G.R. No.

74431 November 6, 1989

PURITA MIRANDA VESTIL and AGUSTIN VESTIL, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, DAVID UY and TERESITA UY, respondents.
Pablo P. Garcia for petitioners.
Roberto R. Palmares for private respondents.

CRUZ, J.:
Little Theness Tan Uy was dead at the age of three. Her parents said she died because she was
bitten by a dog of the petitioners, but the latter denied this, claiming they had nothing to do with
the dog. The Uys sued the Vestils, who were sustained by the trial court. On appeal, the decision of
the court a quo was reversed in favor of the Uys. The Vestils are now before us. They ask us to set
aside the judgment of the respondent court and to reinstate that of the trial court.
On July 29, 1915, Theness was bitten by a dog while she was playing with a child of the petitioners
in the house of the late Vicente Miranda, the father of Purita Vestil, at F. Ramos Street in Cebu City.
She was rushed to the Cebu General Hospital, where she was treated for "multiple lacerated wounds
on the forehead" 1 and administered an anti-rabies vaccine by Dr. Antonio Tautjo. She was
discharged after nine days but was readmitted one week later due to "vomiting of saliva." 2 The
following day, on August 15, 1975, the child died. The cause of death was certified as bronchopneumonia. 3
Seven months later, the Uys sued for damages, alleging that the Vestils were liable to them as the
possessors of "Andoy," the dog that bit and eventually killed their daughter. The Vestils rejected the
charge, insisting that the dog belonged to the deceased Vicente Miranda, that it was a tame animal,
and that in any case no one had witnessed it bite Theness. After trial, Judge Jose R. Ramolete of the
Court of First Instance of Cebu sustained the defendants and dismissed the complaint. 4
The respondent court arrived at a different conclusion when the case was appealed. 5 It found that
the Vestils were in possession of the house and the dog and so should be responsible under Article
2183 of the Civil Code for the injuries caused by the dog. It also held that the child had died as a
result of the dog bites and not for causes independent thereof as submitted by the appellees.
Accordingly, the Vestils were ordered to pay the Uys damages in the amount of P30,000.00 for the
death of Theness, P12,000.00 for medical and hospitalization expenses, and P2,000.00 as attorney's
fees.
In the proceedings now before us, Purita Vestil insists that she is not the owner of the house or of
the dog left by her father as his estate has not yet been partitioned and there are other heirs to the
property. Pursuing the logic of the Uys, she claims, even her sister living in Canada would be held
responsible for the acts of the dog simply because she is one of Miranda's heirs. However, that is
hardly the point. What must be determined is the possession of the dog that admittedly was staying
in the house in question, regardless of the ownership of the dog or of the house.
Article 2183 reads as follows:
The possessor of an animal or whoever may make use of the same is responsible for the damage
which it may cause, although it may escape or be lost. 'This responsibility shall cease only in case
the damages should come from force majeure from the fault of the person who has suffered
damage.
Thus, in Afialda v. Hisole, 6 a person hired as caretaker of a carabao gored him to death and his
heirs thereupon sued the owner of the animal for damages. The complaint was dismissed on the
ground that it was the caretaker's duty to prevent the carabao from causing injury to any one,
including himself.

Purita Vestil's testimony that she was not in possession of Miranda's house is hardly credible. She said
that the occupants of the house left by her father were related to him ("one way or the other") and
maintained themselves out of a common fund or by some kind of arrangement (on which, however,
she did not elaborate ). 7 She mentioned as many as ten of such relatives who had stayed in the
house at one time or another although they did not appear to be close kin. 8 She at least implied
that they did not pay any rent, presumably because of their relation with Vicente Miranda
notwithstanding that she herself did not seem to know them very well.
There is contrary evidence that the occupants of the house, were boarders (or more of boarders
than relatives) who paid the petitioners for providing them with meals and accommodations. It also
appears that Purita Vestil had hired a maid, Dolores Jumao-as, who did the cooking and cleaning in
the said house for its occupants. 9 Her mother, Pacita, who was a nursemaid of Purita herself,
categorically declared that the petitioners were maintaining boarders in the house where Theness
was bitten by a dog. 10 Another witness, Marcial Lao, testified that he was indeed a boarder and
that the Vestils were maintaining the house for business purposes. 11 And although Purita denied
paying the water bills for the house, the private respondents submitted documentary evidence of
her application for water connection with the Cebu Water District, which strongly suggested that she
was administering the house in question. 12
While it is true that she is not really the owner of the house, which was still part of Vicente
Miranda's estate, there is no doubt that she and her husband were its possessors at the time of the
incident in question. She was the only heir residing in Cebu City and the most logical person to take
care of the property, which was only six kilometers from her own house. 13 Moreover, there is
evidence showing that she and her family regularly went to the house, once or twice weekly,
according to at least one witness, 14 and used it virtually as a second house. Interestingly, her own
daughter was playing in the house with Theness when the little girl was bitten by the dog. 15 The
dog itself remained in the house even after the death of Vicente Miranda in 1973 and until 1975,
when the incident in question occurred. It is also noteworthy that the petitioners offered to assist
the Uys with their hospitalization expenses although Purita said she knew them only casually. 16
The petitioners also argue that even assuming that they were the possessors of the dog that bit
Theness there was no clear showing that she died as a result thereof. On the contrary, the death
certificate 17 declared that she died of broncho-pneumonia, which had nothing to do with the dog
bites for which she had been previously hospitalized. The Court need not involve itself in an
extended scientific discussion of the causal connection between the dog bites and the certified
cause of death except to note that, first, Theness developed hydrophobia, a symptom of rabies, as a
result of the dog bites, and second, that asphyxia broncho-pneumonia, which ultimately caused her
death, was a complication of rabies. That Theness became afraid of water after she was bitten by
the dog is established by the following testimony of Dr. Tautjo:
COURT:

I think there was mention of rabies in the report in the second admission?

A:
Now, the child was continuously vomiting just before I referred to Dr. Co earlier in the
morning and then the father, because the child was asking for water, the father tried to give the
child water and this child went under the bed, she did not like to drink the water and there was
fright in her eyeballs. For this reason, because I was in danger there was rabies, I called Dr. Co.
Q:

In other words, the child had hydrophobia?

A:

Yes, sir. 18

As for the link between rabies and broncho-pneumonia, the doctor had the following to say under
oath:
A:
Now, as 1 said before, broncho-pneumonia can result from physical, chemical and
bacterial means. ... It can be the result of infection, now, so if you have any other disease which
can lower your resistance you can also get pneumonia.
xxx

xxx

xxx

Q:
Would you say that a person who has rabies may die of complication which is bronchopneumonia?
A:

Yes.

Q:
For the record, I am manifesting that this book shown the witness is know as CURRENT
DIANOSIS & TREATMENT, 1968 by Henry Brainerd, Sheldon Margen and Milton Chaton. Now, I invite
your attention, doctor, to page 751 of this book under the title "Rabies." There is on this page,
"Prognosis" as a result of rabies and it says: Once the symptoms, have appeared death inevitably
occurs after 2-3 days as a result of cardiac or respiratory failure or generalized paralysis. After a
positive diagnosis of rabies or after a bite by a suspected animal if the animal cannot be observed or
if the bite is on the head, give rabies vaccine (duck embryo). Do you believe in this statement?
A:

Yes.

Q:
Would you say therefore that persons who have rabies may die of respiratory failure which
leave in the form of bronco-pneumonia?
A:

Broncho-pneumonia can be a complication of rabies. 19

On the strength of the foregoing testimony, the Court finds that the link between the dog bites and
the certified cause of death has beep satisfactorily established. We also reiterate our ruling in Sison
v. Sun Life Assurance Company of Canada, 20 that the death certificate is not conclusive proof of the
cause of death but only of the fact of death. Indeed, the evidence of the child's hydrophobia is
sufficient to convince us that she died because she was bitten by the dog even if the death
certificate stated a different cause of death. The petitioner's contention that they could not be
expected to exercise remote control of the dog is not acceptable. In fact, Article 2183 of the Civil
Code holds the possessor liable even if the animal should "escape or be lost" and so be removed from
his control. And it does not matter either that, as the petitioners also contend, the dog was tame
and was merely provoked by the child into biting her. The law does not speak only of vicious animals
but covers even tame ones as long as they cause injury. As for the alleged provocation, the
petitioners forget that Theness was only three years old at the time she was attacked and can hardly
be faulted for whatever she might have done to the animal.
It is worth observing that the above defenses of the petitioners are an implied rejection of their
original posture that there was no proof that it was the dog in their father's house that bit Theness.
According to Manresa the obligation imposed by Article 2183 of the Civil Code is not based on the
negligence or on the presumed lack of vigilance of the possessor or user of the animal causing the
damage. It is based on natural equity and on the principle of social interest that he who possesses
animals for his utility, pleasure or service must answer for the damage which such animal may
cause. 21
We sustain the findings of the Court of Appeals and approve the monetary awards except only as to
the medical and hospitalization expenses, which are reduced to P2,026.69, as prayed for in the
complaint. While there is no recompense that can bring back to the private respondents the child
they have lost, their pain should at least be assuaged by the civil damages to which they are
entitled.
WHEREFORE, the challenged decision is AFFIRMED as above modified. The petition is DENIED, with
costs against the petitioners. It is so ordered.

(1) Injuries or endangers the health or safety of others; or

G.R. No. L-18390 August 6, 1971

(2) Annoys or offends the senses;

PEDRO J. VELASCO, plaintiff-appellant,

vs.
MANILA ELECTRIC CO., WILLIAM SNYDER, its President; JOHN COTTON and HERMENEGILDO B.
REYES, its Vice-Presidents; and ANASTACIO A. AGAN, City Engineer of Quezon City, defendantsappellees.

xxx xxx xxx

because subjection to the sound since 1954 had disturbed the concentration and sleep of said
appellant, and impaired his health and lowered the value of his property. Wherefore, he sought a
judicial decree for the abatement of the nuisance and asked that he be declared entitled to recover
compensatory, moral and other damages under Article 2202 of the Civil Code.

Q. Paredes, B. Evangelista and R. T. Durian for plaintiff-appellant.

Ross, Selph and Carrascoso for defendants-appellees Manila Electric Co., etc., et al.
Asst. City Fiscal Jaime R. Agloro for defendant-appellee Anastacio A. Agan, etc.
REYES, J.B.L., J.:
The present case is direct appeal (prior to Republic Act 5440) by the herein plaintiff-appellant,
Pedro J. Velasco (petitioner in L-14035; respondent in L-13992) * from the decision of the Court of
First Instance of Rizal, Quezon City Branch, in its Civil Case No. 1355, absolving the defendants from
a complaint for the abatement of the sub-station as a nuisance and for damages to his health and
business in the amount of P487,600.00.
In 1948, appellant Velasco bought from the People's Homesite and Housing Corporation three (3)
adjoining lots situated at the corner of South D and South 6 Streets, Diliman, Quezon City. These lots
are within an area zoned out as a "first residence" district by the City Council of Quezon City.
Subsequently, the appellant sold two (2) lots to the Meralco, but retained the third lot, which was
farthest from the street-corner, whereon he built his house.
In September, 1953, the appellee company started the construction of the sub-station in question
and finished it the following November, without prior building permit or authority from the Public
Service Commission (Meralco vs. Public Service Commission, 109 Phil. 603). The facility reduces high
voltage electricity to a current suitable for distribution to the company's consumers, numbering not
less than 8,500 residential homes, over 300 commercial establishments and about 30 industries
(T.s.n., 19 October 1959, page 1765). The substation has a rated capacity of "2 transformers at 5000
Kva each or a total of 10,000 Kva without fan cooling; or 6250 Kva each or a total of 12,500 Kva with
fan cooling" (Exhibit "A-3"). It was constructed at a distance of 10 to 20 meters from the appellant's
house (T.s.n., 16 July 1956, page 62; 19 December 1956, page 343; 1 June 1959, page 29). The
company built a stone and cement wall at the sides along the streets but along the side adjoining
the appellant's property it put up a sawale wall but later changed it to an interlink wire fence.
It is undisputed that a sound unceasingly emanates from the substation. Whether this sound
constitutes an actionable nuisance or not is the principal issue in this case.
Plaintiff-appellant Velasco contends that the sound constitutes an actionable nuisance under Article
694 of the Civil Code of the Philippines, reading as follows:
A nuisance is any act, omission, establishment, business condition of property or
anything else which:

ART. 2202. In crimes and quasi-delicts, the defendant shall be liable for all
damages which are the natural and probable consequences of the act or
omission complained of. It is not necessary that such damages have been
foreseen or could have reasonably been foreseen by the defendant.
After trial, as already observed, the court below dismissed the claim of the plaintiff, finding that
the sound of substation was unavoidable and did not constitute nuisance; that it could not have
caused the diseases of anxiety neurosis, pyelonephritis, ureteritis, lumbago and anemia; and that
the items of damage claimed by plaintiff were not adequate proved. Plaintiff then appealed to this
Court.
The general rule is that everyone is bound to bear the habitual or customary inconveniences that
result from the proximity of others, and so long as this level is not surpassed, he may not complain
against them. But if the prejudice exceeds the inconveniences that such proximity habitually brings,
the neighbor who causes such disturbance is held responsible for the resulting damage, 1 being guilty
of causing nuisance.
While no previous adjudications on the specific issue have been made in the Philippines, our law of
nuisances is of American origin, and a review of authorities clearly indicates the rule to be that the
causing or maintenance of disturbing noise or sound may constitute an actionable nuisance (V. Ed.
Note, 23 ALR, 2d 1289). The basic principles are laid down in Tortorella vs. Traiser & Co., Inc., 90
ALR 1206:
A noise may constitute an actionable nuisance, Rogers vs. Elliott, 146 Mass, 349,
15 N.E. 768, 4 Am. St. Rep. 316, Stevens v. Rockport Granite Co., 216 Mass. 486,
104 N.E. 371, Ann. Cas. 1915B, 1954, Stodder v. Rosen Talking Machine Co., 241
Mass. 245, 135 N. E. 251, 22 A. L. R. 1197, but it must be a noise which affects
injuriously the health or comfort of ordinary people in the vicinity to an
unreasonable extent. Injury to a particular person in a peculiar position or of
specially sensitive characteristics will not render the noise an actionable
nuisance. Rogers v. Elliott, 146 Mass. 349, 15 N. E. 768, 4 Am. St. Rep. 316. In
the conditions of present living noise seems inseparable from the conduct of
many necessary occupations. Its presence is a nuisance in the popular sense in
which that word is used, but in the absence of statute noise becomes actionable
only when it passes the limits of reasonable adjustment to the conditions of the
locality and of the needs of the maker to the needs of the listener. What those
limits are cannot be fixed by any definite measure of quantity or quality. They
depend upon the circumstances of the particular case. They may be affected,
but are not controlled, by zoning ordinances. Beane v. H. J. Porter, Inc., 280
Mass. 538, 182 N. E. 823,Marshal v. Holbrook, 276 Mass. 341, 177 N. E.
504, Strachan v. Beacon Oil Co., 251 Mass. 479, 146 N. E. 787. The delimitation
of designated areas to use for manufacturing, industry or general business is not

a license to emit every noise profitably attending the conduct of any one of
them.Bean v. H. J. Porter, Inc.. 280 Mass. 538, 182 N. E. 823. The test is
whether rights of property of health or of comfort are so injuriously affected by
the noise in question that the sufferer is subjected to a loss which goes beyond
the reasonable limit imposed upon him by the condition of living, or of holding
property, in a particular locality in fact devoted to uses which involve the
emission of noise although ordinary care is taken to confine it within reasonable
bounds; or in the vicinity of property of another owner who though creating a
noise is acting with reasonable regard for the rights of those affected by
it. Stevens v. Rockport Granite Co., 216 Mass. 486, 104 NE 371, Ann. Cas. 1915B,
1054.
With particular reference to noise emanating from electrical machinery and appliances, the court,
in Kentucky & West Virginia Power Co. v. Anderson, 156 S. W. 2d 857, after a review of authorities,
ruled as follows:
There can be no doubt but that commercial and industrial activities which are
lawful in themselves may become nuisances if they are so offensive to the
senses that they render the enjoyment of life and property uncomfortable. It is
no defense that skill and care have been exercised and the most improved
methods and appliances employed to prevent such result. Wheat Culvert
Company v. Jenkins, 246 Ky. 319, 55 S. W. 2d 4; 46 C.J. 683, 705; 20 R. C. L.
438; Annotations, 23 A. L. R. 1407; 90 A. L. R. 1207. Of course, the creation of
trifling annoyance and inconvenience does not constitute an actionable
nuisance, and the locality and surroundings are of importance. The fact that the
cause of the complaint must be substantial has often led to expressions in the
opinions that to be a nuisance the noise must be deafening or loud or excessive
and unreasonable. Usually it was shown to be of that character. The
determinating factor when noise alone is the cause of complaint is not its
intensity or volume. It is that the noise is of such character as to produce actual
physical discomfort and annoyance to a person of ordinary sensibilities,
rendering adjacent property less comfortable and valuable. If the noise does
that it can well be said to be substantial and unreasonable in degree; and
reasonableness is a question of fact dependent upon all the circumstances and
conditions. 20 R. C. L. 445, 453; Wheat Culvert Company v. Jenkins, supra.
There can be no fixed standard as to what kind of noise constitutes a nuisance.
It is true some witnesses in this case say they have been annoyed by the
humming of these transformers, but that fact is not conclusive as to the
nonexistence of the cause of complaint, the test being the effect which is had
upon an ordinary person who is neither sensitive nor immune to the annoyance
concerning which the complaint is made. In the absence of evidence that the
complainant and his family are supersensitive to distracting noises, it is to be
assumed that they are persons of ordinary and normal sensibilities. Roukovina v.
Island Farm Creamery Company, 160 Minn. 335, 200 N. W. 350, 38 A. L. R. 1502.
xxx xxx xxx
In Wheat Culvert Company vs. Jenkins, supra, we held an injunction was
properly decreed to stop the noise from the operation of a metal culvert factory
at night which interfered with the sleep of the occupants of an adjacent
residence. It is true the clanging, riveting and hammering of metal plates
produces a sound different in character from the steady hum or buzz of the
electric machinery described in this case. In the Jenkins case the noise was
loud, discordant and intermittent. Here it is interminable and monotonous.

Therein lies the physical annoyance and disturbance. Though the noise be
harmonious and slight and trivial in itself, the constant and monotonous sound of
a cricket on the earth, or the drip of a leaking faucet is irritating,
uncomfortable, distracting and disturbing to the average man and woman. So it
is that the intolerable, steady monotony of this ceaseless sound, loud enough to
interfere with ordinary conversation in the dwelling, produces a result generally
deemed sufficient to constitute the cause of it an actionable nuisance. Thus, it
has been held the continuous and monotonous playing of a phonograph for
advertising purposes on the street even though there were various records,
singing, speaking and instrumental, injuriously affected plaintiff's employees by
a gradual wear on their nervous systems, and otherwise, is a nuisance
authorizing an injunction and damages. Frank F. Stodder, et al. v. Rosen Talking
Machine Company, 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197.
The principles thus laid down make it readily apparent that inquiry must be directed at the
character and intensity of the noise generated by the particular substation of the appellee. As can
be anticipated, character and loudness of sound being of subjective appreciation in ordinary
witnesses, not much help can be obtained from the testimonial evidence. That of plaintiff Velasco is
too plainly biased and emotional to be of much value. His exaggerations are readily apparent in
paragraph V of his amended complaint, signed by him as well as his counsel, wherein the noise
complained of as
fearful hazardous noise and clangor are produced by the said electric
transformer of the MEC's substation, approximating a noise of a reactivated
about-to-explode volcano, perhaps like the nerve wracking noise of the torture
chamber in Germany's Dachau or Buchenwald (Record on Appeal, page 6).
The estimate of the other witnesses on the point of inquiry are vague and imprecise, and fail to give
a definite idea of the intensity of the sound complained of. Thus:
OSCAR SANTOS, Chief Building Inspector, Department of Engineering, Quezon City ____ "the sound
(at the front door of plaintiff Velasco's house) becomes noticeable only when I tried to
concentrate ........" (T.s.n., 16 July 1956, page 50)
SERAFIN VILLARAZA, Building Inspector ____ "..... like a high pitch note." (the trial court's
description as to the imitation of noise made by witness:"........ more of a hissing sound) (T.s.n., 16
July 1956, pages 59-60)
CONSTANCIO SORIA, City Electrician ____ "........ humming sound" ..... "of a running car". (T.s.n., 16
July 1956, page 87)
JOSE R. ALVAREZ, Sanitary Engineer, Quezon City Health Department ____ "..... substation emits a
continuous rumbling sound which is audible within the premises and at about a radius of 70 meters."
"I stayed there from 6:00 p.m. to about 1:00 o'clock in the morning" ..... "increases with the
approach of twilight." (T.s.n., 5 September 1956, pages 40-44)
NORBERTO S. AMORANTO, Quezon City Mayor ____ (for 30 minutes in the street at a distance of 12 to
15 meters from sub-station) "I felt no effect on myself." "..... no [piercing noise]" (T.s.n., 18
September 1956, page 189)
PACIFICO AUSTRIA, architect, appellant's neighbor: "..... like an approaching airplane ..... around
five kilometers away." (T.s.n., 19 November 1956, pages 276-277)

ANGEL DEL ROSARIO, radiologist, appellant's neighbor: "..... as if it is a running motor or a running
dynamo, which disturbs the ear and the hearing of a person." T.s.n., 4 December 1956, page 21)
ANTONIO D. PAGUIA, lawyer ____ "It may be likened to the sound emitted by the whistle of a boat at
a far distance but it is very audible." (T.s.n., 19 December 1956, page 309)
RENE RODRIGUEZ, sugar planter and sugar broker, appellant's neighbor ____ "It sounds like a big
motor running continuously." (T.s.n., 19 December 1956, page 347)
SIMPLICIO BELISARIO, Army captain, ____ (on a visit to Velasco) "I can compare the noise to an
airplane C-47 being started - the motor." [Did not notice the noise from the substation when passing
by, in a car, Velasco's house] (T.s.n., 7 January 1957, pages 11-12)
MANOLO CONSTANTINO, businessman, appellant's neighbor ____ "It disturbs our concentration of
mind." (T.s.n., 10 January 1957, page 11)
PEDRO PICA, businessman, appellant's neighbor: "..... We can hear it very well [at a distance of 100
to 150 meters]. (T.s.n., 10 January 1957, page 41)
CIRENEO PUNZALAN, lawyer ____ "..... a continuous droning, ..... like the sound of an airplane."
(T.s.n., 17 January 1957, page 385)
JAIME C. ZAGUIRRE, Chief, Neuro-Psychiatry Section, V. Luna Gen. Hospital ____ "..... comparatively
the sound was really loud to bother a man sleeping." (T.s.n., 17 January 1957, page 406)
We are thus constrained to rely on quantitative measurements shown by the record. Under
instructions from the Director of Health, samplings of the sound intensity were taken by Dr. Jesus
Almonte using a sound level meter and other instruments. Within the compound of the plaintiffappellant, near the wire fence serving as property line between him and the appellee, on 27 August
1957 at 11:45 a.m., the sound level under the sampaloc tree was 46-48 decibels, while behind
Velasco's kitchen, the meter registered 49-50; at the same places on 29 August 1957, at 6:00 a.m.,
the readings were 56-59 and 61-62 decibels, respectively; on 7 September 1957, at 9:30 a.m., the
sound level under the sampaloc tree was 74-76 decibels; and on 8 September 1957 at 3:35 in the
morning, the reading under the same tree was 70 decibels, while near the kitchen it was 79-80
decibels. Several measurements were also taken inside and outside the house (Exhibit "NN-7, b-f").
The ambient sound of the locality, or that sound level characteristic of it or that sound
predominating minus the sound of the sub-station is from 28 to 32 decibels. (T.s.n., 26 March 1958,
pages 6-7)
Mamerto Buenafe, superintendent of the appellee's electrical laboratory, also took sound level
samplings. On 19 December 1958, between 7:00 to 7:30 o'clock in the evening, at the substation
compound near the wire fence or property line, the readings were 55 and 54 and still near the fence
close to the sampaloc tree, it was 52 decibels; outside but close to the concrete wall, the readings
were 42 to 43 decibels; and near the transformers, it was 76 decibels (Exhibit "13").
Buenafe also took samplings at the North General Hospital on 4 January 1959 between 9:05 to 9:45
in the evening. In the different rooms and wards from the first to the fourth floors, the readings
varied from 45 to 67 decibels.
Technical charts submitted in evidence show the following intensity levels in decibels of some
familiar sounds: average residence: 40; average office: 55; average automobile, 15 feet: 70; noisiest

spot at Niagara Falls: 92 (Exhibit "11- B"); average dwelling: 35; quiet office: 40; average office: 50;
conversation: 60; pneumatic rock drill: 130 (Exhibit "12"); quiet home average living room: 40;
home ventilation fan, outside sound of good home airconditioner or automobile at 50 feet: 70
(Exhibit "15-A").
Thus the impartial and objective evidence points to the sound emitted by the appellee's substation
transformers being of much higher level than the ambient sound of the locality. The measurements
taken by Dr. Almonte, who is not connected with either party, and is a physician to boot (unlike
appellee's electrical superintendent Buenafe), appear more reliable. The conclusion must be that,
contrary to the finding of the trial court, the noise continuously emitted, day and night, constitutes
an actionable nuisance for which the appellant is entitled to relief, by requiring the appellee
company to adopt the necessary measures to deaden or reduce the sound at the plaintiff's house, by
replacing the interlink wire fence with a partition made of sound absorbent material, since the
relocation of the substation is manifestly impracticable and would be prejudicial to the customers of
the Electric Company who are being serviced from the substation.
Appellee company insists that as the plaintiff's own evidence (Exhibit "NN-7[c]") the intensity of the
sound (as measured by Dr. Almonte) inside appellant's house is only 46 to 47 decibels at the
consultation room, and 43 to 45 decibels within the treatment room, the appellant had no ground to
complain. This argument is not meritorious, because the noise at the bedrooms was determined to
be around 64-65 decibels, and the medical evidence is to the effect that the basic root of the
appellant's ailments was his inability to sleep due to the incessant noise with consequent irritation,
thus weakening his constitution and making him easy prey to pathogenic germs that could not
otherwise affect a person of normal health.
In Kentucky and West Virginia Co., Inc. vs. Anderson, 156 SW. 857, the average of three readings
along the plaintiff's fence was only 44 decibels but, because the sound from the sub-station was
interminable and monotonous, the court authorized an injunction and damages. In the present case,
the three readings along the property line are 52, 54 and 55 decibels. Plaintiff's case is manifestly
stronger.
Appellee company argues that the plaintiff should not be heard to complain because the sound level
at the North General Hospital, where silence is observed, is even higher than at his residence. This
comparison lacks basis because it has not been established that the hospital is located in
surroundings similar to the residential zone where the plaintiff lived or that the sound at the
hospital is similarly monotonous and ceaseless as the sound emitted by the sub-station.
Constancio Soria testified that "The way the transformers are built, the humming sound cannot be
avoided". On this testimony, the company emphasizes that the substation was constructed for public
convenience. Admitting that the sound cannot be eliminated, there is no proof that it cannot be
reduced. That the sub-station is needed for the Meralco to be able to serve well its customers is no
reason, however, why it should be operated to the detriment and discomfort of others. 2
The fact that the Meralco had received no complaint although it had been operating hereabouts for
the past 50 years with substations similar to the one in controversy is not a valid argument. The
absence of suit neither lessens the company's liability under the law nor weakens the right of others
against it to demand their just due.
As to the damages caused by the noise, appellant Velasco, himself a physician, claimed that the
noise, as a precipitating factor, has caused him anxiety neurosis, which, in turn, predisposed him to,
or is concomitant with, the other ailments which he was suffering at the time of the trial, namely,
pyelonephritis, ureteritis and others; that these resulted in the loss of his professional income and
reduced his life expectancy. The breakdown of his claims is as follows:

Loss of professional earnings P12,600

Damage to life expectancy 180,000
Moral damages 100,000
Loss due to frustration of sale of house 125,000
Exemplary damages 25,000
Attorneys' fees 45,000
A host of expert witnesses and voluminous medical literature, laboratory findings and statistics of
income were introduced in support of the above claims.
The medical evidence of plaintiff's doctors preponderates over the expert evidence for defendantappellee, not merely because of its positive character but also because the physicians presented by
plaintiff had actually treated him, while the defense experts had not done so. Thus the evidence of
the latter was to a large extent conjectural. That appellant's physical ailments should be due to
infectious organisms does not alter the fact that the loss of sleep, irritation and tension due to
excessive noise weakened his constitution and made him easy prey to the infection.
Regarding the amount of damages claimed by appellant, it is plain that the same are exaggerated.
To begin with, the alleged loss of earnings at the rate of P19,000 per annum is predicated on the
Internal Revenue assessment, Exhibit "QQ-1", wherein appellant was found to have undeclared
income of P8,338.20 in additional to his declared gross income of P10,975.00 for 1954. There is no
competent showing, however, that the source of such undeclared income was appellant's profession.
In fact, the inference would be to the contrary, for his gross income from the previous years 1951 to
1953 [Exhibits "QQ-1 (d)" to "QQ-1 (f)"] was only P8,085.00, P5,860.00 and P7,120.00, respectively,
an average of P7,000.00 per annum. Moreover, while his 1947 and 1948 income was larger (P9,995.00
and P11,900.00), it appears that P5,000 thereof was the appellant's annual salary from the Quezon
Memorial Foundation, which was not really connected with the usual earnings derived from practice
as a physician. Considering, therefore, his actual earnings, the claimed moral damages of
P100,000.00 are utterly disproportionate. The alleged losses for shortening of appellant's, life
expectancy are not only inflated but speculative.
As to the demand for exemplary or punitive damages, there appears no adequate basis for their
award. While the appellee Manila Electric Company was convicted for erecting the substation in
question without permit from the Public Service Commission, We find reasonable its explanation
that its officials and counsel had originally deemed that such permit was not required as the
installation was authorized by the terms of its franchise (as amended by Republic Act No. 150)
requiring it to spend within 5 years not less than forty million pesos for maintenance and additions
to its electric system, including needed power plants and substations. Neither the absence of such
permit from the Public Service Commission nor the lack of permit from the Quezon City authorities
(a permit that was subsequently granted) is incompatible with the Company's good faith, until the
courts finally ruled that its interpretation of the franchise was incorrect.

was disturbing or depriving him of sleep and affecting both his physical and mental well being, he
did not take any steps to bring action to abate the nuisance or remove himself from the affected
area as soon as the deleterious effects became noticeable. To evade them appellant did not even
have to sell his house; he could have leased it and rented other premises for sleeping and
maintaining his office and thus preserve his health as ordinary prudence demanded. Instead he
obstinately stayed until his health became gravely affected, apparently hoping that he would
thereby saddle appellee with large damages.
The law in this jurisdiction is clear. Article 2203 prescribes that "The party suffering loss or injury
must exercise the diligence of a good father of a family to minimize the damages resulting from the
act or omission in question". This codal rule, which embodies the previous jurisprudence on the
point, 3 clearly obligates the injured party to undertake measures that will alleviate and not
aggravate his condition after the infliction of the injury, and places upon him the burden of
explaining why he could not do so. This was not done.
Appellant Velasco introduced evidence to the effect that he tried to sell his house to Jose Valencia,
Jr., in September, 1953, and on a 60 day option, for P95,000.00, but that the prospective buyer
backed out on account of his wife objecting to the noise of the substation. There is no reliable
evidence, however, how much were appellant's lot and house worth, either before the option was
given to Valencia or after he refused to proceed with the sale or even during the intervening period.
The existence of a previous offer for P125,000.00, as claimed by the plaintiff, was not corroborated
by Valencia. What Valencia testified to in his deposition is that when they were negotiating on the
price Velasco mentioned to him about an offer by someone for P125,000.00. The testimony of
Valencia proves that in the dialogue between him and Velasco, part of the subject of their
conversation was about the prior offer, but it does not corroborate or prove the reality of the offer
for P125,000.00. The testimony of Velasco on this point, standing alone, is not credible enough,
what with his penchant for metaphor and exaggeration, as previously adverted to. It is urged in
appellant's brief, along the lines of his own testimony, that since one (1) transformer was measured
by witness, Jimenez with a noise intensity of 47.2 decibels at a distance of 30.48 meters, the two
(2) transformers of the substation should create an intensity of 94.4 decibels at the same distance.
If this were true, then the residence of the plaintiff is more noisy than the noisiest spot at the
Niagara Falls, which registers only 92 decibels (Exhibit "15-A").
Since there is no evidence upon which to compute any loss or damage allegedly incurred by the
plaintiff by the frustration of the sale on account of the noise, his claim therefore was correctly
disallowed by the trial court. It may be added that there is no showing of any further attempts on
the part of appellant to dispose of the house, and this fact suffices to raise doubts as to whether he
truly intended to dispose of it. He had no actual need to do so in order to escape deterioration of his
health, as heretofore noted.

There are, moreover, several factors that mitigate defendant's liability in damages. The first is that
the noise from the substation does not appear to be an exclusive causative factor of plaintiffappellant's illnesses. This is proved by the circumstance that no other person in Velasco's own
household nor in his immediate neighborhood was shown to have become sick despite the noise
complained of. There is also evidence that at the time the plaintiff-appellant appears to have been
largely indebted to various credit institutions, as a result of his unsuccessful gubernatorial
campaign, and this court can take judicial cognizance of the fact that financial worries can affect
unfavorably the debtor's disposition and mentality.

Despite the wide gap between what was claimed and what was proved, the plaintiff is entitled to
damages for the annoyance and adverse effects suffered by him since the substation started
functioning in January, 1954. Considering all the circumstances disclosed by the record, as well as
appellant's failure to minimize the deleterious influences from the substation, this Court is of the
opinion that an award in the amount of P20,000.00, by way of moderate and moral damages up to
the present, is reasonable. Recovery of attorney's fees and litigation expenses in the sum of
P5,000.00 is also
justified the factual and legal issues were intricate (the transcript of the stenographic notes is
about 5,000 pages, side from an impressive number of exhibits), and raised for the first time in this
jurisdiction. 4

The other factor militating against full recovery by the petitioner Velasco in his passivity in the face
of the damage caused to him by the noise of the substation. Realizing as a physician that the latter

The last issue is whether the City Engineer of Quezon City, Anastacio A. Agan, a co-defendant, may
be held solidarily liable with Meralco.

Agan was included as a party defendant because he allegedly (1) did not require the Meralco to
secure a building permit for the construction of the substation; (2) even defended its construction
by not insisting on such building permit; and (3) did not initiate its removal or demolition and the
criminal prosecution of the officials of the Meralco.
The record does not support these allegations. On the first plea, it was not Agan's duty to require
the Meralco to secure a permit before the construction but for Meralco to apply for it, as per Section
1. Ordinance No. 1530, of Quezon City. The second allegation is not true, because Agan wrote the
Meralco requiring it to submit the plan and to pay permit fees (T.s.n., 14 January 1960, pages 20812082). On the third allegation, no law or ordinance has been cited specifying that it is the city
engineer's duty to initiate the removal or demolition of, or for the criminal prosecution of, those
persons who are responsible for the nuisance. Republic Act 537, Section 24 (d), relied upon by the
plaintiff, requires an order by, or previous approval of, the mayor for the city engineer to cause or
order the removal of buildings or structures in violation of law or ordinances, but the mayor could
not be expected to take action because he was of the belief, as he testified, that the sound "did not
have any effect on his body."
FOR THE FOREGOING REASONS, the appealed decision is hereby reversed in part and affirmed in
part. The defendant-appellee Manila Electric Company is hereby ordered to either transfer its
substation at South D and South 6 Streets, Diliman, Quezon City, or take appropriate measures to
reduce its noise at the property line between the defendant company's compound and that of the
plaintiff-appellant to an average of forty (40) to fifty (50) decibels within 90 days from finality of
this decision; and to pay the said plaintiff-appellant P20,000.00 in damages and P5,000.00 for
attorney's fees. In all other respects, the appealed decision is affirmed. No costs.

NAVIDA VS DIZON
GR NO. 125598, May 30, 2011

Beginning 1993, a number of personal injury suits were filed in different Texas state courts by
citizens of twelve foreign countries, including the Philippines. The thousands of plaintiffs sought
damages for injuries they allegedly sustained from their exposure to dibromochloropropane (DBCP),
a chemical used to kill nematodes (worms), while working on farms in 23 foreign countries. The
cases were eventually transferred to, and consolidated in, the Federal District Court for the
Southern District of Texas, Houston Division.The cases therein that involved plaintiffs from
the Philippines were Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al., which was docketed as
Civil Action No. H-94-1359, and Juan Ramon Valdez, et al. v. Shell Oil Co., et al., which was
docketed as Civil Action No. H-95-1356. The defendants in the consolidated cases prayed for the
dismissal of all the actions under the doctrine of forum non conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally granted
the defendants motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90
days after the entry of this Memorandum and Order provided that defendants
and third- and fourth-party defendants have:
(1)

participated in expedited discovery in the United States xxx;

(2)

either waived or accepted service of process and waived any

other jurisdictional defense within 40 days after the entry of this
Memorandum and Order in any action commenced by a plaintiff
in these actions in his home country or the country in which his
injury occurred. Any plaintiff desiring to bring such an action will
do so within 30 days after the entry of this Memorandum and
Order;

(3)

waived within 40 days after the entry of this Memorandum and

Order any limitations-based defense that has matured since the
commencement of these actions in the courts ofTexas;

(4)

stipulated within 40 days after the entry of this Memorandum

and Order that any discovery conducted during the pendency of
these actions may be used in any foreign proceeding to the same
extent as if it had been conducted in proceedings initiated there;
and

(5)

submitted within 40 days after the entry of this Memorandum

and Order an agreement binding them to satisfy any final
judgment rendered in favor of plaintiffs by a foreign court.

DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of
Court, which arose out of two civil cases that were filed in different courts but whose factual
background and issues are closely intertwined.
The petitions in G.R. Nos. 125078[1] and 125598[2] both assail the Order[3] dated May 20,
1996 of the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil Case No. 5617. The
said Order decreed the dismissal of the case in view of the perceived lack of jurisdiction of the RTC
over the subject matter of the complaint. The petition in G.R. No. 125598 also challenges the
Orders dated June 4, 1996 [4] and July 9, 1996, [5] which held that the RTC of General Santos City no
longer had jurisdiction to proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos. 126654,[6] 127856,[7] and 128398[8] seek the
reversal of the Order[9] dated October 1, 1996 of the RTC of Davao City, Branch 16, in Civil Case No.
24,251-96, which also dismissed the case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the
Resolutions dated February 10, 1997,[10] April 28, 1997[11] and March 10, 1999.[12]
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts

xxxx
Notwithstanding the dismissals that may result from this Memorandum
and Order, in the event that the highest court of any foreign country finally
affirms the dismissal for lack of jurisdiction of an action commenced by a
plaintiff in these actions in his home country or the country in which he was
injured, that plaintiff may return to this court and, upon proper motion, the
court will resume jurisdiction over the action as if the case had never been
dismissed for [forum non conveniens].[13]
Civil Case No. 5617 before the RTC
of General Santos City and G.R. Nos.
125078 and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General Santos
City (the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA,et al.) filed a Joint
Complaint[14] in the RTC of General Santos City on August 10, 1995. The case was docketed as Civil

Case No. 5617. Named as defendants therein were: Shell Oil Co. (SHELL); Dow Chemical Co. (DOW);
Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit
Co., Standard Fruit and Steamship Co. (hereinafter collectively referred to as DOLE); Chiquita
Brands, Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and
Del Monte Tropical Fruit Co. (hereinafter collectively referred to as DEL MONTE); Dead Sea Bromine
Co., Ltd.; Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac Chemical Corp. (The
aforementioned defendants are hereinafter collectively referred to as defendant companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and injuries to
the reproductive systems which they allegedly suffered because of their exposure to DBCP. They
claimed, among others, that they were exposed to this chemical during the early 1970s up to the
early 1980s when they used the same in the banana plantations where they worked at; and/or when
they resided within the agricultural area where such chemical was used. NAVIDA, et al., claimed
that their illnesses and injuries were due to the fault or negligence of each of the defendant
companies in that they produced, sold and/or otherwise put into the stream of commerce DBCPcontaining products.According to NAVIDA, et al., they were allowed to be exposed to the said
products, which the defendant companies knew, or ought to have known, were highly injurious to
the formers health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed
their Motions for Bill of Particulars. [15] During the pendency of the motions, on March 13, 1996,
NAVIDA, et al., filed an Amended Joint Complaint,[16] excluding Dead Sea Bromine Co., Ltd.,
Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of
Particulars.[17] On May 15, 1996, DOW filed an Answer with Counterclaim.[18]
On May 20, 1996, without resolving the motions filed by the parties, the RTC of General
Santos City issued an Order dismissing the complaint. First, the trial court determined that it did
not have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES FILED
WITH THE REGIONAL TRIAL COURT
SHOULD BE DISMISSED FOR LACK OF
JURISDICTION

NOT A TORT CATEGORY WITHIN THE

PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the present
complaint is product liability tort. When the averments in the present complaint
are examined in terms of the particular categories of tort recognized in the
Philippine Civil Code, it becomes stark clear that such averments describe and
identify the category of specific tort known as product liability tort.This is
necessarily so, because it is the product manufactured by defendant foreign
companies, which is asserted to be the proximate cause of the damages
sustained by the plaintiff workers, and the liability of the defendant foreign
companies, is premised on being the manufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the
present case, if and only if the Civil Code of the Philippines, or a suppletory
special law prescribes a product liability tort, inclusive of and comprehending
the specific tort described in the complaint of the plaintiff workers. [20]
Third, the RTC of General Santos City adjudged that NAVIDA, et al., were coerced into
submitting their case to the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant
action, but rather were coerced to do so, merely to comply with the U.S.
District Courts Order dated July 11, 1995, and in order to keep open to the
plaintiffs the opportunity to return to the U.S. District Court. [21]
Fourth, the trial court ascribed little significance to the voluntary appearance of the
defendant companies therein, thus:
THE
DEFENDANTS
SUBMISSION
TO
JURISDICTION IS CONDITIONAL AS IT IS
ILLUSORY

xxxx
The substance of the cause of action as stated in the complaint against the
defendant foreign companies cites activity on their part which took place
abroad and had occurred outside and beyond the territorial domain of
the Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
through sale or other disposition, resulting in their becoming part of the stream
of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely
particular to the present case, consisted of activity or course of conduct
engaged in by foreign defendants outside Philippine territory, hence, outside and
beyond the jurisdiction of Philippine Courts, including the present Regional Trial
Court.[19]
Second, the RTC of General Santos City declared that the tort alleged by NAVIDA, et al., in
their complaint is a tort category that is not recognized in Philippine laws.Said the trial court:
THE TORT ASSERTED IN THE PRESENT
COMPLAINT
AGAINST
DEFENDANT
FOREIGN COMPANIES IS NOT WITHIN THE
SUBJECT MATTER JURISDICTION OF THE
REGIONAL TRIAL COURT, BECAUSE IT IS

Defendants have appointed their agents authorized to accept service

of summons/processes in the Philippines pursuant to the agreement in
the U.S. court that defendants will voluntarily submit to the jurisdiction of this
court. While it is true that this court acquires jurisdiction over persons of the
defendants through their voluntary appearance, it appears that such voluntary
appearance of the defendants in this case is conditional. Thus in the Defendants
Amended Agreement Regarding Conditions of Dismissal for Forum Non
Conveniens (Annex to the Complaint) filed with the U.S. District Court,
defendants declared that (t)he authority of each designated representative to
accept service of process will become effective upon final dismissal of these
actions by the Court. The decision of the U.S. District Court dismissing the case
is not yet final and executory since both the plaintiffs and defendants appealed
therefrom (par. 3(h), 3(i), Amended Complaint). Consequently, since the
authority of the agent of the defendants in the Philippines is conditioned on the
final adjudication of the case pending with the U.S. courts, the acquisition of
jurisdiction by this court over the persons of the defendants is also
conditional. x x x.
The appointment of agents by the defendants, being subject to a
suspensive condition, thus produces no legal effect and is ineffective at the
moment.[22]

Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the case
in the Philippine courts violated the rules on forum shopping and litis pendencia. The trial court
expounded:
THE JURISDICTION FROWNS UPON AND
PROHIBITS FORUM SHOPPING
This court frowns upon the fact that the parties herein are both vigorously
pursuing their appeal of the decision of the U.S. District court dismissing the
case filed thereat. To allow the parties to litigate in this court when they are
actively pursuing the same cases in another forum, violates the rule on forum
shopping so abhorred in this jurisdiction. x x x.
xxxx
THE
FILING
OF
THE
CASE
IN U.S. DIVESTED THIS COURT OF ITS
OWN JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own
jurisdiction. This court takes note that the U.S. District Court did not decline
jurisdiction over the cause of action. The case was dismissed on the ground
of forum non conveniens, which is really a matter of venue. By taking
cognizance of the case, the U.S. District Court has, in essence, concurrent
jurisdiction with this court over the subject matter of this case. It is settled that
initial acquisition of jurisdiction divests another of its own jurisdiction. x x x.

On June 4, 1996, the RTC of General Santos City likewise issued an Order,[25] dismissing
DOWs Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration [26] of the RTC
Order dated May 20, 1996, while DOW filed a motion for reconsideration [27] of the RTC Order dated
June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for Reconsideration [28] of
the RTC Order dated May 20, 1996.
In an Order[29] dated July 9, 1996, the RTC of General Santos City declared that it had
already lost its jurisdiction over the case as it took into consideration the Manifestation of the
counsel of NAVIDA, et al., which stated that the latter had already filed a petition for review
on certiorari before this Court.
CHIQUITA and SHELL filed their motions for reconsideration[30] of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to assail
the RTC Order dated May 20, 1996, which was docketed as G.R. No. 125078.
The RTC of General Santos City then issued an Order[31] dated August 14, 1996, which
merely noted the incidents still pending in Civil Case No. 5617 and reiterated that it no longer had
any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review on Certiorari,
challenging the orders of the RTC of General Santos City dated May 20, 1996, June 4, 1996 and
July 9, 1996. Their petition was docketed as G.R. No. 125598.
[32]

xxxx
THIS CASE IS BARRED BY THE RULE
OF LITIS PENDENCIA
Furthermore, the case filed in the U.S. court involves the same parties, same
rights and interests, as in this case. There exists litis pendencia since there are
two cases involving the same parties and interests. The court would like to
emphasize that in accordance with the rule on litis pendencia x x x; the
subsequent case must be dismissed. Applying the foregoing [precept] to the
case-at-bar, this court concludes that since the case between the parties in
the U.S. is still pending, then this case is barred by the rule on litis pendencia.
[23]

In fine, the trial court held that:

It behooves this Court, then to dismiss this case. For to continue with
these proceedings, would be violative of the constitutional provision on the Bill
of Rights guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III,
Constitution). The court has no other choice. To insist on further proceedings
with this case, as it is now presented, might accord this court a charming
appearance. But the same insistence would actually thwart the very ends of
justice which it seeks to achieve.
This evaluation and action is made not on account of but rather with due
consideration to the fact that the dismissal of this case does not necessarily
deprive the parties especially the plaintiffs of their possible remedies. The court
is cognizant that the Federal Court may resume proceedings of that earlier case
between the herein parties involving the same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now
considered DISMISSED.[24]

In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City erred in
ruling that it has no jurisdiction over the subject matter of the case as well as the persons of the
defendant companies.
In a Resolution[33] dated October 7, 1996, this Court resolved to consolidate G.R. No.
125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari,[34] which sought the reversal of the RTC
Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was docketed as G.R. No.
126018. In a Resolution[35] dated November 13, 1996, the Court dismissed the aforesaid petition for
failure of CHIQUITA to show that the RTC committed grave abuse of discretion. CHIQUITA filed a
Motion for Reconsideration,[36] but the same was denied through a Resolution [37] dated January 27,
1997.
Civil Case No. 24,251-96 before the
RTC of Davao City and G.R. Nos.
126654, 127856, and 128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL MONTE, and
CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155 plaintiffs from Davao City. This
case was docketed as Civil Case No. 24,251-96. These plaintiffs (the petitioners in G.R. No. 126654,
hereinafter referred to as ABELLA, et al.) amended their Joint-Complaint on May 21, 1996. [38]
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in the
banana plantation and/or as residents near the said plantation, they were made to use and/or were
exposed to nematocides, which contained the chemical DBCP. According to ABELLA, et al., such
exposure resulted in serious and permanent injuries to their health, including, but not limited to,
sterility and severe injuries to their reproductive capacities. [39] ABELLA, et al., claimed that the
defendant companies manufactured, produced, sold, distributed, used, and/or made available in
commerce, DBCP without warning the users of its hazardous effects on health, and without providing
instructions on its proper use and application, which the defendant companies knew or ought to
have known, had they exercised ordinary care and prudence.

alleged in the petition do not exist under Philippine laws. There has
been no decided case in Philippine Jurisprudence awarding to those
adversely affected by DBCP. This means there is no available evidence
which will prove and disprove the relation between sterility and DBCP.

Except for DOW, the other defendant companies filed their respective motions for bill of particulars
to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed their respective Answers
dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated October 1, 1996,
which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint For:
Damages filed by the plaintiffs against the defendants Shell Oil Company, DOW
Chemicals Company, Occidental Chemical Corporation, Standard Fruit Company,
Standard Fruit and Steamship, DOLE Food Company, DOLE Fresh Fruit Company,
Chiquita Brands, Inc., Chiquita Brands International, Del Monte Fresh Produce,
N.A. and Del Monte Tropical Fruits Co., all foreign corporations with Philippine
Representatives, the Court, as correctly pointed out by one of the defendants, is
convinced that plaintiffs would have this Honorable Court dismiss the case to
pave the way for their getting an affirmance by the Supreme Court (#10 of
Defendants Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Co.,
Reply to Opposition dated July 22, 1996). Consider these:
1)
In the original Joint Complaint, plaintiffs state
that: defendants have no properties in the Philippines; they
have no agents as well (par. 18); plaintiffs are suing the
defendants for tortuous acts committed by these foreign
corporations on their respective countries, as plaintiffs,
after having elected to sue in the place of defendants
residence, are now compelled by a decision of a Texas
District Court to file cases under torts in this jurisdiction
for causes of actions which occurred abroad (par. 19); a
petition was filed by same plaintiffs against same
defendants in the Courts of Texas, USA, plaintiffs seeking for
payment of damages based on negligence, strict liability,
conspiracy and international tort theories (par. 27); upon
defendants Motion to Dismiss on Forum non [conveniens],
said petition was provisionally dismissed on condition that
these cases be filed in the Philippines or before 11 August
1995 (Philippine date; Should the Philippine Courts refuse or
deny jurisdiction, the U. S. Courts will reassume
jurisdiction.)
11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995,
the Federal District Court issued a Memorandum and Order conditionally
dismissing several of the consolidated actions including those filed by the
Filipino complainants. One of the conditions imposed was for the plaintiffs to
file actions in their home countries or the countries in which they were injured x
x x.Notwithstanding, the Memorandum and [O]rder further provided that should
the highest court of any foreign country affirm the dismissal for lack of
jurisdictions over these actions filed by the plaintiffs in their home countries
[or] the countries where they were injured, the said plaintiffs may return to
that court and, upon proper motion, the Court will resume jurisdiction as if the
case had never been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely
on the basis of the above but because it shares the opinion of legal experts given
in the interview made by the Inquirer in its Special report Pesticide Cause Mass
Sterility, to wit:
1.

Former Justice Secretary Demetrio Demetria in a May 1995 opinion

said: The Philippines should be an inconvenient forum to file this kind
of damage suit against foreign companies since the causes of action

2.

Retired Supreme Court Justice Abraham Sarmiento opined that while

a class suit is allowed in the Philippines the device has been employed
strictly. Mass sterility will not qualify as a class suit injury within the
contemplation of Philippine statute.

3.

Retired High Court Justice Rodolfo Nocom stated that there is simply
an absence of doctrine here that permits these causes to be heard. No
product liability ever filed or tried here.
Case ordered dismissed.[40]

Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by ABELLA, et
al., assails before this Court the above-quoted order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No. 24,251-96 on the
ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject matter
of the case since Articles 2176 and 2187 of the Civil Code are broad enough to cover the acts
complained of and to support their claims for damages.
ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal
luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis.According to them,
their cause of action is based on quasi-delict under Article 2176 of the Civil Code. They also
maintain that the absence of jurisprudence regarding the award of damages in favor of those
adversely affected by the DBCP does not preclude them from presenting evidence to prove their
allegations that their exposure to DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of the
Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its motion for
reconsideration, which contained an additional motion for the inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an Order [41] dated December 2, 1996,
voluntarily inhibiting himself from trying the case. Thus, the case was re-raffled to Branch 13 of the
RTC of Davao City.
In an Order[42] dated December 16, 1996, the RTC of Davao City affirmed the Order dated
October 1, 1996, and denied the respective motions for reconsideration filed by defendant
companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the
Orders dated October 1, 1996 and December 16, 1996 of the RTC of Davao City.This case was
docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the
case motu proprio as it acquired jurisdiction over the subject matter of the case as well as over the
persons of the defendant companies which voluntarily appeared before it. CHIQUITA also claims that
the RTC of Davao City cannot dismiss the case simply on the basis of opinions of alleged legal
experts appearing in a newspaper article.
Initially, this Court in its Resolution [43] dated July 28, 1997, dismissed the petition filed by
CHIQUITA for submitting a defective certificate against forum shopping.CHIQUITA, however, filed a
motion for reconsideration, which was granted by this Court in the Resolution [44] dated October 8,
1997.

10

On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this
Court assailing the above-mentioned orders of the RTC of Davao City. Its petition was docketed
as G.R. No. 127856.

On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition for
Review Filed by Petitioners in G.R. No. 125598,[56] stating that it has no objections to the withdrawal
of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598.

DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No. 24,25196, as defined under the law and that the said court already obtained jurisdiction over its person by
its voluntary appearance and the filing of a motion for bill of particulars and, later, an answer to the
complaint. According to DEL MONTE, the RTC of Davao City, therefore, acted beyond its authority
when it dismissed the case motu proprio or without any motion to dismiss from any of the parties to
the case.

In a Resolution[57] dated October 11, 2004, this Court granted, among others, the motion to
withdraw petition for review filed by DOW and OCCIDENTAL.

In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this Court
consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.
The Consolidated Motion to Drop
DOW, OCCIDENTAL, and SHELL as
Party-Respondents filed by NAVIDA, et
al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a
Consolidated Motion (to Drop Party-Respondents).[45] The plaintiff claimants alleged that they had
amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in July 1997. This
settlement agreement was evidenced by facsimiles of the Compromise Settlement, Indemnity, and
Hold Harmless Agreement, which were attached to the said motion. Pursuant to said agreement, the
plaintiff claimants sought to withdraw their petitions as against DOW, OCCIDENTAL, and SHELL.

THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the following
issues for our consideration:
IN REFUTATION
I.

THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION.

a)

The court did not simply dismiss the case because it was filed in bad
faith with petitioners intending to have the same dismissed and
returned to the Texas court.

b)

The court dismissed the case because it was convinced that it did not
have jurisdiction.

IN SUPPORT OF THE PETITION

II.

THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF

THE CASE.

DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the settlement
entered into between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL.
a.

The acts complained of occurred within Philippine territory.

The Memoranda of the Parties

b.

Art. 2176 of the Civil Code of the Philippines is broad enough to cover
the acts complained of.

c.

Assumption of jurisdiction by the U.S. District Court over

petitioner[s] claims did not divest Philippine [c]ourts of jurisdiction
over the same.

d.

The Compromise Agreement and the subsequent Consolidated Motion

to Drop Party Respondents Dow, Occidental and Shell does not
unjustifiably prejudice remaining respondents Dole, Del Monte and
Chiquita.[58]

Considering the allegations, issues, and arguments adduced by the parties, this Court, in a
Resolution dated June 22, 1998,[46] required all the parties to submit their respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998; [47] SHELL asked to be excused from the
filing of a memorandum alleging that it had already executed a compromise agreement with the
plaintiff claimants.[48] DOLE filed its Memorandum on October 12, 1998 [49] while DEL MONTE filed on
October 13, 1998.[50] NAVIDA, et al., and ABELLA, et al., filed their Consolidated Memorandum on
February 3, 1999;[51] and DOW and OCCIDENTAL jointly filed a Memorandum on December 23, 1999. [52]
The Motion to Withdraw Petition for
Review in G.R. No. 125598
DISCUSSION
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for Review in
G.R. No. 125598, [53] explaining that the said petition is already moot and academic and no longer
presents a justiciable controversy since they have already entered into an amicable settlement with
NAVIDA, et al. DOW and OCCIDENTAL added that they have fully complied with their obligations set
forth in the 1997 Compromise Agreements.

On the issue of jurisdiction

Essentially, the crux of the controversy in the petitions at bar is whether the RTC of
General Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617 and 24,25196, respectively, for lack of jurisdiction.

DOLE filed its Manifestation dated September 6, 2004, [54] interposing no objection to the
withdrawal of the petition, and further stating that they maintain their position that DOW and
OCCIDENTAL, as well as other settling defendant companies, should be retained as defendants for
purposes of prosecuting the cross-claims of DOLE, in the event that the complaint below is
reinstated.

Remarkably, none of the parties to this case claims that the courts a quo are bereft of
jurisdiction to determine and resolve the above-stated cases. All parties contend that the RTC of
General Santos City and the RTC of Davao City have jurisdiction over the action for damages,
specifically for approximately P2.7 million for each of the plaintiff claimants.

NAVIDA, et al., also filed their Comment dated September 14, 2004, [55] stating that they
agree with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has become moot
and academic because Civil Case No. 5617 had already been amicably settled by the parties in 1997.

NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or omissions
of defendant companies occurred within Philippine territory. Specifically, the use of and exposure to
DBCP that was manufactured, distributed or otherwise put into the stream of commerce by

11

defendant companies happened in the Philippines. Said fact allegedly constitutes reasonable basis
for our courts to assume jurisdiction over the case. Furthermore, NAVIDA, et al., and ABELLA, et al.,
assert that the provisions of Chapter 2 of the Preliminary Title of the Civil Code, as well as Article
2176 thereof, are broad enough to cover their claim for damages. Thus, NAVIDA, et al., and
ABELLA, et al., pray that the respective rulings of the RTC of General Santos City and the RTC of
Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and that the said cases be remanded to
the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute a
quasi-delict, which falls under Article 2176 of the Civil Code. In addition, DOLE states that if there
were no actionable wrongs committed under Philippine law, the courts a quo should have dismissed
the civil cases on the ground that the Amended Joint-Complaints of NAVIDA, et al., and ABELLA, et
al., stated no cause of action against the defendant companies. DOLE also argues that if indeed
there is no positive law defining the alleged acts of defendant companies as actionable wrong,
Article 9 of the Civil Code dictates that a judge may not refuse to render a decision on the ground of
insufficiency of the law. The court may still resolve the case, applying the customs of the place and,
in the absence thereof, the general principles of law. DOLE posits that the Philippines is thesitus of
the tortious acts allegedly committed by defendant companies as NAVIDA, et al., and ABELLA, et al.,
point to their alleged exposure to DBCP which occurred in the Philippines, as the cause of the
sterility and other reproductive system problems that they allegedly suffered. Finally, DOLE adds
that the RTC of Davao City gravely erred in relying upon newspaper reports in dismissing Civil Case
No. 24,251-96 given that newspaper articles are hearsay and without any evidentiary
value. Likewise, the alleged legal opinions cited in the newspaper reports were taken judicial notice
of, without any notice to the parties. DOLE, however, opines that the dismissal of Civil Case Nos.
5617 and 24,251-96 was proper, given that plaintiff claimants merely prosecuted the cases with the
sole intent of securing a dismissal of the actions for the purpose of convincing the U.S. Federal
District Court to re-assume jurisdiction over the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject
matter of the cases filed before them. The Amended Joint-Complaints sought approximately P2.7
million in damages for each plaintiff claimant, which amount falls within the jurisdiction of the
RTC. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP, not the
place of manufacture, packaging, distribution, sale, etc., of the said chemical. This is in consonance
with the lex loci delicti commisitheory in determining the situs of a tort, which states that the law
of the place where the alleged wrong was committed will govern the action. CHIQUITA and the other
defendant companies also submitted themselves to the jurisdiction of the RTC by making voluntary
appearances and seeking for affirmative reliefs during the course of the proceedings.None of the
defendant companies ever objected to the exercise of jurisdiction by the courts a quo over their
persons. CHIQUITA, thus, prays for the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of
General Santos City and the RTC of Davao City, respectively.
The RTC of General Santos City and
the RTC of Davao City have
jurisdiction over Civil Case Nos. 5617
and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by law
and is determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the plaintiffs are entitled to all or some of the claims asserted therein.
[59]
Once vested by law, on a particular court or body, the jurisdiction over the subject matter or
nature of the action cannot be dislodged by anybody other than by the legislature through the
enactment of a law.

xxxx
(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorneys fees, litigation expenses, and costs or the value of
the property in controversy exceeds One hundred thousand pesos (P100,000.00)
or, in such other cases in Metro Manila, where the demand, exclusive of the
abovementioned items exceeds Two hundred thousand pesos (P200,000.00).[60]

Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:

2. The exclusion of the term damages of whatever kind in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of
action, the amount of such claim shall be considered in determining the
jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended JointComplaints filed before the courts a quo, the following prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that
after hearing, judgment be rendered in favor of the plaintiffs ordering the
defendants:
a)
TO PAY EACH PLAINTIFF moral damages in the amount of
One Million Five Hundred Thousand Pesos (P1,500,00.00);
b)
TO PAY EACH PLAINTIFF nominal damages in the amount
of Four Hundred Thousand Pesos (P400,000.00) each;
c)
TO PAY EACH PLAINTIFF exemplary damages in the
amount of Six Hundred Thousand Pesos (P600,000.00);
d)
TO PAY EACH PLAINTIFF attorneys fees of Two Hundred
Thousand Pesos (P200,000.00); and
e)

TO PAY THE COSTS of the suit.[61]

From the foregoing, it is clear that the claim for damages is the main cause of action and
that the total amount sought in the complaints is approximately P2.7 million for each of the plaintiff
claimants. The RTCs unmistakably have jurisdiction over the cases filed in General Santos City and
Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview of the
definition of the jurisdiction of the RTC under Batas Pambansa Blg. 129.
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION

At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under
Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:

4. The Defendants manufactured, sold, distributed, used, AND/OR

MADE AVAILABLE IN COMMERCE nematocides containing the chemical
dibromochloropropane, commonly known as DBCP. THE CHEMICAL WAS USED
AGAINST the parasite known as the nematode, which plagued banana
plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT, DBCP not

12

only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF

PERSONS EXPOSED TO IT AFFECTING the human reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the early
1980s WHILE (a) they used this product in the banana plantations WHERE
they were employed, and/or (b) they resided within the agricultural area
WHERE IT WAS USED. As a result of such exposure, the plaintiffs suffered
serious and permanent injuries TO THEIR HEALTH, including, but not limited to,
STERILITY and severe injuries to their reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN THAT
THEY MANUFACTURED, produced, sold, and/or USED DBCP and/or otherwise,
PUT THE SAME into the stream of commerce, WITHOUT INFORMING THE
USERS OF ITS HAZARDOUS EFFECTS ON HEALTH AND/OR WITHOUT
INSTRUCTIONS ON ITS PROPER USE AND APPLICATION. THEY allowed Plaintiffs
to be exposed to, DBCP-containing materials which THEY knew, or in the
exercise of ordinary care and prudence ought to have known, were highly
harmful and injurious to the Plaintiffs health and well-being.
7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM OF COMMERCE
were negligent OR AT FAULT in that they, AMONG OTHERS:
a.

Failed to adequately warn Plaintiffs of the dangerous

characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;

b.

Failed to provide plaintiffs with information as to what

should be reasonably safe and sufficient clothing and proper
protective equipment and appliances, if any, to protect
plaintiffs from the harmful effects of exposure to DBCP, or
to cause their subsidiaries or affiliates to do so;

c.

a.

Failed to adequately supervise and instruct Plaintiffs in

the safe and proper application of DBCP-containing
products;

b.

Failed to implement proper methods and techniques of

application of said products, or to cause such to be
implemented;

c.

Failed to warn Plaintiffs of the hazards of exposure to

said products or to cause them to be so warned;

d.

Failed to test said products for adverse health effects,

or to cause said products to be tested;

e.

Concealed from Plaintiffs information concerning the

observed effects of said products on Plaintiffs;

f.

Failed to monitor the health of plaintiffs exposed to said

products;

g.

Failed to place adequate labels on containers of said

products to warn them of the damages of said products; and

h.

Failed to use substitute nematocides for said products or

to cause such substitutes to [be] used. [62] (Emphasis supplied
and words in brackets ours.)

Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., attribute to defendant companies certain acts and/or omissions which led to their
exposure to nematocides containing the chemical DBCP. According to NAVIDA, et al., and ABELLA, et
al., such exposure to the said chemical caused ill effects, injuries and illnesses, specifically to their
reproductive system.

Failed to place adequate warnings, in a language

understandable to the worker, on containers of DBCPcontaining materials to warn of the dangers to health of
coming into contact with DBCP, or to cause their subsidiaries
or affiliates to do so;

Thus, these allegations in the complaints constitute the cause of action of plaintiff
claimants a quasi-delict, which under the Civil Code is defined as an act, or omission which causes
damage to another, there being fault or negligence. To be precise, Article 2176 of the Civil Code
provides:

d.

Failed to take reasonable precaution or to exercise

reasonable care to publish, adopt and enforce a safety plan
and a safe method of handling and applying DBCP, or to
cause their subsidiaries or affiliates to do so;

Article 2176. Whoever by act or omission causes damage to another,

there being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this Chapter.

e.

Failed to test DBCP prior to releasing these products for

sale, or to cause their subsidiaries or affiliates to do so; and

As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et al.,
point to the acts and/or omissions of the defendant companies in manufacturing, producing, selling,
using, and/or otherwise putting into the stream of commerce, nematocides which contain DBCP,
without informing the users of its hazardous effects on health and/or without instructions on its
proper use and application. [63]

f.

Failed to reveal the results of tests conducted on DBCP

to each plaintiff, governmental agencies and the public, or
to cause their subsidiaries or affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due to the FAULT
or negligence of defendants Standard Fruit Company, Dole Fresh Fruit Company,
Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita Brands
International, Inc. in that they failed to exercise reasonable care to prevent
each plaintiffs harmful exposure to DBCP-containing products which defendants
knew or should have known were hazardous to each plaintiff in that they,
AMONG OTHERS:

Verily, in Citibank, N.A. v. Court of Appeals,[64] this Court has always reminded that
jurisdiction of the court over the subject matter of the action is determined by the allegations of
the complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all or some
of the claims asserted therein. The jurisdiction of the court cannot be made to depend upon the
defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of
jurisdiction would almost entirely depend upon the defendants. What determines the jurisdiction of
the court is the nature of the action pleaded as appearing from the allegations in the
complaint. The averments therein and the character of the relief sought are the ones to be
consulted.

13

Clearly then, the acts and/or omissions attributed to the defendant companies constitute
a quasi-delict which is the basis for the claim for damages filed by NAVIDA, et al., and ABELLA, et
al., with individual claims of approximately P2.7 million for each plaintiff claimant, which obviously
falls within the purview of the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al., allegedly
suffered resulted from their exposure to DBCP while they were employed in the banana plantations
located in the Philippines or while they were residing within the agricultural areas also located in
the Philippines. The factual allegations in the Amended Joint-Complaints all point to their cause of
action, which undeniably occurred in the Philippines. The RTC of General Santos City and the RTC
of Davao City obviously have reasonable basis to assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they dismissed the cases on the
ground of lack of jurisdiction on the mistaken assumption that the cause of action narrated by
NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside and beyond the
territorial boundaries of the Philippines, i.e., the manufacture of the pesticides, their packaging in
containers, their distribution through sale or other disposition, resulting in their becoming part of
the stream of commerce,[65] and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of the
act complained of, would be determinative of jurisdiction and venue for trial of
cases. In personal civil actions, such as claims for payment of damages, the Rules of Court allow the
action to be commenced and tried in the appropriate court, where any of the plaintiffs or
defendants resides, or in the case of a non-resident defendant, where he may be found, at the
election of the plaintiff.[66]
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et al.,
and ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are all residents of
the Philippines, either in General Santos City or in Davao City. Second, the specific areas where they
were allegedly exposed to the chemical DBCP are within the territorial jurisdiction of the courts a
quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their claims for damages. Third, the
testimonial and documentary evidence from important witnesses, such as doctors, co-workers,
family members and other members of the community, would be easier to gather in
the Philippines.Considering the great number of plaintiff claimants involved in this case, it is not
far-fetched to assume that voluminous records are involved in the presentation of evidence to
support the claim of plaintiff claimants. Thus, these additional factors, coupled with the fact that
the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the defendant companies
for damages occurred in the Philippines, demonstrate that, apart from the RTC of General Santos
City and the RTC of Davao City having jurisdiction over the subject matter in the instant civil cases,
they are, indeed, the convenient fora for trying these cases.[67]
The RTC of General Santos City and
the
RTC
of Davao City validly
acquired jurisdiction over the persons
of all the defendant companies
It is well to stress again that none of the parties claims that the courts a quo lack jurisdiction over
the cases filed before them. All parties are one in asserting that the RTC of General Santos City and
the RTC of Davao City have validly acquired jurisdiction over the persons of the defendant
companies in the action below. All parties voluntarily, unconditionally and knowingly appeared and
submitted themselves to the jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that [t]he defendants voluntary
appearance in the action shall be equivalent to service of summons. In this connection, all the
defendant companies designated and authorized representatives to receive summons and to
represent them in the proceedings before the courts a quo. All the defendant companies submitted
themselves to the jurisdiction of the courts a quo by making several voluntary appearances, by
praying for various affirmative reliefs, and by actively participating during the course of the
proceedings below.

In line herewith, this Court, in Meat Packing Corporation of the Philippines v.

Sandiganbayan,[68] held that jurisdiction over the person of the defendant in civil cases is acquired
either by his voluntary appearance in court and his submission to its authority or by service of
summons. Furthermore, the active participation of a party in the proceedings is tantamount to an
invocation of the courts jurisdiction and a willingness to abide by the resolution of the case, and will
bar said party from later on impugning the court or bodys jurisdiction. [69]
Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies, as well as over the subject matter of the
instant case. What is more, this jurisdiction, which has been acquired and has been vested on the
courts a quo, continues until the termination of the proceedings.
It may also be pertinently stressed that jurisdiction is different from the exercise of jurisdiction.
Jurisdiction refers to the authority to decide a case, not the orders or the decision rendered
therein. Accordingly, where a court has jurisdiction over the persons of the defendants and the
subject matter, as in the case of the courts a quo, the decision on all questions arising therefrom is
but an exercise of such jurisdiction. Any error that the court may commit in the exercise of its
jurisdiction is merely an error of judgment, which does not affect its authority to decide the case,
much less divest the court of the jurisdiction over the case. [70]
Plaintiffs purported bad faith in filing
the subject civil cases in Philippine
courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith
merely to procure a dismissal of the same and to allow them to return to the forum of their choice,
this Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are unsupported
by evidence on record. This Court does not rule on allegations which are manifestly conjectural, as
these may not exist at all. This Court deals with facts, not fancies; on realities, not
appearances. When this Court acts on appearances instead of realities, justice and law will be shortlived.[71] This is especially true with respect to allegations of bad faith, in line with the basic rule
that good faith is always presumed and bad faith must be proved. [72]
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao City
have jurisdiction over the subject matter of the amended complaints filed by NAVIDA, et al., and
ABELLA, et al., and that the courts a quo have also acquired jurisdiction over the persons of all the
defendant companies, it therefore, behooves this Court to order the remand of Civil Case Nos. 5617
and 24,251-96 to the RTC of General Santos City and the RTC of Davao City, respectively.
On the issue of the dropping of DOW,
OCCIDENTAL and SHELL as respondents
in view of their amicable settlement
with NAVIDA, et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and SHELL be dropped
as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617 and 24,25196. The non-settling defendants allegedly manifested that they intended to file their cross-claims
against their co-defendants who entered into compromise agreements. NAVIDA, et al., and
ABELLA, et al., argue that the non-settling defendants did not aver any cross-claim in their answers
to the complaint and that they subsequently sought to amend their answers to plead their crossclaims only after the settlement between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL
were executed. NAVIDA, et al., and ABELLA, et al., therefore, assert that the cross-claims are
already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA, et al.,
and ABELLA, et al., since the latters Amended Complaints cited several instances of tortious conduct

14

that were allegedly committed jointly and severally by the defendant companies. This solidary
obligation on the part of all the defendants allegedly gives any co-defendant the statutory right to
proceed against the other co-defendants for the payment of their respective shares. Should the
subject motion of NAVIDA, et al., and ABELLA, et al., be granted, and the Court subsequently orders
the remand of the action to the trial court for continuance, CHIQUITA and DOLE would allegedly be
deprived of their right to prosecute their cross-claims against their other co-defendants. Moreover, a
third party complaint or a separate trial, according to CHIQUITA, would only unduly delay and
complicate the proceedings. CHIQUITA and DOLE similarly insist that the motion of NAVIDA, et al.,
and ABELLA, et al., to drop DOW, SHELL and OCCIDENTAL as respondents in G.R. Nos. 125078 and
126654, as well as in Civil Case Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective
memoranda, DEL MONTE filed a Manifestation and Motion [73] before the Court, stating that similar
settlement agreements were allegedly executed by the plaintiff claimants with DEL MONTE and
CHIQUITA sometime in 1999. Purportedly included in the agreements were Civil Case Nos. 5617 and
24,251-96. Attached to the said manifestation were copies of the Compromise Settlement,
Indemnity, and Hold Harmless Agreement between DEL MONTE and the settling plaintiffs, as well as
the Release in Full executed by the latter.[74] DEL MONTE specified therein that there were only four
(4) plaintiffs in Civil Case No. 5617 who are claiming against the Del Monte parties [75] and that the
latter have executed amicable settlements which completely satisfied any claims against DEL
MONTE. In accordance with the alleged compromise agreements with the four plaintiffs in Civil Case
No. 5617, DEL MONTE sought the dismissal of the Amended Joint-Complaint in the said civil
case. Furthermore, in view of the above settlement agreements with ABELLA, et al., in Civil Case
No. 24,251-96, DEL MONTE stated that it no longer wished to pursue its petition in G.R. No. 127856
and accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC of General
Santos City and the RTC of Davao City, respectively, the Court deems that the Consolidated Motions
(to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et al., should likewise be referred
to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, [a] compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced. Like any other
contract, an extrajudicial compromise agreement is not excepted from rules and principles of a
contract. It is a consensual contract, perfected by mere consent, the latter being manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract.[76] Judicial approval is not required for its perfection. [77] A compromise has upon the parties
the effect and authority of res judicata[78] and this holds true even if the agreement has not been
judicially approved.[79] In addition, as a binding contract, a compromise agreement determines the
rights and obligations of only the parties to it.[80]
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of Davao City
should first receive in evidence and examine all of the alleged compromise settlements involved in
the cases at bar to determine the propriety of dropping any party as a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was filed
by NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and SHELL in view of the
latter companies alleged compromise agreements with the plaintiff claimants. However, in
subsequent developments, DEL MONTE and CHIQUITA supposedly reached their own amicable
settlements with the plaintiff claimants, but DEL MONTE qualified that it entered into a settlement
agreement with only four of the plaintiff claimants in Civil Case No. 5617. These four plaintiff
claimants were allegedly the only ones who were asserting claims against DEL MONTE. However, the
said allegation of DEL MONTE was simply stipulated in their Compromise Settlement, Indemnity, and
Hold Harmless Agreement and its truth could not be verified with certainty based on the records
elevated to this Court. Significantly, the 336 plaintiff claimants in Civil Case No. 5617 jointly filed a
complaint without individually specifying their claims against DEL MONTE or any of the other
defendant companies. Furthermore, not one plaintiff claimant filed a motion for the removal of
either DEL MONTE or CHIQUITA as defendants in Civil Case Nos. 5617 and 24,251-96.
There is, thus, a primary need to establish who the specific parties to the alleged
compromise agreements are, as well as their corresponding rights and obligations therein.For this

purpose, the courts a quo may require the presentation of additional evidence from the
parties. Thereafter, on the basis of the records of the cases at bar and the additional evidence
submitted by the parties, if any, the trial courts can then determine who among the defendants may
be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the same quasi-delict is solidary. A solidary obligation is one in which each
of the debtors is liable for the entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors. [81]
In solidary obligations, the paying debtors right of reimbursement is provided for under
Article 1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes
the obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest for the
intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall be
borne by all his co-debtors, in proportion to the debt of each.
The above right of reimbursement of a paying debtor, and the corresponding liability of
the co-debtors to reimburse, will only arise, however, if a solidary debtor who is made to answer for
an obligation actually delivers payment to the creditor. As succinctly held in Lapanday Agricultural
Development Corporation v. Court of Appeals,[82][p]ayment, which means not only the delivery of
money but also the performance, in any other manner, of the obligation, is the operative fact which
will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to
each of the [other] debtors.[83]
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the
merits must necessarily be conducted first in order to establish whether or not defendant
companies are liable for the claims for damages filed by the plaintiff claimants, which would
necessarily give rise to an obligation to pay on the part of the defendants.
At the point in time where the proceedings below were prematurely halted, no crossclaims have been interposed by any defendant against another defendant. If and when such a crossclaim is made by a non-settling defendant against a settling defendant, it is within the discretion of
the trial court to determine the propriety of allowing such a cross-claim and if the settling
defendant must remain a party to the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals,
the Court had the occasion to state that where there are, along with the parties to the
compromise, other persons involved in the litigation who have not taken part in concluding the
compromise agreement but are adversely affected or feel prejudiced thereby, should not be
precluded from invoking in the same proceedings an adequate relief therefor.[85]
[84]

Relevantly, in Philippine International Surety Co., Inc. v. Gonzales,[86] the Court upheld the
ruling of the trial court that, in a joint and solidary obligation, the paying debtor may file a thirdparty complaint and/or a cross-claim to enforce his right to seek contribution from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above
situation, if proper, is not affected by the compromise agreements allegedly entered into by
NAVIDA, et al., and ABELLA, et al., with some of the defendant companies.

15

WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R. Nos.
125078, 126654, and 128398. We REVERSE and SET ASIDE the Order dated May 20, 1996 of the
Regional Trial Court of General Santos City, Branch 37, in Civil Case No. 5617, and the Order dated
October 1, 1996 of the Regional Trial Court of Davao City, Branch 16, and its subsequent Order dated
December 16, 1996 denying reconsideration in Civil Case No. 24,251-96, and REMAND the records of
this case to the respective Regional Trial Courts of origin for further and appropriate proceedings in
line with the ruling herein that said courts have jurisdiction over the subject matter of the amended
complaints in Civil Case Nos. 5617 and 24,251-96.

- versus -

The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R.
No. 127856. In view of the previous grant of the motion to withdraw the petition in G.R. No. 125598,
both G.R. Nos. 127856 and 125598 are considered CLOSED AND TERMINATED.

AND TORD B. ERIKSON,

No pronouncement as to costs.

LEONARDO-DE CASTRO,
PERALTA,
DEL CASTILLO, and

ASEA BROWN BOVERI, INC.,

VILLARAMA, JR., JJ.

BBC BROWN BOVERI, CORP.,

Promulgated:

Respondents.

October 17, 2011

x--------------------------------------------------------x

SO ORDERED.
DECISION

DEL CASTILLO, J.:

Except as provided by law or by stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages.[1]

This Petition for Review on Certiorari[2] under Rule 45 of the Rules of Court assails the
Decision[3] dated August 25, 2005 and the Resolution [4] dated February 16, 2006 of the Court of Appeals (CA) in
CA-G.R. CV No. 58551.

Factual Antecedents

Sometime in July 1990, petitioner Continental Cement Corporation (CCC),

a corporation engaged in the business of producing cement,[5] obtained the services of respondents[6] Asea Brown
Boveri, Inc. (ABB) and BBC Brown Boveri, Corp. to repair its 160 KW Kiln DC Drive Motor (Kiln Drive Motor).[7]

On October 23, 1991, due to the repeated failure of respondents to repair the Kiln Drive Motor, petitioner filed
with Branch 101 of the Regional Trial Court (RTC) of Quezon City a Complaint[8] for sum of money and damages,
docketed as Civil Case No. Q-91-10419, against respondent corporations and respondent Tord B. Eriksson
(Eriksson), Vice-President of the Service Division of the respondent ABB.[9] Petitioner alleged that:

FIRST DIVISION

CONTINENTAL CEMENT

G.R. No. 171660

CORPORATION,
Petitioner,

Present:

CORONA, C. J., Chairperson,

4.
On July 11, 1990, the plaintiff delivered the 160 KW Kiln DC Drive
Motor to the defendants to be repaired under PO No. 17136-17137, x x x

The defendant, Tord B. Eriksson, was personally directing the repair of the said
Kiln Drive Motor. He has direction and control of the business of the defendant
corporations. Apparently, the defendant Asea Brown Boveri, Inc. has no separate

16

personality because of the 4,000 shares of stock, 3996 shares were subscribed by Honorio
Poblador, Jr. The four other stockholders subscribed for one share of stock each only.

5.
After the first repair by the defendants, the 160 KW Kiln Drive
Motor was installed for testing on October 3, 1990. On October 4, 1990 the test
failed. The plaintiff removed the DC Drive Motor and replaced it with its old motor. It was
only on October 9, 1990 that the plaintiff resumed operation. The plaintiff lost 1,040 MTD
per day from October 5 to October 9, 1990.
6.
On November 14, 1990, after the defendants had undertaken the
second repair of the motor in question, it was installed in the kiln. The test failed
again. The plaintiff resumed operation with its old motor on November 19, 1990. The
plaintiff suffered production losses for five days at the rate of 1,040 MTD daily.

7.
The defendants were given a third chance to repair the 160 KW
Kiln DC Drive Motor. On March 13, 1991, the motor was installed and tested. Again, the
test failed. The plaintiff resumed operation on March 15, 1991. The plaintiff sustained
production losses at the rate of 1,040 MTD for two days.

8.
As a consequence of the failure of the defendants to comply with
their contractual obligation to repair the 160 KW Kiln DC Drive Motor, the plaintiff
sustained the following losses:

(a)

Production and opportunity losses - P10,600,000.00

This amount represents only about 25% of the production losses at the rate
of P72.00 per bag of cement.

10. The plaintiff was constrained to file this action and has undertaken to pay
its counsel Twenty Percentum (20%) of the amount sought to be recovered as attorneys
fees.[10]

Respondents, however, claimed that under Clause 7 of the General Conditions, [11] attached to the
letter of offer[12] dated July 4, 1990 issued by respondent ABB to petitioner, the liability of respondent ABB does
not extend to consequential damages either direct or indirect.[13] Moreover, as to respondent Eriksson, there is
no lawful and tenable reason for petitioner to sue him in his personal capacity because he did not personally
direct the repair of the Kiln Drive Motor.[14]

Ruling of the Regional Trial Court

On August 30, 1995, the RTC rendered a Decision [15] in favor of petitioner. The RTC rejected the defense of
limited liability interposed by respondents since they failed to prove that petitioner received a copy of the
General Conditions.[16] Consequently, the RTC granted petitioners claims for production loss, labor cost and
rental of crane, and attorneys fees.[17] Thus:

WHEREFORE, premises above considered, finding the complaint substantiated

by plaintiff, judgment is hereby rendered in favor of plaintiff and against defendants,
hereby ordering the latter to pay jointly and severally the former, the following sums:

P10,600,00.00 for loss of production;

(b) Labor Cost and Rental of Crane - 26,965.78

P 26,965.78 labor cost and rental of crane;

(c) Penalties (at P987.25 a day) for

P 100,000.00 attorneys fees and cost.

failure to deliver the motor from

Aug. 29, 1990 to July 31, 1991. - 331,716.00

SO ORDERED.[18]

(d) Cost of money interest of the

P987.25 a day from July 18, 1990

Ruling of the Court of Appeals

to April 5, 1991 at 34% for 261 days - 24,335.59

Total Damages 10,983,017.42
9.
The plaintiff has made several demands on the defendants for the
payment of the above-enumerated damages, but the latter refused to do so without valid
justification.

On appeal, the CA reversed the ruling of the RTC. The CA applied the exculpatory clause in the
General Conditions and ruled that there is no implied warranty on repair work; thus, the repairman cannot be
made to pay for loss of production as a result of the unsuccessful repair.[19] The fallo of the CA Decision[20] reads:

17

WHEREFORE, premises considered, the assailed August 30, 1995 Decision of

the Regional Trial Court of Quezon City, Branch 101 is hereby REVERSED and SET
ASIDE. The October 23, 1991 Complaint is hereby DISMISSED.

Our Ruling

The petition has merit.

SO ORDERED.

[21]

Petitioner and respondent ABB entered into a contract for the repair of petitioners Kiln Drive Motor,
evidenced by Purchase Order Nos. 17136-37,[33] with the following terms and conditions:
Petitioner moved for reconsideration[22] but the CA denied the same in its Resolution[23] dated February 16, 2006.

Issues

a) Total Price: P197,450.00

b) Delivery Date: August 29, 1990 or six (6) weeks from receipt of order and down
payment[34]

Hence, the present recourse where petitioner interposes the following issues:

1. Whether x x x the [CA] gravely erred in applying the terms of the General Conditions of
Purchase Orders Nos. 17136 and 17137 to exculpate the respondents x x x from
liability in this case.

2. Whether x x x the [CA] seriously erred in applying the concepts of implied warranty and
warranty against hidden defects of the New Civil Code in order to exculpate the
respondents x x x from its contractual obligation.[24]

c) Penalty: One half of one percent of the total cost or Nine Hundred Eighty Seven Pesos
and Twenty five centavos (P987.25) per day
of delay.

Respondent ABB, however, not only incurred delay in performing its obligation but likewise failed to
repair the Kiln Drive Motor; thus, prompting petitioner to sue for damages.

Clause 7 of the General Conditions is not

binding on petitioner
Petitioners Arguments

Petitioner reiterates that the General Conditions cannot exculpate respondents because petitioner
never agreed to be bound by it nor did petitioner receive a copy of it. [25] Petitioner also imputes error on the part
of the CA in applying the concepts of warranty against hidden defects and implied warranty.[26] Petitioner
contends that these concepts are not applicable because the instant case does not involve a contract of sale.
[27]
What applies are Articles 1170 and 2201 of

Respondents contend that under Clause 7 of the General Conditions their liability does not
extend to consequential damages either direct or indirect. [35] This contention, however, is unavailing
because respondents failed to show that petitioner was duly furnished with a copy of said General
Conditions. Hence, it is not binding on petitioner.

the Civil Code.[28]

Having breached the contract it entered with petitioner, respondent ABB is liable for damages
pursuant to Articles 1167, 1170, and 2201 of the Civil Code, which state:
Respondents Arguments

[29]

Conversely, respondents insist that petitioner is bound by the General Conditions. By issuing
Purchase Order Nos. 17136-37, petitioner in effect accepted the General Conditions appended to respondent
ABBs letter of offer.[30] Respondents likewise defend the ruling of the CA that there could be no implied warranty
on the repair made by respondent ABB as the warranty of the fitness of the equipment should be enforced
directly against the manufacturer of the Kiln Drive Motor.[31] Respondents also deny liability for damages claiming
that they performed their obligation in good faith.[32]

Art. 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of

the obligation. Furthermore, it may be decreed that what has been poorly done be
undone.

18

Art. 1170. Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages.

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-performance
of the obligation.

Based on the foregoing, a repairman who fails to perform his obligation is liable to pay for the cost of
the execution of the obligation plus damages. Though entitled, petitioner in this case is not claiming
reimbursement for the repair allegedly done by Newton Contractor,[36] but is instead asking for damages for the
delay caused by respondent ABB.

Petitioner is entitled to penalties under

Purchase Order Nos. 17136-37

As per Purchase Order Nos. 17136-37, petitioner is entitled to penalties in the amount of P987.25 per
day from the time of delay, August 30, 1990, up to the time the Kiln Drive Motor was finally returned to
petitioner. Records show that although the testing of Kiln Drive Motor was done on March 13, 1991, the said
motor was actually delivered to petitioner as early as January 7, 1991.[37] The installation and testing was done
only on March 13, 1991 upon the request of petitioner because the Kiln was under repair at the time the motor
was delivered; hence, the load testing had to be postponed.[38]

Article 1226 of the Civil Code further provides that if the obligor refuses to pay the penalty, such as in
the instant case, [40] damages and interests may still be recovered on top of the penalty. Damages claimed must
be the natural and probable consequences of the breach, which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.[41]

Thus, in addition to the penalties, petitioner seeks to recover as damages production loss, labor cost
and the rental of the crane.

Petitioner avers that every time the Kiln Drive Motor is tested, petitioner had to rent a crane and pay
for labor to install the motor.[42] But except for the Summary of Claims for Damages, [43] no other evidence was
presented by petitioner to show that it had indeed rented a crane or that it incurred labor cost to install the
motor.

Petitioner likewise claims that as a result of the delay in the repair of the Kiln Drive Motor, its
production from August 29, 1990 to March 15, 1991 decreased since it had to use its old motor which was not
able to produce cement as much as the one under repair; [44] and that every time the said motor was installed
and tested, petitioner had to stop its operations; thereby, incurring more production losses. [45] To support its
claim, petitioner presented its monthly production reports [46] for the months of April to June 1990 showing that
on the average it was able to produce 1040 MT of cement per day. However, the production reports for the
months of August 1990 to March 1991 were not presented. Without these production reports, it cannot be
determined with reasonable certainty whether petitioner indeed incurred production losses during the said
period. It may not be amiss to say that competent proof and a reasonable degree of certainty are needed to
justify a grant of actual or compensatory damages; speculations, conjectures, assertions or guesswork are not
sufficient.[47]

Besides, consequential damages, such as loss of profits on account of delay or failure of delivery, may
be recovered only if such damages were reasonably foreseen or have been brought within the contemplation of
the parties as the probable result of a breach at the time of or prior to contracting. [48] Considering the nature of
the obligation in the instant case, respondent ABB, at the time it agreed to repair petitioners Kiln Drive Motor,
could not have reasonably foreseen that it would be made liable for production loss, labor cost and rental of the
crane in case it fails to repair the motor or incurs delay in delivering the same, especially since the motor under
repair was a spare motor.[49]

For the foregoing reasons, petitioner is not entitled to recover production loss, labor cost and the
rental of the crane.
Under Article 1226[39] of the Civil Code, the penalty clause takes the place of indemnity for damages
and the payment of interests in case of non-compliance with the obligation, unless there is a stipulation to the
contrary. In this case, since there is no stipulation to the contrary, the penalty in the amount of P987.25 per day
of delay covers all other damages (i.e. production loss, labor cost, and rental of the crane) claimed by
petitioner.

Petitioner is not entitled to recover

production loss, labor cost and the

Petitioner is not entitled to attorneys fees

Neither is petitioner entitled to the award of attorneys fees. Jurisprudence requires that the factual
basis for the award of attorneys fees must be set forth in the body of the decision and not in the dispositive
portion only.[50] In this case, no explanation was given by the RTC in awarding attorneys fees in favor of
petitioner. In fact, the award of attorneys fees was mentioned only in the dispositive portion of the decision.

rental of crane
Respondent Eriksson cannot be made
jointly and severally liable for the
penalties

19

Respondent Eriksson, however, cannot be made jointly and severally liable for the penalties. There is
no showing that respondent Eriksson directed or participated in the repair of the Kiln Drive Motor or that he is
guilty of bad faith or gross negligence in directing the affairs of respondent ABB. It is a basic principle that a
corporation has a personality separate and distinct from the persons composing or representing it; hence,
personal liability attaches only in exceptional cases, such as when the director, trustee, or officer is guilty of bad
faith or gross negligence in directing the affairs of the corporation.[51]

In sum, we find petitioner entitled to penalties in the amount of P987.25 per day from August 30,
1990 up to January 7, 1991 (131 days) or a total amount of P129,329.75 for the delay caused by respondent
ABB. Finally, we impose interest at the rate of six percent (6%) on the total amount due from the date of filing of
the complaint until finality of this Decision. However, from the finality of judgment until full payment of the
total award, the interest rate of twelve percent (12%) shall apply.[52]

FIRST DIVISION
ALLAN C. GO, doing business under the name and style
ACG Express Liner,
Petitioner,

G.R. No. 164703

- versus MORTIMER F. CORDERO,

Respondent.
x-----------------------------------------x
MORTIMER F. CORDERO,
Petitioner,

G.R. No. 164747

Present:

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated August 25, 2005 and the
Resolution dated February 16, 2006 of the Court of Appeals in CA-G.R. CV No. 58551 are
hereby REVERSED and SET ASIDE. Respondent ABB is ORDERED to pay petitioner the amount of P129,329.75,
with interest at 6% per annum to be computed from the date of the filing of the complaint until finality of this
Decision and 12% per annum thereafter until full payment.
SO ORDERED.

- versus -

ALLAN C. GO, doing business underthe name and style

ACG Express Liner, FELIPE M. LANDICHO and VINCENT D.
TECSON,
Respondents.

PUNO, C.J., Chairperson,

CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:
May 4, 2010

x-----------------------------------------------------------------------------------------x
DECISION
VILLARAMA, JR., J.:
For review is the Decision [1] dated March 16, 2004 as modified by the Resolution [2] dated July 22,
2004 of the Court of Appeals (CA) in CA-G.R. CV No. 69113, which affirmed with modifications the
Decision[3] dated May 31, 2000 of the Regional Trial Court (RTC) of Quezon City, Branch 85 in Civil
Case No. 98-35332.
The factual antecedents:
Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation (Pamana),
ventured into the business of marketing inter-island passenger vessels.After contacting various
overseas fast ferry manufacturers from all over the world, he came to meet Tony Robinson, an
Australian national based in Brisbane, Australia, who is the Managing Director of Aluminium Fast
Ferries Australia (AFFA).
Between June and August 1997, Robinson signed documents appointing Cordero as the exclusive
distributor of AFFA catamaran and other fast ferry vessels in the Philippines.As such exclusive
distributor, Cordero offered for sale to prospective buyers the 25-meter Aluminium Passenger
catamaran known as the SEACAT 25.[4]

20

After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the
owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to close
a deal for the purchase of two (2) SEACAT 25 as evidenced by the Memorandum of Agreement
dated August 7, 1997.[5] Accordingly, the parties executed Shipbuilding Contract No. 7825 for one (1)
high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00. [6] Per agreement between
Robinson and Cordero, the latter shall receive commissions totalling US$328,742.00, or 22.43% of the
purchase price, from the sale of each vessel. [7]
Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1) occasion even
accompanied Go and his family and Landicho, to monitor the progress of the building of the
vessel. He shouldered all the expenses for airfare, food, hotel accommodations, transportation and
entertainment during these trips. He also spent for long distance telephone calls to communicate
regularly with Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing directly with Robinson when he was informed
by Dennis Padua of Wartsila Philippines that Go was canvassing for a second catamaran engine from
their company which provided the ship engine for the first SEACAT 25. Padua told Cordero that Go
instructed him to fax the requested quotation of the second engine to the Park Royal Hotel
in Brisbane where Go was then staying. Cordero tried to contact Go and Landicho to confirm the
matter but they were nowhere to be found, while Robinson refused to answer his calls. Cordero
immediately flew to Brisbane to clarify matters with Robinson, only to find out that Go and Landicho
were already there in Brisbane negotiating for the sale of the second SEACAT 25. Despite repeated
follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who even made
Cordero believe there would be no further sale between AFFA and ACG Express Liner.
In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing directly
with Robinson violated his exclusive distributorship and demanded that they respect the same,
without prejudice to legal action against him and Robinson should they fail to heed the same.
[8]
Corderos lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, also wrote ACG Express Liner
assailing the fraudulent actuations and misrepresentations committed by Go in connivance with his
lawyers (Landicho and Tecson) in breach of Corderos exclusive distributorship appointment. [9]
Having been apprised of Corderos demand letter, Thyne & Macartney, the lawyer of AFFA and
Robinson, faxed a letter to ACCRA law firm asserting that the appointment of Cordero as AFFAs
distributor was for the purpose of one (1) transaction only, that is, the purchase of a high-speed
catamaran vessel by ACG Express Liner in August 1997. The letter further stated that Cordero was
offered the exclusive distributorship, the terms of which were contained in a draft agreement which
Cordero allegedly failed to return to AFFA within a reasonable time, and which offer is already being
revoked by AFFA.[10]
As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified before the
trial court that on the same day, Landicho, acting on behalf of Go, talked to him over the telephone
and offered to amicably settle their dispute. Tecson and Landicho offered to convince Go to honor
his exclusive distributorship with AFFA and to purchase all vessels for ACG Express Liner through him
for the next three (3) years. In an effort to amicably settle the matter, Landicho, acting in behalf of
Go, set up a meeting with Cordero on June 29, 1998 between 9:30 p.m. to 10:30 p.m. at the Mactan
Island Resort Hotel lobby. On said date, however, only Landicho and Tecson came and no reason was
given for Gos absence. Tecson and Landicho proposed that they will convince Go to pay him
US$1,500,000.00 on the condition that they will get a cut of 20%. And so it was agreed between him,
Landicho and Tecson that the latter would give him a weekly status report and that the matter will
be settled in three (3) to four (4) weeks and neither party will file an action against each other until
a final report on the proposed settlement. No such report was made by either Tecson or Landicho
who, it turned out, had no intention to do so and were just buying time as the catamaran vessel was
due to arrive from Australia. Cordero then filed a complaint with the Bureau of Customs (BOC) to
prohibit
the
entry
of
SEACAT
25
from Australia based
on
misdeclaration
and

undervaluation. Consequently, an Alert Order was issued by Acting BOC Commissioner Nelson Tan for
the vessel which in fact arrived on July 17, 1998. Cordero claimed that Go and Robinson had
conspired to undervalue the vessel by around US$500,000.00.[11]
On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go, Tecson
and Landicho liable jointly and solidarily for conniving and conspiring together in violating his
exclusive distributorship in bad faith and wanton disregard of his rights, thus depriving him of his
due commissions (balance of unpaid commission from the sale of the first vessel in the amount of
US$31,522.01 and unpaid commission for the sale of the second vessel in the amount of
US$328,742.00) and causing him actual, moral and exemplary damages, including P800,000.00
representing expenses for airplane travel to Australia, telecommunications bills and entertainment,
on account of AFFAs untimely cancellation of the exclusive distributorship agreement. Cordero also
prayed for the award of moral and exemplary damages, as well as attorneys fees and litigation
expenses.[12]
Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to
state a cause of action, asserting that there was no act committed in violation of the distributorship
agreement. Said motion was denied by the trial court on December 20, 1999. Robinson was likewise
declared in default for failure to file his answer within the period granted by the trial court. [13] As
for Go and Tecson, their motion to dismiss based on failure to state a cause of action was likewise
denied by the trial court on February 26, 1999.[14] Subsequently, they filed their Answer denying that
they have anything to do with the termination by AFFA of Corderos authority as exclusive distributor
in thePhilippines. On the contrary, they averred it was Cordero who stopped communicating with Go
in connection with the purchase of the first vessel from AFFA and was not doing his part in making
progress status reports and airing the clients grievances to his principal, AFFA, such that Go engaged
the services of Landicho to fly to Australia and attend to the documents needed for shipment of the
vessel to the Philippines. As to the inquiry for the Philippine price for a Wartsila ship engine for
AFFAs other on-going vessel construction, this was merely requested by Robinson but which Cordero
misinterpreted as indication that Go was buying a second vessel. Moreover, Landicho and Tecson had
no transaction whatsoever with Cordero who had no document to show any such shipbuilding
contract. As to the supposed meeting to settle their dispute, this was due to the malicious demand
of Cordero to be given US$3,000,000 as otherwise he will expose in the media the alleged
undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause of action for his
commission for the sale of the second vessel under the memorandum of agreement dated August 7,
1997 considering the termination of his authority by AFFAs lawyers on June 26, 1998.[15]
Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on
motion filed by Cordero through counsel, the trial court reconsidered the resetting of the pre-trial
to another date for the third time as requested by Go, Tecson and Landicho, in view of the latters
failure to appear at the pre-trial conference on January 7, 2000 despite due notice. The trial court
further confirmed that said defendants misled the trial court in moving for continuance during the
pre-trial conference held on December 10, 1999, purportedly to go abroad for the holiday season
when in truth a Hold-Departure Order had been issued against them. [16] Accordingly, plaintiff Cordero
was allowed to present his evidence ex parte.
Corderos testimony regarding his transaction with defendants Go, Landicho and Tecson, and the
latters offer of settlement, was corroborated by his counsel who also took the witness
stand. Further, documentary evidence including photographs taken of the June 29, 1998 meeting
with Landicho, Tecson and Atty. Tabujara at Shangri-las Mactan Island Resort, photographs taken in
Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various documents,
communications, vouchers and bank transmittals were presented to prove that: (1) Cordero was
properly authorized and actually transacted in behalf of AFFA as exclusive distributor in the
Philippines; (2) Cordero spent considerable sums of money in pursuance of the contract with Go and
ACG Express Liner; and (3) AFFA through Robinson paid Cordero his commissions from each scheduled
payment made by Go for the first SEACAT 25 purchased from AFFA pursuant to Shipbuilding Contract
No. 7825.[17]

21

On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads as
follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in
favor of Plaintiff and against defendants Allan C. Go, Tony Robinson, Felipe
Landicho, and Vincent Tecson.As prayed for, defendants are hereby ordered to
pay Plaintiff jointly and solidarily, the following:
1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO
HUNDRED NINETY ONE THOUSAND THREE HUNDRED FIFTY TWO AND
FORTY THREE CENTAVOS (P16,291,352.43) as actual damages with
legal interest from 25 June 1998 until fully paid;
2. On the Second Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as moral damages;
3. On the Third Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as exemplary damages; and
4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as attorneys fees;
Costs against the defendants.
SO ORDERED.[18]

On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in allowing
Cordero to present his evidence ex-parte after the unjustified failure of appellants (Go, Tecson and
Landicho) to appear at the pre-trial conference despite due notice; (2) in finding that it was Cordero
and not Pamana who was appointed by AFFA as the exclusive distributor in the Philippines of its
SEACAT 25 and other fast ferry vessels, which is not limited to the sale of one (1) such catamaran to
Go on August 7, 1997; and (3) in finding that Cordero is entitled to a commission per vessel sold for
AFFA through his efforts in the amount equivalent to 22.43% of the price of each vessel or
US$328,742.00, and with payments of US$297,219.91 having been made to Cordero, there remained
a balance of US$31,522.09 still due to him. The CA sustained the trial court in ruling that Cordero is
entitled to damages for the breach of his exclusive distributorship agreement with AFFA. However, it
held that Cordero is entitled only to commission for the sale of the first catamaran obtained through
his efforts with the remaining unpaid sum of US$31,522.09 or P1,355,449.90 (on the basis of
US$1.00=P43.00 rate) with interest at 6% per annum from the time of the filing of the complaint
until the same is fully paid. As to the P800,000.00 representing expenses incurred by Cordero for
transportation, phone bills, entertainment, food and lodging, the CA declared there was no basis for
such award, the same being the logical and necessary consequences of the exclusive distributorship
agreement which are normal in the field of sales and distribution, and the expenditures having
redounded to the benefit of the distributor (Cordero).
On the amounts awarded by the trial court as moral and exemplary damages, as well as
attorneys fees, the CA reduced the same to P500,000.00, P300,000.00 andP50,000.00,
respectively. Appellants were held solidarily liable pursuant to the provisions of Article 1207 in
relation to Articles 19, 20, 21 and 22 of the New Civil Code. The CA further ruled that no error was
committed by the trial court in denying their motion for new trial, which said court found to be pro
forma and did not raise any substantial matter as to warrant the conduct of another trial.

Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have been unduly
prejudiced by the negligence of their counsel who was allegedly unaware that the pre-trial
conference on January 28, 2000 did not push through for the reason that Cordero was then allowed
to present his evidence ex-parte, as he had assumed that the said ex-parte hearing was being
conducted only against Robinson who was earlier declared in default. [19] In its Order dated July 28,
2000, the trial court denied the motion for new trial. [20] In the same order, Corderos motion for
execution pending appeal was granted. Defendants moved to reconsider the said order insofar as it
granted the motion for execution pending appeal. [21] On August 8, 2000, they filed a notice of
appeal.[22]

By Resolution dated July 22, 2004, the CA denied the motions for reconsideration
respectively filed by the appellants and appellee, and affirmed the Decision dated March 16, 2004
with the sole modification that the legal interest of 6% per annum shall start to run from June 24,
1998 until the finality of the decision, and the rate of 12% interest per annum shall apply once the
decision becomes final and executory until the judgment has been satisfied.

On August 18, 2000, the trial court denied the motion for reconsideration and on August 21, 2000,
the writ of execution pending appeal was issued.[23] Meanwhile, the notice of appeal was denied for
failure to pay the appellate court docket fee within the prescribed period. [24] Defendants filed a
motion for reconsideration and to transmit the case records to the CA. [25]

G.R. No. 164703

(Petitioner Go)

On September 29, 2000, the CA issued a temporary restraining order at the instance of defendants in
the certiorari case they filed with said court docketed as CA-G.R. SP No. 60354 questioning the
execution orders issued by the trial court. Consequently, as requested by the defendants, the trial
court recalled and set aside its November 6, 2000 Order granting the ex-parte motion for release of
garnished funds, cancelled the scheduled public auction sale of levied real properties, and denied
the ex-parte Motion for Break-Open Order and Ex-Parte Motion for Encashment of Check filed by
Cordero.[26] On November 29, 2000, the trial court reconsidered its Order dated August 21,
2000 denying due course to the notice of appeal and forthwith directed the transmittal of the
records to the CA.[27]
On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R. SP
No. 60354 and setting aside the trial courts orders of execution pending appeal.Cordero appealed
the said judgment in a petition for review filed with this Court which was eventually denied under
our Decision dated September 17, 2002.[28]

The case before us is a consolidation of the petitions for review under Rule 45 separately
filed by Go (G.R. No. 164703) and Cordero (G.R. No. 164747) in which petitioners raised the
following arguments:

I. THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES OF COURT AND

PERTINENT JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN NOT RULING THAT THE RESPONDENT IS NOT THE REAL
PARTY-IN-INTEREST AND IN NOT DISMISSING THE INSTANT CASE ON THE
GROUND OF LACK OF CAUSE OF ACTION;
II. THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND JURISPRUDENCE
AND ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN
PETITIONER RESPONSIBLE FOR THE BREACH IN THE ALLEGED EXCLUSIVE
DISTRIBUTORSHIP AGREEMENT WITH ALUMINIUM FAST FERRIES AUSTRALIA;
III. THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER LIABLE IN
SOLIDUMWITH THE CO-DEFENDANTS WITH RESPECT TO THE CLAIMS OF
RESPONDENT;
IV. THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND JURISPRUDENCE
AND GRAVELY ABUSED ITS DISCRETION WHEN IT FOUND PETITIONER

22

LIABLE FOR UNPAID COMMISSIONS, DAMAGES, ATTORNEYS FEES, AND

LITIGATION EXPENSES; and
V. THE

HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND

JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT
EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS RIGHT TO DUE
PROCESS BY AFFIRMING THE LOWER COURTS DENIAL OF PETITIONERS
MOTION FOR NEW TRIAL.[29]

G.R. No. 164747

(Petitioner Cordero)
I.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF THE TRIAL
COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS COMMISSION FOR
THE SALE OF THE SECOND VESSEL, SINCE THERE IS SUFFICIENT EVIDENCE ON
RECORD WHICH PROVES THAT THERE WAS A SECOND SALE OF A VESSEL.
A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST
1997 PROVIDES THAT RESPONDENT GO WAS CONTRACTUALLY
BOUND TO BUY TWO (2) VESSELS FROM AFFA.
B. RESPONDENT GOS POSITION PAPER AND COUNTERAFFIDAVIT/POSITION PAPER THAT WERE FILED BEFORE THE
BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD INDEED
PURCHASED A SECOND VESSEL FROM AFFA.
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY
HAD PURCHASED A SECOND VESSEL.
II.
THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO
HIS COMMISSIONS FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT WAS
PETITIONERS EFFORTS WHICH ACTUALLY FACILITATED AND SET-UP THE
TRANSACTION FOR RESPONDENTS.
III.
THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL INTEREST
RATE ON RESPONDENTS UNPAID OBLIGATION WHICH SHOULD BE TWELVE PERCENT
(12%) FROM THE TIME OF THE BREACH OF THE OBLIGATION.
IV.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL AMOUNT OF
CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY THE TRIAL COURT
CONSIDERING THE BAD FAITH AND FRAUDULENT CONDUCT OF RESPONDENTS IN
MISAPPROPRIATING THE MONEY OF PETITIONER.[30]
The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the legal
personality to sue the respondents for breach of contract; and (2) whether the respondents may be
held liable for damages to Cordero for his unpaid commissions and termination of his exclusive
distributorship appointment by the principal, AFFA.
I. Real Party-in-Interest

First, on the issue of whether the case had been filed by the real party-in-interest as required by
Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes of
this provision are: 1) to prevent the prosecution of actions by persons without any right, title or
interest in the case; 2) to require that the actual party entitled to legal relief be the one to
prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it
within certain bounds, pursuant to sound public policy.[31] A case is dismissible for lack of personality
to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to
state a cause of action.[32]
On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the
exclusive distributor of AFFA in the Philippines as shown by the Certification datedJune 1,
1997 issued by Tony Robinson.[33] Petitioner Go mentions the following documents also signed by
respondent Robinson which state that Pamana Marketing Corporation represented by Mr. Mortimer F.
Cordero was actually the exclusive distributor: (1) letter dated 1 June 1997 [34]; (2) certification
dated 5 August 1997[35]; and (3) letter dated 5 August 1997 addressed to petitioner Cordero
concerning commissions to be paid to Pamana Marketing Corporation. [36] Such apparent inconsistency
in naming AFFAs exclusive distributor in the Philippines is of no moment. For all intents and
purposes, Robinson and AFFA dealt only with Cordero who alone made decisions in the performance
of the exclusive distributorship, as with other clients to whom he had similarly offered AFFAs fast
ferry vessels. Moreover, the stipulated commissions from each progress payments made by Go were
directly paid by Robinson to Cordero. [37] Respondents Landicho and Tecson were only too aware of
Corderos authority as the person who was appointed and acted as exclusive distributor of AFFA,
which can be gleaned from their act of immediately furnishing him with copies of bank transmittals
everytime Go remits payment to Robinson, who in turn transfers a portion of funds received to the
bank account of Cordero in the Philippines as his commission. Out of these partial payments of his
commission, Cordero would still give Landicho and Tecson their respective commission, or cuts from
his own commission. Respondents Landicho and Tecson failed to refute the evidence submitted by
Cordero consisting of receipts signed by them. Said amounts were apart from the earlier expenses
shouldered by Cordero for Landichos airline tickets, transportation, food and hotel accommodations
for the trip to Australia.[38]
Moreover, petitioner Go, Landicho and Tecson never raised petitioner Corderos lack of personality to
sue on behalf of Pamana,[39] and did so only before the CA when they contended that it is Pamana
and not Cordero, who was appointed and acted as exclusive distributor for AFFA. [40] It was Robinson
who argued in support of his motion to dismiss that as far as said defendant is concerned, the real
party plaintiff appears to be Pamana, against the real party defendant which is AFFA. [41] As already
mentioned, the trial court denied the motion to dismiss filed by Robinson.
We find no error committed by the trial court in overruling Robinsons objection over the
improper resort to summons by publication upon a foreign national like him and in an action in
personam, notwithstanding that he raised it in a special appearance specifically raising the issue of
lack of jurisdiction over his person. Courts acquire jurisdiction over the plaintiffs upon the filing of
the complaint, while jurisdiction over the defendants in a civil case is acquired either through the
service of summons upon them in the manner required by law or through their voluntary
appearance in court and their submission to its authority.[42] A party who makes a special
appearance in court challenging the jurisdiction of said court based on the ground of invalid service
of summons is not deemed to have submitted himself to the jurisdiction of the court. [43]
In this case, however, although the Motion to Dismiss filed by Robinson specifically stated
as one (1) of the grounds the lack of personal jurisdiction, it must be noted that he had earlier filed
a Motion for Time to file an appropriate responsive pleading even beyond the time provided in the
summons by publication.[44] Such motion did not state that it was a conditional appearance entered
to question the regularity of the service of summons, but an appearance submitting to the

23

jurisdiction of the court by acknowledging the summons by publication issued by the court and
praying for additional time to file a responsive pleading. Consequently, Robinson having
acknowledged the summons by publication and also having invoked the jurisdiction of the trial court
to secure affirmative relief in his motion for additional time, he effectively submitted voluntarily to
the trial courts jurisdiction. He is now estopped from asserting otherwise, even before this Court. [45]
II. Breach of Exclusive Distributorship,
Contractual Interference and
Respondents Liability for Damages
In Yu v. Court of Appeals,[46] this Court ruled that the right to perform an exclusive
distributorship agreement and to reap the profits resulting from such performance are proprietary
rights which a party may protect. Thus, injunction is the appropriate remedy to prevent a wrongful
interference with contracts by strangers to such contracts where the legal remedy is insufficient and
the resulting injury is irreparable. In that case, the former dealer of the same goods purchased the
merchandise from the manufacturer in Englandthrough a trading firm in West Germany and sold
these in the Philippines. We held that the rights granted to the petitioner under the exclusive
distributorship agreement may not be diminished nor rendered illusory by the expedient act of
utilizing or interposing a person or firm to obtain goods for which the exclusive distributorship was
conceptualized, at the expense of the sole authorized distributor.[47]
In the case at bar, it was established that petitioner Cordero was not paid the balance of
his commission by respondent Robinson. From the time petitioner Go and respondent Landicho
directly dealt with respondent Robinson in Brisbane, and ceased communicating through petitioner
Cordero as the exclusive distributor of AFFA in the Philippines, Cordero was no longer informed of
payments remitted to AFFA in Brisbane. In other words, Cordero had clearly been cut off from the
transaction until the arrival of the first SEACAT 25 which was sold through his efforts. When Cordero
complained to Go, Robinson, Landicho and Tecson about their acts prejudicial to his rights and
demanded that they respect his exclusive distributorship, Go simply let his lawyers led by Landicho
and Tecson handle the matter and tried to settle it by promising to pay a certain amount and to
purchase high-speed catamarans through Cordero. However, Cordero was not paid anything and
worse, AFFA through its lawyer in Australia even terminated his exclusive dealership insisting that his
services were engaged for only one (1) transaction, that is, the purchase of the first SEACAT 25 in
August 1997.
[48]

Petitioner Go argues that unlike in Yu v. Court of Appeals there is no conclusive proof

adduced by petitioner Cordero that they actually purchased a second SEACAT 25 directly from AFFA
and hence there was no violation of the exclusive distributorship agreement. Further, he contends
that the CA gravely abused its discretion in holding them solidarily liable to Cordero, relying on
Articles 1207, 19 and 21 of the Civil Code despite absence of evidence, documentary or testimonial,
showing that they conspired to defeat the very purpose of the exclusive distributorship agreement.
[49]

We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient
evidence that respondents actually purchased a second SEACAT 25 directly from AFFA. But this
circumstance will not absolve respondents from liability for invading Corderos rights under the
exclusive distributorship. Respondents clearly acted in bad faith in bypassing Cordero as they
completed the remaining payments to AFFA without advising him and furnishing him with copies of
the bank transmittals as they previously did, and directly dealt with AFFA through Robinson regarding
arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the purchase of
the second vessel pursuant to the Memorandum of Agreement which Cordero signed in behalf of
AFFA. As a result of respondents actuations, Cordero incurred losses as he was not paid the balance
of his commission from the sale of the first vessel and his exclusive distributorship revoked by AFFA.

Petitioner Go contends that the trial and appellate courts erred in holding them solidarily
liable for Corderos unpaid commission, which is the sole obligation of the principal AFFA. It was
Robinson on behalf of AFFA who, in the letter dated August 5, 1997 addressed to Cordero, undertook
to pay commission payments to Pamana on a staggered progress payment plan in the form of
percentage of the commission per payment. AFFA explicitly committed that it will, upon receipt of
progress payments, pay to Pamana their full commission by telegraphic transfer to an account
nominated by Pamana within one to two days of [AFFA] receiving such payments. [50] Petitioner Go
further maintains that he had not in any way violated or caused the termination of the exclusive
distributorship agreement between Cordero and AFFA; he had also paid in full the first and only
vessel he purchased from AFFA.[51]
While it is true that a third person cannot possibly be sued for breach of contract because
only parties can breach contractual provisions, a contracting party may sue a third person not for
breach but for inducing another to commit such breach.
Article 1314 of the Civil Code provides:
Art. 1314. Any third person who induces another to violate his
contract shall be liable for damages to the other contracting party.
The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part
of the third person of the existence of a contract; and (3) interference of the third person is without
legal justification.[52]
The presence of the first and second elements is not disputed. Through the letters issued by
Robinson attesting that Cordero is the exclusive distributor of AFFA in thePhilippines, respondents
were clearly aware of the contract between Cordero and AFFA represented by Robinson. In fact,
evidence on record showed that respondents initially dealt with and recognized Cordero as such
exclusive dealer of AFFA high-speed catamaran vessels in the Philippines. In that capacity as
exclusive distributor, petitioner Go entered into the Memorandum of Agreement and Shipbuilding
Contract No. 7825 with Cordero in behalf of AFFA.
As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals[53] is
instructive, to wit:
A duty which the law of torts is concerned with is respect for the
property of others, and a cause of action ex delicto may be predicated upon an
unlawful interference by one person of the enjoyment by the other of his
private property. This may pertain to a situation where a third person induces a
party to renege on or violate his undertaking under a contract. In the case
before us, petitioners Trendsetter Marketing asked DCCSI to execute lease
contracts in its favor, and as a result petitioner deprived respondent corporation
of the latters property right. Clearly, and as correctly viewed by the appellate
court, the three elements of tort interference above-mentioned are present in
the instant case.
Authorities debate on whether interference may be justified where the
defendant acts for the sole purpose of furthering his own financial or economic
interest. One view is that, as a general rule, justification for interfering with the
business relations of another exists where the actors motive is to benefit
himself. Such justification does not exist where his sole motive is to cause harm
to the other. Added to this, some authorities believe that it is not necessary that
the interferers interest outweigh that of the party whose rights are invaded, and
that an individual acts under an economic interest that is substantial, not
merely de minimis, such that wrongful and malicious motives are negatived, for
he acts in self-protection. Moreover, justification for protecting ones financial

24

position should not be made to depend on a comparison of his economic interest

in the subject matter with that of others. It is sufficient if the impetus of his
conduct lies in a proper business interest rather than in wrongful motives.
As early as Gilchrist vs. Cuddy, we held that where there was no
malice in the interference of a contract, and the impulse behind ones
conduct lies in a proper business interest rather than in wrongful motives, a
party cannot be a malicious interferer. Where the alleged interferer is
financially interested, and such interest motivates his conduct, it cannot be said
that he is an officious or malicious intermeddler.
In the instant case, it is clear that petitioner So Ping Bun prevailed upon
DCCSI to lease the warehouse to his enterprise at the expense of respondent
corporation. Though petitioner took interest in the property of respondent
corporation and benefited from it, nothing on record imputes deliberate
wrongful motives or malice in him.
xxx
While we do not encourage tort interferers seeking their economic
interest to intrude into existing contracts at the expense of others, however, we
find that the conduct herein complained of did not transcend the limits
forbidding an obligatory award for damages in the absence of any malice. The
business desire is there to make some gain to the detriment of the contracting
parties. Lack of malice, however, precludes damages. But it does not relieve
petitioner of the legal liability for entering into contracts and causing breach
of existing ones. The respondent appellate court correctly confirmed the
permanent injunction and nullification of the lease contracts between DCCSI and
Trendsetter Marketing, without awarding damages. The injunction saved the
respondents from further damage or injury caused by petitioners interference.
[54]
[EMPHASIS SUPPLIED.]

Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention
to do ulterior and unjustifiable harm. Malice is bad faith or bad motive.[55] In the case of Lagon v.
Court of Appeals,[56] we held that to sustain a case for tortuous interference, the defendant must
have acted with malice or must have been driven by purely impure reasons to injure the plaintiff; in
other words, his act of interference cannot be justified. We further explained that the word induce
refers to situations where a person causes another to choose one course of conduct by persuasion or
intimidation. As to the allegation of private respondent in said case that petitioner induced the heirs
of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged renewal of the
original lease contract with the deceased landowner, we ruled as follows:
Assuming ex gratia argumenti that petitioner knew of the contract, such
knowledge alone was not sufficient to make him liable for tortuous interference.
xxx
Furthermore, the records do not support the allegation of private
respondent that petitioner induced the heirs of Bai Tonina Sepi to sell the
property to him. The word induce refers to situations where a person causes
another to choose one course of conduct by persuasion or intimidation. The
records show that the decision of the heirs of the late Bai Tonina Sepi to sell the
property was completely of their own volition and that petitioner did absolutely
nothing to influence their judgment. Private respondent himself did not proffer
any evidence to support his claim. In short, even assuming that private
respondent was able to prove the renewal of his lease contract with Bai Tonina
Sepi, the fact was that he was unable to prove malice or bad faith on the part
of petitioner in purchasing the property. Therefore, the claim of tortuous
interference was never established.[57]

In their Answer, respondents denied having anything to do with the unpaid balance of the
commission due to Cordero and the eventual termination of his exclusive distributorship by
AFFA. They gave a different version of the events that transpired following the signing of
Shipbuilding Contract No. 7825. According to them, several builder-competitors still entered the
picture after the said contract for the purchase of one (1) SEACAT 25 was sent to Brisbane in July
1997 for authentication, adding that the contract was to be effective on August 7, 1997, the time
when their funds was to become available. Go admitted he called the attention of AFFA if it can
compete with the prices of other builders, and upon mutual agreement, AFFA agreed to give them a
discounted price under the following terms and conditions: (1) that the contract price be lowered;
(2) that Go will obtain another vessel; (3) that to secure compliance of such conditions, Go must
make an advance payment for the building of the second vessel; and (4) that the payment scheme
formerly agreed upon as stipulated in the first contract shall still be the basis and used as the
guiding factor in remitting money for the building of the first vessel. This led to the signing of
another contract superseding the first one (1), still to be dated 07 August 1997. Attached to the
answer were photocopies of the second contract stating a lower purchase price (US$1,150,000.00)
and facsimile transmission of AFFA to Go confirming the transaction.[58]
As to the cessation of communication with Cordero, Go averred it was Cordero who was nowhere to
be contacted at the time the shipbuilding progress did not turn good as promised, and it was
always Landicho and Tecson who, after several attempts, were able to locate him only to obtain
unsatisfactory reports such that it was Go who would still call up Robinson regarding any progress
status report, lacking documents for MARINA, etc., and go to Australia for ocular
inspection. Hence, in May 1998 on the scheduled launching of the ship in Australia, Go engaged the
services of Landicho who went to Australia to see to it that all documents needed for the shipment
of the vessel to the Philippines would be in order. It was also during this time that Robinsons
request for inquiry on the Philippine price of a Wartsila engine for AFFAs then on-going vessel
construction, was misinterpreted by Cordero as indicating that Go was buying a second vessel. [59]
We find these allegations unconvincing and a mere afterthought as these were the very same
averments contained in the Position Paper for the Importer dated October 9, 1998, which was
submitted by Go on behalf of ACG Express Liner in connection with the complaint-affidavit filed by
Cordero before the BOC-SGS Appeals Committee relative to the shipment valuation of the first
SEACAT 25 purchased from AFFA. [60] It appears that the purported second contract superseding the
original Shipbuilding Contract No. 7825 and stating a lower price of US$1,150,000.00 (not
US$1,465,512.00) was only presented before the BOC to show that the vessel imported into
the Philippines was not undervalued by almost US$500,000.00. Cordero vehemently denied there
was such modification of the contract and accused respondents of resorting to falsified documents,
including the facsimile transmission of AFFA supposedly confirming the said sale for only
US$1,150,000.00. Incidentally, another document filed in said BOC case, the CounterAffidavit/Position Paper for the Importer dated November 16, 1998, [61] states in paragraph 8 under
the Antecedent facts thereof, that -8. As elsewhere stated, the total remittances made by herein
Importer to AFFA does not alone represent the purchase
price for Seacat 25. It includes advance payment for
the acquisition of another vessel as part of the deal
due to the discounted price.[62]
which even gives credence to the claim of Cordero that respondents negotiated for the sale of the
second vessel and that the nonpayment of the remaining two (2) instalments of his commission for
the sale of the first SEACAT 25 was a result of Go and Landichos directly dealing with Robinson,
obviously to obtain a lower price for the second vessel at the expense of Cordero.
The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another
contract directly with ACG Express Liner to obtain a lower price for the second vessel resulted in
AFFAs breach of its contractual obligation to pay in full the commission due to Cordero and

25

unceremonious termination of Corderos appointment as exclusive distributor. Following our

pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed malicious if impelled by
a proper business interest rather than in wrongful motives. The attendant circumstances, however,
demonstrated that respondents transgressed the bounds of permissible financial interest to benefit
themselves at the expense of Cordero. Respondents furtively went directly to
Robinson after Cordero had worked hard to close the deal for them to purchase from AFFA two (2)
SEACAT 25, closely monitored the progress of building the first vessel sold, attended to their
concerns and spent no measly sum for the trip to Australia with Go, Landicho and Gos family
members.But what is appalling is the fact that even as Go, Landicho and Tecson secretly negotiated
with Robinson for the purchase of a second vessel, Landicho and Tecson continued to demand and
receive from Cordero their commission or cut from Corderos earned commission from the sale of
the first SEACAT 25.
Cordero was practically excluded from the transaction when Go, Robinson, Tecson and
Landicho suddenly ceased communicating with him, without giving him any explanation. While
there was nothing objectionable in negotiating for a lower price in the second purchase of SEACAT
25, which is not prohibited by the Memorandum of Agreement, Go, Robinson, Tecson and Landicho
clearly connived not only in ensuring that Cordero would have no participation in the contract for
sale of the second SEACAT 25, but also that Cordero would not be paid the balance of his
commission from the sale of the first SEACAT 25. This, despite their knowledge that it was
commission already earned by and due to Cordero. Thus, the trial and appellate courts correctly
ruled that the actuations of Go, Robinson, Tecson and Landicho were without legal justification and
intended solely to prejudice Cordero.
The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact
of the trial court, when affirmed by the appellate court, are conclusive on this Court. [63] We see no
compelling reason to reverse the findings of the RTC and the CA that respondents acted in bad faith
and in utter disregard of the rights of Cordero under the exclusive distributorship agreement.
The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good
faith in securing better terms for the purchase of high-speed catamarans from AFFA, to the
prejudice of Cordero as the duly appointed exclusive distributor, is further proscribed by Article 19
of the Civil Code:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith.
As we have expounded in another case:
Elsewhere, we explained that when a right is exercised in a manner which does
not conform with the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be
responsible. The object of this article, therefore, is to set certain standards
which must be observed not only in the exercise of ones rights but also in the
performance of ones duties. These standards are the following: act with justice,
give everyone his due and observe honesty and good faith. Its antithesis,
necessarily, is any act evincing bad faith or intent to injure. Its elements are
the following: (1) There is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring another. When Article 19
is violated, an action for damages is proper under Articles 20 or 21 of the Civil
Code. Article 20 pertains to damages arising from a violation of law x x x.
Article 21, on the other hand, states:

Art. 21. Any person who willfully causes loss or injury to

another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.
Article 21 refers to acts contra bonus mores and has the following elements: (1)
There is an act which is legal; (2) but which is contrary to morals, good custom,
public order, or public policy; and (3) it is done with intent to injure.
A common theme runs through Articles 19 and 21, and that is, the act
complained of must be intentional.[64]
Petitioner Gos argument that he, Landicho and Tecson cannot be held liable solidarily with
Robinson for actual, moral and exemplary damages, as well as attorneys fees awarded to
Cordero since no law or contract provided for solidary obligation in these cases, is equally bereft of
merit. Conformably with Article 2194 of the Civil Code, the responsibility of two or more persons
who are liable for the quasi-delict is solidary.[65] In Lafarge Cement Philippines, Inc. v. Continental
Cement Corporation,[66] we held:
[O]bligations arising from tort are, by their nature, always
solidary. We have assiduously maintained this legal principle as early as 1912
in Worcester v. Ocampo, in which we held:
x x x The difficulty in the contention of the appellants
is that they fail to recognize that the basis of the present
action is tort. They fail to recognize the universal doctrine that
each joint tort feasor is not only individually liable for the tort
in which he participates, but is also jointly liable with his tort
feasors. x x x
It may be stated as a general rule that joint tort
feasors are all the persons who command, instigate, promote,
encourage, advise, countenance, cooperate in, aid or abet the
commission of a tort, or who approve of it after it is done, if
done for their benefit. They are each liable as principals, to
the same extent and in the same manner as if they had
performed the wrongful act themselves. x x x
Joint tort feasors are jointly and severally liable for
the tort which they commit. The persons injured may sue all of
them or any number less than all. Each is liable for the whole
damages caused by all, and all together are jointly liable for
the whole damage. It is no defense for one sued alone, that
the others who participated in the wrongful act are not joined
with him as defendants; nor is it any excuse for him that his
participation in the tort was insignificant as compared to that
of the others. x x x
Joint tort feasors are not liable pro rata. The damages
can not be apportioned among them, except among
themselves. They cannot insist upon an apportionment, for the
purpose of each paying an aliquot part. They are jointly and
severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the
joint tort feasors, of course satisfies any claim which might
exist against the others. There can be but satisfaction. The
release of one of the joint tort feasors by agreement generally
operates to discharge all. x x x

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Of course, the court during trial may find that some of

the alleged tort feasors are liable and that others are not
liable. The courts may release some for lack of evidence while
condemning others of the alleged tort feasors. And this is true
even though they are charged jointly and severally.
[67]
[EMPHASIS SUPPLIED.]
The rule is that the defendant found guilty of interference with contractual relations
cannot be held liable for more than the amount for which the party who was inducted to break the
contract can be held liable.[68] Respondents Go, Landicho and Tecson were therefore correctly held
liable for the balance of petitioner Corderos commission from the sale of the first SEACAT 25, in
the amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in violation of
the exclusive distributorship agreement, with interest at the rate of 6% per annum from June 24,
1998 until the same is fully paid.
Respondents having acted in bad faith, moral damages may be recovered under Article
2219 of the Civil Code.[69] On the other hand, the requirements of an award of exemplary damages
are: (1) they may be imposed by way of example in addition to compensatory damages, and only
after the claimants right to them has been established; (2) that they cannot be recovered as a
matter of right, their determination depending upon the amount of compensatory damages that
may be awarded to the claimant; and (3) the act must be accompanied by bad faith or done in a
wanton, fraudulent, oppressive or malevolent manner.[70] The award of exemplary damages is thus
in order. However, we find the sums awarded by the trial court as moral and exemplary damages as
reduced by the CA, still excessive under the circumstances.

humiliation, and similar injuries unjustly caused. Although incapable of pecuniary estimation, the
amount must somehow be proportional to and in approximation of the suffering inflicted. Moral
damages are not punitive in nature and were never intended to enrich the claimant at the expense
of the defendant. There is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar facts. Trial courts
are given discretion in determining the amount, with the limitation that it should not be palpably
and scandalously excessive. Indeed, it must be commensurate to the loss or injury suffered. [71]
We believe that the amounts of P300,000.00 and P200,000.00 as moral and exemplary
damages, respectively, would be sufficient and reasonable. Because exemplary damages are
awarded, attorneys fees may also be awarded in consonance with Article 2208 (1). [72] We affirm the
appellate courts award of attorneys fees in the amount ofP50,000.00.
WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified
by the Resolution dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are
hereby AFFIRMED with MODIFICATION in that the awards of moral and exemplary damages are
hereby reduced to P300,000.00 and P200,000.00, respectively.
With costs against the petitioner in G.R. No. 164703.
SO ORDERED.

Moral damages are meant to compensate and alleviate the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social

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