 when the rates had already been changed, the
Court did not decide or make any pronouncement on the issue in that case.
Clearly, it is impossible for these two decisions to clash with our pronouncement
in Rio Tuba and second Atlas case, in which we ruled that the refund granted be

computed on the basis of the amounts deemed paid under Sections 1 and 2 of RA
1435. In this light, we find no basis for petitioners invocation of the constitutional
proscription that no doctrine or principle of law laid down by the Court in a decision
rendered en bancor in division may be modified or reversed except by the Court
sitting en banc.
[27]

Finally, petitioner asserts that equity and justice demand that the computation of
the tax refunds be based on actual amounts paid under Sections 153 and 156 of the
NIRC. We disagree. According to an eminent authority on taxation, there is no tax
exemption solely on the ground of equity.
[28]

[29]

WHEREFORE, the petition is hereby DENIED and the assailed Decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,
Kapunan, Mendoza, Martinez, Quisumbing, and Purisima, JJ., concur.

Goldin v. Lipkind
Annotate this Case
49 So.2d 539 (1950)
GOLDIN v. LIPKIND.
Supreme Court of Florida, Special Division B.
December 19, 1950.
Louis Glick, Miami, for appellant.
Blackwell, Walker & Gray, Miami, for appellees.
CHAPMAN, Justice.
Involved on this appeal is the question of whether or not plaintiff-appellant's amended
complaint (declaration) states a cause of action. The Court below held that it did not
and, accordingly, entered a final judgment on motion to dismiss for the defendantappellee, and plaintiff appealed. Pertinent allegations of the amended complaint are as
follows:

"2. On or about March 29th, 1950, at about 6:25 o'clock, p.m., the plaintiff was a lawful
paying guest of the Harman Villa Hotel, 354 Washington Avenue, Miami Beach, Dade
County, Florida, leased and operated by the defendant, Nathan Lipkind; at said time,
plaintiff was lawfully in and about said premises, and had entered said premises through
the stairway at the Washington Avenue entrance of said hotel, leading from the outside
to the second storey. Upon arriving at the second floor, the plaintiff walked down a
hallway, which was unlighted and dark, at the time, despite the fact that evening had set
in. The plaintiff was compelled to walk through the said hallway in order to reach her
room at the end of said hallway. As the direct and proximate result of the defendant's
negligence in failing to provide proper lighting, and as the direct and proximate result of
the defendant's negligence in leaving a bed mattress in said hallway, the plaintiff
suddenly tripped and fell over said mattress, which the defendant had negligently left in
said hallway, and which was lying, at said time, across the floor of the said hallway.
"3. As the direct and proximate result of the defendant's failure to provide proper lighting
at said time, and as the direct and proximate result of the defendant's negligence *540
in leaving the mattress in said hallway, the plaintiff, Bessie Goldin, was greatly and
severely injured, sustaining great and excruciating pain and suffering, a complete
comminuted, fractured right radius, lower third, with displacements of the fragments.
"4. As the direct and proximate result of the defendant's failure to provide proper lighting
at said time, and as the direct and proximate result of the defendant's negligence in
leaving the mattress in said hallway, the plaintiff, Bessie Goldin, has continued to suffer
excruciating pains throughout the length of her entire right arm and right shoulder, has
been forced to have her right forearm in an uncomfortable and bulky cast, and will be
forced to wear this cast for an approximate period of six (6) weeks, and said plaintiff
further says that her condition is permanent and that she has been gravely and
permanently damaged, and that her nervous system was severely shocked and injured.
"5. As the direct and proximate result of the defendant's failure to provide proper lighting
at said time, and as the direct and proximate result of the defendant's negligence in
leaving the mattress in said hallway, the plaintiff, Bessie Goldin, has been hindered and
prevented from performing and carrying on the duties of her lawful employment for a
long period of time, and, in fact, is still prevented and hindered from performing and
carrying on the duties of her lawful employment, and may be so prevented and hindered
for the rest of her natural life, to her great monetary loss.

"6. As the direct and proximate result of the defendant's failure to provide proper lighting
at said time, and as the direct and proximate result of the defendant's negligence in
leaving the mattress in said hallway, the plaintiff, Bessie Goldin, has in the past, and will
in the future, expend large sums of money for doctors' bills, hospital bills, nursing, drugs,
x-rays, and other related medical needs and services in and about the care of said
injuries to herself.
"Wherefore, the plaintiff demands judgment against the defendant in the amount of Ten
Thousand Dollars ($10,000.00), and the plaintiff furthermore demands a trial by jury in
this action."
In the case of Kasanof v. Embry-Riddle Co., 157 Fla. 677, 26 So.2d 889, 891, the legal
sufficiency of a declaration was before the Court, and, in sustaining the declaration, we
in part said:
"It is established law that a declaration need not set out specific facts constituting
negligence but allegations of sufficient acts or omissions causing injury, coupled with
averments that they were negligently done or omitted, will be sufficient. See American
Dist. Electric Protective Co. v. Seaboard Airline R. Co., 129 Fla. 518, 177 So. 294. A
declaration based on a charge of simple negligence is sufficient if it alleges an act or
omission causing the injury and further alleges that such act or omission was
negligently done or omitted to be done. Jackson v. Edwards, 144 Fla. 187, 197 So. 833;
Dunn Bus Service, Inc., v. Wise, 140 Fla. 341, 191 So. 509; Potts v. Mulligan, 141 Fla.
685, 193 So. 767."
Section 511.13, F.S.A., requires that every hotel, rooming house, apartment house,
tenement house, restaurant, lunch or sandwich stand or counter in the State of Florida
shall be properly plumbed, lighted, heated and ventilated and shall be conducted in
every department with strict regard to health, comfort and safety of the guests or
tenants: Provided that such proper lighting shall be construed to apply to both daylight
and illumination. Further and additional regulations of hotels, etc., are provided for by
statutory enactments. See Chapter 511, F.S.A.
It will be observed that Section 511.13, supra, requires that hotels, rooming houses,
apartments, etc., must be properly lighted and each department of the hotels, rooming
houses and apartments in the State of Florida "shall be conducted * * * with strict regard
to health, comfort and safety of the guests or tenants * * *." (Emphasis supplied.)

Paragraph 2 of the complaint alleged that the plaintiff, about 6:25 P.M., March 29, 1950,
was walking down the hallway of the second floor "which was unlighted and dark" and
as a result of defendant's *541 negligence the plaintiff tripped and fell over a mattress
left in the hallway. The plaintiff sustained permanent injuries as a result of the fall, which
was due to the negligent failure to provide proper lighting at the time and place
aforesaid, coupled with the negligent leaving in the hallway of the hotel of the mattress
that the proximate cause of the plaintiff's injuries was the improper lighting of the hallway
and the negligent leaving of a mattress therein.
The law imposes on hotels, apartments, innkeepers, etc., the duty to keep their
buildings, premises and appliances in a condition reasonably safe for the use of their
guests, or at least those parts of the buildings and premises to which the guests are
invited or may reasonably be expected to use. The duty of maintaining safe premises
and appliances cannot be delegated to another. There is a duty to exercise ordinary or
reasonable care to keep the hallways and passageways reasonably well lighted and free
of obstructions or hazards. An innkeeper is not an insurer of the personal safety of his
guests arising out of the condition of the buildings and premises. See 43 C.J.S.,
Innkeepers, 22, pages 1176-1180; 28 Am.Jur. 579, par. 57; 32 C.J. 562-563, par. 70;
14 R.C.L. 508-509, par. 14.
The facts involved in the case of Burgauer v. McClellan, 205 Ky. 51, 265 S.W. 439, are
similar to the case at bar. Mrs. Burgauer, it appears, was a guest of Hotel Palmer of
Paducah. She was walking along the hallway of the hotel on the way to her room and
tripped and fell over some linoleum and carpeting removed from a room and left in the
hallway. The rolls of linoleum and carpeting were placed in the hallway of the hotel by its
servants and Mrs. Burgauer, in passing to her room along the hallway, stumbled and fell
over the obstruction because the hallway was not sufficiently lighted and she could not
see the obstruction. The Court held that it was the legal duty of the hotel to exercise
ordinary care to have and keep the hallways and passageways of the hotel reasonably
well lighted and free from obstructions so that guests may pass to and from their rooms
and other places about the hotel in safety. The hotel was not an insurer of the safety of
the guests and its responsibility was limited to the exercise of reasonable care. The rule
enunciated in the Kentucky case, supra, has been cited with approval in other
jurisdictions. See Picard v. Waggoner, 204 Miss. 366, 37 So.2d 567; Early v. Lowe, 119
W. Va. 690, 195 S.E. 852; Keeran v. Spurgeon Mercantile Co., 194 Iowa 1240, 191 N.W.

99, 27 A.L.R. 579; 33 A.L.R. 181; Law v. Morris, 102 N.J.L. 650, 133 A. 427, 46 A.L.R.
1111; J.C. Penny Co. v. Robison, 128 Ohio St. 626, 193 N.E. 401, 100 A.L.R. 710.
It is contend that the amended complaint on its face shows that the plaintiff-appellant
was guilty of contributory negligence and is precluded from recovery as a matter of law.
Likewise, it is argued that the law requires that in order to charge actionable negligence
the complaint must allege and the evidence must show that the defendant-appellee
knew or should have known of the insufficient light and obstruction in the hallway of the
hotel and that the condition complained of must have existed for a reasonable period of
time in order to state a cause of action. The answer to the contention is, first, that
Section 511.13, F.S.A., makes it the statutory duty of the hotel to "properly light" the
hallways of the hotel "with a strict regard to health, comfort and safety of the guests";
second, in personal injury suits contributory negligence is generally a question for the
jury. It is an affirmative defense and should be specially pleaded. It is a question of fact
to be submitted to the jury under appropriate instructions. Hart v. Held, 149 Fla. 33, 5
So.2d 878; Dunn Bus Service v. McKinley, 130 Fla. 778, 178 So. 865; Ferlita & Sons v.
Beck, 143 Fla. 509, 197 So. 340.
It is our conclusion that the amended complaint states a cause of action and accordingly
the judgment below is reversed with directions to enter an order fixing the time for the
defendant-appellee to answer the complaint.
ADAMS, C.J., and HOBSON and ROBERTS, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46179 January 31, 1978
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON
VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and
EVANGELINA VIRATA, petitioners,
vs.
VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.
Remulla, Estrella & Associates for petitioners

Exequil C. Masangkay for respondents.

FERNANDEZ, J.:
This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in
Civil Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground
that there is another action pending between the same parties for the same cause. 1
The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been
bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo
Borilla and registered in the name Of Victoria Ochoa; that Borilla is the employer of Ochoa; that for
the death of Arsenio Virata, a action for homicide through reckless imprudence was instituted on
September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City,
docketed as C Case No. 3162-P of said court; that at the hearing of the said criminal case on
December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to file a
separate civil action for damages against the driver on his criminal liability; that on February 19,
1976 Atty. Julio Francisco filed a motion in said c case to withdraw the reservation to file a separate
civil action; that thereafter, the private prosecutor actively participated in the trial and presented
evidence on the damages; that on June 29, 1976 the heirs of Arsenio Virata again reserved their
right to institute a separate civil action; that on July 19, 1977 the heirs of Arsenio Virata, petitioners
herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for
damages based on quasi-delict against the driver Maximo Borilla and the registered owner of the
jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private respondents filed a motion
to dismiss on the ground that there is another action, Criminal Case No. 3162-P, pending between
the same parties for the same cause; that on September 8, 1976 the Court of First Instance of Rizal
at Pasay City a decision in Criminal Case No. 3612-P acquitting the accused Maximo Borilla on the
ground that he caused an injury by name accident; and that on January 31, 1977, the Court of First
Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134 for damages. 2
The principal issue is weather or not the of the Arsenio Virata, can prosecute an action for the
damages based on quasi-delict against Maximo Borilla and Victoria Ochoa, driver and owner,
respectively on the passenger jeepney that bumped Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may choose between an action under the
Revised Penal Code or of quasi-delict under Article 2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the same
negligent act.
The Supreme Court has held that:
According to the Code Commission: 'The foregoing provision (Article 2177) though at
first sight startling, is not so novel or extraordinary when we consider the exact
nature of criminal and civil negligence. The former is a violation of the criminal law,
while the latter is a 'culpa aquiliana' or quasi-delict, of ancient origin, having always
had its own foundation and individuality, separate from criminal negligence. Such
distinction between criminal negligence and 'culpa extra-contractual' or quasi-delito
has been sustained by decision of the Supreme Court of Spain and maintained as
clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist.
Therefore, under the proposed Article 2177, acquittal from an accusation of criminal
negligence, whether on reasonable doubt or not, shall not be a bar to a subsequent

civil action, not for civil liability arising from criminal negligence, but for damages due
to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.
(Report of the Code Commission, p. 162.)
Although, again, this Article 2177 does seem to literally refer to only acts of
negligence, the same argument of Justice Bocobo about construction that upholds
'the spirit that given life' rather than that which is literal that killeth the intent of the
lawmaker should be observed in applying the same. And considering that the
preliminary chapter on human relations of the new Civil Code definitely establishes
the separability and independence of liability in a civil action for acts criminal in
character (under Articles 29 to 32) from the civil responsibility arising from crime fixed
by Article 100 of the Penal Code, and, in a sense, the Rules of Court, under Sections
2 and 3(c), Rule 111, contemplate also the same separability, it is 'more congruent'
with the spirit of law, equity and justice, and more in harmony with modern progress',
to borrow the felicitous language in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. to
359, to hod as We do hold, that Article 2176, where it refers to 'fault covers not only
acts 'not punishable by law' but also criminal in character, whether intentional and
voluntary or consequently, a separate civil action lies against the in a criminal act,
whether or not he is criminally prosecuted and found guilty and acquitted, provided
that the offended party is not allowed, if he is actually charged also criminally, to
recover damages on both scores, and would be entitled in such eventuality only to
the bigger award of the, two assuming the awards made in the two cases vary. In
other words the extinction of civil liability refereed to in Par. (c) of Section 13, Rule
111, refers exclusively to civil liability founded on Article 100 of the Revised Penal
Code, whereas the civil liability for the same act considered as a quasi-delict only
and not as a crime is not extinguished even by a declaration in the criminal case that
the criminal act charged has not happened or has not been committed by the
accused. Brief stated, We hold, in reitration of Garcia, that culpa aquilina includes
voluntary and negligent acts which may be punishable by law. 3
The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case
No. 3162-P was decided, they manifested in said criminal case that they were filing a separate civil
action for damages against the owner and driver of the passenger jeepney based on quasidelict. The acquittal of the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P
is not a bar to the prosecution of Civil Case No. B-134 for damages based on quasi-delict The
source of the obligation sought to be enforced in Civil Case No. B-134 isquasi-delict, not an act or
omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and
an act or omission punishable by law are two different sources of obligation.
Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have
only to establish their cause of action by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is
reinstated and remanded to the lower court for further proceedings, with costs against the private
respondents.
SO ORDERED.
Teehankee (Chairman), Makasiar, Muoz Palma and Guerrero, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-66274 September 30, 1984
BAGUMBAYAN CORPORATION, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, LELISA SEA and ARTURO SEA respondents.
De Santos, Balgos & Perez Law Office for petitioner.
Quiason, Ermitano, Makalintal & Barot Law Office for respondents.

AQUINO, J.:
This case is about the customer's claims for moral and exemplary damages due to the alleged
negligence of a waiter. The spouses Lelisa Sea and Arturo Sea and their four children went to the
Tropical Palace Hotel, Paraaque, Metro Manila in the evening of December 20, 1976 to see the
Reycard Duet Show they occupied a table and ordered drinks before the show the hall was crowded
and as anyone who attended such show can attest, excitement and confusion prevailed (8, 40-41
tsn, January 19, 1978).
Lelisa's version was that when a waiter named Baez was going to serve the tray containing the
drinks was overturned and fell on her. She was drenched. Later, she felt some chill. The drinks and
the splinters from the broken glasses allegedly destroyed her dress which, with her handbag and
shoes, cost one thousand pesos (32-33 tsn November 29, 1977).
She was shocked. She sensed that some persons were laughing at or pitying her. Lawyer Francisco
Gatchalian, who was at the same table, commented that it was one of those unavoidable things (24
tsn November 29, 1977).
A waitress took Lelisa to the ladies' room. She had to remove her dress and underwear which were
wet She was not given any towel to cover herself. She remained standing as there was no chair (2728 tsn). Two of her daughters followed her to the ladies' room (31 tsn). She returned to the hag after
about thirty minutes later when the show had started (28, 5152 tsn). The lower court erred in
concluding that she missed the show.
Lelisa testified that she was claiming moral damages of P100,000 for herself and her husband due
toembarrassment and the fact that the management did not even offer any apology on that night (3437 tsn). She was claiming exemplary damages in the same amount to teach the management a
lesson. The husband, Arturo Seta, testified that the incident infuriated him. There was no apology
from the management.
Rudy Tanchanco, the food and beverage manager, was one of three persons in charge of the show.
He testified that the admission was on a "first come, first served" basis. An the waiters
were extras performing under twelve supervisors. In open court, Tanchanco apologized to the

plaintiffs in behalf of the management for the inconvenience caused to them, meaning that the
management was sorry for what happened to Mrs. Seta (38-39 February 27, 1978).
The Seas sued the corporation, as employer of the waiter, for actual damages of P200,000 plus
attorney's fees of P10,000 and such moral and exemplary damages as might be fixed by the court.
The action involves a quasi-delict. It was based on articles 2176 and 2180 of the Civil Code.
The corporation in its answer alleged that it came to know of the incident only when it was served
with summons. Had the incident been brought to its attention on that same night, it would have
apologized immediately to the plaintiffs, made appropriate amends and taken steps to discipline the
waiter and his supervisor.
In fact, in its answer it apologized to the plaintiffs. It labelled the incident as a fortuitous event. It
alleged that it observed diligentissimi patris-familias to prevent the damage. It reiterated that it was
sorry for what had happened. It manifested its desire to make the proper amends in any reasonable
manner or form.
After hearing, the trial court awarded the Seas P1,540 as actual damages consisting of the value of
Mrs. Sea's outfit and P540, the cost of the six tickets used by the Sea family which was
considered a loss because of their alleged failure to enjoy the show. It also awarded the Seas
P50,000 as moral damages, P10,000 as exemplary damages and P5,000 as attorney's fees.
The corporation appealed. The Intermediate Appellate Court affirmed the judgment with the
modification that the moral and exemplary damages were reduced to P15,000 and P5,000,
respectively. Hence, this appeal.
The trial court sensibly noted that court action could have been avoided had the matter been taken
up directly with the corporation before the action was filed. No extrajudicial demand preceded the
action.
While the award for actual damages has some basis, the grant of moral and exemplary damages is
devoid of legal justification because it was not predicated upon any of the cases enumerated in the
Civil Code (Ventanina vs. Centeno, 110 Phil. 811, 816). The Civil Code provides:
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant's wrongful act or
omission.
ART. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;


(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3
of this article, may also recover moral damages.
The spouse descendants, ascendants, and brothers and sisters may bring the action
mentioned in No. 9 of this article, in the order named.
ART. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.
The instant case is not specifically mentioned in article 2219 which refers to quasi-delicts causing
physical injuries. The Appellate Court erred in considering it as analogous to the cases mentioned
therein without indicating what specific case the instant case resembles or is analogous to. For
example, an unfounded complaint with a baseless imputation of forgery is analogous to defamation
mentioned in article 2219 (7). It justified an award of P2,000 as moral damages (Justiva vs. Gustilo,
117 Phil. 71).
Generally, there can be no recovery of moral damages if the case is not mentioned in articles 2219
and 2220 (Malonzo vs. Galang, 109 Phil. 16; Ventanilla vs. Centeno, 110 Phil. 811).
What we call moral damages are treated in American jurisprudence as compensatory
damages awarded for mental pain and suffering or mental anguish resulting from a wrong (25 C.J.S.
815).
"Mental suffering means distress or serious pain as distinguished from annoyance, regret or
vexation. Mental anguish is intense mental suffering" (Johnson vs. Western Union Telegraph Co., 81
S.C. 235, 238, 62 SE 244, Note 35, 17 C.J. 829.)
"Generally, damages for mental anguish are limited to cases in which there has been a personal
physical injury or where the defendant wilfully, wantonly, recklessly, or intentionally caused the
mental anguish (22 Am Jur 2nd 275). "Nor will damages generally be awarded for mental anguish
which is not accompanied by a physical injury, at least where maliciousness, wantonness, or
intentional conduct is not involved" (22 Am Jur 2nd 276).
"Damages for mental anguish and suffering have been held recoverable where the act complained
of was done with such gross carelessness or recklessness as to show an utter indifference to the
consequences" (25 C.J.S. 820).

"Under Ohio law, damages for emotional distress consisting of embarrassment and mental suffering
and dire threats, are not recoverable unless intentionally caused" (Parmelee vs. E.A. Ackerman 252
Fed. 2nd 721).
In Chicago, R.I. & P. Ry Co. vs. Caple, 179 S.W. 2nd 151, it was held that where the act is wanton or
willful there may be a recovery for humiliation and mental suffering without any physical injury. It was
further held that in negligence cases, where there is no willful or wanton wrong, there can be no
recovery for mental suffering unless there is also physical injury.
We hold that the "embarrassment" to which Mrs. Sea was exposed by the incident is not the mental
anguish contemplated in article 2217 for which moral damages can be recovered.
Parenthetically, the case of People vs. Plaza, CA 52 OG 6609, 6612, a case decided by Justice
Sanchez, may be cited. In that case, Genoveva de Soriano was a passenger in a riverboat which
was bumped by another boat manned by Berchman Plaza and caused the first boat to capsize and
sink but did not drown Genoveva. She did not know how to swim Her life was endangered. She
suffered fright and mental anguish during those moments when her fate was uncertain. Her claim for
P500 as moral damages was not allowed.
In this case, it would not be just and proper to include moral damages in the corporation's vicarious
liability as employer. The award of P5,000 as exemplary or corrective damages cannot also be
sustained because there was no gross negligence in this case.
WHEREFORE, the decision of the Appellate Court is modified. The petitioner is ordered to pay
Lelisa Sea the sum of P5,000 to cover her actual damages, litigation expenses and attorney's fees.
The award of moral and exemplary damages is eliminated. No costs.
SO ORDERED.
Makasiar (Chairman), Escolin and Cuevas, JJ., concur.
Concepcion, Jr., J., took no part.
Guerrero, J., is on leave.

Separate Opinions
ABAD SANTOS, J., concurring:
The Sea's claim for excessive damages could have been amicably settled by the trial judge. The
record does not show whether or not a pre-trial was conducted. But it must be presumed that official
duty was performed, that a pre-trial was held. Why then was not a case like this aborted? Not only
did the case go to trial but the court awarded unwarranted damages and the Intermediate Appellate
Court which should have known better compounded the error. Judges and justices of inferior courts
are enjoined to review the law on damages so that decisions like those rendered by the trial and
appellate courts shall not be repeated. With this observation, I concur in the learned ponencia of Mr.
Justice Ramon C. Aquino.

Separate Opinions
ABAD SANTOS, J., concurring:
The Sea's claim for excessive damages could have been amicably settled by the trial judge. The
record does not show whether or not a pre-trial was conducted. But it must be presumed that official
duty was performed, that a pre-trial was held. Why then was not a case like this aborted? Not only
did the case go to trial but the court awarded unwarranted damages and the Intermediate Appellate
Court which should have known better compounded the error. Judges and justices of inferior courts
are enjoined to review the law on damages so that decisions like those rendered by the trial and
appellate courts shall not be repeated. With this observation, I concur in the learned ponencia of Mr.
Justice Ramon C. Aquino.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20202

May 31, 1965

CIRIACO HERNANDEZ, petitioner,


vs.
WORKMEN'S COMPENSATION COMMISSION and MANILA ELECTRIC COMPANY, respondents.
Felix Law Office for petitioner.
Villavieja and Martinez for respondent Workmen's Compensation Commission.
Ross, Selph and Carrascoso for respondent Manila Electric Company.
BENGZON, J.P., J.:
Petition for review of a decision of the Workmen's Compensation Commission.
Petitioner Ciriaco Hernandez was employed by respondent Manila Electric Company, hereafter
called MERALCO, on May 15, 1930, as automotive mechanic. The work entailed, among other
things, the dismantling, repair and installation of transmissions, differentials and steering wheels of
trucks. Admittedly, he was then in good health.
On January 15, 1953, after 23 years continuous service Hernandez was found to be suffering
from pulmonary tuberculosis. From 1953 to 1959, his x-ray examinations indicated presence of
"minimal, fibrotic infiltration of both apices." During said period he received treatment for said
disease from MERALCO's physician at its clinic.
Aside from pulmonary tuberculosis, Hernandez contracted inguinal hernia, and underwent operation
therefor, in 1954. Still later, on September 18, 1959, he had carcinoma of the prostate, and was
likewise operated on for it.
Pursuant to its general circular on "Leaves and Retirement" providing:

When an employee shall have (a) Completed 30 years of continuous, faithful and
satisfactory service to the Company, or (b) Reached his 60th birthday, said employee shall
be retired from the service and be paid the full amount credited to his "Retirement Account",
MERALCO advised Hernandez on May 8, 1959 that he will be retired on December 31, 1959 and be
paid his "Retirement Account". At his own request, however, Hernandez was retired on November
25, 1959 and was paid his retirement benefits. He was then 69 years old.
On March 10, 1960, Hernandez filed with the Department of Labor a Notice of Sickness and Claim
for Compensation. Subsequently, this was superseded by an Amended Claim filed on March 7,
1961. The claimant alleged, in brief, that due to illness suffered in the course of his employment he
was forced to retire due to disability to work but respondent MERALCO did not pay him
compensation as provided by law.
After MERALCO filed its answer controverting the claim, the Department of Labor, Regional Office
No. 4, heard the case. On February 1, 1962, the hearing officer decided that claimant was entitled to
disability compensation, thus:
WHEREFORE the Manila Electric Company is hereby adjudged to pay Mr. Ciriaco
Hernandez, through this Office, the sum of FOUR THOUSAND PESOS (P4,000.00) as
temporary total disability compensation pursuant to the instant claim.
Respondent is further ordered to pay to this Office the sum of FORTY ONE PESOS (P41.00)
as fees pursuant to Sec. 55 of Act No. 3428, as amended.
Counsel for claimant may not charge the latter, attorney's fees in excess of the limit provided
for under Section 6, Rule 26 of the Rules of the Workmen's Compensation Commission.
SO ORDERED.
A petition for review of the hearing officer's decision was filed by MERALCO before the Workmen's
Compensation Commission. On June 25, 1962, the Associate Commissioner designated thereon
rendered a decision reversing that of the hearing officer. On a motion for reconsideration by the
claimant, the Workmen's Compensation Commission, en banc, affirmed the Associate
Commissioner's decision, per its resolution of August 22, 1962. Accordingly, the claimant has
appealed.
The record shows that petitioner was forced to ask for retirement ahead of schedule not because of
his old age, but principally because of his weakened bodily condition due to his illness. At the time of
his actual retirement, on November 25, 1959, petitioner was still being treated for his pulmonary
tuberculosis which was definitely pronounced arrested only on April 6, 1961. As the hearing officer
found, and MERALCO does not dispute it, the Employer's Report of Sickness in fact stated that
Hernandez retired due to "minimal PTB, bilateral, fibroid." There is, therefore, no denying the fact
that petitioner's aforesaid sickness contracted in the course of his employment, and not merely his
age, was responsible for his untimely retirement 36 days ahead of schedule from the service of
MERALCO.
The reason given by the Workmen's Compensation Commission in rejecting compensation for
petitioner's tuberculosis was that since it took 23 years for the disease to manifest itself the same
could not have been due to petitioner's working conditions. Such a view runs counter to our ruling
in Agustin vs. WCC, L-19957, September 29, 1964, that once the disease has been shown to have

arisen in the course of the employment, it is presumed by law , in the absence of substantial
evidence to the contrary, that it arose out of it. Petitioner's tuberculosis admittedly arose in the
course of his employment. The fact alone that 23 years had elapsed before the disease appeared is
not substantial evidence that it did not arise out of the employment:
The Commission does not refer to any evidence showing that the disease of the claimant
could not have been due to the conditions in which he had been working for so many years.
It merely speculates that it could not have so originated, because after 23 years the
tuberculosis was found to be minimal. We find this speculation insufficient to rebut the
statutory presumption, since it does not exclude the probability that the condition of work
reduced the resistance of the laborer's body to the point that he was unable to withstand the
infection. Also, the Commission's reasoning is faulty, in that the number of years that elapsed
before the disease became manifest merely tends to prove that the deterioration caused by
working conditions was slow, but not that the working conditions did not cause such
deterioration in the health of the laborer. (Agustin vs. WCC, supra.)
Since petitioner is entitled to compensation payments due to his pulmonary tuberculosis, we find it
unnecessary and academic to resolve whether his inguinal hernia and carcinoma of the prostate
likewise entitled him to the same.
Petitioner's compensation, however, should be for his inability to work during the remaining 36 days
before his scheduled compulsory retirement. Since he was retirable on December 31, 1959 and has
in fact received from MERALCO his retirement benefits, it cannot be said that subsequent to said
date his inability to work was due to his sickness. There is no evidentiary basis to support an award
for compensation payment even after December 31, 1959. From the record it could only be
concluded that petitioner's earning capacity, independent of his sickness ended on December 31,
1959, so that compensation payments, which are premised on loss or impairment of earning
capacity due to illness or injury, cannot extend beyond that date. In this regard compensation differs
from medical and hospital services and supplies. An employer's obligation to provide the latter
subsists until the illness is cured or arrested, pursuant to Section 13 of the Workmen's
Compensation Act, as long as the illness was contracted during the employer's employment (ItogonSuyoc Mines, Inc. vs. Dulay, L-18974, September 30, 1963). The present case involves only
compensation payments since MERALCO had voluntarily provided Hernandez with medical and
hospital services and supplies.
As to the alleged prescription, suffice it to say that by voluntarily furnishing medical service and
supplies MERALCO dispensed with the need for petitioner to file his Notice of Sickness within the
time limit therefor (Section 24, Workmen's Compensation Act). With regard to the two-month period
for the filing of a claim for compensation, the same should be counted from the date when the
disease or illness becomes compensable, that is, from the date the employee becomes physically
disabled to work (Peter Paul Philippines Corporation vs. Workmen's Compensation Commission, L19612, July 30, 1964). Petitioner herein was thus disabled only on November 25, 1959. While his
formal claim was filed on March 10, 1960, or beyond the two-month period, his request for retirement
on November 25, 1959 predicated on sickness causing his disability from working until his scheduled
retirement on December 31, 1959, substantially fulfills the requirement of a claim, for then the
company cannot plead surprise in the preparation of its defense, which is the only reason for
requiring an early filing of the claim on the part of the employee (Luzon Stevedoring Co., Inc. vs.
WCC, L-19742, January 31, 1964).
Petitioner's applicable average weekly wage has been shown to be P69.60 (P11.60 x 6 days). Sixty
per cent thereof is P41.76, so he is entitled to the maximum of P35.00 weekly compensation for the

period from November 25, 1959 to December 31, 1959, exclusive of the first three days pursuant to
Section 14 of the Workmen's Compensation Act.
1wph1.t

WHEREFORE, the decision appealed from is reversed and respondent Manila Electric Company
(MERALCO) is hereby ordered to pay petitioner the compensation payment of P35.00 per week for
the period from November 25, 1959 to December 31, 1959, exclusive of the first three days.
Respondent is further ordered to pay to the Workmen's Compensation Commission the expenses
provided for in Sec. 55 of Act No. 3428. No costs in this instance. It is so ordered.
Bengzon C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal and
Zaldivar, JJ., concur.
Concepcion, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-39587

March 24, 1934

ALEKO E. LILIUS, ET AL., plaintiffs-appellants,


vs.
THE MANILA RAILROAD COMPANY, defendant-appellant.
Harvey and O'Brien for plaintiffs-appellants.
Jose C. Abreu for defendant-appellant.
VILLA-REAL, J.:
This case involves two appeals, one by the defendant the Manila Railroad Company, and the other
by the plaintiffs Aleko E. Lilius et al., from the judgment rendered by the Court of First Instance of
Manila, the dispositive part of which reads as follows:
Wherefore, judgment is rendered ordering the defendant company to pay to the plaintiffs, for
the purposes above stated, the total amount of P30,865, with the costs of the suit. And
although the suit brought by the plaintiffs has the nature of a joint action, it must be
understood that of the amount adjudicated to the said plaintiffs in this judgment, the sum of
P10,000 personally belongs to the plaintiff Sonja Maria Lilius; the sum of P5,000, to the
plaintiff Brita Marianne Lilius; the sum of P250, to Dr. Marfori of the Calauan Hospital,
Province of Laguna, and the balance to the plaintiff Aleko E. Lilius.
In support of its appeal, the appellant the Manila Railroad Company assigns nine alleged errors
committed by the trial court in its said judgment, which will be discussed in the course of this
decision.
As a ground of their appeal, the appellants Aleko E. Lilius et al., in turn, assign two alleged errors as
committed by the same court a quo in its judgment in question, which will be discussed later.
This case originated from a complaint filed by Aleko E. Lilius et al., praying, under the facts therein
alleged, that the Manila Railroad Company be ordered to pay to said plaintiffs, by way of indemnity

for material and moral damages suffered by them through the fault and negligence of the said
defendant entity's employees, the sum of P50,000 plus legal interest thereon from the date of the
filing of the complaint, with costs.
The defendant the Manila Railroad Company, answering the complaint, denies each and every
allegation thereof and, by way of special defense, alleges that the plaintiff Aleko E. Lilius, with the
cooperation of his wife and coplaintiff, negligently and recklessly drove his car, and prays that it be
absolved from the complaint.
The following facts have been proven at the trial, some without question and the others by a
preponderance of evidence, to wit:
The plaintiff Aleko E. Lilius has, for many years, been a well-known and reputed journalist, author
and photographer. At the time of the collision in question, he was a staff correspondent in the Far
East of the magazines The American Weekly of New York and The Sphere of London.
Some of his works have been translated into various languages. He had others in preparation when
the accident occurred. According to him, his writings netted him a monthly income of P1,500. He
utilized the linguistic ability of his wife Sonja Maria Lilius, who translated his articles and books into
English, German, and Swedish. Furthermore, she acted as his secretary.
At about 7 o'clock on the morning of May 10, 1931, the plaintiff, his wife Sonja Maria Lilius, and his
4-year old daughter Brita Marianne Lilius, left Manila in their Studebaker car driven by the said
plaintiff Aleko E. Lilius for the municipality of Pagsanjan, Province of Laguna, on a sight-seeing
trip. It was the first time that he made said trip although he had already been to many places, driving
his own car, in and outside the Philippines. Where the road was clear and unobstructed, the plaintiff
drove at the rate of from 19 to 25 miles an hour. Prior thereto, he had made the trip as far as
Calauan, but never from Calauan to Pagsanjan, via Dayap. He was entirely unacquainted with the
conditions of the road at said points and had no knowledge of the existence of a railroad crossing at
Dayap. Before reaching the crossing in question, there was nothing to indicate its existence and
inasmuch as there were many houses, shrubs and trees along the road, it was impossible to see an
approaching train. At about seven or eight meters from the crossing, coming from Calauan, the
plaintiff saw an autotruck parked on the left side of the road. Several people, who seemed to have
alighted from the said truck, were walking on the opposite side. He slowed down to about 12 miles
an hour and sounded his horn for the people to get out of the way. With his attention thus occupied,
he did not see the crossing but he heard two short whistles. Immediately afterwards, he saw a huge
black mass fling itself upon him, which turned out to be locomotive No. 713 of the defendant
company's train coming eastward from Bay to Dayap station. The locomotive struck the plaintiff's car
right in the center. After dragging the said car a distance of about ten meters, the locomotive threw it
upon a siding. The force of the impact was so great that the plaintiff's wife and daughter were thrown
from the car and were picked up from the ground unconscious and seriously hurt. In spite of the
efforts of engineer Andres Basilio, he was unable to stop the locomotive until after it had gone about
seventy meters from the crossing.
On the afternoon of the same day, the plaintiff's entered St. Paul's Hospital in the City of Manila
where they were treated by Dr. Waterous. The plaintiff Aleko E. Lilius suffered from a fractured nose,
a contusion above the left eye and a lacerated wound on the right leg, in addition to multiple
contusions and scratches on various parts of the body. As a result of the accident, the said plaintiff
was highly nervous and very easily irritated, and for several months he had great difficulty in
concentrating his attention on any matter and could not write articles nor short stories for the
newspapers and magazines to which he was a contributor, thus losing for some time his only means
of livelihood.

The plaintiff Sonja Maria Lilius suffered from fractures of the pelvic bone, the tibia and fibula of the
right leg, below the knee, and received a large lacerated wound on the forehead. She underwent two
surgical operations on the left leg for the purpose of joining the fractured bones but said operations
notwithstanding, the leg in question still continues deformed. In the opinion of Dr. Waterous, the
deformity is permanent in character and as a result the plaintiff will have some difficulty in walking.
The lacerated wound, which she received on her forehead, has left a disfiguring scar.
The child Brita Marianne Lilius received two lacerated wounds, one on the forehead and the other on
the left side of the face, in addition to fractures of both legs, above and below the knees. Her
condition was serious and, for several days, she was hovering between life and death. Due to a
timely and successful surgical operation, she survived her wounds. The lacerations received by the
child have left deep scars which will permanently disfigure her face, and because of the fractures of
both legs, although now completely cured, she will be forced to walk with some difficulty and
continuous extreme care in order to keep her balance.
Prior to the accident, there had been no notice nor sign of the existence of the crossing, nor was
there anybody to warn the public of approaching trains. The flagman or switchman arrived after the
collision, coming from the station with a red flag in one hand and a green one in the other, both of
which were wound on their respective sticks. The said flagman and switchman had many times
absented himself from his post at the crossing upon the arrival of a train. The train left Bay station a
little late and therefore traveled at great speed.
Upon examination of the oral as well as of the documentary evidence which the parties presented at
the trial in support of their respective contentions, and after taking into consideration all the
circumstances of the case, this court is of the opinion that the accident was due to negligence on the
part of the defendant-appellant company, for not having had on that occasion any semaphore at the
crossing at Dayap, to serve as a warning to passers-by of its existence in order that they might take
the necessary precautions before crossing the railroad; and, on the part of its employees the
flagman and switchman, for not having remained at his post at the crossing in question to warn
passers-by of the approaching train; the stationmaster, for failure to send the said flagman and
switchman to his post on time; and the engineer, for not having taken the necessary precautions to
avoid an accident, in view of the absence of said flagman and switchman, by slackening his speed
and continuously ringing the bell and blowing the whistle before arriving at the crossing. Although it
is probable that the defendant-appellant entity employed the diligence of a good father of a family in
selecting its aforesaid employees, however, it did not employ such diligence in supervising their work
and the discharge of their duties because, otherwise, it would have had a semaphore or sign at the
crossing and, on previous occasions as well as on the night in question, the flagman and switchman
would have always been at his post at the crossing upon the arrival of a train. The diligence of a
good father of a family, which the law requires in order to avoid damage, is not confined to the
careful and prudent selection of subordinates or employees but includes inspection of their work and
supervision of the discharge of their duties.
However, in order that a victim of an accident may recover indemnity for damages from the person
liable therefor, it is not enough that the latter has been guilty of negligence, but it is also necessary
that the said victim has not, through his own negligence, contributed to the accident, inasmuch as
nobody is a guarantor of his neighbor's personal safety and property, but everybody should look after
them, employing the care and diligence that a good father of a family should apply to his own
person, to the members of his family and to his property, in order to avoid any damage. It appears
that the herein plaintiff-appellant Aleko E. Lilius took all precautions which his skill and the presence
of his wife and child suggested to him in order that his pleasure trip might be enjoyable and have a
happy ending, driving his car at a speed which prudence demanded according to the circumstances
and conditions of the road, slackening his speed in the face of an obstacle and blowing his horn

upon seeing persons on the road, in order to warn them of his approach and request them to get out
of the way, as he did when he came upon the truck parked on the left hand side of the road seven or
eight meters from the place where the accident occurred, and upon the persons who appeared to
have alighted from the said truck. If he failed to stop, look and listen before going over the crossing,
in spite of the fact that he was driving at 12 miles per hour after having been free from obstacles, it
was because, his attention having been occupied in attempting to go ahead, he did not see the
crossing in question, nor anything, nor anybody indicating its existence, as he knew nothing about it
beforehand. The first and only warning, which he received of the impending danger, was two short
blows from the whistle of the locomotive immediately preceding the collision and when the accident
had already become inevitable.
In view of the foregoing considerations, this court is of the opinion that the defendant the Manila
Railroad Company alone is liable for the accident by reason of its own negligence and that of its
employees, for not having employed the diligence of a good father of a family in the supervision of
the said employees in the discharge of their duties.
The next question to be decided refers to the sums of money fixed by the court a quo as indemnities
for damages which the defendant company should pay to the plaintiffs-appellants.
With respect to the plaintiff-appellant Aleko E. Lilius, although this court believes his claim of a net
income of P1,500 a month to be somewhat exaggerated, however, the sum of P5,000, adjudicated
to him by the trial court as indemnity for damages, is reasonable.
As to the sum of P10,635 which the court awards to the plaintiffs by way of indemnity for damages,
the different items thereof representing doctor's fees, hospital and nursing services, loss of personal
effects and torn clothing, have duly been proven at the trial and the sum in question is not excessive,
taking into consideration the circumstances in which the said expenses have been incurred.
Taking into consideration the fact that the plaintiff Sonja Maria Lilius, wife of the plaintiff Aleko E.
Lilius is in the language of the court, which saw her at the trial "young and beautiful and the big
scar, which she has on her forehead caused by the lacerated wound received by her from the
accident, disfigures her face and that the fracture of her left leg has caused a permanent deformity
which renders it very difficult for her to walk", and taking into further consideration her social
standing, neither is the sum of P10,000, adjudicated to her by the said trial court by way of indemnity
for patrimonial and moral damages, excessive. In the case of Gutierrez vs. Gutierrez (56 Phil., 177),
the right leg of the plaintiff Narciso Gutierrez was fractured as a result of a collision between the
autobus in which he was riding and the defendant's car, which fractured required medical attendance
for a considerable period of time. On the day of the trial the fracture had not yet completely healed
but it might cause him permanent lameness. The trial court sentenced the defendants to indemnify
him in the sum of P10,000 which this court reduced to P5,000, in spite of the fact that the said
plaintiff therein was neither young nor good-looking, nor had he suffered any facial deformity, nor did
he have the social standing that the herein plaintiff-appellant Sonja Maria Lilius enjoys.
1vvphi1.ne+

As to the indemnity of P5,000 in favor of the child Brita Marianne Lilius, daughter of Aleko E. Lilius
and Sonja Maria Lilius, neither is the same excessive, taking into consideration the fact that the
lacerations received by her have left deep scars that permanently disfigure her face and that the
fractures of both her legs permanently render it difficult for her to walk freely, continuous extreme
care being necessary in order to keep her balance in addition to the fact that all of this unfavorably
and to a great extent affect her matrimonial future.
With respect to the plaintiffs' appeal, the first question to be decided is that raised by the plaintiff
Aleko E. Lilius relative to the insufficiency of the sum of P5,000 which the trial court adjudicated to

him by way of indemnity for damages consisting in the loss of his income as journalist and author as
a result of his illness. This question has impliedly been decided in the negative when the defendantappellant entity's petition for the reduction of said indemnity was denied, declaring it to be
reasonable.
As to the amount of P10,000 claimed by the plaintiff Aleko E. Lilius as damages for the loss of his
wife's services in his business as journalist and author, which services consisted in going over his
writings, translating them into English, German and Swedish, and acting as his secretary, in addition
to the fact that such services formed part of the work whereby he realized a net monthly income of
P1,500, there is no sufficient evidence of the true value of said services nor to the effect that he
needed them during her illness and had to employ a translator to act in her stead.
The plaintiff Aleko E. Lilius also seeks to recover the sum of P2,500 for the loss of what is called
Anglo-Saxon common law "consortium" of his wife, that is, "her services, society and conjugal
companionship", as a result of personal injuries which she had received from the accident now under
consideration.
In the case of Goitia vs. Campos Rueda (35 Phil., 252, 255, 256), this court, interpreting the
provisions of the Civil Marriage Law of 1870, in force in these Islands with reference to the mutual
rights and obligations of the spouses, contained in articles 44-48 thereof, said as follows:
The above quoted provisions of the Law of Civil Marriage and the Civil Code fix the duties
and obligations of the spouses. The spouses must be faithful to, assist, and support each
other. The husband must live with and protect his wife. The wife must obey and live with her
husband and follow him when he changes his domicile or residence, except when he
removes to a foreign country. . . .
Therefore, under the law and the doctrine of this court, one of the husband's rights is to count on his
wife's assistance. This assistance comprises the management of the home and the performance of
household duties, including the care and education of the children and attention to the husband upon
whom primarily devolves the duty of supporting the family of which he is the head. When the wife's
mission was circumscribed to the home, it was not difficult to assume, by virtue of the marriage
alone, that she performed all the said tasks and her physical incapacity always redounded to the
husband's prejudice inasmuch as it deprived him of her assistance. However, nowadays when
women, in their desire to be more useful to society and to the nation, are demanding greater civil
rights and are aspiring to become man's equal in all the activities of life, commercial and industrial,
professional and political, many of them spending their time outside the home, engaged in their
businesses, industry, profession and within a short time, in politics, and entrusting the care of their
home to a housekeeper, and their children, if not to a nursemaid, to public or private institutions
which take charge of young children while their mothers are at work, marriage has ceased to create
the presumption that a woman complies with the duties to her husband and children, which the law
imposes upon her, and he who seeks to collect indemnity for damages resulting from deprivation of
her domestic services must prove such services. In the case under consideration, apart from the
services of his wife Sonja Maria Lilius as translator and secretary, the value of which has not been
proven, the plaintiff Aleko E. Lilius has not presented any evidence showing the existence of
domestic services and their nature, rendered by her prior to the accident, in order that it may serve
as a basis in estimating their value.
Furthermore, inasmuch as a wife's domestic assistance and conjugal companionship are purely
personal and voluntary acts which neither of the spouses may be compelled to render (Arroyo vs.
Vazquez de Arroyo, 42 Phil., 54), it is necessary for the party claiming indemnity for the loss of such

services to prove that the person obliged to render them had done so before he was injured and that
he would be willing to continue rendering them had he not been prevented from so doing.
In view of the foregoing considerations this court is of the opinion and so holds: (1) That a railroad
company which has not installed a semaphore at a crossing an does not see to it that its flagman
and switchman faithfully complies with his duty of remaining at the crossing when a train arrives, is
guilty of negligence and is civilly liable for damages suffered by a motorist and his family who cross
its line without negligence on their part; (2) that an indemnity of P10,000 for a permanent deformity
on the face and on the left leg, suffered by a young and beautiful society woman, is not excessive;
(3) that an indemnity of P5,000 for a permanent deformity on the face and legs of a four-year old girl
belonging to a well-to-do family, is not excessive; and (4) that in order that a husband may recover
damages for deprivation of his wife's assistance during her illness from an accident, it is necessary
for him to prove the existence of such assistance and his wife's willingness to continue rendering it
had she not been prevented from so doing by her illness.
The plaintiffs-appellants are entitled to interest of 6 percent per annum on the amount of the
indemnities adjudicated to them, from the date of the appealed judgment until this judgment
becomes final, in accordance with the provisions of section 510 of Act No. 190.
Wherefore, not finding any error in the judgment appealed from, it is hereby affirmed in toto, with the
sole modification that interest of 6 per cent per annum from the date of the appealed judgment until
this judgment becomes final will be added to the indemnities granted, with the costs of both
instances against the appellant. So ordered.
Malcolm, Hull, Imperial, and Goddard, JJ., concur.