1.3.

Attractive Nuisance

VELASCO vs. MERALCO

VELASCO vs. MANILA ELECTRIC CO

FACTS:

Velasco bought three (3) adjoining lots. He sold two (2) of these to
Meralco and maintained the last one as his residence. Meralco
constructed on their lots a sub-station at a distance of 10-20 meters
away from appellant’s house. The company also built a concrete wall
at the sides along the streets but put up only an interlink wire fence
(previously a sawali wall) on the boundary with appellant. An
unceasing sound emanates from the substation, caused by
transformers. Such, appellent contends, constitute a nuisance which
has worsened his health condition and has lowered the value of his
property. Several witnesses came forth but their testimonies were vague
and imprecise. Resort was made to a sound level meter. The audible sound
from different areas in Velaso’s property was measured in terms of decibels.
It was found that the sound exceeded the average intensity levels of
residences.

ISSUE: Can there be a nuisance caused by noise or sound?

HELD:

Yes. Several American decisions are cited showing that noise is an

actionable nuisance. In fact, Kentucky v. Anderson dealt with noise
emanating from electrical machinery and appliances. The determining
factor, however, is not just intensity or volume. It must be of such
character as to produce actual physical discomfort and annoyance to
a person of ordinary sensibilities.

However, appellant’s testimony is too plainly biased. Nor are the

witnesses’ testimonies revealing on account of different perceptions.
Consequently, sound level meters were used. As stated above, the sound
exceeds average residential decibels. Also, the testimonies of
appellant’s physicians (which were more reliable since they actually
treated him, unlike the appellee’s) point to the noise as having
caused appellant loss of sleep, irritation and tension weakening his
constitution. Notable lastly is the fact that in the Kentucky case, where the
nuisance was ordered abated, the average reading was 44 decibels while in
the instant, the readings include 52, 54, and 55. The decision goes on to
discuss the proper award of damages. But Meralco was ordered either to
transfer the facilities or reduce the produced sound to around. Therefore,
noise may constitute a nuisance but it must be of such character as
to produce actual physical discomfort and annoyance to a person of
ordinary sensibilities.

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 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.

CITY OF MANILA vs. GARCIA

CITY OF MANILA, plaintiff-appellee,

vs.
GERARDO GARCIA, ET AL., defendants-appellant.
GR L-26053 (1967)

FACTS:
 Plaintiff is the owner of certain parcels of land. Without the
knowledge and consent of plaintiff, defendants occupied the
property and built their houses.
 Having discovered, plaintiff through its mayor gave each
defendant written permits labeled as “lease contract” to occupy
specific areas. Defendants were charged nominal rentals for
their occupancy.
 After sometime, plaintiff, through its treasurer, demanded
payment of their rentals and vacate the premises for the
Epifanio de los Santos Elementary School’s expansion.
 Despite the demand, defendants refused to vacate the said
property. Hence, this case was filed for recovery of possession.

 Lower court:
- ruled in favor of plaintiff taking judicial notice of Ordinance 4566 –
appropriating P100k for the construction of additional building of
Epifanio De Los Santos Elementary School

 Defendants appealed.

ISSUE:
Whether the subject houses and constructions constitute nuisance
for school purposes

HELD:
Yes.

As public nuisance per se, they clearly hinder and impair the use of
that property for a badly needed school building – to the prejudice of
the education of the youth of the land. They shackle the hands of the
government and thus obstruct performance of its constitutionally ordained
obligation to establish and maintain a complete and adequate system of
public education, and more, to "provide at least free public primary
instruction".

The judgment below directed defendants to vacate the premises; to pay the amounts heretofore
indicated opposite their respective names; and to pay their monthly rentals from March, 1962, until
they vacate the said premises, and the costs. Defendants appealed.
1. We are called upon to rule on the forefront question of whether the trial court properly
found that the city needs the premises for school purposes.

The city's evidence on this point is Exhibit E, the certification of the Chairman, Committee on
Appropriations of the Municipal Board. That document recites that the amount of
P100,000.00 had been set aside in Ordinance 4566, the 1962-1963 Manila City Budget, for
the construction of an additional building of the Epifanio de los Santos Elementary School. It
is indeed correct to say that the court below, at the hearing, ruled out the admissibility of said
document. But then, in the decision under review, the trial judge obviously revised his views.
He there declared that there was need for defendants to vacate the premises for school
expansion; he cited the very document, Exhibit E, aforesaid.

It is beyond debate that a court of justice may alter its ruling while the case is within its
power, to make it conformable to law and justice.3 Such was done here. Defendants' remedy
was to bring to the attention of the court its contradictory stance. Not having done so, this
Court will not reopen the case solely for this purpose. 4

Anyway, elimination of the certification, Exhibit E, as evidence, would not profit defendants.
For, in reversing his stand, the trial judge could well have taken — because the was duty
bound to take — judicial notice5 of Ordinance 4566. The reason being that the city charter of
Manila requires all courts sitting therein to take judicial notice of all ordinances passed by the
municipal board of Manila.6 And, Ordinance 4566 itself confirms the certification aforesaid
that an appropriation of P100,000.00 was set aside for the "construction of additional
building" of the Epifanio de los Santos Elementary School.

Furthermore, defendants' position is vulnerable to assault from a third direction. Defendants

have absolutely no right to remain in the premises. The excuse that they have permits from
the mayor is at best flimsy. The permits to occupy are recoverable on thirty days' notice.
They have been asked to leave; they refused to heed. It is in this factual background that we
say that the city's need for the premises is unimportant. The city's right to throw defendants
out of the area cannot be gainsaid. The city's dominical right to possession is paramount. If
error there was in the finding that the city needs the land, such error is harmless and will not
justify reversal of the judgment below.7

2. But defendants insist that they have acquired the legal status of tenants. They are wrong.

They entered the land, built houses of second-class materials thereon without the knowledge
and consent of the city. Their homes were erected without city permits.

These constructions are illegal. In a language familiar to all, defendants are squatters:

Since the last global war, squatting on another's property in this country has become a
widespread vice. It was and is a blight. Squatters' areas pose problems of health, sanitation.
They are breeding places for crime. They constitute proof that respect for the law and the
rights of others, even those of the government, are being flouted. Knowingly, squatters have
embarked on the pernicious act of occupying property whenever and wherever convenient to
their interests — without as much as leave, and even against the will, of the owner. They are
emboldened seemingly because of their belief that they could violate the law with impunity.
The pugnaciousness of some of them has tied up the hands of legitimate owners. The latter
are thus prevented from recovering possession by peaceful means. Government lands have
not been spared by them. They know, of course, that intrusion into property, government or
private, is wrong. But, then, the mills of justice grind slow, mainly because of lawyers who, by
means, fair or foul, are quite often successful in procuring delay of the day of reckoning.
Rampancy of forcible entry into government lands particularly, is abetted by the apathy of
some public officials to enforce the government's rights. Obstinacy of these squatters is
difficult to explain unless it is spawned by official tolerance, if not outright encouragement or
protection. Said squatters have become insensible to the difference between right and
wrong. To them, violation of law means nothing. With the result that squatting still exists,
much to the detriment of public interest. It is high time that, in this aspect, sanity and the rule
of law be restored. It is in this environment that we look into the validity of the permits
granted defendants herein.

These permits, erroneously labeled "lease" contracts, were issued by the mayors in 1947
and 1948 when the effects of the war had simmered down and when these defendants could
have very well adjusted themselves. Two decades have now elapsed since the unlawful
entry. Defendants could have, if they wanted to, located permanent premises for their abode.
And yet, usurpers that they are, they preferred to remain on city property.

Defendants' entry as aforesaid was illegal. Their constructions are as illegal, without
permits.8 The city charter enjoins the mayor to "safeguard all the lands" of the City of Manila. 9

Surely enough, the permits granted did not "safeguard" the city's land in question. It is our
considered view that the Mayor of the City of Manila cannot legalize forcible entry into public
property by the simple expedient of giving permits, or, for that matter, executing leases.

Squatting is unlawful and no amount of acquiescence on the part of the city officials will
elevate it into a lawful act. In principle, a compound of illegal entry and official permit to stay
is obnoxious to our concept of proper official norm of conduct. Because, such permit does
not serve social justice; it fosters moral decadence. It does not promote public welfare; it
abets disrespect for the law. It has its roots in vice; so it is an infected bargain. Official
approval of squatting should not, therefore, be permitted to obtain in this country where there
is an orderly form of government.

We, accordingly, rule that the Manila mayors did not have authority to give permits, written or
oral, to defendants, and that the permits herein granted are null and void.

3. Let us look into the houses and constructions planted by defendants on the premises.
They clearly hinder and impair the use of that property for school purposes. The courts may
well take judicial notice of the fact that housing school children in the elementary grades has
been and still is a perennial problem in the city. The selfish interests of defendants must have
to yield to the general good. The public purpose of constructing the school building annex is
paramount.10

In the situation thus obtaining, the houses and constructions aforesaid constitute public
nuisance per se. And this, for the reason that they hinder and impair the use of the property
for a badly needed school building, to the prejudice of the education of the youth of the
land.11 They shackle the hands of the government and thus obstruct performance of its
constitutionally ordained obligation to establish and maintain a complete and adequate
system of public education, and more, to "provide at least free public primary instruction".12

Reason dictates that no further delay should be countenanced. The public nuisance could
well have been summarily abated by the city authorities themselves, even without the aid of
the courts.13
 4. Defendants challenge the jurisdiction of the Court of First Instance of Manila. They say
that the case should have been started in the municipal court. They prop up their position by
the averment that notice for them to vacate was only served in September, 1961, and suit
was started in July, 1962. Their legal ground is Section 1, Rule 70 of the Rules of Court. We
have reached the conclusion that their forcible entry dates back to the period from 1945 to
1947. That entry was not legalized by the permits. Their possession continued to remain
illegal from incipiency. Suit was filed long after the one-year limitation set forth in Section 1 of
Rule 70. And the Manila Court of First Instance has jurisdiction. 14

Upon the premises, we vote to affirm the judgment under review. Costs against defendants-
appellants. So ordered.

FARRALES vs. MAYOR OF BAGUIO CITY (MISSING- ANGELES)

HIDALGO ENTERPRISES vs. BALANDA

HIDALGO ENTERPRISES, INC. vs. BALANDAN, et al.

Attractive Nuisance Doctrine

Attractive nuisance doctrine generally is not applicable to bodies of
water, artificial (e.g. water tanks) as well as natural, in the absence
of some unusual condition or artificial feature other than the mere
water and its location.

FACTS:

Guillermo Balandan and his wife is claiming damages in the sum of

P2,000 for the death of their son, Mario. Petitioner was the owner of an
Ice plant, who had in their premises 2 tanks filled of water, 9 feet
deep. The factory was fenced but Ingress and egress was easily made
because the gates were always open and there was no guard assigned
in the said gate. Also the tanks didn’t have any barricade or fence. One
day when Mario was playing with his friend, they saw the tank inside
the factory and began playing and swimming inside it. While
bathing, Mario sank to the bottom of the tank, only to be fished out
later, already as a cadaver, having died of ‘asphyxia secondary to
drowning.’ The lower decided in the favor of the parents saying that the
petitioner is liable for damages due to the doctrine of attractive nuisance.

ISSUE:
Whether or not the doctrine of attractive nuisance is applicable in this case?

RULING:

NO.

The doctrine of attractive nuisance states that “One who maintains on his
premises dangerous instrumentalities or appliances of a character
likely to attract children in play, and who fails to exercise ordinary
care to prevent children from playing therewith or resorting thereto,
is liable to a child of tender years who is injured thereby, even if the
child is technically a trespasser in the premises.

American Jurisprudence shows us that the attractive nuisance doctrine

generally is not applicable to bodies of water, artificial as well as
natural, in the absence of some unusual condition or artificial
feature other than the mere water and its location. In the case bar, the
tanks themselves cannot fall under such doctrine thus the
petitioners cannot be held liable for Mario’s death.

NO. Doctrine of Attractive Nuisance states that: One who maintains

on his premises dangerous instrumentalities or appliances of a
character likely to attract children in play, and who fails to exercise
ordinary care to prevent children from playing therewith or resorting
thereto, is liable to a child of tender years who is injured thereby,
even if the child is technically a trespasser in the premises.

Hidalgo Enterprises’s tanks are not classified as attractive nuisance.

Nature has created streams, lakes and pools which attract children.
Lurking in their waters is always the danger of drowning. Against
this danger children are early instructed so that they are sufficiently
presumed to know the danger; and if the owner of private property
creates an artificial pool on his own property, merely duplicating the
work of nature without adding any new danger, he is not liable
because of having created an 'attractive nuisance.

Hence, whether the Hidalgo Enterprises’s had taken reasonable

precautions becomes immaterial. It is absolved from liability.

Doctrine:

The Doctrine of Attractive Nuisance is not applicable to swimming

pool or water tank. The doctrine generally is not applicable to bodies
of water, artificial as well as natural, in the absence of some unusual
condition or artificial feature other than the mere water and its
location.

Nature has created streams, lakes and pools which attract children. Lurking in their waters is
always the danger of drowning. Against this danger children are early instructed so that they
are sufficiently presumed to know the danger; and if the owner of private property creates an
artificial pool on his own property, merely duplicating the work of nature without adding any
new danger, . . . (he) is not liable because of having created an "attractive nuisance."
Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 112 Ind. App., 170.

Therefore, as petitioner's tanks are not classified as attractive nuisance, the question whether the
petitioner had taken reasonable precautions becomes immaterial. And the other issue submitted by
petitioner — that the parents of the boy were guilty of contributory negligence precluding recovery,
because they left for Manila on that unlucky day leaving their son under the care of no responsible
individual — needs no further discussion.

5. Strict Liability of Employer to Pay for Death or Injuries to

Employees

MITSUBISHI MOTORS EMPLOYEES UNION vs. MITSUBISHI

MOTORS PHILS.

Strict Liability Of Employer To Pay For the Death Or Injuries To

Employees – There should not be unjust enrichment – Contra Collateral
Source Rule

Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU)

Vs. Mitsubishi Motors Philippines Corporation (MMPC)

 A CBA was executed by the parties on the case which provides

for the hospitalization insurance benefit for the covered
dependents of the regular employees (Dependent Group
Hospitalization Insurance)
 The CBA expired but another CAB was executed incorporating
the same provision on the dependent’s hospitalization
insurance benefit but in the increase amount (room, board
expenses and doctor’s fee)
 3 members of the MMPSEU filed claims for the reimbursement
of hospitalization expenses of their dependent (Calida, Oabel and
Martin)
o Calida’s wife was confined in the Sto Tomas University
Hospital due to Thyroiddectomy. On the medical expenses
 incurred but the professional fee was paid by Medicard
which is a health maintenance provider. MMPC only paid
the expenses covered by official receipts, it did not pay
the amount already paid by Medicard and those not
covered by official receipt.
o Oabel’s wife was confined at the Medical City due to
Tonsillopharyngitis. Majority of the medical expenses was paid
by the wife’s personal health insurance Prosper Insurance
Company and the remaining was paid by MMPC after the
discount given by the hospital.
o Martin’s father was admitted at the Medical City due to Acid
Peptic Disease. Majority of the medical expenses was paid by
Medicard and remaining after hospital discount was paid by
MMPC.
 The said 3 members claimed under the CBA that they are
entitled to hospital benefits which should not be reduced by the
amounts paid by Medicard and Prosper Insurance, From which
they asked reimbursement from MMPC.
 MMPC denied their claim contending that it would result to double
insurance if the said employees would receive the full amount of the
hospitalization expense despite already received payment of portions
thereof from other health insurance providers..
 President of the MMPSEU wrote the MMPC president
demanding full payment of the hospitalization benefits,
alleging discrimination against the MMPSEU union members
by pointing out a full reimbursement given on a similar claim
by another employee (Luisito Cruz)
 MMPSEU referred the dispute to the National Conciliation and
Mediation and requested for preventive mediation, from which was
referred to Voluntary Arbitrator Capocyan for resolution.
 MMPSEU alleged that there was nothing in the CBA that
prohibit an employee from obtaining other insurance or
declares that medical expenses can be reimbursed upon
presentation of original official receipts. That it should be
computed without deducting the benefit derived from other insurance
provider and that if reduction was permitted then MMPC would be
unjustly benefitted.
 MMPC argued that the reimbursement of the entire amount,
including those already paid by other insurance companies
would constitute double indemnity or double insurance which
 is circumscribed under the Insurance code. And that a contract of
insurance is a contract of indemnity and the employees cannot
be allowed to profit from the loss.
 Both parties sought for a legal opinion from the insurance
commission. The commission opted not to render an opinion as
requested by MMPC for the matter may become the subject of a
formal complaint but the request of MMPSEU through Atty Funk
rendered and opinion that the claim for reimbursement of medical
expenses when there are 2 contracts providing for benefit may be had
on both simultaneously through the application of the Collateral
Source Rule.
 The Voluntary arbitrator found MMPC liable to pay the
reimbursement since separate premiums were paid for each
contract and the CBA does not prohibit reimbursement in case
there are other health providers.
 MMPC filed a petition for review with TRO and/or of Preliminary
Injunction before the CA contending that there was grave abuse of
discretion (not finding double insurance and relying on the
commissioner’s opinion) on the Arbitrator.
 CA reversed and set aside the decision of the voluntary
arbitrator. Pointing out that the provision of the CBA showed
the intention of the parties that MMPC would only be liable for
expenses actually incurred by an employee’s qualified
dependent. That payment should be made directly to the hospital and
the claim should be supported by actual hospital and doctor’s bill.
Hence this petition

Issue: W/N Union members of MMPSEU should be allowed to

reimburse medical expenses that was already paid for by other
insurance provider in relation to the application of the Collateral
Source Rule?

Ruling: No union members of MMPSEU should not be allowed to

reimburse

 The collateral source rules was misapplied by opinion of Atty

Funk which was the basis of the Voluntary arbitrator’s decision. His
view was inconsistent with the theory of the collateral source rule.
The collateral source rule was originally applied to tort cases
wherein the defendant is prevented from benefitting from the
plaintiff’s receipt of money from other sources. That the
 compensation received by the injured party should not be
deducted from the damages which he would otherwise collect
from the tortfeasor.
 The voluntary arbitrator erred in adopting Atty. Frunk’s view that the
covered employees are entitled to full payment of the hospital
expenses incurred by their dependents since the collateral source rule
finds no application to the cases involving no-fault insurances under
which the insured is indemnified for losses by insurance companies
regardless of who was at fault in the incident generating the loss.
MMPC is a no-fault insurer and cannot be obliged to pay the
hospitalization expenses of its employees dependents which have
already been paid by separate health insurance providers.
 MMPC’s liability is limited that is it does not include amounts paid by
other health insurance providers.
 There is no unjust profit from the premiums by MMPC for in order to
constitute unjust enrichment it must be shown that a party was
unjustly enriched illegally or unlawfully and should fail when the
person who will benefit has a valid claim.
 The CBA has provided MMPC with limited liability which extends only
up to the amount to be paid to the hospital or doctor by the
employee’s dependents excluding those paid by other insurer.
 The indemnity covered extends only up to the expenses actually
incurred which is consistent with the principle of indemnity.

LOCSIN II vs. MEKENI FOOD CORP. (MISSING- DE GUZMAN)

6. Owner of Animals

VESTIL vs. IAC (MISSING- DIZON)

7. Proprietor of building/ thing

GOTESCO vs. CHATTO (MISSING- HERNANDEZ)

SPS. MAMARIL vs. BOY SCOUTS

Sps. Mamaril vs. Boy Scout of the Philippines | G.R. No. 179382 |
January 14, 2013

Facts: PUJ operators Sps. Mamaril would park their 6 passenger jeepneys
every night at BSP’s compound in Malate, Manila for a fee of P300.00 per
month for each unit. One day, one of the vehicles was missing and was
never recovered. According to the security guards Peña and Gaddi of AIB
Security Agency with whom BSP had contracted for its security and
protection, a male person who looked familiar to them took the subject
vehicle out of the compound. Sps. Mamaril prayed that Peña and Gaddi,
together with AIB and BSP, be held liable for: (a) the value of the subject
vehicle; (b) amount representing daily loss of income/boundary reckoned
from the day the vehicle was lost; (c) exemplary damages; (d) moral
damages; (e) attorney's fees; and (f) cost of suit. BSP denied any liability
contending that not only did Sps. Mamaril directly deal with AIB with
respect to the manner by which the parked vehicles would be handled, but
the parking ticket itself expressly stated that the "Management shall not be
responsible for loss of vehicle or any of its accessories or article left
therein." It also claimed that Sps. Mamaril erroneously relied on the Guard
Service Contract. Apart from not being parties thereto, its provisions cover
only the protection of BSP's properties, its officers, and employees.

Issue: Whether or not BSP may be held liable for the loss of the vehicle
caused by the negligence of its security guards.

Held: The proximate cause of the loss of Sps. Mamaril's vehicle was the
negligent act of security guards Peña and Gaddi in allowing an unidentified
person to drive out the subject vehicle. The records are bereft of any finding
of negligence on the part of BSP. Neither will the vicarious liability of an
employer under Article 2180 of the Civil Code apply in this case. Peña and
Gaddi were assigned as security guards by AIB to BSP pursuant to the
Guard Service Contract. No employer-employee relationship existed
between BSP and the security guards assigned in its premises. Sps.
Mamaril are not parties to the Guard Service Contract. Guard Service
Contract between defendant-appellant BSP and defendant AIB Security
Agency is purely between the parties therein. Contracts take effect only
between the parties, their assigns and heirs, except in case where the rights
and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is not liable beyond
the value of the property he received from the decedent. If a contract
should contain some stipulation in favor of a third person, he may demand
its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately
conferred a favor upon a third person. Thus, in order that a third person
benefited by the second paragraph of Article 1311, referred to as a
stipulation pour autrui, may demand its fulfillment, the following requisites
must concur: (1) There is a stipulation in favor of a third person;

(2) The stipulation is a part, not the whole, of the contract; (3) The
contracting parties clearly and deliberately conferred a favor to the third
person - the favor is not merely incidental; (4) The favor is unconditional
and uncompensated; (5) The third person communicated his or her
acceptance of the favor before its revocation; and (6) The contracting
parties do not represent, or are not authorized, by the third party. However,
none of the foregoing elements obtains in this case.There is absolutely
nothing in the said contract that would indicate any obligation and/or
liability on the part of the parties therein in favor of third persons such as
herein plaintiffs-appellees. Moreover, the Court concurs with the finding of
the CA that the contract between the parties herein was one of lease as
defined under Article 1643 of the Civil Code. It has been held that the act of
parking a vehicle in a garage, upon payment of a fixed amount, is a lease.
The agreement with respect to the ingress and egress of Sps. Mamaril's
vehicles were coordinated only with AIB and its security guards, without the
knowledge and consent of BSP. Accordingly, the mishandling of the parked
vehicles that resulted in herein complained loss should be recovered only
from the tort feasors (Peña and Gaddi) and their employer, AIB; and not
against the lessor, BSP.

8. Product and Service Liability; Rights of Consumers

DEL ROSARIO vs. CA (1997)

Lessons Applicable: Proof and Proximate Cause (Torts and Damages)

Laws Applicable: Article 2229 of the Civil Code, Article 2208 of the Civil
Code

FACTS: Metal Forming Corp. advertised there metal shingles as

"STRUCTURALLY SAFE AND STRONG" and that the "BANAWE METAL
TILE structure acts as a single unit against wind and storm pressure due to
the strong hook action on its overlaps." The Spouses Del Rosario through
their contractor Engineer Puno purchased believing their representation.

The proper installation procedure expressly specified in the former's

brochures and advertisements for installation, i.e., the metal tile attached to
the roof panels should be by 2 self-drilling screws for 1 metal cleat but
instead what was attached was metal cleats with only 1-inch ordinary nail
each and others were fastened with only 1 wood screw each so the roof was
blown by Typhoon Ruping 2 months later

MFC replaced the roof free of charge, in acknowledgment of its one-year

warranty on the materials and their installation. Esteban Adjusters and
Valuers, Inc. hired by the Spouses Del Rosario determined that only with a
single wood screw or a combination of a single wood screw and a 1-inch nail
was used

DTI: charged MFC administrative fine of P10,000 otherwise its registration

will be deemed suspended and its establishment closed until the fine was
fully paid

Office of the President: affirmed

MFC declining to concede to liability for the other damages to its electrical
wiring, ceiling, furtures, walls, wall paper, wood parquet flooring and
furniture, the Spouses Del Rosario filed in the RTC for total damage of
P1,008,003 also praying for moral and exemplary damages

RTC: favored Spouses Del Rosario Actual damage P1,008,003, Moral

Damages P500,000, Exemplary Damages P300,000 and Attorney's fees and
expenses of litigation P150,000

CA: reversed holding there is no privity bet. the Spouses Del Rosario and
MFC

ISSUE: W/N the Spouses Del Rosario should be awarded damages

HELD: YES. REINSTATED AND AFFIRMED, with the modification that the
award of actual damages and attorney's fees is deleted, and the moral and
exemplary damages awarded are reduced from P500,000.00 to
P100,000.00, and from P300,000.00 to P50,000.00, respectively.

Since MFC, in bad faith and with gross negligence, infringed the express
warranty made by it to the general public in connection with the "Banawe"
tiles brought to and set up in the house of the Del Rosarios who had relied
on the warranty, and thereby caused them considerable injury, the identity
of the individual who actually dealt with MFC and asked the latter to make
such delivery and installation is of little moment

Actual or compensatory damages cannot be presumed, but must be duly

proved and proved with reasonable degree of certainty.

relied only on the report of the Esteban Adjusters and Valuers, Inc. which
contains no statement whatever of the amount of the damage therefore no
evidentiary foundation upon which to lay an award of actual damages

law explicitly authorizes the award of moral damages "in breaches of

contract where the defendant acted fraudulently or in bad faith."
There being, moreover, satisfactory evidence of the psychological and
mental trauma actually suffered by the Del Rosarios, the grant to them of
moral damages is warranted

Article 2229 of the Civil Code

damages may be imposed by way of example or correction for the public

good, While exemplary damages cannot be recovered as a matter of right,
they need not be proved, although plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court may consider
the question of whether or not exemplary damages should be awarded.

Exemplary damages are imposed not to enrich one party or impoverish

another but to serve as a deterrent against or as a negative incentive to
curb socially deleterious actions

moral damages awarded must be commensurate with the loss or injury

suffered

Since the judgment does not say why attorney's fees are awarded, there is
no basis for such award, which should consequently be removed

It is settled that the award of attorney's fees is the exception rather than
the rule and counsel's fees are not to be awarded every time a party wins.
The power of the court to award attorney's fees under Article 2208 of the
Civil Code demands factual, legal, and equitable justification; its basis
cannot be left to speculation or conjecture. Where granted. the court must
explicitly state in the body of the decision, and not only in the dispositive
portion thereof, the legal reason for the award of attorney's fees.

COCA-COLA BOTTLERS PHILIPPINES, INC. vs. CA and MS. LYDIA

GERONIMO
G.R. No. 110295 October 18, 1993

FACTS:
 Private respondent was the proprietress of Kindergarten Wonderland
Canteen in Dagupan City.
  In August 1989, some parents of the students complained to her that
the Coke and Sprite soft drinks sold by her contained fiber-like matter
and other foreign substances.
 Private respondent brought the said bottles for examination to DOH
and it was found out that the soft drinks “are adulterated.” As a
result, her per day sales of soft drinks severely plummeted that she
had to close her shop on 12 December 1989 for losses.
 On 7 May 1990, the herein private respondent, filed a complaint for
damages against petitioner before the RTC.
 RTC – dismissed the same on motion by petitioner based on the
ground of Prescription. The complaint is based on a contract, and not
on quasi-delict, as there exists pre-existing contractual relation
between the parties; thus, on the basis of Article 1571, in relation to
Article 1562, the complaint should have been filed within six months
from the delivery of the thing sold.
 CA – annulled the orders of the RTC. Petitioner's complaint being one
for quasi-delict, and not for breach of warranty as respondent
contends, the applicable prescriptive period is four years.

ISSUE:
 WON the action for damages by the proprietress against the soft
drinks manufacturer should be treated as one for breach of implied
warranty under article 1561 of the CC which prescribes after six
months from delivery of the thing sold.

RULING:
 No.
 The SC agrees with the CA’s conclusion that the cause of action in the
case at bar is found on quasi-delict under Article 1146 of the CC
which prescribes in four years and not on breach of warranty under
article 1562 of the same code. This is supported by the allegations in
the complaint which makes reference to the reckless and negligent
manufacture of "adulterated food items intended to be sold for public
consumption."
 The vendor could likewise be liable for quasi-delict under Article 2176
of the Civil Code, and an action based thereon may be brought by the
vendee. While it may be true that the pre-existing contract between
the parties may, as a general rule, bar the applicability of the law on
quasi-delict, the liability may itself be deemed to arise from quasi-
delict, i.e., the acts which breaks the contract may also be a quasi-
delict.
 IN VIEW OF ALL THE FOREGOING, the instant petition is hereby
DENIED for lack of merit, with costs against the petitioner.
NARVIDA vs. JUDGE DIZON (MISSING- NAGUIT)

PETRON CORPORATION vs. JOVERO

PETRON CORPORATION VS SPS CAESAR JOVERO
under product and service liability (rights of consumers)

FACTS:
Robin Uy leased a property from Cesar for a period of five years to operate
a gasoline station in Estancia, Iloilo. He then entered into Retail Dealer
Contract with Petron Corporation for the period May 1, 1984 to April 30,
1989, where he obligated himself to sell Petron products in quantities as
ordered by him. One of the provisions of the contract is that the dealer hold
Petron harmless against all losses and claims for death, personal injury or
property damage arising out of any use or condition of the dealer’s
premises, regardless of any defects therein.

To comply with the obligation to deliver its products to the dealer, Petron
entered into a hauling contract with Jose Villaruz, doing business under the
name Gale Freight Services, for the period of three years from March 1988.
Under the hauling contract, Jose specifically assigned three trucks (tanks
trucks with plate numbers FVG-605, FVG-581, and FVG-583). The parties
also agreed that Jose shall hold Petron free from any liability on claims by
third persons arising out of but not limited to the terms of the hauling
contract. Delivery was defined as “not only transportation but also proper
loading and unloading and delivery”.

On October 27, 1988, Robin executed a Special Power of Attorney for the
management of the gasoline station in favor of Chiong and his wife, Dortina.
Howver, Chiong left for Honkong on November 27, 1990, so Dortina was left
with the management of the station. On January 27, 1991, Ronnie, an
employee of the station, ordered products from Petron, who then instructed
Jose to deliver the products. The latter however used a truck not stipulated
in the contract, but was allowed by Petron. During the unloading of the
petroleum from the truck to the fill pipe into the underground tank, a fire
started in the fill pipe and spread to the rubber hose connected to the tank
truck. When the driver (Igdanis), who was out of the premises saw the fire,
he immediately drove the truck in reverse without detaching the rubber
hose from the fill pipe, starting a conflagration that damaged the property
of spouses Cesar and Erma (Jovero), Leonilo and Luzvilla (Samson), and
Rogelio and Lucia (Simpoco).
The aggrieved parties then filed cases for damages against Petron, Jose,
Rubin and Dortina, which was consolidated and tried by the RTC Iloilo. In
its answer, Petron alleged that liability rests with Rubin and Dortina and
Jose, as it alleged that the products were already paid for and delivered to
Rubin and Dortina, while Jose transported the petroleum. It also asserted
cross-claims against the other defendants, for contribution, indemnity and
subrogation if in case it is held liable.

RTC dismissed the cross claims, and held Petron liable. CA affirmed. Petron
appeals the decision only as to its liability, not the dismissal of the cross
claims.

ISSUE:
Whether Petron is liable for the damages to third persons.

HELD:
Petitioner, as an importer and a distributer of gasoline and other petroleum
product, executed with a dealer of these products an exclusive dealership
agreement for mutual benefit and gain. On one hand, petitioner benefits
from the sale of its products, as well as the advertisement it gains when it
broadens its geographical coverage in contracting with independent dealers
in different areas. The products sold and the services rendered by the
dealer also contribute to its goodwill. Thus, despite the transfer of
ownership upon the sale and delivery of its products, petitioner still imposes
the obligation on the dealer to exclusively carry its products.

The dealer also benefits from the dealership agreement, not only from the
resale of the products of petitioner, but also from the latter’s goodwill.

However, with the use of its trade name and trademark, petitioner and the
dealer inform and guarantee to the public that the products and services
are of a particular standard or quality. More importantly, the public, which
is not privy to the dealership contract, assumes that the gasoline station is
owned or operated by petitioner. Thus, respondents, who suffered damages
from the act or omission that occurred in the gasoline station and that
caused the fire, may file an action against petitioner based on the
representations it made to the public. As far as the public is concerned, it is
enough that the establishment carries exclusively the name and products of
petitioner to assume that the latter is liable for acts done within the
premises.

Petron, and the dealer Rubin Uy – acting through his agent, Dortina Uy –
shared the responsibility for the maintenance of the equipment used in the
gasoline station and for making sure that the unloading and the storage of
highly flammable products were without incident. As both were equally
negligent in those aspects, petitioner cannot pursue a claim against the
dealer for the incident. Therefore, both are solidarily liable to respondents
for damages caused by the fire.

With respect to the claims of third persons, it is not enough for petitioner to
allege that the tank truck met the same requirements provided under the
contract; it must duly prove its allegations. This, petitioner failed to do. To
reiterate, it was not able to prove the proximate cause of the fire, only the
involvement of the tank truck and the underground storage tank. Notably,
both pieces of equipment were under its responsibility. Absent any positive
determination of the cause of the fire, a presumption exists that there was
something wrong with the truck or the underground storage tank, or both.
Petitioner, which had the obligation to ensure that the truck was safe, is
likewise liable for the operation of that truck.

MERALCO vs. CASTILLO

MERALCO vs CASTILLO

FACTS:

Respondents Pablito M. Castillo and Guia Castillo are spouses

engaged in the business of manufacturing and selling flouredcent fixtures,
office steels cabinets and related metal fabrications under the name and
style of permanent Light Manufacturing Enterprises. On march 2, 1994, the
Board of Trustees of the Government Service Insurance System(GSIS)
approved the award to Permanent light of a contract for the supply and
installation of 1,200 units of lateral steel filing cabinets worthP7,636,800.
Immediately, Permanent Light began production of the steel cabinets so that
it can obtain the award for the supply of 500 additional units.

In the afternoon of April 19, 1994, Joselito Ignacio and Peter Legaspi,
Fully phased Inspectors of Petitioner Meralco, sought permission to inspect
Permanent Light’s electric meter. Said inspection was carried out in the
presence of Mike Malikay, an employee of respondents.

The results of the inspection, which are contained in a Special

Investigation Report, show that the terminal seal of Permanent Light’s
meter was deformed, its meter seal was covered with fake lead, and the
100th dial pointer was misaligned. On the basis of these findings, Ignacio
concluded that the meter was tampered with and electric supply to
Permanent Light was immediately disconnected. The questioned meter was
then taken to Meralco’s laboratory for verification.
By petitioner Meralco’s claim, it sustained losses in the amount of
P126,319.92 over a 24-month period, on account of Permanent Light’s
tampered meter. The next day, in order to secure the reconnection of
electricity to Permanent Light, respondents paid P50,000 as down payment
on the differential bill to be rendered by Meralco.

Petitioner Meralco billed Permanent Light the amount of P61,709.11,

representing the latter’s unregistered electric consumption for the period of
September 20, 1993 to March 22, 1994. Meralco, however, credited the
initial payment of P50,000 made by respondents. It assessed respondents a
balance of P11,709.11, but later reduced said amount to P5,538.20 after
petitioner allowed respondents a 10% discount on their total bill. Then,
petitioner received the amount of P5,538.20 as full settlement of the
remaining balance.

Subsequently, respondents received an electric bill in the amount of

P38,693.53 for the period of March 22, 1994 to April 21, 1994. This was
followed by another bill for P192,009.64 covering the period from
November 19, 1993 to April 21, 1994. Respondents contested both
assessments in a Letter dated October 12, 1994.9 They likewise complained
of a significant increase in their electric bills since petitioner installed the
replacement meter on April 20, 1994.

On August 2, 1995, respondents filed against Meralco a Petition for

Injunction, Recovery of a Sum of Money and Damages with Prayer for the
Issuance of a TRO and Writ of Preliminary Injunction.

ISSUE:

Whether the award of moral and exemplary damages in favor of the

respondents is proper.

Whether respondents are entitled to temperate damages

HELD:

In order for the discovery of a tampered, broken or fake seal on the

meter to constitute prima facie evidence of illegal use of electricity by the
person who benefits from such illegal use, the discovery thereof must have
been personally witnessed and attested to by an officer of the law or a duly
authorized representative of the ERB. Absent any showing that an officer of
the law or a duly authorized representative of the ERB personally witnessed
and attested to the discovery of Permanent Light’s tampered electric meter,
such discovery did not constitute prima facie evidence of illegal use of
electricity that justifies immediate disconnection of electric service.
Besides, even if there is prima facie evidence of illegal use of electricity,
Section 4, RA 7832 requires due notice to the person benefited before
disconnection of electricity can be effected.

Thus, even when the consumer, or someone acting in his behalf, is

caught in flagrante delicto or in the act of doing any of the acts enumerated
in Section 4 of RA 7832, petitioner may not immediately disconnect
electricity without serving a written notice or warning to the owner of the
house or establishment concerned. The electric utility may discontinue
service in case the customer is in arrear(s) in the payment of bill(s). Any
such suspension of service shall not terminate the contract between the
electric utility and the customer. Moral damages are awarded to
compensate the claimant for physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation and similar injury. Jurisprudence has established the
following requisites for the award of moral damages: (1) there is an injury
whether physical, mental or psychological, which was clearly sustained by
the claimant; (2) there is a culpable act or omission factually established;
(3) the wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant; and (4) the award of damages is
predicated on any of the cases stated in Article 2219 of the Civil Code.

Pertinent to the case at hand, Article 32 of the Civil Code provides for the
award of moral damages in cases where the rights of individuals, including
the right against deprivation of property without due process of law, are
violated. More seriously, the action of the defendant in maliciously
disconnecting the electric service constitutes a breach of public policy. For
public utilities, broad as their powers are, have a clear duty to see to it that
they do not violate nor transgress the rights of the consumers. Any act on
their part that militates against the ordinary norms of justice and fair play is
considered an infraction that gives rise to an action for damages.

In addition to moral damages, exemplary damages are imposed by way of

example or correction for the public good. In this case, to serve as an
example - that before disconnection of electric supply can be effected by a
public utility, the requisites of law must be complied with - we sustain the
award of exemplary damages to respondents.

Actual damages are compensation for an injury that will put the injured
party in the position where it was before the injury. They pertain to such
injuries or losses that are actually sustained and susceptible of
measurement. Except as provided by law or by stipulation, a party is
entitled to adequate compensation only for such pecuniary loss as is duly
proven.

Be that as it may, we cannot award actual damages to respondents. We

reiterate that actual or compensatory damages competent proof of the
damage suffered and the actual amount thereof. The award must be based
on the evidence presented, not on the personal knowledge of the court; and
certainly not on flimsy, remote, speculative and unsubstantial proof.

Nonetheless, in the absence of competent proof on the amount of actual

damages suffered, a party is entitled to temperate damages. Temperate or
moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of
the case, be proved with certainty. The amount thereof is usually left to the
discretion of the courts but the same should be reasonable, bearing in mind
that temperate damages should be more than nominal but less than
compensatory.In this case, we are convinced that respondents sustained
damages from the abnormal increase in Permanent Light’s electric bills
after petitioner replaced the latter’s meter on April 19, 1994. However,
respondents failed to establish the exact amount thereof by competent
evidence. Considering the attendant circumstances, an award of temperate
damages in the amount of P300,000 is just and reasonable.