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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

L-36481-2 October 23, 1982 AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees, vs. PHILIPPINE STEAM NAVIGATION CO., defendant-appellant. Zoilo de la Cruz, Jr. & Associate for plaintiff-appellee Amparo Servando. Benedicto, Sumbingco & Associate for appellee Clara Uy Bico. Ross, Salcedo, del Rosario, Bito & Misa for defendant-appellant.

ESCOLIN, J.: This appeal, originally brought to the Court of Appeals, seeks to set aside the decision of the Court of First Instance of Negros Occidental in Civil Cases Nos. 7354 and 7428, declaring appellant Philippine Steam Navigation liable for damages for the loss of the appellees' cargoes as a result of a fire which gutted the Bureau of Customs' warehouse in Pulupandan, Negros Occidental. The Court of Appeals certified the case to Us because only pure questions of law are raised therein. The facts culled from the pleadings and the stipulations submitted by the parties are as follows: On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental, the following cargoes, to wit:
Clara Uy Bico 1,528 cavans of rice valued at P40,907.50; Amparo Servando 44 cartons of colored paper,

toys and general merchandise valued at P1,070.50;

as evidenced by the corresponding bills of lading issued by the appellant. 1 Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice 2 Appellees' claims for the value of said goods were rejected by the appellant. On the bases of the foregoing facts, the lower court rendered a decision, the decretal portion of which reads as follows:
WHEREFORE, judgment is rendered as follows: 1. In case No. 7354, the defendant is hereby ordered to pay the plaintiff Amparo C. Servando the aggregate sum of P1,070.50 with legal interest thereon from the date of the filing of the complaint until fully paid, and to pay the costs. 2. In case No. 7428, the defendant is hereby ordered to pay to plaintiff Clara Uy Bico the aggregate sum of P16,625.00 with legal interest thereon from the date of the filing of the complaint until fully paid, and to pay the costs.

Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. " The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation:
Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ...

We sustain the validity of the above stipulation; there is nothing therein that is contrary to law, morals or public policy.

Appellees would contend that the above stipulation does not bind them because it was printed in fine letters on the back-of the bills of lading; and that they did not sign the same. This argument overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals, promulgated June 29, 1979, 3 where the same issue was resolved in this wise:
While it may be true that petitioner had not signed the plane ticket (Exh. '12'), he is nevertheless bound by the provisions thereof. 'Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation'. It is what is known as a contract of 'adhesion', in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice J.B.L. Reyes, Lawyer's Journal, Jan. 31, 1951, p. 49).

Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of the basic principle of law written in Article 1 1 7 4 of the Civil Code:
Article 1174. Except in cases expressly specified 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.

Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability for non-performance. The Partidas, 4 the antecedent of Article 1174 of the Civil Code, defines 'caso fortuito' as 'an event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers.' In its dissertation of the phrase 'caso fortuito' the Enciclopedia Juridicada Espanola 5 says: "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 fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor." In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event. There is nothing in the record to show that appellant carrier ,incurred in delay in the performance of its obligation. It appears that appellant had not only notified appellees of the arrival of their shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand, appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.

Nor can the appellant or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with their knowledge and consent. Since the warehouse belonged to and was maintained by the government, it would be unfair to impute negligence to the appellant, the latter having no control whatsoever over the same. The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio 6, where this Court held the defendant liable for damages arising from a fire caused by the negligence of the defendant's employees while loading cases of gasoline and petroleon products. But unlike in the said case, there is not a shred of proof in the present case that the cause of the fire that broke out in the Custom's warehouse was in any way attributable to the negligence of the appellant or its employees. Under the circumstances, the appellant is plainly not responsible. WHEREFORE, the judgment appealed from is hereby set aside. No costs. SO ORDERED. Makasiar (Chairman), Concepcion, Jr., Guerrero, Abad Santos and De Castro, JJ., concur.

Separate Opinions

AQUINO, J., concurring: I concur. Under article 1738 of the Civil Code "the extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in the warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them". From the time the goods in question were deposited in the Bureau of Customs' warehouse in the morning of their arrival up to two o' clock in the afternoon of the same day, when the warehouse was burned, Amparo C. Servando and Clara Uy Bico, the consignees, had reasonable opportunity to remove the goods. Clara had removed more than one-half of the rice consigned to her. Moreover, the shipping company had no more control and responsibility over the goods after they were deposited in the customs warehouse by the arrastre and stevedoring operator.

No amount of extraordinary diligence on the part of the carrier could have prevented the loss of the goods by fire which was of accidental origin. Under those circumstances, it would not be legal and just to hold the carrier liable to the consignees for the loss of the goods. The consignees should bear the loss which was due to a fortuitous event.

Separate Opinions AQUINO, J., concurring: I concur. Under article 1738 of the Civil Code "the extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in the warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them". From the time the goods in question were deposited in the Bureau of Customs' warehouse in the morning of their arrival up to two o' clock in the afternoon of the same day, when the warehouse was burned, Amparo C. Servando and Clara Uy Bico, the consignees, had reasonable opportunity to remove the goods. Clara had removed more than one-half of the rice consigned to her. Moreover, the shipping company had no more control and responsibility over the goods after they were deposited in the customs warehouse by the arrastre and stevedoring operator. No amount of extraordinary diligence on the part of the carrier could have prevented the loss of the goods by fire which was of accidental origin. Under those circumstances, it would not be legal and just to hold the carrier liable to the consignees for the loss of the goods. The consignees should bear the loss which was due to a fortuitous event. Footnotes
1 Exhibits A, B, C, D, E, F, G and H. 2 Par. IV, Complaint; p. 23, Record on Appeal. Page 836 3 91 SCRA 224.

4 Law 11, Title 33, Partida 7. 5 Enciclopedia Juridicada Espanola. 6 43 Phil. 511.

Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION
G.R. No. L-53401 November 6, 1989 THE ILOCOS NORTE ELECTRIC COMPANY, petitioner, vs. HONORABLE COURT OF APPEALS, (First Division) LILIAN JUAN LUIS, JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA JUAN CARAG, and PURISIMA JUAN, respondents. Herman D. Coloma for petitioner. Glicerio S. Ferrer for private respondents.

PARAS, J.: Sought to be reversed in this petition is the Decision * of the respondent Court of Appeals' First Division, setting aside the judgment of the then Court of First Instance (CFI) of Ilocos Norte, with the following dispositive portion:
WHEREFORE, the appealed judgment is hereby set aside and another rendered in its stead whereby defendant is hereby sentenced to pay plaintiffs actual damages of P30,229.45; compensatory damages of P50,000.00; exemplary damages of P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in both instances. (p. 27 Rollo)

Basically, this case involves a clash of evidence whereby both patties strive for the recognition of their respective versions of the scenario from which the disputed claims originate. The respondent Court of Appeals (CA) summarized the evidence of the parties as follows:
From the evidence of plaintiffs it appears that in the evening of June 28 until the early morning of June 29, 1967 a strong typhoon by the code name "Gening" buffeted the province of Ilocos Norte, bringing heavy rains and consequent flooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the typhoon had abated and when the floodwaters were beginning to recede the deceased Isabel Lao Juan, fondly called Nana Belen, ventured out of the house of her son-in-law, Antonio Yabes, on No. 19 Guerrero Street, Laoag City, and proceeded northward towards the direction of the Five Sisters Emporium, of which she was the owner and proprietress, to look after the merchandise therein that might have been damaged. Wading in waist-deep flood on Guerrero, the deceased was followed by Aida Bulong, a Salesgirl at the Five Sisters Grocery, also owned by the deceased, and by Linda Alonzo Estavillo, a ticket seller at the YJ Cinema, which was partly owned by the deceased. Aida and Linda walked side by side at a distance of between 5 and 6 meters behind the deceased, Suddenly, the deceased screamed "Ay" and quickly sank into the water. The two girls attempted to help, but fear dissuaded them from doing so because on the spot where the deceased sank they saw an electric wire dangling from a post and moving in snake-like fashion in the water. Upon their shouts for help, Ernesto dela Cruz came out of the house of Antonio Yabes. Ernesto tried to go to the deceased, but at four meters away from her he turned back shouting that the water was grounded. Aida and Linda prodded Ernesto to seek help from Antonio Yabes at the YJ Cinema building which was four or five blocks away.

When Antonio Yabes was informed by Ernesto that his mother-in law had been electrocuted, he acted immediately. With his wife Jane, together with Ernesto and one Joe Ros, Yabes passed by the City Hall of Laoag to request the police to ask the people of defendant Ilocos Norte Electric Company or INELCO to cut off the electric current. Then the party waded to the house on Guerrero Street. The floodwater was receding and the lights inside the house were out indicating that the electric current had been cut off in Guerrero. Yabes instructed his boys to fish for the body of the deceased. The body was recovered about two meters from an electric post. In another place, at about 4:00 A.M. on that fateful date, June 29, 1967, Engineer Antonio Juan, Power Plant Engineer of the National Power Corporation at the Laoag Diesel-Electric Plant, noticed certain fluctuations in their electric meter which indicated such abnormalities as grounded or short-circuited lines. Between 6:00 and 6:30 A.M., he set out of the Laoag NPC Compound on an inspection. On the way, he saw grounded and disconnected lines. Electric lines were hanging from the posts to the ground. Since he could not see any INELCO lineman, he decided to go to the INELCO Office at the Life Theatre on Rizal Street by way of Guerrero. As he turned right at the intersection of Guerrero and Rizal, he saw an electric wire about 30 meters long strung across the street "and the other end was seeming to play with the current of the water." (p. 64, TSN, Oct. 24, 1972) Finding the Office of the INELCO still closed, and seeing no lineman therein, he returned to the NPC Compound. At about 8:10 A.M., Engr. Juan went out of the compound again on another inspection trip. Having learned of the death of Isabel Lao Juan, he passed by the house of the deceased at the corner of Guerrero and M.H. del Pilar streets to which the body had been taken. Using the resuscitator which was a standard equipment in his jeep and employing the skill he acquired from an in service training on resuscitation, he tried to revive the deceased. His efforts proved futile. Rigor mortis was setting in. On the left palm of the deceased, Engr. Juan noticed a hollow wound. Proceeding to the INELCO Office, he met two linemen on the way. He told them about the grounded lines of the INELCO In the afternoon of the same day, he went on a third inspection trip preparatory to the restoration of power. The dangling wire he saw on Guerrero early in the morning of June 29, 1967 was no longer there. Many people came to the house at the corner of Guerrero and M.H. del Pilar after learning that the deceased had been electrocuted. Among the sympathizers was Dr. Jovencio Castro, Municipal Health Officer of Sarrat, Ilocos Norte. Upon the request of the relatives of the deceased, Dr. Castro examined the body at about 8:00 A.M. on June 29, 1967. The skin was grayish or, in medical parlance, cyanotic, which indicated death by electrocution. On the left palm, the doctor found an "electrically charged wound" (Exh. C-1: p. 101, TSN, Nov. 28, 1972) or a first degree burn. About the base of the thumb on the left hand was a burned wound. (Exh. C-2, pp. 102-103, Ibid.) The certificate of death prepared by Dr. Castro stated the cause of' death as ,'circulatory shock electrocution" (Exh. I; p. 103, Ibid.). In defense and exculpation, defendant presented the testimonies of its officers and employees, namely, Conrado Asis, electric engineer; Loreto Abijero, collector-inspector; Fabico Abijero, lineman; and Julio Agcaoili, president-manager of INELCO Through the testimonies of these witnesses, defendant sought to prove that on and even before June 29, 1967 the electric service system of the INELCO in the whole franchise area, including Area No. 9 which covered the residence of Antonio Yabes at No. 18 Guerrero Street, did not suffer from any defect that might constitute a hazard to life and property. The service lines, devices and other INELCO equipment in Area No. 9 had been newly-installed prior to the date in question. As a public service operator and in line with its business of supplying electric current to the public, defendant had installed safety devices to prevent and avoid injuries to persons and damage to property in case of natural calamities such as floods, typhoons, fire and others. Defendant had 12 linesmen charged with the duty of making a round-the-clock check-up of the areas respectively assigned to them. Defendant asserts that although a strong typhoon struck the province of Ilocos Norte on June 29, 1967, putting to streets of Laoag City under water, only a few known places in Laoag were reported to have suffered damaged electric lines, namely, at the southern approach of the Marcos Bridge which was washed away and where the INELCO lines and posts collapsed; in the eastern part near the residence of the late Governor Simeon Mandac; in the far north near the defendant's power plant at the corner of Segundo and Castro Streets, Laoag City and at the far northwest side, near the premises of the Ilocos Norte National High School. Fabico Abijero, testified that in the early morning before 6 o'clock on June 29, 1967 he passed by the intersection of Rizal and Guerrero Streets to switch off the street lights in Area No. 9. He did not see any cut or broken wires in or near the vicinity. What he saw were many people fishing out the body of Isabel Lao Juan. A witness in the person of Dr. Antonio Briones was presented by the defense to show that the deceased could not have died of electrocution Substantially, the testimony of the doctor is as follows: Without an autopsy on the cadaver of the victim, no doctor, not even a medicolegal expert, can speculate as to the real cause of death. Cyanosis could not have been found in the body of the deceased three hours after her death, because cyanosis which means lack of oxygen circulating in the blood and rendering the color of the skin purplish, appears only in a live person. The presence of the elongated burn in the left palm of the deceased (Exhibits C-1 and C-2) is not sufficient to establish her death by electrocution; since burns caused by electricity are more or less round in shape and with points of entry and exit. Had the deceased held the lethal wire for a long time, the laceration in her palm would have been bigger and the injury more massive. (CA Decision, pp. 18-21, Rollo)

An action for damages in the aggregate amount of P250,000 was instituted by the heirs of the deceased with the aforesaid CFI on June 24, 1968. In its Answer (Vide, Record on Appeal, p. 55, Rollo), petitioner advanced the theory, as a special defense, that the deceased could have died simply either by drowning or by electrocution due to negligence attributable only to herself and not to petitioner. In this regard, it was

pointed out that the deceased, without petitioner's knowledge, caused the installation of a burglar deterrent by connecting a wire from the main house to the iron gate and fence of steel matting, thus, charging the latter with electric current whenever the switch is on. Petitioner then conjectures that the switch to said burglar deterrent must have been left on, hence, causing the deceased's electrocution when she tried to open her gate that early morning of June 29, 1967. After due trial, the CFI found the facts in favor of petitioner and dismissed the complaint but awarded to the latter P25,000 in moral damages and attorney's fees of P45,000. An appeal was filed with the CA which issued the controverted decision. In this petition for review the petitioner assigns the following errors committed by the respondent CA:
1. The respondent Court of Appeals committed grave abuse of discretion and error in considering the purely hearsay alleged declarations of Ernesto de la Cruz as part of the res gestae. 2. The respondent Court of Appeals committed grave abuse of discretion and error in holding that the strong typhoon "Gening" which struck Laoag City and Ilocos Norte on June 29, 1967 and the flood and deluge it brought in its wake were not fortuitous events and did not exonerate petitionercompany from liability for the death of Isabel Lao Juan. 3. The respondent Court of Appeals gravely abused its discretion and erred in not applying the legal principle of "assumption of risk" in the present case to bar private respondents from collecting damages from petitioner company. 4. That the respondent Court of Appeals gravely erred and abused its discretion in completely reversing the findings of fact of the trial court. 5. The findings of fact of the respondent Court of Appeals are reversible under the recognized exceptions. 6. The trial court did not err in awarding moral damages and attorney's fees to defendant corporation, now petitioner company. 7. Assuming arguendo that petitioner company may be held liable from the death of the late Isabel Lao Juan, the damages granted by respondent Court of Appeals are improper and exhorbitant. (Petitioners Memorandum, p. 133, Rollo)

Basically, three main issues are apparent: (1) whether or not the deceased died of electrocution; (2) whether or not petitioner may be held liable for the deceased's death; and (3) whether or not the respondent CA's substitution of the trial court's factual findings for its own was proper. In considering the first issue, it is Our view that the same be resolved in the affirmative. By a preponderance of evidence, private respondents were able to show that the deceased died of electrocution, a conclusion which can be primarily derived from the photographed burnt wounds (Exhibits "C", "C-1", "C-2") on the left palm of the former. Such wounds undoubtedly point to the fact that the deceased had clutched a live wire of the petitioner. This was corroborated by the testimony of Dr. Jovencio Castro who actually examined the body of the deceased a few hours after the death and described the said burnt wounds as a "first degree burn" (p. 144, TSN, December 11, 1972) and that they were "electrically charged" (p. 102, TSN, November 28, 1972). Furthermore, witnesses Linda Alonzo Estavillo and Aida Bulong added that after the deceased screamed "Ay" and sank into the water, they tried to render some help but were overcome with fear by the sight of an electric wire dangling from an electric post, moving in the water in a snake-like fashion (supra). The foregoing therefore justifies the respondent CA in concluding that "(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion than that they were "burns," and there was nothing else in the street where the victim was wading thru which could cause a burn except the dangling live wire of defendant company" (CA Decision, p. 22, Rollo). But in order to escape liability, petitioner ventures into the theory that the deceased was electrocuted, if such was really the case when she tried to open her steel gate, which was electrically charged by an

electric wire she herself caused to install to serve as a burglar deterrent. Petitioner suggests that the switch to said burglar alarm was left on. But this is mere speculation, not backed up with evidence. As required by the Rules, "each party must prove his own affirmative allegations." (Rule 131, Sec. 1). Nevertheless, the CA significantly noted that "during the trial, this theory was abandoned" by the petitioner (CA Decision, p. 23, Rollo). Furthermore the CA properly applied the principle of res gestae. The CA said:
Linda Alonzo Estavillo, a ticket seller, and Aida Bulong, a salesgirl, were with the deceased during that fateful morning of June 29, 1967. This Court has not been offered any sufficient reason to discredit the testimonies of these two young ladies. They were one in the affirmation that the deceased, while wading in the waist-deep flood on Guerrero Street five or six meters ahead of them, suddenly screamed "Ay" and quickly sank into the water. When they approached the deceased to help, they were stopped by the sight of an electric wire dangling from a post and moving in snake-like fashion in the water. Ernesto dela Cruz also tried to approach the deceased, but he turned back shouting that the water was grounded. These bits of evidence carry much weight. For the subject of the testimonies was a startling occurrence, and the declarations may be considered part of the res gestae. (CA Decision, p. 21, Rollo)

For the admission of the res gestae in evidence, the following requisites must be present: (1) that the principal act, the res gestae, be a startling occurrence; (2) that the statements were made before the declarant had time to contrive or devise; (3) that the statements made must concern the occurrence in question and its immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs. Balbas, 122 SCRA 959). We do not find any abuse of discretion on the CA' part in view of the satisfaction of said requisites in the case at bar. The statements made relative to the startling occurrence are admitted in evidence precisely as an exception to the hearsay rule on the grounds of trustworthiness and necessity. "Trustworthiness" because the statements are made instinctively (Wesley vs. State, 53 Ala. 182), and "necessity" because such natural and spontaneous utterances are more convincing than the testimony of the same person on the stand (Mobile vs. Ascraft 48 Ala. 31). Therefore, the fact that the declarant, Ernesto de la Cruz, was not presented to testify does not make the testimony of Linda Alonzo Estavillo and Aida Bulong hearsay since the said declaration is part of the res gestae. Similarly, We considered part of the res gestae a conversation between two accused immediately after commission of the crime as overheard by a prosecution witness (People vs. Reyes, 82 Phil. 563). While it may be true that, as petitioner argues (vide petitioner's Memorandum, p. 135, Rollo), Ernesto de la Cruz was not an actual witness to the instant when the deceased sank into the waist-deep water, he acted upon the call of help of Aida Bulong and Linda Alonzo Estavillo with the knowledge of, and immediately after, the sinking of the deceased. In fact the startling event had not yet ceased when Ernesto de la Cruz entered the scene considering that the victim remained submerged. Under such a circumstance, it is undeniable that a state of mind characterized by nervous excitement had been triggered in Ernesto de la Cruz's being as anybody under the same contingency could have experienced. As such, We cannot honestly exclude his shouts that the water was grounded from the res gestae just because he did not actually see the sinking of the deceased nor hear her scream "Ay." Neither can We dismiss the said declaration as a mere opinion of Ernesto de la Cruz. While We concede to the submission that the statement must be one of facts rather than opinion, We cannot agree to the proposition that the one made by him was a mere opinion. On the contrary, his shout was a translation of an actuality as perceived by him through his sense of touch. Finally, We do not agree that the taking of Ernesto de la Cruz' testimony was suppressed by the private respondents, thus, is presumed to be adverse to them pursuant to Section 5(e), Rule 131. For the application of said Rule as against a party to a case, it is necessary that the evidence alleged to be suppressed is available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil. 953). The presumption does not operate if the evidence in question is equally available to both parties (StaplesHowe Printing Co. vs. Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records that

petitioner could have called Ernesto de la Cruz to the witness stand. This, precisely, was Linda Alonzo Estavillo's suggestion to petitioner's counsel when she testified on cross examination:
Q. And that Erning de la Cruz, how far did he reach from the gate of the house? A. Well, you can ask that matter from him sir because he is here. (TSN, p. 30, 26 Sept. 1972)

The foregoing shows that petitioner had the opportunity to verify the declarations of Ernesto de la Cruz which, if truly adverse to private respondent, would have helped its case. However, due to reasons known only to petitioner, the opportunity was not taken. Coming now to the second issue, We tip the scales in the private respondents' favor. The respondent CA acted correctly in disposing the argument that petitioner be exonerated from liability since typhoons and floods are fortuitous events. While it is true that typhoons and floods are considered Acts of God for which no person may be held responsible, it was not said eventuality which directly caused the victim's death. It was through the intervention of petitioner's negligence that death took place. We subscribe to the conclusions of the respondent CA when it found:
On the issue whether or not the defendant incurred liability for the electrocution and consequent death of the late Isabel Lao Juan, defendant called to the witness-stand its electrical engineer, chief lineman, and lineman to show exercise of extraordinary diligence and to negate the charge of negligence. The witnesses testified in a general way about their duties and the measures which defendant usually adopts to prevent hazards to life and limb. From these testimonies, the lower court found "that the electric lines and other equipment of defendant corporation were properly maintained by a well-trained team of lineman, technicians and engineers working around the clock to insure that these equipments were in excellent condition at all times." (P. 40, Record on Appeal) The finding of the lower court, however, was based on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the date in question, and not on the occasion of the emergency situation brought about by the typhoon. The lower court made a mistake in assuming that defendant's employees worked around the clock during the occurrence of the typhoon on the night of June 28 and until the early morning of June 29, 1967, Engr. Antonio Juan of the National Power Corporation affirmed that when he first set out on an inspection trip between 6:00 and 6:30 A.M. on June 29, 1967, he saw grounded and disconnected electric lines of the defendant but he saw no INELCO lineman. The INELCO Office at the Life theatre on Rizal Street was still closed. (pp. 63-64, TSN, Oct. 24, 1972) Even the witnesses of defendant contradict the finding of the lower court. Conrado Asis, defendant's electrical engineer, testified that he conducted a general inspection of the franchise area of the INELCO only on June 30, 1967, the day following the typhoon. The reason he gave for the delay was that all their vehicles were submerged. (p. 337, TSN, July 20, 1973) According to Asis, he arrived at his office at 8:00 A.M. on June 30 and after briefing his men on what to do they started out. (p. 338, lbid) One or two days after the typhoon, the INELCO people heard "rumors that someone was electrocuted" so he sent one of his men to the place but his man reported back that there was no damaged wire. (p. 385, Id.) Loreto Abijero, chief lineman of defendant, corroborated Engr. Juan. He testified that at about 8:00 A.M. on June 29, 1967 Engr. Juan came to the INELCO plant and asked the INELCO people to inspect their lines. He went with Engr. Juan and their inspection lasted from 8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan. 28, 1975) Fabico Abijero lineman of defendant, testified that at about 6:00 on June 29, 1967 the typhoon ceased. At that time, he was at the main building of the Divine Word College of Laoag where he had taken his family for refuge. (pp. 510-511, Ibid.) In times of calamities such as the one which occurred in Laoag City on the night of June 28 until the early hours of June 29, 1967, extraordinary diligence requires a supplier of electricity to be in constant vigil to prevent or avoid any probable incident that might imperil life or limb. The evidence does not show that defendant did that. On the contrary, evidence discloses that there were no men (linemen or otherwise) policing the area, nor even manning its office. (CA Decision, pp. 24-25, Rollo)

Indeed, under the circumstances of the case, petitioner was negligent in seeing to it that no harm is done to the general public"... considering that electricity is an agency, subtle and deadly, the measure of care required of electric companies must be commensurate with or proportionate to the danger. The duty of exercising this high degree of diligence and care extends to every place where persons have a right to be" (Astudillo vs. Manila Electric, 55 Phil. 427). The negligence of petitioner having been shown, it may not now absolve itself from liability by arguing that the victim's death was solely due to a fortuitous event. "When an act of God combines or concurs with the negligence of the defendant to produce an injury, the defendant is liable if the injury would not have resulted but for his own negligent conduct or omission" (38 Am. Jur., p. 649).

Likewise, the maxim "volenti non fit injuria" relied upon by petitioner finds no application in the case at bar. It is imperative to note the surrounding circumstances which impelled the deceased to leave the comforts of a roof and brave the subsiding typhoon. As testified by Linda Alonzo Estavillo (see TSN, p. 5, 26 Sept. 1972) and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased, accompanied by the former two, were on their way to the latter's grocery store "to see to it that the goods were not flooded." As such, shall We punish her for exercising her right to protect her property from the floods by imputing upon her the unfavorable presumption that she assumed the risk of personal injury? Definitely not. For it has been held that a person is excused from the force of the rule, that when he voluntarily assents to a known danger he must abide by the consequences, if an emergency is found to exist or if the life or property of another is in peril (65A C.S.C. Negligence(174(5), p. 301), or when he seeks to rescue his endangered property (Harper and James, "The Law of Torts." Little, Brown and Co., 1956, v. 2, p. 1167). Clearly, an emergency was at hand as the deceased's property, a source of her livelihood, was faced with an impending loss. Furthermore, the deceased, at the time the fatal incident occurred, was at a place where she had a right to be without regard to petitioner's consent as she was on her way to protect her merchandise. Hence, private respondents, as heirs, may not be barred from recovering damages as a result of the death caused by petitioner's negligence (ibid., p. 1165, 1166). But petitioner assails the CA for having abused its discretion in completely reversing the trial court's findings of fact, pointing to the testimonies of three of its employees its electrical engineer, collectorinspector, lineman, and president-manager to the effect that it had exercised the degree of diligence required of it in keeping its electric lines free from defects that may imperil life and limb. Likewise, the said employees of petitioner categorically disowned the fatal wires as they appear in two photographs taken on the afternoon of June 29, 1967 (Exhs. "D" and "E"), suggesting that said wires were just hooked to the electric post (petitioner's Memorandum, p. 170, Rollo). However, as the CA properly held, "(t)he finding of the lower court ... was based on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the date in question, and not on the occasion of the emergency situation brought about by the typhoon" (CA Decision, p. 25, Rollo). And as found by the CA, which We have already reiterated above, petitioner was in fact negligent. In a like manner, petitioner's denial of ownership of the several wires cannot stand the logical conclusion reached by the CA when it held that "(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion than that they were 'burns', and there was nothing else in the street where the victim was wading thru which could cause a burn except the dangling live wire of defendant company" (supra). "When a storm occurs that is liable to prostrate the wires, due care requires prompt efforts to discover and repair broken lines" (Cooley on Torts, 4th ed., v. 3, p. 474). The fact is that when Engineer Antonio Juan of the National Power Corporation set out in the early morning of June 29, 1967 on an inspection tour, he saw grounded and disconnected lines hanging from posts to the ground but did not see any INELCO lineman either in the streets or at the INELCO office (vide, CA Decision, supra). The foregoing shows that petitioner's duty to exercise extraordinary diligence under the circumstance was not observed, confirming the negligence of petitioner. To aggravate matters, the CA found:
. . .even before June 28 the people in Laoag were already alerted about the impending typhoon, through radio announcements. Even the fire department of the city announced the coming of the big flood. (pp. 532-534, TSN, March 13, 1975) At the INELCO irregularities in the flow of electric current were noted because "amperes of the switch volts were moving". And yet, despite these danger signals, INELCO had to wait for Engr. Juan to request that defendant's switch be cut off but the harm was done. Asked why the delay, Loreto Abijero answered that he "was not the machine tender of the electric plant to switch off the current." (pp. 467-468, Ibid.) How very characteristic of gross inefficiency! (CA Decision, p. 26, Rollo)

From the preceding, We find that the CA did not abuse its discretion in reversing the trial court's findings but tediously considered the factual circumstances at hand pursuant to its power to review questions of fact raised from the decision of the Regional Trial Court, formerly the Court of First Instance (see sec. 9, BP 129). In considering the liability of petitioner, the respondent CA awarded the following in private respondent's favor: P30,229.45 in actual damages (i.e., P12,000 for the victim's death and P18,229.45 for funeral expenses); P50,000 in compensatory damages, computed in accordance with the formula set in the Villa-

Rey Transit case (31 SCRA 511) with the base of P15,000 as average annual income of the deceased; P10,000 in exemplary damages; P3,000 attorney's fees; and costs of suit. Except for the award of P12,000 as compensation for the victim's death, We affirm the respondent CA's award for damages and attorney's fees. Pusuant to recent jurisprudence (People vs. Mananquil, 132 SCRA 196; People vs. Traya, 147 SCRA 381), We increase the said award of P12,000 to P30,000, thus, increasing the total actual damages to P48,229.45. The exclusion of moral damages and attorney's fees awarded by the lower court was properly made by the respondent CA, the charge of malice and bad faith on the part of respondents in instituting his case being a mere product of wishful thinking and speculation. Award of damages and attorney's fees is unwarranted where the action was filed in good faith; there should be no penalty on the right to litigate (Espiritu vs. CA, 137 SCRA 50). If damage results from a person's exercising his legal rights, it is damnum absque injuria (Auyong Hian vs. CTA, 59 SCRA 110). WHEREFORE, the questioned decision of the respondent, except for the slight modification that actual damages be increased to P48,229.45 is hereby AFFIRMED. SO ORDERED. Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
* Penned by then Acting Presiding Justice Lourdes P. San Diego and concurred in by Justices Samuel F. Reyes and Lino M. Patajo.

The Lawphil Project - Arellano Law Foundation

THIRD DIVISION G.R. No. 79688. February 1, 1996 PLEASANTVILLE DEVELOPMENT CORPORATION, Petitioner, vs. COURT OF APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED JARDINICO, Respondent. DECISION PANGANIBAN, J.: Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the owners agent, a builder in good faith? This is the main issue resolved in this petition for review on certiorari to reverse the Decision 1 of the Court of Appeals 2 in CA-G.R. SP No. 11040, promulgated on August 20, 1987.

By resolution dated November 13, 1995, the First Division of this Court resolved to transfer this case (along with several others) to the Third Division. After due deliberation and consultation, the Court assigned the writing of this Decision to the undersigned ponente. The Facts The facts, as found by respondent Court, are as follows: Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot 9 was vacant. Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on December 19, 1978 Transfer Certificate of Title No. 106367 in his name. It was then that he discovered that improvements had been introduced on Lot 9 by respondent Wilson Kee, who had taken possession thereof. It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner. Under the Contract to Sell on Installment, Kee could possess the lot even before the completion of all installment payments. On January 20, 1975, Kee paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for the preparation of the lot plan. These amounts were paid prior to Kees taking actual possession of Lot 8. After the preparation of the lot plan and a copy thereof given to Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kees wife, Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store, an auto repair shop and other improvements on the lot. After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach an amicable settlement, but failed. On January 30, 1981, Jardinicos lawyer wrote Kee, demanding that the latter remove all improvements and vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment with damages against Kee. Kee, in turn, filed a third-party complaint against petitioner and CTTEI. The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. It further ruled that petitioner and CTTEI could not successfully invoke as a defense the failure of Kee to give notice of his intention to begin construction required under paragraph 22 of the Contract to Sell on Installment and his having built a sari-sari store without. the prior approval of petitioner required under paragraph 26 of said contract, saying that the purpose of these requirements was merely to regulate the type of improvements to be constructed on the lot 3 .

However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8 for the latters failure to pay the installments due, and that Kee had not contested the rescission. The rescission was effected in 1979, before the complaint was instituted. The MTCC concluded that Kee no longer had any right over the lot subject of the contract between him and petitioner. Consequently, Kee must pay reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim reimbursement for the improvements he introduced on said lot. The MTCC thus disposed: "IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows: 1. Defendant Wilson Kee is ordered to vacate tithe premises of Lot 9, covered by TCT No. 106367 and to remove all structures and improvements he introduced thereon; 2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P 15.00 a day computed from the time this suit was filed on March 12, 1981 until he actually vacates the premises. This amount shall bear interests (sic) at the rate of 12 per cent (sic) per annum. 3. Third-Party Defendant CT. Torres Enterprises, Inc. and Pleasantville Subdivision are ordered to pay the plaintiff jointly and severally the sum of P3,000.00 as attorneys fees and P700.00 as cost and litigation expenses." 4 On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were not at fault or were not negligent, there being no preponderant evidence to show that they directly participated in the delivery of Lot 9 to Kee. 5 It found Kee a builder in bad faith. It further ruled that even assuming arguendo that Kee was acting in good faith, he was, nonetheless, guilty of unlawfully usurping the possessory right of Jardinico over Lot 9 from the time he was served with notice to vacate said lot, and thus was liable for rental. The RTC thus disposed: "WHEREFORE, the decision appealed from is affirmed with respect to the order against the defendant to vacate the premises of Lot No. 9 covered by Transfer Certificate of Title No. T106367 of the land records of Bacolod City; the removal of all structures and improvements introduced thereon at his expense and the payment to plaintiff (sic) the sum of Fifteen (P 15.00) Pesos a day as reasonable rental to be computed from January 30, 1981, the date of the demand, and not from the date of the filing of the complaint, until he had vacated (sic) the premises, with interest thereon at 12% per annum. This Court further renders judgment against the defendant to pay the plaintiff the sum of Three Thousand (P3,000.00) Pesos as attorneys fees, plus costs of litigation. "The third-party complaint against Third-Party Defendants Pleasantville Development Corporation and C.T. Torres Enterprises, Inc. is dismissed. The order against Third-Party Defendants to pay attorneys fees to plaintiff and costs of litigation is reversed." 6

Following the denial of his motion for reconsideration on October 20, 1986, Kee appealed directly to the Supreme Court, which referred the matter to the Court of Appeals. The appellate court ruled that Kee was a builder in good faith, as he was unaware of the "mixup" when he began construction of the improvements on Lot 8. It further ruled that the erroneous delivery was due to the negligence of CTTEI, and that such wrong delivery was likewise imputable to its principal, petitioner herein. The appellate court also ruled that the award of rentals was without basis. Thus, the Court of Appeals disposed: "WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and judgment is rendered as follows: 1. Wilson Kee is declared a builder in good faith with respect to the improvements he introduced on Lot 9, and is entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code. 2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable under the following circumstances: a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered useless; b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the value of Lot 9 that Kee should pay to Jardinico. 3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses. 4. The award of rentals to Jardinico is dispensed with. "Furthermore, the case is REMANDED to the court of origin for the determination of the actual value of the improvements and the property (Lot 9), as well as for further proceedings in conformity with Article 448 of the New Civil Code." 7 Petitioner then filed the instant petition against Kee, Jardinico and CTTEI. The Issues The petition submitted the following grounds to justify a review of the respondent Courts Decision, as follows:

"1. The Court of Appeals has decided the case in a way probably not in accord with law or the the (sic) applicable decisions of the Supreme Court on third-party complaints, by ordering thirdparty defendants to pay the demolition expenses and/or price of the land; "2. The Court of Appeals has so far departed from the accepted course of judicial proceedings, by granting to private respondent-Kee the rights of a builder in good faith in excess of what the law provides, thus enriching private respondent Kee at the expense of the petitioner; "3. In the light of the subsequent events or circumstances which changed the rights of the parties, it becomes imperative to set aside or at least modify the judgment of the Court of Appeals to harmonize with justice and the facts; "4. Private respondent-Kee in accordance with the findings of facts of the lower court is clearly a builder in bad faith, having violated several provisions of the contract to sell on installments; "5. The decision of the Court of Appeals, holding the principal, Pleasantville Development Corporation (liable) for the acts made by the agent in excess of its authority is clearly in violation of the provision of the law; "6. The award of attorneys fees is clearly without basis and is equivalent to putting a premium in (sic) court litigation." From these grounds, the issues could be re-stated as follows: (1) Was Kee a builder in good faith? (2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.? and (3) Is the award of attorneys fees proper? The First Issue: Good Faith Petitioner contends that the Court of Appeals erred in reversing the RTCs ruling that Kee was a builder in bad faith. Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals that Kee was a builder in good faith. We agree with the following observation of the Court of Appeals: "The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed the wrong property to Wilson Kee and his wife. It is highly improbable that a purchaser of a lot would knowingly and willingly build his residence on a lot owned by another, deliberately exposing himself and his family to the risk of being ejected from the land and losing all improvements thereon, not to mention the social humiliation that would follow.

"Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of his property. Lot 8 is covered by Transfer Certificate of Title No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-106367. Hence, under the Torrens system of land registration, Kee is presumed to have knowledge of the metes and bounds of the property with which he is dealing. x x x xxx xxx xxx "But as Kee is a layman not versed in the technical description of his property, he had to find a way to ascertain that what was described in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision developers agent and applied and paid for the relocation of the lot, as well as for the production of a lot plan by CTTEIs geodetic engineer. Upon Kees receipt of the map, his wife went to the subdivision site accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the land she was pointing to was indeed Lot 8. Having full faith and confidence in the reputation of CTTEI, and because of the companys positive identification of the property, Kee saw no reason to suspect that there had been a misdelivery. The steps Kee had taken to protect his interests were reasonable. There was no need for him to have acted ex-abundantia cautela, such as being present during the geodetic engineers relocation survey or hiring an independent geodetic engineer to countercheck for errors, for the final delivery of subdivision lots to their owners is part of the regular course of everyday business of CTTEI. Because of CTTEIs blunder, what Kee had hoped to forestall did in fact transpire. Kees efforts all went to naught." 8 Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw in his title. 9 And as good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee. 10 At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from petitioner. He was not aware that the lot delivered to him was not Lot 8. Thus, Kees good faith. Petitioner failed to prove otherwise. To demonstrate Kees bad faith, petitioner points to Kees violation of paragraphs 22 and 26 of the Contract of Sale on Installment. We disagree. Such violations have no bearing whatsoever on whether Kee was a builder in good faith, that is, on his state of mind at the time he built the improvements on Lot 9. These alleged violations may give rise to petitioners cause of action against Kee under the said contract (contractual breach), but may not be bases to negate the presumption that Kee was a builder in good faith. Petitioner also points out that, as found by the trial court, the Contract of Sale on Installment covering Lot 8 between it and Kee was rescinded long before the present action was instituted. This has no relevance on the liability of petitioner, as such fact does not negate the negligence of its agent in pointing out the wrong lot to Kee. Such circumstance is relevant only as it gives Jardinico a cause of action for unlawful detainer against Kee.

Petitioner next contends that Kee cannot "claim that another lot was erroneously pointed out to him" because the latter agreed to the following provision in the Contract of Sale on Installment, to wit: "13. The Vendee hereby declares that prior to the execution of his contract he/she has personally examined or inspected the property made subject-matter hereof, as to its location, contours, as well as the natural condition of the lots and from the date hereof whatever consequential change therein made due to erosion, the said Vendee shall bear the expenses of the necessary fillings, when the same is so desired by him/her." 11 The subject matter of this provision of the contract is the change of the location, contour and condition of the lot due to erosion. It merely provides that the vendee, having examined the property prior to the execution of the contract, agrees to shoulder the expenses resulting from such change. We do not agree with the interpretation of petitioner that Kee contracted away his right to recover damages resulting from petitioners negligence. Such waiver would be contrary to public policy and cannot be allowed. "Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law." 12 The Second Issue: Petitioners Liability Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC after ruling that there was no evidence from which fault or negligence on the part of petitioner and CTTEI can be inferred. The Court of Appeals disagreed and found CTTEI negligent for the erroneous delivery of the lot by Octaviano, its employee. Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the erroneous delivery of Lot 9 to Kee was an act which was clearly outside the scope of its authority, and consequently, CTTEI alone should be liable. It asserts that "while [CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was never authorized to deliver the wrong lot to Kee." 13 Petitioners contention is without merit. The rule is that the principal is responsible for the acts of the agent, done within the scope of his authority, and should bear the damage caused to third persons. 14 On the other hand, the agent who exceeds his authority is personally liable for the damage. 15 CTTEI was acting within its authority as the sole real estate representative of petitioner when it made the delivery to Kee. In acting within its scope of authority, it was, however, negligent. It is this negligence that is the basis of petitioners liability, as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.

Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July 24, 1987 entered into a deed of sale, wherein the former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of such deal. The deed of sale contained the following provision: "1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is now pending appeal with the Court of Appeals, regardless of the outcome of the decision shall be mutually disregarded and shall not be pursued by the parties herein and shall be considered dismissed and without effect whatsoever; 16 Kee asserts though that the "terms and conditions in said deed of sale are strictly for the parties thereto" and that "(t)here is no waiver made by either of the parties in said deed of whatever favorable judgment or award the honorable respondent Court of Appeals may make in their favor against herein petitioner Pleasantville Development Corporation and/or private respondent C.T. Torres Enterprises, Inc." 17 Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier stated, petitioners liability is grounded on the negligence of its agent. On the other hand, what the deed of sale regulates are the reciprocal rights of Kee and Jardinico; it stressed that they had reached an agreement independent of the outcome of the case. Petitioner further assails the following holding of the Court of Appeals: "2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable under the following circumstances: "a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered useless; "b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the value of Lot 9 that Kee should pay to Jardinico." 18 Petitioner contends that if the above holding would be carried out, Kee would be unjustly enriched at its expense. In other words, Kee would be -able to own the lot, as buyer, without having to pay anything on it, because the aforequoted portion of respondent Courts Decision would require petitioner and CTTEI jointly and solidarily to "answer" or reimburse Kee there for. We agree with petitioner. Petitioners liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner should be held liable for damages. Now, the extent and/or amount of damages to be awarded is a factual issue which should be determined after evidence is adduced. However, there is no

showing that such evidence was actually presented in the trial court; hence no damages could now be awarded. The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good faith, respectively, are regulated by law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for the Court of Appeals to make a "slight modification" in the application of such law, on the ground of "equity". At any rate, as it stands now, Kee and Jardinico have amicably settled through their deed of sale their rights and obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the dispositive portion of the Court of Appeals Decision [as reproduced above] holding petitioner and CTTEI solidarily liable. The Third Issue: Attorneys Fees The MTCC awarded Jardinico attorneys fees and costs in the amount of P3,000.00 and P700.00, respectively, as prayed for in his complaint. The RTC deleted the award, consistent with its ruling that petitioner was without fault or negligence. The Court of Appeals, however, reinstated the award of attorneys fees after ruling that petitioner was liable for its agents negligence. The award of attorneys fees lies within the discretion of the court and depends upon the circumstances of each case. 19 We shall not interfere with the discretion of the Court of Appeals. Jardinico was compelled to litigate for the protection of his interests and for the recovery of damages sustained as a result of the negligence of petitioners agent. 20 In sum, we rule that Kee is a builder in good faith. The disposition of the Court of Appeals that Kee "is entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code" is deleted, in view of the deed of sale entered into by Kee and Jardinico, which deed now governs the rights of Jardinico and Kee as to each other. There is also no further need, as ruled by the appellate Court, to remand the case to the court of origin "for determination of the actual value of the improvements and the property (Lot 9), as well as for further proceedings in conformity with Article 448 of the New Civil Code." WHEREFORE, the petition is partially GRANTED. The Decision of the Court of Appeals is hereby MODIFIED as follows: (1) Wilson Kee is declared a builder in good faith; (2) Petitioner Pleasantville Development Corporation and respondent C.T. Tones Enterprises, Inc. are declared solidarily liable for damages due to negligence; however, since the amount and/or extent of such damages was not proven during the trial, the same cannot now be quantified and awarded; (3) Petitioner Pleasantville Develpment Corporation and respondent C.T. Torres Enterprises, Inc. are ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses; and (4) The award of rentals to Jardinico is dispensed with.

SO ORDERED. Narvasa, C.J. (Chairman), Davide, Jr., and Melo, JJ., concur. Francisco, J., took no part. Member of the division in the CA which rendered the assailed decision.

Endnotes: -SUPREME COURT Manila EN BANC G.R. No. L-2075 November 29, 1949

MARGARITA AFIALDA, plaintiff-appellant, vs. BASILIO HISOLE and FRANCISCO HISOLE, defendants-appellees. Nicolas P. Nonato for appellant. Gellada, Mirasol and Ravena for appellees. REYES, J.: This is an action for damages arising from injury caused by an animal. The complaint alleges that the now deceased, Loreto Afialda, was employed by the defendant spouses as caretaker of their carabaos at a fixed compensation; that while tending the animals he was, on March 21, 1947, gored by one of them and later died as a consequence of his injuries; that the mishap was due neither to his own fault nor to force majeure; and that plaintiff is his elder sister and heir depending upon him for support. Before filing their answer, defendants moved for the dismissal of the complaint for lack of a cause of action, and the motion having been granted by the lower court, plaintiff has taken this appeal. Plaintiff seeks to hold defendants liable under article 1905 of the Civil Code, which reads: The possessor of an animal, or the one who uses the same, is liable for any damages it may cause, even if such animal should escape from him or stray away. This liability shall cease only in case, the damage should arise from force majeure or from the fault of the person who may have suffered it.

The question presented is whether the owner of the animal is liable when damage is caused to its caretaker. The lower court took the view that under the above-quoted provision of the Civil Code, the owner of an animal is answerable only for damages caused to a stranger, and that for damage caused to the caretaker of the animal the owner would be liable only if he had been negligent or at fault under article 1902 of the same code. Claiming that the lower court was in error, counsel for plaintiff contends that the article 1905 does not distinguish between damage caused to the caretaker and makes the owner liable whether or not he has been negligent or at fault. For authority counsel cites the following opinion which Manresa quotes from a decision of the Spanish Supreme Court: El articulo 1905 del codigo Civil no consienta otra interpretacion que la que, clara y evidentemente, se deriva de sus terminos literales, bastando, segun el mismo, que un animal cause perjuicio para que nasca la responsibilidad del dueno, aun no imputandose a este ninguna clase de culpa o negligencia, habida,sin duda, cuenta por el lgislador de que tal concepto de dueno es suficiente para que arrastre las consecuencias favorables o adversas de esta clase de propiedad, salvo la exception en el mismo contenida. (12 Manresa, Commentaries on the Spanish CivilCode, 573.) This opinion, however, appears to have been rendered in a case where an animal caused injury to a stranger or third person. It is therefore no authority for a case like the present where the person injured was the caretaker of the animal. The distinction is important. For the statute names the possessor or user of the animal as the person liable for "any damages it may cause," and this for the obvious reason that the possessor or user has the custody and control of the animal and is therefore the one in a position to prevent it from causing damage. In the present case, the animal was in custody and under the control of the caretaker, who was paid for his work as such. Obviously, it was the caretaker's business to try to prevent the animal from causing injury or damage to anyone, including himself. And being injured by the animal under those circumstances, was one of the risks of the occupation which he had voluntarily assumed and for which he must take the consequences. In a decision of the Spanish Supreme Court, cited by Manresa in his Commentaries (Vol. 12, p. 578), the death of an employee who was bitten by a feline which his master had asked him to take to his establishment was by said tribunal declared to be "a veritable accident of labor" which should come under the labor laws rather than under article 1905 of the Civil Code. The present action, however, is not brought under the Workmen's Compensation Act, there being no allegation that, among other things, defendant's business, whatever that might be, had a gross income of P20,000. As already stated, defendant's liability is made to rest on article 1905 of the Civil Code. but action under that article is not tenable for the reasons already stated. On the other hand, if action is to be based on article 1902 of the Civil Code, it is essential that there be fault or negligence on the part of the defendants as owners of the animal that caused the damage. But the complaint contains no allegation on those points.

There being no reversible error in the order appealed from, the same is hereby affirmed, but without costs in view of the financial situation of the appellant. Moran, C.J., Ozaeta, Paras, Bengzon, Padilla, Tuason, Montemayor and Torres, JJ., concur. [G.R. No. 113003. October 17, 1997] ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, vs. COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY and JASMIN TUMBOY, respondents. DECISION ROMERO, J.: In this petition for review on certiorari of the decision of the Court of Appeals, the issue is whether or not the explosion of a newly installed tire of a passenger vehicle is a fortuitous event that exempts the carrier from liability for the death of a passenger. On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City. Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus exploded. The bus fell into a ravine around three (3) feet from the road and struck a tree. The incident resulted in the death of 28-year-old Tito Tumboy and physical injuries to other passengers. On November 21, 1988, a complaint for breach of contract of carriage, damages and attorneys fees was filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver, before the Regional Trial Court of Davao City. When the defendants therein filed their answer to the complaint, they raised the affirmative defense of caso fortuito. They also filed a third-party complaint against Philippine Phoenix Surety and Insurance, Inc. This third-party defendant filed an answer with compulsory counterclaim. At the pre-trial conference, the parties agreed to a stipulation of facts. Upon a finding that the third party defendant was not liable under the insurance contract, the lower court dismissed the third party complaint. No amicable settlement having been arrived at by the parties, trial on the merits ensued. The plaintiffs asserted that violation of the contract of carriage between them and the defendants was brought about by the drivers failure to exercise the diligence required of the carrier in transporting passengers safely to their place of destination. According to Leny Tumboy, the bus left Mangagoy at 3:00 oclock in the afternoon. The winding road it traversed was not cemented and was wet due to the rain; it was rough with crushed rocks. The bus which was full of passengers had cargoes on top. Since it was running fast, she cautioned the driver to slow down but he merely stared at her through the mirror. At around 3:30 p.m., in Trento, she heard something explode and immediately, the bus fell into a ravine.

For their part, the defendants tried to establish that the accident was due to a fortuitous event. Abundio Salce, who was the bus conductor when the incident happened, testified that the 42seater bus was not full as there were only 32 passengers, such that he himself managed to get a seat. He added that the bus was running at a speed of 60 to 50 and that it was going slow because of the zigzag road. He affirmed that the left front tire that exploded was a brand new tire that he mounted on the bus on April 21, 1988 or only five (5) days before the incident. The Yobido Liner secretary, Minerva Fernando, bought the new Goodyear tire from Davao Toyo Parts on April 20, 1988 and she was present when it was mounted on the bus by Salce. She stated that all driver applicants in Yobido Liner underwent actual driving tests before they were employed. Defendant Cresencio Yobido underwent such test and submitted his professional drivers license and clearances from the barangay, the fiscal and the police. On August 29, 1991, the lower court rendered a decision dismissing the action for lack of merit. On the issue of whether or not the tire blowout was a caso fortuito, it found that the falling of the bus to the cliff was a result of no other outside factor than the tire blow-out. It held that the ruling in the La Mallorca and Pampanga Bus Co. v. De Jesus that a tire blowout is a mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more thorough or rigid check-up before it took to the road that morning is inapplicable to this case. It reasoned out that in said case, it was found that the blowout was caused by the established fact that the inner tube of the left front tire was pressed between the inner circle of the left wheel and the rim which had slipped out of the wheel. In this case, however, the cause of the explosion remains a mystery until at present. As such, the court added, the tire blowout was a caso fortuito which is completely an extraordinary circumstance independent of the will of the defendants who should be relieved of whatever liability the plaintiffs may have suffered by reason of the explosion pursuant to Article 1174 of the Civil Code. Dissatisfied, the plaintiffs appealed to the Court of Appeals. They ascribed to the lower court the following errors: (a) finding that the tire blowout was a caso fortuito; (b) failing to hold that the defendants did not exercise utmost and/or extraordinary diligence required of carriers under Article 1755 of the Civil Code, and (c) deciding the case contrary to the ruling in Juntilla v. Fontanar, and Necesito v. Paras. On August 23, 1993, the Court of Appeals rendered the Decision reversing that of the lower court. It held that: To Our mind, the explosion of the tire is not in itself a fortuitous event. The cause of the blowout, if due to a factory defect, improper mounting, excessive tire pressure, is not an unavoidable event. On the other hand, there may have been adverse conditions on the road that were unforeseeable and/or inevitable, which could make the blow-out a caso fortuito. The fact that the cause of the blow-out was not known does not relieve the carrier of liability. Owing to the statutory presumption of negligence against the carrier and its obligation to exercise the utmost diligence of very cautious persons to carry the passenger safely as far as human care and foresight can provide, it is the burden of the defendants to prove that the cause of the blow-out was a fortuitous event. It is not incumbent upon the plaintiff to prove that the cause of the blowout is not caso-fortuito.

Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge defendants burden. As enunciated in Necesito vs. Paras, the passenger has neither choice nor control over the carrier in the selection and use of its equipment, and the good repute of the manufacturer will not necessarily relieve the carrier from liability. Moreover, there is evidence that the bus was moving fast, and the road was wet and rough. The driver could have explained that the blow-out that precipitated the accident that caused the death of Toto Tumboy could not have been prevented even if he had exercised due care to avoid the same, but he was not presented as witness. The Court of Appeals thus disposed of the appeal as follows: WHEREFORE, the judgment of the court a quo is set aside and another one entered ordering defendants to pay plaintiffs the sum of P50,000.00 for the death of Tito Tumboy, P30,000.00 in moral damages, and P7,000.00 for funeral and burial expenses. SO ORDERED. The defendants filed a motion for reconsideration of said decision which was denied on November 4, 1993 by the Court of Appeals. Hence, the instant petition asserting the position that the tire blowout that caused the death of Tito Tumboy was a caso fortuito. Petitioners claim further that the Court of Appeals, in ruling contrary to that of the lower court, misapprehended facts and, therefore, its findings of fact cannot be considered final which shall bind this Court. Hence, they pray that this Court review the facts of the case. The Court did re-examine the facts and evidence in this case because of the inapplicability of the established principle that the factual findings of the Court of Appeals are final and may not be reviewed on appeal by this Court. This general principle is subject to exceptions such as the one present in this case, namely, that the lower court and the Court of Appeals arrived at diverse factual findings. However, upon such re-examination, we found no reason to overturn the findings and conclusions of the Court of Appeals. As a rule, when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he has taken. After all, a carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events to carry them safely and without injury. However, when a passenger is injured or dies while travelling, the law presumes that the common carrier is negligent. Thus, the Civil Code provides: Art. 1756. In case of death or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. Article 1755 provides that (a) common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Accordingly, in culpa contractual, once a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted negligently. This

disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733, 1755 and 1756 of the Civil Code or that the death or injury of the passenger was due to a fortuitous event. Consequently, the court need not make an express finding of fault or negligence on the part of the carrier to hold it responsible for damages sought by the passenger. In view of the foregoing, petitioners contention that they should be exempt from liability because the tire blowout was no more than a fortuitous event that could not have been foreseen, must fail. A fortuitous event is possessed of the following characteristics: (a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligations, must be independent 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 fulfill 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. As Article 1174 provides, no person shall be responsible for a fortuitous event which could not be foreseen, or which, though foreseen, was inevitable. In other words, there must be an entire exclusion of human agency from the cause of injury or loss. Under the circumstances of this case, the explosion of the new tire may not be considered a fortuitous event. There are human factors involved in the situation. The fact that the tire was new did not imply that it was entirely free from manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tire bought and used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could not explode within five days use. Be that as it may, it is settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liability for damages. Moreover, a common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. The common carrier must still prove that it was not negligent in causing the death or injury resulting from an accident. This Court has had occasion to state: 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. It is interesting to note that petitioners proved through the bus conductor, Salce, that the bus was running at 60-50 kilometers per hour only or within the prescribed lawful speed limit. However, they failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the driver to slow down. These contradictory facts must, therefore, be resolved in favor of liability in view of the presumption of negligence of the carrier in the law. Coupled with this is the established condition of the road rough, winding and wet due to the rain. It was incumbent upon the defense to establish that it took precautionary measures

considering partially dangerous condition of the road. As stated above, proof that the tire was new and of good quality is not sufficient proof that it was not negligent. Petitioners should have shown that it undertook extraordinary diligence in the care of its carrier, such as conducting daily routinary check-ups of the vehicles parts. As the late Justice J.B.L. Reyes said: It may be impracticable, as appellee argues, to require of carriers to test the strength of each and every part of its vehicles before each trip; but we are of the opinion that a due regard for the carriers obligations toward the traveling public demands adequate periodical tests to determine the condition and strength of those vehicle portions the failure of which may endanger the safety of the passengers. Having failed to discharge its duty to overthrow the presumption of negligence with clear and convincing evidence, petitioners are hereby held liable for damages. Article 1764 in relation to Article 2206 of the Civil Code prescribes the amount of at least three thousand pesos as damages for the death of a passenger. Under prevailing jurisprudence, the award of damages under Article 2206 has been increased to fifty thousand pesos (P50,000.00). Moral damages are generally not recoverable in culpa contractual except when bad faith had been proven. However, the same damages may be recovered when breach of contract of carriage results in the death of a passenger, as in this case. Exemplary damages, awarded by way of example or correction for the public good when moral damages are awarded, may likewise be recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. Because petitioners failed to exercise the extraordinary diligence required of a common carrier, which resulted in the death of Tito Tumboy, it is deemed to have acted recklessly. As such, private respondents shall be entitled to exemplary damages. WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED subject to the modification that petitioners shall, in addition to the monetary awards therein, be liable for the award of exemplary damages in the amount of P20,000.00. Costs against petitioners. SO ORDERED. Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur. Record, pp. 77-78. Penned by Judge William M. Layague. 123 Phil. 875 (1966). Art. 1174. Except in cases expressly specified 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. L-45637, May 31, 1985, 136 SCRA 624.

104 Phil. 75 (1958). Penned by Associate Justice Minerva P. Gonzaga-Reyes and concurred in by Associate Justices Vicente V. Mendoza and Pacita Caizares-Nye. Philippine Rabbit Bus Lines, Inc. v. IAC, G.R. Nos. 66102-04, August 30, 1990, 189 SCRA 158, 159. TOLENTINO, CIVIL CODE OF THE PHILIPPINES, Vol. V, 1992 ed., p. 312.
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. Phil. Rabbit Bus Lines, Inc. vs. IAC, supra, at pp. 171-172 citing Lasam v. Smith, Jr., 45 Phil. 657 (1924). Batangas Trans. Co. v. Caguimbal, 130 Phil. 166, 171 (1968) citing Brito Sy v. Malate Taxicab & Garage, Inc., 102 Phil. 482 (1957). Metal Forming Corp. v. Office of the President, 317 Phil. 853, 859 (1995); Vasquez v. Court of Appeals, L-42926, September 13, 1985, 138 SCRA 553, 557 citing Lasam v. Smith, supra at p. 661 and Austria v. Court of Appeals, 148-A Phil. 462 (1971); Estrada v. Consolacion, L-40948, June 29, 1976, 71 SCRA 523,530; Republic of the Phil. v. Luzon Stevedoring Corporation, 128 Phil. 313 (1967). Vasquez v. Court of Appeals, supra, at p. 557. Son v. Cebu Autobus Co., 94 Phil. 893, 896 (1954) citing Lasam v. Smith, supra. Bachelor Express, Inc. v. Court of Appeals, G.R. No. 85691, July 31, 1990, 188 SCRA 216, 222223. Juntilla v. Fontanar, supra, at p. 630. Necesito v. Paras, supra at p. 82. Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. x x x.

Sulpicio Lines, Inc. v. Court of Appeals, 316 Phil. 455, 460 (1995) citing People v. Flores, G.R. Nos. 103801-02, October 19, 1994, 237 SCRA 653. Sulpicio Lines, Inc. v. Court of Appeals, supra at pp. 460-461 citing Trans World Air Lines v. Court of Appeals, G.R. No. 78656, August 30, 1988, 165 SCRA 143; Philippine Rabbit Bus Lines, Inc. v. Esguerra, 203 Phil. 107 (1982) and Vasquez v. Court of Appeals, supra. Art. 2229, Civil Code. Art. 2232, supra. Sulpicio Lines, Inc. v. Court of Appeals, supra at p. 461.