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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-17447

April 30, 1963

GONZALO PUYAT & SONS, INC., plaintiff-appelle,


vs.
CITY OF MANILA AND MARCELO SARMIENTO, as City Treasurer of Manila, defendantsappellants
Feria, Manglapus & Associates for plainttiff-appelle.Asst. City Fiscal Manuel T. Reyes for
defendants-appellants.
PAREDES, J.:
This is an appeal from the judgment of the CFI of Manila, the dispostive portion of which reads:
"xxx Of the payments made by the plaintiff, only that made on October 25, 1950 in the
amount of P1,250.00 has prescribed Payments made in 1951 and thereafter are still
recoverable since the extra-judicial demand made on October 30, 1956 was well within the
six-year prescriptive period of the New CivilCode.
In view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiff,
ordering the defendants to refund the amount of P29,824.00, without interest. No costs.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted
and approved by this Honorable Court, without prejudice to the parties adducing other
evidence to prove their case not covered by this stipulation of facts.
1wph1.t

Defendants' counterclaim is hereby dismissed for not having been substantiated."


On August 11, 1958, the plaintiff Gonzalo Puyat & Sons, Inc., filed an action for refund of Retail
DealerlsTaxes paid by it, corresponding to the first Quarter of 1950 up to the third Quarter of 1956,
amounting to P33,785.00, against the City of Manila and its City Treasurer.The case was submitted
on the following stipulation of facts, to wit-"1. That the plaintiff is a corporation duly organized and existing according to the laws of the
Philippines, with offices at Manila; while defendant City Manila is a Municipal Corporation
duly organized in accordance with the laws of the Philippines, and defendant Marcelino
Sarmiento is the dulyqualified incumbent City Treasurer of Manila;
"2. That plaintiff is engaged in the business of manufacturing and selling all kinds of furniture
at its factory at 190 Rodriguez-Arias, San Miguel, Manila, and has a display room located at
604-606 Rizal Avenue, Manila, wherein it displays the various kind of furniture manufactured
by it and sells some goods imported by it, such as billiard balls, bowling balls and other
accessories;

"3. That acting pursuant to the provisions of Sec. 1. group II, of Ordinance No. 3364,
defendant City Treasurer of Manilaassessed from plaintiff retail dealer's tax corresponding to
the quarters hereunder stated on the sales of furniture manufactured and sold by it at its
factory site, all of which assessments plaintiff paid without protest in the erroneous belief that
it was liable therefor, on the dates and in the amount enumerated herein below:

Period

Date Paid

O.R. No.

Amount
Assessed
and Paid.

First Quarter 1950

Jan. 25, 1950

436271X

P1,255.00

Second Quarter 1950

Apr. 25, 1950

215895X

1,250.00

Third Quarter 1950

Jul. 25, 1950

243321X

1,250.00

Fourth Quarter 1950

Oct. 25, 1950

271165X

1,250.00

(Follows the assessment for different quarters in 1951, 1952,


1953, 1954 and 1955, fixing the same amount quarterly.) x x x..
First Quarter 1956

Jan. 25, 1956

823047X

1,250.00

Second Quarter 1956

Apr. 25, 1956

855949X

1,250.00

Third Quarter 1956

Jul. 25, 1956

880789X

1,250.00

TO TAL

.............

P33,785.00
===========

"4. That plaintiff, being a manufacturer of various kinds of furniture, is exempt from the
payment of taxes imposed under the provisions of Sec. 1, Group II, of Ordinance No.
3364,which took effect on September 24, 1956, on the sale of the various kinds of furniture
manufactured by it pursuant to the provisions of Sec. 18(n) of Republic Act No. 409 (Revised
Charter of Manila), as restated in Section 1 of Ordinance No.3816.
"5. That, however, plaintiff, is liable for the payment of taxes prescribed in Section 1, Group II
or Ordinance No. 3364mas amended by Sec. 1, Group II of Ordinance No. 3816, which took
effect on September 24, 1956, on the sales of imported billiard balls, bowling balls and other
accessories at its displayroom. The taxes paid by the plaintiff on the sales of said article are
as follows:
xxx

xxx

xxx

"6. That on October 30, 1956, the plaintiff filed with defendant City Treasurer of Manila, a
formal request for refund of the retail dealer's taxes unduly paid by it as aforestated in
paragraph 3, hereof.
"7. That on July 24, 1958, the defendant City Treasurer of Maniladefinitely denied said
request for refund.

"8. Hence on August 21, 1958, plaintiff filed the present complaint.
"9. Based on the above stipulation of facts, the legal issues to be resolved by this Honorable
Court are: (1) the period of prescription applicable in matters of refund of municipal taxes
errenously paid by a taxpayer and (2) refund of taxes not paid under protest. x x x."
Said judgment was directly appealed to this Court on two dominant issues to wit: (1) Whether or not
the amounts paid by plaintiff-appelle, as retail dealer's taxes under Ordinance 1925, as amended by
Ordinance No. 3364of the City of Manila, without protest, are refundable;(2) Assuming arguendo,
that plaintiff-appellee is entitled to the refund of the retail taxes in question, whether or not the claim
for refund filed in October 1956, in so far as said claim refers to taxes paid from 1950 to 1952 has
already prescribed. .
Under the first issue, defendants-appellants contend tht the taxes in question were voluntarily paid
by appellee company and since, in this jurisdiction, in order that a legal basis arise for claim of
refund of taxes erroneously assessed, payment thereof must be made under protest, and this being
a condition sine qua non, and no protest having been made, -- verbally or in writing,
therebyindicating that the payment was voluntary, the action must fail. Cited in support of the above
contention, are the cases of Zaragoza vs. Alfonso, 46 Phil. 160-161, and Gavino v. Municipality of
Calapan, 71 Phil. 438..
In refutation of the above stand of appellants, appellee avers tht the payments could not have been
voluntary.At most, they were paid "mistakenly and in good faith"and "without protest in the erroneous
belief that it was liable thereof." Voluntariness is incompatible with protest and mistake. It submits
that this is a simple case of "solutio indebiti"..
Appellants do not dispute the fact that appellee-companyis exempted from the payment of the tax in
question.This is manifest from the reply of appellant City Treasurer stating that sales of
manufactured products at the factory site are not taxable either under the Wholesalers Ordinance or
under the Retailers' Ordinance. With this admission, it would seem clear that the taxes collected
from appellee were paid, thru an error or mistake, which places said act of payment within the pale
of the new Civil Code provision on solutio indebiti. The appellant City of Manila, at the very start,
notwithstanding the Ordinance imposing the Retailer's Tax, had no right to demand payment
thereof..
"If something is received when there is no right to demand it, and it was unduly delivered through
mistake, the obligationto retun it arises" (Art. 2154, NCC)..
Appelle categorically stated that the payment was not voluntarily made, (a fact found also by the
lower court),but on the erronoues belief, that they were due. Under this circumstance, the amount
paid, even without protest is recoverable. "If the payer was in doubt whether the debt was due, he
may recover if he proves that it was not due" (Art. 2156, NCC). Appellee had duly proved that taxes
were not lawfully due. There is, therefore, no doubt that the provisions of solutio indebtiti, the new
Civil Code, apply to the admitted facts of the case..
With all, appellant quoted Manresa as saying: "x x x De la misma opinion son el Sr. Sanchez Roman
y el Sr. Galcon, et cual afirma que si la paga se hizo por error de derecho, ni existe el cuasi-contrato
ni esta obligado a la restitucion el que cobro, aunque no se debiera lo que se pago" (Manresa, Tomo
12, paginas 611-612). This opinion, however, has already lost its persuasiveness, in view of the
provisions of the Civil Code, recognizing "error de derecho" as a basis for the quasi-contract, of
solutio indebiti. .

"Payment by reason of a mistake in the contruction or application of a doubtful or difficult question of


law may come within the scope of the preceding article" (Art. 21555)..
There is no gainsaying the fact that the payments made by appellee was due to a mistake in the
construction of a doubtful question of law. The reason underlying similar provisions, as applied to
illegal taxation, in the United States, is expressed in the case of Newport v. Ringo, 37 Ky. 635, 636;
10 S.W. 2, in the following manner:.
"It is too well settled in this state to need the citation of authority that if money be paid through a
clear mistake of law or fact, essentially affecting the rights of the parties, and which in law or
conscience was not payable, and should not be retained by the party receiving it, it may be
recovered. Both law and sound morality so dictate. Especially should this be the rule as to illegal
taxation. The taxpayer has no voice in the impositionof the burden. He has the right to presume that
the taxing power has been lawfully exercised. He should not be required to know more than those in
authority over him, nor should he suffer loss by complying with what he bona fide believe to be his
duty as a good citizen. Upon the contrary, he should be promoted to its ready performance by
refunding to him any legal exaction paid by him in ignorance of its illegality; and, certainly, in such a
case, if be subject to a penalty for nonpayment, his compliance under belief of its legality, and
without awaitinga resort to judicial proceedings should not be regrded in law as so far voluntary as to
affect his right of recovery.".
"Every person who through an act or performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal grounds, shall
return the same to him"(Art. 22, Civil Code). It would seems unedifying for the government, (here the
City of Manila), that knowing it has no right at all to collect or to receive money for alleged taxes paid
by mistake, it would be reluctant to return the same. No one should enrich itself unjustly at the
expense of another (Art. 2125, Civil Code)..
Admittedly, plaintiff-appellee paid the tax without protest.Equally admitted is the fact that section 76
of the Charter of Manila provides that "No court shall entertain any suit assailing the validity of tax
assessed under this article until the taxpayer shall have paid, under protest the taxes assessed
against him, xx". It should be noted, however, that the article referred to in said section is Article XXI,
entitled Department of Assessment and the sections thereunder manifestly show that said article and
its sections relate to asseessment, collection and recovery of real estate taxes only. Said section 76,
therefor, is not applicable to the case at bar, which relates to the recover of retail dealer taxes..
In the opinion of the Secretary of Justice (Op. 90,Series of 1957, in a question similar to the case at
bar, it was held that the requiredment of protest refers only to the payment of taxes which are directly
imposed by the charter itself, that is, real estate taxes, which view was sustained by judicial and
administrative precedents, one of which is the case of Medina, et al., v. City of Baguio, G.R. No. L4269, Aug. 29, 1952. In other words, protest is not necessary for the recovery of retail dealer's taxes,
like the present, because they are not directly imposed by the charter. In the Medina case, the
Charter of Baguio (Chap. 61, Revised Adm. Code), provides that "no court shall entertain any suit
assailing the validity of a tax assessed unde this charter until the tax-payer shall have paid, under
protest, the taxes assessed against him (sec.25474[b], Rev. Adm. Code), a proviso similar to section
76 of the Manila Charter. The refund of specific taxes paid under a void ordinance was ordered,
although it did not appear that payment thereof was made under protest..
In a recent case, We said: "The appellants argue that the sum the refund of which is sought by the
appellee, was not paid under protest and hence is not refundable. Again, the trial court correctly held
that being unauthorized, it is not a tax assessed under the Charter of the Appellant City of Davao
and for that reason, no protest is necessary for a claim or demand for its refund" (Citing the Medina

case, supra; East Asiatic Co., Ltd. v. City of Davao, G.R. No. L-16253, Aug. 21, 1962). Lastly, being
a case of solutio indebiti, protest is not required as a condition sine qua non for its application..
The next issue in discussion is that of prescription. Appellants maintain that article 1146 (NCC),
which provides for a period of four (4) years (upon injury to the rights of the plaintiff), apply to the
case. On the other hand, appellee contends that provisions of Act 190 (Code of Civ. Procedure)
should apply, insofar as payments made before the effectivity of the New Civil Code on August 30,
1950, the period of which is ten (10) years, (Sec. 40,Act No. 190; Osorio v. Tan Jongko, 51 O.G.
6211) and article 1145 (NCC), for payments made after said effectivity, providing for a period of six
(6) years (upon quasi-contracts like solutio indebiti). Even if the provisionsof Act No. 190 should
apply to those payments made before the effectivity of the new Civil Code, because "prescription
already runnig before the effectivity of this Code shall be governed by laws previously in force x x x"
(art. 1116, NCC), for payments made after said effectivity,providing for a period of six (6) years (upon
quasi-contracts like solutio indebiti). Even if the provisions of Act No. 190should apply to those
payments made before the effectivity of the new Civil Code, because "prescription already running
before the effectivity of of this Code shall be govern by laws previously in force xxx " (Art. 1116,
NCC), Still payments made before August 30, 1950 are no longer recoverable in view of the second
paragraph of said article (1116), which provides:"but if since the time this Code took effect the entire
period herein required for prescription should elapse the present Code shall be applicable even
though by the former laws a longer period might be required". Anent the payments made after
August 30, 1950, it is abvious that the action has prescribed with respect to those made before
October 30, 1950 only, considering the fact that the prescription of action is interrupted xxx when is a
writteen extra-judicial demand x x x" (Art. 1155, NCC), and the written demand in the case at bar
was made on October 30, 1956 (Stipulation of Facts).MODIFIED in the sense that only payments
made on or after October 30, 1950 should be refunded, the decision appealed from is affirmed, in all
other respects. No costs. .
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion,Dizon, Regala and Makalintal, JJ., concur.
Padilla, Reyes, J.B.L., and Barrera, JJ., too no part.
Decision affirmed.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-33171 May 31, 1979
PORFIRIO P. CINCO, petitioner-appellant,
vs.
HON. MATEO CANONOY, Presiding Judge of the Third Branch of the Court of First Instance
of Cebu, HON. LORENZO B. BARRIA City Judge of Mandaue City, Second Branch ROMEO
HILOT, VALERIANA PEPITO and CARLOS PEPITO, respondents-appellees.
Eriberto Seno for appellant.
Jose M. Mesina for appellees.

MELENCIO-HERRERA, J.:
This is a Petition for Review on certiorari of the Decision of the Court of First Instance of Cebu
rendered on November 5, 1970.
The background facts to the controversy may be set forth as follows:
Petitioner herein filed, on February 25, 1970, a Complaint in the City Court of Mandaue City, Cebu,
Branch II, for the recovery of damages on account of a vehicular accident involving his automobile
and a jeepney driven by Romeo Hilot and operated by Valeriana Pepito and Carlos Pepito, the last
three being the private respondents in this suit. Subsequent thereto, a criminal case was filed
against the driver, Romeo Hilot, arising from the same accident. At the pre-trial in the civil case,
counsel for private respondents moved to suspend the civil action pending the final determination of
the criminal suit, invoking Rule 111, Section 3 (b) of the Rules of Court, which provides:
(b) After a criminal action has been commenced. no civil action arising from the same
offense can be prosecuted, and the same shall be suspended, in whatever stage it
may be found, until final judgment in the criminal proceeding has been rendered;
The City Court of Mandaue City in an Order dated August 11, 1970, ordered the suspension of the
civil case. Petitioner's Motion for Reconsideration thereof, having been denied on August 25,
1970, 1 petitioner elevated the matter on certiorari to the Court of First Instance of Cebu, respondent
Judge presiding, on September 11, 1970, alleging that the City Judge had acted with grave abuse of
discretion in suspending the civil action for being contrary to law and jurisprudence. 2
On November 5, 1970, respondent Judge dismissed the Petition for certiorari on the ground that
there was no grave abuse of discretion on the part of the City Court in suspending the civil action
inasmuch as damage to property is not one of the instances when an independent civil action is
proper; that petitioner has another plain, speedy, and adequate remedy under the law, which is to
submit his claim for damages in the criminal case; that the resolution of the City Court is interlocutory
and, therefore, certiorari is improper; and that the Petition is defective inasmuch as what petitioner
actually desires is a Writ of mandamus (Annex "R"). Petitioner's Motion for Reconsideration was
denied by respondent Judge in an Order dated November 14,1970 (Annex "S" and Annex "U").
Hence, this Petition for Review before this Tribunal, to which we gave due course on February 25,
1971. 3
Petitioner makes these:
ASSIGNMENTS OF ERROR
1. THE TRIAL COURT, RESPONDENT JUDGE MATEO CANONOY, ERRED IN
HOLDING THAT THE TRIAL OF THE CIVIL CASE NO. 189 FILED IN THE CITY
COURT OF MANDAUE SHOULD BE SUSPENDED UNTIL AFTER A FINAL
JUDGMENT IS RENDERED IN THE CRIMINAL CASE.
2. THAT THE COURT ERRED IN HOLDING THAT IN ORDER TO AVOID DELAY
THE OFFENDED PARTY MAY SUBMIT HIS CLAIM FOR DAMAGES IN THE
CRIMINAL CASE.

3. THAT THE COURT ERRED IN HOLDING THAT THE PETITION FOR certiorari IS
NOT PROPER, BECAUSE THE RESOLUTION IN QUESTION IS
INTERLOCUTORY.
4. THAT THE COURT ERRED IN HOLDING THAT THE PETITION IS DEFECTIVE.

all of which can be synthesized into one decisive issue: whether or not there can be an independent
civil action for damage to property during the pendency of the criminal action.
From the Complaint filed by petitioner before the City Court of Mandaue City, Cebu, it is evident that
the nature and character of his action was quasi-delictual predicated principally on Articles 2176 and
2180 of the Civil Code, which provide:
Art. 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 caned a quasidelict and is governed by the provisions of this Chapter. (1902a)
Art. 2180. The obligation imposed by article 2176 is demandable not only for one's
own acts or omissions but also for those of persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages cause by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage. (1903a)
Thus, plaintiff made the essential averments that it was the fault or negligence of the driver, Romeo
Hilot, in the operation of the jeepney owned by the Pepitos which caused the collision between his
automobile and said jeepney; that damages were sustained by petitioner because of the collision;
that there was a direct causal connection between the damages he suffered and the fault and
negligence of private respondents.
Similarly, in the Answer, private respondents contended, among others, that defendant, Valeriana
Pepito, observed due diligence in the selection and supervision of her employees, particularly of her
co-defendant Romeo Hilot, a defense peculiar to actions based on quasi-delict. 5
Liability being predicated on quasi-delict the civil case may proceed as a separate and independent
civil action, as specifically provided for in Article 2177 of the Civil Code.
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal

Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant. (n)
The crucial distinction between criminal negligence and quasi-delict, which is readily
discernible from the foregoing codal provision, has been expounded in Barredo
vs. Garcia, et al., 73 Phil. 607, 620-621, 6 thus:
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also
simple imprudence. if we were to hold that articles 1902 to 1910 of the Civil Code
refer only to fault or negligence not punished by law, according to the literal import of
article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very
little scope and application in actual life. Death or injury to persons and damage to
property through any degree of negligence even the slightest would have to be
indemnified only through the principle of civil hability arising from crime. In such a
state of affairs, what sphere would remain for quasidelito or culpa aquiliana We are
loath to impute to the lawmaker any intention to bring about a situation so absurd and
anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the letter
that killeth rather than the spirit that giveth life. We will not use the literal meaning of
the law to smother and render almost lifeless a principle of such ancient origin and
such full-grown development as culpa aquiliana or quasi-delito, which is conserved
and made enduring in articles 1902 to 11910 of the Spanish Civil Code.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond
reasonable doubt is required, while in a civil case, preponderance of evidence is
sufficient to make the defendant pay in damages. There are numerous cases of
criminal negligence which cannot be shown beyond reasonable doubt, but can be
proved by a preponderance of evidence. In such cases, the defendant can and
should be made responsible in a civil action under articles 1902 to 1910 of the Civil
Code, otherwise, there would be many instances of unvindicated civil wrongs. Ubi jus
ibi remedium.
Thirdly, to hold that there is only one way to make defendants liability effective, and
that is, to sue the driver and exhaust his (the latter's) property first, would be
tantamount to compelling the plaintiff to follow a devious and cumbersome method of
obtaining a reliel True, there is such a remedy under our laws, but there is also a
more expeditious way, which is based on the primary and direct responsibility of the
defendant under article 1903 of the Civil Code. Our view of the law is more likely to
facilitate remedy for civil wrongs because the procedure indicated by the defendant is
wasteful and productive of delay, it being a matter of common knowledge that
professional drivers of taxis and similar public conveyances usually do not have
sufficient means with which to pay damages. Why, then, should the plaintiff be
required in all cases to go through this round-about, unnecessary, and probably
useless procedure? In construing the laws, courts have endeavored to shorten and
facilitate the pathways of right and justice.
At this juncture, it should be said that the primary and direct responsibility of
employers and their presumed negligence are principles calculated to protect society.
Workmen and employees should be carefully chosen and supervised in order to
avoid injury to the public. It is the masters or employers who principally reap the

profits resulting from the services of these servants and employees. It is but right that
they should guarantee the latter's careful conduct for the personnel and patrimonial
safety of others. As Theilhard has said, "they should reproach themselves, at least,
some for their weakness, others for their poor selection and all for their negligence."
And according to Manresa, "It is much more equitable and just that such
responsibility should fail upon the principal or director who could have chosen a
careful and prudent employee, and not upon the such employee because of his
confidence in the principal or director." (Vol. 12, p. 622, 2nd Ed.) Many jurists also
base this primary responsibility of the employer on the principle of representation of
the principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p.
747) that before third persons the employer and employee vienen a ser como una
sola personalidad, por refundicion de la del dependiente en la de quien la emplea y
utihza (become as one personality by the merging of the person of the employee in
that of him who employs and utilizes him.) All these observations acquire a peculiar
force and significance when it comes to motor accidents, and there is need of
stressing and accentuating the responsibility of owners of motor vehicles.
Fourthly, because of the broad sweep of the provisions of both the Penal Code and
the Civil Code on this subject, which has given rise to overlapping or concurrence of
spheres already discussed, and for lack of understanding of the character and
efficacy of the action for culpaaquiliana there has grown up a common practice to
seek damages only by virtue of the Civil responsibility arising from crime, forgetting
that there is another remedy, which is by invoking articles 1902-1910 of the Civil
Code. Although this habitual method is allowed by our laws, it has nevertheless
rendered practically useless and nugatory the more expeditious and effective remedy
based on culpa aquiliana or culpa extra-contractual. In the present case, we are
asked to help perpetuate this usual course. But we believe it is high time we pointed
out to the harm done by such practice and to restore the principle of responsibility for
fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is
high time we cause the stream of quasi-delict or culpa aquiliana to flow on its own
natural channel, so that its waters may no longer be diverted into that of a crime
under the Penal Code. This will, it is believed, make for the bet ter safeguarding of
private rights because it re-establishes an ancient and additional remedy, and for the
further reason that an independent civil action, not depending on the issues, stations
and results of a criminal prosecution, and entirely directed by the party wronged or
his counsel is more likely to secure adequate and efficacious redress. (Garcia vs.
Florida 52 SCRA 420, 424-425, Aug. 31, 1973). (Emphasis supplied)
The separate and independent civil action for a quasi-delict is also clearly recognized in section 2,
Rule 111 of the Rules of Court, reading:
Sec. 2. Independent civil action. In the cases provided for in Articles 31, 32, 33, 34
and 2177 of the Civil Code of the Philippines, Are independent civil action entirely
separate and distinct from the c action, may be brought by the injured party during
the pendency of the criminal case, provided the right is reserved as required in the
preceding section. Such civil action shag proceed independently of the criminal
prosecution, and shall require only a preponderance of evidence.

Significant to note is the fact that the foregoing section categorically lists cases provided for in Article
2177 of the Civil Code, supra, as allowing of an "independent civil action."
Tested by the hereinabove-quoted legal tenets, it has to be held that the City Court, in surrounding
the civil action, erred in placing reliance on section 3 (b) of Rule 111 of the Rules of
Court, supra which refers to "other civil actions arising from cases not included in the section just
cited" (i.e., Section 2, Rule 111 above quoted), in which case 6 once the criminal action has being
commenced, no civil action arising from the same offense can be prosecuted and the same shall be
suspended in whatever stage it may be found, until final judgment in the criminal proceeding has
been rendered." Stated otherwise, the civil action referred to in Secs. 3(a) and 3(b) of Rule 111 of the
Rules of Court, which should be suspended after the criminal action has been instituted is that
arising from the criminal offense not the civil action based on quasi-delict
Article 31 of the Civil Code then clearly assumes relevance when it provides:
Art. 31. When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed independently of
the criminal proceedings and regardless of the result of the latter.
For obviously, the jural concept of a quasi-delict is that of an independent source of obligation "not
arising from the act or omission complained of as a felony." Article 1157 of the Civil Code bolsters
this conclusion when it specifically recognizes that:
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)
(Emphasis supplied)
It bears emphasizing that petitioner's cause of action is based on quasi-delict. The concept of
quasidelica as enunciated in Article 2176 of the Civil Code (supra), is so broad that it includes not
only injuries to persons but also damage to property. 7 It makes no distinction between "damage to
persons" on the one hand and "damage to property" on the other. Indeed, the word "damage" is used in
two concepts: the "harm" done and "reparation" for the harm done. And with respect to harm it is plain
that it includes both injuries to person and property since "harm" is not limited to personal but also to
property injuries. In fact, examples of quasi-delict in the law itself include damage to property. An instance
is Article 2191(2) of the Civil Code which holds proprietors responsible for damages caused by excessive
smoke which may be harmful to persons or property."
In the light of the foregoing disquisition, we are constrained to hold that respondent Judge gravely
abused his discretion in upholding the Decision of the City Court of Mandaue City, Cebu, suspending

the civil action based on a quasi-delict until after the criminal case is finally terminated. Having
arrived at this conclusion, a discussion of the other errors assigned becomes unnecessary.
WHEREFORE, granting the Writ of certiorari prayed for, the Decision of the Court of First Instance of
Cebu sought to be reviewed is hereby set aside, and the City Court of Mandaue City, Cebu, Branch
11, is hereby ordered to proceed with the hearing of Civil Case No. 189 of that Court.
Without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez, Guerrero and De Castro, JJ., concur

SECOND DIVISION
[G.R. No. 124378. March 8, 2005]

NATIONAL POWER CORPORATION, petitioner, vs. THE HONORABLE


COURT OF APPEALS (Ninth Division), HADJI ABDUL CARIM
ABDULLAH, CARIS ABDULLAH, HADJI ALI LANGCO [1] and
DIAMAEL PANGCATAN, respondents.
DECISION
CHICO-NAZARIO, J.:

In this petition for review, petitioner seeks the reversal of the Decision [2] dated 21
December 1995 of the Court of Appeals in CA-G.R. CV No. 44639, which affirmed with
modification the Decision[3] dated 29 July 1991 of the Regional Trial Court (RTC),
12th Judicial Region, Branch 9, Marawi City, in Civil Case No. 115-87, for Damages. The
Resolution[4] dated 27 March 1996 that denied petitioners motion for reconsideration is
likewise assailed.
The factual milieu, as gleaned from the records, follows:
Petitioner National Power Corporation (NPC) is a government-owned and controlled
corporation created under Commonwealth Act No. 120, as amended. [5] It is tasked to
undertake the development of hydroelectric generations of power and the production of
electricity from nuclear, geothermal and other sources, as well as the transmission of
electric power on a nationwide basis. [6] Concomitant to its mandate, petitioner has,
among other things, the power to construct, operate and maintain power plants,
auxiliary plants, dams, reservoirs, pipes, mains, transmission lines, power stations, and
substations, and other works for the purpose of developing hydraulic power from any

river, creek, lake, spring, and waterfalls in the Philippines, and supplying such power to
the inhabitants.[7]
On 15 November 1973, the Office of the President of the Philippines issued
Memorandum Order No. 398 - Prescribing Measures to Preserve the Lake Lanao
Watershed, To Enforce the Reservation of Areas Around the Lake Below Seven
Hundred And Two Meters Elevation, and for Other Purposes. Said decree instructed the
NPC to build the Agus Regulation Dam at the mouth of Agus River in Lanao del Sur, at
a normal maximum water level of Lake Lanao at 702 meters elevation.[8] Pursuant
thereto, petitioner built and operated the said dam in 1978.
Private respondents Hadji Abdul Carim Abdullah and Caris Abdullah were owners of
fishponds in Barangay Bacong, Municipality of Marantao, Lanao del Sur, while private
respondents Hadji Ali Langco and Diamael Pangcatan had their fishponds built in
Poona-Marantao, also in the same province. All of these fishponds were sited along the
Lake Lanao shore. Private respondents have spent substantial amounts to construct,
maintain, and stock their respective fishponds with fish fingerlings, and make plantings
along the adjoining foreshore areas between 1984 and 1986. [9]
In October and November of 1986, all the improvements were washed away when
the water level of the lake escalated and the subject lakeshore area was flooded.
Private respondents blamed the inundation on the Agus Regulation Dam built and
operated by the NPC in 1978. They theorized that NPC failed to increase the outflow of
water even as the water level of the lake rose due to the heavy rains. [10]
Thus, in December of 1986, the private respondents, except for Caris Abdullah,
wrote separate letters to the NPCs Vice-President, a certain R.B. Santos, who was
based in Ditucalan, Iligan City. They sought assistance and compensation for the
damage suffered by each of them.[11] The private respondents pleas were shorn off by
NPC on the ground that it was mandated under Memorandum Order No. 398 dated 15
November 1973 to build the dam and maintain the normal maximum lake level of 702
meters, and that since its operation in 1978, the water level never rose beyond 702
meters. Furthermore, NPC retorted that visible monuments and benchmarks indicating
the 702-meter elevation had been established around the lake from 1974 to 1983, which
should have served as a warning to the private respondents not to introduce any
improvements below the 702-meter level as this was outlawed. [12]
Left with no other recourse, the private respondents filed a complaint for damages
before the RTC of Marawi City, Branch 9, on 24 February 1987, docketed as Civil Case
No. 115-87. They alleged that the negligence and inexperience of NPCs employees
assigned to operate the Agus Regulation Dam were the proximate causes of the
damage caused to their properties and livelihood. They prayed for damages
corresponding to the cost of their lost fishes plus the value of their destroyed fishpond

and the expenses and the fishes thereof. They, too, asked for reimbursement of
necessary expenses as may be proved in the trial, moral and exemplary damages, and
the costs.[13]
NPC denied the private respondents allegations, and tossed back the disputations
that: (a) the water level of Lake Lanao never went beyond 702 meters, (b) NPC
employees were never remiss in the performance of their duties, and (c) the private
respondents alleged fishponds were either located below the 702-meter level, or must
have been introduced when the water level was abnormally low and as such, were
within the prohibited area as defined in Memorandum Order No. 398. In fine, the NPC
posited that the private respondents had no cause of action against it. [14]
The trial court created a committee composed of representatives of both parties to
conduct an ocular inspection of the dam and its surrounding areas. On 29 July 1991,
the trial court rendered a Decision in favor of the private respondents. Thus, the trial
court disposed:
WHEREFORE, for all the foregoing consideration, judgment is hereby rendered in favor
of plaintiffs Hadji Abdul Carim Abdullah, Caris Abdullah, Hadji Langco and Diamael
Pangcatan and against defendant National Power Corporation directing said defendant
National Power Corporation to pay unto Plaintiff Hadji Abdul Carim Abdullah the sum
of P410,000.00 in actual or compensatory damages; to pay unto plaintiff Caris Abdullah
the sum of P208,000.00 in actual or compensatory damages; to pay unto plaintiff Hadji
Ali Langco or his substitutes Said Langco; Jalila Langco; Raga Langco; Namolawan
Langco; Alikan Langco; Dibolawan Langco; Binolawan Langco; Ismael Langco; Bokari
Langco; and Diamael Pangcatan the total sum of P260,000.00 in actual or
compensatory damages; and the further sum of P20,000.00 in litigation expenses and
the costs.[15]
Unflinched, the petitioner appealed to the Court of Appeals, which in a Decision
dated 21 December 1995, affirmed the decision of the court a quo with modification on
the award of damages, to wit:
WHEREFORE, for all the foregoing considerations, judgment is hereby
rendered in favor of plaintiffs Hadji Abdul Carim Abdullah, Caris Abdullah, Hadji
Langco and Diamael Pangcatan and against defendant National Power
Corporation directing said defendant National Power Corporation to pay unto
plaintiff Hadji Abdul Carim Abdullah the sum of P350,000.00; unto plaintiff Caris
Abdullah the sum of P150,000.00; unto plaintiff Hadji Ali Langcos heirs and
Diamael Pangcatan the sum of P210,000.00 as and for temperate or moderate
damages; as well as P20,000.00 as and for litigation expenses and costs.
Costs against appellant.[16]

The subsequent motion for reconsideration having been denied, petitioner


interposes this appeal, contending that the Court of Appeals seriously erred when it:
I. DISREGARDED THE MANDATE OF PRESIDENTIAL MEMORANDUM
ORDER NO. 398.
II. CONCLUDED THAT PETITIONER WAS NEGLIGENT IN APPLYING
PRESIDENTIAL MEMORANDUM ORDER NO. 398, DESPITE THE
CLEAR ABSENCE OF EVIDENCE OF SUCH ALLEGED NEGLIGENCE.
III. CONCLUDED THAT THE ADVERSE RESULT OF AN OCULAR
INSPECTION CONDUCTED BY THE TRIAL COURT AT A MUCH LATER
DATE AND DURING THE TRIAL COULD BE USED, AS IT DID, AS
PROOF OF THE ALLEGED FLOODING IN OCTOBER/NOVEMBER
1986.
IV. CONCLUDED AND SO HELD THAT PETITIONER ALLEGEDLY FAILED TO
PROVE THAT PRIVATE RESPONDENTS FISHPONDS WERE
SITUATED BELOW THE 702-METER ELEVATION OF THE LAKE.
V. AWARDED TEMPERATE AND MODERATE DAMAGES IN LIEU OF
ACTUAL AND COMPENSATORY DAMAGES, AT UNREASONABLE
AMOUNTS AT THAT, DESPITE THE CLEAR ABSENCE OF LEGAL AND
FACTUAL BASES FOR SUCH AWARD.[17]
Despite the manifold spin-off subjects raised, the pertinent issue worthy of
exploration at the core is whether or not the Court of Appeals erred in affirming the trial
courts verdict that petitioner was legally answerable for the damages endured by the
private respondents.
From the above-mentioned assignment of errors, petitioner palpably disputes the
findings of facts and the appreciation of evidence made by the trial court and later
affirmed by respondent court. It is apodictic that in a petition for review, only questions
of law may be raised[18] for the reason that the Supreme Court is not a trier of facts and
generally does not weigh anew the evidence already passed upon by the Court of
Appeals.[19] Corollarily, the factual findings of the Court of Appeals affirming those of the
trial court bind this Court when such findings are supported by substantial evidence. In
the case at hand, no reversible error could be attributed to the Court of Appeals in
espousing conclusions of facts similar to the trial court on petitioners liability for the
damages suffered by private respondents.[20]
Here are the reasons why:

Memorandum Order No. 398, also known as the law Prescribing Measures to
Preserve the Lake Lanao Watershed, To Enforce the Reservation of Areas Around the
Lake Below Seven Hundred And Two Meters Elevation, and for Other Purposes, clothes
the NPC with the power to build the Agus Regulation Dam and to operate it for the
purpose of generating energy. Twin to such power are the duties: (1) to maintain the
normal maximum lake elevation at 702 meters, and (2) to build benchmarks to
warn the inhabitants in the area that cultivation of land below said elevation is
forbidden. The wordings of the said presidential order cannot be any clearer on this
point. Thus
4. The National Power Corporation shall render financial assistance to
forest protection, tree farming, reforestation and other conservation
measures in coordination with private timber concessionaires and
the Bureau of Forest Development. With the assistance and
cooperation of provincial and municipal officials, as well as the
Provincial Commander of the Philippine Constabulary, NPC shall
place in every town around the lake, at the normal maximum lake
elevation of seven hundred and two meters, benchmarks
warning that cultivation of land below said elevation is
prohibited. (Emphasis supplied)
By the bulk of evidence, NPC ostensibly reneged on both duties.
With respect to its job to maintain the normal maximum level of the lake at 702
meters, the Court of Appeals, echoing the trial court, observed with alacrity that when
the water level rises due to the rainy season, the NPC ought to release more water to
the Agus River to avoid flooding and prevent the water from going over the maximum
level. And yet, petitioner failed to do so, resulting in the inundation of the nearby estates.
[21]
The facts, as unraveled by the trial court from the evidence on record, established
that before the construction of the Agus Regulation Dam across the Agus River just
beyond the Marawi City Bridge, no report of damages to landowners around the lake
was ever heard. After its construction and when it started functioning in 1978, reports
and complaints of damages sustained by landowners around the lake due to
overflooding became widespread. The factual findings of the trial court rightly support its
conclusions on this respect Lake Lanao has only one outlet, the Agus River which in effect is the
natural regulator. When the Lake level is high, more water leaves the
lakes towards the Agus River. Under such a natural course, overflooding is
remote because excess in water level of the lake, there is a corresponding
increase in the volume of water drain down towards the Agus River and
vice versa.

In order to achieve its goal of generating hydroelectric power, defendant


NPC constructed the Intake Regulation Dam, the purpose of which being
to control and regulate the amount of water discharged into the Agus
River. With this dam, defendant NPC is able to either increase or decrease
the volume of water discharged into the Agus River depending on the
amount of power to be generated. When the lake level rises, specially
during rainy days, it is indispensable to wide open the dam to allow more
water to flow to the Agus River to prevent overflowing of the lakeshore and
the land around it. But the NPC cannot allow the water to flow freely into
its outlet the Agus River, because it will adversely affect its hydroelectric
power plants. It has to hold back the water by its dam in order to maintain
the volume of water required to generate the power supply. As a
consequence of holding back the water, the lands around the lake are
inundated. This is even admitted by defendants witness Mama
Manongguiring. Consequently, in October, November and December of
1986 when the lake level increased, farmlands in the Basak area around
Lake Lanao and fishponds were inundated as a result of such holding
back of water by defendant NPC.[22] (Emphasis supplied)
Petitioner adduced in evidence its company records to bear out its claim that the
water level of the lake was, at no point in time, higher than 702 meters. The trial court
and the Court of Appeals, however, did not lend credence to this piece of evidence.
Both courts below held that the data contained in petitioners records collapse in the face
of the actual state of the affected areas. During the ocular inspection conducted by the
lower court where representatives of both parties were present, it was established that
in the subject areas, the benchmarks as pointed out by the NPC representative, could
not be seen nor reached because they were totally covered with water.[23] This fact,
by itself, constitutes an unyielding proof that the water level did rise above the
benchmarks and inundated the properties in the area.
In the absence of any clear explanation on what other factors could have explained
the flooding in the neighboring properties of the dam, it is fair to reasonably infer that the
incident happened because of want of care on the part of NPC to maintain the water
level of the dam within the benchmarks at the maximum normal lake elevation of 702
meters. An application of the doctrine of res ipsa loquitur, the thing speaks for itself,
comes to fore.[24] Where the thing which causes injury is shown to be under the
management of the defendant, and the accident is such as in the ordinary course of
things does not happen if those who have the management use proper care, it affords
reasonable evidence, in the absence of an explanation by the defendant, that the
accident arose from want of care. [25]
NPC further attempts to dodge its burden by turning the tables against private
respondents. Petitioner would entice this Court to believe that private respondents

brought the catastrophe upon themselves by constructing their fishponds below the
702-meter level in defiance of Memorandum Order No. 398. Yet, petitioner failed to
demonstrate that the subject fishponds were situated at an area below the 702-meter
level yardstick. Allegation is one thing; proof is another. Save for its bare claim, NPC
was unable to indicate the position of the fishponds vis--vis its benchmarks. But, how
can it do so when it cannot show its own benchmarks as they were submerged in
water?
This brings us to the second duty of NPC under Memorandum Order No. 398 - to
build and maintain benchmarks to warn the inhabitants in the area that cultivation of
land below the 702-meter elevation is forbidden.
Notably, despite the clear mandate of Memorandum Order No. 398, petitioners own
witness, Principal Hydrologist Mama Manongguiring, testified that although the dam
was built in 1978, the benchmarks were installed only in July and August of 1984
and that apparently, many had already worn-out, to be replaced only in October of
1986.[26] As adroitly observed by the Court of Appeals, it was only after many years from
the time it was built that NPC installed said benchmarks. At that time, many farms and
houses were already swamped and many fishponds, including those of the private
respondents, damaged. [27]
Consequently, even assuming that the fishponds were erected below the 702-meter
level, NPC must, nonetheless, bear the brunt for such damages inasmuch as it has the
duty to erect and maintain the benchmarks precisely to warn the owners of the
neighboring properties not to build fishponds below these marks. Such benchmarks,
likewise, serve the evidentiary purpose of extricating NPC from liability in cases of
overflooding in the neighboring estates because all NPC would have to do is point out
that such constructions are below the 702-meter allowable elevation. Without such
points of reference, the inhabitants in said areas are clueless whether or not their
improvements are within the prohibited area. Conversely, without such benchmarks,
NPC has no way of telling if the fishponds, subject matter of the present controversy,
are indeed below the prescribed maximum level of elevation.
NPC staunchly asserts that the damages, if any, were due to a fortuitous event.
Again, we cannot agree with petitioner. We defer instead to the findings and opinions
expressed by the Court of Appeals that NPC cannot escape liability on the mere excuse
that the rise of water was due to heavy rains that were acts of God. The rainy season is
an expected occurrence and the NPC cannot stop doing its duty when the rains fall. In
fact, it is during these critical times that the NPC needs to be vigilant to make sure that
the lake level does not exceed the maximum level. [28] Indeed, negligence or imprudence
is human factor which makes the whole occurrence humanized, as it were, and
removed from the rules applicable to acts of God.[29]

NPC further enthuses that the principle of damnum absque injuria, or damage
without injury, applies in the present case.
Again, we disagree. This principle means that although there was physical damage,
there was no legal injury, as there was no violation of a legal right. The negligence of
NPC as a result of its inability to maintain the level of water in its dams has been
satisfactorily and extensively established.
Article 2176 of the New Civil Code provides that 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. 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. [30]
In the case at bar, both the appellate court and the trial court uniformly found that it
was such negligence on the part of NPC which directly caused the damage to the
fishponds of private respondents. The degree of damages suffered by the latter remains
unrebutted and there exists adequate documentary evidence that the private
respondents did have fishponds in their respective locations and that these were
inundated and damaged when the water level escalated in October 1986. [31]
However, as observed by the Court of Appeals, while the private respondents claim
reimbursement for actual or compensatory damages, they failed to present independent
evidence to prove with a reasonable degree of certainty the actual amount of loss. The
private respondents could only testify as to the amounts they had spent to build and
stock their respective fishponds and as to the amount of earnings they would have
made had the fish been sold at current market prices. We find no reason to deflect from
the award of temperate or moderate damages by the Court of Appeals in reduced
amounts, but are reasonable under the circumstances conformably with Articles 2224
and 2225 of the New Civil Code.[32]
WHEREFORE, the instant petition is DENIED. The Decision dated 21 December
1995 and the Resolution dated 27 March 1996 of the Court of Appeals in CA-G.R. CV
No. 44639 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION
G.R. No. 71049 May 29, 1987
BERNARDINO JIMENEZ, petitioner,
vs.
CITY OF MANILA and INTERMEDIATE APPELLATE COURT, respondents.

PARAS, J.:
This is a petition for review on certiorari of: (1) the decision

* of the Intermediate Appellate Court in AC-G.R. No.


013887-CV Bernardino Jimenez v. Asiatic Integrated Corporation and City of Manila, reversing the decision ** of the Court of First Instance of
Manila, Branch XXII in Civil Case No. 96390 between the same parties, but only insofar as holding Asiatic Integrated Corporation solely liable
for damages and attorney's fees instead of making the City of Manila jointly and solidarily liable with it as prayed for by the petitioner and (2)
the resolution of the same Appellate Court denying his Partial Motion for Reconsideration (Rollo, p. 2).

The dispositive portion of the Intermediate Appellate Court's decision is as follows:


WHEREFORE, the decision appealed from is hereby REVERSED. A new one is
hereby entered ordering the defendant Asiatic Integrated Corporation to pay the
plaintiff P221.90 actual medical expenses, P900.00 for the amount paid for the
operation and management of a school bus, P20,000.00 as moral damages due to
pains, sufferings and sleepless nights and P l0,000.00 as attorney's fees.
SO ORDERED. (p. 20, Rollo)
The findings of respondent Appellate Court are as follows:
The evidence of the plaintiff (petitioner herein) shows that in the morning of August 15, 1974 he,
together with his neighbors, went to Sta. Ana public market to buy "bagoong" at the time when the
public market was flooded with ankle deep rainwater. After purchasing the "bagoong" he turned
around to return home but he stepped on an uncovered opening which could not be seen because of
the dirty rainwater, causing a dirty and rusty four- inch nail, stuck inside the uncovered opening, to
pierce the left leg of plaintiff-petitioner penetrating to a depth of about one and a half inches. After
administering first aid treatment at a nearby drugstore, his companions helped him hobble home. He
felt ill and developed fever and he had to be carried to Dr. Juanita Mascardo. Despite the medicine
administered to him by the latter, his left leg swelled with great pain. He was then rushed to the
Veterans Memorial Hospital where he had to be confined for twenty (20) days due to high fever and
severe pain.
Upon his discharge from the hospital, he had to walk around with crutches for fifteen (15) days. His
injury prevented him from attending to the school buses he is operating. As a result, he had to
engage the services of one Bienvenido Valdez to supervise his business for an aggregate
compensation of nine hundred pesos (P900.00). (Decision, AC-G.R. CV No. 01387, Rollo, pp. 1320).

Petitioner sued for damages the City of Manila and the Asiatic Integrated Corporation under whose
administration the Sta. Ana Public Market had been placed by virtue of a Management and
Operating Contract (Rollo, p. 47).
The lower court decided in favor of respondents, the dispositive portion of the decision reading:
WHEREFORE, judgment is hereby rendered in favor of the defendants and against
the plaintiff dismissing the complaint with costs against the plaintiff. For lack of
sufficient evidence, the counterclaims of the defendants are likewise dismissed.
(Decision, Civil Case No. 96390, Rollo, p. 42).
As above stated, on appeal, the Intermediate Appellate Court held the Asiatic Integrated Corporation
liable for damages but absolved respondent City of Manila.
Hence this petition.
The lone assignment of error raised in this petition is on whether or not the Intermediate Appellate
Court erred in not ruling that respondent City of Manila should be jointly and severally liable with
Asiatic Integrated Corporation for the injuries petitioner suffered.
In compliance with the resolution of July 1, 1985 of the First Division of this Court (Rollo, p. 29)
respondent City of Manila filed its comment on August 13, 1985 (Rollo, p. 34) while petitioner filed its
reply on August 21, 1985 (Reno, p. 51).
Thereafter, the Court in the resolution of September 11, 1985 (Rollo, p. 62) gave due course to the
petition and required both parties to submit simultaneous memoranda
Petitioner filed his memorandum on October 1, 1985 (Rollo, p. 65) while respondent filed its
memorandum on October 24, 1985 (Rollo, p. 82).
In the resolution of October 13, 1986, this case was transferred to the Second Division of this Court,
the same having been assigned to a member of said Division (Rollo, p. 92).
The petition is impressed with merit.
As correctly found by the Intermediate Appellate Court, there is no doubt that the plaintiff suffered
injuries when he fell into a drainage opening without any cover in the Sta. Ana Public Market.
Defendants do not deny that plaintiff was in fact injured although the Asiatic Integrated Corporation
tries to minimize the extent of the injuries, claiming that it was only a small puncture and that as a
war veteran, plaintiff's hospitalization at the War Veteran's Hospital was free. (Decision, AC-G.R. CV
No. 01387, Rollo, p. 6).
Respondent City of Manila maintains that it cannot be held liable for the injuries sustained by the
petitioner because under the Management and Operating Contract, Asiatic Integrated Corporation
assumed all responsibility for damages which may be suffered by third persons for any cause
attributable to it.

It has also been argued that the City of Manila cannot be held liable under Article 1, Section 4 of
Republic Act No. 409 as amended (Revised Charter of Manila) which provides:
The City shall not be liable or held for damages or injuries to persons or property
arising from the failure of the Mayor, the Municipal Board, or any other City Officer, to
enforce the provisions of this chapter, or any other law or ordinance, or from
negligence of said Mayor, Municipal Board, or any other officers while enforcing or
attempting to enforce said provisions.
This issue has been laid to rest in the case of City of Manila v. Teotico (22 SCRA 269-272 [1968])
where the Supreme Court squarely ruled that Republic Act No. 409 establishes a general rule
regulating the liability of the City of Manila for "damages or injury to persons or property arising from
the failure of city officers" to enforce the provisions of said Act, "or any other law or ordinance or from
negligence" of the City "Mayor, Municipal Board, or other officers while enforcing or attempting to
enforce said provisions."
Upon the other hand, Article 2189 of the Civil Code of the Philippines which provides that:
Provinces, cities and municipalities shall be liable for damages for the death of, or
injuries suffered by any person by reason of defective conditions of roads, streets,
bridges, public buildings and other public works under their control or supervision.
constitutes a particular prescription making "provinces, cities and municipalities ... liable for damages
for the death of, or injury suffered by any person by reason" specifically "of the defective
condition of roads, streets, bridges, public buildings, and other public works under their control or
supervision." In other words, Art. 1, sec. 4, R.A. No. 409 refers to liability arising from negligence, in
general, regardless of the object, thereof, while Article 2189 of the Civil Code governs liability due to
"defective streets, public buildings and other public works" in particular and is therefore decisive on
this specific case.
In the same suit, the Supreme Court clarified further that under Article 2189 of the Civil Code, it is
not necessary for the liability therein established to attach, that the defective public works belong to
the province, city or municipality from which responsibility is exacted. What said article requires is
that the province, city or municipality has either "control or supervision" over the public building in
question.
In the case at bar, there is no question that the Sta. Ana Public Market, despite the Management and
Operating Contract between respondent City and Asiatic Integrated Corporation remained under the
control of the former.
For one thing, said contract is explicit in this regard, when it provides:
II
That immediately after the execution of this contract, the SECOND PARTY shall start
the painting, cleaning, sanitizing and repair of the public markets and talipapas and
within ninety (90) days thereof, the SECOND PARTY shall submit a program of
improvement, development, rehabilitation and reconstruction of the city public
markets and talipapas subject to prior approval of the FIRST PARTY. (Rollo, p. 44)

xxx xxx xxx


VI
That all present personnel of the City public markets and talipapas shall be retained
by the SECOND PARTY as long as their services remain satisfactory and they shall
be extended the same rights and privileges as heretofore enjoyed by them. Provided,
however, that the SECOND PARTY shall have the right, subject to prior approval of
the FIRST PARTY to discharge any of the present employees for cause. (Rollo, p.
45).
VII
That the SECOND PARTY may from time to time be required by the FIRST PARTY,
or his duly authorized representative or representatives, to report, on the activities
and operation of the City public markets and talipapas and the facilities and
conveniences installed therein, particularly as to their cost of construction, operation
and maintenance in connection with the stipulations contained in this Contract. (lbid)
The fact of supervision and control of the City over subject public market was admitted by Mayor
Ramon Bagatsing in his letter to Secretary of Finance Cesar Virata which reads:
These cases arose from the controversy over the Management and Operating
Contract entered into on December 28, 1972 by and between the City of Manila and
the Asiatic Integrated Corporation, whereby in consideration of a fixed service fee,
the City hired the services of the said corporation to undertake the physical
management, maintenance, rehabilitation and development of the City's public
markets and' Talipapas' subject to the control and supervision of the City.
xxx xxx xxx
It is believed that there is nothing incongruous in the exercise of these powers vis-avis the existence of the contract, inasmuch as the City retains the power of
supervision and control over its public markets and talipapas under the terms of the
contract. (Exhibit "7-A") (Emphasis supplied.) (Rollo, p. 75).
In fact, the City of Manila employed a market master for the Sta. Ana Public Market whose primary
duty is to take direct supervision and control of that particular market, more specifically, to check the
safety of the place for the public.
Thus the Asst. Chief of the Market Division and Deputy Market Administrator of the City of Manila
testified as follows:
Court This market master is an employee of the City of Manila?
Mr. Ymson Yes, Your Honor.
Q What are his functions?

A Direct supervision and control over the market area assigned to


him."(T.s.n.,pp. 41-42, Hearing of May 20, 1977.)
xxx xxx xxx
Court As far as you know there is or is there any specific employee
assigned with the task of seeing to it that the Sta. Ana Market is safe
for the public?
Mr. Ymson Actually, as I stated, Your Honor, that the Sta. Ana has its
own market master. The primary duty of that market master is to
make the direct supervision and control of that particular market, the
check or verifying whether the place is safe for public safety is vested
in the market master. (T.s.n., pp. 2425, Hearing of July 27, 1977.)
(Emphasis supplied.) (Rollo, p. 76).
Finally, Section 30 (g) of the Local Tax Code as amended, provides:
The treasurer shall exercise direct and immediate supervision administration and
control over public markets and the personnel thereof, including those whose duties
concern the maintenance and upkeep of the market and ordinances and other
pertinent rules and regulations. (Emphasis supplied.) (Rollo, p. 76)
The contention of respondent City of Manila that petitioner should not have ventured to go to Sta.
Ana Public Market during a stormy weather is indeed untenable. As observed by respondent Court
of Appeals, it is an error for the trial court to attribute the negligence to herein petitioner. More
specifically stated, the findings of appellate court are as follows:
... The trial court even chastised the plaintiff for going to market on a rainy day just to
buy bagoong. A customer in a store has the right to assume that the owner will
comply with his duty to keep the premises safe for customers. If he ventures to the
store on the basis of such assumption and is injured because the owner did not
comply with his duty, no negligence can be imputed to the customer. (Decision, ACG. R. CV No. 01387, Rollo, p. 19).
As a defense against liability on the basis of a quasi-delict, one must have exercised the diligence of
a good father of a family. (Art. 1173 of the Civil Code).
There is no argument that it is the duty of the City of Manila to exercise reasonable care to keep the
public market reasonably safe for people frequenting the place for their marketing needs.
While it may be conceded that the fulfillment of such duties is extremely difficult during storms and
floods, it must however, be admitted that ordinary precautions could have been taken during good
weather to minimize the dangers to life and limb under those difficult circumstances.
For instance, the drainage hole could have been placed under the stalls instead of on the passage
ways. Even more important is the fact, that the City should have seen to it that the openings were
covered. Sadly, the evidence indicates that long before petitioner fell into the opening, it was already

uncovered, and five (5) months after the incident happened, the opening was still uncovered. (Rollo,
pp. 57; 59). Moreover, while there are findings that during floods the vendors remove the iron grills to
hasten the flow of water (Decision, AC-G.R. CV No. 0 1387; Rollo, p. 17), there is no showing that
such practice has ever been prohibited, much less penalized by the City of Manila. Neither was it
shown that any sign had been placed thereabouts to warn passersby of the impending danger.
To recapitulate, it appears evident that the City of Manila is likewise liable for damages under Article
2189 of the Civil Code, respondent City having retained control and supervision over the Sta. Ana
Public Market and as tort-feasor under Article 2176 of the Civil Code on quasi-delicts
Petitioner had the right to assume that there were no openings in the middle of the passageways
and if any, that they were adequately covered. Had the opening been covered, petitioner could not
have fallen into it. Thus the negligence of the City of Manila is the proximate cause of the injury
suffered, the City is therefore liable for the injury suffered by the peti- 4 petitioner.
Respondent City of Manila and Asiatic Integrated Corporation being joint tort-feasors are solidarily
liable under Article 2194 of the Civil Code.
PREMISES CONSIDERED, the decision of the Court of Appeals is hereby MODIFIED, making the
City of Manila and the Asiatic Integrated Corporation solidarily liable to pay the plaintiff P221.90
actual medical expenses, P900.00 for the amount paid for the operation and management of the
school bus, P20,000.00 as moral damages due to pain, sufferings and sleepless nights and
P10,000.00 as attorney's fees.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC

G.R. No. L-25494 June 14, 1972


NICOLAS SANCHEZ, plaintiff-appellee,
vs.
SEVERINA RIGOS, defendant-appellant.
Santiago F. Bautista for plaintiff-appellee.
Jesus G. Villamar for defendant-appellant.

CONCEPCION, C.J.:p
Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of Appeals, which
certified the case to Us, upon the ground that it involves a question purely of law.
The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos
executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and
committed ... to sell" to Sanchez the sum of P1,510.00, a parcel of land situated in the barrios of
Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described
in Transfer Certificate of Title No. NT-12528 of said province, within two (2) years from said date with
the understanding that said option shall be deemed "terminated and elapsed," if "Sanchez shall fail
to exercise his right to buy the property" within the stipulated period. Inasmuch as several tenders of
payment of the sum of Pl,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos,
on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija
and commenced against the latter the present action, for specific performance and damages.
After the filing of defendant's answer admitting some allegations of the complaint, denying other
allegations thereof, and alleging, as special defense, that the contract between the parties "is a
unilateral promise to sell, and the same being unsupported by any valuable consideration, by force
of the New Civil Code, is null and void" on February 11, 1964, both parties, assisted by their
respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on February 28,
1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum
judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs.
Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and other costs. Hence, this
appeal by Mrs. Rigos.
This case admittedly hinges on the proper application of Article 1479 of our Civil Code, which
provides:
ART. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor if the promise is supported by a consideration distinct
from the price.
In his complaint, plaintiff alleges that, by virtue of the option under consideration, "defendant agreed
and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the
option, copy of which was annexed to said pleading as Annex A thereof and is quoted on the
margin. 1 Hence, plaintiff maintains that the promise contained in the contract is "reciprocally
demandable," pursuant to the first paragraph of said Article 1479. Although defendant had really "agreed,
promised and committed" herself to sell the land to the plaintiff, it is not true that the latter had, in turn,
"agreed and committed himself " to buy said property. Said Annex A does not bear out plaintiff's allegation
to this effect. What is more, since Annex A has been made "an integral part" of his complaint, the
provisions of said instrument form part "and parcel" 2 of said pleading.

The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A
is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy. And both parties so
understood it, as indicated by the caption, "Option to Purchase," given by them to said instrument.
Under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the
land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate
that her aforementioned agreement, promise and undertaking is supported by a consideration
"distinct from the price" stipulated for the sale of the land.
Relying upon Article 1354 of our Civil Code, the lower court presumed the existence of said
consideration, and this would seem to be the main factor that influenced its decision in plaintiff's
favor. It should be noted, however, that:
(1) Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers
to "sales" in particular, and, more specifically, to "an accepted unilateral promise to buy or to sell." In
other words, Article 1479 is controlling in the case at bar.
(2) In order that said unilateral promise may be "binding upon the promisor, Article 1479 requires the
concurrence of a condition, namely, that the promise be "supported by a consideration distinct from
the price." Accordingly, the promisee can not compel the promisor to comply with the promise,
unless the former establishes the existence of said distinct consideration. In other words,
the promisee has the burden of proving such consideration. Plaintiff herein has not even alleged the
existence thereof in his complaint.
(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a special
defense, the absence of said consideration for her promise to sell and, by joining in the petition for a
judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment in defendant's
answer. Indeed as early as March 14, 1908, it had been held, in Bauermann v. Casas, 3 that:
One who prays for judgment on the pleadings without offering proof as to the truth of
his own allegations, and without giving the opposing party an opportunity to introduce
evidence, must be understood to admit the truth of all the material and relevant
allegations of the opposing party, and to rest his motion for judgment on those
allegations taken together with such of his own as are admitted in the pleadings. (La
Yebana Company vs. Sevilla, 9 Phil. 210). (Emphasis supplied.)
This view was reiterated in Evangelista v. De la Rosa 4 and Mercy's Incorporated v. Herminia Verde. 5
Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 6 from which
We quote:
The main contention of appellant is that the option granted to appellee to sell to it
barge No. 10 for the sum of P30,000 under the terms stated above has no legal
effect because it is not supported by any consideration and in support thereof it
invokes article 1479 of the new Civil Code. The article provides:
"ART. 1479. A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a


price certain is binding upon the promisor if the promise is supported
by a consideration distinct from the price."
On the other hand, Appellee contends that, even granting that the "offer of option" is
not supported by any consideration, that option became binding on appellant when
the appellee gave notice to it of its acceptance, and that having accepted it within the
period of option, the offer can no longer be withdrawn and in any event such
withdrawal is ineffective. In support this contention, appellee invokes article 1324 of
the Civil Code which provides:
"ART. 1324. When the offerer has allowed the offeree a certain period
to accept, the offer may be withdrawn any time before acceptance by
communicating such withdrawal, except when the option is founded
upon consideration as something paid or promised."
There is no question that under article 1479 of the new Civil Code "an option to sell,"
or "a promise to buy or to sell," as used in said article, to be valid must be "supported
by a consideration distinct from the price." This is clearly inferred from the context of
said article that a unilateral promise to buy or to sell, even if accepted, is only binding
if supported by consideration. In other words, "an accepted unilateral promise can
only have a binding effect if supported by a consideration which means that the
option can still be withdrawn, even if accepted, if the same is not supported by any
consideration. It is not disputed that the option is without consideration. It can
therefore be withdrawn notwithstanding the acceptance of it by appellee.
It is true that under article 1324 of the new Civil Code, the general rule regarding
offer and acceptance is that, when the offerer gives to the offeree a certain period to
accept, "the offer may be withdrawn at any time before acceptance" except when the
option is founded upon consideration, but this general rule must be interpreted
as modified by the provision of article 1479 above referred to, which applies to "a
promise to buy and sell" specifically. As already stated, this rule requires that a
promise to sell to be valid must be supported by a consideration distinct from the
price.
We are not oblivious of the existence of American authorities which hold that an offer,
once accepted, cannot be withdrawn, regardless of whether it is supported or not by
a consideration (12 Am. Jur. 528). These authorities, we note, uphold the general
rule applicable to offer and acceptance as contained in our new Civil Code. But we
are prevented from applying them in view of the specific provision embodied in article
1479. While under the "offer of option" in question appellant has assumed a clear
obligation to sell its barge to appellee and the option has been exercised in
accordance with its terms, and there appears to be no valid or justifiable reason for
appellant to withdraw its offer, this Court cannot adopt a different attitude because
the law on the matter is clear. Our imperative duty is to apply it unless modified by
Congress.
However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, 8 decided later
that Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 9 saw no distinction between

Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral promise to sell similar
to the one sued upon here was involved, treating such promise as an option which, although not binding
as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of
purchase and sale upon acceptance. Speaking through Associate Justice, later Chief Justice, Cesar
Bengzon, this Court said:

Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the
offeree should decide to exercise his option within the specified time. After accepting
the promise and before he exercises his option, the holder of the option is not bound
to buy. He is free either to buy or not to buy later. In this case, however, upon
accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and
the respondent ipso facto assumed the obligation of a purchaser. He did not just get
the right subsequently to buy or not to buy. It was not a mere option then; it was a
bilateral contract of sale.
Lastly, even supposing that Exh. A granted an option which is not binding for lack of
consideration, the authorities hold that:
"If the option is given without a consideration, it is a mere offer of a
contract of sale, which is not binding until accepted. If, however,
acceptance is made before a withdrawal, it constitutes a binding
contract of sale, even though the option was not supported by a
sufficient consideration. ... . (77 Corpus Juris Secundum, p. 652. See
also 27 Ruling Case Law 339 and cases cited.)
"It can be taken for granted, as contended by the defendant, that the
option contract was not valid for lack of consideration. But it was, at
least, an offer to sell, which was accepted by letter, and of the
acceptance the offerer had knowledge before said offer was
withdrawn. The concurrence of both acts the offer and the
acceptance could at all events have generated a contract, if none
there was before (arts. 1254 and 1262 of the Civil Code)." (Zayco vs.
Serra, 44 Phil. 331.)
In other words, since there may be no valid contract without a cause or consideration, the promisor
is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his
accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a
perfected contract of sale.
This view has the advantage of avoiding a conflict between Articles 1324 on the general principles
on contracts and 1479 on sales of the Civil Code, in line with the cardinal rule of statutory
construction that, in construing different provisions of one and the same law or code, such
interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict
between the same. Indeed, the presumption is that, in the process of drafting the Code, its author
has maintained a consistent philosophy or position. Moreover, the decision in Southwestern Sugar &
Molasses Co. v. Atlantic Gulf & Pacific Co., 10 holding that Art. 1324 is modified by Art. 1479 of the Civil
Code, in effect, considers the latter as an exception to the former, and exceptions are not favored, unless
the intention to the contrary is clear, and it is not so, insofar as said two (2) articles are concerned. What
is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or promise

supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to
enforce or implement the same principle.

Upon mature deliberation, the Court is of the considered opinion that it should, as it hereby reiterates
the doctrine laid down in the Atkins, Kroll & Co. case, and that, insofar as inconsistent therewith, the
view adhered to in the Southwestern Sugar & Molasses Co. case should be deemed abandoned or
modified.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendantappellant Severina Rigos. It is so ordered.
Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo and Makasiar, JJ., concur.
Castro, J., took no part.

Separate Opinions

ANTONIO, J., concurring:


I concur in the opinion of the Chief Justice.
I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar &
Molasses Co. vs. Atlantic Gulf and Pacific Co., 1 which holds that an option to sell can still be
withdrawn, even if accepted, if the same is not supported by any consideration, and the reaffirmance of
the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, 2holding that "an option implies ... the
legal obligation to keep the offer (to sell) open for the time specified;" that it could be withdrawn before
acceptance, if there was no consideration for the option, but once the "offer to sell" is accepted, a bilateral
promise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser. In
other words, if the option is given without a consideration, it is a mere offer to sell, which is not binding
until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of
sale. The concurrence of both acts the offer and the acceptance could in such event generate a
contract.
While the law permits the offeror to withdraw the offer at any time before acceptance even before the
period has expired, some writers hold the view, that the offeror can not exercise this right in an
arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the
part of the offeror to maintain in such length of time as to permit the offeree to decide whether to
accept or not, and therefore cannot arbitrarily revoke the offer without being liable for damages
which the offeree may suffer. A contrary view would remove the stability and security of business
transactions. 3
In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of
Pl,510.00 before any withdrawal from the contract has been made by the Defendant (Severina

Rigos)." Since Rigos' offer sell was accepted by Sanchez, before she could withdraw her offer, a
bilateral reciprocal contract to sell and to buy was generated.

Separate Opinions
ANTONIO, J., concurring:
I concur in the opinion of the Chief Justice.
I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar &
Molasses Co. vs. Atlantic Gulf and Pacific Co., 1 which holds that an option to sell can still be
withdrawn, even if accepted, if the same is not supported by any consideration, and the reaffirmance of
the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, 2holding that "an option implies ... the
legal obligation to keep the offer (to sell) open for the time specified;" that it could be withdrawn before
acceptance, if there was no consideration for the option, but once the "offer to sell" is accepted, a bilateral
promise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser. In
other words, if the option is given without a consideration, it is a mere offer to sell, which is not binding
until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of
sale. The concurrence of both acts the offer and the acceptance could in such event generate a
contract.
While the law permits the offeror to withdraw the offer at any time before acceptance even before the
period has expired, some writers hold the view, that the offeror can not exercise this right in an
arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the
part of the offeror to maintain in such length of time as to permit the offeree to decide whether to
accept or not, and therefore cannot arbitrarily revoke the offer without being liable for damages
which the offeree may suffer. A contrary view would remove the stability and security of business
transactions. 3
In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of
Pl,510.00 before any withdrawal from the contract has been made by the Defendant (Severina
Rigos)." Since Rigos' offer sell was accepted by Sanchez, before she could withdraw her offer, a
bilateral reciprocal contract to sell and to buy was generated.