JANUARY 23 CASES (Chavez V Gonzales To Southern College V CA)

[G.R.
No. L-27454. April 30, 1970.]
ROSENDO O. CHAVES, Plaintiff-Appellant, v. FRUCTUOSO GONZALES, Defendant-Appellee.
Chaves, Elio, Chaves & Associates, for Plaintiff-Appellant.
Sulpicio E. Platon, for Defendant-Appellee.
SYLLABUS
1. CIVIL LAW; CONTRACTS; BREACH OF CONTRACT FOR NON-PERFORMANCE; FIXING OF PERIOD BEFORE FILING OF COMPLAINT FOR
NON-PERFORMANCE, ACADEMIC.— Where the time for compliance had expired and there was breach of contract by non-performance, it
was academic for the plaintiff to have îrst petitioned the court to îx a period for the performance of the contract before îling his complaint.
2. ID.; ID.; ID.; DEFENDANT CANNOT INVOKE ARTICLE 1197 OF THE CIVIL CODE OF THE PHILIPPINES.— Where the defendant virtually
admitted non-performance of the contract by returning the typewriter that he was obliged to repair in a non-working condition, with essen-
tial parts missing, Article 1197 of the Civil Code of the Philippines cannot be invoked. The îxing of a period would thus be a mere formality
and would serve no purpose than to delay.
3. ID.; ID.; ID.; DAMAGES RECOVERABLE; CASE AT BAR.— Where the defendant-appellee contravened the tenor of his obligation because he
not only did not repair the typewriter but returned it "in shambles,’’ he is liable for the cost of the labor or service expended in the repair of
the typewriter, which is in the amount of P58.75, because the obligation or contract was to repair it. In addition, he is likewise liable under
Art. 1170 of the Code, for the cost of the missing parts, in the amount of P31.10, for in his obligation to repair the typewriter he was bound,
but failed or neglected, to return it in the same condition it was when he received it.
4. ID.; ID.; ID.; CLAIMS FOR DAMAGES OR ATTORNEY’S FEES NOT RECOVERABLE; NOT ALLEGED OR PROVED IN INSTANT CASE.— Claims
for damages and attorney’s fees must be pleaded, and the existence of the actual basis thereof must be proved. As no îndings of fact were
made on the claims for damages and attorney’s fees, there is no factual basis upon which to make an award therefor.
5. REMEDIAL LAW; APPEALS; APPEAL FROM COURT OF FIRST INSTANCE TO SUPREME COURT; ONLY QUESTIONS OF LAW REVIEWABLE.—
Where the appellant directly appeals from the decision of the trial court to the Supreme Court on questions of law, he is bound by the judg-
ment of the court a quo on its îndings of fact.
D E C I S I O N
REYES, J.B.L., J.:
This is a direct appeal by the party who prevailed in a suit for breach of oral contract and recovery of damages but was unsatisîed with the
decision rendered by the Court of First Instance of Manila, in its Civil Case No. 65138, because it awarded him only P31.10 out of his total
claim of P690 00 for actual, temperate and moral damages and attorney’s fees.
The appealed judgment, which is brief, is hereunder quoted in full:jgc:chanrobles.com.ph
"In the early part of July, 1963, the plaintiff delivered to the defendant, who is a typewriter repairer, a portable typewriter for routine clean-
ing and servicing. The defendant was not able to înish the job after some time despite repeated reminders made by the plaintiff. The defen-
dant merely gave assurances, but failed to comply with the same. In October, 1963, the defendant asked from the plaintiff the sum of P6.00
for the purchase of spare parts, which amount the plaintiff gave to the defendant. On October 26, 1963, after getting exasperated with the
delay of the repair of the typewriter, the plaintiff went to the house of the defendant and asked for the return of the typewriter. The defen-
dant delivered the typewriter in a wrapped package. On reaching home, the plaintiff examined the typewriter returned to him by the defen-
dant and found out that the same was in shambles, with the interior cover and some parts and screws missing. On October 29, 1963. the
plaintiff sent a letter to the defendant formally demanding the return of the missing parts, the interior cover and the sum of P6.00 (Exhibit
D). The following day, the defendant returned to the plaintiff some of the missing parts, the interior cover and the P6.00.
"On August 29, 1964, the plaintiff had his typewriter repaired by Freixas Business Machines, and the repair job cost him a total of P89.85,
including labor and materials (Exhibit C).
"On August 23, 1965, the plaintiff commenced this action before the City Court of Manila, demanding from the defendant the payment of
P90.00 as actual and compensatory damages, P100.00 for temperate damages, P500.00 for moral damages, and P500.00 as attorney’s fees.
"In his answer as well as in his testimony given before this court, the defendant made no denials of the facts narrated above, except the claim
of the plaintiff that the typewriter was delivered to the defendant through a certain Julio Bocalin, which the defendant denied allegedly be-
cause the typewriter was delivered to him personally by the plaintiff.
"The repair done on the typewriter by Freixas Business Machines with the total cost of P89.85 should not, however, be fully chargeable
against the defendant. The repair invoice, Exhibit C, shows that the missing parts had a total value of only P31.10.
"WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of P31.10, and the costs of suit.
"SO ORDERED."cralaw virtua1aw library
The error of the court a quo, according to the plaintiff-appellant, Rosendo O. Chaves, is that it awarded only the value of the missing parts of
the typewriter, instead of the whole cost of labor and materials that went into the repair of the machine, as provided for in Article 1167 of the
Civil Code, reading as follows:jgc:chanrobles.com.ph
"ART. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.
This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore it may be decreed that what has
been poorly done he undone."cralaw virtua1aw library
On the other hand, the position of the defendant-appellee, Fructuoso Gonzales, is that he is not liable at all, not even for the sum of P31.10,
because his contract with plaintiff-appellant did not contain a period, so that plaintiff-appellant should have îrst îled a petition for the court
to îx the period, under Article 1197 of the Civil Code, within which the defendant appellee was to comply with the contract before said de-
fendant-appellee could be held liable for breach of contract.
Because the plaintiff appealed directly to the Supreme Court and the appellee did not interpose any appeal, the facts, as found by the trial
court, are now conclusive and non-reviewable. 1
The appealed judgment states that the "plaintiff delivered to the defendant . . . a portable typewriter for routine cleaning and servicing" ; that
the defendant was not able to înish the job after some time despite repeated reminders made by the plaintiff" ; that the "defendant merely
gave assurances, but failed to comply with the same" ; and that "after getting exasperated with the delay of the repair of the typewriter", the
plaintiff went to the house of the defendant and asked for its return, which was done. The inferences derivable from these îndings of fact are
that the appellant and the appellee had a perfected contract for cleaning and servicing a typewriter; that they intended that the defendant
was to înish it at some future time although such time was not speciîed; and that such time had passed without the work having been ac-
complished, far the defendant returned the typewriter cannibalized and unrepaired, which in itself is a breach of his obligation, without de-
manding that he should be given more time to înish the job, or compensation for the work he had already done. The time for compliance
having evidently expired, and there being a breach of contract by non-performance, it was academic for the plaintiff to have îrst petitioned
the court to îx a period for the performance of the contract before îling his complaint in this case. Defendant cannot invoke Article 1197 of
the Civil Code for he virtually admitted non-performance by returning the typewriter that he was obliged to repair in a non-working condi-
tion, with essential parts missing. The îxing of a period would thus be a mere formality and would serve no purpose than to delay (cf. Tiglao.
Et. Al. V. Manila Railroad Co. 98 Phil. 18l).
It is clear that the defendant-appellee contravened the tenor of his obligation because he not only did not repair the typewriter but returned
it "in shambles", according to the appealed decision. For such contravention, as appellant contends, he is liable under Article 1167 of the Civil
Code. jam quot, for the cost of executing the obligation in a proper manner. The cost of the execution of the obligation in this case should be
the cost of the labor or service expended in the repair of the typewriter, which is in the amount of P58.75. because the obligation or contract
was to repair it.
In addition, the defendant-appellee is likewise liable, under Article 1170 of the Code, for the cost of the missing parts, in the amount of
P31.10, for in his obligation to repair the typewriter he was bound, but failed or neglected, to return it in the same condition it was when he
received it.
Appellant’s claims for moral and temperate damages and attorney’s fees were, however, correctly rejected by the trial court, for these were
not alleged in his complaint (Record on Appeal, pages 1-5). Claims for damages and attorney’s fees must be pleaded, and the existence of the
actual basis thereof must be proved. 2 The appealed judgment thus made no îndings on these claims, nor on the fraud or malice charged to
the appellee. As no îndings of fact were made on the claims for damages and attorney’s fees, there is no factual basis upon which to make an
award therefor. Appellant is bound by such judgment of the court, a quo, by reason of his having resorted directly to the Supreme Court on
questions of law.
IN VIEW OF THE FOREGOING REASONS, the appealed judgment is hereby modiîed, by ordering the defendant-appellee to pay, as he is here-
by ordered to pay, the plaintiff-appellant the sum of P89.85, with interest at the legal rate from the îling of the complaint. Costs in all in-
stances against appellee Fructuoso Gonzales.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and Villamor, JJ., concur.
Barredo, J., did not take part.

G.R. No. 117190 January 2, 1997
JACINTO TANGUILIG doing business under the name and style J.M.T. ENGINEERING AND GENERAL MERCHANDISING, Petitioner, v. COURT
OF APPEALS and VICENTE HERCE JR., Respondents.
BELLOSILLO, J.:
This case involves the proper interpretation of the contract entered into between the parties.
Sometime in April 1987 petitioner Jacinto M. Tanguilig doing business under the name and style J.M.T. Engineering and General Merchandis-
ing proposed to respondent Vicente Herce Jr. to construct a windmill system for him. After some negotiations they agreed on the construction
of the windmill for a consideration of P60,000.00 with a one-year guaranty from the date of completion and acceptance by respondent Herce
Jr. of the project. Pursuant to the agreement respondent paid petitioner a down payment of P30,000.00 and an installment payment of
P15,000.00, leaving a balance of P15,000.00.
On 14 March 1988, due to the refusal and failure of respondent to pay the balance, petitioner îled a complaint to collect the amount. In his
Answer before the trial court respondent denied the claim saying that he had already paid this amount to the San Pedro General Merchandis-
ing Inc. (SPGMI) which constructed the deep well to which the windmill system was to be connected. According to respondent, since the deep
well formed part of the system the payment he tendered to SPGMI should be credited to his account by petitioner. Moreover, assuming that
he owed petitioner a balance of P15,000.00, this should be offset by the defects in the windmill system which caused the structure to collapse
after a strong wind hit their place. 1
Petitioner denied that the construction of a deep well was included in the agreement to build the windmill system, for the contract price of
P60,000.00 was solely for the windmill assembly and its installation, exclusive of other incidental materials needed for the project. He also
disowned any obligation to repair or reconstruct the system and insisted that he delivered it in good and working condition to respondent
who accepted the same without protest. Besides, its collapse was attributable to a typhoon, a force majeure, which relieved him of any liabili-
ty.
In înding for plaintiff, the trial court held that the construction of the deep well was not part of the windmill project as evidenced clearly by
the letter proposals submitted by petitioner to respondent. 2 It noted that "[i]f the intention of the parties is to include the construction of
the deep well in the project, the same should be stated in the proposals. In the absence of such an agreement, it could be safely concluded
that the construction of the deep well is not a part of the project undertaken by the plaintiff." 3 With respect to the repair of the windmill, the
trial court found that "there is no clear and convincing proof that the windmill system fell down due to the defect of the construction." 4
The Court of Appeals reversed the trial court. It ruled that the construction of the deep well was included in the agreement of the parties
because the term "deep well" was mentioned in both proposals. It also gave credence to the testimony of respondent's witness Guillermo Pili,
the proprietor of SPGMI which installed the deep well, that petitioner Tanguilig told him that the cost of constructing the deep well would be
deducted from the contract price of P60,000.00. Upon these premises the appellate court concluded that respondent's payment of
P15,000.00 to SPGMI should be applied to his remaining balance with petitioner thus effectively extinguishing his contractual obligation.
However, it rejected petitioner's claim of force majeure and ordered the latter to reconstruct the windmill in accordance with the stipulated
one-year guaranty.
His motion for reconsideration having been denied by the Court of Appeals, petitioner now seeks relief from this Court. He raises two issues:
îrstly, whether the agreement to construct the windmill system included the installation of a deep well and, secondly, whether petitioner is
under obligation to reconstruct the windmill after it collapsed.
We reverse the appellate court on the îrst issue but sustain it on the second.
The preponderance of evidence supports the înding of the trial court that the installation of a deep well was not included in the proposals of
petitioner to construct a windmill system for respondent. There were in fact two (2) proposals: one dated 19 May 1987 which pegged the
contract price at P87,000.00 (Exh. "1"). This was rejected by respondent. The other was submitted three days later, i.e., on 22 May 1987
which contained more speciîcations but proposed a lower contract price of P60,000.00 (Exh. "A"). The latter proposal was accepted by re-
spondent and the construction immediately followed. The pertinent portions of the îrst letter-proposal (Exh. "1") are reproduced hereunder
-
In connection with your Windmill System and Installation, we would like to quote to you as follows:
One (1) Set - Windmill suitable for 2 inches diameter deepwell, 2 HP, capacity, 14 feet in diameter, with 20 pieces blade, Tower 40 feet high,
including mechanism which is not advisable to operate during extra-intensity wind. Excluding cylinder pump.
UNIT CONTRACT PRICE P87,000.00
The second letter-proposal (Exh. "A") provides as follows:
In connection with your Windmill system, Supply of Labor Materials and Installation, operated water pump, we would like to quote to you as
follows -
One (1) set - Windmill assembly for 2 inches or 3 inches deep-well pump, 6 Stroke, 14 feet diameter, 1-lot blade materials, 40 feet Tower
complete with standard appurtenances up to Cylinder pump, shafting U.S. adjustable International Metal.
One (1) lot - Angle bar, G.I. pipe, Reducer Coupling, Elbow Gate valve, cross Tee coupling.
One (1) lot - Float valve.
One (1) lot - Concreting materials foundation.
F. O. B. Laguna
Contract Price P60,000.00
Notably, nowhere in either proposal is the installation of a deep well mentioned, even remotely. Neither is there an itemization or description
of the materials to be used in constructing the deep well. There is absolutely no mention in the two (2) documents that a deep well pump is a
component of the proposed windmill system. The contract prices îxed in both proposals cover only the features speciîcally described there-
in and no other. While the words "deep well" and "deep well pump" are mentioned in both, these do not indicate that a deep well is part of
the windmill system. They merely describe the type of deep well pump for which the proposed windmill would be suitable. As correctly
pointed out by petitioner, the words "deep well" preceded by the prepositions "for" and "suitable for" were meant only to convey the idea
that the proposed windmill would be appropriate for a deep well pump with a diameter of 2 to 3 inches. For if the real intent of petitioner
was to include a deep well in the agreement to construct a windmill, he would have used instead the conjunctions "and" or "with." Since the
terms of the instruments are clear and leave no doubt as to their meaning they should not be disturbed.
Moreover, it is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration 5
and, in case
of doubt, their contemporaneous and subsequent acts shall be principally considered. 6 An examination of such contemporaneous and sub-
sequent acts of respondent as well as the attendant circumstances does not persuade us to uphold him.
Respondent insists that petitioner verbally agreed that the contract price of P60,000.00 covered the installation of a deep well pump. He con-
tends that since petitioner did not have the capacity to install the pump the latter agreed to have a third party do the work the cost of which
was to be deducted from the contract price. To prove his point, he presented Guillermo Pili of SPGMI who declared that petitioner Tanguilig
approached him with a letter from respondent Herce Jr. asking him to build a deep well pump as "part of the price/contract which Engineer
(Herce) had with Mr. Tanguilig." 7
We are disinclined to accept the version of respondent. The claim of Pili that Herce Jr. wrote him a letter is unsubstantiated. The alleged letter
was never presented in court by private respondent for reasons known only to him. But granting that this written communication existed, it
could not have simply contained a request for Pili to install a deep well; it would have also mentioned the party who would pay for the under-
taking. It strains credulity that respondent would keep silent on this matter and leave it all to petitioner Tanguilig to verbally convey to Pili
that the deep well was part of the windmill construction and that its payment would come from the contract price of P60,000.00.
We înd it also unusual that Pili would readily consent to build a deep well the payment for which would come supposedly from the windmill
contract price on the mere representation of petitioner, whom he had never met before, without a written commitment at least from the for-
mer. For if indeed the deep well were part of the windmill project, the contract for its installation would have been strictly a matter between
petitioner and Pili himself with the former assuming the obligation to pay the price. That it was respondent Herce Jr. himself who paid for the
deep well by handing over to Pili the amount of P15,000.00 clearly indicates that the contract for the deep well was not part of the windmill
project but a separate agreement between respondent and Pili. Besides, if the price of P60,000.00 included the deep well, the obligation of
respondent was to pay the entire amount to petitioner without prejudice to any action that Guillermo Pili or SPGMI may take, if any, against
the latter. Signiîcantly, when asked why he tendered payment directly to Pili and not to petitioner, respondent explained, rather lamely, that
he did it "because he has (sic) the money, so (he) just paid the money in his possession." 8
Can respondent claim that Pili accepted his payment on behalf of petitioner? No. While the law is clear that "payment shall be made to the
person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it," 9 it does not
appear from the record that Pili and/or SPGMI was so authorized.
Respondent cannot claim the beneît of the law concerning "payments made by a third person." 10 The Civil Code provisions do not apply in
the instant case because no creditor-debtor relationship between petitioner and Guillermo Pili and/or SPGMI has been established regarding
the construction of the deep well. Speciîcally, witness Pili did not testify that he entered into a contract with petitioner for the construction
of respondent's deep well. If SPGMI was really commissioned by petitioner to construct the deep well, an agreement particularly to this effect
should have been entered into.
The contemporaneous and subsequent acts of the parties concerned effectively belie respondent's assertions. These circumstances only
show that the construction of the well by SPGMI was for the sole account of respondent and that petitioner merely supervised the installa-
tion of the well because the windmill was to be connected to it. There is no legal nor factual basis by which this Court can impose upon peti-
tioner an obligation he did not expressly assume nor ratify.
The second issue is not a novel one. In a long line of cases 11 this Court has consistently held that in order for a party to claim exemption
from liability by reason of fortuitous event under Art. 1174 of the Civil Code the event should be the sole and proximate cause of the loss or
destruction of the object of the contract. In Nakpil vs. Court of Appeals, 12 four (4) requisites must concur: (a) the cause of the breach of the
obligation must be independent of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event must be
such as to render it impossible for the debtor to fulîll his obligation in a normal manner; and, (d) the debtor must be free from any participa-
tion in or aggravation of the injury to the creditor.
Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Interestingly, the evidence does not disclose
that there was actually a typhoon on the day the windmill collapsed. Petitioner merely stated that there was a "strong wind." But a strong
wind in this case cannot be fortuitous - unforeseeable nor unavoidable. On the contrary, a strong wind should be present in places where
windmills are constructed, otherwise the windmills will not turn.
The appellate court correctly observed that "given the newly-constructed windmill system, the same would not have collapsed had there
been no inherent defect in it which could only be attributable to the appellee." 13 It emphasized that respondent had in his favor the pre-
sumption that "things have happened according to the ordinary course of nature and the ordinary habits of life." 14 This presumption has not
been rebutted by petitioner.
Finally, petitioner's argument that private respondent was already in default in the payment of his outstanding balance of P15,000.00 and
hence should bear his own loss, is untenable. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. 15 When the windmill failed to function properly it became incum-
bent upon petitioner to institute the proper repairs in accordance with the guaranty stated in the contract. Thus, respondent cannot be said
to have incurred in delay; instead, it is petitioner who should bear the expenses for the reconstruction of the windmill. Article 1167 of the
Civil Code is explicit on this point that if a person obliged to do something fails to do it, the same shall be executed at his cost.
WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay petitioner JACINTO M. TANGUILIG the
balance of P15,000.00 with interest at the legal rate from the date of the îling of the complaint. In return, petitioner is ordered to "recon-
struct subject defective windmill system, in accordance with the one-year guaranty" 16 and to complete the same within three (3) months
from the înality of this decision.
SO ORDERED.
G.R. No. 73867 February 29, 1988
TELEFAST COMMUNICATIONS/PHILIPPINE WIRELESS, INC., petitioner,

vs.
IGNACIO CASTRO, SR., SOFIA C. CROUCH, IGNACIO CASTRO JR., AURORA CASTRO, SALVADOR CASTRO, MARIO CASTRO, CONRADO CASTRO,
ESMERALDA C. FLORO, AGERICO CASTRO, ROLANDO CASTRO, VIRGILIO CASTRO AND GLORIA CASTRO, and HONORABLE INTERMEDIATE
APPELLATE COURT, respondents.
PADILLA, J.:
Petition for review on certiorari of the decision * of the Intermediate Appellate Court, dated 11 February 1986, in AC-G.R. No. CV-70245, enti-
tled "Ignacio Castro, Sr., et al., Plaintiffs-Appellees, versus Telefast Communication/Philippine Wireless, Inc., Defendant-Appellant."
The facts of the case are as follows:
On 2 November 1956, Consolacion Bravo-Castro wife of plaintiff Ignacio Castro, Sr. and mother of the other plaintiffs, passed away in Lin-
gayen, Pangasinan. On the same day, her daughter Soîa C. Crouch, who was then vacationing in the Philippines, addressed a telegram to
plaintiff Ignacio Castro, Sr. at 685 Wanda, Scottsburg, Indiana, U.S.A., 47170 announcing Consolacion's death. The telegram was accepted by
the defendant in its Dagupan ofîce, for transmission, after payment of the required fees or charges.
The telegram never reached its addressee. Consolacion was interred with only her daughter Soîa in attendance. Neither the husband nor any
of the other children of the deceased, then all residing in the United States, returned for the burial.
When Soîa returned to the United States, she discovered that the wire she had caused the defendant to send, had not been received. She and
the other plaintiffs thereupon brought action for damages arising from defendant's breach of contract. The case was îled in the Court of First
Instance of Pangasinan and docketed therein as Civil Case No. 15356. The only defense of the defendant was that it was unable to transmit
the telegram because of "technical and atmospheric factors beyond its control." 1 No evidence appears on record that defendant ever made
any attempt to advise the plaintiff Soîa C. Crouch as to why it could not transmit the telegram.
The Court of First Instance of Pangasinan, after trial, ordered the defendant (now petitioner) to pay the plaintiffs (now private respondents)
damages, as follows, with interest at 6% per annum:
1. Soîa C. Crouch, P31.92 and P16,000.00 as compensatory damages and P20,000.00 as moral damages.
2. Ignacio Castro Sr., P20,000.00 as moral damages.
3. Ignacio Castro Jr., P20,000.00 as moral damages.
4. Aurora Castro, P10,000.00 moral damages.
5. Salvador Castro, P10,000.00 moral damages.
6. Mario Castro, P10,000.00 moral damages.
7. Conrado Castro, P10,000 moral damages.
8. Esmeralda C. Floro, P20,000.00 moral damages.
9. Agerico Castro, P10,000.00 moral damages.
10. Rolando Castro, P10,000.00 moral damages.
11. Virgilio Castro, P10,000.00 moral damages.
12. Gloria Castro, P10,000.00 moral damages.
Defendant is also ordered to pay P5,000.00 attorney's fees, exemplary damages in the amount of P1,000.00 to each of the plaintiffs and costs.
2
On appeal by petitioner, the Intermediate Appellate Court afîrmed the trial court's decision but eliminated the award of P16,000.00 as com-
pensatory damages to Soîa C. Crouch and the award of P1,000.00 to each of the private respondents as exemplary damages. The award of
P20,000.00 as moral damages to each of Soîa C. Crouch, Ignacio Castro, Jr. and Esmeralda C. Floro was also reduced to P120,000. 00 for each.
3
Petitioner appeals from the judgment of the appellate court, contending that the award of moral damages should be eliminated as defen-
dant's negligent act was not motivated by "fraud, malice or recklessness."
In other words, under petitioner's theory, it can only be held liable for P 31.92, the fee or charges paid by Soîa C. Crouch for the telegram that
was never sent to the addressee thereof.
Petitioner's contention is without merit.
Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of fraud, negligence or delay, and those
who in any manner contravene the tenor thereof, are liable for damages." Art. 2176 also provides that "whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for the damage done."
In the case at bar, petitioner and private respondent Soîa C. Crouch entered into a contract whereby, for a fee, petitioner undertook to send
said private respondent's message overseas by telegram. This, petitioner did not do, despite performance by said private respondent of her
obligation by paying the required charges. Petitioner was therefore guilty of contravening its obligation to said private respondent and is
thus liable for damages.
This liability is not limited to actual or quantiîed damages. To sustain petitioner's contrary position in this regard would result in an in-
equitous situation where petitioner will only be held liable for the actual cost of a telegram îxed thirty (30) years ago.
We înd Art. 2217 of the Civil Code applicable to the case at bar. It states: "Moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary
computation, moral damages may be recovered if they are the proximate results of the defendant's wrongful act or omission." (Emphasis
supplied).
Here, petitioner's act or omission, which amounted to gross negligence, was precisely the cause of the suffering private respondents had to
undergo.
As the appellate court properly observed:
[Who] can seriously dispute the shock, the mental anguish and the sorrow that the overseas children must have suffered upon learning of the
death of their mother after she had already been interred, without being given the opportunity to even make a choice on whether they want-
ed to pay her their last respects? There is no doubt that these emotional sufferings were proximately caused by appellant's omission and
substantive law provides for the justiîcation for the award of moral damages. 4
We also sustain the trial court's award of P16,000.00 as compensatory damages to Soîa C. Crouch representing the expenses she incurred
when she came to the Philippines from the United States to testify before the trial court. Had petitioner not been remiss in performing its
obligation, there would have been no need for this suit or for Mrs. Crouch's testimony.
The award of exemplary damages by the trial court is likewise justiîed and, therefore, sustained in the amount of P1,000.00 for each of the
private respondents, as a warning to all telegram companies to observe due diligence in transmitting the messages of their customers.
WHEREFORE, the petition is DENIED. The decision appealed from is modiîed so that petitioner is held liable to private respondents in the
following amounts:
(1) P10,000.00 as moral damages, to each of private respondents;
(2) P1,000.00 as exemplary damages, to each of private respondents;
(3) P16,000.00 as compensatory damages, to private respondent Soîa C. Crouch;
(4) P5,000.00 as attorney's fees; and
(5) Costs of suit.
SO ORDERED.
Yap (Chairman), Paras and Sarmiento, JJ., concur.
Separate Opinions
MELENCIO-HERRERA, J., concurring.
[I] concur.In addition to compensatory and exemplary damages, moral damages are recoverable in actions for breach of contract, as in this
case, where the breach has been wanton and reckless, tantamount to bad faith.
G.R. No. 150843 March 14, 2003
CATHAY PACIFIC AIRWAYS, LTD., petitioner,

vs.
SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents.
DAVIDE, JR., C.J.:
Is an involuntary upgrading of an airline passenger’s accommodation from one class to a more superior class at no extra cost a breach of
contract of carriage that would entitle the passenger to an award of damages? This is a novel question that has to be resolved in this case.
The facts in this case, as found by the Court of Appeals and adopted by petitioner Cathay Paciîc Airways, Ltd., (hereinafter Cathay) are as
follows:
Cathay is a common carrier engaged in the business of transporting passengers and goods by air. Among the many routes it services is the
Manila-Hongkong-Manila course. As part of its marketing strategy, Cathay accords its frequent ^lyers membership in its Marco Polo Club. The
members enjoy several privileges, such as priority for upgrading of booking without any extra charge whenever an opportunity arises. Thus,
a frequent ^lyer booked in the Business Class has priority for upgrading to First Class if the Business Class Section is fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez are frequent ^lyers of Cathay and are Gold Card mem-
bers of its Marco Polo Club. On 24 September 1996, the Vazquezes, together with their maid and two friends Pacita Cruz and Joseîna Vergel
de Dios, went to Hongkong for pleasure and business.
For their return ^light to Manila on 28 September 1996, they were booked on Cathay’s Flight CX-905, with departure time at 9:20 p.m. Two
hours before their time of departure, the Vazquezes and their companions checked in their luggage at Cathay’s check-in counter at Kai Tak
Airport and were given their respective boarding passes, to wit, Business Class boarding passes for the Vazquezes and their two friends, and
Economy Class for their maid. They then proceeded to the Business Class passenger lounge.
When boarding time was announced, the Vazquezes and their two friends went to Departure Gate No. 28, which was designated for Business
Class passengers. Dr. Vazquez presented his boarding pass to the ground stewardess, who in turn inserted it into an electronic machine read-
er or computer at the gate. The ground stewardess was assisted by a ground attendant by the name of Clara Lai Han Chiu. When Ms. Chiu
glanced at the computer monitor, she saw a message that there was a "seat change" from Business Class to First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes’ accommodations were upgraded to First Class. Dr. Vazquez refused the
upgrade, reasoning that it would not look nice for them as hosts to travel in First Class and their guests, in the Business Class; and moreover,
they were going to discuss business matters during the ^light. He also told Ms. Chiu that she could have other passengers instead transferred
to the First Class Section. Taken aback by the refusal for upgrading, Ms. Chiu consulted her supervisor, who told her to handle the situation
and convince the Vazquezes to accept the upgrading. Ms. Chiu informed the latter that the Business Class was fully booked, and that since
they were Marco Polo Club members they had the priority to be upgraded to the First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told
them that if they would not avail themselves of the privilege, they would not be allowed to take the ^light. Eventually, after talking to his two
friends, Dr. Vazquez gave in. He and Mrs. Vazquez then proceeded to the First Class Cabin.
Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996 addressed to Cathay’s Country Manager, demanded that they be
indemniîed in the amount of P1million for the "humiliation and embarrassment" caused by its employees. They also demanded "a written
apology from the management of Cathay, preferably a responsible person with a rank of no less than the Country Manager, as well as the
apology from Ms. Chiu" within îfteen days from receipt of the letter.
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathay’s Country Manager Argus Guy Robson, informed the Vazquezes that
Cathay would investigate the incident and get back to them within a week’s time.
On 8 November 1996, after Cathay’s failure to give them any feedback within its self-imposed deadline, the Vazquezes instituted before the
Regional Trial Court of Makati City an action for damages against Cathay, praying for the payment to each of them the amounts of P250,000
as temperate damages; P500,000 as moral damages; P500,000 as exemplary or corrective damages; and P250,000 as attorney’s fees.
In their complaint, the Vazquezes alleged that when they informed Ms. Chiu that they preferred to stay in Business Class, Ms. Chiu "obstinate-
ly, uncompromisingly and in a loud, discourteous and harsh voice threatened" that they could not board and leave with the ^light unless they
go to First Class, since the Business Class was overbooked. Ms. Chiu’s loud and stringent shouting annoyed, embarrassed, and humiliated
them because the incident was witnessed by all the other passengers waiting for boarding. They also claimed that they were unjustiîably
delayed to board the plane, and when they were înally permitted to get into the aircraft, the forward storage compartment was already full.
A ^light stewardess instructed Dr. Vazquez to put his roll-on luggage in the overhead storage compartment. Because he was not assisted by
any of the crew in putting up his luggage, his bilateral carpal tunnel syndrome was aggravated, causing him extreme pain on his arm and
wrist. The Vazquezes also averred that they "belong to the uppermost and absolutely top elite of both Philippine Society and the Philippine
înancial community, [and that] they were among the wealthiest persons in the Philippine[s]."
In its answer, Cathay alleged that it is a practice among commercial airlines to upgrade passengers to the next better class of accommodation,
whenever an opportunity arises, such as when a certain section is fully booked. Priority in upgrading is given to its frequent ^lyers, who are
considered favored passengers like the Vazquezes. Thus, when the Business Class Section of Flight CX-905 was fully booked, Cathay’s com-
puter sorted out the names of favored passengers for involuntary upgrading to First Class. When Ms. Chiu informed the Vazquezes that they
were upgraded to First Class, Dr. Vazquez refused. He then stood at the entrance of the boarding apron, blocking the queue of passengers
from boarding the plane, which inconvenienced other passengers. He shouted that it was impossible for him and his wife to be upgraded
without his two friends who were traveling with them. Because of Dr. Vazquez’s outburst, Ms. Chiu thought of upgrading the traveling com-
panions of the Vazquezes. But when she checked the computer, she learned that the Vazquezes’ companions did not have priority for upgrad-
ing. She then tried to book the Vazquezes again to their original seats. However, since the Business Class Section was already fully booked,
she politely informed Dr. Vazquez of such fact and explained that the upgrading was in recognition of their status as Cathay’s valued passen-
gers. Finally, after talking to their guests, the Vazquezes eventually decided to take the First Class accommodation.
Cathay also asserted that its employees at the Hong Kong airport acted in good faith in dealing with the Vazquezes; none of them shouted,
humiliated, embarrassed, or committed any act of disrespect against them (the Vazquezes). Assuming that there was indeed a breach of con-
tractual obligation, Cathay acted in good faith, which negates any basis for their claim for temperate, moral, and exemplary damages and at-
torney’s fees. Hence, it prayed for the dismissal of the complaint and for payment of P100,000 for exemplary damages and P300,000 as at-
torney’s fees and litigation expenses.
During the trial, Dr. Vazquez testiîed to support the allegations in the complaint. His testimony was corroborated by his two friends who
were with him at the time of the incident, namely, Pacita G. Cruz and Joseîna Vergel de Dios.
For its part, Cathay presented documentary evidence and the testimonies of Mr. Yuen; Ms. Chiu; Norma Barrientos, Comptroller of its re-
tained counsel; and Mr. Robson. Yuen and Robson testiîed on Cathay’s policy of upgrading the seat accommodation of its Marco Polo Club
members when an opportunity arises. The upgrading of the Vazquezes to First Class was done in good faith; in fact, the First Class Section is
deînitely much better than the Business Class in terms of comfort, quality of food, and service from the cabin crew. They also testiîed that
overbooking is a widely accepted practice in the airline industry and is in accordance with the International Air Transport Association (IATA)
regulations. Airlines overbook because a lot of passengers do not show up for their ^light. With respect to Flight CX-905, there was no overall
overbooking to a degree that a passenger was bumped off or downgraded. Yuen and Robson also stated that the demand letter of the
Vazquezes was immediately acted upon. Reports were gathered from their ofîce in Hong Kong and immediately forwarded to their counsel
Atty. Remollo for legal advice. However, Atty. Remollo begged off because his services were likewise retained by the Vazquezes; nonetheless,
he undertook to solve the problem in behalf of Cathay. But nothing happened until Cathay received a copy of the complaint in this case. For
her part, Ms. Chiu denied that she shouted or used foul or impolite language against the Vazquezes. Ms. Barrientos testiîed on the amount of
attorney’s fees and other litigation expenses, such as those for the taking of the depositions of Yuen and Chiu.
In its decision1 of 19 October 1998, the trial court found for the Vazquezes and decreed as follows:
WHEREFORE, înding preponderance of evidence to sustain the instant complaint, judgment is hereby rendered in favor of plaintiffs Vazquez
spouses and against defendant Cathay Paciîc Airways, Ltd., ordering the latter to pay each plaintiff the following:
a) Nominal damages in the amount of P100,000.00 for each plaintiff;
b) Moral damages in the amount of P2,000,000.00 for each plaintiff;
c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;
d) Attorney’s fees and expenses of litigation in the amount of P1,000,000.00 for each plaintiff; and
e) Costs of suit.
SO ORDERED.
According to the trial court, Cathay offers various classes of seats from which passengers are allowed to choose regardless of their reasons or
motives, whether it be due to budgetary constraints or whim. The choice imposes a clear obligation on Cathay to transport the passengers in
the class chosen by them. The carrier cannot, without exposing itself to liability, force a passenger to involuntarily change his choice. The
upgrading of the Vazquezes’ accommodation over and above their vehement objections was due to the overbooking of the Business Class. It
was a pretext to pack as many passengers as possible into the plane to maximize Cathay’s revenues. Cathay’s actuations in this case displayed
deceit, gross negligence, and bad faith, which entitled the Vazquezes to awards for damages.
On appeal by the petitioners, the Court of Appeals, in its decision of 24 July 2001,2 deleted the award for exemplary damages; and it reduced
the awards for moral and nominal damages for each of the Vazquezes to P250,000 and P50,000, respectively, and the attorney’s fees and liti-
gation expenses to P50,000 for both of them.
The Court of Appeals ratiocinated that by upgrading the Vazquezes to First Class, Cathay novated the contract of carriage without the for-
mer’s consent. There was a breach of contract not because Cathay overbooked the Business Class Section of Flight CX-905 but because the
latter pushed through with the upgrading despite the objections of the Vazquezes.
However, the Court of Appeals was not convinced that Ms. Chiu shouted at, or meant to be discourteous to, Dr. Vazquez, although it might
seemed that way to the latter, who was a member of the elite in Philippine society and was not therefore used to being harangued by any-
body. Ms. Chiu was a Hong Kong Chinese whose fractured Chinese was difîcult to understand and whose manner of speaking might sound
harsh or shrill to Filipinos because of cultural differences. But the Court of Appeals did not înd her to have acted with deliberate malice, de-
ceit, gross negligence, or bad faith. If at all, she was negligent in not offering the First Class accommodations to other passengers. Neither can
the ^light stewardess in the First Class Cabin be said to have been in bad faith when she failed to assist Dr. Vazquez in lifting his baggage into
the overhead storage bin. There is no proof that he asked for help and was refused even after saying that he was suffering from "bilateral
carpal tunnel syndrome." Anent the delay of Yuen in responding to the demand letter of the Vazquezes, the Court of Appeals found it to have
been sufîciently explained.
The Vazquezes and Cathay separately îled motions for a reconsideration of the decision, both of which were denied by the Court of Appeals.
Cathay seasonably îled with us this petition in this case. Cathay maintains that the award for moral damages has no basis, since the Court of
Appeals found that there was no "wanton, fraudulent, reckless and oppressive" display of manners on the part of its personnel; and that the
breach of contract was not attended by fraud, malice, or bad faith. If any damage had been suffered by the Vazquezes, it was damnum absque
injuria, which is damage without injury, damage or injury in^licted without injustice, loss or damage without violation of a legal right, or a
wrong done to a man for which the law provides no remedy. Cathay also invokes our decision in United Airlines, Inc. v. Court of Appeals3
where we recognized that, in accordance with the Civil Aeronautics Board’s Economic Regulation No. 7, as amended, an overbooking that
does not exceed ten percent cannot be considered deliberate and done in bad faith. We thus deleted in that case the awards for moral and
exemplary damages, as well as attorney’s fees, for lack of proof of overbooking exceeding ten percent or of bad faith on the part of the airline
carrier.
On the other hand, the Vazquezes assert that the Court of Appeals was correct in granting awards for moral and nominal damages and attor-
ney’s fees in view of the breach of contract committed by Cathay for transferring them from the Business Class to First Class Section without
prior notice or consent and over their vigorous objection. They likewise argue that the issuance of passenger tickets more than the seating
capacity of each section of the plane is in itself fraudulent, malicious and tainted with bad faith.
The key issues for our consideration are whether (1) by upgrading the seat accommodation of the Vazquezes from Business Class to First
Class Cathay breached its contract of carriage with the Vazquezes; (2) the upgrading was tainted with fraud or bad faith; and (3) the
Vazquezes are entitled to damages.
We resolve the îrst issue in the afîrmative.
A contract is a meeting of minds between two persons whereby one agrees to give something or render some service to another for a consid-
eration. There is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) an object certain which is the
subject of the contract; and (3) the cause of the obligation which is established.4 Undoubtedly, a contract of carriage existed between Cathay
and the Vazquezes. They voluntarily and freely gave their consent to an agreement whose object was the transportation of the Vazquezes
from Manila to Hong Kong and back to Manila, with seats in the Business Class Section of the aircraft, and whose cause or consideration was
the fare paid by the Vazquezes to Cathay.
The only problem is the legal effect of the upgrading of the seat accommodation of the Vazquezes. Did it constitute a breach of contract?
Breach of contract is deîned as the "failure without legal reason to comply with the terms of a contract."5 It is also deîned as the "[f]ailure,
without legal excuse, to perform any promise which forms the whole or part of the contract."6
In previous cases, the breach of contract of carriage consisted in either the bumping off of a passenger with conîrmed reservation or the
downgrading of a passenger’s seat accommodation from one class to a lower class. In this case, what happened was the reverse. The contract
between the parties was for Cathay to transport the Vazquezes to Manila on a Business Class accommodation in Flight CX-905. After check-
ing-in their luggage at the Kai Tak Airport in Hong Kong, the Vazquezes were given boarding cards indicating their seat assignments in the
Business Class Section. However, during the boarding time, when the Vazquezes presented their boarding passes, they were informed that
they had a seat change from Business Class to First Class. It turned out that the Business Class was overbooked in that there were more pas-
sengers than the number of seats. Thus, the seat assignments of the Vazquezes were given to waitlisted passengers, and the Vazquezes, being
members of the Marco Polo Club, were upgraded from Business Class to First Class.
We note that in all their pleadings, the Vazquezes never denied that they were members of Cathay’s Marco Polo Club. They knew that as
members of the Club, they had priority for upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just like
other privileges, such priority could be waived. The Vazquezes should have been consulted îrst whether they wanted to avail themselves of
the privilege or would consent to a change of seat accommodation before their seat assignments were given to other passengers. Normally,
one would appreciate and accept an upgrading, for it would mean a better accommodation. But, whatever their reason was and however odd
it might be, the Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for and
which was designated in their boarding passes. They clearly waived their priority or preference when they asked that other passengers be
given the upgrade. It should not have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay breached its
contract of carriage with the Vazquezes.
We are not, however, convinced that the upgrading or the breach of contract was attended by fraud or bad faith. Thus, we resolve the second
issue in the negative.
Bad faith and fraud are allegations of fact that demand clear and convincing proof. They are serious accusations that can be so conveniently
and casually invoked, and that is why they are never presumed. They amount to mere slogans or mudslinging unless convincingly substanti-
ated by whoever is alleging them.
Fraud has been deîned to include an inducement through insidious machination. Insidious machination refers to a deceitful scheme or plot
with an evil or devious purpose. Deceit exists where the party, with intent to deceive, conceals or omits to state material facts and, by reason
of such omission or concealment, the other party was induced to give consent that would not otherwise have been given.7
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing
of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud.8
We înd no persuasive proof of fraud or bad faith in this case. The Vazquezes were not induced to agree to the upgrading through insidious
words or deceitful machination or through willful concealment of material facts. Upon boarding, Ms. Chiu told the Vazquezes that their ac-
commodations were upgraded to First Class in view of their being Gold Card members of Cathay’s Marco Polo Club. She was honest in telling
them that their seats were already given to other passengers and the Business Class Section was fully booked. Ms. Chiu might have failed to
consider the remedy of offering the First Class seats to other passengers. But, we înd no bad faith in her failure to do so, even if that amount-
ed to an exercise of poor judgment.
Neither was the transfer of the Vazquezes effected for some evil or devious purpose. As testiîed to by Mr. Robson, the First Class Section is
better than the Business Class Section in terms of comfort, quality of food, and service from the cabin crew; thus, the difference in fare be-
tween the First Class and Business Class at that time was $250.9 Needless to state, an upgrading is for the better condition and, deînitely, for
the beneît of the passenger.
We are not persuaded by the Vazquezes’ argument that the overbooking of the Business Class Section constituted bad faith on the part of
Cathay. Section 3 of the Economic Regulation No. 7 of the Civil Aeronautics Board, as amended, provides:
Sec 3. Scope. – This regulation shall apply to every Philippine and foreign air carrier with respect to its operation of ^lights or portions of
^lights originating from or terminating at, or serving a point within the territory of the Republic of the Philippines insofar as it denies board-
ing to a passenger on a ^light, or portion of a ^light inside or outside the Philippines, for which he holds conîrmed reserved space. Further-
more, this Regulation is designed to cover only honest mistakes on the part of the carriers and excludes deliberate and willful acts of non-
accommodation. Provided, however, that overbooking not exceeding 10% of the seating capacity of the aircraft shall not be considered as a
deliberate and willful act of non-accommodation.
It is clear from this section that an overbooking that does not exceed ten percent is not considered deliberate and therefore does not amount
to bad faith.10 Here, while there was admittedly an overbooking of the Business Class, there was no evidence of overbooking of the plane
beyond ten percent, and no passenger was ever bumped off or was refused to board the aircraft.
Now we come to the third issue on damages.
The Court of Appeals awarded each of the Vazquezes moral damages in the amount of P250,000. Article 2220 of the Civil Code provides:
Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should înd that, under the circum-
stances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. Although incapable of pecuniary computation, moral damages may be recovered if they are the proxi-
mate result of the defendant’s wrongful act or omission.11 Thus, case law establishes the following requisites for the award of moral dam-
ages: (1) there must be an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be 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 for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.12
Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the carrier is guilty of fraud or
bad faith or where the mishap resulted in the death of a passenger.13 Where in breaching the contract of carriage the airline is not shown to
have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the obliga-
tion which the parties had foreseen or could have reasonably foreseen. In such a case the liability does not include moral and exemplary
damages.14
In this case, we have ruled that the breach of contract of carriage, which consisted in the involuntary upgrading of the Vazquezes’ seat ac-
commodation, was not attended by fraud or bad faith. The Court of Appeals’ award of moral damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is correct. It is a requisite in the grant of exemplary damages that
the act of the offender must be accompanied by bad faith or done in wanton, fraudulent or malevolent manner.15 Such requisite is absent in
this case. Moreover, to be entitled thereto the claimant must îrst establish his right to moral, temperate, or compensatory damages.16 Since
the Vazquezes are not entitled to any of these damages, the award for exemplary damages has no legal basis. And where the awards for moral
and exemplary damages are eliminated, so must the award for attorney’s fees.17
The most that can be adjudged in favor of the Vazquezes for Cathay’s breach of contract is an award for nominal damages under Article 2221
of the Civil Code, which reads as follows:
Article 2221 of the Civil Code provides:
Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Worth noting is the fact that in Cathay’s Memorandum îled with this Court, it prayed only for the deletion of the award for moral damages. It
deferred to the Court of Appeals’ discretion in awarding nominal damages; thus:
As far as the award of nominal damages is concerned, petitioner respectfully defers to the Honorable Court of Appeals’ discretion. Aware as it
is that somehow, due to the resistance of respondents-spouses to the normally-appreciated gesture of petitioner to upgrade their accommo-
dations, petitioner may have disturbed the respondents-spouses’ wish to be with their companions (who traveled to Hong Kong with them)
at the Business Class on their ^light to Manila. Petitioner regrets that in its desire to provide the respondents-spouses with additional ameni-
ties for the one and one-half (1 1/2) hour ^light to Manila, unintended tension ensued.18
Nonetheless, considering that the breach was intended to give more beneît and advantage to the Vazquezes by upgrading their Business
Class accommodation to First Class because of their valued status as Marco Polo members, we reduce the award for nominal damages to
P5,000.
Before writing înis to this decision, we înd it well-worth to quote the apt observation of the Court of Appeals regarding the awards adjudged
by the trial court:
We are not amused but alarmed at the lower court’s unbelievable alacrity, bordering on the scandalous, to award excessive amounts as dam-
ages. In their complaint, appellees asked for P1 million as moral damages but the lower court awarded P4 million; they asked for
P500,000.00 as exemplary damages but the lower court cavalierly awarded a whooping P10 million; they asked for P250,000.00 as attor-
ney’s fees but were awarded P2 million; they did not ask for nominal damages but were awarded P200,000.00. It is as if the lower court went
on a rampage, and why it acted that way is beyond all tests of reason. In fact the excessiveness of the total award invites the suspicion that it
was the result of "prejudice or corruption on the part of the trial court."
The presiding judge of the lower court is enjoined to hearken to the Supreme Court’s admonition in Singson vs. CA (282 SCRA 149 [1997]),
where it said:
The well-entrenched principle is that the grant of moral damages depends upon the discretion of the court based on the circumstances of
each case. This discretion is limited by the principle that the amount awarded should not be palpably and scandalously excessive as to indi-
cate that it was the result of prejudice or corruption on the part of the trial court….
and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held:
Nonetheless, we agree with the injunction expressed by the Court of Appeals that passengers must not prey on international airlines for
damage awards, like "trophies in a safari." After all neither the social standing nor prestige of the passenger should determine the extent to
which he would suffer because of a wrong done, since the dignity affronted in the individual is a quality inherent in him and not conferred by
these social indicators. 19
We adopt as our own this observation of the Court of Appeals.
WHEREFORE, the instant petition is hereby partly GRANTED. The Decision of the Court of Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is
hereby MODIFIED, and as modiîed, the awards for moral damages and attorney’s fees are set aside and deleted, and the award for nominal
damages is reduced to P5,000.
No pronouncement on costs.
SO ORDERED.
G.R. No. 83768 February 28, 1990
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI) and GLOBE MACKAY AND RADIO CORPORATION, petitioners,
vs.
RUFUS B. RODRIGUEZ, respondent.
Salalima, Ungos and David for petitioners.
Maximo G. Rodriguez for private respondent.
GUTIERREZ, JR., J.:
This petition for review on certiorari seeks to reverse the decision of the Court of Appeals which afîrmed the decision of the then Court of
First Instance of Rizal, Branch 17-B, Quezon City in Civil Case No. Q-26623 ordering petitioner Radio Communications of the Philippines, Inc.
[RCPI] and their co-defendant Globe Mackay and Radio Corporation (Globe Mackay), jointly and severally to pay the plaintiff, private respon-
dent herein, a total amount of Two Hundred Thirteen Thousand One Hundred Forty Eight Pesos (P213,148.00) broken down as follows: a)
P100, 000.00 as moral damages; b) P50,000.00 as exemplary damages; c) P43,148.00 as actual damages; and d) P20,000.00 as attorney's
fees by way of damages.
This is the second time that this case has been brought to us. The îrst was when petitioner RCPI questioned the decision of the Court of Ap-
peals which refused to set aside the orders of the lower court directing execution pending appeal of the money awards. In that case (G.R. No.
59311, 134 SCRA [1985]) we set aside the decision of the appellate court and entered a new order authorizing execution pending appeal of
the award of actual damages but enjoining the execution of the award of moral damages, exemplary damages and attorney's fees until after
the resolution of the issues in the main case. We summarized the facts of the case as follows:
On September 8, 1978, Rufus B. Rodriguez, as President of the World Association of Law Students (WALS), sent two cablegrams overseas
through RCPI, one addressed to Mohamed Elsir Taha in Khartoum, Sudan Socialist Union, and the other to Diane Merger in Athens, Georgia,
United States. The cablegram were, in turn, relayed to GLOBE for transmission to their foreign destination The telegram to Taha advised him
of Rodriguez's pending arrival in Khartoum on September 18, 1978, while the telegram to Merger advised her of the scheduled WALS confer-
ence in Khartoum. Rodriguez left the Philippines on September 15, 1978. On September 18, 1978, he arrived in Khartoum, Sudan at 9:30 in
the evening. Nobody was at the airport to meet him. Due to the lateness of the hour, he was forced to sleep at the airport. He lined up îve (5)
chairs together and lay down with his luggages near him. Because of the non-receipt of the cablegram, Taha was not able to meet him. Worse
all preparations for the international conference had to be cancelled. Furthermore, Fernando Barros, the Vice-President, arrived the next day
from Chile, followed by the other ofîcers from other countries except Diane Merger, the organization's secretary. It turned out that the wire
sent by Rodriguez to Merger was delivered to the address on the message but the person who delivered it was told that the address was no
longer staying there. This fact was not accordingly reported to Rodriguez in Metro Manila. The undelivered cablegram was not returned by
the correspondent abroad to Globe for disposition in the Philippines.
On December 8, 1978, Rodriguez îled a complaint for compensatory damages in the amount of P45,147.00, moral damages in the amount of
P200,000.00, and exemplary damages in the amount of P50,000.00 against RCPI and GLOBE.
On March 17, 1980, the then Presiding Judge Lino L. Anover of the Court of First Instance of Rizal rendered a decision, the dispositive portion
of which reads as follows:
"WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally to pay the plaintiff the total sum of TWO HUN-
DRED THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this suit."
The above amount is broken down as follows by the trial court:
"Moral damages consequent to the humiliation and embarrassment that the plaintiff suffered under the two causes of action in the amount of
P100,000.00 are adequate. Exemplary damages under both counts are îxed reasonably at P50,000.00. On the actual damages, the court ac-
cepts plaintiffs expenses for the preparation of the trip at P10,000.00; plane fare at P20,000.00; stay in transit in Pakistan at P5,000.00; his
hotel bills in Khartoum at P4,000.00; his meals in Khartoum at P4,000.00 and the telegraphic toll at P78.00. The court refuses the sum spent
for the dinner that he allegedly tendered as not established by sufîcient proof.
With respect to the telegram sent to Diane Merger, the court înds that the actual damages amount to P70.00 representing the cost of cable-
gram. As for attorney's fees, the court înds that the amount of P20,000.00 including litigation expenses are reasonable. (at pp. 396-398)"
Upon appeal, the Court of Appeals afîrmed the lower court's decision. A motion for reconsideration was denied.
Hence, this petition îled by RCPI. The title of the case includes Globe Mackay but the petition proper and the name on counsel show that only
RCPI comes to this Court through the petition. Globe Mackay did not join as petitioner and its counsel Atty. Romulo P. Atencia did not sign the
petition.
The issues raised by petitioner RCPI are two-fold — 1) whether or nor petitioner RCPI is responsible for the non-delivery of the two (2)
telegrams notwithstanding the fact that RCPI relayed said telegrams to Globe Mackay and 2) whether or not under the attendant facts and
circumstances petitioner RCPI is liable for moral damages in the amount of P100,000.00; exemplary damages in the amount of P50,000.00;
actual damages in the amount of P43,148.00 and attorney's fees in the amount of P20,000.00.
RCPI insists that its responsibility vis-a-vis the two (2) telegrams ceased after it relayed and transmitted the telegrams on the same day they
were îled to Globe Mackay. It argues that it was not incumbent upon RCPI to advise respondent Rodriguez the status of his telegrams be-
cause Globe Mackay did not also inform RCPI what happened to the telegrams since the respective operating agency of the country of desti-
nation did not also inform Globe Mackay about the non-delivery of the telegrams.
Moreover, RCPI blames respondent Rodriguez for the non-delivery of the two telegrams. Regarding the telegram addressed to Elsir Taha,
RCPI avers that it has an incomplete address as it did not include P.O. Box 1850 per instruction of Taha in an earlier cable asking for respon-
dent to reply via telex, to wit:
... send me a telegram immediately after receiving this one a telex number if any. Thanks. Mohammed Elsir Taha Regional Director WALS
Africa Youth Committee SSU, Khartoum, P.O. Box 1850. (Exhibit D). (Rollo, p. 27)
In regard to the telegram addressed to Diane Merger which she did not receive because she had moved, to another place RCPI avers that re-
spondent Rodriguez was partly at fault for not verifying the address of Diane before sending the telegram and that Merger was negligent by
not leaving her forwarding address with the present occupant of the apartment she vacated.
Petitioner RCPI is a domestic corporation engaged in the business of receiving and transmitting messages. Mr. Alfredo Catolico, Jr., manager,
Customer and Relations Ofîce testiîed that RCPI does not have facilities for foreign countries, hence it has a contract to course all in-
ternational communications thru Globe Mackay. On the other hand, Wenceslao Felix, the Trafîc Operations Manager of Globe Mackay testi-
îed that Globe Mackay has an inter-connecting agreement with RCPI under which the latter's international messages are coursed thru Globe
Mackay in the same way that local and domestic messages received by Globe Mackay are coursed thru RCPI.
Respondent Rodriguez and RCPI entered into a contract whereby for a fee RCPI undertook to send the respondent's messages overseas.
When, therefore, respondent Rodriguez paid RCPI to deliver his messages overseas by telegram, RCPI obligated itself to transmit the mes-
sages to the addressee. Clearly, RCPI reneged on its obligation when it failed to deliver the messages or to inform the sender about the non-
delivery, thus making it liable for damages. (Article 1170, Civil Code; Article 2176; see also Telefast Communication/Philippine Wireless, Inc.
v. Castro, Sr., 158 SCRA 445 [1988]).
Parenthetically, RCPI cannot escape liability for damages by passing off the blame for negligence to Globe Mackay. It has an inter-connecting
agreement with Globe Mackay. RCPI receives messages for overseas destinations and conducts its business to transmit foreign messages only
through Globe Mackay. To allow it to escape liability for damages by attributing sole negligence to Globe Mackay for the expedient reason that
it had already delivered the messages to the latter would deprive the general public availing of the services of RCPI of an effective and ade-
quate remedy. (See Radio Communications of the Philippines, Inc. (RCPI) v. Court of Appeals, 143 SCRA 657 [1986]). It cannot simply wash
its hands of all responsibility.
RCPI's similar attempt to pass the total blame for the non-delivery of the telegram intended for Taha to respondent Rodriguez is not support-
ed by the records. The evidence clearly demonstrates that an earlier cablegram dated July 27, 1978 (Exhibit "E") similarly addressed to Taha,
Africa, Youth Committee, Khartoum, SSU and without P.O. Box 1850 was received by Taha. This is conclusively shown by a cable (Exhibit "F")
addressed by Taha to respondent Rodriguez acknowledging the receipt of the July 27 cablegram. Evidence was also introduced to show that
the Africa Youth Committee is a very important ofîce in Khartoum, Sudan and the building that houses it is a very popular building known to
the people.
We rule that the arguments about the alleged negligence on the part of respondent Rodriguez in not verifying the address of Diane Merger
before sending the telegram and also the alleged negligence on the part of Merger for not leaving a forwarding address do not deserve much
consideration. Considering the public utility nature of RCPI's business and its contractual obligation to transmit messages, it should exercise
due diligence to ascertain that messages are delivered to the persons at the given address and should provide a system whereby in cases of
undelivered messages the sender is given notice of non-delivery. Messages sent by cable or wireless means are usually more important and
urgent than those which can wait for the mail.
For recovery of damages, Article 2217 of the New Civil Code applies. It is provided therein that: "Moral damages include physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feeling, moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation moral damages may be recovered if they are the proximate result of the defendant's wrongful act or
omission." (Emphasis supplied)
There is no doubt that RCPI's failure to deliver the two questioned telegrams resulted in the suffering that respondent Rodriguez, had to un-
dergo.
Respondent Rodriguez left Manila for Khartoum, Sudan believing that Taha received his telegram and would meet him at the airport. He re-
lated his experience at the airport of Khartoum, Sudan as follows:
Q. All right, from 9:30 in the evening up to 12:00 midnight, was there any person or ofîcer of the World Association of Law Students who met
you?
A. None.
Q. Now, inform the Court what was your feeling during that time in a foreign country?
A. First of all, when I arrived at 9:30 A.M., I was thinking that Mr. Taha was îrst late in fetching me but when it was already 10:30 to 11:00
P.M., I was already afraid because there was no one there that I know and it was already late in the evening that I could not go to the address
of Mr. Taha. (TSN pages 18 and 19, August 20, 1979).
Q. What were you doing at that time from 9:30 in the evening until 6:00 in the morning?
A. I was every tired and what I did was pulled îve chairs together. I remember there were about ten (10) persons and some tourists in that
restaurant. I got îve chairs together and laid my baggage trying to sleep but which I was not able to do because of fear and anxiety. (TSN,
pages 10 and 11, August 20, 1979). (Rollo, p. 15)
We are convinced that respondent Rodriguez suffered a certain degree of mental anguish, fear and anxiety considering his experience at the
airport of a foreign country. His suffering was caused by the non-appearance of Taha who did not receive the telegram sent by the respondent
due to the gross negligence of RCPI. There is moreover, the dismay arising from the fact, that after so much preparation and travel on the part
of Rodriguez, his pains were all for nothing. Hence, RCPI is liable for moral damages.
Nevertheless, we înd the award of P100,000.00 as moral damages in favor of respondent Rodriguez excessive and unconscionable. In the
case of Prudenciado v. Alliance Transport System, Inc. (148 SCRA 440 [1987]) we said:
... [I]t is undisputed that the trial courts are given discretion to determine the amount of moral damages (Alcantara v. Surro, 93 Phil. 472) and
that the Court of Appeals can only modify or change the amount awarded when they are palpably and scandalously excessive 'so as to indi-
cate that it was the result of passion, prejudice or corruption on the part of the trial court' (Gellada v. Warner Barnes & Co., Inc., 57 O.G. [4]
7347, 7358; Sadie v. Bachrach Motors Co., Inc., 57 O.G. [4] 636 and Adone v. Bachrach Motor Co., Inc., 57 O.G. 656). But in more recent cases
where the awards of moral and exemplary damages are far too excessive compared to the actual losses sustained by the aggrieved party, this
Court ruled that they should be reduced to more reasonable amounts.
Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the Supreme Court ruled that while the amount of moral damages
is a matter left largely to the sound discretion of a court, the same when found excessive should be reduced to more reasonable amounts,
considering the attendant facts and circumstances. Moral damages, though incapable of pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.
In a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]), the Supreme Court, reiterating the above ruling, reduced the
awards of moral and exemplary damages which were far too excessive compared to the actual losses sustained by the aggrieved parties and
where the records show that the injury suffered was not serious or gross and, therefore, out of proportion to the amount of damages gener-
ously awarded by the trial court.
In any case the Court held that 'moral damages are emphatically not intended to enrich a complainant at the expense of a defendant. They are
awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of the defendants' culpable action.' The award of moral damages must be proportionate to the suffering in^licted (R & B
Surety & Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 745 [1984] citing Grand Union Supermarket, Inc. v. Espino, Jr., 94
SCRA 966). (Emphasis supplied)
The respondent is not entirely blameless for the problems which befell him. Apart from the various arguments raised by RCPI in its petition,
there are other factors to be considered in îxing the amount of damages. Anybody who has been involved in international conferences and
meetings knows that a telegram is not adequate preparation. Considering the lackaidaisical attitude of public utility employees in the Philip-
pines and presumably in Africa, the head of an international student organization cannot simply send a telegram and nonchalantly assume
that every preparation will proceed as he anticipates it. The planning expertise and degree of thoroughness incumbent upon conference or-
ganizers is missing from the records. The trial court appears to have been in^luenced by the impressive title of World Association of Law Stu-
dents. There is nothing in the records pointing to a certain degree of distinction earned by WALS which would warrant substantial damages
because of a failed meeting.
Be that as it may, damages are warranted. People depend on telecommunications companies in times of deep emotional stress or pressing
înancial needs. Knowing that messages about the illnesses or deaths of loved ones, births or marriages in a family, important business trans-
actions, and notices of conferences or meetings as in this case, are coursed through the petitioner and similar corporations, it is incumbent
upon them to exercise a greater amount of care and concern than that shown in this case. Every reasonable effort to inform senders of the
non-delivery of messages should be undertaken. From the pleadings îled by counsel in this case, RCPI does not seem to be particularly con-
cerned about its responsibility.
We rule that the amount of P10,000.00 as moral damages in favor of the respondent would be reasonable considering the facts and circum-
stances surrounding the petitioner's liability.
The award of exemplary damages is not proper considering that there is no showing that RCPI acted in "a wanton, fraudulent, reckless, op-
pressive, or malevolent manner." (Article 2232, New Civil Code).
Respondent Rodriguez was awarded the total amount of P43,148.00 as actual or compensatory damages broken down as follows: (a)
P10,000.00 for the preparation of the trip; (b) P20,000.00 for plane fare; (c) P5,000.00 for respondent's stay in transit in Pakistan; (d)
P4,000.00 for hotel bills in Khartoum; (e) P78.00 for the telegraphic toll, and P70.00 for the cost of the cablegram sent to Diane Merger. The
trial court rejected the expenses allegedly incurred by the respondent for a dinner he tendered for the ofîcers, organizers and students at
Khartoum for insufîciency of evidence. It is to be noted that the petitioner does not controvert the amounts. Instead, the petitioner concen-
trates its opposition to the award of actual damages on the argument that the respondent's expenses were actually paid by the organization
and the Sudanese government. The petitioner, however, fails to substantiate its allegations with clear proof. On the other hand, what is evi-
dent on record is that due to the non-receipt of the telegram which would have conîrmed the scheduled conference on September 20, 1978,
Taha cancelled all preparations and stopped the soliciting of funds for the conference which would have included the expenses of the re-
spondent. As a result of the cancellation of the conference, triggered by the non-delivery of the telegrams, the ofîcers were constrained to
schedule another meeting in Santiago, Chile in April 1979. Therefore, we see no reason to disturb these îndings of the trial court afîrmed by
the appellate court as these were not sufîciently controverted by the petitioner (See Ganzon v. Court of Appeals, 161 SCRA 646 [1988]).
Finally, petitioner RCPI objects to the award of attorney's fees. Citing the case of Mirasol v. De la Cruz (84 SCRA 337 (1987]), RCPI contends
that the award of attorney's fees was improper because there was no allegation in the complaint with respect to attorney's fees; respondent
Rodriguez did not present any evidence to prove attorney's fees and the decision failed to explain why attorney's fees are being awarded.
We agree. In the recent case of Stronghold Insurance Company, Inc. v. Court of Appeals, (G.R. No. 88376, May 29,1989), we ruled:
In Abrogar v. Intermediate Appellate Court (G.R. No. 67970, January 15, 1988, 157 SCRA 57) the Court had occasion to state that '[t]he reason
for the award of attorney's fees must be stated in the text of the court's decision, otherwise, if it is stated only in the dispositive portion of the
decision, the same must be disallowed on appeal. (at p. 61 citing Mirasol v. dela Cruz, G.R. No. L-32552, July 31, 1978, 84 SCRA 337).
A cursory reading of the trial court's decision shows that the award of attorney's fees was stated only once — "As for attorney's fees, the
court înds that the amount of P20,000.00 including litigation expenses are reasonable" — just below the dispositive portion of the decision
which reads: "WHEREFORE judgment is hereby rendered ordering the defendants jointly and severally liable to pay the plaintiff the total
sum of TWO HUNDRED THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs
of this suit." The trial court failed to justify the payment of attorney's by RCPI, therefore, the award of attorney's fees as part of its liability
should be disallowed and deleted.
WHEREFORE, the instant petition is PARTLY GRANTED. The questioned decision of the respondent court is MODIFIED. The award directing
Radio Communications of the Philippines, Inc., to pay P100,000.00 moral damages is reduced to P10,000.00. The award ordering it to pay
exemplary damages and attorney's fees is DELETED. In all other respects, the questioned decision is AFFIRMED. Costs against the petitioner.
SO ORDERED.
G.R. No. 1719 January 23, 1907
M. H., RAKES, plaintiff-appellee,

vs.
THE ATLANTIC, GULF AND PACIFIC COMPANY, defendant-appellant.
A. D. Gibbs for appellant.

F. G. Waite, & Thimas Kepner for appellee.
TRACEY, J.:
This is an action for damages. The plaintiff, one of a gang of eight negro laborers in the employment of the defendant, was at work transport-
ing iron rails from a barge in the harbor to the company's yard near the malecon in Manila. Plaintiff claims that but one hand car was used in
this work. The defendant has proved that there were two immediately following one another, upon which were piled lengthwise seven rails,
each weighing 560 pounds, so that the ends of the rails lay upon two crosspieces or sills secured to the cars, but without side pieces or
guards to prevent them from slipping off. According to the testimony of the plaintiff, the men were either in the rear of the car or at its sides.
According to that defendant, some of them were also in front, hauling by a rope. At a certain spot at or near the water's edge the track sagged,
the tie broke, the car either canted or upset, the rails slid off and caught the plaintiff, breaking his leg, which was afterwards amputated at
about the knee.
This îrst point for the plaintiff to establish was that the accident happened through the negligence of the defendant. The detailed description
by the defendant's witnesses of the construction and quality of the track proves that if was up to the general stranded of tramways of that
character, the foundation consisting on land of blocks or crosspieces of wood, by 8 inches thick and from 8 to 10 feet long laid, on the surface
of the ground, upon which at a right angle rested stringers of the same thickness, but from 24 to 30 feet in length. On the across the stringers
the parallel with the blocks were the ties to which the tracks were fastened. After the road reached the water's edge, the blocks or cross-
pieces were replaced with pilling, capped by timbers extending from one side to the other. The tracks were each about 2 feet wide and the
two inside rails of the parallel tracks about 18 inches apart. It was admitted that there were no side pieces or guards on the car; that where
no ends of the rails of the track met each other and also where the stringers joined, there were no îsh plates. the defendant has not effectual-
ly overcome the plaintiff's proof that the joints between the rails were immediately above the joints between the underlying stringers.
The cause of the sagging of the tracks and the breaking of the tie, which was the immediate occasion of the accident, is not clear in the evi-
dence, but is found by the trial court and is admitted in the briefs and in the argument to have been the dislodging of the crosspiece or piling
under the stringer by the water of the bay raised by a recent typhoon. The superintendent of the company attributed it to the giving way of
the block laid in the sand. No effort was made to repair the injury at the time of the occurrence. According to plaintiffs witnesses, a depres-
sion of the track, varying from one half inch to one inch and a half, was therafter apparent to the eye, and a fellow workman of the plaintiff
swears that the day before the accident he called the attention of McKenna, the foreman, to it and asked by simply straightening out the
crosspiece, resetting the block under the stringer and renewing the tie, but otherwise leaving the very same timbers as before. It has not
proven that the company inspected the track after the typhoon or had any proper system of inspection.
In order to charge the defendant with negligence, it was necessary to show a breach of duty on its part in failing either to properly secure the
load on iron to vehicles transporting it, or to skillfully build the tramway or to maintain it in proper condition, or to vigilantly inspect and
repair the roadway as soon as the depression in it became visible. It is upon the failure of the defendant to repair the weakened track, after
notice of its condition, that the judge below based his judgment.
This case presents many important matters for our decision, and îrst among them is the standard of duty which we shall establish in our
jurisprudence on the part of employees toward employees.
The lack or the harshness of legal rules on this subject has led many countries to enact designed to put these relations on a fair basis in the
form of compensation or liability laws or the institution of insurance. In the absence of special legislation we înd no difîculty in so applying
the general principles of our law as to work out a just result.
Civil obligations, arising from crimes or misdemeanors, shall be governed by the provisions of the Penal Code.
And article 568 of the latter code provides:
He who shall execute through reckless negligence an act that if done with malice would constitute a grave crime, shall be punished.
And article 590 provides that the following shall be punished:
4. Those who by simple imprudence or negligence, without committing any infraction of regulations, shall cause an injury which, had malice
intervened, would have constituted a crime or misdemeanor.
And înally by articles 19 and 20, the liability of owners and employers for the faults of their servants and representatives is declared to be
civil and subsidiary in its character.
It is contented by the defendant, as its îrst defense to the action, that the necessary conclusion from these collated laws is that the remedy
for injuries through negligence lies only in a criminal action in which the ofîcial criminally responsible must be made primarily liable and his
employer held only subsidiarily to him. According to this theory the plaintiff should have procured the arrest of the representative of the
company accountable for not repairing the tract, and on his prosecution a suitable îne should have been imposed, payable primarily by him
and secondarily by his employer.
This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the Civil Code makes obligations arising from
faults or negligence not punished by the law, subject to the provisions of Chapter 11 of Title XVI. Section 1902 of that chapter reads:
A person who by an act or omission causes damage to another when there is fault or negligence shall be obliged to repair the damage so
done.
SEC. 1903. The obligation imposed by the preceding article is demandable, not only for personal acts and omissions, but also for those of the
persons for whom they should be responsible.
The father, and on his death or incapacity, the mother, is liable for the damages caused by the minors who live with them.
xxx xxx xxx
Owners or directors of an establishment or enterprise are equally liable for the damages caused by their employees in the service of the
branches in which the latter may be employed or in the performance of their duties.
xxx xxx xxx
The liability referred to in this article shall cease when the persons mentioned therein prove that they employed all the diligence of a good
father of a family to avoid the damages.
As an answer to the argument urged in this particular action it may be sufîcient to point out that nowhere in our general statutes is the em-
ployer penalized for failure to provide or maintain safe appliances for his workmen. His obligation therefore is one "not punished by the law "
and falls under civil rather than criminal jurisprudence. But the answer may be a broader one. We should be reluctant, under any conditions,
to adopt a forced construction of these scientiîc codes, such as is proposed by the defendant, that would rob some of these articles of effect,
would shut out litigants their will from the civil courts, would make the assertion of their rights dependent upon the selection for prosecu-
tion of the proper criminal offender, and render recovery doubtful by reason of the strict rules of proof prevailing in criminal actions. Even if
these articles had always stood alone, such a construction would be unnecessary, but clear light is thrown upon their meaning by the provi-
sions of the Law of Criminal Procedure of Spain (Ley de Enjuiciamiento Criminal), which, though n ever in actual force in these Islands, was
formerly given a suppletory or explanatory effect. Under article 111 of this law, both classes of action, civil and criminal, might be prosecuted
jointly or separately, but while the penal action was pending the civil was suspended. According to article 112, the penal action once started,
the civil remedy should be sought therewith, unless it had been waived by the party injured or been expressly reserved by him for civil pro-
ceedings for the future. If the civil action alone was prosecuted, arising out of a crime that could be enforced by only on private complaint, the
penal action thereunder should be extinguished. These provisions are in harmony with those of articles 23 and 133 of our Penal Code on the
same subject.
An examination of this topic might be carried much further, but the citations of these articles sufîces to show that the civil liability was not
intended to be merged in the criminal nor even to be suspended thereby, except as expressly provided by law. Where an individual is civilly
liable for a negligent act or omission, it is not required that the inured party should seek out a third person criminally liable whose prosecu-
tion must be a condition precedent to the enforcement of the civil right.
Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in respect of criminal actions against his
employees only while they are process of prosecution, or in so far as they determinate the existence of the criminal act from which liability
arises, and his obligation under the civil law and its enforcement in the civil courts is not barred thereby unless by election of the injured
person. Inasmuch as no criminal in question, the provisions of the Penal Code can not affect this action. This construction renders it unneces-
sary to înally determine here whether this subsidiary civil liability in penal actions survived the laws that fully regulated it or has been abro-
gated by the American civil and criminal procedure now in force in the Philippines.
The difîculty in construing the articles of the code above cited in this case appears from the briefs before us to have arisen from the interpre-
tation of the words of article 1093, "fault or negligence not punished by law," as applied to the comprehensive deînition of offenses in arti-
cles 568 and 590 of the Penal Code. It has been shown that the liability of an employer arising out of his relation to his employee who is the
offender is not to be regarded as derived from negligence punished by the law, within the meaning of articles 1092 and 1093. More than this,
however, it can not be said to fall within the class of acts unpunished by the law, the consequences of which are regulated by articles 1902
and 1903 of the Civil Code. The acts to which these articles are applicable are understood to be those and growing out of preexisting duties of
the parties to one another. But were relations already formed give rise to duties, whether springing from contract or quasi contract, then
breaches of those duties are subject to articles 1101, 1103, and 1104, of the same code. A typical application of the distinction may be found
in the consequences of a railway accident due to defective machinery supplied by the employer. His liability to his employee would arise out
of the contract of employment, that to the passengers out of the contract for passage. while that to that injured bystander would originate in
the negligent act itself. This distinction is thus clearly set forth by Manresa in his commentary on article 1093.
We are with reference to such obligations, that culpa, or negligence, may be understood in two difference senses; either as culpa, substantive
and independent, which on account of its origin arises in an obligation between two persons not formerly bound by any other obligation; or
as an incident in the performance of an obligation; or as already existed, which can not be presumed to exist without the other, and which
increases the liability arising from the already exiting obligation.
Of these two species of culpa the îrst one mentioned, existing by itself, may be also considered as a real source of an independent obligation,
and, as chapter 2, title 16 of this book of the code is devoted to it, it is logical to presume that the reference contained in article 1093 is limit-
ed thereto and that it does not extend to those provisions relating to the other species of culpa (negligence), the nature of which we will dis-
cuss later. (Vol. 8, p. 29.)
And in his commentary on articles 1102 and 1104 he says that these two species of negligence may be somewhat inexactly described as con-
tractual and extra-contractual, the letter being the culpa aquiliana of the Roman law and not entailing so strict an obligation as the former.
This terminology is unreservedly accepted by Sanchez-Roman (Derecho Civil, fourth section, Chapter XI, Article II, No. 12), and the principle
stated is supported be decisions of the supreme court of Spain, among them those of November 20, 1896 (80 Jurisprudencia Civil, No. 151),
and June 27, 1894 (75 Jurisprudencia Civil, No. 182). The contract is one for hire and not one of mandate. (March 10, 1897, 81 Jurisprudencia
Civil, No. 107.)
Spanish Jurisprudencia prior to the adoption of the Working Men's Accident Law of January 30, 1900, throws uncertain light on the relation
between master and workman. Moved by the quick industrial development of their people, the courts of France early applied to the subject
the principles common to the law of both countries, which are lucidly discussed by the leading French commentators.
The original French theory, resting the responsibility of owners of industrial enterprises upon articles 1382, 1383, and 1384 of the Code
Napoleon, corresponding in scope to articles 1902 and 1903 of the Spanish Code, soon yielded to the principle that the true basis is the con-
tractual obligation of the employer and employee. (See 18 Dalloz, 196, Title Travail, 331.)
Later the hardships resulting from special exemptions inserted in contracts for employment led to the discovery of a third basis for liability
in an article of he French Code making the possessor of any object answerable for damage done by it while in his charge. Our law having no
counterpart of this article, applicable to every kind of object, we need consider neither the theory growing out of it nor that of "professional
risk" more recently imposed by express legislation, but rather adopting the interpretation of our Civil Code above given, înd a rule for this
case in the contractual obligation. This contractual obligation, implied from the relation and perhaps so inherent in its nature to be invariable
by the parties, binds the employer to provide safe appliances for the use of the employee, thus closely corresponding to English and Ameri-
can Law. On these principles it was the duty of the defendant to build and to maintain its track in reasonably sound condition, so as to protect
its workingmen from unnecessary danger. It is plain that in one respect or the other it failed in its duty, otherwise the accident could not have
occurred; consequently the negligence of the defendant is established.
Another contention of the defense is that the injury resulted to the plaintiff as a risk incident to his employment and, as such, one assumed by
him. It is evident that this can not be the case if the occurrence was due to the failure to repair the track or to duly inspect, it for the employee
is not presumed to have stipulated that the employer might neglect his legal duty. Nor may it be excused upon the ground that the negligence
leading to the accident was that of a fellow-servant of the injured man. It is not apparent to us that the intervention of a third person can re-
lieve the defendant from the performance of its duty nor impose upon the plaintiff the consequences of an act or omission not his own. Sua
cuique culpa nocet. This doctrine, known as "the fellow-servant, rule," we are not disposed to introduce into our jurisprudence. Adopted in
England by Lord Abinger in the case of Prescott vs. Fowler (3 Meeson & Welsby, 1) in 1837, it has since been effectually abrogated by "the
Employers' Liability Acts" and the "Compensation Law." The American States which applied it appear to be gradually getting rid of it; for in-
stance, the New York State legislature of 1906 did away with it in respect to railroad companies, and had in hand a scheme for its total aboli-
tion. It has never found place in the civil law of continental Europe. (Dalloz, vol. 39, 1858, Title Responsibilite, 630, and vol. 15, 1895, same
title, 804. Also more recent instances in Fuzier-Herman, Title Responsibilite Civile, 710.)
The French Cour de Cassation clearly laid down the contrary principle in its judgment of June 28, 1841, in the case of Reygasse, and has since
adhered to it.
The most controverted question in the case is that of the negligence of the plaintiff, contributing to the accident, to what extent it existed in
fact and what legal effect is to be given it. In two particulars is he charged with carelessness:
First. That having noticed the depression in the track he continued his work; and
Second. That he walked on the ends of the ties at the side of the car instead of along the boards, either before or behind it.
As to the îrst point, the depression in the track night indicate either a serious or a rival difîculty. There is nothing in the evidence to show
that the plaintiff did or could see the displaced timber underneath the sleeper. The claim that he must have done so is a conclusion drawn
from what is assumed to have been a probable condition of things not before us, rather than a fair inference from the testimony. While the
method of construction may have been known to the men who had helped build the road, it was otherwise with the plaintiff who had worked
at this job less than two days. A man may easily walk along a railway without perceiving a displacement of the underlying timbers. The fore-
man testiîed that he knew the state of the track on the day of the accident and that it was then in good condition, and one Danridge, a wit-
ness for the defendant, working on the same job, swore that he never noticed the depression in the track and never saw any bad place in it.
The sagging of the track this plaintiff did perceive, but that was reported in his hearing to the foreman who neither promised nor refused to
repair it. His lack of caution in continuing at his work after noticing the slight depression of the rail was not of so gross a nature as to consti-
tute negligence, barring his recovery under the severe American rule. On this point we accept the conclusion of the trial judge who found as
facts that "the plaintiff did not know the cause of the one rail being lower than then other" and "it does not appear in this case that the plain-
tiff knew before the accident occurred that the stringers and rails joined in the same place."
Were we not disposed to agree with these îndings they would, nevertheless, be binding upon us, because not "plainly and manifestly against
the weight of evidence," as those words of section 497, paragraph 3 of the Code of Civil Procedure were interpreted by the Supreme Court of
the United States in the De la Rama case (201 U. S., 303).
In respect of the second charge of negligence against the plaintiff, the judgment below is not so speciîc. While the judge remarks that the
evidence does not justify the înding that the car was pulled by means of a rope attached to the front end or to the rails upon it, and further
that the circumstances in evidence make it clear that the persons necessary to operate the car could not walk upon the plank between the
rails and that, therefore, it was necessary for the employees moving it to get hold upon it as best they could, there is no speciîc înding upon
the instruction given by the defendant to its employees to walk only upon the planks, nor upon the necessity of the plaintiff putting himself
upon the ties at the side in order to get hold upon the car. Therefore the îndings of the judge below leave the conduct of the plaintiff in walk-
ing along the side of the loaded car, upon the open ties, over the depressed track, free to our inquiry.
While the plaintiff and his witnesses swear that not only were they not forbidden to proceed in this way, but were expressly directed by the
foreman to do so, both the ofîcers of the company and three of the workmen testify that there was a general prohibition frequently made
known to all the gang against walking by the side of the car, and the foreman swears that he repeated the prohibition before the starting of
this particular load. On this contradiction of proof we think that the preponderance is in favor of the defendant's contention to the extent of
the general order being made known to the workmen. If so, the disobedience of the plaintiff in placing himself in danger contributed in some
degree to the injury as a proximate, although not as its primary cause. This conclusion presents sharply the question, What effect is to be
given such an act of contributory negligence? Does it defeat a recovery, according to the American rule, or is it to be taken only in reduction of
damages?
While a few of the American States have adopted to a greater or less extent the doctrine of comparative negligence, allowing a recovery by a
plaintiff whose own act contributed to his injury, provided his negligence was slight as compared with that of the defendant, and some others
have accepted the theory of proportional damages, reducing the award to a plaintiff in proportion to his responsibility for the accident, yet
the overwhelming weight of adjudication establishes the principle in American jurisprudence that any negligence, however slight, on the part
of the person injured which is one of the causes proximately contributing to his injury, bars his recovery. (English and American Encyclope-
dia of law, Titles "Comparative Negligence" and Contributory Negligence.")
In Grant Trunk Railway Company vs. Ives (144 U. S., 408, at page 429) the Supreme Court of the United States thus authoritatively states the
present rule of law:
Although the defendant's' negligence may have been the primary cause of the injury complained of, yet an action for such injury can not be
maintained if the proximate and immediate cause of the injury can be traced to the want of ordinary care and caution in the person injured;
subject to this qualiîcation, which has grown up in recent years (having been îrst enunciated in Davies vs. Mann, 10 M. & W., 546) that the
contributory negligence of the party injured will not defeat the action if it be shown that the defendant might, by the exercise of reasonable
care and prudence, have avoided the consequences of the injured party's negligence.
There are may cases in the supreme court of Spain in which the defendant was exonerated, but when analyzed they prove to have been de-
cided either upon the point that he was not negligent or that the negligence of the plaintiff was the immediate cause of the casualty or that
the accident was due to casus fortuitus. Of the îrst class in the decision of January 26, 1887 (38 Jurisprudencia Criminal, No. 70), in which a
railway employee, standing on a car, was thrown therefrom and killed by the shock following the backing up of the engine. It was held that
the management of the train and engine being in conformity with proper rules of the company, showed no fault on its part.
Of the second class are the decision of the 15th of January, the 19th of February, and the 7th of March, 1902, stated in Alcubilla's Index of that
year; and of the third class the decision of the 4th of June, 1888 (64 Jurisprudencia Civil, No. 1), in which the breaking down of plaintiff's dam
by the logs of the defendant impelled against it by the Tajo River, was held due to a freshet as a fortuitous cause.
The decision of the 7th of March, 1902, on which stress has been laid, rested on two bases, one, that the defendant was not negligent, because
expressly relieved by royal order from the common obligation imposed by the police law of maintaining a guard at the road crossing; the
other, because the act of the deceased in driving over level ground with unobstructed view in front of a train running at speed, with the en-
gine whistle blowing was the determining cause of the accident. It is plain that the train was doing nothing but what it had a right to do and
that the only fault lay with the injured man. His negligence was not contributory, it was sole, and was of such an efîcient nature that without
it no catastrophe could have happened.
On the other hand, there are many cases reported in which it seems plain that the plaintiff sustaining damages was not free from contributo-
ry negligence; for instance, the decision of the 14th of December, 1894 (76 Jurisprudencia Civil, No. 134), in which the owner of a building
was held liable for not furnishing protection to workmen engaged in hanging out ^lags, when the latter must have perceived beforehand the
danger attending the work.
None of those cases deîne the effect to be given the negligence of a plaintiff which contributed to his injury as one of its causes, though not
the principal one, and we are left to seek the theory of the civil law in the practice of other countries.
In France in the case of Marquant, August 20, 1879, the cour de cassation held that the carelessness of the victim did not civilly relieve the
person without whose fault the accident could not have happened, but that the contributory negligence of the injured man had the effect only
of reducing the damages. The same principle was applied in the case of Recullet, November 10, 1888. and that of Laugier of the 11th of No-
vember, 1896. (Fuzier-Herman, Title Responsibilite Cirile, 411, 412.) Of like tenor are citations in Dalloz (vol. 18, 1806, Title Trail, 363, 364,
and vol. 15, 1895, Title Responsibilite, 193, 198).
In the Canadian Province of Quebee, which has retained for the most part the French Civil Law, now embodied in a code following the Code
Napoleon, a practice in accord with that of France is laid down in many cases collected in the annotations to article 1053 of the code edited
by Beauchamps, 1904. One of these is Luttrell vs. Trottier, reported in La Revue de Jurisprudence, volume 6, page 90, in which the court of
Kings bench, otherwise known as the court of appeals, the highest authority in the Dominion of Canada on points of French law, held that
contributory negligence did not exonerate the defendants whose fault had been the immediate cause of the accident, but entitled him to a
reduction of damages. Other similar cases in the provincial courts have been overruled by appellate tribunals made up of common law judges
drawn from other provinces, who have preferred to impose uniformally throughout the Dominion the English theory of contributory negli-
gence. Such decisions throw no light upon the doctrines of the civil law. Elsewhere we înd this practice embodied in legislation; for instance,
section 2 of article 2398 of the Code of Portugal reads as follows:
If in the case of damage there was fault or negligence on the part of the person injured or in the part of some one else, the indemniîcation
shall be reduced in the îrst case, and in the second case it shall be appropriated in proportion to such fault or negligence as provided in
paragraphs 1 and 2 of section 2372.
And in article 1304 of the Austrian Code provides that the victim who is partly changeable with the accident shall stand his damages in pro-
portion to his fault, but when that proportion is incapable of ascertainment, he shall share the liability equally with the person principally
responsible. The principle of proportional damages appears to be also adopted in article 51 of the Swiss Code. Even in the United States in
admirality jurisdictions, whose principles are derived from the civil law, common fault in cases of collision have been disposed of not on the
ground of contradictor negligence, but on that of equal loss, the fault of the one part being offset against that of the other. (Ralli vs. Troop, 157
U. S. 386; 97.)
The damage of both being added together and the sum equally divided, a decree is entered in favor of the vessel sustaining the greater loss
against the other for the excess of her damages over one-half of the aggregate sum. (The Manitoba, 122 U. S., 97)
Exceptional practice appears to prevail in maritime law in other jurisdictions. The Spanish Code of Commerce, article 827, makes each vessel
for its own damage when both are the fault; this provision restricted to a single class of the maritime accidents, falls for short of a recognition
of the principle of contributory negligence as understood in American Law, with which, indeed, it has little in common. This is a plain from
other articles of the same code; for instance, article 829, referring to articles 826, 827, and 828, which provides: "In the cases above men-
tioned the civil action of the owner against the person liable for the damage is reserved, as well as the criminal liability which may appear."
The rule of the common law, a hard and fast one, not adjustable with respects of the faults of the parties, appears to have grown out the orig-
inal method of trial by jury, which rendered difîcult a nice balancing of responsibilities and which demanded an in^lexible standard as a safe-
guard against too ready symphaty for the injured. It was assumed that an exact measure of several concurring faults was unattainable.
The reason why, in cases of mutual concurring negligence, neither party can maintain an action against the other, is, not the wrong of the one
is set off against the wrong of the other; it that the law can not measure how much of the damage suffered is attributable to the plaintiff's
own fault. If he were allowed to recover, it might be that he would obtain from the other party compensation for hiss own misconduct. (Heil
vs. Glanding, 42 Penn. St. Rep., 493, 499.)
The parties being mutually in fault, there can be no appointment of damages. The law has no scales to determine in such cases whose wrong-
doing weighed most in the compound that occasioned the mischief. (Railroad vs. Norton, 24 Penn. St. 565, 469.)
Experience with jury trials in negligence cases has brought American courts to review to relax the vigor of the rule by freely exercising the
power of setting aside verdicts deemed excessive, through the device of granting new trials, unless reduced damages are stipulated for,
amounting to a partial revision of damages by the courts. It appears to us that the control by the court of the subject matter may be secured
on a moral logical basis and its judgment adjusted with greater nicety to the merits of the litigants through the practice of offsetting their
respective responsibilities. In the civil law system the desirable end is not deemed beyond the capacity of its tribunals.
Whatever may prove to be the doctrine înally adopted in Spain or in other countries under the stress and counter stress of novel schemers
of legislation, we înd the theory of damages laid down in the judgment the most consistent with the history and the principals of our law in
these Islands and with its logical development.
Difîculty seems to be apprehended in deciding which acts of the injured party shall be considered immediate causes of the accident. The test
is simple. Distinction must be between the accident and the injury, between the event itself, without which there could have been no acci-
dent, and those acts of the victim not entering into it, independent of it, but contributing under review was the displacement of the cross-
piece or the failure to replace it. this produced the event giving occasion for damages — that is, the shinking of the track and the sliding of the
iron rails. To this event, the act of the plaintiff in walking by the side of the car did not contribute, although it was an element of the damage
which came to himself. Had the crosspiece been out of place wholly or partly thorough his act of omission of duty, the last would have been
one of the determining causes of the event or accident, for which he would have been responsible. Where he contributes to the principal oc-
currence, as one of its determining factors, he can not recover. Where, in conjunction with the occurrence, he contributes only to his own
injury, he may recover the amount that the defendant responsible for the event should pay for such injury, less a sum deemed a suitable
equivalent for his own imprudence.
Accepting, though with some hesitation, the judgment of the trial court, îxing the damage incurred by the plaintiff at 5,000 pesos, the equiva-
lent of 2,500 dollars, United States money, we deduct therefrom 2,500 pesos, the amount fairly attributable to his negligence, and direct
judgment to be entered in favor of the plaintiff for the resulting sum of 2,500 pesos, with cost of both instances, and ten days hereafter let the
case be remanded to the court below for proper action. So ordered.
Arellano, C.J. Torres and Mapa, JJ., concur.
Separate Opinions
WILLARD, J., dissenting:
The knowledge which the plaintiff had in regard to the condition of the track is indicated by his own evidence. He testiîed, among other
things, as follows:
Q. Now, describe the best you can the character of the track that ran from the place where you loaded the irons from the barge up to the
point where you unloaded them on the ground.
A. — Well, it was pretty bad character.
xxx xxx xxx
Q. And you were familiar with the track before that its construction?
A. Familiar with what?

Q. Well, you have described it here to the court.
A. Oh, yes; I knew the condition of the track.
Q. You knew its conditions as you have described it here at the time you were working around there?
A. Yes, sir.
xxx xxx xxx
Q. And while operating it from the side it was necessary for you to step from board to board on the cross-ties which extended out over the
stringers?
A. Yes, sir.
Q. And these were very of irregular shape, were they not?
A. They were in pretty bad condition.
xxx xxx xxx
Q. And it was not safe to walk along on the outside of these crosspieces?
A. It was safe if the car stayed on the track. We didn't try to hold the load on. We tried to hold the car back, keep it from going too fast, be-
cause we knew the track was in bad condition just here, and going down too fast we could be liable to run off most any time.
Q. You knew the track was in bad condition when you got hold?
A. Sure, it was in bad condition.
xxx xxx xxx
Q. And the accident took place at that point where you believed it to be so dangerous?
A. Yes, sir.
Q. But you knew it was dangerous?
A. Why certainly, anybody could see it; but a workingman had to work in those days or get arrested for a vag here in Manila.
The court below, while it found that the plaintiff knew in a general way of the bad condition of the track, found that he was not informed of
the exact cause of the accident, namely, the washing away of the large crosspiece laid upon the ground or placed upon the posts as the foun-
dation upon which the stripers rested. This înding of fact to my mind is plainly and manifestly against the weight of the evidence. Ellis, a
witness for the plaintiff, testiîed that on the morning of the accident he called the attention of McKenna, the foreman, to the defective condi-
tion of the track at his precise point where the accident happened. His testimony in part is as follows:
A. I called Mr. McKenna. I showed him the track and told him I didn't think it was safe working, and that if he didn't îx it he was liable to
have an accident; I told him I thought if he put îsh plates on it would it. He said, you keep on îshing around here for îsh plates and you will
be îshing for another job the îrst thing you know." He says, "You see to much."
xxx xxx xxx
Q. Who else was present at the time you had this conversation with Mr. McKenna?
A. Well, at that conversation as far as I can remember, we were all walking down the track and I know that McCoy and Mr. Blakes was
along at the time. I remember them two, but we were all walking down the track in a bunch, but I disremember them.
xxx xxx xxx
Q. Was that the exact language that you used, that you wanted some îsh plates put on?
A. No, sir: I told him to look at that track. I says get some îsh plates. I says if there was any îsh plates we would îx that.
Q. What did the îsh plates have to do with that?
A. It would have strengthened that joint.
Q. Why didn't you put the 8 by 8 which was washed crossways in place?
A. That would have been taken the raising of the track and digging out along this upright piece and then putting it up again.
The plaintiff himself testiîed that he was present with Ellis at the time this conversation was had with McKenna. It thus appears that on the
morning in question the plaintiff and McKenna were standing directly over the place where the accident happened later in the day. The acci-
dent was caused, as the court below found, by the washing away or displacement of the large 8 by 8 piece of timber. This track was con-
structed as all other tracks are, all of it open work, with no ^loor over the ties, and of course see the ground and the entire construction of the
road, including these large 8 by 8 pieces, the long stringers placed thereon, the ties placed on these stringers, and the rails placed on the ties.
The plaintiff himself must have seen that the 8 by 8 piece of timber was out of place.
If the testimony of the plaintiff's witnesses is to be believed, the displacement was more markedly apparent even than it would appear from
the testimony of the defendant's witnesses. According to the plaintiff's witnesses, the water at high tide reached the place in question and
these 8 by 8 pieces were therefore not laid upon the ground but were placed upon posts driven into the ground, the height of the posts at this
particular place being, according to the testimony of the plaintiff's witnesses, from a foot to two feet and a half. As has been said, Ellis testi-
îed that the reason why they did not put the 8 by 8 back in its place was because that would have required the raising up of the track and
digging out along this upright piece and then putting it up again.
It conclusively appears from the evidence that the plaintiff, before the accident happened, knew the exact condition of the track and was in-
formed and knew of the defect which caused the accident. There was no promise on the part of McKenna to repair the track.
Under the circumstances the plaintiff was negligent in placing himself on the side of the car where he knew that he would be injured by the
falling of the rails from the car when they reached this point in the track where the two stringers were without any support of their ends. He
either should have refused to work at all or he should have placed himself behind the car, on the other side of it, or in front of it, drawing it
with a rope. He was guilty of contributory negligence and is not entitled to recover.
It is, said however, that contributory negligence on the part of the plaintiff in a case like this is no defense under the law in force in these Is-
lands. To this proposition I can not agree. The liability of the defendant is based in the majority opinion upon articles 1101 and 1103 of the
Civil Code.
In order to impose such liability upon the defendant, it must appear that its negligence caused the accident. The reason why contradictory
negligence on the part of the plaintiff is a defense in this class of cases is that the negligence of the defendant did not alone cause the acci-
dent. If nothing but that negligence had existed, the accident would not have happened and, as I understand it, in every case in which contra-
dictory negligence is a defense it is made so because the negligence of the plaintiff is the cause of the accident, to this extent, that if the plain-
tiff had not been negligent the accident would not have happened, although the defendant was also negligent. In other words, the negligence
of the defendant is not alone sufîcient to cause the accident. It requires also the negligence of the plaintiff.
There is, so far as I know, nothing in the Civil Code relating to contributory negligence. The rule of the Roman law was: "Quod quis ex culap
sua damnum sentit, no intelligitur damnum sentire." (Digest, book, 50, tit. 17, rule 203.)
The partidas contain the following provisions:
The just thing is that a man should suffer the damage which comes to him through his own fault, and that he can not demand reparation
therefor from another. (Law 25, tit. 5, partida 3.)
And they even said that when a man received an injury through his own acts, the grievance should be against himself and not against another.
(Law 2, tit. 7, partida 2.)
In several cases in the supreme court of Spain the fact has been negligence that the plaintiff was himself guilty of negligence, as in the civil
judgments of the 4th of June, 1888, and of the 20th of February, 1887, and in the criminal judgments of the 20th of February 1888, the 90th
of March, 1876, and the 6th of October, 1882. These cases do not throw much light upon the subject. The judgment of the 7th of March, 1902
(93 Jurisprudencia Civil, 391), is, however, directly in point. In that case the supreme court of Spain said:
According to the doctrine expressed in article 1902 of the Civil Code, fault or negligence is a source of obligation when between such negli-
gence and the injury thereby caused there exists the relation of cause and effect; but in the injury caused should not be the result of acts or
omissions of a third party, the latter has no obligation to repair the same, even though such acts or omissions were imprudent or unlawful,
and much less when it is shown that the immediate cause of the injury was the negligence of the injured person party himself.
Found the reasons above stated, and the court below having found that the death of the deceased was due to his own imprudence, and not
therefore due to the absence of a guard at the grade crossing where the accident occurred, it seems clear that court in acquitting the railroad
company of the complaint îled by the widow did not violate the provisions of the aforesaid article of the Civil Code.
For the same reason, although the authority granted to the railroad company to open the grade crossing without a special guard was nulliîed
by the subsequent promulgation of the railroad police law and the regulations for the execution of the same, the result would be identical,
leaving one of the grounds upon which the judgment of acquittal is based, to wit, that the accident was caused by the imprudence of the in-
jured party himself, unaffected.
It appears that the accident in this case took place at a grade crossing where, according to the claim of the plaintiff, it was the duty of the rail-
road company to maintain husband was injured by a train at this crossing, his negligence contributing to the injury according to the ruling of
the court below. This judgment, then, amounts to a holding that a contributory negligence is a defense according to the law of Spain. (See also
judgment of the 21st of October, 1903, vol. 96 p. 400, Jurisprudencia Civil.)
Although in the Civil Code there is no express provision upon the subject, in the Code of Commerce there is found a distinct declaration upon
it in reference to damages caused by collission at sea. Article 827 of the Code of Commerce is as follows:
If both vessels may be blamed for the collission, each one shall for liable for his own damages, and both shall jointly responsible for the loss
and damages suffered to their cargoes.
That article is an express recognition of the fact that in collision cases contributory negligence is a defense,
I do not think that this court is justiîed in view of the Roman law, of the provisions of the Partidas, of the judgment of March 7, 1902, of arti-
cle 827 of the Code of Commerce, and in the absence of any declaration upon the subject in the Civil Code, in saying that it was the intention
rule announced in the majority opinion, a rule dimetrically opposed to that put in force by the Code of Commerce.
The chief, is not the only, reason stated in the opinion for adopting the rule that contradictory negligence is not a defense seems to be that
such is the holding of the later French decisions.
As to whether, if any liability existed in this case, it would be necessary in accordance with the provisions of the Penal Code, or primary, in
accordance with the provision of the Civil Code, I express no opinion.
The judgment should, I think, be reversed and the defendant acquitted of the complaint.
Carson, J., concurs.

G.R. No. L-21749 September 29, 1967
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,

vs.
LUZON STEVEDORING CORPORATION, defendant-appellant.
Ofîce of the Solicitor General for plaintiff-appellee.

H. San Luis and L.V. Simbulan for defendant-appellant.
REYES, J.B.L., J.:
The present case comes by direct appeal from a decision of the Court of First Instance of Manila (Case No. 44572) adjudging the defendant-
appellant, Luzon Stevedoring Corporation, liable in damages to the plaintiff-appellee Republic of the Philippines.
In the early afternoon of August 17, 1960, barge L-1892, owned by the Luzon Stevedoring Corporation was being towed down the Pasig river
by tugboats "Bangus" and "Barbero"1 also belonging to the same corporation, when the barge rammed against one of the wooden piles of the
Nagtahan bailey bridge, smashing the posts and causing the bridge to list. The river, at the time, was swollen and the current swift, on ac-
count of the heavy downpour of Manila and the surrounding provinces on August 15 and 16, 1960.
Sued by the Republic of the Philippines for actual and consequential damage caused by its employees, amounting to P200,000 (Civil Case No.
44562, CFI of Manila), defendant Luzon Stevedoring Corporation disclaimed liability therefor, on the grounds that it had exercised due dili-
gence in the selection and supervision of its employees; that the damages to the bridge were caused by force majeure; that plaintiff has no
capacity to sue; and that the Nagtahan bailey bridge is an obstruction to navigation.
After due trial, the court rendered judgment on June 11, 1963, holding the defendant liable for the damage caused by its employees and or-
dering it to pay to plaintiff the actual cost of the repair of the Nagtahan bailey bridge which amounted to P192,561.72, with legal interest
thereon from the date of the îling of the complaint.
Defendant appealed directly to this Court assigning the following errors allegedly committed by the court a quo, to wit:
I — The lower court erred in not holding that the herein defendant-appellant had exercised the diligence required of it in the selection and
supervision of its personnel to prevent damage or injury to others.1awphîl.nèt
II — The lower court erred in not holding that the ramming of the Nagtahan bailey bridge by barge L-1892 was caused by force majeure.
III — The lower court erred in not holding that the Nagtahan bailey bridge is an obstruction, if not a menace, to navigation in the Pasig river.
IV — The lower court erred in not blaming the damage sustained by the Nagtahan bailey bridge to the improper placement of the dolphins.
V — The lower court erred in granting plaintiff's motion to adduce further evidence in chief after it has rested its case.
VI — The lower court erred in înding the plaintiff entitled to the amount of P192,561.72 for damages which is clearly exorbitant and without
any factual basis.
However, it must be recalled that the established rule in this jurisdiction is that when a party appeals directly to the Supreme Court, and
submits his case there for decision, he is deemed to have waived the right to dispute any înding of fact made by the trial Court. The only
questions that may be raised are those of law (Savellano vs. Diaz, L-17441, July 31, 1963; Aballe vs. Santiago, L-16307, April 30, 1963; G.S.I.S.
vs. Cloribel, L-22236, June 22, 1965). A converso, a party who resorts to the Court of Appeals, and submits his case for decision there, is
barred from contending later that his claim was beyond the jurisdiction of the aforesaid Court. The reason is that a contrary rule would en-
courage the undesirable practice of appellants' submitting their cases for decision to either court in expectation of favorable judgment, but
with intent of attacking its jurisdiction should the decision be unfavorable (Tyson Tan, et al. vs. Filipinas Compañia de Seguros) et al.,
L-10096, Res. on Motion to Reconsider, March 23, 1966). Consequently, we are limited in this appeal to the issues of law raised in the appel-
lant's brief.
Taking the aforesaid rules into account, it can be seen that the only reviewable issues in this appeal are reduced to two:
1) Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan bridge was in law caused by fortuitous event
or force majeure, and
2) Whether or not it was error for the Court to have permitted the plaintiff-appellee to introduce additional evidence of damages after said
party had rested its case.
As to the îrst question, considering that the Nagtahan bridge was an immovable and stationary object and uncontrovertedly provided with
adequate openings for the passage of water craft, including barges like of appellant's, it is undeniable that the unusual event that the barge,
exclusively controlled by appellant, rammed the bridge supports raises a presumption of negligence on the part of appellant or its employees
manning the barge or the tugs that towed it. For in the ordinary course of events, such a thing does not happen if proper care is used. In An-
glo American Jurisprudence, the inference arises by what is known as the "res ipsa loquitur" rule (Scott vs. London Docks Co., 2 H & C 596;
San Juan Light & Transit Co. vs. Requena, 224 U.S. 89, 56 L. Ed., 680; Whitwell vs. Wolf, 127 Minn. 529, 149 N.W. 299; Bryne vs. Great Atlantic
& Paciîc Tea Co., 269 Mass. 130; 168 N.E. 540; Gribsby vs. Smith, 146 S.W. 2d 719).
The appellant strongly stresses the precautions taken by it on the day in question: that it assigned two of its most powerful tugboats to tow
down river its barge L-1892; that it assigned to the task the more competent and experienced among its patrons, had the towlines, engines
and equipment double-checked and inspected; that it instructed its patrons to take extra precautions; and concludes that it had done all it
was called to do, and that the accident, therefore, should be held due to force majeure or fortuitous event.
These very precautions, however, completely destroy the appellant's defense. For caso fortuito or force majeure (which in law are identical in
so far as they exempt an obligor from liability)2 by deînition, are extraordinary events not foreseeable or avoidable, "events that could not
be foreseen, or which, though foreseen, were inevitable" (Art. 1174, Civ. Code of the Philippines). It is, therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difî-
culty to foresee the happening is not impossibility to foresee the same: "un hecho no constituye caso fortuito por la sola circunstancia de que
su existencia haga mas diîcil o mas onerosa la accion diligente del presento ofensor" (Peirano Facio, Responsibilidad Extra-contractual, p.
465; Mazeaud Trait de la Responsibilite Civil, Vol. 2, sec. 1569). The very measures adopted by appellant prove that the possibility of danger
was not only foreseeable, but actually foreseen, and was not caso fortuito.
Otherwise stated, the appellant, Luzon Stevedoring Corporation, knowing and appreciating the perils posed by the swollen stream and its
swift current, voluntarily entered into a situation involving obvious danger; it therefore assured the risk, and can not shed responsibility
merely because the precautions it adopted turned out to be insufîcient. Hence, the lower Court committed no error in holding it negligent in
not suspending operations and in holding it liable for the damages caused.
It avails the appellant naught to argue that the dolphins, like the bridge, were improperly located. Even if true, these circumstances would
merely emphasize the need of even higher degree of care on appellant's part in the situation involved in the present case. The appellant,
whose barges and tugs travel up and down the river everyday, could not safely ignore the danger posed by these allegedly improper con-
structions that had been erected, and in place, for years.
On the second point: appellant charges the lower court with having abused its discretion in the admission of plaintiff's additional evidence
after the latter had rested its case. There is an insinuation that the delay was deliberate to enable the manipulation of evidence to prejudice
defendant-appellant.
We înd no merit in the contention. Whether or not further evidence will be allowed after a party offering the evidence has rested his case,
lies within the sound discretion of the trial Judge, and this discretion will not be reviewed except in clear case of abuse.3
In the present case, no abuse of that discretion is shown. What was allowed to be introduced, after plaintiff had rested its evidence in chief,
were vouchers and papers to support an item of P1,558.00 allegedly spent for the reinforcement of the panel of the bailey bridge, and which
item already appeared in Exhibit GG. Appellant, in fact, has no reason to charge the trial court of being unfair, because it was also able to se-
cure, upon written motion, a similar order dated November 24, 1962, allowing reception of additional evidence for the said defendant-appel-
lant.4
WHEREFORE, înding no error in the decision of the lower Court appealed from, the same is hereby afîrmed. Costs against the defendant-
appellant.
G.R. No. L-12986 March 31, 1966
THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the HEIRS OF DOMINGA ONG, petitioners-appellants,
vs.
CALTEX (PHIL.), INC., MATEO BOQUIREN and THE COURT OF APPEALS, respondents-appellees.
Ross, Selph, Carrascoso and Janda for the respondents.

Bernabe Africa, etc. for the petitioners.
MAKALINTAL., J.:
This case is before us on a petition for review of the decision of the Court of Appeals, which afîrmed that of the Court of First Instance of
Manila dismissing petitioners' second amended complaint against respondents.
The action is for damages under Articles 1902 and 1903 of the old Civil Code. It appears that in the afternoon of March 18, 1948 a îre broke
out at the Caltex service station at the corner of Antipolo street and Rizal Avenue, Manila. It started while gasoline was being hosed from a
tank truck into the underground storage, right at the opening of the receiving tank where the nozzle of the hose was inserted. The îre spread
to and burned several neighboring houses, including the personal properties and effects inside them. Their owners, among them petitioners
here, sued respondents Caltex (Phil.), Inc. and Mateo Boquiren, the îrst as alleged owner of the station and the second as its agent in charge
of operation. Negligence on the part of both of them was attributed as the cause of the îre.
The trial court and the Court of Appeals found that petitioners failed to prove negligence and that respondents had exercised due care in the
premises and with respect to the supervision of their employees.
The îrst question before Us refers to the admissibility of certain reports on the îre prepared by the Manila Police and Fire Departments and
by a certain Captain Tinio of the Armed Forces of the Philippines. Portions of the îrst two reports are as follows:
1. Police Department report: —
Investigation disclosed that at about 4:00 P.M. March 18, 1948, while Leandro Flores was transferring gasoline from a tank truck, plate No. T-
5292 into the underground tank of the Caltex Gasoline Station located at the corner of Rizal Avenue and Antipolo Street, this City, an un-
known Filipino lighted a cigarette and threw the burning match stick near the main valve of the said underground tank. Due to the gasoline
fumes, îre suddenly blazed. Quick action of Leandro Flores in pulling off the gasoline hose connecting the truck with the underground tank
prevented a terriîc explosion. However, the ^lames scattered due to the hose from which the gasoline was spouting. It burned the truck and
the following accessorias and residences.
2. The Fire Department report: —
In connection with their allegation that the premises was (sic) subleased for the installation of a coca-cola and cigarette stand, the com-
plainants furnished this Ofîce a copy of a photograph taken during the îre and which is submitted herewith. it appears in this picture that
there are in the premises a coca-cola cooler and a rack which according to information gathered in the neighborhood contained cigarettes
and matches, installed between the gasoline pumps and the underground tanks.
The report of Captain Tinio reproduced information given by a certain Benito Morales regarding the history of the gasoline station and what
the chief of the îre department had told him on the same subject.
The foregoing reports were ruled out as "double hearsay" by the Court of Appeals and hence inadmissible. This ruling is now assigned as
error. It is contended: îrst, that said reports were admitted by the trial court without objection on the part of respondents; secondly, that
with respect to the police report (Exhibit V-Africa) which appears signed by a Detective Zapanta allegedly "for Salvador Capacillo," the latter
was presented as witness but respondents waived their right to cross-examine him although they had the opportunity to do so; and thirdly,
that in any event the said reports are admissible as an exception to the hearsay rule under section 35 of Rule 123, now Rule 130.
The îrst contention is not borne out by the record. The transcript of the hearing of September 17, 1953 (pp. 167-170) shows that the reports
in question, when offered as evidence, were objected to by counsel for each of respondents on the ground that they were hearsay and that
they were "irrelevant, immaterial and impertinent." Indeed, in the court's resolution only Exhibits J, K, K-5 and X-6 were admitted without
objection; the admission of the others, including the disputed ones, carried no such explanation.
On the second point, although Detective Capacillo did take the witness stand, he was not examined and he did not testify as to the facts men-
tioned in his alleged report (signed by Detective Zapanta). All he said was that he was one of those who investigated "the location of the îre
and, if possible, gather witnesses as to the occurrence, and that he brought the report with him. There was nothing, therefore, on which he
need be cross-examined; and the contents of the report, as to which he did not testify, did not thereby become competent evidence. And even
if he had testiîed, his testimony would still have been objectionable as far as information gathered by him from third persons was concerned.
Petitioners maintain, however, that the reports in themselves, that is, without further testimonial evidence on their contents, fall within the
scope of section 35, Rule 123, which provides that "entries in ofîcial records made in the performance of his duty by a public ofîcer of the
Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated."
There are three requisites for admissibility under the rule just mentioned: (a) that the entry was made by a public ofîcer, or by another per-
son specially enjoined by law to do so; (b) that it was made by the public ofîcer in the performance of his duties, or by such other person in
the performance of a duty specially enjoined by law; and (c) that the public ofîcer or other person had sufîcient knowledge of the facts by
him stated, which must have been acquired by him personally or through ofîcial information (Moran, Comments on the Rules of Court, Vol. 3
[1957] p. 398).
Of the three requisites just stated, only the last need be considered here. Obviously the material facts recited in the reports as to the cause
and circumstances of the îre were not within the personal knowledge of the ofîcers who conducted the investigation. Was knowledge of
such facts, however, acquired by them through ofîcial information? As to some facts the sources thereof are not even identiîed. Others are
attributed to Leopoldo Medina, referred to as an employee at the gas station were the îre occurred; to Leandro Flores, driver of the tank
truck from which gasoline was being transferred at the time to the underground tank of the station; and to respondent Mateo Boquiren, who
could not, according to Exhibit V-Africa, give any reason as to the origin of the îre. To qualify their statements as "ofîcial information" ac-
quired by the ofîcers who prepared the reports, the persons who made the statements not only must have personal knowledge of the facts
stated but must have the duty to give such statements for record.1
The reports in question do not constitute an exception to the hearsay rule; the facts stated therein were not acquired by the reporting ofî-
cers through ofîcial information, not having been given by the informants pursuant to any duty to do so.
The next question is whether or not, without proof as to the cause and origin of the îre, the doctrine of res ipsa loquitur should apply so as to
presume negligence on the part of appellees. Both the trial court and the appellate court refused to apply the doctrine in the instant case on
the grounds that "as to (its) applicability ... in the Philippines, there seems to he nothing deînite," and that while the rules do not prohibit its
adoption in appropriate cases, "in the case at bar, however, we înd no practical use for such doctrine." The question deserves more than such
summary dismissal. The doctrine has actually been applied in this jurisdiction, in the case of Espiritu vs. Philippine Power and Development
Co. (CA-G.R. No. 3240-R, September 20, 1949), wherein the decision of the Court of Appeals was penned by Mr. Justice J.B.L. Reyes now a
member of the Supreme Court.
The facts of that case are stated in the decision as follows:
In the afternoon of May 5, 1946, while the plaintiff-appellee and other companions were loading grass between the municipalities of Bay and
Calauan, in the province of Laguna, with clear weather and without any wind blowing, an electric transmission wire, installed and main-
tained by the defendant Philippine Power and Development Co., Inc. alongside the road, suddenly parted, and one of the broken ends hit the
head of the plaintiff as he was about to board the truck. As a result, plaintiff received the full shock of 4,400 volts carried by the wire and was
knocked unconscious to the ground. The electric charge coursed through his body and caused extensive and serious multiple burns from
skull to legs, leaving the bone exposed in some parts and causing intense pain and wounds that were not completely healed when the case
was tried on June 18, 1947, over one year after the mishap.
The defendant therein disclaimed liability on the ground that the plaintiff had failed to show any speciîc act of negligence, but the appellate
court overruled the defense under the doctrine of res ipsa loquitur. The court said:
The îrst point is directed against the sufîciency of plaintiff's evidence to place appellant on its defense. While it is the rule, as contended by
the appellant, that in case of noncontractual negligence, or culpa aquiliana, the burden of proof is on the plaintiff to establish that the proxi-
mate cause of his injury was the negligence of the defendant, it is also a recognized principal that "where the thing which caused injury,
without fault of the injured person, is under the exclusive control of the defendant and the injury is such as in the ordinary course of things
does not occur if he having such control use proper care, it affords reasonable evidence, in the absence of the explanation, that the injury
arose from defendant's want of care."
And the burden of evidence is shifted to him to establish that he has observed due care and diligence. (San Juan Light & Transit Co. v. Reque-
na, 244, U.S. 89, 56 L. ed. 680.) This rule is known by the name of res ipsa loquitur (the transaction speaks for itself), and is peculiarly applic-
able to the case at bar, where it is unquestioned that the plaintiff had every right to be on the highway, and the electric wire was under the
sole control of defendant company. In the ordinary course of events, electric wires do not part suddenly in fair weather and injure people,
unless they are subjected to unusual strain and stress or there are defects in their installation, maintenance and supervision; just as barrels
do not ordinarily roll out of the warehouse windows to injure passersby, unless some one was negligent. (Byrne v. Boadle, 2 H & Co. 722; 159
Eng. Reprint 299, the leading case that established that rule). Consequently, in the absence of contributory negligence (which is admittedly
not present), the fact that the wire snapped sufîces to raise a reasonable presumption of negligence in its installation, care and maintenance.
Thereafter, as observed by Chief Baron Pollock, "if there are any facts inconsistent with negligence, it is for the defendant to prove."
It is true of course that decisions of the Court of Appeals do not lay down doctrines binding on the Supreme Court, but we do not consider
this a reason for not applying the particular doctrine of res ipsa loquitur in the case at bar. Gasoline is a highly combustible material, in the
storage and sale of which extreme care must be taken. On the other hand, îre is not considered a fortuitous event, as it arises almost invari-
ably from some act of man. A case strikingly similar to the one before Us is Jones vs. Shell Petroleum Corporation, et al., 171 So. 447:
Arthur O. Jones is the owner of a building in the city of Hammon which in the year 1934 was leased to the Shell Petroleum Corporation for a
gasoline îlling station. On October 8, 1934, during the term of the lease, while gasoline was being transferred from the tank wagon, also op-
erated by the Shell Petroleum Corporation, to the underground tank of the station, a îre started with resulting damages to the building
owned by Jones. Alleging that the damages to his building amounted to $516.95, Jones sued the Shell Petroleum Corporation for the recovery
of that amount. The judge of the district court, after hearing the testimony, concluded that plaintiff was entitled to a recovery and rendered
judgment in his favor for $427.82. The Court of Appeals for the First Circuit reversed this judgment, on the ground the testimony failed to
show with reasonable certainty any negligence on the part of the Shell Petroleum Corporation or any of its agents or employees. Plaintiff
applied to this Court for a Writ of Review which was granted, and the case is now before us for decision.1äwphï1.ñët
In resolving the issue of negligence, the Supreme Court of Louisiana held:
Plaintiff's petition contains two distinct charges of negligence — one relating to the cause of the îre and the other relating to the spreading
of the gasoline about the îlling station.
Other than an expert to assess the damages caused plaintiff's building by the îre, no witnesses were placed on the stand by the defendant.
Taking up plaintiff's charge of negligence relating to the cause of the îre, we înd it established by the record that the îlling station and the
tank truck were under the control of the defendant and operated by its agents or employees. We further înd from the uncontradicted testi-
mony of plaintiff's witnesses that îre started in the underground tank attached to the îlling station while it was being îlled from the tank
truck and while both the tank and the truck were in charge of and being operated by the agents or employees of the defendant, extended to
the hose and tank truck, and was communicated from the burning hose, tank truck, and escaping gasoline to the building owned by the plain-
tiff.
Predicated on these circumstances and the further circumstance of defendant's failure to explain the cause of the îre or to show its lack of
knowledge of the cause, plaintiff has evoked the doctrine of res ipsa loquitur. There are many cases in which the doctrine may be successfully
invoked and this, we think, is one of them.
Where the thing which caused the injury complained of is shown to be under the management of defendant or his servants and the accident
is such as in the ordinary course of things does not happen if those who have its management or control use proper care, it affords reason-
able evidence, in absence of explanation by defendant, that the accident arose from want of care. (45 C.J. #768, p. 1193).
This statement of the rule of res ipsa loquitur has been widely approved and adopted by the courts of last resort. Some of the cases in this
jurisdiction in which the doctrine has been applied are the following, viz.: Maus v. Broderick, 51 La. Ann. 1153, 25 So. 977; Hebert v. Lake
Charles Ice, etc., Co., 111 La. 522, 35 So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505; Willis v. Vicksburg, etc., R. Co., 115 La. 63, 38 So. 892; Bents
v. Page, 115 La. 560, 39 So. 599.
The principle enunciated in the aforequoted case applies with equal force here. The gasoline station, with all its appliances, equipment and
employees, was under the control of appellees. A îre occurred therein and spread to and burned the neighboring houses. The persons who
knew or could have known how the îre started were appellees and their employees, but they gave no explanation thereof whatsoever. It is a
fair and reasonable inference that the incident happened because of want of care.
In the report submitted by Captain Leoncio Mariano of the Manila Police Department (Exh. X-1 Africa) the following appears:
Investigation of the basic complaint disclosed that the Caltex Gasoline Station complained of occupies a lot approximately 10 m x 10 m at the
southwest corner of Rizal Avenue and Antipolo. The location is within a very busy business district near the Obrero Market, a railroad cross-
ing and very thickly populated neighborhood where a great number of people mill around the
Until gasoline
Whatever be the actjvities of these people lighting a cigarette cannot be excluded and this constitute a secondary hazard to its operation
which in turn endangers the entire neighborhood to con^lagration.
Furthermore, aside from precautions already taken by its operator the concrete walls south and west adjoining the neighborhood are only 2-
1/2 meters high at most and cannot avoid the ^lames from leaping over it in case of îre.
Records show that there have been two cases of îre which caused not only material damages but desperation and also panic in the neigh-
borhood.
Although the soft drinks stand had been eliminated, this gasoline service station is also used by its operator as a garage and repair shop for
his ^leet of taxicabs numbering ten or more, adding another risk to the possible outbreak of îre at this already small but crowded gasoline
station.
The foregoing report, having been submitted by a police ofîcer in the performance of his duties on the basis of his own personal observation
of the facts reported, may properly be considered as an exception to the hearsay rule. These facts, descriptive of the location and objective
circumstances surrounding the operation of the gasoline station in question, strengthen the presumption of negligence under the doctrine of
res ipsa loquitur, since on their face they called for more stringent measures of caution than those which would satisfy the standard of due
diligence under ordinary circumstances. There is no more eloquent demonstration of this than the statement of Leandro Flores before the
police investigator. Flores was the driver of the gasoline tank wagon who, alone and without assistance, was transferring the contents thereof
into the underground storage when the îre broke out. He said: "Before loading the underground tank there were no people, but while the
loading was going on, there were people who went to drink coca-cola (at the coca-cola stand) which is about a meter from the hole leading to
the underground tank." He added that when the tank was almost îlled he went to the tank truck to close the valve, and while he had his back
turned to the "manhole" he, heard someone shout "îre."
Even then the îre possibly would not have spread to the neighboring houses were it not for another negligent omission on the part of defen-
dants, namely, their failure to provide a concrete wall high enough to prevent the ^lames from leaping over it. As it was the concrete wall was
only 2-1/2 meters high, and beyond that height it consisted merely of galvanized iron sheets, which would predictably crumple and melt
when subjected to intense heat. Defendants' negligence, therefore, was not only with respect to the cause of the îre but also with respect to
the spread thereof to the neighboring houses.
There is an admission on the part of Boquiren in his amended answer to the second amended complaint that "the îre was caused through
the acts of a stranger who, without authority, or permission of answering defendant, passed through the gasoline station and negligently
threw a lighted match in the premises." No evidence on this point was adduced, but assuming the allegation to be true — certainly any unfa-
vorable inference from the admission may be taken against Boquiren — it does not extenuate his negligence. A decision of the Supreme Court
of Texas, upon facts analogous to those of the present case, states the rule which we înd acceptable here. "It is the rule that those who dis-
tribute a dangerous article or agent, owe a degree of protection to the public proportionate to and commensurate with a danger involved ...
we think it is the generally accepted rule as applied to torts that 'if the effects of the actor's negligent conduct actively and continuously oper-
ate to bring about harm to another, the fact that the active and substantially simultaneous operation of the effects of a third person's inno-
cent, tortious or criminal act is also a substantial factor in bringing about the harm, does not protect the actor from liability.' (Restatement of
the Law of Torts, vol. 2, p. 1184, #439). Stated in another way, "The intention of an unforeseen and unexpected cause, is not sufîcient to re-
lieve a wrongdoer from consequences of negligence, if such negligence directly and proximately cooperates with the independent cause in
the resulting injury." (MacAfee, et al. vs. Traver's Gas Corporation, 153 S.W. 2nd 442.)
The next issue is whether Caltex should be held liable for the damages caused to appellants. This issue depends on whether Boquiren was an
independent contractor, as held by the Court of Appeals, or an agent of Caltex. This question, in the light of the facts not controverted, is one
of law and hence may be passed upon by this Court. These facts are: (1) Boquiren made an admission that he was an agent of Caltex; (2) at
the time of the îre Caltex owned the gasoline station and all the equipment therein; (3) Caltex exercised control over Boquiren in the man-
agement of the state; (4) the delivery truck used in delivering gasoline to the station had the name of CALTEX painted on it; and (5) the li-
cense to store gasoline at the station was in the name of Caltex, which paid the license fees. (Exhibit T-Africa; Exhibit U-Africa; Exhibit X-5
Africa; Exhibit X-6 Africa; Exhibit Y-Africa).
In Boquiren's amended answer to the second amended complaint, he denied that he directed one of his drivers to remove gasoline from the
truck into the tank and alleged that the "alleged driver, if one there was, was not in his employ, the driver being an employee of the Caltex
(Phil.) Inc. and/or the owners of the gasoline station." It is true that Boquiren later on amended his answer, and that among the changes was
one to the effect that he was not acting as agent of Caltex. But then again, in his motion to dismiss appellants' second amended complaint the
ground alleged was that it stated no cause of action since under the allegations thereof he was merely acting as agent of Caltex, such that he
could not have incurred personal liability. A motion to dismiss on this ground is deemed to be an admission of the facts alleged in the com-
plaint.
Caltex admits that it owned the gasoline station as well as the equipment therein, but claims that the business conducted at the service sta-
tion in question was owned and operated by Boquiren. But Caltex did not present any contract with Boquiren that would reveal the nature of
their relationship at the time of the îre. There must have been one in existence at that time. Instead, what was presented was a license
agreement manifestly tailored for purposes of this case, since it was entered into shortly before the expiration of the one-year period it was
intended to operate. This so-called license agreement (Exhibit 5-Caltex) was executed on November 29, 1948, but made effective as of Jan-
uary 1, 1948 so as to cover the date of the îre, namely, March 18, 1948. This retroactivity provision is quite signiîcant, and gives rise to the
conclusion that it was designed precisely to free Caltex from any responsibility with respect to the îre, as shown by the clause that Caltex
"shall not be liable for any injury to person or property while in the property herein licensed, it being understood and agreed that LICENSEE
(Boquiren) is not an employee, representative or agent of LICENSOR (Caltex)."
But even if the license agreement were to govern, Boquiren can hardly be considered an independent contractor. Under that agreement Bo-
quiren would pay Caltex the purely nominal sum of P1.00 for the use of the premises and all the equipment therein. He could sell only Caltex
Products. Maintenance of the station and its equipment was subject to the approval, in other words control, of Caltex. Boquiren could not
assign or transfer his rights as licensee without the consent of Caltex. The license agreement was supposed to be from January 1, 1948 to
December 31, 1948, and thereafter until terminated by Caltex upon two days prior written notice. Caltex could at any time cancel and termi-
nate the agreement in case Boquiren ceased to sell Caltex products, or did not conduct the business with due diligence, in the judgment of
Caltex. Termination of the contract was therefore a right granted only to Caltex but not to Boquiren. These provisions of the contract show
the extent of the control of Caltex over Boquiren. The control was such that the latter was virtually an employee of the former.
Taking into consideration the fact that the operator owed his position to the company and the latter could remove him or terminate his ser-
vices at will; that the service station belonged to the company and bore its tradename and the operator sold only the products of the compa-
ny; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of
their repair and maintenance; that an employee of the company supervised the operator and conducted periodic inspection of the company's
gasoline and service station; that the price of the products sold by the operator was îxed by the company and not by the operator; and that
the receipts signed by the operator indicated that he was a mere agent, the înding of the Court of Appeals that the operator was an agent of
the company and not an independent contractor should not be disturbed.
To determine the nature of a contract courts do not have or are not bound to rely upon the name or title given it by the contracting parties,
should thereby a controversy as to what they really had intended to enter into, but the way the contracting parties do or perform their re-
spective obligations stipulated or agreed upon may be shown and inquired into, and should such performance con^lict with the name or title
given the contract by the parties, the former must prevail over the latter. (Shell Company of the Philippines, Ltd. vs. Firemens' Insurance
Company of Newark, New Jersey, 100 Phil. 757).
The written contract was apparently drawn for the purpose of creating the apparent relationship of employer and independent contractor,
and of avoiding liability for the negligence of the employees about the station; but the company was not satisîed to allow such relationship to
exist. The evidence shows that it immediately assumed control, and proceeded to direct the method by which the work contracted for should
be performed. By reserving the right to terminate the contract at will, it retained the means of compelling submission to its orders. Having
elected to assume control and to direct the means and methods by which the work has to be performed, it must be held liable for the negli-
gence of those performing service under its direction. We think the evidence was sufîcient to sustain the verdict of the jury. (Gulf Reîning
Company v. Rogers, 57 S.W. 2d, 183).
Caltex further argues that the gasoline stored in the station belonged to Boquiren. But no cash invoices were presented to show that Bo-
quiren had bought said gasoline from Caltex. Neither was there a sales contract to prove the same.
As found by the trial court the Africas sustained a loss of P9,005.80, after deducting the amount of P2,000.00 collected by them on the insur-
ance of the house. The deduction is now challenged as erroneous on the ground that Article 2207 of the New Civil Code, which provides for
the subrogation of the insurer to the rights of the insured, was not yet in effect when the loss took place. However, regardless of the silence of
the law on this point at that time, the amount that should be recovered be measured by the damages actually suffered, otherwise the princi-
ple prohibiting unjust enrichment would be violated. With respect to the claim of the heirs of Ong P7,500.00 was adjudged by the lower court
on the basis of the assessed value of the property destroyed, namely, P1,500.00, disregarding the testimony of one of the Ong children that
said property was worth P4,000.00. We agree that the court erred, since it is of common knowledge that the assessment for taxation purpos-
es is not an accurate gauge of fair market value, and in this case should not prevail over positive evidence of such value. The heirs of Ong are
therefore entitled to P10,000.00.
Wherefore, the decision appealed from is reversed and respondents-appellees are held liable solidarily to appellants, and ordered to pay
them the aforesaid sum of P9,005.80 and P10,000.00, respectively, with interest from the îling of the complaint, and costs.
G.R. No. 111127 July 26, 1996
MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,
vs.
COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZA-
LES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA
CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS CAESAR, GARCIA,
ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES, MARELLA MI-
JARES, JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RA-
NARIO, ROSAMARIA T. RADOC and BERNADETTE FERRER, respondents.
MENDOZA, J.:p
This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-GR No. 28245, dated September 30, 1992, which af-
îrmed with modiîcation the decision of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay dam-
ages to private respondent Amyline Antonio, and its resolution which denied petitioners' motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus principally in connection with a
bus service for school children which they operated in Manila. The couple had a driver, Porîrio J. Cabil, whom they hired in 1981, after trying
him out for two weeks, His job was to take school children to and from the St. Scholastica's College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with petitioners for the trans-
portation of 33 members of its Young Adults Ministry from Manila to La Union and back in consideration of which private respondent paid
petitioners the amount of P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon. However, as several members of the party were late,
the bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock in the evening. Petitioner Porîrio Cabil
drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, sot hat petitioner Ca-
bil, who was unfamiliar with the area (it being his îrst trip to La Union), was forced to take a detour through the town of Baay in Lingayen,
Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction, which he de-
scribed as "siete." The road was slippery because it was raining, causing the bus, which was running at the speed of 50 kilometers per hour,
to skid to the left road shoulder. The bus hit the left trafîc steel brace and sign along the road and rammed the fence of one Jesus Escano,
then turned over and landed on its left side, coming to a full stop only after a series of impacts. The bus came to rest off the road. A coconut
tree which it had hit fell on it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio was thrown on the ^loor of the bus and pinned down by a wooden seat
which came down by a wooden seat which came off after being unscrewed. It took three persons to safely remove her from this portion. She
was in great pain and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not familiar with the area and he could not
have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road. He said that he saw
the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to 30 kilometers per hour, but it was too late.
The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their înding they îled a criminal complaint
against the driver, Porîrio Cabil. The case was later îled with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano
P1,500.00 for the damage to the latter's fence. On the basis of Escano's afîdavit of desistance the case against petitioners Fabre was dis-
missed.
Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As a result of the accident, she is now suf-
fering from paraplegia and is permanently paralyzed from the waist down. During the trial she described the operations she underwent and
adduced evidence regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to the Nazareth Hospital in
Baay, Lingayen. As this hospital was not adequately equipped, she was transferred to the Sto. Niño Hospital, also in the town of Ba-ay, where
she was given sedatives. An x-ray was taken and the damage to her spine was determined to be too severe to be treated there. She was there-
fore brought to Manila, îrst to the Philippine General Hospital and later to the Makati Medical Center where she underwent an operation to
correct the dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly checked for travel to a long distance trip and that the driver was properly
screened and tested before being admitted for employment. Indeed, all the evidence presented have shown the negligent act of the defen-
dants which ultimately resulted to the accident subject of this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio were the only ones who adduced evidence
in support of their claim for damages, the Court is therefore not in a position to award damages to the other plaintiffs.
WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porîrio Cabil y
Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to pay jointly and severally to
the plaintiffs the following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorney's fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals afîrmed the decision of the trial court with respect to Amyline Antonio but dismissed it with respect to the other plain-
tiffs on the ground that they failed to prove their respective claims. The Court of Appeals modiîed the award of damages as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorney's fees; and
6) Costs of suit.
The Court of Appeals sustained the trial court's înding that petitioner Cabil failed to exercise due care and precaution in the operation of his
vehicle considering the time and the place of the accident. The Court of Appeals held that the Fabres were themselves presumptively negli-
gent. Hence, this petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE RESPONDENTS.
III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00. It is insisted that, on the assump-
tion that petitioners are liable an award of P600,000.00 is unconscionable and highly speculative. Amyline Antonio testiîed that she was a
casual employee of a company called "Suaco," earning P1,650.00 a month, and a dealer of Avon products, earning an average of P1,000.00
monthly. Petitioners contend that as casual employees do not have security of tenure, the award of P600,000.00, considering Amyline Anto-
nio's earnings, is without factual basis as there is no assurance that she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of merit.
First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are liable for breach of con-
tract of carriage or culpa contractual or on the theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the Court of Ap-
peals held, for although the relation of passenger and carrier is "contractual both in origin and nature," nevertheless "the act that breaks the
contract may be also a tort." 2 In either case, the question is whether the bus driver, petitioner Porîrio Cabil, was negligent.
The înding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to exercise the diligence of a good
father of the family in the selection and supervision of their employee is fully supported by the evidence on record. These factual îndings of
the two courts we regard as înal and conclusive, supported as they are by the evidence. Indeed, it was admitted by Cabil that on the night in
question, it was raining, and as a consequence, the road was slippery, and it was dark. He averred these facts to justify his failure to see that
there lay a sharp curve ahead. However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour and only slowed
down when he noticed the curve some 15 to 30 meters ahead. 3 By then it was too late for him to avoid falling off the road. Given the condi-
tions of the road and considering that the trip was Cabil's îrst one outside of Manila, Cabil should have driven his vehicle at a moderate
speed. There is testimony 4 that the vehicles passing on that portion of the road should only be running 20 kilometers per hour, so that at 50
kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing — the fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50 kilometers an
hour when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was
grossly negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres, were them-
selves negligent in the selection and supervisions of their employee.
Due diligence in selection of employees is not satisîed by înding that the applicant possessed a professional driver's license. The employer
should also examine the applicant for his qualiîcations, experience and record of service. 5 Due diligence in supervision, on the other hand,
requires the formulation of rules and regulations for the guidance of employees and issuance of proper instructions as well as actual imple-
mentation and monitoring of consistent compliance with the rules.6
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact that Cabil had been driving
for school children only, from their homes to the St. Scholastica's College in Metro Manila. 7 They had hired him only after a two-week ap-
prenticeship. They had hired him only after a two-week apprenticeship. They had tested him for certain matters, such as whether he could
remember the names of the children he would be taking to school, which were irrelevant to his qualiîcation to drive on a long distance trav-
el, especially considering that the trip to La Union was his îrst. The existence of hiring procedures and supervisory policies cannot be casual-
ly invoked to overturn the presumption of negligence on the part of an employer. 8
Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregation's delayed meeting) could
have a averted the mishap and (2) under the contract, the WWCF was directly responsible for the conduct of the trip. Neither of these con-
tentions hold water. The hour of departure had not been îxed. Even if it had been, the delay did not bear directly on the cause of the accident.
With respect to the second contention, it was held in an early case that:
[A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be conveyed, but exercises no
other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from recovering for injuries
suffered from a collision between the automobile and a train, caused by the negligence or the automobile driver. 9
As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be engaged in the business of pub-
lic transportation for the provisions of the Civil Code on common carriers to apply to them. As this Court has held: 10
Art. 1732. Common carriers are persons, corporations, îrms or associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasion-
al, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We
think that Article 1732 deliberately refrained from making such distinctions.
As common carriers, the Fabres were found to exercise "extraordinary diligence" for the safe transportation of the passengers to their desti-
nation. This duty of care is not excused by proof that they exercise the diligence of a good father of the family in the selection and supervision
of their employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees al-
though such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selec-
tion and supervision of their employees.
The same circumstances detailed above, supporting the înding of the trial court and of the appellate court that petitioners are liable under
Arts. 2176 and 2180 for quasi delict, fully justify îndings them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of
the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the Court of Appeals erred in increasing the
amount of compensatory damages because private respondents did not question this award as inadequate. 11 To the contrary, the award of
P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable considering the contingent nature of her income
as a casual employee of a company and as distributor of beauty products and the fact that the possibility that she might be able to work again
has not been foreclosed. In fact she testiîed that one of her previous employers had expressed willingness to employ her again.
With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufîciently indicate the factual and
legal basis for them, we înd that they are nevertheless supported by evidence in the records of this case. Viewed as an action for quasi delict,
this case falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in cases of quasi delict. On the theory
that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art. 2220,
since Cabil's gross negligence amounted to bad faith.12 Amyline Antonio's testimony, as well as the testimonies of her father and copassen-
gers, fully establish the physical suffering and mental anguish she endured as a result of the injuries caused by petitioners' negligence.
The award of exemplary damages and attorney's fees was also properly made. However, for the same reason that it was error for the appel-
late court to increase the award of compensatory damages, we hold that it was also error for it to increase the award of moral damages and
reduce the award of attorney's fees, inasmuch as private respondents, in whose favor the awards were made, have not appealed. 13
As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi delict or on that of breach of contract. The
question is whether, as the two courts below held, petitioners, who are the owners and driver of the bus, may be made to respond jointly and
severally to private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of Appeals, 14 on facts similar to those in this
case, this Court held the bus company and the driver jointly and severally liable for damages for injuries suffered by a passenger. Again, in
Bachelor Express, Inc. v. Court of
Appeals 15 a driver found negligent in failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a result of
which the passengers jumped out of the speeding bus and suffered injuries, was held also jointly and severally liable with the bus company to
the injured passengers.
The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred with
the negligence of a third party who was the driver of another vehicle, thus causing an accident. In Anuran v. Buño, 16 Batangas Laguna
Tayabas Bus Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation v. Court of Appeals, 18 the bus company, its driver,
the operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injured passenger or the latters'
heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals, 19 thus:
Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of respondents [owner and
driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of in-
jury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as
well as the owners of the two vehicles are jointly and severally liable for damages. Some members of the Court, though, are of the view that
under the circumstances they are liable on quasi-delict. 20
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21 this Court exonerated the jeepney driver from liability to the injured
passengers and their families while holding the owners of the jeepney jointly and severally liable, but that is because that case was expressly
tried and decided exclusively on the theory of culpa contractual. As this Court there explained:
The trial court was therefore right in înding that Manalo (the driver) and spouses Mangune and Carreon (the jeepney owners) were negli-
gent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot be
held jointly and severally liable with carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. First-
ly, the contract of carriage is between the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negli-
gence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742). 22
As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their claim against the carrier and the driver
exclusively on one theory, much less on that of breach of contract alone. After all, it was permitted for them to allege alternative causes of
action and join as many parties as may be liable on such causes of action 23 so long as private respondent and her coplaintiffs do not recover
twice for the same injury. What is clear from the cases is the intent of the plaintiff there to recover from both the carrier and the driver, thus,
justifying the holding that the carrier and the driver were jointly and severally liable because their separate and distinct acts concurred to
produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to award of damages. Petitioners are ORDERED to
PAY jointly and severally the private respondent Amyline Antonio the following amounts:
1) P93,657.11 as actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorney's fees; and
6) costs of suit.
SO ORDERED.
G.R. No. 104408 June 21, 1993
METRO MANILA TRANSIT CORPORATION, petitioner,

vs.
THE COURT OF APPEALS AND NENITA CUSTODIA, respondents.
Ofîce of the Government Corporate Counsel for petitioner.
Renato P. Decena and Restituto Abjero for private respondent.
REGALADO, J.:
This appeal calls for a review of the legal validity and sufîciency of petitioner's invocation of due diligence in the selection and supervision of
employees as its defense against liability resulting from a vehicular collision. With the facility by which such a defense can be contrived and
our country having reputedly the highest trafîc accident rate in its geographical region, it is indeed high time for us to once again address
this matter which poses not only a litigation issue for the courts but affects the very safety of our streets.
The facts of the case at bar are recounted for us by respondent court, thus —
At about six o'clock in the morning of August 28, 1979, plaintiff-appellant Nenita Custodio boarded as a paying passenger a public utility
jeepney with plate No. D7 305 PUJ Pilipinas 1979, then driven by defendant Agudo Calebag and owned by his co-defendant Victorino
Lamayo, bound for her work at Dynetics Incorporated located in Bicutan, Taguig, Metro Manila, where she then worked as a machine opera-
tor earning P16.25 a day. While the passenger jeepney was travelling at (a) fast clip along DBP Avenue, Bicutan, Taguig, Metro Manila another
fast moving vehicle, a Metro Manila Transit Corp. (MMTC, for short) bus bearing plate no. 3Z 307 PUB (Philippines) "79 driven by defendant
Godofredo C. Leonardo was negotiating Honeydew Road, Bicutan, Taguig, Metro Manila bound for its terminal at Bicutan. As both vehicles
approached the intersection of DBP Avenue and Honeydew Road they failed to slow down and slacken their speed; neither did they blow
their horns to warn approaching vehicles. As a consequence, a collision between them occurred, the passenger jeepney ramming the left side
portion of the MMTC bus. The collision impact caused plaintiff-appellant Nenita Custodio to hit the front windshield of the passenger jeepney
and (she) was thrown out therefrom, falling onto the pavement unconscious with serious physical injuries. She was brought to the Medical
City Hospital where she regained consciousness only after one (1) week. Thereat, she was conîned for twenty-four (24) days, and as a con-
sequence, she was unable to work for three and one half months (31/2).1
A complaint for damages2 was îled by herein private respondent, who being then a minor was assisted by her parents, against all of therein
named defendants following their refusal to pay the expenses incurred by the former as a result of the collision.
Said defendants denied all the material allegations in the complaint and pointed an accusing înger at each other as being the party at fault.
Further, herein petitioner Metro Manila Transit Corporation (MMTC), a government-owned corporation and one of the defendants in the
court a quo, along with its driver, Godofredo Leonardo, contrarily averred in its answer with cross-claim and counterclaim3 that the MMTC
bus was driven in a prudent and careful manner by driver Leonardo and that it was the passenger jeepney which was driven recklessly con-
sidering that it hit the left middle portion of the MMTC bus, and that it was defendant Lamayo, the owner of the jeepney and employer of
driver Calebag, who failed to exercise due diligence in the selection and supervision of employees and should thus be held solidarily liable for
damages caused to the MMTC bus through the fault and negligence of its employees.
Defendant Victorino Lamayo, for his part, alleged in his answer with cross-claim and counterclaim4 that the damages suffered by therein
plaintiff should be borne by defendants MMTC and its driver, Godofredo Leonardo, because the latter's negligence was the sole and proxi-
mate cause of the accident and that MMTC failed to exercise due diligence in the selection and supervision of its employees.
By order of the trial court, defendant Calebag was declared in default for failure to île an answer.5 Thereafter, as no amicable settlement was
reached during the pre-trial conference,6 trial on the merits ensued with the opposing parties presenting their respective witnesses and
documentary evidence.
Herein private respondent Nenita Custodia, along with her parents, were presented as witnesses for the prosecution. In addition, Dr. Edgardo
del Mundo, the attending physician, testiîed on the cause, nature and extent of the injuries she sustained as a result of the vehicular mishap.7
On the other hand, defendant MMTC presented as witnesses Godofredo Leonardo, Christian Bautista and Milagros Garbo. Defendant Lamayo,
however, failed to present any witness.
Milagros Garbo testiîed that, as a training ofîcer of MMTC, she was in charge of the selection of the company's bus drivers, conducting for
this purpose a series of training programs and examinations. According to her, new applicants for job openings at MMTC are preliminarily
required to submit certain documents such as National Bureau of Investigation (NBI) clearance, birth or residence certiîcate, ID pictures,
certiîcate or diploma of highest educational attainment, professional driver's license, and work experience certiîcation. Re-entry applicants,
aside from the foregoing requirements, are additionally supposed to submit company clearance for shortages and damages and revenue per-
formance for the preceding year. Upon satisfactory compliance with said requisites, applicants are recommended for and subjected to a Pre-
liminary interview, followed by a record check to înd out whether they are included in the list of undesirable employees given by other com-
panies.
Thereafter, she continued, if an applicant is found to be acceptable, a înal interview by the Chief Supervisor is scheduled and followed by a
training program which consists of seminars and actual driving and Psycho-physical tests and X-ray examinations. The seminars, which last
for a total of eighteen (18) days, include familiarization with assigned routes, existing trafîc rules and regulations, Constabulary Highway
Patrol Group (CHPG) seminar on defensive driving, preventive maintenance, proper vehicle handling, interpersonal relationship ,and admin-
istrative rules on discipline and on-the-job training. Upon completion of all the seminars and tests, a înal clearance is issued, an employment
contract is executed and the driver is ready to report for duty.8
MMTC's Transport Supervisor, Christian Bautista, testiîed that it was his duty to monitor the daily operation of buses in the îeld, to coun-
tercheck the dispatcher on duty prior to the operation of the buses in the morning and to see to it that the bus crew follow written guidelines
of the company, which include seeing to it that its employees are in proper uniform, briefed in trafîc rules and regulations before the start of
duty, ît to drive and, in general, follow other rules and regulations of the Bureau of Land Transportation as well as of the company.9
The reorganized trial court, in its decision of August 1, 1989, 10 found both drivers of the colliding vehicles concurrently negligent for non-
observance of appropriate trafîc rules and regulations and for failure to take the usual precautions when approaching an intersection. As
joint tortfeasors, both drivers, as well as defendant Lamayo, were held solidarily liable for damages sustained by plaintiff Custodio. Defen-
dant MMTC, on the bases of the evidence presented was, however, absolved from liability for the accident on the ground that it was not only
careful and diligent in choosing and screening applicants for job openings but was also strict and diligent in supervising its employees by
seeing to it that its employees were in proper uniforms, briefed in trafîc rules and regulations before the start of duty, and that it checked its
employees to determine whether or not they were positive for alcohol and followed other rules and regulations and guidelines of the Bureau
of Land Transportation and of the company.
The trial court accordingly ruled:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered dismissing the complaint against the Metro Manila Transit Corporation
and ordering defendants Agudo P. Calebag, Victorino Lamayo and Godofredo C. Leonardo to pay plaintiffs, jointly and severally, the following:
a) the sum of P10,000.00 by way of medical expenses;
b) the sum of P5,000.00 by way of expenses of litigation;
c) the sum of P15,000.00 by way of moral damages;
d) the sum of P2,672.00 by way of loss of earnings;
e) the sum of P5,000.00 by way of exemplary damages;
f) the sum of P6,000.00 by way of attorney's fees; and
g) costs of suit.
SO ORDERED. 11
Plaintiff's motion to have that portion of the trial court's decision absolving MMTC from liability reconsidered 12 having been denied for lack
of merit, 13 an appeal was îled by her with respondent appellate court. After consideration of the appropriate pleadings on appeal and înd-
ing the appeal meritorious, the Court of Appeals modiîed the trial court's decision by holding MMTC solidarily liable with the other defen-
dants for the damages awarded by the trial court because of their concurrent negligence, concluding that while there is no hard and fast rule
as to what constitutes sufîcient evidence to prove that an employer has exercised the due diligence required of it in the selection and super-
vision of its employees, based on the quantum of evidence adduced the said appellate court was not disposed to say that MMTC had exer-
cised the diligence required of a good father of a family in the selection and supervision of its driver, Godofredo Leonardo. 14
The Court of Appeals was resolute in its conclusion and denied the motions for reconsideration of appellee Custodio and appellant MMTC in
a resolution dated February 17, 1982, 15 thus prompting MMTC to île the instant petition invoking the review powers of this Court over the
decision of the Court of Appeals, raising as issues for resolution whether or not (1) the documentary evidence to support the positive testi-
monies of witnesses Garbo and Bautista are still necessary; (2) the testimonies of witnesses Garbo and Bautista may still be disturbed on
appeal; and (3) the evidence presented during the trial with respect to the proof of due diligence of petitioner MMTC in the selection and
supervision of its employees, particularly driver Leonardo, is sufîcient.
Prefatorily, private respondent questions the timeliness of the îling of the petition at bar in view of the procedural stricture that the timely
perfection of an appeal is both a mandatory and jurisdictional requirement. This is a legitimate concern on the part of private respondent
and presents an opportune occasion to once again clarify this point as there appears to be some confusion in the application of the rules and
interpretative rulings regarding the computation of reglementary periods at this stage of the proceedings.
The records of this case reveal that the decision of respondent Court of Appeals, dated October 31, 1991, was received by MMTC on No-
vember 18, 1991 16 and it seasonably îled a motion for the reconsideration thereof on November 28, 1991. 17 Said motion for reconsidera-
tion was denied by respondent court in its resolution dated February 17, 1992, which in turn was received by MMTC on March 9, 1992. 18
Therefore, it had, pursuant to Section 1, Rule 45 of the Rules of Court, îfteen (15) days therefrom or up to March 24, 1992 within which to
île its petition, for review on certiorari. Anticipating, however, that it may not be able to île said petition before the lapse of the reglemen-
tary period therefor, MMTC îled a motion on March 19, 1992 for an extension of thirty (30) days to île the present petition, with proof of
service of copies thereof to respondent court and the adverse parties. The Court granted said motion, with the extended period to be counted
from the expiration of the reglementary period. 19 Consequently, private respondent had thirty (30) days from March 24, 1992 within which
to île its petition, or up to April 23, 1992, and the eventual îling of said petition on April 14, 1992 was well within the period granted by the
Court.
We digress to reiterate, in view of erroneous submissions that we continue to receive, that in the case of a petition for review on certiorari
from a decision rendered by the Court of Appeals, Section 1, Rule 45 of the Rules of Court, which has long since been clariîed in Lacsamana
vs. The Hon. Second Special Cases Division of the Intermediate Appellate Court, et al., 20 allows the same to be îled "within îfteen (15) days
from notice of judgment or of the denial of the motion for reconsideration îled in due time, and paying at the same time to the corresponding
docket fee." In other words, in the event a motion for reconsideration is îled and denied, the period of îfteen (15) days begins to run all over
again from notice of the denial resolution. Otherwise put, if a motion for reconsideration is îled, the reglementary period within which to
appeal the decision of the Court of Appeals to the Supreme Court is reckoned from the date the party who intends to appeal received the or-
der denying the motion for reconsideration. 21 Furthermore, a motion for extension of time to île a petition for review may be îled with this
Court within said reglementary period, paying at the same time the corresponding docket fee.
1. The îrst two issues raised by petitioner shall be correlatively discussed in view of their interrelation.
In its present petition, MMTC insists that the oral testimonies of its employees were presented as witnesses in its behalf sufîciently prove,
even without the presentation documentary evidence, that driver Leonardo had complied with all the hiring and clearance requirements and
had undergone all trainings, tests and examinations preparatory to actual employment, and that said positive testimonies spell out the rigid
procedure for screening of job applicants and the supervision of its employees in the îeld. It underscored the fact that it had indeed complied
with the measure of diligence in the selection and supervision of its employees as enunciated in Campo, et al. vs. Camarote, et al. 22 requiring
an employer, in the exercise of the diligence of a good father of a family, to carefully examine the applicant for employment as to his qualiîca-
tions, experience and record service, and not merely be satisîed with the possession of a professional driver's license.
It goes on to say since the testimonies of these witnesses were allegedly neither discredited nor impeached by the adverse party, they should
be believed and not arbitrarily disregarded or rejected nor disturbed on appeal. It assiduously argues that inasmuch as there is no law re-
quiring that facts alleged by petitioner be established by documentary evidence, the probative force and weight of their testimonies should
not be discredited, with the further note that the lower court having passed upon the relevancy of the oral testimonies and considered the
same as unrebutted, its consideration should no longer be disturbed on appeal. 23
Private respondent, on the other hand, retorts that the factual îndings of respondent court are conclusive upon the High Court which cannot
be burdened with the task of analyzing and weighing the evidence all over again. 24
At this juncture, it sufîces to note that factual îndings of the trial court may be reversed by the Court of Appeals, which is vested by law with
the power to review both legal and factual issues, if on the evidence of record, it appears that the trial court may have been mistaken 25 par-
ticularly in the appreciation of evidence, which is within the domain of the Court of Appeals. 26 The general rule laid down in a plethora of
cases is that such îndings of fact by the Court of Appeals are conclusive upon and beyond the power of review of the Supreme Court. 27
However, it is now well-settled that while the îndings of fact of the Court of Appeals are entitled to great respect, and even înality at times,
that rule is not in^lexible and is subject to well established exceptions, to wit: (1) when the conclusion is a înding grounded entirely on spec-
ulation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is grave abuse
of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the îndings of fact are con^licting; (6) when the Court
of Appeals, in making its îndings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and ap-
pellee; (7) when the îndings of the Court of Appeals are contrary to those of the trial court; (8) when the îndings of fact are conclusions
without citation of speciîc evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner's main
and reply briefs are not disputed by the respondents and (10) when the îndings of fact of the Court of Appeals are premised on the supposed
absence of evidence and are contradicted by the evidence on record. 28
When as in this case, the îndings of the Court of Appeals and the trial court are contrary to each other, this court may scrutinize the evidence
on record, 29 in order to arrive at a correct înding based thereon. 30
A perusal of the same shows that since there is no dispute as to the înding of concurrent negligence on the part of the defendant Calebag, the
driver of the passenger jeepney, and co-defendant Leonardo, the bus driver of petitioner MMTC, both of whom were solidarily held liable
with defendant Lamayo, the owner of the jeepney, we are spared the necessity of determining the sufîciency of evidence establishing the fact
of negligence. 31 The contrariety is in the îndings of the two lower courts, and which is the subject of this present controversy, with regard
to the liability of MMTC as employer of one the erring drivers.
The trial court, in absolving MMTC from liability ruled that —
On the question as to whether defendant MMTC was successful in proving its defense that indeed it had exercised the due diligence of a good
father of a family in the selection and supervision of defendant Leonardo, this Court înds that based on the evidence presented during the
trial, defendant MMTC was able to prove that it was not only careful and diligent in choosing and screening applicants for job openings but
also strict (and) diligent in supervising its employees by seeing to it that its employees were in proper uniforms, briefed in trafîc rules and
regulations before the start of duty, checked employees to determine whether they were positive for alcohol and followed other rules and
regulations and guidelines of the Bureau of Land Transportation as well as its company. Having successfully proven such defense, defendant
MMTC therefore, cannot be held liable for the accident.
Having reached this conclusion, the Court now, holds that defendant MMTC be totally absolved from liability and that the complaint against it
be dismissed. . . . 32
whereas respondent court was of the opinion that —
It is surprising though that witness Milagros Garbo did not testify nor present any evidence that defendant-appellee's driver, defendant God-
ofredo Leonardo has complied with or has undergone all clearances and trainings she referred to. The clearances, result of seminars and
tests which Godofredo Leonardo submitted and complied with, if any, were not presented in court despite the fact that they are obviously in
the possession and control of defendant-appellee. Instead, it resorted to generalities. The Court has ruled that due diligence in (the) selection
and supervision of employee(s) are not proved by mere testimonies to the effect that its applicant has complied with all the company re-
quirements before one is admitted as an employee but without proof thereof. . . .
On the part of Christian Bautista, the transport supervisor of defendant-appellee, he testiîed that it is his duty to monitor the operation of
buses in the îeld; to countercheck the dispatchers' duty prior to the operation of the buses in the morning; to see to it that bus crew follows
written guidelines of the company (t.s.n., April 29, 1988, pp. 4-5), but when asked to present in court the alleged written guidelines of the
company he merely stated that he brought with him a "wrong document" and defendant-appellee's counsel asked for reservation to present
such written guidelines in the next hearing but the same was (sic) never presented in court. 33
A thorough and scrupulous review of the records of this case reveals that the conclusion of respondent Court of Appeals is more îrmly
grounded on jurisprudence and amply supported by the evidence of record than that of the court below.
It is procedurally required for each party in a case to prove his own afîrmative assertion by the degree of evidence required by law. 34 In
civil cases, the degree of evidence required of a party in order to support his claim is preponderance of evidence, or that evidence adduced by
one party which is more conclusive and credible than that of the other party. It is, therefore, incumbent on the plaintiff who is claiming a right
to prove his case. Corollarily, defendant must likewise prove own allegation to buttress its claim that it is not liable. 35
In îne, the party, whether plaintiff or defendant, who asserts the afîrmative of the issue has the burden of presenting at the trial such
amount of evidence required by law to obtain a favorable judgment. 36 It is entirely within each of the parties discretion, consonant with the
theory of the case it or he seeks to advance and subject to such procedural strategy followed thereby, to present all available evidence at its or
his disposal in the manner which may be deemed necessary and beneîcial to prove its or his position, provided only that the same shall mea-
sure up to the quantum of evidence required by law. In making proof in its or his case, it is paramount that the best and most complete evi-
dence be formally entered. 37
Coming now to the case at bar, while there is no rule which requires that testimonial evidence, to hold sway, must be corroborated by docu-
mentary evidence, or even subject evidence for that matter, inasmuch as the witnesses' testimonies dwelt on mere generalities, we cannot
consider the same as sufîciently persuasive proof that there was observance of due diligence in the selection and supervision of employees.
38 Petitioner's attempt to prove its diligentissimi patris familias in the selection and supervision of employees through oral evidence must
fail as it was unable to buttress the same with any other evidence, object or documentary, which might obviate the apparent biased nature of
the testimony. 39
Our view that the evidence for petitioner MMTC falls short of the required evidentiary quantum as would convincingly and undoubtedly
prove its observance of the diligence of a good father of a family has its precursor in the underlying rationale pronounced in the earlier case
of Central Taxicab Corp. vs. Ex-Meralco Employees Transportation Co., et al., 40 set amidst an almost identical factual setting, where we held
that:
. . . . This witness spoke of an "afîdavit of experience" which a driver-applicant must accomplish before he is employed by the company, a
written "time schedule" for each bus, and a record of the inspections and thorough checks pertaining to each bus before it leaves the car
barn; yet no attempt was ever made to present in evidence any of these documents, despite the fact that they were obviously in the posses-
sion and control of the defendant company.
xxx xxx xxx
Albert also testiîed that he kept records of the preliminary and înal tests given him as well as a record of the qualiîcations and experience
of each of the drivers of the company. It is rather strange, therefore, that he failed to produce in court the all important record of Roberto, the
driver involved in this case.
The failure of the defendant company to produce in court any "record" or other documentary proof tending to establish that it had exercised
all the diligence of a good father of a family in the selection and supervision of its drivers and buses, notwithstanding the calls therefor by
both the trial court and the opposing counsel, argues strongly against its pretensions.
We are fully aware that there is no hard-and-fast rule on the quantum of evidence needed to prove due observance of all the diligence of a
good father of a family as would constitute a valid defense to the legal presumption of negligence on the part of an employer or master whose
employee has by his negligence, caused damage to another. . . . (R)educing the testimony of Albert to its proper proportions, we do not have
enough trustworthy evidence left to go by. We are of the considered opinion, therefore, that the believable evidence on the degree of care and
diligence that has been exercised in the selection and supervision of Roberto Leon y Salazar, is not legally sufîcient to overcome the pre-
sumption of negligence against the defendant company.
Whether or not the diligence of a good father of a family has been observed by petitioner is a matter of proof which under the circumstances
in the case at bar has not been clearly established. It is not felt by the Court that there is enough evidence on record as would overturn the
presumption of negligence, and for failure to submit all evidence within its control, assuming the putative existence thereof, petitioner MMTC
must suffer the consequences of its own inaction and indifference.
2. In any event, we do not înd the evidence presented by petitioner sufîciently convincing to prove the diligence of a good father of a family,
which for an employer doctrinally translates into its observance of due diligence in the selection and supervision of its employees but which
mandate, to use an oft-quoted phrase, is more often honored in the breach than in the observance.
Petitioner attempted to essay in detail the company's procedure for screening job applicants and supervising its employees in the îeld,
through the testimonies of Milagros Garbo, as its training ofîcer, and Christian Bautista, as its transport supervisor, both of whom naturally
and expectedly testiîed for MMTC. It then concluded with its sweeping pontiîcations that "thus, there is no doubt that considering the na-
ture of the business of petitioner, it would not let any applicant-drivers to be (sic) admitted without undergoing the rigid selection and train-
ing process with the end (in) view of protecting the public in general and its passengers in particular; . . . thus, there is no doubt that appli-
cant had fully complied with the said requirements otherwise Garbo should not have allowed him to undertake the next set of
requirements . . . and the training conducted consisting of seminars and actual driving tests were satisfactory otherwise he should have not
been allowed to drive the subject vehicle. 41
These statements strike us as both presumptuous and in the nature of petitio principii, couched in generalities and shorn of any supporting
evidence to boost their verity. As earlier observed, respondent court could not but express surprise, and thereby its incredulity, that witness
Garbo neither testiîed nor presented any evidence that driver Leonardo had complied with or had undergone all the clearances and train-
ings she took pains to recite and enumerate. The supposed clearances, results of seminars and tests which Leonardo allegedly submitted and
complied with were never presented in court despite the fact that, if true, then they were obviously in the possession and control of petition-
er. 42
The case at bar is clearly within the coverage of Article 2176 and 2177, in relation to Article 2180, of the Civil Code provisions on quasi-
delicts as all the elements thereof are present, to wit: (1) damages suffered by the plaintiff, (2) fault or negligence of the defendant or some
other person for whose act he must respond, and (3) the connection of cause and effect between fault or negligence of the defendant and the
damages incurred by plaintiff. 43 It is to be noted that petitioner was originally sued as employer of driver Leonardo under Article 2180, the
pertinent parts of which provides that:
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 damages caused 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.
The basis of the employer's vicarious liability has been explained under this ratiocination:
The responsibility imposed by this article arises by virtue of a presumption juris tantum of negligence on the part of the persons made re-
sponsible under the article, derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent them from
causing damage. Negligence is imputed to them by law, unless they prove the contrary. Thus, the last paragraph of the article says that such
responsibility ceases if is proved that the persons who might be held responsible under it exercised the diligence of a good father of a family
(diligentissimi patris familias) to prevent damage. It is clear, therefore, that it is not representation, nor interest, nor even the necessity of
having somebody else answer for the damages caused by the persons devoid of personality, but it is the non-performance of certain duties of
precaution and prudence imposed upon the persons who become responsible by civil bond uniting the actor to them, which forms the foun-
dation of such responsibility. 44
The above rule is, of course, applicable only where there is an employer-employee relationship, although it is not necessary that the employ-
er be engaged in business or industry. Whether or not engaged in any business or industry, the employer under Article 2180 is liable for torts
committed by his employees within the scope of their assigned tasks. But, it is necessary îrst to establish the employment relationship. Once
this is done, the plaintiff must show, to hold the employer liable, that the employee was acting within the scope of his assigned task when the
tort complained of was committed. It is only then that the defendant, as employer, may înd it necessary to interpose the defense of due dili-
gence in the selection and supervision of employees. 45 The diligence of a good father of a family required to be observed by employers to
prevent damages under Article 2180 refers to due diligence in the selection and supervision of employees in order to protect the public. 46
With the allegation and subsequent proof of negligence against the defendant driver and of an employer-employee relation between him and
his co-defendant MMTC in this instance, the case in undoubtedly based on a quasi-delict under Article 2180 47 When the employee causes
damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negli-
gent, 48 rebuttable only by proof of observance of the diligence of a good father of a family. For failure to rebut such legal presumption of
negligence in the selection and supervision of employees, the employer is likewise responsible for damages, 49 the basis of the liability being
the relationship of pater familias or on the employer's own negligence. 50
As early as the case of Gutierrez vs. Gutierrez, 51 and thereafter, we have consistently held that where the injury is due to the concurrent
negligence of the drivers of the colliding vehicles, the drivers and owners of the said vehicles shall be primarily, directly and solidarily liable
for damages and it is immaterial that one action is based on quasi-delict and the other on culpa contractual, as the solidarily of the obligation
is justiîed by the very nature thereof. 52
It should be borne in mind that the legal obligation of employers to observe due diligence in the selection and supervision of employees is
not to be considered as an empty play of words or a mere formalism, as appears to be the fashion of the times, since the non-observance
thereof actually becomes the basis of their vicarious liability under Article 2180.
On the matter of selection of employees, Campo vs. Camarote, supra, lays down this admonition:
. . . . In order tat the owner of a vehicle may be considered as having exercised all diligence of a good father of a family, he should not have
been satisîed with the mere possession of a professional driver's license; he should have carefully examined the applicant for employment as
to his qualiîcations, his experience and record of service. These steps appellant failed to observe; he has therefore, failed to exercise all due
diligence required of a good father of a family in the choice or selection of driver.
Due diligence in the supervision of employees, on the other hand, includes the formulation of suitable rules and regulations for the guidance
of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has
relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be
warranted to ensure the performance of acts indispensable to the business of and beneîcial to their employer. 53 To this, we add that actual
implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer, acting through
dependable supervisors who should regularly report on their supervisory functions.
In order that the defense of due diligence in the selection and supervision of employees may be deemed sufîcient and plausible, it is not
enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. As the negligence of the employee
gives rise to the presumption of negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only
in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures and
supervisory policies, without anything more, is decidedly not sufîcient to overcome presumption.
We emphatically reiterate our holding, as a warning to all employers, that "(t)he mere formulation of various company policies on safety
without showing that they were being complied with is not sufîcient to exempt petitioner from liability arising from negligence of its em-
ployees. It is incumbent upon petitioner to show that in recruiting and employing the erring driver the recruitment procedures and company
policies on efîciency and safety were followed." 54 Paying lip-service to these injunctions or merely going through the motions of compliance
therewith will warrant stern sanctions from the Court.
These obligations, imposed by the law and public policy in the interests and for the safety of the commuting public, herein petitioner failed to
perform. Respondent court was deînitely correct in ruling that ". . . due diligence in the selection and supervision of employee (is) not
proved by mere testimonies to the effect that its applicant has complied with all the company requirements before one is admitted as an em-
ployee but without proof thereof." 55 It is further a distressing commentary on petitioner that it is a government-owned public utility, main-
tained by public funds, and organized for the public welfare.
The Court it is necessary to once again stress the following rationale behind these all-important statutory and jurisprudential mandates, for
it has been observed that despite its pronouncement in Kapalaran Bus Line vs. Coronado, et al., supra, there has been little improvement in
the transport situation in the country:
In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them, the law
compels them to curb the recklessness of their drivers. While the immediate beneîciaries of the standard of extraordinary diligence are, of
course, the passengers and owners of the cargo carried by a common carrier, they are not the only persons that the law seeks to beneît. For
if common carriers carefully observe the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help
but simultaneously beneît pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient
use of our roads and highways. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) and the
destruction of property (whether freight or not) on our highways by buses, the very size and power of which seem often to in^lame the minds
of their drivers. . . .
Finally, we believe that respondent court acted in the exercise of sound discretion when it afîrmed the trial court's award, without requiring
the payment of interest thereon as an item of damages just because of delay in the determination thereof, especially since private respondent
did not speciîcally pray therefor in her complaint. Article 2211 of the Civil Code provides that in quasi-delicts, interest as a part of the dam-
ages may be awarded in the discretion of the court, and not as a matter of right. We do not perceive that there have been international dilato-
ry maneuvers or any special circumstances which would justify that additional award and, consequently, we înd no reason to disturb said
ruling.
WHEREFORE, the impugned decision of respondent Court of Appeals is hereby AFFIRMED.
[G.R. NO. 147349. February 13, 2004]
MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), Petitioner, v. ALA INDUSTRIES CORPORATION, Respondent.
D E C I S I O N
PANGANIBAN, J.:
Foreseeable difîculties that occur during the Christmas season and cause a delay do not constitute a fortuitous event. The difîculties in pro-
cessing claims during that period are not acts of God that would excuse noncompliance with judicially approved obligations.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the February 28, 2001 Decision2 of the Court of Appeals
(CA) in CA-GR CV No. 59518.The dispositive part of the Decision reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
WHEREFORE, the appealed înal order is hereby REVERSED. The Court a quo is ordered to issue a Writ of Execution directing the branch
sheriff to enforce [Respondent] ALA Industries unpaid claim against [Petitioner] Manila International Airport Authority (MIAA) in the total
amount of P7,171,835.53.3
The Facts
The facts of the case are narrated by the CA as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
[Petitioner] MIAA conducted a public bidding for a contract involving the structural repair and waterprooîng of the International Passenger
Terminal (IPT) and International Container Terminal (ICT) buildings of the Ninoy Aquino International Airport (NAIA) .Out of eleven bidders,
[Respondent] ALA submitted the second lowest and most advantageous bid. The contract was awarded to [respondent] in the amount of
P32,000,000.00 when it agreed to reduce the price from P36,000.00.4 On June 28, 1993, the contract was executed providing, inter alia, the
following terms:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
ARTICLE I
SCOPE OF WORK
1.1The CONTRACTOR shall furnish all materials, labor, tools, plans, equipment and other services and [perform] all operations necessary to
complete the structural repair and waterprooîng of IPT and ICT buildings, all in accordance with the plans and speciîcations and subject to
the terms and conditions of the Bid Documents. The CONTRACTOR shall likewise be responsible for the removal, hauling, disposal of materi-
als used in the work area including cleaning thereof during and after completion of the work.
1.2The CONTRACTOR guarantees and warrants the availability, quality and genuineness of all the materials it will supply, deliver and use in
the construction.

1.3The CONTRACTOR warrants further that all works stipulated in the Contract shall be done in good and acceptable condition and to make
good at the CONTRACTORs expense any imperfections or defects which the MIAA or its representative may discover during the progress of
the work within one (1) year from and after acceptance in writing of the said work by the MIAA, as provided in the General Conditions and
Speciîcations.
x x xx x xx x x
ARTICLE IV
CONTRACT PRICE/MANNER OF PAYMENT
4.1In consideration of the full, satisfactory and faithful performance by the CONTRACTOR of all its undertakings and obligations deîned in
and provided for under this agreement, the MIAA agrees to pay the CONTRACTOR the total amount of PESOS: THIRTY TWO MILLION [AND]
00/100 (P32,000,000.00) Philippine Currency, payable as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
4.1.1Initial payment shall be made upon submission of work accomplishment of not less than 15%;
4.1.2Subsequent payments shall be for work accomplished as measured, veriîed and approved by MIAA. Such progress billings shall indicate
actual work accomplishments and shall be subject to the approval of MIAA, which approval shall not be unreasonably withheld.
4.1.3Progress billings shall be paid by the MIAA periodically but not more than once a month within 30 calendar days from receipt hereof.
The contract contains escalation clauses and price adjustments. [Respondent] made the necessary repairs and waterprooîng. After submis-
sion of its progress billings to [petitioner], [respondent] received partial payments. Progress billing No. 6 remained unpaid despite repeated
demands by [respondent].
On June 30, 1994, [petitioner] unilaterally rescinded the contract on the ground that [respondent] failed to complete the project within the
agreed completion date. On September 16, 1994, [petitioner] advised [respondent] of a committee formed to determine the extent of the
work done which was given until September 30, 1994 to submit its îndings. Just the same, [respondent] was not fully paid.
On October 20, 1994, [respondent] objected to the rescission made by [petitioner] and reiterated its claims. As of the îling of the complaint
for sum of money and damages on July 18, 1995, [respondent] was seeking to recover from [petitioner] P10,376,017.00 as the latters out-
standing obligation and P1,642,112.84 due from the îrst to [the] îfth progress billings.
With the îling of [respondents] sur-rejoinder to [petitioners] rejoinder, the trial Court directed the parties to proceed to arbitration on July
16, 1996. The Court a quos ruling is based on Article XXVII of the contract that provides for arbitration.
Both parties executed a compromise agreement, assisted by their counsels, and jointly îled in court a motion for judgment based on com-
promise agreement.
RTC Disposition
On November 4, 1997, the Court a quo rendered judgment approving the compromise agreement. The pertinent portions of the compromise
read as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
1.As full and complete payment of its claims against [petitioner] arising from their waterprooîng contract subject of this case, [respondent]
accepts [petitioner]s offer of payment in the amount of FIVE MILLION NINE HUNDRED FORTY SIX THOUSAND TWO HUNDRED NINETY
FOUR AND 31/100 (P5,946,294.31).
2.[Petitioner] shall pay [respondent] said amount of FIVE MILLION NINE HUNDRED FORTY SIX THOUSAND TWO HUNDRED NINETY FOUR
AND 31/100 (P5,946,294.31) within a period of thirty (30) days from receipt of a copy of the Order of the Court approving this Compromise
Agreement.
3.Failure of the [petitioner] to pay said amount to [respondent] within the period above stipulated shall entitle the [respondent] to a writ of
execution from this Honorable Court to enforce all its claims5 pleaded in the Complaint.
4.In consideration of the Implementation of this Compromise Agreement, [respondent] agrees to waive all its claims against the [petitioner]
as pleaded in the Complaint, and [petitioner] also agrees to waive all its claims, rights and interests pleaded in the answer, and all such other
claims that it has or may have in connection with, related to or arising from the Waterprooîng Contract subject of this case with [respon-
dent].
Finding the aforesaid COMPROMISE AGREEMENT not to be contrary to law, moral[s], good customs, public order, and public policy, the Court
hereby approves the same and renders judgment in conformity with the terms and conditions of the said COMPROMISE AGREEMENT, enjoin-
ing the parties to comply with the provisions thereof strictly and in good faith without pronouncement as to costs.
SO ORDERED.
For [petitioners] failure to pay within the period above stipulated, [respondent] îled a motion for execution to enforce its claim in the total
amount of P13,118,129.84. [Petitioner] îled a comment and attributed the delays to its being a government agency. In its effort to render
[respondents] motion for execution moot and academic, [petitioner] paid [respondent] P5,946,294.31 on February 2, 1998.
On February 16, 1998, the trial court denied [respondents] motion for execution. It also denied the motion for reconsideration, ruling as fol-
lows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The delay in complying with the Compromise Agreement having been satisfactorily explained by the Ofîce of the Government Counsel, the
Motion for Reconsideration of the order denying [respondents] Motion for Execution is denied.
SO ORDERED.6
Ruling of the Court of Appeals
Reversing the trial court, the CA ordered it to issue a writ of execution to enforce respondents claim to the extent of petitioners remaining
balance. The appellate court ratiocinated that a judgment rendered in accordance with a compromise agreement was immediately executory,
and that a delay of almost two months was not substantial compliance therewith.
Hence this Petition.7
Issues
Petitioner raises the following issues for our consideration:
I.
Whether or not the slight delay of petitioner in complying with its obligation under the Compromise Agreement is a valid ground for the en-
forcement of private respondents claim under the Complaint.
II.
Whether or not the delay of petitioner in complying with its obligation under the Compromise Agreement is justiîed under the principle that
no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable.
III.
Whether or not private respondent is estopped from enforcing its claim under the Complaint considering that it already enjoyed the beneîts
of the Compromise Agreement.8
The foregoing may be summed up in one issue: Whether there was a fortuitous event that excused petitioner from complying with the terms
and conditions of the judicially approved Compromise Agreement.
The Courts Ruling
The Petition has no merit.
Sole Issue:
Delay in Payment by Reason

of a Fortuitous Event
A compromise agreement is a contract whereby the parties make reciprocal concessions to resolve their differences,9 thus avoiding litiga-
tion10 or putting an end to one that has already commenced.11 Generally favored in law,12 such agreement is a bilateral act or transaction
that is binding on the contracting parties and is expressly acknowledged by the Civil Code as a juridical agreement between them.13 Provid-
ed it is not contrary to law, morals, good customs, public order or public policy,14 it is immediately executory.15
Judicial Compromise
Final and Executory
In a long line of cases, we have consistently held that x x x a compromise once approved by înal orders of the court has the force of res judi-
cata16 between the parties and should not be disturbed except for vices of consent or forgery. Hence, a decision on a compromise agreement
is înal and executory x x x.17 Such agreement has the force of law18 and is conclusive between the parties.19 It transcends its identity as a
mere contract binding only upon the parties thereto, as it becomes a judgment that is subject to execution in accordance with the Rules.20
Judges therefore have the ministerial and mandatory duty to implement and enforce it.21
To be valid, a compromise agreement is merely required by law, îrst, to be based on real claims; second, to be actually agreed upon in good
faith.22 Both conditions are present in this case. The claims of the parties are valid, and the agreement done without any fraud or vice of
consent.
Without a doubt, each of the parties herein entered into Compromise Agreement freely and voluntarily. When they carefully negotiated the
terms and provisions thereof, they were adequately assisted by their respective counsels -- petitioner, no less than by the Ofîce of the Gov-
ernment Corporate Counsel (OGCC). 23 Each party agreed to something that neither might have actually wanted, except for the peace that
would be brought by the avoidance of a protracted litigation. Hence, the Agreement must govern their relations.
The Christmas Season

Not a Fortuitous Event
The failure to pay on the date stipulated was clearly a violation of the Agreement. Within thirty days from receipt of the judicial Order ap-
proving it -- on December 20, 1997 -- payment should have been made, but was not. Thus, nonfulîllment of the terms of the compromise
justiîed execution.24 It is the height of absurdity for petitioner to attribute to a fortuitous event its delayed payment. Petitioners explanation
is clearly a gratuitous assertion that borders on callousness.25 The Christmas season cannot be cited as an act of God that would excuse a
delay in the processing of claims by a government entity that is subject to routine accounting and auditing rules.
A fortuitous event is one that cannot be foreseen or, though foreseen, is inevitable.26 It has the following characteristics:ςηαñrοblεš νιr†υαl
lαω lιbrαrÿ
x x x (a) [T]he cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligations, must be inde-
pendent of human will; (b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulîll his obligation in a normal manner; and
(d) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.27
None of these elements appears in this case.
First, processing claims against the government and subjecting these to the usual accounting and auditing procedures are certainly not only
foreseeable and expectable, but also dependent upon the human will. Liquidation and payment resulting therefrom can be deliberately de-
layed or speeded up.
Second, the Christmas season is not a caso fortuito, but a regularly occurring event. It is in fact foreseeable, and its occurrence has absolutely
nothing to do with the processing of claims.
Further, in order to claim exemption from liability by reason of a fortuitous event, such event should be the sole and proximate cause of the
injury to or the loss or destruction of the object of the contract28 or compromise, which was the payment to be made by petitioner. Certainly,
this payment was not lost or destroyed, but merely delayed, thus causing injury to respondent. Granting arguendo such loss or destruction,
the Christmas season could not have been the sole and proximate cause thereof.
Third, the occurrence of the Christmas season did not at all render impossible the normal fulîllment of the obligation of petitioner; other-
wise, few claims would ever be paid during this period. It ought to have taken appropriate measures to ensure that a delay would be avoided.
When it entered into the Agreement, it knew fully well that the 30-day period for it to pay its obligation would end during the Christmas sea-
son. Thus, it cannot now be allowed to renege on its commitment.
Fourth, petitioner cannot argue that it is free from any participation in the delay. It should have laid out on the compromise table the prob-
lems that would be caused by a deadline falling during the Christmas season. Furthermore, it should have explained to respondent that gov-
ernment accounts would be examined carefully and thoroughly to the last detail, in strict compliance29 with accounting and auditing rules
issued by and pursuant to the constitutional mandate of the Commission on Audit.30
Indeed, the liquidation of government obligations involves a long process beginning with the preparation of disbursement vouchers; fol-
lowed by the processing of requests for allotment as supported by vouchers, job orders and requisitions; and ending with the issuance of the
corresponding checks.31 Without îrst securing the necessary certiîcation as to the availability of funds and allotment against which expen-
ditures may be properly charged,32 no funds shall be disbursed; and no expenditures chargeable against any authorized allotments shall be
incurred or authorized by agency heads.
Moreover, it is important to note that under government accounting principles, no contract involving the expenditure of public funds shall be
made until there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufîcient to cover the proposed
expenditure.33 In the present case, there was already an antecedent appropriation for the contract when petitioner entered into it. Obvious-
ly, prior planning had not taken into account the liquidation process in the conduct of the compromise.
The sheer neglect shown by petitioner in failing to consider these matters aggravated the resulting injury suffered by respondent. The former
cannot be allowed to hide now behind its government cloak.
Fortuitous Event
Negated by Negligence
The act-of-God doctrine requires all human agencies to be excluded from creating the cause of the mischief.34 Such doctrine cannot be in-
voked to protect a person who has failed to take steps to forestall the possible adverse consequences of loss35 or injury. Since the delay in
payment in the present case was partly a result of human participation -- whether from active intervention or neglect -- the whole occurrence
was humanized and was therefore outside the ambit of a caso fortuito.
Furthermore, none of the requisites we have earlier mentioned are present in this case, a fact that clearly prevents petitioner from being
excused from liability.36 Under the rules of evidence, the burden of proving that a loss is due to a caso fortuito rests upon the party invoking
it.37 This responsibility, it failed to discharge.
Verily, an assiduous scrutiny of the records convinces us that it was negligent,38 and that it thereby incurred a delay in the performance of its
contractual obligation under the judicial compromise. It thus created an undue risk or injury to respondent by failing to exercise that reason-
able degree of care, precaution or vigilance that the circumstances justly demanded,39 and that an ordinarily prudent person would have
done.40
Court Without Power to Alter
a Judicial Compromise
The principle of autonomy of contracts must be respected.41 The Compromise Agreement was a contract perfected by mere consent;42
hence, it should have been respected. Item 3 thereof provided that failure of petitioner to pay within the stipulated period would entitle re-
spondent to a writ of execution to enforce all the claims that had been pleaded by the latter in the Complaint. This provision must be upheld,
because the Agreement supplanted the Complaint itself. Although judicial approval was not required for the perfection of that Agreement
once it was granted, it could not and must not be disturbed except for vices of consent or forgery.43
No such inîrmity can be found in the subject Compromise Agreement. Its terms are clear and leave no doubt as to their intention. Thus, the
literal meaning of its stipulations must control.44 It must be strictly interpreted and x x x understood as including only matters speciîcally
determined therein or which, by necessary inference from its wording, must be deemed included.45
The lower court was without power to relieve petitioner from an obligation it had voluntarily assumed, simply because the Agreement later
turned out to be unwise, disastrous or foolish.46 It had no authority to impose upon the parties a judgment different from or against the
terms and conditions of their Compromise Agreement.47 It could not alter a contract by construction or make a new one for the parties; its
duty is conîned to the interpretation of the one which they have made for themselves without regard to its wisdom or folly as the court can-
not supply material stipulations or read into the contract words which it does not contain.48 It could not even set aside its judgment without
declaring in an incidental hearing that the Agreement was vitiated by any of the grounds enumerated in Article 2038 of the Civil Code.49
Above all, neither the Agreement nor the courts approval of it was ever questioned or assailed by the parties.
Basic is the rule that if a party fails or refuses to abide by a compromise agreement, the other may either enforce it or regard it as rescinded
and insist upon the original demand.50 For failure of petitioner to abide by the judicial compromise, respondent chose to enforce it. The lat-
ters course of action was in accordance with the very stipulations in the Agreement that the lower court could not change.51
Respondent is thus entitled to a writ of execution for the total amount contained in the Compromise Agreement. The Court cannot reduce it.
The partial payment made by petitioner does not at all contravene Article 1229 of the Civil Code,52 which is applicable only to contracts that
are the subjects of litigation, not to înal and executory judgments.53
Estoppel Inapplicable
Petitioners attempt to put respondent in estoppel must be struck down. In estoppel, a person, who by his act or conduct has induced another
to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or in-
jury to another.54 No such inconsistency is present here. From the very start, respondent was already asking the courts to enforce all its
claims, pursuant to the Agreement. It has not shown any act or conduct that would leads us to believe that by accepting petitioners partial
payment, it has dropped all claims to which it is entitled.
Certainly, an obligation may be extinguished by payment,55 but this rule applies when the creditor receives and acknowledges full paymen-
t56 from the debtor. Respondent has neither acknowledged full payment nor led petitioner to believe that it has. Lack of reservation or
protest does not ipso facto constitute a waiver of claims. Because estoppel should be applied with caution, the action that gives rise to it must
be deliberate and unequivocal.57
In the present case, respondent continued to pursue the execution of its total demand of P13,118,129.84, even after receiving P5,946,294.31
from petitioner. This continued pursuit signiîed the formers intent not to waive its total claim. Hence, it cannot be considered estopped from
enforcing such claim.
The appellate court was correct in strictly following the Agreement by deducting the amount received by respondent from the latters total
claim. Besides, questions raised on appeal must be within the issues framed by the parties and, consequently, issues not raised in the trial
court cannot be raised for the îrst time on appeal.58 Any assertion of equity must înally be struck down when dilatory schemes exist.59
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. L-29640 June 10, 1971
GUILLERMO AUSTRIA, petitioner,

vs.
THE COURT OF APPEALS (Second Division), PACIFICO ABAD and MARIA G. ABAD, respondents.
Antonio Enrile Inton for petitioner.
Jose A. Buendia for respondents.
REYES, J.B.L., J.:
Guillermo Austria petitions for the review of the decision rendered by the Court of Appeal (in CA-G.R. No. 33572-R), on the sole issue of
whether in a contract of agency (consignment of goods for sale) it is necessary that there be prior conviction for robbery before the loss of
the article shall exempt the consignee from liability for such loss.
In a receipt dated 30 January 1961, Maria G. Abad acknowledged having received from Guillermo Austria one (1) pendant with diamonds
valued at P4,500.00, to be sold on commission basis or to be returned on demand. On 1 February 1961, however, while walking home to her
residence in Mandaluyong, Rizal, Abad was said to have been accosted by two men, one of whom hit her on the face, while the other snatched
her purse containing jewelry and cash, and ran away. Among the pieces of jewelry allegedly taken by the robbers was the consigned pendant.
The incident became the subject of a criminal case îled in the Court of First Instance of Rizal against certain persons (Criminal Case No.
10649, People vs. Rene Garcia, et al.).
As Abad failed to return the jewelry or pay for its value notwithstanding demands, Austria brought in the Court of First Instance of Manila an
action against her and her husband for recovery of the pendant or of its value, and damages. Answering the allegations of the complaint, de-
fendants spouses set up the defense that the alleged robbery had extinguished their obligation.
After due hearing, the trial court rendered judgment for the plaintiff, and ordered defendants spouses, jointly and severally, to pay to the
former the sum of P4,500.00, with legal interest thereon, plus the amount of P450.00 as reasonable attorneys' fees, and the costs. It was held
that defendants failed to prove the fact of robbery, or, if indeed it was committed, that defendant Maria Abad was guilty of negligence when
she went home without any companion, although it was already getting dark and she was carrying a large amount of cash and valuables on
the day in question, and such negligence did not free her from liability for damages for the loss of the jewelry.
Not satisîed with his decision, the defendants went to the Court of Appeals, and there secured a reversal of the judgment. The appellate
court overruling the înding of the trial court on the lack of credibility of the two defense witnesses who testiîed on the occurrence of the
robbery, and holding that the facts of robbery and defendant Maria Abad's possesion of the pendant on that unfortunate day have been duly
published, declared respondents not responsible for the loss of the jewelry on account of a fortuitous event, and relieved them from liability
for damages to the owner. Plaintiff thereupon instituted the present proceeding.
It is now contended by herein petitioner that the Court of Appeals erred in înding that there was robbery in the case, although nobody has
been found guilty of the supposed crime. It is petitioner's theory that for robbery to fall under the category of a fortuitous event and relieve
the obligor from his obligation under a contract, pursuant to Article 1174 of the new Civil Code, there ought to be prior înding on the guilt of
the persons responsible therefor. In short, that the occurrence of the robbery should be proved by a înal judgment of conviction in the crim-
inal case. To adopt a different view, petitioner argues, would be to encourage persons accountable for goods or properties received in trust or
consignment to connive with others, who would be willing to be accused in court for the robbery, in order to be absolved from civil liability
for the loss or disappearance of the entrusted articles.
We înd no merit in the contention of petitioner.
It is recognized in this jurisdiction that to constitute a caso fortuito that would exempt a person from responsibility, it is necessary that (1)
the event must be independent of the human will (or rather, of the debtor's or obligor's); (2) the occurrence must render it impossible for the
debtor to fulîll the obligation in a normal manner; and that (3) the obligor must be free of participation in or aggravation of the injury to the
creditor.1 A fortuitous event, therefore, can be produced by nature, e.g., earthquakes, storms, ^loods, etc., or by the act of man, such as war,
attack by bandits, robbery,2 etc., provided that the event has all the characteristics enumerated above.
It is not here disputed that if respondent Maria Abad were indeed the victim of robbery, and if it were really true that the pendant, which she
was obliged either to sell on commission or to return to petitioner, were taken during the robbery, then the occurrence of that fortuitous
event would have extinguished her liability. The point at issue in this proceeding is how the fact of robbery is to be established in order that a
person may avail of the exempting provision of Article 1174 of the new Civil Code, which reads as follows:
ART. 1174. Except in cases expressly speciîed by law, or when it is otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.
It may be noted the reform that the emphasis of the provision is on the events, not on the agents or factors responsible for them. To avail of
the exemption granted in the law, it is not necessary that the persons responsible for the occurrence should be found or punished; it would
only be sufîcient to established that the enforceable event, the robbery in this case did take place without any concurrent fault on the
debtor's part, and this can be done by preponderant evidence. To require in the present action for recovery the prior conviction of the cul-
prits in the criminal case, in order to establish the robbery as a fact, would be to demand proof beyond reasonable doubt to prove a fact in a
civil case.
It is undeniable that in order to completely exonerate the debtor for reason of a fortutious event, such debtor must, in addition to the cams
itself, be free of any concurrent or contributory fault or negligence.3 This is apparent from Article 1170 of the Civil Code of the Philippines,
providing that:
ART. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contra-
vene the tenor thereof, are liable for damages.
It is clear that under the circumstances prevailing at present in the City of Manila and its suburbs, with their high incidence of crimes against
persons and property that renders travel after nightfall a matter to be sedulously avoided without suitable precaution and protection, the
conduct of respondent Maria G. Abad, in returning alone to her house in the evening, carrying jewelry of considerable value would be negli-
gent per se and would not exempt her from responsibility in the case of a robbery. We are not persuaded, however, that the same rule should
obtain ten years previously, in 1961, when the robbery in question did take place, for at that time criminality had not by far reached the lev-
els attained in the present day.
There is likewise no merit in petitioner's argument that to allow the fact of robbery to be recognized in the civil case before conviction is
secured in the criminal action, would prejudice the latter case, or would result in inconsistency should the accused obtain an acquittal or
should the criminal case be dismissed. It must be realized that a court înding that a robbery has happened would not necessarily mean that
those accused in the criminal action should be found guilty of the crime; nor would a ruling that those actually accused did not commit the
robbery be inconsistent with a înding that a robbery did take place. The evidence to establish these facts would not necessarily be the same.
WHEREFORE, înding no error in the decision of the Court of Appeals under review, the petition in this case is hereby dismissed with costs
against the petitioner.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo, Villamor and Makasiar, JJ., concur.
Castro, J., took no part.

G.R. No. L-42926 September 13, 1985
PEDRO VASQUEZ, SOLEDAD ORTEGA, CLETO B. BAGAIPO, AGUSTINA VIRTUDES, ROMEO VASQUEZ and MAXIMINA CAINAY, petitioners,
vs.
THE COURT OF APPEALS and FILIPINAS PIONEER LINES, INC., respondents.
Emilio D. Castellanes for petitioners.
Apolinario A. Abantao for private respondents.
MELENCIO-HERRERA, J.:
This litigation involves a claim for damages for the loss at sea of petitioners' respective children after the shipwreck of MV Pioneer Cebu due
to typhoon "Klaring" in May of 1966.
The factual antecedents, as summarized by the trial Court and adopted by respondent Court, and which we înd supported by the record,
read as follows:
When the inter-island vessel MV "Pioneer Cebu" left the Port of Manila in the early morning of May 15, 1966 bound for Cebu, it had on board
the spouses Alfonso Vasquez and Filipinas Bagaipo and a four-year old boy, Mario Marlon Vasquez, among her passengers. The MV "Pioneer
Cebu" encountered typhoon "Klaring" and struck a reef on the southern part of Malapascua Island, located somewhere north of the island of
Cebu and subsequently sunk. The aforementioned passengers were unheard from since then.
Plaintiffs Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez; plaintiffs Cleto Bagaipo and Agustina Virtudes are the par-
ents of Filipinas Bagaipo; and plaintiffs Romeo Vasquez and Maxima Cainay are the parents of the child, Mario Marlon Vasquez. They seek the
recovery of damages due to the loss of Alfonso Vasquez, Filipinas Bagaipo and Mario Marlon Vasquez during said voyage.
At the pre-trial, the defendant admitted its contract of carriage with Alfonso Vasquez, Filipinas Bagaipo and Mario Marlon Vasquez, and the
fact of the sinking of the MV "Pioneer Cebu". The issues of the case were limited to the defenses alleged by the defendant that the sinking of
the vessel was caused by force majeure, and that the defendant's liability had been extinguished by the total loss of the vessel.
The evidence on record as to the circumstances of the last voyage of the MV "Pioneer Cebu" came mainly, if not exclusively, from the defen-
dant. The MV "Pioneer Cebu" was owned and operated by the defendant and used in the transportation of goods and passengers in the inter-
island shipping. Scheduled to leave the Port of Manila at 9:00 p.m. on May 14, 1966, it actually left port at 5:00 a.m. the following day, May 15,
1966. It had a passenger capacity of three hundred twenty-two (322) including the crew. It undertook the said voyage on a special permit
issued by the Collector of Customs inasmuch as, upon inspection, it was found to be without an emergency electrical power system. The spe-
cial permit authorized the vessel to carry only two hundred sixty (260) passengers due to the said deîciency and for lack of safety devices
for 322 passengers (Exh. 2). A headcount was made of the passengers on board, resulting on the tallying of 168 adults and 20 minors, al-
though the passengers manifest only listed 106 passengers. It has been admitted, however, that the headcount is not reliable inasmuch as it
was only done by one man on board the vessel.
When the vessel left Manila, its ofîcers were already aware of the typhoon Klaring building up somewhere in Mindanao. There being no ty-
phoon signals on the route from Manila to Cebu, and the vessel having been cleared by the Customs authorities, the MV "Pioneer Cebu" left
on its voyage to Cebu despite the typhoon. When it reached Romblon Island, it was decided not to seek shelter thereat, inasmuch as the
weather condition was still good. After passing Romblon and while near Jintotolo island, the barometer still indicated the existence of good
weather condition continued until the vessel approached Tanguingui island. Upon passing the latter island, however, the weather suddenly
changed and heavy rains felt Fearing that due to zero visibility, the vessel might hit Chocolate island group, the captain ordered a reversal of
the course so that the vessel could 'weather out' the typhoon by facing the winds and the waves in the open. Unfortunately, at about noon-
time on May 16, 1966, the vessel struck a reef near Malapascua island, sustained leaks and eventually sunk, bringing with her Captain Floro
Yap who was in command of the vessel.
Due to the loss of their children, petitioners sued for damages before the Court of First Instance of Manila (Civil Case No. 67139). Respondent
defended on the plea of force majeure, and the extinction of its liability by the actual total loss of the vessel.
After proper proceedings, the trial Court awarded damages, thus:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay:
(a) Plaintiffs Pedro Vasquez and Soledad Ortega the sums of P15,000.00 for the loss of earning capacity of the deceased Alfonso Vasquez,
P2,100.00 for support, and P10,000.00 for moral damages;
(b) Plaintiffs Cleto B. Bagaipo and Agustina Virtudes the sum of P17,000.00 for loss of earning capacity of deceased Filipinas Bagaipo, and
P10,000.00 for moral damages; and
(c) Plaintiffs Romeo Vasquez and Maximina Cainay the sum of P10,000.00 by way of moral damages by reason of the death of Mario Marlon
Vasquez.
On appeal, respondent Court reversed the aforementioned judgment and absolved private respondent from any and all liability.
Hence, this Petition for Review on Certiorari, the basic issue being the liability for damages of private respondent for the presumptive death
of petitioners' children.
The trial Court found the defense of caso fortuito untenable due to various decisive factors, thus:
... It is an admitted fact that even before the vessel left on its last voyage, its ofîcers and crew were already aware of the typhoon brewing
somewhere in the same general direction to which the vessel was going. The crew of the vessel took a calculated risk when it proceeded de-
spite the typhoon advisory. This is quite evident from the fact that the ofîcers of the vessel had to conduct conferences amongst themselves
to decide whether or not to proceed. The crew assumed a greater risk when, instead of seeking shelter in Romblon and other islands the ves-
sel passed en route, they decided to take a change on the expected continuation of the good weather the vessel was encountering, and the
possibility that the typhoon would veer to some other directions. The eagerness of the crew of the vessel to proceed on its voyage and to
arrive at its destination is readily understandable. It is undeniably lamentable, however, that they did so at the risk of the lives of the passen-
gers on board.
Contrariwise, respondent Appellate Court believed that the calamity was caused solely and proximately by fortuitous event which not even
extraordinary diligence of the highest degree could have guarded against; and that there was no negligence on the part of the common carri-
er in the discharge of its duties.
Upon the evidence and the applicable law, we sustain the trial Court. "To constitute a caso fortuito that would exempt a person from respon-
sibility, it is necessary that (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the debtor
to fulîll the obligation in a normal manner; and that (3) the obligor must be free of participation in, or aggravation of, the injury to the credi-
tor." 1 In the language of the law, the event must have been impossible to foresee, or if it could be foreseen, must have been impossible to
avoid. 2 There must be an entire exclusion of human agency from the cause of injury or loss. 3
Turning to this case, before they sailed from the port of Manila, the ofîcers and crew were aware of typhoon "Klaring" that was reported
building up at 260 kms. east of Surigao. In fact, they had lashed all the cargo in the hold before sailing in anticipation of strong winds and
rough waters.4 They proceeded on their way, as did other vessels that day. Upon reaching Romblon, they received the weather report that the
typhoon was 154 kms. east southeast of Tacloban and was moving west northwest.5 Since they were still not within the radius of the ty-
phoon and the weather was clear, they deliberated and decided to proceed with the course. At Jintotolo Island, the typhoon was already re-
ported to be reaching the mainland of Samar. 6 They still decided to proceed noting that the weather was still "good" although, according to
the Chief Forecaster of the Weather Bureau, they were already within the typhoon zone. 7 At Tanguingui Island, about 2:00 A.M. of May 16,
1966, the typhoon was in an area quite close to Catbalogan, placing Tanguingui also within the typhoon zone. Despite knowledge of that fact,
they again decided to proceed relying on the forecast that the typhoon would weaken upon crossing the mainland of Samar. 8 After about half
an hour of navigation towards Chocolate Island, there was a sudden fall of the barometer accompanied by heavy downpour, big waves, and
zero visibility. The Captain of the vessel decided to reverse course and face the waves in the open sea but because the visibility did not im-
prove they were in total darkness and, as a consequence, the vessel ran aground a reef and sank on May 16, 1966 around 12:45 P.M. near
Malapascua Island somewhere north of the island of Cebu.
Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet, having been kept posted on the course of the typhoon
by weather bulletins at intervals of six hours, the captain and crew were well aware of the risk they were taking as they hopped from island
to island from Romblon up to Tanguingui. They held frequent conferences, and oblivious of the utmost diligence required of very cautious
persons, 9 they decided to take a calculated risk. In so doing, they failed to observe that extraordinary diligence required of them explicitly by
law for the safety of the passengers transported by them with due regard for an circumstances 10 and unnecessarily exposed the vessel and
passengers to the tragic mishap. They failed to overcome that presumption of fault or negligence that arises in cases of death or injuries to
passengers. 11
While the Board of Marine Inquiry, which investigated the disaster, exonerated the captain from any negligence, it was because it had consid-
ered the question of negligence as "moot and academic," the captain having "lived up to the true tradition of the profession." While we are
bound by the Board's factual îndings, we disagree with its conclusion since it obviously had not taken into account the legal responsibility of
a common carrier towards the safety of the passengers involved.
With respect to private respondent's submission that the total loss of the vessel extinguished its liability pursuant to Article 587 of the Code
of Commerce12 as construed in Yangco vs. Laserna, 73 Phil. 330 [1941], sufîce it to state that even in the cited case, it was held that the lia-
bility of a shipowner is limited to the value of the vessel or to the insurance thereon. Despite the total loss of the vessel therefore, its insur-
ance answers for the damages that a shipowner or agent may be held liable for by reason of the death of its passengers.
WHEREFORE, the appealed judgment is hereby REVERSED and the judgment of the then Court of First Instance of Manila, Branch V, in Civil
Case No. 67139, is hereby reinstated. No costs.
SO ORDERED.
G.R. No. L-45637 May 31, 1985
ROBERTO JUNTILLA, petitioner,

vs.
CLEMENTE FONTANAR, FERNANDO BANZON and BERFOL CAMORO, respondents.
Valentin A. Zozobrado for petitioner.
Ruperto N. Alfarara for respondents.
GUTIERREZ, JR., J.:
This is a petition for review, on questions of law, of the decision of the Court of First Instance of Cebu which reversed the decision of the City
Court of Cebu and exonerated the respondents from any liability arising from a vehicular accident.
The background facts which led to the îling of a complaint for breach of contract and damages against the respondents are summarized by
the Court of First Instance of Cebu as follows:
The facts established after trial show that the plaintiff was a passenger of the public utility jeepney bearing plate No. PUJ-71-7 on the course
of the trip from Danao City to Cebu City. The jeepney was driven by defendant Berfol Camoro. It was registered under the franchise of defen-
dant Clemente Fontanar but was actually owned by defendant Fernando Banzon. When the jeepney reached Mandaue City, the right rear tire
exploded causing the vehicle to turn turtle. In the process, the plaintiff who was sitting at the front seat was thrown out of the vehicle. Upon
landing on the ground, the plaintiff momentarily lost consciousness. When he came to his senses, he found that he had a lacerated wound on
his right palm. Aside from this, he suffered injuries on his left arm, right thigh and on his back. (Exh. "D"). Because of his shock and injuries,
he went back to Danao City but on the way, he discovered that his "Omega" wrist watch was lost. Upon his arrival in Danao City, he immedi-
ately entered the Danao City Hospital to attend to his injuries, and also requested his father-in-law to proceed immediately to the place of the
accident and look for the watch. In spite of the efforts of his father-in-law, the wrist watch, which he bought for P 852.70 (Exh. "B") could no
longer be found.
xxx xxx xxx
Petitioner Roberto Juntilla îled Civil Case No. R-17378 for breach of contract with damages before the City Court of Cebu City, Branch I
against Clemente Fontanar, Fernando Banzon and Berfol Camoro.
The respondents îled their answer, alleging inter alia that the accident that caused losses to the petitioner was beyond the control of the
respondents taking into account that the tire that exploded was newly bought and was only slightly used at the time it blew up.
After trial, Judge Romulo R. Senining of the Civil Court of Cebu rendered judgment in favor of the petitioner and against the respondents. The
dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants and the latter are hereby ordered, jointly and
severally, to pay the plaintiff the sum of P750.00 as reimbursement for the lost Omega wrist watch, the sum of P246.64 as unrealized salary
of the plaintiff from his employer, the further sum of P100.00 for the doctor's fees and medicine, an additional sum of P300.00 for attorney's
fees and the costs.
The respondents appealed to the Court of First Instance of Cebu, Branch XIV.
Judge Leonardo B. Canares reversed the judgment of the City Court of Cebu upon a înding that the accident in question was due to a fortu-
itous event. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered exonerating the defendants from any liability to the plaintiff without pronouncement as to costs.
A motion for reconsideration was denied by the Court of First Instance.
The petitioner raises the following alleged errors committed by the Court of First Instance of Cebu on appeal—
a. The Honorable Court below committed grave abuse of discretion in failing to take cognizance of the fact that defendants and/or their em-
ployee failed to exercise "utmost and/or extraordinary diligence" required of common carriers contemplated under Art. 1755 of the Civil
Code of the Philippines.
b. The Honorable Court below committed grave abuse of discretion by deciding the case contrary to the doctrine laid down by the Honorable
Supreme Court in the case of Necesito et al. v. Paras, et al.
We înd the petition impressed with merit.
The City Court and the Court of First Instance of Cebu found that the right rear tire of the passenger jeepney in which the petitioner was rid-
ing blew up causing the vehicle to fall on its side. The petitioner questions the conclusion of the respondent court drawn from this înding of
fact.
The Court of First Instance of Cebu erred when it absolved the carrier from any liability upon a înding that the tire blow out is a fortuitous
event. The Court of First Instance of Cebu ruled that:
After reviewing the records of the case, this Court înds that the accident in question was due to a fortuitous event. A tire blow-out, such as
what happened in the case at bar, is an inevitable accident that exempts the carrier from liability, there being absence of a showing that there
was misconduct or negligence on the part of the operator in the operation and maintenance of the vehicle involved. The fact that the right
rear tire exploded, despite being brand new, constitutes a clear case of caso fortuito which can be a proper basis for exonerating the defen-
dants from liability. ...
The Court of First Instance relied on the ruling of the Court of Appeals in Rodriguez v. Red Line Transportation Co., CA G.R. No. 8136, Decem-
ber 29, 1954, where the Court of Appeals ruled that:
A tire blow-out does not constitute negligence unless the tire was already old and should not have been used at all. Indeed, this would be a
clear case of fortuitous event.
The foregoing conclusions of the Court of First Instance of Cebu are based on a misapprehension of overall facts from which a conclusion
should be drawn. The reliance of the Court of First Instance on the Rodriguez case is not in order. In La Mallorca and Pampanga Bus Co. v. De
Jesus, et al. (17 SCRA 23), we held that:
Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence, citing the rulings of the Court of
Appeals in Rodriguez v. Red Line Transportation Co., CA G.R. No. 8136, December 29, 1954, and People v. Palapad, CA-G.R. No. 18480, June 27,
1958. These rulings, however, not only are not binding on this Court but were based on considerations quite different from those that obtain
in the case at bar. The appellate court there made no îndings of any speciîc acts of negligence on the part of the defendants and conîned
itself to the question of whether or not a tire blow-out, by itself alone and without a showing as to the causative factors, would generate lia-
bility. ...
In the case at bar, there are speciîc acts of negligence on the part of the respondents. The records show that the passenger jeepney turned
turtle and jumped into a ditch immediately after its right rear tire exploded. The evidence shows that the passenger jeepney was running at a
very fast speed before the accident. We agree with the observation of the petitioner that a public utility jeep running at a regular and safe
speed will not jump into a ditch when its right rear tire blows up. There is also evidence to show that the passenger jeepney was overloaded
at the time of the accident. The petitioner stated that there were three (3) passengers in the front seat and fourteen (14) passengers in the
rear.
While it may be true that the tire that blew-up was still good because the grooves of the tire were still visible, this fact alone does not make
the explosion of the tire a fortuitous event. No evidence was presented to show that the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to compensate for any conditions liable to cause accidents. The sudden blowing-up, therefore,
could have been caused by too much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and speeding at
the time of the accident.
In Lasam v. Smith (45 Phil. 657), we laid down the following essential characteristics of caso fortuito:
xxx xxx xxx
... In a legal sense and, consequently, also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The
cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the
human will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to
avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulîll his obligation in a normal manner. And (4) the
obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. (5 Encyclopedia Juridica Es-
panola, 309.)
In the case at bar, the cause of the unforeseen and unexpected occurrence was not independent of the human will. The accident was caused
either through the negligence of the driver or because of mechanical defects in the tire. Common carriers should teach their drivers not to
overload their vehicles, not to exceed safe and legal speed limits, and to know the correct measures to take when a tire blows up thus insur-
ing the safety of passengers at all times. Relative to the contingency of mechanical defects, we held in Necesito, et al. v. Paras, et al. (104 Phil.
75), that:
... The preponderance of authority is in favor of the doctrine that a passenger is entitled to recover damages from a carrier for an injury re-
sulting from a defect in an appliance purchased from a manufacturer, whenever it appears that the defect would have been discovered by the
carrier if it had exercised the degree of care which under the circumstances was incumbent upon it, with regard to inspection and application
of the necessary tests. For the purposes of this doctrine, the manufacturer is considered as being in law the agent or servant of the carrier, as
far as regards the work of constructing the appliance. According to this theory, the good repute of the manufacturer will not relieve the carri-
er from liability' (10 Am. Jur. 205, s, 1324; see also Pennsylvania R. Co. v. Roy, 102 U.S. 451; 20 L. Ed. 141; Southern R. Co. v. Hussey, 74 ALR
1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788.: Ann. Cas. 1916E 929).
The rationale of the carrier's liability is the fact that the passenger has neither choice nor control over the carrier in the selection and use of
the equipment and appliances in use by the carrier. Having no privity whatever with the manufacturer or vendor of the defective equipment,
the passenger has no remedy against him, while the carrier usually has. It is but logical, therefore, that the carrier, while not an insurer of the
safety of his passengers, should nevertheless be held to answer for the ^laws of his equipment if such ^laws were at all discoverable. ...
It is sufîcient to reiterate that the source of a common carrier's legal liability is the contract of carriage, and by entering into the said con-
tract, it binds itself to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cau-
tious person, with a due regard for all the circumstances. The records show that this obligation was not met by the respondents.
The respondents likewise argue that the petitioner cannot recover any amount for failure to prove such damages during the trial. The re-
spondents submit that if the petitioner was really injured, why was he treated in Danao City and not in Mandaue City where the accident took
place. The respondents argue that the doctor who issued the medical certiîcate was not presented during the trial, and hence not cross-ex-
amined. The respondents also claim that the petitioner was not wearing any wrist watch during the accident.
It should be noted that the City Court of Cebu found that the petitioner had a lacerated wound on his right palm aside from injuries on his left
arm, right thigh and on his back, and that on his way back to Danao City, he discovered that his "Omega" wrist watch was lost. These are înd-
ings of facts of the City Court of Cebu which we înd no reason to disturb. More so when we consider the fact that the Court of First Instance
of Cebu impliedly concurred in these matters when it conîned itself to the question of whether or not the tire blow out was a fortuitous
event.
WHEREFORE, the decision of the Court of First Instance of Cebu, Branch IV appealed from is hereby REVERSED and SET ASIDE, and the deci-
sion of the City Court of Cebu, Branch I is REINSTATED, with the modiîcation that the damages shall earn interest at 12% per annum and the
attorney's fees are increased to SIX HUNDRED PESOS (P600.00). Damages shall earn interests from January 27, 1975.
SO ORDERED.
G.R. Nos. 81100-01 February 7, 1990
BACOLOD-MURCIA MILLING CO., INC., petitioner,

vs.
HON. COURT OF APPEALS AND ALONSO GATUSLAO, respondents.
BACOLOD-MURCIA MILLING CO., INC., petitioner,

vs.
HON. COURT OF APPEALS, ALONSO GATUSLAO, AGRO-INDUSTRIAL DEVELOPMENT OF SILAY-SARAVIA (AIDSISA) AND BACOLOD-MURCIA
AGRICULTURAL COOPERATIVE MARKETING ASSOCIATION (BM-ACMA), respondents.
Jalandoni, Herrera, Del Castillo & Associates for petitioner.
Tañada, Vico & Tan for respondent AIDSISA.
San Juan, Gonzalez, San Agustin & Sinense for respondents Alfonso Gatuslao and BM-ACMA.
PARAS, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. CV Nos. 59716-59717 promulgated on September
11, 1987 afîrming in toto the decision of the Court of First Instance of Negros Occidental in two consolidated civil cases, the dispositive por-
tion of which reads as follows:
PREMISES CONSIDERED, the decision appealed from is hereby afîrmed in toto.
The uncontroverted facts of the case 1 are as follows:
1. xxx xxx xxx
2. BMMC is the owner and operator of the sugar central in Bacolod City, Philippines;
3. ALONSO GATUSLAO is a registered planter of the Bacolod-Murcia Mill District with Plantation Audit No. 3-79, being a registered owner of
Lot Nos. 310, 140, 141 and 101-A of the Cadastral Survey of Murcia, Negros Occidental, otherwise known as Hda. San Roque;
4. On May 24, 1957 BMMC and Alonso Gatuslao executed an 'Extension and Modiîcation of Milling Contract (Annex 'A' of the complaint in
both cases) which was registered on September 17, 1962 in the Ofîce of the Register of Deeds of Negros Occidental, and annotated on Trans-
fer Certiîcates of Title Nos. T-24207, RT-2252, RT-12035, and RT-12036 covering said Lot Nos. 310, 140, 141 and 101-A;
5. That since the crop year 1957-1958 up to crop year 1967-1968, inclusive, Alonso Gatuslao has been milling all the sugarcane grown and
produced on said Lot Nos. 310, 140, 141 and 101-A with the Mill of BMMC;.
6. Since the crop year 1920-21 to crop year 1967-1968, inclusive, the canes of planters adhered to the mill of BMMC were transported from
the plantation to the mill by means of cane cars and through railway system operated by BMMC;
7. The loading points at which planters Alonso Gatuslao was and should deliver and load all his canes produced in his plantation, Hda. San
Roque, were at the Arimas Line, Switch 2, and from which loading stations, BMMC had been hauling planter Gatuslao's sugar cane to its mill
or factory continuously until the crop year 1967-68;
8. BMMC had not been able to use its cane cars and railway system for the cargo crop year 1968-1969;
9. Planter Alonso Gatuslao on various dates requested transportation facilities of BMMC to be sent to his loading stations or switches for
purposes of hauling and milling his sugarcane crops of crop year 1968-1969;
10. The estimated gross production of Hda. San Roque for the crop year 1968-1969 is 4,500 piculs.
The records show that since the crop year 1920-1921 to the crop year 1967-1968, the canes of the adhered planters were transported from
the plantation to the mill of BMMC by means of cane cars and through a railway system operated by BMMC which traversed the land of the
adherent planters, corresponding to the rights of way on their lands granted by the planters to the Central for the duration of the milling con-
tracts which is for "un periodo de cuarenta y cinco anos o cosechas a contar desde la cosecha de 1920-1921" 2 (a period of 45 years or har-
vests, beginning with a harvest of 1920-1921).
BMMC constructed the railroad tracks in 1920 and the adherent planters granted the BMMC a right of way over their lands as provided for in
the milling contracts. The owners of the hacienda Helvetia were among the signatories of the milling contracts. When their milling contracts
with petitioner BMMC expired at the end of the 1964-1965 crop year, the corresponding right of way of the owners of the hacienda Helvetia
granted to the Central also expired.
Thus, the BMMC was unable to use its railroad facilities during the crop year 1968-1969 due to the closure in 1968 of the portion of the rail-
way traversing the hacienda Helvetia as per decision of the Court in Angela Estate, Inc. and Fernando F. Gonzaga, Inc. v. Court of First Instance
of Negros Occidental, G.R. No. L-27084, (24 SCRA 500 [1968]). In the same case the Court ruled that the Central's conventional right of way
over the hacienda Helvetia ceased with the expiration of its amended milling contracts with the landowners of the hacienda at the end of the
1964-1965 crop year and that in the absence of a renewal contract or the establishment of a compulsory servitude of right of way on the
same spot and route which must be predicated on the satisfaction of the preconditions required by law, there subsists no right of way to be
protected.
Consequently, the owners of the hacienda Helvetia required the Central to remove the railway tracks in the hacienda occupying at least 3,245
lineal meters with a width of 7 meters or a total of 22,715 square meters, more or less. That was the natural consequence of the expiration of
the milling contracts with the landowners of the hacienda Helvetia (Angela Estate, Inc. and Fernando Gonzaga, Inc. v. Court of First Instance
of Negros Occidental, ibid). BMMC îled a complaint for legal easement against the owners of the hacienda, with the Court of First Instance of
Negros Occidental which issued on October 4, 1965 an ex parte writ of preliminary injunction restraining the landowners from reversing
and/or destroying the railroad tracks in question and from impeding, obstructing or in any way preventing the passage and operation of
plaintiffs locomotives and cane cars over defendants' property during the pendency of the litigation and maintained the same in its subse-
quent orders of May 31, and November 26, 1966. The outcome of the case, however, was not favorable to the plaintiff BMMC. In the same case
the landowners asked this Court to restrain the lower court from enforcing the writ of preliminary injunction it issued, praying that after the
hearing on the merits, the restraining order be made permanent and the orders complained of be annulled and set aside. The Court gave due
course to the landowner's petition and on August 10, 1967 issued the writ of preliminary injunction enjoining the lower court from enforcing
the writ of preliminary injunction issued by the latter on October 4, 1965.
The writ of preliminary injunction issued by the Court was lifted temporarily on motion that through the mediation of the President of the
Philippines the Angela Estate and the Gonzaga Estate agreed with the Central to allow the use of the railroad tracks passing through the ha-
cienda Helvetia during the 1967-1968 milling season only, for the same purpose for which they had been previously used, but it was under-
stood that the lifting of the writ was without prejudice to the respective rights and positions of the parties in the case and not deemed a
waiver of any of their respective claims and allegations in G.R. No. L-27084 or in any other case between the same parties, future or pending.
The Court resolved to approve the motion only up to and including June 30, 1968 to give effect to the agreement but to be deemed automati-
cally reinstated beginning July 1, 1968 (Angela Estate, Inc. and Fernando F. Gonzaga, Inc. v. Court of First Instance of Negros Occidental, ibid.).
The temporary lifting of the writ of preliminary injunction assured the milling of the 1967-1968 crop but not the produce of the succeeding
crop years which situation was duly communicated by the President and General Manager of the BMMC to the President of Bacolod-Murcia
Sugar Farmers Corporation (BMSFC) on January 2, 1968. 3
On October 30, 1968, Alonso Gatuslao, one of private respondents herein, and his wife, Maria H. Gatuslao, îled Civil Case No. 8719 in the
Court of First Instance of Negros Occidental, against petitioner herein, Bacolod-Murcia Milling Co., Inc. (BMMC), for breach of contract, pray-
ing among others, for the issuance of a writ of preliminary mandatory injunction ordering defendant to immediately send transportation
facilities and haul the already cut sugarcane to the mill site and principally praying after hearing, that judgment be rendered declaring the
rescission of the milling contract executed by plaintiffs and defendant in 1957 for seventeen (17) years or up to crop year 1973-74, invoking
as ground the alleged failure and/or inability of defendant to comply with its speciîc obligation of providing the necessary transportation
facilities to haul the sugarcane of Gatuslao from plaintiffs plantation speciîcally for the crop year 1967-1968. Plaintiffs further prayed for the
recovery of actual and compensatory damages as well as moral and exemplary damages and attorney's fees. 4
In answer, defendant BMMC claimed that despite its inability to use its railways system for its locomotives and cane cars to haul the sugar-
canes of all its adhered planters including plaintiffs for the 1968-69 crop year allegedly due to force majeure, in order to comply with its
obligation, defendant hired at tremendous expense, private trucks as prime movers for its trailers to be used for hauling of the canes, espe-
cially for those who applied for and requested transportation facilities. Plaintiffs, being one of said planters, instead of loading their cut canes
for the 1968-69 crop on the cargo trucks of defendant, loaded their cut canes on trucks provided by the Bacolod-Murcia Agricultural Cooper-
ative Marketing Association, Inc. (B-M ACMA) which transported plaintiffs' canes of the 1968-69 sugarcanes crop. Defendant prayed in its
counterclaim for the dismissal of Civil Case No. 8719 for the recovery of actual damages, moral and exemplary damages and for attorney's
fees.5
On November 21, 1968, BMMC îled in the same court Civil Case No. 8745 against Alonso Gatuslao, the Agro-Industrial Development of Silay-
Saravia (AIDSISA) and the Bacolod-Murcia Agricultural Cooperative Marketing Associations, Inc. (B-M ACMA), seeking speciîc performance
under the mining contract executed on May 24, 1957 between plaintiff and defendant Alonso Gatuslao praying for the issuance of writs of
preliminary mandatory injunction to stop the alleged violation of the contract by defendant Alonso Gatuslao in confederation, collaboration
and connivance with defendant BM-ACMA, AIDSISA, and for the recovery of actual, moral and exemplary damages and attorney's fees. 6
Defendant Alonso Gatuslao and the Bacolod-Murcia Agricultural Cooperative Marketing Association, Inc. îled their answer on January 27,
1969 with compulsory counter-claims, stating by way of special and afîrmative defense, among others, that the case is barred by another
action pending between the same parties for the same cause of action. 7
Defendant Agro-Industrial Development Corporation of Silay-Saravia, Inc. îled its answer on February 8, 1969, alleging among others by way
of afîrmative defense that before it agreed to mill the sugarcane of its co-defendant Alonso Gatuslao, it carefully ascertained and believed in
good faith that: (a) plaintiff was incapable of the sugarcane of AIDSISA's co-defendant planters as well as the sugarcane of other planters
formerly adherent to plaintiff, (b) plaintiff had in effect agreed to a rescission of its milling contracts with its adhered planters, including the
defendant planter, because of inadequate means of transportation. and had warned and advised them to mill their sugarcane elsewhere, and
had thus induced them to believe and act on the belief, that it could not mill their sugarcane and that it would not object to their milling with
other centrals; and (c) up to now plaintiff is incapable of hauling the sugarcane of AIDSISA's co-defendants to plaintiffs mill site for milling
purposes.
The two cases, Civil Cases Nos. 8719 and 8745 were consolidated for joint trial before Branch II of the Court of First Instance of Negros Occi-
dental. 8 On September 8, 1969, the parties in both civil cases îled their partial stipulation of facts which included a statement of the issues
raised by the parties. 9
On February 6, 1976, the lower court rendered judgment declaring the milling contract dated May 24, 1957 rescinded. The dispositive por-
tion of the decision 10 reads:
WHEREFORE, judgment is hereby rendered as follows:
(1) In Civil Case No. 8719 the milling contract (Exh. "121") dated May 24, 1957 is hereby declared rescinded or resolved and the defendant
Bacolod-Murcia Company, Inc. is hereby ordered to pay plaintiffs Alonso Gatuslao and Maria H. Gatuslao the amount of P2,625.00 with legal
interest from the time of the îling of the complaint by way of actual damages; P5,000.00 as attorney's fees and the costs of the suit; defen-
dant's counterclaim is dismissed; and
(2) The complaint in Civil Case No. 8745 as well as the counterclaims therein are ordered dismissed, without costs.
Bacolod-Murcia Milling Co., Inc. defendant in Civil Case No. 8719 and plaintiff in Civil Case No. 8745 appealed the case to respondent Court of
Appeals which afîrmed in toto (Rollo, p. 81) the decision of the lower court. The motion for reconsideration îled by defendant-appellant
Bacolod-Murcia Milling Company, petitioner herein, was denied by the appellate court for lack of merit. 11 Hence, this petition.
The issues 12 raised by petitioner are as follows:
WHETHER OR NOT THE CLOSURE OF PETITIONER'S RAIL ROAD LINES CONSTITUTE FORCE MAJEURE.
II
WHETHER OR NOT PRIVATE RESPONDENT GATUSLAO HAS THE RIGHT TO RESCIND THE MILLING CONTRACT WITH PETITIONER UNDER
ARTICLE 1191 OF THE CIVIL CODE.
III
WHETHER OR NOT PRIVATE RESPONDENT GATUSLAO WAS JUSTIFIED IN VIOLATING HIS MILLING CONTRACT WITH PETITIONER.
IV
WHETHER OR NOT PRIVATE RESPONDENTS GATUSLAO AND B-M ACMA ARE GUILTY OF BAD FAITH IN THE EXERCISE OF THEIR DUTIES
AND ARE IN ESTOPPEL TO QUESTION THE ADEQUACY OF THE TRANSPORTATION FACILITIES OF PETITIONER AND ITS CAPACITY TO MILL
AND HAUL THE CANES OF ITS ADHERENT PLANTERS.
The crux of the issue is whether or not the termination of petitioner's right of way over the hacienda Helvetia caused by the expiration of its
amended milling contracts with the landowners of the lands in question is a fortuitous event or force majeure which will exempt petitioner
BMMC from fulîllment of its contractual obligations.
It is the position of petitioner Bacolod-Murcia Milling Co., Inc. (BMMC) that the closure of its railroad lines constitute force majeure, citing
Article 1174 of the Civil Code, exempting a person from liability for events which could not be foreseen or which though foreseen were in-
evitable.
This Court has consistently ruled that when an obligor is exempted from liability under the aforecited provision of the Civil Code for a breach
of an obligation due to an act of God, the following elements must concur: (a) the cause of the breach of the obligation must be independent
of the wig of the debtor; (b) the event must be either unforseeable or unavoidable; (c) the event must be such as to render it impossible for
the debtor to fulîll his obligation in a normal manner; (d) the debtor must be free from any participation in, or aggravation of the injury to
the creditor (Vasquez v. Court of Appeals, 138 SCRA 553 [1985]; Juan F. Nakpil & Sons v. Court of Appeals, 144 SCRA 596 [1986]). Applying
the criteria to the instant case, there can be no other conclusion than that the closure of the railroad tracks does not constitute force majeure.
The terms of the milling contracts were clear and undoubtedly there was no reason for BAMC to expect otherwise. The closure of any portion
of the railroad track, not necessarily in the hacienda Helvetia but in any of the properties whose owners decided not to renew their milling
contracts with the Central upon their expiration, was forseeable and inevitable.
Petitioner Central should have anticipated and should have provided for the eventuality before committing itself. Under the circumstances it
has no one to blame but itself and cannot now claim exemption from liability.
In the language of the law, the event must have been impossible to foresee, or if it could be foreseen, must have been impossible to avoid.
There must be an entire exclusion of human agency from the cause of the injury or loss (Vasquez v. Court of Appeals, supra). In the case at
bar, despite its awareness that the conventional contract of lease would expire in Crop Year 1964-1965 and that refusal on the part of any one
of the landowners to renew their milling contracts and the corresponding use of the right of way on their lands would render impossible
compliance of its commitments, petitioner took a calculated risk that all the landowners would renew their contracts. Unfortunately, the sug-
ar plantation of Angela Estate, Inc. which is located at the entrance of the mill was the one which refused to renew its milling contract. As a
result, the closure of the railway located inside said plantation paralyzed the entire transportation system. Thus, the closure of the railway
lines was not an act of God nor does it constitute force majeure. It was due to the termination of the contractual relationships of the parties,
for which petitioner is charged with knowledge. Verily, the lower court found that the Angela Estate, Inc. notiîed BMMC as far back as August
or September 1965 of its intention not to allow the passage of the railway system thru its land after the aforesaid crop year. Adequate mea-
sures should have been adopted by BMMC to forestall such paralyzation but the records show none. All its efforts were geared toward the
outcome of the court litigation but provided no solutions to the transport problem early enough in case of an adverse decision.
The last three issues being inter-related will be treated as one. Private respondent Gatuslao îled an action for rescission while BMMC îled in
the same court an action against Gatuslao, the Agro Industrial Development Silay Saravia (AIDSISA) and the Bacolod-Murcia Agricultural
Cooperative Marketing Associations, Inc. (B-M ACMA) for speciîc performance under the milling contract.
There is no question that the contract in question involves reciprocal obligations; as such party is a debtor and creditor of the other, such that
the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously so that the performance of one
is conditioned upon the simultaneous fulîllment of the other (Boysaw v. Interphil Promotions, Inc., 148 SCRA 643 [1987]).
Under Article 1191 of the Civil Code, the power to rescind obligations is implied in reciprocal ones in case one of the obligors should not
comply with what is incumbent upon him. In fact, it is well established that the party who deems the contract violated may consider it re-
voked or rescinded pursuant to their agreement and act accordingly, even without previous court action (U.P. v. de los Angeles, 35 SCRA 102
[1970]; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 43 SCRA 94 [1972]).
It is the general rule, however, that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial
and fundamental breach as would defeat the very object of the parties in making the agreement. The question of whether a breach of a con-
tract is substantial depends upon the attendant circumstances (Universal Food Corporation v. Court of Appeals, et al., 33 SCRA 1 [1970]).
The issue therefore, hinges on who is guilty of the breach of the milling contract.
Both parties are agreed that time is of the essence in the sugar industry; so that the sugarcanes have to be milled at the right time, not too
early or too late, if the quantity and quality of the juice are to be assured. As found by the trial court, upon the execution of the amended
milling contract on May 24, 1957 for a period of 17 crop years, BMMC undertook expressly among its principal prestations not only to mill
Gatuslao's canes but to haul them by railway from the loading stations to the mill. Atty. Solidum, Chief Legal Counsel and in Charge of the
Legal-Crop Loan Department of the BMMC Bacolod City admits that the mode of transportation of canes from the îelds to the mill is a vital
factor in the sugar industry; precisely for this reason the mode of transportation or hauling the canes is embodied in the milling contract. 13
But BMMC is now unable to haul the canes by railways as stipulated because of the closure of the railway lines; so that resolution of this issue
ultimately rests on whether or not BMMC was able to provide adequate and efîcient transportation facilities of the canes of Gatuslao and the
other planters milling with BMMC during the crop year 1968-1969. As found by both the trial court and the Court of Appeals, the answer is in
the negative.
Armando Guanzon, Dispatcher of the Transportation Department of BMMC testiîed that when the Central was still using the railway lines, it
had between 900 to 1,000 cane cars and 10 locomotives, each locomotive pulling from 30 to 50 cane cars with maximum capacity of 8 tons
each.14 This testimony was corroborated by Rodolfo Javelosa, Assistant Crop Loan Inspector in the Crop Loan Department of petitioner. 15
After the closure of the railway lines, petitioner on February 5, 1968 through its President and General Manager, informed the National
Committee of the National Federation of Sugarcane Planters that the trucking requirement for hauling adherent planters produce with a
milling average of 3,500 tons of canes daily at an average load of 5 tons per truck is not less than 700 trucks daily plus another 700 empty
trucks to be shuttled back to the plantations to be available for loading the same day. 16 Guanzon, however, testiîed that petitioner had only
280 units of trailers, 20 tractors and 3 trucks plus 20 trucks more or less hired by the Central and given as repartos (allotments) to the dif-
ferent planters. 17 The 180 trailers that the Central initially had were permanently leased to some planters who had their own cargo trucks
while out of the 250 BMMC trailers existing during the entire milling season only 70 were left available to the rest of the planters pulled by 3
trucks. 18
It is true that BMMC purchased 20 units John Deere Tractors (prime movers) and 230 units, Vanguard Trailers with land capacity of 3 tons
each but that was only on October 1968 as registered in the Land Transportation Commission, Bacolod City. 19
The evidence shows that great efforts had been exerted by the planters to enter into some concrete understanding with BMMC with a view of
obtaining a reasonable assurance that the latter would be able to haul and mill their canes for the 1968-1969 crop year, but to no avail. 20
As admitted by BMMC itself, in its communications with the planters, it is not in a position to provide adequate transportation for the canes
in compliance with its commitment under the milling contract. Said communications 21 were quoted by the Court of Appeals as follows:
We are sorry to inform you that unless we can work out a fair and equitable solution to this problem of closure of our railroad lines, the
milling of your canes for the crop year 1968-69 would be greatly hampered to the great detriment of our economy and the near elimination
of the means of livelihood of most planters and the possible starvation of thousands of laborers working in the sugar District of Bacolod-
Murcia Milling Co.
and
We are fully conscious of our contractual obligations to our existing Milling Contract. But, if prevented by judicial order we will înd ourselves
unable to serve you in the hauling of the canes through our railroad lines. It is for this reason that we suggest you explore other solutions to
the problem in the face of such an eventuality so that you may be able to proceed with the planting of your canes with absolute peace of mind
and the certainty that the same will be properly milled and not left to rot in the îelds.
also,
In the meantime, and before July 1, 1968, the end of the temporary arrangement we have with Fernando Gonzaga, Inc. and the Angela Estate,
Inc. for the use of the rights of ways, our lawyers are studying the possibility of getting a new injunction from the Supreme Court or the Court
of First Instance of Negros Occidental based on the new grounds interposed in said memorandum not heretofore raised previously nor in the
Capitol Subdivision case. And if we are doing this, it is principally to prevent any injury to your crops or foreclosure of your property, which is
just in line with the object of your plans.
On March 26, 1968 the President of the Bacolod-Murcia Sugar Farmer's Corporation writing on behalf of its planter-members demanded to
know the plans of the Central for the crop year 1968-1969, stating that if they fail to hear from the Central on or before the 15th of April they
will feel free to make their own plans in order to save their crops and the possibility of foreclosure of their properties. 22
In its letter dated April 1, 1968, the president of BMMC simply informed the Bacolod-Murcia Sugar Farmer's Corporation that they were
studying the possibility of getting a new injunction from the court before expiration of their temporary arrangement with Fernando Gonzaga,
Inc. and the Angela Estate, Inc. 23
Pressing for a more deînite commitment (not a mere hope or expectation), on May 30, 1968 the Bacolod-Murcia Sugar Farmer's Corporation
requested the Central to put up a performance bond in the amount of P13 million within a 5-day period to allay the fears of the planters that
their sugar canes can not be milled at the Central in the coming milling season. 24
BMMC's reply was only to express optimism over the înal outcome of its pending cases in court.
Hence, what actually happened afterwards is that petitioner failed to provide adequate transportation facilities to Gatuslao and other adher-
ent planters.
As found by the trial court, the experience of Alfonso Gatuslao at the start of the 1968-1969 milling season is re^lective of the inadequacies of
the reparto or trailer allotment as well as the state of unpreparedness on the part of BMMC to meet the problem posed by the closure of the
railway lines.
It was established that after Gatuslao had cut his sugarcanes for hauling, no trailers arrived and when two trailers înally arrived on October
20, 1968 after several unheeded requests, they were left on the national highway about one (1) kilometer away from the loading station.
Such fact was conîrmed by Carlos Butog the driver of the truck that hauled the trailers. 25
Still further, Javelosa, Assistant Crop Loan Inspector, testiîed that the estimated production of Gatuslao for the crop year 1968-1969 was
4,400 piculs hauled by 10 cane cars a week with a maximum capacity of 8 tons. 26 Compared with his later schedule of only one trailer a
week with a maximum capacity of only 3 to 4 tons, 27 there appears to be no question that the means of transportation provided by BMMC is
very inadequate to answer the needs of Gatuslao.
Undoubtedly, BMMC is guilty of breach of the conditions of the milling contract and that Gatuslao is the injured party. Under the same Article
1191 of the Civil Code, the injured party may choose between the fulîllment and the rescission of the obligation, with the payment of dam-
ages in either case. In fact, he may also seek rescission even after he had chosen fulîllment if the latter should become impossible.
Under the foregoing, Gatuslao has the right to rescind the milling contract and neither the court a quo erred in decreeing the rescission
claimed nor the Court of Appeals in afîrming the same.
Conversely, BMMC cannot claim enforcement of the contract. As ruled by this Court, by virtue of the violations of the terms of the contract,
the offending party has forfeited any right to its enforcement (Boysaw v. Interphil Promotions, Inc., 148 SCRA 645 [1987]).
Likewise, the Bacolod-Murcia Agricultural Cooperative Marketing Association, Inc. (B-M ACMA) cannot be faulted for organizing itself to take
care of the needs of its members. Deînitely, it was organized at that time when petitioner could not assure the planters that it could deînite-
ly haul and mill their canes. More importantly, as mentioned earlier in a letter dated January 12, 1968, J. Araneta, President & General Man-
ager of the Central itself suggested to the Bacolod-Murcia Sugar Farmer's Corporation that it explore solutions to the problem of hauling the
canes to the milling station in the face of the eventuality of a judicial order permanently closing the railroad lines so that the planters may be
able to proceed with their planting of the canes with absolute peace of mind and the certainty that they will be properly milled and not left to
rot in the îelds. As a result, the signing of the milling contract between private respondents AIDSISA and B-M-ACMA on June 19, 196828 was
a matter of self-preservation inasmuch as the sugarcanes were already matured and the planters had crop loans to pay. Further delay would
mean tremendous losses. 29
In its defense AIDSISA stressed as earlier stated, that it agreed to mill the sugarcanes of Gatuslao only after it had carefully ascertained and
believed in good faith that BMMC was incapable of milling the sugarcanes of the adherent planters because of inadequate transportation and
in fact up to now said Central is incapable of hauling the sugarcanes of the said planters to its mill site for milling purposes.
As an extra precaution, AIDSISA provided in paragraph 15 30 of its milling contract that—
If any member of the planter has an existing milling contract with other sugar central, then this milling contract with the Central shall be of
no force and effect with respect to that member or those members having such contract, if that other sugar central is able, ready and willing,
to mill said member or members' canes in accordance with their said milling contract. (Emphasis supplied)
The President of BANC himself induced the planters to believe and to act on the belief that said Central would not object to the milling of
their canes with other centrals.
Under the circumstances, no evidence of bad faith on the part of private respondents could be found much less any plausible reason to dis-
turb the îndings and conclusions of the trial court and the Court of Appeals.
PREMISES CONSIDERED, the petition is hereby DENIED for lack of merit and the decision of the Court of Appeals is hereby AFFIRMED in
toto.
SO ORDERED.
[G.R. NO. 147324 : May 25, 2004]
PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, Petitioner, v. GLOBE TELECOM, INC. (formerly and Globe Mckay Cable and Radio
Corporation), Respondents.
[G.R. NO. 147334 : May 25, 2004]
GLOBE TELECOM, INC., Petitioner, v. PHILIPPINE COMMUNICATION SATELLITE CORPORATION, Respondent.
D E C I S I O N
TINGA, J.:
Before the Court are two Petitions for Review assailing the Decision of the Court of Appeals, dated 27 February 2001, in CA-G.R. CV No.
63619.1
The facts of the case are undisputed.
For several years prior to 1991, Globe Mckay Cable and Radio Corporation, now Globe Telecom, Inc. (Globe), had been engaged in the coordi-
nation of the provision of various communication facilities for the military bases of the United States of America (US) in Clark Air Base, Ange-
les, Pampanga and Subic Naval Base in Cubi Point, Zambales. The said communication facilities were installed and conîgured for the exclu-
sive use of the US Defense Communications Agency (USDCA), and for security reasons, were operated only by its personnel or those of Amer-
ican companies contracted by it to operate said facilities. The USDCA contracted with said American companies, and the latter, in turn, con-
tracted with Globe for the use of the communication facilities. Globe, on the other hand, contracted with local service providers such as the
Philippine Communications Satellite Corporation (Philcomsat) for the provision of the communication facilities.
On 07 May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat obligated itself to establish, operate and provide an
IBS Standard B earth station (earth station) within Cubi Point for the exclusive use of the USDCA.2 The term of the contract was for 60
months, or îve (5) years.3 In turn, Globe promised to pay Philcomsat monthly rentals for each leased circuit involved.4
At the time of the execution of the Agreement, both parties knew that the Military Bases Agreement between the Republic of the Philippines
and the US (RP-US Military Bases Agreement), which was the basis for the occupancy of the Clark Air Base and Subic Naval Base in Cubi
Point, was to expire in 1991. Under Section 25, Article XVIII of the 1987 Constitution, foreign military bases, troops or facilities, which in-
clude those located at the US Naval Facility in Cubi Point, shall not be allowed in the Philippines unless a new treaty is duly concurred in by
the Senate and ratiîed by a majority of the votes cast by the people in a national referendum when the Congress so requires, and such new
treaty is recognized as such by the US Government.

Subsequently, Philcomsat installed and established the earth station at Cubi Point and the USDCA made use of the same.
On 16 September 1991, the Senate passed and adopted Senate Resolution No. 141, expressing its decision not to concur in the ratiîcation of
the Treaty of Friendship, Cooperation and Security and its Supplementary Agreements that was supposed to extend the term of the use by
the US of Subic Naval Base, among others.5 The last two paragraphs of the Resolution state:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
FINDING that the Treaty constitutes a defective framework for the continuing relationship between the two countries in the spirit of friend-
ship, cooperation and sovereign equality: Now, therefore, be it
Resolved by the Senate, as it is hereby resolved, To express its decision not to concur in the ratiîcation of the Treaty of Friendship, Coopera-
tion and Security and its Supplementary Agreements, at the same time reafîrming its desire to continue friendly relations with the govern-
ment and people of the United States of America.6
On 31 December 1991, the Philippine Government sent a Note Verbale to the US Government through the US Embassy, notifying it of the
Philippines termination of the RP-US Military Bases Agreement. The Note Verbale stated that since the RP-US Military Bases Agreement, as
amended, shall terminate on 31 December 1992, the withdrawal of all US military forces from Subic Naval Base should be completed by said
date.
In a letter dated 06 August 1992, Globe notiîed Philcomsat of its intention to discontinue the use of the earth station effective 08 November
1992 in view of the withdrawal of US military personnel from Subic Naval Base after the termination of the RP-US Military Bases Agreement.
Globe invoked as basis for the letter of termination Section 8 (Default) of the Agreement, which provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Neither party shall be held liable or deemed to be in default for any failure to perform its obligation under this Agreement if such failure re-
sults directly or indirectly from force majeure or fortuitous event. Either party is thus precluded from performing its obligation until such
force majeure or fortuitous event shall terminate. For the purpose of this paragraph, force majeure shall mean circumstances beyond the
control of the party involved including, but not limited to, any law, order, regulation, direction or request of the Government of the Philip-
pines, strikes or other labor difîculties, insurrection riots, national emergencies, war, acts of public enemies, îre, ^loods, typhoons or other
catastrophies or acts of God.
Philcomsat sent a reply letter dated 10 August 1992 to Globe, stating that we expect [Globe] to know its commitment to pay the stipulated
rentals for the remaining terms of the Agreement even after [Globe] shall have discontinue[d] the use of the earth station after November 08,
1992.7 Philcomsat referred to Section 7 of the Agreement, stating as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
7.DISCONTINUANCE OF SERVICE
Should [Globe] decide to discontinue with the use of the earth station after it has been put into operation, a written notice shall be served to
PHILCOMSAT at least sixty (60) days prior to the expected date of termination. Notwithstanding the non-use of the earth station, [Globe]
shall continue to pay PHILCOMSAT for the rental of the actual number of T1 circuits in use, but in no case shall be less than the îrst two (2)
T1 circuits, for the remaining life of the agreement. However, should PHILCOMSAT make use or sell the earth station subject to this agree-
ment, the obligation of [Globe] to pay the rental for the remaining life of the agreement shall be at such monthly rate as may be agreed upon
by the parties.8
After the US military forces left Subic Naval Base, Philcomsat sent Globe a letter dated 24 November 1993 demanding payment of its out-
standing obligations under the Agreement amounting to US$4,910,136.00 plus interest and attorneys fees. However, Globe refused to heed
Philcomsats demand.
On 27 January 1995, Philcomsat îled with the Regional Trial Court of Makati a Complaint against Globe, praying that the latter be ordered to
pay liquidated damages under the Agreement, with legal interest, exemplary damages, attorneys fees and costs of suit. The case was raf^led
to Branch 59 of said court.
Globe îled an Answer to the Complaint, insisting that it was constrained to end the Agreement due to the termination of the RP-US Military
Bases Agreement and the non-ratiîcation by the Senate of the Treaty of Friendship and Cooperation, which events constituted force majeure
under the Agreement. Globe explained that the occurrence of said events exempted it from paying rentals for the remaining period of the
Agreement.
On 05 January 1999, the trial court rendered its Decision, the dispositive portion of which reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
WHEREFORE, premises considered, judgment is hereby rendered as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
1.Ordering the defendant to pay the plaintiff the amount of Ninety Two Thousand Two Hundred Thirty Eight US Dollars (US$92,238.00) or its
equivalent in Philippine Currency (computed at the exchange rate prevailing at the time of compliance or payment) representing rentals for
the month of December 1992 with interest thereon at the legal rate of twelve percent (12%) per annum starting December 1992 until the
amount is fully paid;
2.Ordering the defendant to pay the plaintiff the amount of Three Hundred Thousand (P300,000.00) Pesos as and for attorneys fees;
3.Ordering the DISMISSAL of defendants counterclaim for lack of merit; and
4.With costs against the defendant.
SO ORDERED.
Both parties appealed the trial courts Decision to the Court of Appeals.
Philcomsat claimed that the trial court erred in ruling that: (1) the non-ratiîcation by the Senate of the Treaty of Friendship, Cooperation and
Security and its Supplementary Agreements constitutes force majeure which exempts Globe from complying with its obligations under the
Agreement; (2) Globe is not liable to pay the rentals for the remainder of the term of the Agreement; and (3) Globe is not liable to Philcomsat
for exemplary damages.
Globe, on the other hand, contended that the RTC erred in holding it liable for payment of rent of the earth station for December 1992 and of
attorneys fees. It explained that it terminated Philcomsats services on 08 November 1992; hence, it had no reason to pay for rentals beyond
that date.
On 27 February 2001, the Court of Appeals promulgated its Decision dismissing Philcomsats appeal for lack of merit and afîrming the trial
courts înding that certain events constituting force majeure under Section 8 the Agreement occurred and justiîed the non-payment by
Globe of rentals for the remainder of the term of the Agreement.
The appellate court ruled that the non-ratiîcation by the Senate of the Treaty of Friendship, Cooperation and Security, and its Supplementary
Agreements, and the termination by the Philippine Government of the RP-US Military Bases Agreement effective 31 December 1991 as stated
in the Philippine Governments Note Verbale to the US Government, are acts, directions, or requests of the Government of the Philippines
which constitute force majeure. In addition, there were circumstances beyond the control of the parties, such as the issuance of a formal or-
der by Cdr. Walter Corliss of the US Navy, the issuance of the letter notiîcation from ATT and the complete withdrawal of all US military
forces and personnel from Cubi Point, which prevented further use of the earth station under the Agreement.
However, the Court of Appeals ruled that although Globe sought to terminate Philcomsats services by 08 November 1992, it is still liable to
pay rentals for the December 1992, amounting to US$92,238.00 plus interest, considering that the US military forces and personnel com-
pletely withdrew from Cubi Point only on 31 December 1992.10
Both parties îled their respective Petitions for Review assailing the Decision of the Court of Appeals.
In G.R. No. 147324,11 petitioner Philcomsat raises the following assignments of error:
A.THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING A DEFINITION OF FORCE MAJEURE DIFFERENT FROM WHAT ITS LEGAL
DEFINITION FOUND IN ARTICLE 1174 OF THE CIVIL CODE, PROVIDES, SO AS TO EXEMPT GLOBE TELECOM FROM COMPLYING WITH ITS
OBLIGATIONS UNDER THE SUBJECT AGREEMENT.
B.THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT GLOBE TELECOM IS NOT LIABLE TO PHILCOMSAT FOR RENTALS FOR
THE REMAINING TERM OF THE AGREEMENT, DESPITE THE CLEAR TENOR OF SECTION 7 OF THE AGREEMENT.
C.THE HONORABLE OCURT OF APPEALS ERRED IN DELETING THE TRIAL COURTS AWARD OF ATTORNEYS FEES IN FAVOR OF PHILCOM-
SAT.
D.THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT GLOBE TELECOM IS NOT LIABLE TO PHILCOMSAT FOR EXEMPLARY
DAMAGES.12
Philcomsat argues that the termination of the RP-US Military Bases Agreement cannot be considered a fortuitous event because the happen-
ing thereof was foreseeable. Although the Agreement was freely entered into by both parties, Section 8 should be deemed ineffective because
it is contrary to Article 1174 of the Civil Code. Philcomsat posits the view that the validity of the parties deînition of force majeure in Section
8 of the Agreement as circumstances beyond the control of the party involved including, but not limited to, any law, order, regulation, direc-
tion or request of the Government of the Philippines, strikes or other labor difîculties, insurrection riots, national emergencies, war, acts of
public enemies, îre, ^loods, typhoons or other catastrophies or acts of God, should be deemed subject to Article 1174 which deînes fortu-
itous events as events which could not be foreseen, or which, though foreseen, were inevitable.13
Philcomsat further claims that the Court of Appeals erred in holding that Globe is not liable to pay for the rental of the earth station for the
entire term of the Agreement because it runs counter to what was plainly stipulated by the parties in Section 7 thereof.Moreover, said ruling
is inconsistent with the appellate courts pronouncement that Globe is liable to pay rentals for December 1992 even though it terminated
Philcomsats services effective 08 November 1992, because the US military and personnel completely withdrew from Cubi Point only in De-
cember 1992. Philcomsat points out that it was Globe which proposed the îve-year term of the Agreement, and that the other provisions of
the Agreement, such as Section 4.114 thereof, evince the intent of Globe to be bound to pay rentals for the entire îve-year term.15
Philcomsat also maintains that contrary to the appellate courts îndings, it is entitled to attorneys fees and exemplary damages.16
In its Comment to Philcomsats Petition, Globe asserts that Section 8 of the Agreement is not contrary to Article 1174 of the Civil Code be-
cause said provision does not prohibit parties to a contract from providing for other instances when they would be exempt from fulîlling
their contractual obligations. Globe also claims that the termination of the RP-US Military Bases Agreement constitutes force majeure and
exempts it from complying with its obligations under the Agreement.17 On the issue of the propriety of awarding attorneys fees and exem-
plary damages to Philcomsat, Globe maintains that Philcomsat is not entitled thereto because in refusing to pay rentals for the remainder of
the term of the Agreement, Globe only acted in accordance with its rights.18
In G.R. No. 147334,19 Globe, the petitioner therein, contends that the Court of Appeals erred in înding it liable for the amount of
US$92,238.00, representing rentals for December 1992, since Philcomsats services were actually terminated on 08 November 1992.20
In its Comment, Philcomsat claims that Globes petition should be dismissed as it raises a factual issue which is not cognizable by the Court in
a Petition for Review on Certiorari .21
On 15 August 2001, the Court issued a Resolution giving due course to Philcomsats Petition in G.R. No. 147324 and required the parties to
submit their respective memoranda.22
Similarly, on 20 August 2001, the Court issued a Resolution giving due course to the Petition îled by Globe in G.R. No. 147334and required
both parties to submit their memoranda.23
Philcomsat and Globe thereafter îled their respective Consolidated Memoranda in the two cases, reiterating their arguments in their respec-
tive petitions.
The Court is tasked to resolve the following issues: (1) whether the termination of the RP-US Military Bases Agreement, the non-ratiîcation
of the Treaty of Friendship, Cooperation and Security, and the consequent withdrawal of US military forces and personnel from Cubi Point
constitute force majeure which would exempt Globe from complying with its obligation to pay rentals under its Agreement with Philcomsat;
(2) whether Globe is liable to pay rentals under the Agreement for the month of December 1992; and (3) whether Philcomsat is entitled to
attorneys fees and exemplary damages.
No reversible error was committed by the Court of Appeals in issuing the assailed Decision; hence the petitions are denied.
There is no merit is Philcomsats argument that Section 8 of the Agreement cannot be given effect because the enumeration of events consti-
tuting force majeure therein unduly expands the concept of a fortuitous event under Article 1174 of the Civil Code and is therefore invalid.
In support of its position, Philcomsat contends that under Article 1174 of the Civil Code, an event must be unforeseen in order to exempt a
party to a contract from complying with its obligations therein. It insists that since the expiration of the RP-US Military Bases Agreement, the
non-ratiîcation of the Treaty of Friendship, Cooperation and Security and the withdrawal of US military forces and personnel from Cubi
Point were not unforeseeable, but were possibilities known to it and Globe at the time they entered into the Agreement, such events cannot
exempt Globe from performing its obligation of paying rentals for the entire îve-year term thereof.
However, Article 1174, which exempts an obligor from liability on account of fortuitous events or force majeure, refers not only to events that
are unforeseeable, but also to those which are foreseeable, but inevitable:
Art. 1174. Except in cases speciîed by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires
the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which, though foreseen were in-
evitable.
A fortuitous event under Article 1174 may either be an act of God, or natural occurrences such as ^loods or typhoons,24 or an act of man,
such as riots, strikes or wars.25
Philcomsat and Globe agreed in Section 8 of the Agreement that the following events shall be deemed events constituting force
majeure:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
1.Any law, order, regulation, direction or request of the Philippine Government;
2.Strikes or other labor difîculties;
3.Insurrection;
4.Riots;
5.National emergencies;
6.War;
7.Acts of public enemies;
8.Fire, ^loods, typhoons or other catastrophies or acts of God;
9.Other circumstances beyond the control of the parties.
Clearly, the foregoing are either unforeseeable, or foreseeable but beyond the control of the parties. There is nothing in the enumeration that
runs contrary to, or expands, the concept of a fortuitous event under Article 1174.
Furthermore, under Article 130626 of the Civil Code, parties to a contract may establish such stipulations, clauses, terms and conditions as
they may deem ît, as long as the same do not run counter to the law, morals, good customs, public order or public policy.27
Article 1159 of the Civil Code also provides that [o]bligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.28 Courts cannot stipulate for the parties nor amend their agreement where the same does not
contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run
contrary to the function of the courts to give force and effect thereto.29
Not being contrary to law, morals, good customs, public order, or public policy, Section 8 of the Agreement which Philcomsat and Globe freely
agreed upon has the force of law between them.30
In order that Globe may be exempt from non-compliance with its obligation to pay rentals under Section 8, the concurrence of the following
elements must be established: (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the
debtor to fulîll the obligation in a normal manner; and (3) the obligor must be free of participation in, or aggravation of, the injury to the
creditor.31
The Court agrees with the Court of Appeals and the trial court that the abovementioned requisites are present in the instant case. Philcomsat
and Globe had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired in 1991, because
the prerogative to ratify the treaty extending the life thereof belonged to the Senate. Neither did the parties have control over the subsequent
withdrawal of the US military forces and personnel from Cubi Point in December 1992:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Obviously the non-ratiîcation by the Senate of the RP-US Military Bases Agreement (and its Supplemental Agreements) under its Resolution
No. 141. (Exhibit 2) on September 16, 1991 is beyond the control of the parties. This resolution was followed by the sending on December
31, 1991 o[f] a Note Verbale (Exhibit 3) by the Philippine Government to the US Government notifying the latter of the formers termination
of the RP-US Military Bases Agreement (as amended) on 31 December 1992 and that accordingly, the withdrawal of all U.S. military forces
from Subic Naval Base should be completed by said date. Subsequently, defendant [Globe] received a formal order from Cdr. Walter F. Corliss
II Commander USN dated July 31, 1992 and a notiîcation from ATT dated July 29, 1992 to terminate the provision of T1s services (via an IBS
Standard B Earth Station) effective November 08, 1992. Plaintiff [Philcomsat] was furnished with copies of the said order and letter by the
defendant on August 06, 1992.
Resolution No. 141 of the Philippine Senate and the Note Verbale of the Philippine Government to the US Government are acts, direction or
request of the Government of the Philippines and circumstances beyond the control of the defendant. The formal order from Cdr. Walter
Corliss of the USN, the letter notiîcation from ATT and the complete withdrawal of all the military forces and personnel from Cubi Point in
the year-end 1992 are also acts and circumstances beyond the control of the defendant.
Considering the foregoing, the Court înds and so holds that the afore-narrated circumstances constitute force majeure or fortuitous event(s)
as deîned under paragraph 8 of the Agreement.
From the foregoing, the Court înds that the defendant is exempted from paying the rentals for the facility for the remaining term of the con-
tract.
As a consequence of the termination of the RP-US Military Bases Agreement (as amended) the continued stay of all US Military forces and
personnel from Subic Naval Base would no longer be allowed, hence, plaintiff would no longer be in any position to render the service it was
obligated under the Agreement. To put it blantly (sic), since the US military forces and personnel left or withdrew from Cubi Point in the year
end December 1992, there was no longer any necessity for the plaintiff to continue maintaining the IBS facility.32 (Emphasis in the original.)
The aforementioned events made impossible the continuation of the Agreement until the end of its îve-year term without fault on the part of
either party. The Court of Appeals was thus correct in ruling that the happening of such fortuitous events rendered Globe exempt from pay-
ment of rentals for the remainder of the term of the Agreement.
Moreover, it would be unjust to require Globe to continue paying rentals even though Philcomsat cannot be compelled to perform its corre-
sponding obligation under the Agreement. As noted by the appellate court:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
We also point out the sheer inequity of PHILCOMSATs position. PHILCOMSAT would like to charge GLOBE rentals for the balance of the lease
term without there being any corresponding telecommunications service subject of the lease.It will be grossly unfair and iniquitous to hold
GLOBE liable for lease charges for a service that was not and could not have been rendered due to an act of the government which was clearly
beyond GLOBEs control. The binding effect of a contract on both parties is based on the principle that the obligations arising from contracts
have the force of law between the contracting parties, and there must be mutuality between them based essentially on their equality under
which it is repugnant to have one party bound by the contract while leaving the other party free therefrom (Allied Banking Corporation v.
Court of Appeals, 284 SCRA 357 ). 33
With respect to the issue of whether Globe is liable for payment of rentals for the month of December 1992, the Court likewise afîrms the
appellate courts ruling that Globe should pay the same.
Although Globe alleged that it terminated the Agreement with Philcomsat effective 08 November 1992 pursuant to the formal order issued
by Cdr. Corliss of the US Navy, the date when they actually ceased using the earth station subject of the Agreement was not established during
the trial.34 However, the trial court found that the US military forces and personnel completely withdrew from Cubi Point only on 31 Decem-
ber 1992.35 Thus, until that date, the USDCA had control over the earth station and had the option of using the same. Furthermore, Philcom-
sat could not have removed or rendered ineffective said communication facility until after 31 December 1992 because Cubi Point was acces-
sible only to US naval personnel up to that time. Hence, the Court of Appeals did not err when it afîrmed the trial courts ruling that Globe is
liable for payment of rentals until December 1992.
Neither did the appellate court commit any error in holding that Philcomsat is not entitled to attorneys fees and exemplary damages.
The award of attorneys fees is the exception rather than the rule, and must be supported by factual, legal and equitable justiîcations.36 In
previously decided cases, the Court awarded attorneys fees where a party acted in gross and evident bad faith in refusing to satisfy the other
partys claims and compelled the former to litigate to protect his rights;37 when the action îled is clearly unfounded,38 or where moral or
exemplary damages are awarded.39 However, in cases where both parties have legitimate claims against each other and no party actually
prevailed, such as in the present case where the claims of both parties were sustained in part, an award of attorneys fees would not be war-
ranted.40
Exemplary damages may be awarded in cases involving contracts or quasi-contracts, if the erring party acted in a wanton, fraudulent, reck-
less, oppressive or malevolent manner.41 In the present case, it was not shown that Globe acted wantonly or oppressively in not heeding
Philcomsats demands for payment of rentals. It was established during the trial of the case before the trial court that Globe had valid grounds
for refusing to comply with its contractual obligations after 1992.
WHEREFORE, the Petitions are DENIED for lack of merit. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 63619 is AFFIRMED.
G.R. No. 179337 April 30, 2008
JOSEPH SALUDAGA, petitioner,

vs.
FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his capacity as President of FEU, respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the June 29, 2007 Decision2 of the Court of Appeals in CA-
G.R. CV No. 87050, nullifying and setting aside the November 10, 2004 Decision3 of the Regional Trial Court of Manila, Branch 2, in Civil Case
No. 98-89483 and dismissing the complaint îled by petitioner; as well as its August 23, 2007 Resolution4 denying the Motion for Reconsid-
eration.5
The antecedent facts are as follows:
Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern University (FEU) when he was shot by Alejandro Rosete
(Rosete), one of the security guards on duty at the school premises on August 18, 1996. Petitioner was rushed to FEU-Dr. Nicanor Reyes Med-
ical Foundation (FEU-NRMF) due to the wound he sustained.6 Meanwhile, Rosete was brought to the police station where he explained that
the shooting was accidental. He was eventually released considering that no formal complaint was îled against him.
Petitioner thereafter îled a complaint for damages against respondents on the ground that they breached their obligation to provide stu-
dents with a safe and secure environment and an atmosphere conducive to learning. Respondents, in turn, îled a Third-Party Complaint7
against Galaxy Development and Management Corporation (Galaxy), the agency contracted by respondent FEU to provide security services
within its premises and Mariano D. Imperial (Imperial), Galaxy's President, to indemnify them for whatever would be adjudged in favor of
petitioner, if any; and to pay attorney's fees and cost of the suit. On the other hand, Galaxy and Imperial îled a Fourth-Party Complaint
against AFP General Insurance.8
On November 10, 2004, the trial court rendered a decision in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, from the foregoing, judgment is hereby rendered ordering:
1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay jointly and severally Joseph Saludaga the amount of P35,298.25 for
actual damages with 12% interest per annum from the îling of the complaint until fully paid; moral damages of P300,000.00, exemplary
damages of P500,000.00, attorney's fees of P100,000.00 and cost of the suit;
2. Galaxy Management and Development Corp. and its president, Col. Mariano Imperial to indemnify jointly and severally 3rd party plaintiffs
(FEU and Edilberto de Jesus in his capacity as President of FEU) for the above-mentioned amounts;
3. And the 4th party complaint is dismissed for lack of cause of action. No pronouncement as to costs.
SO ORDERED.9
Respondents appealed to the Court of Appeals which rendered the assailed Decision, the decretal portion of which provides, viz:
WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 10, 2004 is hereby REVERSED and SET ASIDE. The complaint
îled by Joseph Saludaga against appellant Far Eastern University and its President in Civil Case No. 98-89483 is DISMISSED.
SO ORDERED.10
Petitioner îled a Motion for Reconsideration which was denied; hence, the instant petition based on the following grounds:
THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO LAW AND JURISPRUDENCE IN RULING THAT:
5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;
5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE INJURY RESULTING FROM A GUNSHOT WOUND SUFFERED BY THE PETI-
TIONER FROM THE HANDS OF NO LESS THAN THEIR OWN SECURITY GUARD IN VIOLATION OF THEIR BUILT-IN CONTRACTUAL OBLIGA-
TION TO PETITIONER, BEING THEIR LAW STUDENT AT THAT TIME, TO PROVIDE HIM WITH A SAFE AND SECURE EDUCATIONAL ENVI-
RONMENT;
5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO SHOT PETITIONER WHILE HE WAS WALKING ON HIS WAY TO THE LAW LIBRARY OF
RESPONDENT FEU IS NOT THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT FOR SECURITY SERVICES BETWEEN GALAXY AND FEU NOT-
WITHSTANDING THE FACT THAT PETITIONER, NOT BEING A PARTY TO IT, IS NOT BOUND BY THE SAME UNDER THE PRINCIPLE OF RELA-
TIVITY OF CONTRACTS; and
5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING GALAXY AS THE AGENCY WHICH WOULD PROVIDE SECURITY SERVICES
WITHIN THE PREMISES OF RESPONDENT FEU.11
Petitioner is suing respondents for damages based on the alleged breach of student-school contract for a safe learning environment. The
pertinent portions of petitioner's Complaint read:
6.0. At the time of plaintiff's conînement, the defendants or any of their representative did not bother to visit and inquire about his condi-
tion. This abject indifference on the part of the defendants continued even after plaintiff was discharged from the hospital when not even a
word of consolation was heard from them. Plaintiff waited for more than one (1) year for the defendants to perform their moral obligation
but the wait was fruitless. This indifference and total lack of concern of defendants served to exacerbate plaintiff's miserable condition.
x x x x
11.0. Defendants are responsible for ensuring the safety of its students while the latter are within the University premises. And that should
anything untoward happens to any of its students while they are within the University's premises shall be the responsibility of the defen-
dants. In this case, defendants, despite being legally and morally bound, miserably failed to protect plaintiff from injury and thereafter, to
mitigate and compensate plaintiff for said injury;
12.0. When plaintiff enrolled with defendant FEU, a contract was entered into between them. Under this contract, defendants are supposed
to ensure that adequate steps are taken to provide an atmosphere conducive to study and ensure the safety of the plaintiff while inside de-
fendant FEU's premises. In the instant case, the latter breached this contract when defendant allowed harm to befall upon the plaintiff when
he was shot at by, of all people, their security guard who was tasked to maintain peace inside the campus.12
In Philippine School of Business Administration v. Court of Appeals,13 we held that:
When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations
which both parties are bound to comply with. For its part, the school undertakes to provide the student with an education that would pre-
sumably sufîce to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student
covenants to abide by the school's academic requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that promotes or
assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher
mathematics or explore the realm of the arts and other sciences when bullets are ^lying or grenades exploding in the air or where there
looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to
maintain peace and order within the campus premises and to prevent the breakdown thereof.14
It is undisputed that petitioner was enrolled as a sophomore law student in respondent FEU. As such, there was created a contractual obliga-
tion between the two parties. On petitioner's part, he was obliged to comply with the rules and regulations of the school. On the other hand,
respondent FEU, as a learning institution is mandated to impart knowledge and equip its students with the necessary skills to pursue higher
education or a profession. At the same time, it is obliged to ensure and take adequate steps to maintain peace and order within the campus.
It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief.15 In the instant case, we înd that, when petitioner was shot inside the campus by no less the security guard
who was hired to maintain peace and secure the premises, there is a prima facie showing that respondents failed to comply with its obliga-
tion to provide a safe and secure environment to its students.
In order to avoid liability, however, respondents aver that the shooting incident was a fortuitous event because they could not have reason-
ably foreseen nor avoided the accident caused by Rosete as he was not their employee;16 and that they complied with their obligation to
ensure a safe learning environment for their students by having exercised due diligence in selecting the security services of Galaxy.
After a thorough review of the records, we înd that respondents failed to discharge the burden of proving that they exercised due diligence
in providing a safe learning environment for their students. They failed to prove that they ensured that the guards assigned in the campus
met the requirements stipulated in the Security Service Agreement. Indeed, certain documents about Galaxy were presented during trial;
however, no evidence as to the qualiîcations of Rosete as a security guard for the university was offered.
Respondents also failed to show that they undertook steps to ascertain and conîrm that the security guards assigned to them actually pos-
sess the qualiîcations required in the Security Service Agreement. It was not proven that they examined the clearances, psychiatric test re-
sults, 201 îles, and other vital documents enumerated in its contract with Galaxy. Total reliance on the security agency about these matters
or failure to check the papers stating the qualiîcations of the guards is negligence on the part of respondents. A learning institution should
not be allowed to completely relinquish or abdicate security matters in its premises to the security agency it hired. To do so would result to
contracting away its inherent obligation to ensure a safe learning environment for its students.
Consequently, respondents' defense of force majeure must fail. In order for force majeure to be considered, respondents must show that no
negligence or misconduct was committed that may have occasioned the loss. An act of God cannot be invoked to protect a person who has
failed to take steps to forestall the possible adverse consequences of such a loss. One's negligence may have concurred with an act of God in
producing damage and injury to another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a fortu-
itous event would not exempt one from liability. When the effect is found to be partly the result of a person's participation - whether by active
intervention, neglect or failure to act - the whole occurrence is humanized and removed from the rules applicable to acts of God.17
Article 1170 of the Civil Code provides that those who are negligent in the performance of their obligations are liable for damages. Accord-
ingly, for breach of contract due to negligence in providing a safe learning environment, respondent FEU is liable to petitioner for damages. It
is essential in the award of damages that the claimant must have satisfactorily proven during the trial the existence of the factual basis of the
damages and its causal connection to defendant's acts.18
In the instant case, it was established that petitioner spent P35,298.25 for his hospitalization and other medical expenses.19 While the trial
court correctly imposed interest on said amount, however, the case at bar involves an obligation arising from a contract and not a loan or
forbearance of money. As such, the proper rate of legal interest is six percent (6%) per annum of the amount demanded. Such interest shall
continue to run from the îling of the complaint until the înality of this Decision.20 After this Decision becomes înal and executory, the ap-
plicable rate shall be twelve percent (12%) per annum until its satisfaction.
The other expenses being claimed by petitioner, such as transportation expenses and those incurred in hiring a personal assistant while re-
cuperating were however not duly supported by receipts.21 In the absence thereof, no actual damages may be awarded. Nonetheless, tem-
perate damages under Art. 2224 of the Civil Code may be recovered where it has been shown that the claimant suffered some pecuniary loss
but the amount thereof cannot be proved with certainty. Hence, the amount of P20,000.00 as temperate damages is awarded to petitioner.
As regards the award of moral damages, there is no hard and fast rule in the determination of what would be a fair amount of moral damages
since each case must be governed by its own peculiar circumstances.22 The testimony of petitioner about his physical suffering, mental an-
guish, fright, serious anxiety, and moral shock resulting from the shooting incident23 justify the award of moral damages. However, moral
damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the
wrongdoer. The award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain
means, diversion, or amusements that will serve to obviate the moral suffering he has undergone. It is aimed at the restoration, within the
limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering in^licted. Trial courts must then guard
against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was
due to passion, prejudice, or corruption on the part of the trial court.24 We deem it just and reasonable under the circumstances to award
petitioner moral damages in the amount of P100,000.00.
Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of damages is reasonable in view of Article 2208 of the
Civil Code.25 However, the award of exemplary damages is deleted considering the absence of proof that respondents acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.
We note that the trial court held respondent De Jesus solidarily liable with respondent FEU. In Powton Conglomerate, Inc. v. Agcolicol,26 we
held that:
[A] corporation is invested by law with a personality separate and distinct from those of the persons composing it, such that, save for certain
exceptions, corporate ofîcers who entered into contracts in behalf of the corporation cannot be held personally liable for the liabilities of the
latter. Personal liability of a corporate director, trustee or ofîcer along (although not necessarily) with the corporation may so validly attach,
as a rule, only when - (1) he assents to a patently unlawful act of the corporation, or when he is guilty of bad faith or gross negligence in di-
recting its affairs, or when there is a con^lict of interest resulting in damages to the corporation, its stockholders or other persons; (2) he
consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith île with the corporate secretary his
written objection thereto; (3) he agrees to hold himself personally and solidarily liable with the corporation; or (4) he is made by a speciîc
provision of law personally answerable for his corporate action.27
None of the foregoing exceptions was established in the instant case; hence, respondent De Jesus should not be held solidarily liable with
respondent FEU.
Incidentally, although the main cause of action in the instant case is the breach of the school-student contract, petitioner, in the alternative,
also holds respondents vicariously liable under Article 2180 of the Civil Code, which provides:
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.
x x x x
Employers shall be liable for the damages caused 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.
x x x x
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.
We agree with the îndings of the Court of Appeals that respondents cannot be held liable for damages under Art. 2180 of the Civil Code be-
cause respondents are not the employers of Rosete. The latter was employed by Galaxy. The instructions issued by respondents' Security
Consultant to Galaxy and its security guards are ordinarily no more than requests commonly envisaged in the contract for services entered
into by a principal and a security agency. They cannot be construed as the element of control as to treat respondents as the employers of
Rosete.28
As held in Mercury Drug Corporation v. Libunao:29
In Soliman, Jr. v. Tuazon,30 we held that where the security agency recruits, hires and assigns the works of its watchmen or security guards to
a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security
guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client:
… [I]t is settled in our jurisdiction that where the security agency, as here, recruits, hires and assigns the work of its watchmen or security
guards, the agency is the employer of such guards or watchmen. Liability for illegal or harmful acts committed by the security guards attach-
es to the employer agency, and not to the clients or customers of such agency. As a general rule, a client or customer of a security agency has
no hand in selecting who among the pool of security guards or watchmen employed by the agency shall be assigned to it; the duty to observe
the diligence of a good father of a family in the selection of the guards cannot, in the ordinary course of events, be demanded from the client
whose premises or property are protected by the security guards.
x x x x
The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client
responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions.31
We now come to respondents' Third Party Claim against Galaxy. In Firestone Tire and Rubber Company of the Philippines v. Tempengko,32
we held that:
The third-party complaint is, therefore, a procedural device whereby a 'third party' who is neither a party nor privy to the act or deed com-
plained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce
against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiff's claim. The
third-party complaint is actually independent of and separate and distinct from the plaintiff's complaint. Were it not for this provision of the
Rules of Court, it would have to be îled independently and separately from the original complaint by the defendant against the third-party.
But the Rules permit defendant to bring in a third-party defendant or so to speak, to litigate his separate cause of action in respect of plain-
tiff's claim against a third-party in the original and principal case with the object of avoiding circuitry of action and unnecessary proliferation
of law suits and of disposing expeditiously in one litigation the entire subject matter arising from one particular set of facts.33
Respondents and Galaxy were able to litigate their respective claims and defenses in the course of the trial of petitioner's complaint. Evi-
dence duly supports the îndings of the trial court that Galaxy is negligent not only in the selection of its employees but also in their supervi-
sion. Indeed, no administrative sanction was imposed against Rosete despite the shooting incident; moreover, he was even allowed to go on
leave of absence which led eventually to his disappearance.34 Galaxy also failed to monitor petitioner's condition or extend the necessary
assistance, other than the P5,000.00 initially given to petitioner. Galaxy and Imperial failed to make good their pledge to reimburse petition-
er's medical expenses.
For these acts of negligence and for having supplied respondent FEU with an unqualiîed security guard, which resulted to the latter's breach
of obligation to petitioner, it is proper to hold Galaxy liable to respondent FEU for such damages equivalent to the above-mentioned amounts
awarded to petitioner.
Unlike respondent De Jesus, we deem Imperial to be solidarily liable with Galaxy for being grossly negligent in directing the affairs of the
security agency. It was Imperial who assured petitioner that his medical expenses will be shouldered by Galaxy but said representations
were not fulîlled because they presumed that petitioner and his family were no longer interested in îling a formal complaint against them.
35
WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the Court of Appeals in CA-G.R. CV No. 87050 nullifying the Decision of
the trial court and dismissing the complaint as well as the August 23, 2007 Resolution denying the Motion for Reconsideration are RE-
VERSED and SET ASIDE. The Decision of the Regional Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 înding respondent FEU
liable for damages for breach of its obligation to provide students with a safe and secure learning atmosphere, is AFFIRMED with the follow-
ing MODIFICATIONS:
a. respondent Far Eastern University (FEU) is ORDERED to pay petitioner actual damages in the amount of P35,298.25, plus 6% interest per
annum from the îling of the complaint until the înality of this Decision. After this decision becomes înal and executory, the applicable rate
shall be twelve percent (12%) per annum until its satisfaction;
b. respondent FEU is also ORDERED to pay petitioner temperate damages in the amount of P20,000.00; moral damages in the amount of
P100,000.00; and attorney's fees and litigation expenses in the amount of P50,000.00;
c. the award of exemplary damages is DELETED.
The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The counterclaims of respondents are likewise DISMISSED.
Galaxy Development and Management Corporation (Galaxy) and its president, Mariano D. Imperial are ORDERED to jointly and severally pay
respondent FEU damages equivalent to the above-mentioned amounts awarded to petitioner.
SO ORDERED.
G.R. No. 159617 August 8, 2007
ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC., petitioners,

vs.
LULU V. JORGE and CESAR JORGE, respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari îled by Roberto C. Sicam, Jr. (petitioner Sicam) and Agencia de R.C. Sicam, Inc. (petitioner
corporation) seeking to annul the Decision1 of the Court of Appeals dated March 31, 2003, and its Resolution2 dated August 8, 2003, in CA
G.R. CV No. 56633.
It appears that on different dates from September to October 1987, Lulu V. Jorge (respondent Lulu) pawned several pieces of jewelry with
Agencia de R. C. Sicam located at No. 17 Aguirre Ave., BF Homes Parañaque, Metro Manila, to secure a loan in the total amount of P59,500.00.
On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry were found inside the pawnshop
vault. The incident was entered in the police blotter of the Southern Police District, Parañaque Police Station as follows:
Investigation shows that at above TDPO, while victims were inside the ofîce, two (2) male unidentiîed persons entered into the said ofîce
with guns drawn. Suspects(sic) (1) went straight inside and poked his gun toward Romeo Sicam and thereby tied him with an electric wire
while suspects (sic) (2) poked his gun toward Divina Mata and Isabelita Rodriguez and ordered them to lay (sic) face ^lat on the ^loor. Sus-
pects asked forcibly the case and assorted pawned jewelries items mentioned above.
Suspects after taking the money and jewelries ^led on board a Marson Toyota unidentiîed plate number.3
Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987 informing her of the loss of her jewelry due to the robbery incident in
the pawnshop. On November 2, 1987, respondent Lulu then wrote a letter4 to petitioner Sicam expressing disbelief stating that when the
robbery happened, all jewelry pawned were deposited with Far East Bank near the pawnshop since it had been the practice that before they
could withdraw, advance notice must be given to the pawnshop so it could withdraw the jewelry from the bank. Respondent Lulu then re-
quested petitioner Sicam to prepare the pawned jewelry for withdrawal on November 6, 1987 but petitioner Sicam failed to return the jewel-
ry.
On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, îled a complaint against petitioner Sicam with the Regional
Trial Court of Makati seeking indemniîcation for the loss of pawned jewelry and payment of actual, moral and exemplary damages as well as
attorney's fees. The case was docketed as Civil Case No. 88-2035.
Petitioner Sicam îled his Answer contending that he is not the real party-in-interest as the pawnshop was incorporated on April 20, 1987
and known as Agencia de R.C. Sicam, Inc; that petitioner corporation had exercised due care and diligence in the safekeeping of the articles
pledged with it and could not be made liable for an event that is fortuitous.
Respondents subsequently îled an Amended Complaint to include petitioner corporation.
Thereafter, petitioner Sicam îled a Motion to Dismiss as far as he is concerned considering that he is not the real party-in-interest. Respon-
dents opposed the same. The RTC denied the motion in an Order dated November 8, 1989.5
After trial on the merits, the RTC rendered its Decision6 dated January 12, 1993, dismissing respondents’ complaint as well as petitioners’
counterclaim. The RTC held that petitioner Sicam could not be made personally liable for a claim arising out of a corporate transaction; that
in the Amended Complaint of respondents, they asserted that "plaintiff pawned assorted jewelries in defendants' pawnshop"; and that as a
consequence of the separate juridical personality of a corporation, the corporate debt or credit is not the debt or credit of a stockholder.
The RTC further ruled that petitioner corporation could not be held liable for the loss of the pawned jewelry since it had not been rebutted
by respondents that the loss of the pledged pieces of jewelry in the possession of the corporation was occasioned by armed robbery; that
robbery is a fortuitous event which exempts the victim from liability for the loss, citing the case of Austria v. Court of Appeals;7 and that the
parties’ transaction was that of a pledgor and pledgee and under Art. 1174 of the Civil Code, the pawnshop as a pledgee is not responsible for
those events which could not be foreseen.
Respondents appealed the RTC Decision to the CA. In a Decision dated March 31, 2003, the CA reversed the RTC, the dispositive portion of
which reads as follows:
WHEREFORE, premises considered, the instant Appeal is GRANTED, and the Decision dated January 12, 1993,of the Regional Trial Court of
Makati, Branch 62, is hereby REVERSED and SET ASIDE, ordering the appellees to pay appellants the actual value of the lost jewelry amount-
ing to P272,000.00, and attorney' fees of P27,200.00.8
In înding petitioner Sicam liable together with petitioner corporation, the CA applied the doctrine of piercing the veil of corporate entity
reasoning that respondents were misled into thinking that they were dealing with the pawnshop owned by petitioner Sicam as all the pawn-
shop tickets issued to them bear the words "Agencia de R.C. Sicam"; and that there was no indication on the pawnshop tickets that it was the
petitioner corporation that owned the pawnshop which explained why respondents had to amend their complaint impleading petitioner
corporation.
The CA further held that the corresponding diligence required of a pawnshop is that it should take steps to secure and protect the pledged
items and should take steps to insure itself against the loss of articles which are entrusted to its custody as it derives earnings from the
pawnshop trade which petitioners failed to do; that Austria is not applicable to this case since the robbery incident happened in 1961 when
the criminality had not as yet reached the levels attained in the present day; that they are at least guilty of contributory negligence and
should be held liable for the loss of jewelries; and that robberies and hold-ups are foreseeable risks in that those engaged in the pawnshop
business are expected to foresee.
The CA concluded that both petitioners should be jointly and severally held liable to respondents for the loss of the pawned jewelry.
Petitioners’ motion for reconsideration was denied in a Resolution dated August 8, 2003.
Hence, the instant petition for review with the following assignment of errors:
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT OPENED ITSELF TO REVERSAL, WHEN IT ADOPTED UNCRITICALLY (IN FACT IT
REPRODUCED AS ITS OWN WITHOUT IN THE MEANTIME ACKNOWLEDGING IT) WHAT THE RESPONDENTS ARGUED IN THEIR BRIEF,
WHICH ARGUMENT WAS PALPABLY UNSUSTAINABLE.
THE COURT OF APPEALS ERRED, AND WHEN IT DID, IT OPENED ITSELF TO REVERSAL BY THIS HONORABLE COURT, WHEN IT AGAIN
ADOPTED UNCRITICALLY (BUT WITHOUT ACKNOWLEDGING IT) THE SUBMISSIONS OF THE RESPONDENTS IN THEIR BRIEF WITHOUT
ADDING ANYTHING MORE THERETO DESPITE THE FACT THAT THE SAID ARGUMENT OF THE RESPONDENTS COULD NOT HAVE BEEN
SUSTAINED IN VIEW OF UNREBUTTED EVIDENCE ON RECORD.9
Anent the îrst assigned error, petitioners point out that the CA’s înding that petitioner Sicam is personally liable for the loss of the pawned
jewelries is "a virtual and uncritical reproduction of the arguments set out on pp. 5-6 of the Appellants’ brief."10
Petitioners argue that the reproduced arguments of respondents in their Appellants’ Brief suffer from inîrmities, as follows:
(1) Respondents conclusively asserted in paragraph 2 of their Amended Complaint that Agencia de R.C. Sicam, Inc. is the present owner of
Agencia de R.C. Sicam Pawnshop, and therefore, the CA cannot rule against said conclusive assertion of respondents;
(2) The issue resolved against petitioner Sicam was not among those raised and litigated in the trial court; and
(3) By reason of the above inîrmities, it was error for the CA to have pierced the corporate veil since a corporation has a personality distinct
and separate from its individual stockholders or members.
Anent the second error, petitioners point out that the CA înding on their negligence is likewise an unedited reproduction of respondents’
brief which had the following defects:
(1) There were unrebutted evidence on record that petitioners had observed the diligence required of them, i.e, they wanted to open a vault
with a nearby bank for purposes of safekeeping the pawned articles but was discouraged by the Central Bank (CB) since CB rules provide
that they can only store the pawned articles in a vault inside the pawnshop premises and no other place;
(2) Petitioners were adjudged negligent as they did not take insurance against the loss of the pledged jelweries, but it is judicial notice that
due to high incidence of crimes, insurance companies refused to cover pawnshops and banks because of high probability of losses due to
robberies;
(3) In Hernandez v. Chairman, Commission on Audit (179 SCRA 39, 45-46), the victim of robbery was exonerated from liability for the sum of
money belonging to others and lost by him to robbers.
Respondents îled their Comment and petitioners îled their Reply thereto. The parties subsequently submitted their respective Memoranda.
We înd no merit in the petition.
To begin with, although it is true that indeed the CA îndings were exact reproductions of the arguments raised in respondents’ (appellants’)
brief îled with the CA, we înd the same to be not fatally inîrmed. Upon examination of the Decision, we înd that it expressed clearly and
distinctly the facts and the law on which it is based as required by Section 8, Article VIII of the Constitution. The discretion to decide a case
one way or another is broad enough to justify the adoption of the arguments put forth by one of the parties, as long as these are legally ten-
able and supported by law and the facts on records.11
Our jurisdiction under Rule 45 of the Rules of Court is limited to the review of errors of law committed by the appellate court. Generally, the
îndings of fact of the appellate court are deemed conclusive and we are not duty-bound to analyze and calibrate all over again the evidence
adduced by the parties in the court a quo.12 This rule, however, is not without exceptions, such as where the factual îndings of the Court of
Appeals and the trial court are con^licting or contradictory13 as is obtaining in the instant case.
However, after a careful examination of the records, we înd no justiîcation to absolve petitioner Sicam from liability.
The CA correctly pierced the veil of the corporate îction and adjudged petitioner Sicam liable together with petitioner corporation. The rule
is that the veil of corporate îction may be pierced when made as a shield to perpetrate fraud and/or confuse legitimate issues. 14 The theory
of corporate entity was not meant to promote unfair objectives or otherwise to shield them.15
Notably, the evidence on record shows that at the time respondent Lulu pawned her jewelry, the pawnshop was owned by petitioner Sicam
himself. As correctly observed by the CA, in all the pawnshop receipts issued to respondent Lulu in September 1987, all bear the words
"Agencia de R. C. Sicam," notwithstanding that the pawnshop was allegedly incorporated in April 1987. The receipts issued after such alleged
incorporation were still in the name of "Agencia de R. C. Sicam," thus inevitably misleading, or at the very least, creating the wrong impres-
sion to respondents and the public as well, that the pawnshop was owned solely by petitioner Sicam and not by a corporation.
Even petitioners’ counsel, Atty. Marcial T. Balgos, in his letter16 dated October 15, 1987 addressed to the Central Bank, expressly referred to
petitioner Sicam as the proprietor of the pawnshop notwithstanding the alleged incorporation in April 1987.
We also înd no merit in petitioners' argument that since respondents had alleged in their Amended Complaint that petitioner corporation is
the present owner of the pawnshop, the CA is bound to decide the case on that basis.
Section 4 Rule 129 of the Rules of Court provides that an admission, verbal or written, made by a party in the course of the proceedings in the
same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no
such admission was made.
Thus, the general rule that a judicial admission is conclusive upon the party making it and does not require proof, admits of two exceptions,
to wit: (1) when it is shown that such admission was made through palpable mistake, and (2) when it is shown that no such admission was in
fact made. The latter exception allows one to contradict an admission by denying that he made such an admission.17
The Committee on the Revision of the Rules of Court explained the second exception in this wise:
x x x if a party invokes an "admission" by an adverse party, but cites the admission "out of context," then the one making the "admission" may
show that he made no "such" admission, or that his admission was taken out of context.
x x x that the party can also show that he made no "such admission", i.e., not in the sense in which the admission is made to appear.
That is the reason for the modiîer "such" because if the rule simply states that the admission may be contradicted by showing that "no ad-
mission was made," the rule would not really be providing for a contradiction of the admission but just a denial.18 (Emphasis supplied).
While it is true that respondents alleged in their Amended Complaint that petitioner corporation is the present owner of the pawnshop, they
did so only because petitioner Sicam alleged in his Answer to the original complaint îled against him that he was not the real party-in-inter-
est as the pawnshop was incorporated in April 1987. Moreover, a reading of the Amended Complaint in its entirety shows that respondents
referred to both petitioner Sicam and petitioner corporation where they (respondents) pawned their assorted pieces of jewelry and ascribed
to both the failure to observe due diligence commensurate with the business which resulted in the loss of their pawned jewelry.
Markedly, respondents, in their Opposition to petitioners’ Motion to Dismiss Amended Complaint, insofar as petitioner Sicam is concerned,
averred as follows:
Roberto C. Sicam was named the defendant in the original complaint because the pawnshop tickets involved in this case did not show that
the R.C. Sicam Pawnshop was a corporation. In paragraph 1 of his Answer, he admitted the allegations in paragraph 1 and 2 of the Complaint.
He merely added "that defendant is not now the real party in interest in this case."
It was defendant Sicam's omission to correct the pawnshop tickets used in the subject transactions in this case which was the cause of the
instant action. He cannot now ask for the dismissal of the complaint against him simply on the mere allegation that his pawnshop business is
now incorporated. It is a matter of defense, the merit of which can only be reached after consideration of the evidence to be presented in due
course.19
Unmistakably, the alleged admission made in respondents' Amended Complaint was taken "out of context" by petitioner Sicam to suit his
own purpose. Ineluctably, the fact that petitioner Sicam continued to issue pawnshop receipts under his name and not under the corpora-
tion's name militates for the piercing of the corporate veil.
We likewise înd no merit in petitioners' contention that the CA erred in piercing the veil of corporate îction of petitioner corporation, as it
was not an issue raised and litigated before the RTC.
Petitioner Sicam had alleged in his Answer îled with the trial court that he was not the real party-in-interest because since April 20, 1987,
the pawnshop business initiated by him was incorporated and known as Agencia de R.C. Sicam. In the pre-trial brief îled by petitioner Sicam,
he submitted that as far as he was concerned, the basic issue was whether he is the real party in interest against whom the complaint should
be directed.20 In fact, he subsequently moved for the dismissal of the complaint as to him but was not favorably acted upon by the trial court.
Moreover, the issue was squarely passed upon, although erroneously, by the trial court in its Decision in this manner:
x x x The defendant Roberto Sicam, Jr likewise denies liability as far as he is concerned for the reason that he cannot be made personally li-
able for a claim arising from a corporate transaction.
This Court sustains the contention of the defendant Roberto C. Sicam, Jr. The amended complaint itself asserts that "plaintiff pawned assort-
ed jewelries in defendant's pawnshop." It has been held that " as a consequence of the separate juridical personality of a corporation, the
corporate debt or credit is not the debt or credit of the stockholder, nor is the stockholder's debt or credit that of a corporation.21
Clearly, in view of the alleged incorporation of the pawnshop, the issue of whether petitioner Sicam is personally liable is inextricably con-
nected with the determination of the question whether the doctrine of piercing the corporate veil should or should not apply to the case.
The next question is whether petitioners are liable for the loss of the pawned articles in their possession.
Petitioners insist that they are not liable since robbery is a fortuitous event and they are not negligent at all.
We are not persuaded.
Art. 1174. Except in cases expressly speciîed by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those events which could not be foreseen or which, though foreseen, were
inevitable.
Fortuitous events by deînition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event should not
have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere difîculty to fore-
see the happening is not impossibility to foresee the same. 22
To constitute a fortuitous event, the following elements must concur: (a) the cause of the unforeseen and unexpected occurrence or of the
failure of the debtor to comply with obligations must be independent of human will; (b) it must be impossible to foresee the event that con-
stitutes the caso fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it impossible for
the debtor to fulîll obligations in a normal manner; and, (d) the obligor must be free from any participation in the aggravation of the injury
or loss. 23
The burden of proving that the loss was due to a fortuitous event rests on him who invokes it.24 And, in order for a fortuitous event to ex-
empt one from liability, it is necessary that one has committed no negligence or misconduct that may have occasioned the loss. 25
It has been held that an act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse conse-
quences of such a loss. One's negligence may have concurred with an act of God in producing damage and injury to another; nonetheless,
showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When
the effect is found to be partly the result of a person's participation -- whether by active intervention, neglect or failure to act -- the whole
occurrence is humanized and removed from the rules applicable to acts of God. 26
Petitioner Sicam had testiîed that there was a security guard in their pawnshop at the time of the robbery. He likewise testiîed that when he
started the pawnshop business in 1983, he thought of opening a vault with the nearby bank for the purpose of safekeeping the valuables but
was discouraged by the Central Bank since pawned articles should only be stored in a vault inside the pawnshop. The very measures which
petitioners had allegedly adopted show that to them the possibility of robbery was not only foreseeable, but actually foreseen and anticipat-
ed. Petitioner Sicam’s testimony, in effect, contradicts petitioners’ defense of fortuitous event.
Moreover, petitioners failed to show that they were free from any negligence by which the loss of the pawned jewelry may have been occa-
sioned.
Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of negligence on the part of herein petition-
ers. In Co v. Court of Appeals,27 the Court held:
It is not a defense for a repair shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its
possession was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was unlawfully and
forcefully taken from another's rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be
considered as such, carnapping entails more than the mere forceful taking of another's property. It must be proved and established that the
event was an act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negligent has any par-
ticipation. In accordance with the Rules of Evidence, the burden of proving that the loss was due to a fortuitous event rests on him who in-
vokes it — which in this case is the private respondent. However, other than the police report of the alleged carnapping incident, no other
evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to
which only private respondent is privy, does not sufîce to establish the carnapping. Neither does it prove that there was no fault on the part
of private respondent notwithstanding the parties' agreement at the pre-trial that the car was carnapped. Carnapping does not foreclose the
possibility of fault or negligence on the part of private respondent.28
Just like in Co, petitioners merely presented the police report of the Parañaque Police Station on the robbery committed based on the report
of petitioners' employees which is not sufîcient to establish robbery. Such report also does not prove that petitioners were not at fault.
On the contrary, by the very evidence of petitioners, the CA did not err in înding that petitioners are guilty of concurrent or contributory
negligence as provided in Article 1170 of the Civil Code, to wit:
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contra-
vene the tenor thereof, are liable for damages.29
Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments which are engaged in making loans secured
by pledges, the special laws and regulations concerning them shall be observed, and subsidiarily, the provisions on pledge, mortgage and
antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall take care of the thing pledged with the
diligence of a good father of a family. This means that petitioners must take care of the pawns the way a prudent person would as to his own
property.
In this connection, Article 1173 of the Civil Code further provides:

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the persons, of time and of the place. When negligence shows bad faith, the provisions of Articles
1171 and 2201, paragraph 2 shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a
family shall be required.
We expounded in Cruz v. Gangan30 that negligence is the omission to do something which a reasonable man, guided by those considerations
which ordinarily regulate the conduct of human affairs, would do; or the doing of something which a prudent and reasonable man would not
do.31 It is want of care required by the circumstances.
A review of the records clearly shows that petitioners failed to exercise reasonable care and caution that an ordinarily prudent person would
have used in the same situation. Petitioners were guilty of negligence in the operation of their pawnshop business. Petitioner Sicam testiîed,
thus:
Court:
Q. Do you have security guards in your pawnshop?
A. Yes, your honor.
Q. Then how come that the robbers were able to enter the premises when according to you there was a security guard?
A. Sir, if these robbers can rob a bank, how much more a pawnshop.
Q. I am asking you how were the robbers able to enter despite the fact that there was a security guard?
A. At the time of the incident which happened about 1:00 and 2:00 o'clock in the afternoon and it happened on a Saturday and everything
was quiet in the area BF Homes Parañaque they pretended to pawn an article in the pawnshop, so one of my employees allowed him to come
in and it was only when it was announced that it was a hold up.
Q. Did you come to know how the vault was opened?
A. When the pawnshop is ofîcial (sic) open your honor the pawnshop is partly open. The combination is off.
Q. No one open (sic) the vault for the robbers?
A. No one your honor it was open at the time of the robbery.
Q. It is clear now that at the time of the robbery the vault was open the reason why the robbers were able to get all the items pawned to you
inside the vault.
A. Yes sir.32
revealing that there were no security measures adopted by petitioners in the operation of the pawnshop. Evidently, no sufîcient precaution
and vigilance were adopted by petitioners to protect the pawnshop from unlawful intrusion. There was no clear showing that there was any
security guard at all. Or if there was one, that he had sufîcient training in securing a pawnshop. Further, there is no showing that the alleged
security guard exercised all that was necessary to prevent any untoward incident or to ensure that no suspicious individuals were allowed to
enter the premises. In fact, it is even doubtful that there was a security guard, since it is quite impossible that he would not have noticed that
the robbers were armed with caliber .45 pistols each, which were allegedly poked at the employees.33 Signiîcantly, the alleged security
guard was not presented at all to corroborate petitioner Sicam's claim; not one of petitioners' employees who were present during the rob-
bery incident testiîed in court.
Furthermore, petitioner Sicam's admission that the vault was open at the time of robbery is clearly a proof of petitioners' failure to observe
the care, precaution and vigilance that the circumstances justly demanded. Petitioner Sicam testiîed that once the pawnshop was open, the
combination was already off. Considering petitioner Sicam's testimony that the robbery took place on a Saturday afternoon and the area in
BF Homes Parañaque at that time was quiet, there was more reason for petitioners to have exercised reasonable foresight and diligence in
protecting the pawned jewelries. Instead of taking the precaution to protect them, they let open the vault, providing no difîculty for the rob-
bers to cart away the pawned articles.
We, however, do not agree with the CA when it found petitioners negligent for not taking steps to insure themselves against loss of the
pawned jewelries.
Under Section 17 of Central Bank Circular No. 374, Rules and Regulations for Pawnshops, which took effect on July 13, 1973, and which was
issued pursuant to Presidential Decree No. 114, Pawnshop Regulation Act, it is provided that pawns pledged must be insured, to wit:
Sec. 17. Insurance of Ofîce Building and Pawns- The place of business of a pawnshop and the pawns pledged to it must be insured against
îre and against burglary as well as for the latter(sic), by an insurance company accredited by the Insurance Commissioner.
However, this Section was subsequently amended by CB Circular No. 764 which took effect on October 1, 1980, to wit:
Sec. 17 Insurance of Ofîce Building and Pawns – The ofîce building/premises and pawns of a pawnshop must be insured against îre. (em-
phasis supplied).
where the requirement that insurance against burglary was deleted. Obviously, the Central Bank considered it not feasible to require insur-
ance of pawned articles against burglary.
The robbery in the pawnshop happened in 1987, and considering the above-quoted amendment, there is no statutory duty imposed on peti-
tioners to insure the pawned jewelry in which case it was error for the CA to consider it as a factor in concluding that petitioners were negli-
gent.
Nevertheless, the preponderance of evidence shows that petitioners failed to exercise the diligence required of them under the Civil Code.
The diligence with which the law requires the individual at all times to govern his conduct varies with the nature of the situation in which he
is placed and the importance of the act which he is to perform.34 Thus, the cases of Austria v. Court of Appeals,35 Hernandez v. Chairman,
Commission on Audit36 and Cruz v. Gangan37 cited by petitioners in their pleadings, where the victims of robbery were exonerated from
liability, înd no application to the present case.
In Austria, Maria Abad received from Guillermo Austria a pendant with diamonds to be sold on commission basis, but which Abad failed to
subsequently return because of a robbery committed upon her in 1961. The incident became the subject of a criminal case îled against sev-
eral persons. Austria îled an action against Abad and her husband (Abads) for recovery of the pendant or its value, but the Abads set up the
defense that the robbery extinguished their obligation. The RTC ruled in favor of Austria, as the Abads failed to prove robbery; or, if commit-
ted, that Maria Abad was guilty of negligence. The CA, however, reversed the RTC decision holding that the fact of robbery was duly estab-
lished and declared the Abads not responsible for the loss of the jewelry on account of a fortuitous event. We held that for the Abads to be
relieved from the civil liability of returning the pendant under Art. 1174 of the Civil Code, it would only be sufîcient that the unforeseen
event, the robbery, took place without any concurrent fault on the debtor’s part, and this can be done by preponderance of evidence; that to
be free from liability for reason of fortuitous event, the debtor must, in addition to the casus itself, be free of any concurrent or contributory
fault or negligence.38
We found in Austria that under the circumstances prevailing at the time the Decision was promulgated in 1971, the City of Manila and its
suburbs had a high incidence of crimes against persons and property that rendered travel after nightfall a matter to be sedulously avoided
without suitable precaution and protection; that the conduct of Maria Abad in returning alone to her house in the evening carrying jewelry of
considerable value would have been negligence per se and would not exempt her from responsibility in the case of robbery. However we did
not hold Abad liable for negligence since, the robbery happened ten years previously; i.e., 1961, when criminality had not reached the level of
incidence obtaining in 1971.
In contrast, the robbery in this case took place in 1987 when robbery was already prevalent and petitioners in fact had already foreseen it as
they wanted to deposit the pawn with a nearby bank for safekeeping. Moreover, unlike in Austria, where no negligence was committed, we
found petitioners negligent in securing their pawnshop as earlier discussed.
In Hernandez, Teodoro Hernandez was the OIC and special disbursing ofîcer of the Ternate Beach Project of the Philippine Tourism in Cavite.
In the morning of July 1, 1983, a Friday, he went to Manila to encash two checks covering the wages of the employees and the operating ex-
penses of the project. However for some reason, the processing of the check was delayed and was completed at about 3 p.m. Nevertheless, he
decided to encash the check because the project employees would be waiting for their pay the following day; otherwise, the workers would
have to wait until July 5, the earliest time, when the main ofîce would open. At that time, he had two choices: (1) return to Ternate, Cavite
that same afternoon and arrive early evening; or (2) take the money with him to his house in Marilao, Bulacan, spend the night there, and
leave for Ternate the following day. He chose the second option, thinking it was the safer one. Thus, a little past 3 p.m., he took a passenger
jeep bound for Bulacan. While the jeep was on Epifanio de los Santos Avenue, the jeep was held up and the money kept by Hernandez was
taken, and the robbers jumped out of the jeep and ran. Hernandez chased the robbers and caught up with one robber who was subsequently
charged with robbery and pleaded guilty. The other robber who held the stolen money escaped. The Commission on Audit found Hernandez
negligent because he had not brought the cash proceeds of the checks to his ofîce in Ternate, Cavite for safekeeping, which is the normal
procedure in the handling of funds. We held that Hernandez was not negligent in deciding to encash the check and bringing it home to Mari-
lao, Bulacan instead of Ternate, Cavite due to the lateness of the hour for the following reasons: (1) he was moved by unselîsh motive for his
co-employees to collect their wages and salaries the following day, a Saturday, a non-working, because to encash the check on July 5, the next
working day after July 1, would have caused discomfort to laborers who were dependent on their wages for sustenance; and (2) that choos-
ing Marilao as a safer destination, being nearer, and in view of the comparative hazards in the trips to the two places, said decision seemed
logical at that time. We further held that the fact that two robbers attacked him in broad daylight in the jeep while it was on a busy highway
and in the presence of other passengers could not be said to be a result of his imprudence and negligence.
Unlike in Hernandez where the robbery happened in a public utility, the robbery in this case took place in the pawnshop which is under the
control of petitioners. Petitioners had the means to screen the persons who were allowed entrance to the premises and to protect itself from
unlawful intrusion. Petitioners had failed to exercise precautionary measures in ensuring that the robbers were prevented from entering the
pawnshop and for keeping the vault open for the day, which paved the way for the robbers to easily cart away the pawned articles.
In Cruz, Dr. Filonila O. Cruz, Camanava District Director of Technological Education and Skills Development Authority (TESDA), boarded the
Light Rail Transit (LRT) from Sen. Puyat Avenue to Monumento when her handbag was slashed and the contents were stolen by an unidenti-
îed person. Among those stolen were her wallet and the government-issued cellular phone. She then reported the incident to the police au-
thorities; however, the thief was not located, and the cellphone was not recovered. She also reported the loss to the Regional Director of TES-
DA, and she requested that she be freed from accountability for the cellphone. The Resident Auditor denied her request on the ground that
she lacked the diligence required in the custody of government property and was ordered to pay the purchase value in the total amount of
P4,238.00. The COA found no sufîcient justiîcation to grant the request for relief from accountability. We reversed the ruling and found that
riding the LRT cannot per se be denounced as a negligent act more so because Cruz’s mode of transit was in^luenced by time and money con-
siderations; that she boarded the LRT to be able to arrive in Caloocan in time for her 3 pm meeting; that any prudent and rational person
under similar circumstance can reasonably be expected to do the same; that possession of a cellphone should not hinder one from boarding
the LRT coach as Cruz did considering that whether she rode a jeep or bus, the risk of theft would have also been present; that because of her
relatively low position and pay, she was not expected to have her own vehicle or to ride a taxicab; she did not have a government assigned
vehicle; that placing the cellphone in a bag away from covetous eyes and holding on to that bag as she did is ordinarily sufîcient care of a
cellphone while traveling on board the LRT; that the records did not show any speciîc act of negligence on her part and negligence can never
be presumed.
Unlike in the Cruz case, the robbery in this case happened in petitioners' pawnshop and they were negligent in not exercising the precautions
justly demanded of a pawnshop.
WHEREFORE, except for the insurance aspect, the Decision of the Court of Appeals dated March 31, 2003 and its Resolution dated August 8,
2003, are AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 124922 June 22, 1998
JIMMY CO, doing business under the name & style DRAGON METAL MANUFACTURING, petitioner,
vs.
COURT OF APPEALS and BROADWAY MOTOR SALES CORPORATION, respondents.
MARTINEZ, J.:
On July 18, 1990, petitioner entrusted his Nissan pick-up car 1988 model 1 to private respondent — which is engaged in the sale, distribution
and repair of motor vehicles — for the following job repair services and supply of parts:
— Bleed injection pump and all nozzles;
— Adjust valve tappet;
— Change oil and îlter;
— Open up and service four wheel brakes, clean and adjust;
— Lubricate accelerator linkages;
— Replace aircon belt; and
— Replace battery 2
Private respondent undertook to return the vehicle on July 21, 1990 fully serviced and supplied in accordance with the job contract. After
petitioner paid in full the repair bill in the amount of P1,397.00 3 private respondent issued to him a gate pass for the release of the vehicle
on said date. But came July 21, 1990, the latter could not release the vehicle as its battery was weak and was not yet replaced. Left with no
option, petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the same day. However, the
battery was not installed and the delivery of the car was rescheduled to July 24, 1990 or three (3) days later. When petitioner sought to re-
claim his car in the afternoon of July 24, 1990, he was told that it was carnapped earlier that morning while being road-tested by private re-
spondent's employee along Pedro Gil and Perez Streets in Paco, Manila. Private respondent said that the incident was reported to the police.
Having failed to recover his car and its accessories or the value thereof, petitioner îled a suit for damages against private respondent anchor-
ing his claim on the latter's alleged negligence. For its part, private respondent contended that it has no liability because the car was lost as
result of a fortuitous event — the carnapping. During pre-trial, the parties agreed that:
(T)he cost of the Nissan Pick-up four (4) door when the plaintiff purchased it from the defendent is P332,500.00 excluding accessories which
were installed in the vehicle by the plaintiff consisting of four (4) brand new tires, magwheels, stereo speaker, ampliîer which amount all to
P20,000.00. It is agreed that the vehicle was lost on July 24, 1990 "approximately two (2) years and îve (5) months from the date of the pur-
chase." It was agreed that the plaintiff paid the defendant the cost of service and repairs as early as July 21, 1990 in the amount of P1,397.00
which amount was received and duly receipted by the defendant company. It was also agreed that the present value of a brand new vehicle of
the same type at this time is P425,000.00 without accessories. 4
They likewise agreed that the sole issue for trial was who between the parties shall bear the loss of the vehicle which necessitates the resolu-
tion of whether private respondent was indeed negligent. 5 After trial, the court a quo found private respondent guilty of delay in the per-
formance of its obligation and held it liable to petitioner for the value of the lost vehicle and its accessories plus interest and attorney's fees. 6
On appeal, the Court of Appeals (CA) reversed the ruling of the lower court and ordered the dismissal of petitioner's damage suit. 7 The CA
ruled that: (1) the trial court was limited to resolving the issue of negligence as agreed during pre-trial; hence it cannot pass on the issue of
delay; and (2) the vehicle was lost due to a fortuitous event.
In a petition for review to this Court, the principal query raised is whether a repair shop can be held liable for the loss of a customer's vehicle
while the same is in its custody for repair or other job services?
The Court resolves the query in favor of the customer. First, on the technical aspect involved. Contrary to the CA' s pronouncement, the rule
that the determination of issues at a pre-trial conference bars the consideration of other issues on appeal, except those that may involve priv-
ilege or impeaching matter, 8 is inapplicable to this case. The question of delay, though not speciîcally mentioned as an issue at the pre-trial
may be tackled by the court considering that it is necessarily intertwined and intimately connected with the principal issue agreed upon by
the parties, i.e., who will bear the loss and whether there was negligence. Petitioner's imputation of negligence to private respondent is
premised on delay which is the very basis of the former's complaint. Thus, it was unavoidable for the court to resolve the case, particularly
the question of negligence without considering whether private respondent was guilty of delay in the performance of its obligation.
On the merits. It is a not defense for a repair shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully
placed in its possession was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was un-
lawfully and forcefully taken from another's rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous
event. To be considered as such, carnapping entails more than the mere forceful taking of another's property. It must be proved and estab-
lished that the event was an act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negli-
gent has any participation. 9 In accordance with the Rules of evidence, the burden of proving that the loss was due to a fortuitous event rests
on him who invokes it 10 — which in this case is the private respondent. However, other than the police report of the alleged carnapping
incident, no other evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an
alleged crime, to which only private respondent is privy, does not sufîce to establish the carnapping. Neither does it prove that there was no
fault on the part of private respondent notwithstanding the parties' agreement at the pre-trial that the car was carnapped. Carnapping does
not foreclose the pissibility of fault or negligence on the part of private respondent.
Even assuming arguendo that carnapping was duly established as a fortuitous event, still private respondent cannot escape liability. Article
1165 11 of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the deliv-
ery. In this case, private respondent was already in delay as it was supposed to deliver petitioner's car three (3) days before it was lost. Peti-
tioner's agreement to the rescheduled delivery does not defeat his claim as private respondent had already breached its obligation. Moreover,
such accession cannot be construed as waiver of petitioner's right to hold private respondent liable because the car was unusable and thus,
petitioner had no option but to leave it.
Assuming further that there was no delay, still working against private respondent is the legal presumption under Article 1265 that its pos-
session of the thing at the time it was lost was due to its fault. 12 This presumption is reasonable since he who has the custody and care of
the thing can easily explain the circumstances of the loss. The vehicle owner has no duty to show that the repair shop was at fault. All that
petitioner needs to prove, as claimant, is the simple fact that private respondent was in possession of the vehicle at the time it was lost. In
this case, private respondent's possession at the time of the loss is undisputed. Consequently, the burden shifts to the possessor who needs to
present controverting evidence sufîcient enough to overcome that presumption. Moreover, the exempting circumstances — earthquake,
^lood, storm or other natural calamity — when the presumption of fault is not applicable 13 do not concur in this case. Accordingly, having
failed to rebut the presumption and since the case does not fall under the exceptions, private respondent is answerable for the loss.
It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil Code, liability attaches even if the loss was due to a
fortuitous event if "the nature of the obligation requires the assumption of risk". 14 Carnapping is a normal business risk for those engaged
in the repair of motor vehicles. For just as the owner is exposed to that risk so is the repair shop since the car was entrusted to it. That is why,
repair shops are required to îrst register with the Department of Trade and Industry (DTI) 15 and to secure an insurance policy for the
"shop covering the property entrusted by its customer for repair, service or maintenance" as a pre-requisite for such registration/accredita-
tion.16 Violation of this statutory duty constitutes negligence per se.17 Having taken custody of the vehicle private respondent is obliged not
only to repair the vehicle but must also provide the customer with some form of security for his property over which he loses immediate
control. An owner who cannot exercise the seven (7) juses or attributes of ownership — the right to possess, to use and enjoy, to abuse or
consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits — 18 is a crippled owner. Failure of the repair shop to
provide security to a motor vehicle owner would leave the latter at the mercy of the former. Moreover, on the assumption that private re-
spondent's repair business is duly registered, it presupposes that its shop is covered by insurance from which it may recover the loss. If pri-
vate respondent can recover from its insurer, then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be
attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies.
One last thing. With respect to the value of the lost vehicle and its accessories for which the repair shop is liable, it should be based on the fair
market value that the property would command at the time it was entrusted to it or such other value as agreed upon by the parties subse-
quent to the loss. Such recoverable value is fair and reasonable considering that the value of the vehicle depreciates. This value may be recov-
ered without prejudice to such other damages that a claimant is entitled under applicable laws.
WHEREFORE, premises considered, the decision of the Court Appeals is REVERSED and SET ASIDE and the decision of the court a quo is
REINSTATED.
SO ORDERED. 
G.R. No. 126389 July 10, 1998
SOUTHEASTERN COLLEGE INC., petitioner,
vs.
COURT OF APPEALS, JUANITA DE JESUS VDA. DE DIMAANO, EMERITA DIMAANO, REMEDIOS DIMAANO, CONSOLACION DIMAANO and MI-
LAGROS DIMAANO, respondents.
PURISIMA, J.:
Petition for review under Rule 45 of the Rules of Court seeking to set aside the Decision 1 promulgated on July 31, 1996, and Resolution 2
dated September 12, 1996 of the Court of Appeals 3 in CA-G.R. No. 41422, entitled "Juanita de Jesus vda. de Dimaano, et al. vs. Southeastern
College, Inc.", which reduced the moral damages awarded below from P1,000,000.00 to P200,000.00. 4 The Resolution under attack denied
petitioner's motion for reconsideration.
Private respondents are owners of a house at 326 College Road, Pasay City, while petitioner owns a four-storey school building along the
same College Road. On October 11, 1989, at about 6:30 in the morning, a powerful typhoon "Saling" hit Metro Manila. Buffeted by very strong
winds, the roof of petitioner's building was partly ripped off and blown away, landing on and destroying portions of the rooîng of private
respondents' house. After the typhoon had passed, an ocular inspection of the destroyed building was conducted by a team of engineers
headed by the city building ofîcial, Engr. Jesus L. Reyna. Pertinent aspects of the latter's Report 5 dated October 18, 1989 stated, as follows:
5. One of the factors that may have led to this calamitous event is the formation of the building in the area and the general direction of the
wind. Situated in the peripheral lot is an almost U-shaped formation of 4-storey building. Thus, with the strong winds having a westerly di-
rection, the general formation of the building becomes a big funnel-like structure, the one situated along College Road, receiving the heaviest
impact of the strong winds. Hence, there are portions of the rooîng, those located on both ends of the building, which remained intact after
the storm.
6. Another factor and perhaps the most likely reason for the dislodging of the rooîng structural trusses is the improper anchorage of the said
trusses to the roof beams. The 1/2' diameter steel bars embedded on the concrete roof beams which serve as truss anchorage are not bolted
nor nailed to the trusses. Still, there are other steel bars which were not even bent to the trusses, thus, those trusses are not anchored at all to
the roof beams.
It then recommended that "to avoid any further loss and damage to lives, limbs and property of persons living in the vicinity," the fourth ^loor
of subject school building be declared as a "structural hazard."
In their Complaint 6 before the Regional Trial Court of Pasay City, Branch 117, for damages based on culpa aquiliana, private respondents
alleged that the damage to their house rendered the same uninhabitable, forcing them to stay temporarily in others' houses. And so they
sought to recover from petitioner P117,116.00, as actual damages, P1,000,000.00, as moral damages, P300,000.00, as exemplary damages
and P100,000.00, for and as attorney's fees; plus costs.
In its Answer, petitioner averred that subject school building had withstood several devastating typhoons and other calamities in the past,
without its rooîng or any portion thereof giving way; that it has not been remiss in its responsibility to see to it that said school building,
which houses school children, faculty members, and employees, is "in tip-top condition"; and furthermore, typhoon "Saling" was "an act of
God and therefore beyond human control" such that petitioner cannot be answerable for the damages wrought thereby, absent any negli-
gence on its part.
The trial court, giving credence to the ocular inspection report to the effect that subject school building had a "defective rooîng structure,"
found that, while typhoon "Saling" was accompanied by strong winds, the damage to private respondents' houses "could have been avoided if
the construction of the roof of [petitioner's] building was not faulty." The dispositive portion of the lower court's decision 7 reads, thus:
WHEREFORE, in view of the foregoing, the Court renders judgment (sic) in favor of the plaintiff (sic) and against the defendants, (sic) order-
ing the latter to pay jointly and severally the former as follows:
a) P117,116.00, as actual damages, plus litigation expenses;
b) P1,000,000.00 as moral damages;
c) P100,000.00 as attorney's fees;
d) Costs of the instant suit.
The claim for exemplary damages is denied for the reason that the defendants (sic) did in a wanton fraudulent, reckless, oppressive or
malevolent manner.
In its appeal to the Court of Appeals, petitioner assigned as errors, 8 that:
THE TRIAL COURT ERRED IN HOLDING THAT TYPHOON "SALING", AS AN ACT OF GOD, IS NOT "THE SOLE AND ABSOLUTE REASON" FOR
THE RIPPING-OFF OF THE SMALL PORTION OF THE ROOF OF SOUTHEASTERN'S FOUR (4) STOREY SCHOOL BUILDING.
II
THE TRIAL COURT ERRED IN HOLDING THAT "THE CONSTRUCTION OF THE ROOF OF DEFENDANT'S SCHOOL BUILDING WAS FAULTY"
NOTWITHSTANDING THE ADMISSION THAT THERE WERE TYPHOONS BEFORE BUT NOT AS GRAVE AS TYPHOON "SALING" WHICH IS THE
DIRECT AND PROXIMATE CAUSE OF THE INCIDENT.
III
THE TRIAL COURT ERRED IN AWARDING ACTUAL AND MORAL DAMAGES AS WELL AS ATTORNEY'S FEES AND LITIGATION EXPENSES AND
COSTS OF SUIT TO DIMAANOS WHEN THEY HAVE NOT INCURRED ACTUAL DAMAGES AT ALL AS DIMAANOS HAVE ALREADY SOLD THEIR
PROPERTY, AN INTERVENING EVENT THAT RENDERS THIS CASE MOOT AND ACADEMIC.
IV
THE TRIAL COURT ERRED IN ORDERING THE ISSUANCE OF THE WRIT OF EXECUTION INSPITE OF THE PERFECTION OF SOUTHEASTERN'S
APPEAL WHEN THERE IS NO COMPELLING REASON FOR THE ISSUANCE THERETO.
As mentioned earlier, respondent Court of Appeals afîrmed with modiîcation the trial court's disposition by reducing the award of moral
damages from P1,000,000.00 to P200,000.00. Hence, petitioner's resort to this Court, raising for resolution the issues of:
1. Whether or not the award of actual damages [sic] to respondent Dimaanos on the basis of speculation or conjecture, without proof or re-
ceipts of actual damage, [sic] legally feasible or justiîed.
2. Whether or not the award of moral damages to respondent Dimaanos, with the latter having suffered, actual damage has legal basis.
3. Whether or not respondent Dimaanos who are no longer the owner of the property, subject matter of the case, during its pendency, has the
right to pursue their complaint against petitioner when the case was already moot and academic by the sale of the property to third party.
4. Whether or not the award of attorney's fees when the case was already moot academic [sic] legally justiîed.
5. Whether or not petitioner is liable for damage caused to others by typhoon "Saling" being an act of God.
6. Whether or not the issuance of a writ of execution pending appeal, ex-parte or without hearing, has support in law.
The pivot of inquiry here, determinative of the other issues, is whether the damage on the roof of the building of private respondents result-
ing from the impact of the falling portions of the school building's roof ripped off by the strong winds of typhoon "Saling", was, within legal
contemplation, due to fortuitous event? If so, petitioner cannot be held liable for the damages suffered by the private respondents. This con-
clusion înds support in Article 1174 of Civil Code, which provides:
Art 1174. Except in cases expressly speciîed by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.
The antecedent of fortuitous event or caso fortuito is found in the Partidas which deînes it as "an event which takes place by accident and
could not have been foreseen." 9 Escriche elaborates it as "an unexpected event or act of God which could neither be foreseen nor resisted."
10 Civilist Arturo M. Tolentino adds that "[f]ortuitous events may be produced by two general causes: (1) by nature, such as earthquakes,
storms, ^loods, epidemics, îres, etc. and (2) by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, rob-
bery, etc." 11
In order that a fortuitous event may exempt a person from liability, it is necessary that he be free from any previous negligence or miscon-
duct by reason of which the loss may have been occasioned. 12 An act of God cannot be invoked for the protection of a person who has been
guilty of gross negligence in not trying to forestall its possible adverse consequences. When a person's negligence concurs with an act of God
in producing damage or injury to another, such person is not exempt from liability by showing that the immediate or proximate cause of the
damages or injury was a fortuitous event. When the effect is found to be partly the result of the participation of man — whether it be from
active intervention, or neglect, or failure to act — the whole occurrence is hereby humanized, and removed from the rules applicable to acts
of God. 13
In the case under consideration, the lower court accorded full credence to the înding of the investigating team that subject school building's
rooîng had "no sufîcient anchorage to hold it in position especially when battered by strong winds." Based on such înding, the trial court
imputed negligence to petitioner and adjudged it liable for damages to private respondents.
After a thorough study and evaluation of the evidence on record, this Court believes otherwise, notwithstanding the general rule that factual
îndings by the trail court, especially when afîrmed by the appellate court, are binding and conclusive upon this Court. 14 After a careful
scrutiny of the records and the pleadings submitted by the parties, we înd exception to this rule and hold that the lower courts misappreci-
ated the evidence proffered.
There is no question that a typhoon or storm is a fortuitous event, a natural occurrence which may be foreseen but is unavoidable despite
any amount of foresight, diligence or care. 15 In order to be exempt from liability arising from any adverse consequence engendered thereby,
there should have been no human participation amounting to a negligent act. 16 In other words; the person seeking exoneration from liabili-
ty must not be guilty of negligence. Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or
harm to others. It may be the failure to observe that degree of care, precaution, and vigilance which the circumstances justify demand, 17 or
the omission to do something which a prudent and reasonable man, guided by considerations which ordinarily regulate the conduct of hu-
man affairs, would
do. 18 From these premises, we proceed to determine whether petitioner was negligent, such that if it were not, the damage caused to pri-
vate respondents' house could have been avoided?
At the outset, it bears emphasizing that a person claiming damages for the negligence of another has the burden of proving the existence of
fault or negligence causative of his injury or loss. The facts constitutive of negligence must be afîrmatively established by competent evi-
dence, 19 not merely by presumptions and conclusions without basis in fact. Private respondents, in establishing the culpability of petitioner,
merely relied on the aforementioned report submitted by a team which made an ocular inspection of petitioner's school building after the
typhoon. As the term imparts, an ocular inspection is one by means of actual sight or viewing. 20 What is visual to the eye through, is not
always re^lective of the real cause behind. For instance, one who hears a gunshot and then sees a wounded person, cannot always deînitely
conclude that a third person shot the victim. It could have been self-in^licted or caused accidentally by a stray bullet. The relationship of
cause and effect must be clearly shown.
In the present case, other than the said ocular inspection, no investigation was conducted to determine the real cause of the partial unrooîng
of petitioner's school building. Private respondents did not even show that the plans, speciîcations and design of said school building were
deîcient and defective. Neither did they prove any substantial deviation from the approved plans and speciîcations. Nor did they conclusive-
ly establish that the construction of such building was basically ^lawed. 21
On the other hand, petitioner elicited from one of the witnesses of private respondents, city building ofîcial Jesus Reyna, that the original
plans and design of petitioner's school building were approved prior to its construction. Engr. Reyna admitted that it was a legal requirement
before the construction of any building to obtain a permit from the city building ofîcial (city engineer, prior to the passage of the Building Act
of 1977). In like manner, after construction of the building, a certiîcation must be secured from the same ofîcial attesting to the readiness
for occupancy of the ediîce. Having obtained both building permit and certiîcate of occupancy, these are, at the very least, prima facie evi-
dence of the regular and proper construction of subject school building. 22
Furthermore, when part of its roof needed repairs of the damage in^licted by typhoon "Saling", the same city ofîcial gave the go-signal for
such repairs — without any deviation from the original design — and subsequently, authorized the use of the entire fourth ^loor of the same
building. These only prove that subject building suffers from no structural defect, contrary to the report that its "U-shaped" form was "struc-
turally defective." Having given his unqualiîed imprimatur, the city building ofîcial is presumed to have properly performed his duties 23 in
connection therewith.
In addition, petitioner presented its vice president for înance and administration who testiîed that an annual maintenance inspection and
repair of subject school building were regularly undertaken. Petitioner was even willing to present its maintenance supervisor to attest to the
extent of such regular inspection but private respondents agreed to dispense with his testimony and simply stipulated that it would be cor-
roborative of the vice president's narration.
Moreover, the city building ofîcial, who has been in the city government service since 1974, admitted in open court that no complaint re-
garding any defect on the same structure has ever been lodged before his ofîce prior to the institution of the case at bench. It is a matter of
judicial notice that typhoons are common occurrences in this country. If subject school building's rooîng was not îrmly anchored to its
trusses, obviously, it could not have withstood long years and several typhoons even stronger than "Saling."
In light of the foregoing, we înd no clear and convincing evidence to sustain the judgment of the appellate court. We thus hold that petitioner
has not been shown negligent or at fault regarding the construction and maintenance of its school building in question and that typhoon "Sal-
ing" was the proximate cause of the damage suffered by private respondents' house.
With this disposition on the pivotal issue, private respondents' claim for actual and moral damages as well as attorney's fees must fail. 24
Petitioner cannot be made to answer for a purely fortuitous event. 25 More so because no bad faith or willful act to cause damage was alleged
and proven to warrant moral damages.
Private respondents failed to adduce adequate and competent proof of the pecuniary loss they actually incurred. 26 It is not enough that the
damage be capable of proof but must be actually proved with a reasonable degree of certainty, pointing out speciîc facts that afford a basis
for measuring whatever compensatory damages are borne. 27 Private respondents merely submitted an estimated amount needed for the
repair of the roof their subject building. What is more, whether the "necessary repairs" were caused ONLY by petitioner's alleged negligence
in the maintenance of its school building, or included the ordinary wear and tear of the house itself, is an essential question that remains
indeterminable.
The Court deems unnecessary to resolve the other issues posed by petitioner.
As regards the sixth issue, however, the writ of execution issued on April 1, 1993 by the trial court is hereby nulliîed and set aside. Private
respondents are ordered to reimburse any amount or return to petitioner any property which they may have received by virtue of the en-
forcement of said writ.
WHEREFORE, the petition is GRANTED and the challenged Decision is REVERSED. The complaint of private respondents in Civil Case No.
7314 before the trial court a quo is ordered DISMISSED and the writ of execution issued on April 1, 1993 in said case is SET ASIDE. Accord-
ingly, private respondents are ORDERED to return to petitioner any amount or property received by them by virtue of said writ. Costs against
the private respondents.
SO ORDERED.
G.R. No. L-12191 October 14, 1918
JOSE CANGCO, plaintiff-appellant,

vs.
MANILA RAILROAD CO., defendant-appellee.
Ramon Sotelo for appellant.

Kincaid & Hartigan for appellee.
FISHER, J.:
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the employment of Manila Railroad Company
in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of Rizal, which is located upon the
line of the defendant railroad company; and in coming daily by train to the company's ofîce in the city of Manila where he worked, he used a
pass, supplied by the company, which entitled him to ride upon the company's trains free of charge. Upon the occasion in question, January
20, 1915, the plaintiff arose from his seat in the second class-car where he was riding and, making, his exit through the door, took his position
upon the steps of the coach, seizing the upright guardrail with his right hand for support.
On the side of the train where passengers alight at the San Mateo station there is a cement platform which begins to rise with a moderate
gradient some distance away from the company's ofîce and extends along in front of said ofîce for a distance sufîcient to cover the length of
several coaches. As the train slowed down another passenger, named Emilio Zuñiga, also an employee of the railroad company, got off the
same car, alighting safely at the point where the platform begins to rise from the level of the ground. When the train had proceeded a little
farther the plaintiff Jose Cangco stepped off also, but one or both of his feet came in contact with a sack of watermelons with the result that
his feet slipped from under him and he fell violently on the platform. His body at once rolled from the platform and was drawn under the
moving car, where his right arm was badly crushed and lacerated. It appears that after the plaintiff alighted from the train the car moved for-
ward possibly six meters before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted dimly by a single light located some
distance away, objects on the platform where the accident occurred were difîcult to discern especially to a person emerging from a lighted
car.
The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was the customary
season for harvesting these melons and a large lot had been brought to the station for the shipment to the market. They were contained in
numerous sacks which has been piled on the platform in a row one upon another. The testimony shows that this row of sacks was so placed
of melons and the edge of platform; and it is clear that the fall of the plaintiff was due to the fact that his foot alighted upon one of these mel-
ons at the moment he stepped upon the platform. His statement that he failed to see these objects in the darkness is readily to be credited.
The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries which he had received were very
serious. He was therefore brought at once to a certain hospital in the city of Manila where an examination was made and his arm was ampu-
tated. The result of this operation was unsatisfactory, and the plaintiff was then carried to another hospital where a second operation was
performed and the member was again amputated higher up near the shoulder. It appears in evidence that the plaintiff expended the sum of
P790.25 in the form of medical and surgical fees and for other expenses in connection with the process of his curation.
Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of the defendant
company, founding his action upon the negligence of the servants and employees of the defendant in placing the sacks of melons upon the
platform and leaving them so placed as to be a menace to the security of passenger alighting from the company's trains. At the hearing in the
Court of First Instance, his Honor, the trial judge, found the facts substantially as above stated, and drew therefrom his conclusion to the ef-
fect that, although negligence was attributable to the defendant by reason of the fact that the sacks of melons were so placed as to obstruct
passengers passing to and from the cars, nevertheless, the plaintiff himself had failed to use due caution in alighting from the coach and was
therefore precluded form recovering. Judgment was accordingly entered in favor of the defendant company, and the plaintiff appealed.
It can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the platform in the man-
ner above stated; that their presence caused the plaintiff to fall as he alighted from the train; and that they therefore constituted an effective
legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant company is liable for the damage thereby occa-
sioned unless recovery is barred by the plaintiff's own contributory negligence. In resolving this problem it is necessary that each of these
conceptions of liability, to-wit, the primary responsibility of the defendant company and the contributory negligence of the plaintiff should be
separately examined.
It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to respond
for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of defendant to exercise
due care in its performance. That is to say, its liability is direct and immediate, differing essentially, in legal viewpoint from that presumptive
responsibility for the negligence of its servants, imposed by article 1903 of the Civil Code, which can be rebutted by proof of the exercise of
due care in their selection and supervision. Article 1903 of the Civil Code is not applicable to obligations arising ex contractu, but only to ex-
tra-contractual obligations — or to use the technical form of expression, that article relates only to culpa aquiliana and not to culpa contrac-
tual.
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points out this distinction, which was also
recognized by this Court in its decision in the case of Rakes vs. Atlantic, Gulf and Paciîc Co. (7 Phil. rep., 359). In commenting upon article
1093 Manresa clearly points out the difference between "culpa, substantive and independent, which of itself constitutes the source of an
obligation between persons not formerly connected by any legal tie" and culpa considered as an accident in the performance of an obligation
already existing . . . ."
In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition that article 1903 of the Civil Code is not
applicable to acts of negligence which constitute the breach of a contract.
Upon this point the Court said:
The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be those not growing out of pre-existing
duties of the parties to one another. But where relations already formed give rise to duties, whether springing from contract or quasi-con-
tract, then breaches of those duties are subject to article 1101, 1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Paciîc Co., 7
Phil. Rep., 359 at 365.)
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases imposed upon employers with
respect to damages occasioned by the negligence of their employees to persons to whom they are not bound by contract, is not based, as in
the English Common Law, upon the principle of respondeat superior — if it were, the master would be liable in every case and unconditional-
ly — but upon the principle announced in article 1902 of the Civil Code, which imposes upon all persons who by their fault or negligence, do
injury to another, the obligation of making good the damage caused. One who places a powerful automobile in the hands of a servant whom
he knows to be ignorant of the method of managing such a vehicle, is himself guilty of an act of negligence which makes him liable for all the
consequences of his imprudence. The obligation to make good the damage arises at the very instant that the unskillful servant, while acting
within the scope of his employment causes the injury. The liability of the master is personal and direct. But, if the master has not been guilty
of any negligence whatever in the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within the
scope of his employment or not, if the damage done by the servant does not amount to a breach of the contract between the master and the
person injured.
It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the master from liability for the
latter's acts — on the contrary, that proof shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability arising
from extra-contractual culpa is always based upon a voluntary act or omission which, without willful intent, but by mere negligence or inat-
tention, has caused damage to another. A master who exercises all possible care in the selection of his servant, taking into consideration the
qualiîcations they should possess for the discharge of the duties which it is his purpose to conîde to them, and directs them with equal dili-
gence, thereby performs his duty to third persons to whom he is bound by no contractual ties, and he incurs no liability whatever if, by rea-
son of the negligence of his servants, even within the scope of their employment, such third person suffer damage. True it is that under arti-
cle 1903 of the Civil Code the law creates a presumption that he has been negligent in the selection or direction of his servant, but the pre-
sumption is rebuttable and yield to proof of due care and diligence in this respect.
The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has held that these articles are applic-
able to cases of extra-contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)
This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep., 624), which
was an action brought upon the theory of the extra-contractual liability of the defendant to respond for the damage caused by the careless-
ness of his employee while acting within the scope of his employment. The Court, after citing the last paragraph of article 1903 of the Civil
Code, said:
From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee there instantly arises
a presumption of law that there was negligence on the part of the master or employer either in selection of the servant or employee, or in
supervision over him after the selection, or both; and (2) that that presumption is juris tantum and not juris et de jure, and consequently,
may be rebutted. It follows necessarily that if the employer shows to the satisfaction of the court that in selection and supervision he has
exercised the care and diligence of a good father of a family, the presumption is overcome and he is relieved from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This is the notable pecu-
liarity of the Spanish law of negligence. It is, of course, in striking contrast to the American doctrine that, in relations with strangers, the neg-
ligence of the servant in conclusively the negligence of the master.
The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon negligence, it is necessary that
there shall have been some fault attributable to the defendant personally, and that the last paragraph of article 1903 merely establishes a
rebuttable presumption, is in complete accord with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the liability created
by article 1903 is imposed by reason of the breach of the duties inherent in the special relations of authority or superiority existing between
the person called upon to repair the damage and the one who, by his act or omission, was the cause of it.
On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when such acts or
omissions cause damages which amount to the breach of a contact, is not based upon a mere presumption of the master's negligence in their
selection or control, and proof of exercise of the utmost diligence and care in this regard does not relieve the master of his liability for the
breach of his contract.
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation has its source in the breach or omis-
sion of those mutual duties which civilized society imposes upon it members, or which arise from these relations, other than contractual, of
certain members of society to others, generally embraced in the concept of status. The legal rights of each member of society constitute the
measure of the corresponding legal duties, mainly negative in character, which the existence of those rights imposes upon all other members
of society. The breach of these general duties whether due to willful intent or to mere inattention, if productive of injury, give rise to an oblig-
ation to indemnify the injured party. The fundamental distinction between obligations of this character and those which arise from contract,
rests upon the fact that in cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum
juris, whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when
entering into the contractual relation.
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect —
and our Legislature has so elected — whom such an obligation is imposed is morally culpable, or, on the contrary, for reasons of public policy,
to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the negligence of those person who
acts or mission are imputable, by a legal îction, to others who are in a position to exercise an absolute or limited control over them. The leg-
islature which adopted our Civil Code has elected to limit extra-contractual liability — with certain well-deîned exceptions — to cases in
which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to exer-
cise due care in the selection and control of one's agents or servants, or in the control of persons who, by reason of their status, occupy a po-
sition of dependency with respect to the person made liable for their conduct.
The position of a natural or juridical person who has undertaken by contract to render service to another, is wholly different from that to
which article 1903 relates. When the sources of the obligation upon which plaintiff's cause of action depends is a negligent act or omission,
the burden of proof rests upon plaintiff to prove the negligence — if he does not his action fails. But when the facts averred show a contrac-
tual undertaking by defendant for the beneît of plaintiff, and it is alleged that plaintiff has failed or refused to perform the contract, it is not
necessary for plaintiff to specify in his pleadings whether the breach of the contract is due to willful fault or to negligence on the part of the
defendant, or of his servants or agents. Proof of the contract and of its nonperformance is sufîcient prima facie to warrant a recovery.
As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor should assume the burden of proof of its existence, as
the only fact upon which his action is based; while on the contrary, in a case of negligence which presupposes the existence of a contractual
obligation, if the creditor shows that it exists and that it has been broken, it is not necessary for him to prove negligence. (Manresa, vol. 8, p.
71 [1907 ed., p. 76]).
As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was due to the negligent conduct of
defendant or of his servants, even though such be in fact the actual cause of the breach, it is obvious that proof on the part of defendant that
the negligence or omission of his servants or agents caused the breach of the contract would not constitute a defense to the action. If the neg-
ligence of servants or agents could be invoked as a means of discharging the liability arising from contract, the anomalous result would be
that person acting through the medium of agents or servants in the performance of their contracts, would be in a better position than those
acting in person. If one delivers a valuable watch to watchmaker who contract to repair it, and the bailee, by a personal negligent act causes
its destruction, he is unquestionably liable. Would it be logical to free him from his liability for the breach of his contract, which involves the
duty to exercise due care in the preservation of the watch, if he shows that it was his servant whose negligence caused the injury? If such a
theory could be accepted, juridical persons would enjoy practically complete immunity from damages arising from the breach of their con-
tracts if caused by negligent acts as such juridical persons can of necessity only act through agents or servants, and it would no doubt be true
in most instances that reasonable care had been taken in selection and direction of such servants. If one delivers securities to a banking cor-
poration as collateral, and they are lost by reason of the negligence of some clerk employed by the bank, would it be just and reasonable to
permit the bank to relieve itself of liability for the breach of its contract to return the collateral upon the payment of the debt by proving that
due care had been exercised in the selection and direction of the clerk?
This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere incident to the performance of a
contract has frequently been recognized by the supreme court of Spain. (Sentencias of June 27, 1894; November 20, 1896; and December 13,
1896.) In the decisions of November 20, 1896, it appeared that plaintiff's action arose ex contractu, but that defendant sought to avail himself
of the provisions of article 1902 of the Civil Code as a defense. The Spanish Supreme Court rejected defendant's contention, saying:
These are not cases of injury caused, without any pre-existing obligation, by fault or negligence, such as those to which article 1902 of the
Civil Code relates, but of damages caused by the defendant's failure to carry out the undertakings imposed by the contracts . . . .
A brief review of the earlier decision of this court involving the liability of employers for damage done by the negligent acts of their servants
will show that in no case has the court ever decided that the negligence of the defendant's servants has been held to constitute a defense to
an action for damages for breach of contract.
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not liable for the damages caused by the
negligence of his driver. In that case the court commented on the fact that no evidence had been adduced in the trial court that the defendant
had been negligent in the employment of the driver, or that he had any knowledge of his lack of skill or carefulness.
In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for damages caused
by the loss of a barge belonging to plaintiff which was allowed to get adrift by the negligence of defendant's servants in the course of the per-
formance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the defendant grew out of a con-
tract made between it and the plaintiff . . . we do not think that the provisions of articles 1902 and 1903 are applicable to the case."
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover damages for the personal injuries caused
by the negligence of defendant's chauffeur while driving defendant's automobile in which defendant was riding at the time. The court found
that the damages were caused by the negligence of the driver of the automobile, but held that the master was not liable, although he was
present at the time, saying:
. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a reasonable opportunity to observe them
and to direct the driver to desist therefrom. . . . The act complained of must be continued in the presence of the owner for such length of time
that the owner by his acquiescence, makes the driver's acts his own.
In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court rested its conclu-
sion as to the liability of the defendant upon article 1903, although the facts disclosed that the injury complaint of by plaintiff constituted a
breach of the duty to him arising out of the contract of transportation. The express ground of the decision in this case was that article 1903,
in dealing with the liability of a master for the negligent acts of his servants "makes the distinction between private individuals and public
enterprise;" that as to the latter the law creates a rebuttable presumption of negligence in the selection or direction of servants; and that in
the particular case the presumption of negligence had not been overcome.
It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded in tort rather than as based
upon the breach of the contract of carriage, and an examination of the pleadings and of the briefs shows that the questions of law were in fact
discussed upon this theory. Viewed from the standpoint of the defendant the practical result must have been the same in any event. The
proof disclosed beyond doubt that the defendant's servant was grossly negligent and that his negligence was the proximate cause of plain-
tiff's injury. It also afîrmatively appeared that defendant had been guilty of negligence in its failure to exercise proper discretion in the direc-
tion of the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of the duty were to be regarded as
constituting culpa aquiliana or culpa contractual. As Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the
course of the performance of a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its essential
characteristics are identical. There is always an act or omission productive of damage due to carelessness or inattention on the part of the
defendant. Consequently, when the court holds that a defendant is liable in damages for having failed to exercise due care, either directly, or
in failing to exercise proper care in the selection and direction of his servants, the practical result is identical in either case. Therefore, it fol-
lows that it is not to be inferred, because the court held in the Yamada case that defendant was liable for the damages negligently caused by
its servants to a person to whom it was bound by contract, and made reference to the fact that the defendant was negligent in the selection
and control of its servants, that in such a case the court would have held that it would have been a good defense to the action, if presented
squarely upon the theory of the breach of the contract, for defendant to have proved that it did in fact exercise care in the selection and con-
trol of the servant.
The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-contractual obliga-
tions. The îeld of noncontractual obligation is much more broader than that of contractual obligations, comprising, as it does, the whole
extent of juridical human relations. These two îelds, îguratively speaking, concentric; that is to say, the mere fact that a person is bound to
another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor
may break the contract under such conditions that the same act which constitutes the source of an extra-contractual obligation had no con-
tract existed between the parties.
The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe means of
entering and leaving its trains (civil code, article 1258). That duty, being contractual, was direct and immediate, and its non-performance
could not be excused by proof that the fault was morally imputable to defendant's servants.
The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing an obstruc-
tion upon the platform was a breach of its contractual obligation to maintain safe means of approaching and leaving its trains, the direct and
proximate cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until the train had come to a com-
plete stop before alighting. Under the doctrine of comparative negligence announced in the Rakes case (supra), if the accident was caused by
plaintiff's own negligence, no liability is imposed upon defendant's negligence and plaintiff's negligence merely contributed to his injury, the
damages should be apportioned. It is, therefore, important to ascertain if defendant was in fact guilty of negligence.
It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the particular injury suffered by him could
not have occurred. Defendant contends, and cites many authorities in support of the contention, that it is negligence per se for a passenger to
alight from a moving train. We are not disposed to subscribe to this doctrine in its absolute form. We are of the opinion that this proposition
is too badly stated and is at variance with the experience of every-day life. In this particular instance, that the train was barely moving when
plaintiff alighted is shown conclusively by the fact that it came to stop within six meters from the place where he stepped from it. Thousands
of person alight from trains under these conditions every day of the year, and sustain no injury where the company has kept its platform free
from dangerous obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it
not been for defendant's negligent failure to perform its duty to provide a safe alighting place.
We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work on Negligence (vol. 3, sec. 3010)
as follows:
The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving railway train, is
that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex and condition of the passen-
ger, would have acted as the passenger acted under the circumstances disclosed by the evidence. This care has been deîned to be, not the
care which may or should be used by the prudent man generally, but the care which a man of ordinary prudence would use under similar
circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)
Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), we may say that the test is this; Was
there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would have admonished a person
of average prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff should have desisted from
alighting; and his failure so to desist was contributory negligence.1awph!l.net
As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was guilty of contribu-
tory negligence is that he stepped off the car without being able to discern clearly the condition of the platform and while the train was yet
slowly moving. In considering the situation thus presented, it should not be overlooked that the plaintiff was, as we înd, ignorant of the fact
that the obstruction which was caused by the sacks of melons piled on the platform existed; and as the defendant was bound by reason of its
duty as a public carrier to afford to its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the absence of
some circumstance to warn him to the contrary, that the platform was clear. The place, as we have already stated, was dark, or dimly lighted,
and this also is proof of a failure upon the part of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any
possibility concede that it had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their pres-
ence would be revealed.
As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following circumstances are to be noted:
The company's platform was constructed upon a level higher than that of the roadbed and the surrounding ground. The distance from the
steps of the car to the spot where the alighting passenger would place his feet on the platform was thus reduced, thereby decreasing the risk
incident to stepping off. The nature of the platform, constructed as it was of cement material, also assured to the passenger a stable and even
surface on which to alight. Furthermore, the plaintiff was possessed of the vigor and agility of young manhood, and it was by no means so
risky for him to get off while the train was yet moving as the same act would have been in an aged or feeble person. In determining the ques-
tion of contributory negligence in performing such act — that is to say, whether the passenger acted prudently or recklessly — the age, sex,
and physical condition of the passenger are circumstances necessarily affecting the safety of the passenger, and should be considered.
Women, it has been observed, as a general rule are less capable than men of alighting with safety under such conditions, as the nature of
their wearing apparel obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly familiar to the plaintiff as
it was his daily custom to get on and of the train at this station. There could, therefore, be no uncertainty in his mind with regard either to the
length of the step which he was required to take or the character of the platform where he was alighting. Our conclusion is that the conduct
of the plaintiff in undertaking to alight while the train was yet slightly under way was not characterized by imprudence and that therefore he
was not guilty of contributory negligence.
The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a copyist clerk, and that the injuries he has
suffered have permanently disabled him from continuing that employment. Defendant has not shown that any other gainful occupation is
open to plaintiff. His expectancy of life, according to the standard mortality tables, is approximately thirty-three years. We are of the opinion
that a fair compensation for the damage suffered by him for his permanent disability is the sum of P2,500, and that he is also entitled to re-
cover of defendant the additional sum of P790.25 for medical attention, hospital services, and other incidental expenditures connected with
the treatment of his injuries.
The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, and for the costs of both in-
stances. So ordered.
Arellano, C.J., Torres, Street and Avanceña, JJ., concur.

JANUARY 23 CASES (Chavez V Gonzales To Southern College V CA)

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JANUARY 23 CASES (Chavez V Gonzales To Southern College V CA)

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[G.R.

No. L-27454. April 30, 1970.]

ROSENDO O. CHAVES, Plaintiff-Appellant, v. FRUCTUOSO GONZALES, Defendant-Appellee.

Chaves, Elio, Chaves & Associates, for Plaintiff-Appellant.

Sulpicio E. Platon, for Defendant-Appellee.

REYES, J.B.L., J.:

The appealed judgment, which is brief, is hereunder quoted in full:jgc:chanrobles.com.ph

Barredo, J., did not take part.

UNIT CONTRACT PRICE P87,000.00

The second letter-proposal (Exh. "A") provides as follows:

One (1) lot - Concreting materials foundation.

TELEFAST COMMUNICATIONS/PHILIPPINE WIRELESS, INC., petitioner,

The facts of the case are as follows:

2. Ignacio Castro Sr., P20,000.00 as moral damages.

3. Ignacio Castro Jr., P20,000.00 as moral damages.

4. Aurora Castro, P10,000.00 moral damages.

5. Salvador Castro, P10,000.00 moral damages.

6. Mario Castro, P10,000.00 moral damages.

7. Conrado Castro, P10,000 moral damages.

8. Esmeralda C. Floro, P20,000.00 moral damages.

9. Agerico Castro, P10,000.00 moral damages.

10. Rolando Castro, P10,000.00 moral damages.

11. Virgilio Castro, P10,000.00 moral damages.

12. Gloria Castro, P10,000.00 moral damages.

As the appellate court properly observed:

(1) P10,000.00 as moral damages, to each of private respondents;

(2) P1,000.00 as exemplary damages, to each of private respondents;

(3) P16,000.00 as compensatory damages, to private respondent So^ia C. Crouch;

(4) P5,000.00 as attorney's fees; and

(5) Costs of suit.

Yap (Chairman), Paras and Sarmiento, JJ., concur.

MELENCIO-HERRERA, J., concurring.

CATHAY PACIFIC AIRWAYS, LTD., petitioner,

DAVIDE, JR., C.J.:

a) Nominal damages in the amount of P100,000.00 for each plaintiff;

b) Moral damages in the amount of P2,000,000.00 for each plaintiff;

c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;

We resolve the ^irst issue in the af^irmative.

Now we come to the third issue on damages.

Article 2221 of the Civil Code provides:

We adopt as our own this observation of the Court of Appeals.

Salalima, Ungos and David for petitioners.

Maximo G. Rodriguez for private respondent.

GUTIERREZ, JR., J.:

The above amount is broken down as follows by the trial court:

M. H., RAKES, plaintiff-appellee,

A. D. Gibbs for appellant.

Article 1092 of the Civil Code provides:

And article 568 of the latter code provides:

And article 590 provides that the following shall be punished:

xxx xxx xxx

xxx xxx xxx

Arellano, C.J. Torres and Mapa, JJ., concur.

WILLARD, J., dissenting:

A. — Well, it was pretty bad character.

xxx xxx xxx

A. Familiar with what?

A. Oh, yes; I knew the condition of the track.

xxx xxx xxx

Q. And these were very of irregular shape, were they not?

A. They were in pretty bad condition.

xxx xxx xxx

A. Sure, it was in bad condition.