G.R. No. 145804             February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners, vs.MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY AGENCY, respondents.

D E C I S I O N

VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals, promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled "Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City, exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo Roman liable for damages on account of the death of Nicanor Navidad.

On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area approached Navidad. A misunderstanding or an altercation between the two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how the fight started or who, between the two, delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent. Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection and supervision of its security guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in his assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the following:

"a) 1) Actual damages of P44,830.00;

2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

"b) Moral damages of P50,000.00;

"c) Attorney’s fees of P20,000;

"d) Costs of suit.

"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

"The compulsory counterclaim of LRTA and Roman are likewise dismissed."1

Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and severally liable thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and severally to the plaintiffs-appellees, the following amounts:

a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorney’s fees."2

The appellate court ratiocinated that while the deceased might not have then as yet boarded the train, a contract of carriage theretofore had already existed when the victim entered the place where passengers were supposed to be after paying the fare and getting the corresponding token therefor. In exempting Prudent from liability, the court stressed that there was nothing to link the security agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist blows upon the victim and the evidence merely established the fact of death of Navidad by reason of his having been hit by the train owned and managed by the LRTA and operated at the time by Roman. The appellate court faulted petitioners for their failure to present expert evidence to establish the fact that the application of emergency brakes could not have stopped the train.

The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October 2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

"I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT

"II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

"III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA."3

Petitioners would contend that the appellate court ignored the evidence and the factual findings of the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of negligence on the part of a common carrier was not overcome. Petitioners would insist that Escartin’s assault upon Navidad, which caused the latter to fall on the tracks, was an act of a stranger that could not have been foreseen or

prevented. The LRTA would add that the appellate court’s conclusion on the existence of an employer-employee relationship between Roman and LRTA lacked basis because Roman himself had testified being an employee of Metro Transit and not of the LRTA.

Respondents, supporting the decision of the appellate court, contended that a contract of carriage was deemed created from the moment Navidad paid the fare at the LRT station and entered the premises of the latter, entitling Navidad to all the rights and protection under a contractual relation, and that the appellate court had correctly held LRTA and Roman liable for the death of Navidad in failing to exercise extraordinary diligence imposed upon a common carrier.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the safety of passengers.4 The Civil Code, governing the liability of a common carrier for death of or injury to its passengers, provides:

"Article 1755. 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.

"Article 1756. In case of death of 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 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although 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 selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission."

The law requires common carriers to carry passengers safely using the utmost diligence of very cautious persons with due regard for all circumstances.5 Such duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the trip but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage.6 The statutory provisions render a common carrier liable for death of or injury to passengers (a) through the negligence or wilful acts of its employees or b) on account of wilful acts or negligence of other passengers or of strangers if the common carrier’s employees through the exercise of due diligence could have prevented or stopped the act or omission.7 In case of such death or injury, a carrier is presumed to have been at fault or been negligent, and8 by simple proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure.9 In the absence of satisfactory explanation by the carrier on how the accident occurred, which petitioners, according to the appellate court, have failed to show, the presumption would be that it has been at fault,10 an exception from the general rule that negligence must be proved.11

The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that contract by reason of its failure to exercise the high diligence required of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier may choose to hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the task. In either case, the common carrier is not relieved of its responsibilities under the contract of carriage.

Should Prudent be made likewise liable? If at all, that liability could only be for tort under the provisions of Article 217612 and related provisions, in conjunction with Article 2180,13 of the Civil Code. The premise, however, for the employer’s liability is negligence or fault on the part of the employee. Once such fault is

established, the employer can then be made liable on the basis of the presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees. The liability is primary and can only be negated by showing due diligence in the selection and supervision of the employee, a factual matter that has not been shown. Absent such a showing, one might ask further, how then must the liability of the common carrier, on the one hand, and an independent contractor, on the other hand, be described? It would be solidary. A contractual obligation can be breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract.16 Stated differently, when an act which constitutes a breach of contract would have itself constituted the source of a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been breached by tort, thereby allowing the rules on tort to apply.17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad, this Court is concluded by the factual finding of the Court of Appeals that "there is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee, Escartin, has not been duly proven x x x." This finding of the appellate court is not without substantial justification in our own review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act or omission, he must also be absolved from liability. Needless to say, the contractual tie between the LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable. 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.18 It is an established rule that nominal damages cannot co-exist with compensatory damages.19

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is absolved from liability. No costs.

SO ORDERED.

G.R. No. L-65295 March 10, 1987

PHOENIX CONSTRUCTION, INC. and ARMANDO U. CARBONEL, petitioners, vs.THE INTERMEDIATE APPELLATE COURT and LEONARDO DIONISIO, respondents.

 

FELICIANO, J:

In the early morning of 15 November 1975 — at about 1:30 a.m. — private respondent Leonardo Dionisio was on his way home — he lived in 1214-B Zamora Street, Bangkal, Makati — from a cocktails-and-dinner meeting with his boss, the general manager of a marketing corporation. During the cocktails phase of the evening, Dionisio had taken "a shot or two" of liquor. Dionisio was driving his Volkswagen car and had just crossed the intersection of General Lacuna and General Santos Streets at Bangkal, Makati, not far from his home, and was proceeding down General Lacuna Street, when his car headlights (in his allegation) suddenly failed. He switched his headlights on "bright" and thereupon he saw a Ford dump truck looming some 2-1/2 meters away from his car. The dump truck, owned by and registered in the name of petitioner Phoenix Construction Inc. ("Phoenix"), was parked on the right hand side of General Lacuna Street (i.e., on the right hand side of a person facing in the same direction toward which Dionisio's car was proceeding), facing the oncoming traffic. The dump truck was parked askew (not parallel to the street curb) in such a manner as to

stick out onto the street, partly blocking the way of oncoming traffic. There were no lights nor any so-called "early warning" reflector devices set anywhere near the dump truck, front or rear. The dump truck had earlier that evening been driven home by petitioner Armando U. Carbonel, its regular driver, with the permission of his employer Phoenix, in view of work scheduled to be carried out early the following morning, Dionisio claimed that he tried to avoid a collision by swerving his car to the left but it was too late and his car smashed into the dump truck. As a result of the collision, Dionisio suffered some physical injuries including some permanent facial scars, a "nervous breakdown" and loss of two gold bridge dentures.

Dionisio commenced an action for damages in the Court of First Instance of Pampanga basically claiming that the legal and proximate cause of his injuries was the negligent manner in which Carbonel had parked the dump truck entrusted to him by his employer Phoenix. Phoenix and Carbonel, on the other hand, countered that the proximate cause of Dionisio's injuries was his own recklessness in driving fast at the time of the accident, while under the influence of liquor, without his headlights on and without a curfew pass. Phoenix also sought to establish that it had exercised due rare in the selection and supervision of the dump truck driver.

The trial court rendered judgment in favor of Dionisio and against Phoenix and Carbonel and ordered the latter:

(1) To pay plaintiff jointly and severally the sum of P 15,000.00 for hospital bills and the replacement of the lost dentures of plaintiff;

(2) To pay plaintiff jointly and severally the sum of P 1,50,000.-00 as loss of expected income for plaintiff brought about the accident in controversy and which is the result of the negligence of the defendants;

(3) To pay the plaintiff jointly and severally the sum of P 10,000. as moral damages for the unexpected and sudden withdrawal of plaintiff from his lifetime career as a marketing man; mental anguish, wounded feeling, serious anxiety, social humiliation, besmirched reputation, feeling of economic insecurity, and the untold sorrows and frustration in life experienced by plaintiff and his family since the accident in controversy up to the present time;

(4) To pay plaintiff jointly and severally the sum of P 10,000.00 as damages for the wanton disregard of defendants to settle amicably this case with the plaintiff before the filing of this case in court for a smaller amount.

(5) To pay the plaintiff jointly and severally the sum of P 4,500.00 due as and for attorney's fees; and

(6) The cost of suit. (Emphasis supplied)

Phoenix and Carbonel appealed to the Intermediate Appellate Court. That court in CA-G.R. No. 65476 affirmed the decision of the trial court but modified the award of damages to the following extent:

1. The award of P15,000.00 as compensatory damages was reduced to P6,460.71, the latter being the only amount that the appellate court found the plaintiff to have proved as actually sustained by him;

2. The award of P150,000.00 as loss of expected income was reduced to P100,000.00, basically because Dionisio had voluntarily resigned his job such that, in the opinion of the appellate court, his loss of income "was not solely attributable to the accident in question;" and

3. The award of P100,000.00 as moral damages was held by the appellate court as excessive and unconscionable and hence reduced to P50,000.00.

The award of P10,000.00 as exemplary damages and P4,500.00 as attorney's fees and costs remained untouched.

This decision of the Intermediate Appellate Court is now before us on a petition for review.

Both the trial court and the appellate court had made fairly explicit findings of fact relating to the manner in which the dump truck was parked along General Lacuna Street on the basis of which both courts drew the inference that there was negligence on the part of Carbonel, the dump truck driver, and that this negligence was the proximate cause of the accident and Dionisio's injuries. We note, however, that both courts failed to pass upon the defense raised by Carbonel and Phoenix that the true legal and proximate cause of the accident was not the way in which the dump truck had been parked but rather the reckless way in which Dionisio had driven his car that night when he smashed into the dump truck. The Intermediate Appellate Court in its questioned decision casually conceded that Dionisio was "in some way, negligent" but apparently failed to see the relevance of Dionisio's negligence and made no further mention of it. We have examined the record both before the trial court and the Intermediate Appellate Court and we find that both parties had placed into the record sufficient evidence on the basis of which the trial court and the appellate court could have and should have made findings of fact relating to the alleged reckless manner in which Dionisio drove his car that night. The petitioners Phoenix and Carbonel contend that if there was negligence in the manner in which the dump truck was parked, that negligence was merely a "passive and static condition" and that private respondent Dionisio's recklessness constituted an intervening, efficient cause determinative of the accident and the injuries he sustained. The need to administer substantial justice as between the parties in this case, without having to remand it back to the trial court after eleven years, compels us to address directly the contention put forward by the petitioners and to examine for ourselves the record pertaining to Dionisio's alleged negligence which must bear upon the liability, or extent of liability, of Phoenix and Carbonel.

There are four factual issues that need to be looked into: (a) whether or not private respondent Dionisio had a curfew pass valid and effective for that eventful night; (b) whether Dionisio was driving fast or speeding just before the collision with the dump truck; (c) whether Dionisio had purposely turned off his car's headlights before contact with the dump truck or whether those headlights accidentally malfunctioned moments before the collision; and (d) whether Dionisio was intoxicated at the time of the accident.

As to the first issue relating to the curfew pass, it is clear that no curfew pass was found on the person of Dionisio immediately after the accident nor was any found in his car. Phoenix's evidence here consisted of the testimony of Patrolman Cuyno who had taken Dionisio, unconscious, to the Makati Medical Center for emergency treatment immediately after the accident. At the Makati Medical Center, a nurse took off Dionisio's clothes and examined them along with the contents of pockets together with Patrolman Cuyno. 1 Private respondent Dionisio was not able to produce any curfew pass during the trial. Instead, he offered the explanation that his family may have misplaced his curfew pass. He also offered a certification (dated two years after the accident) issued by one Major Benjamin N. Libarnes of the Zone Integrated Police Intelligence Unit of Camp Olivas, San Fernando, Pampanga, which was said to have authority to issue curfew passes for Pampanga and Metro Manila. This certification was to the effect that private respondent Dionisio had a valid curfew pass. This certification did not, however, specify any pass serial number or date or period of effectivity of the supposed curfew pass. We find that private respondent Dionisio was unable to prove possession of a valid curfew pass during the night of the accident and that the preponderance of evidence shows that he did not have such a pass during that night. The relevance of possession or non-possession of a curfew pass that night lies in the light it tends to shed on the other related issues: whether Dionisio was speeding home and whether he had indeed purposely put out his headlights before the accident, in order to avoid detection and possibly arrest by the police in the nearby police station for travelling after the onset of curfew without a valid curfew pass.

On the second issue — whether or not Dionisio was speeding home that night — both the trial court and the appellate court were completely silent.

The defendants in the trial court introduced the testimony of Patrolman Cuyno who was at the scene of the accident almost immediately after it occurred, the police station where he was based being barely 200 meters away. Patrolman Cuyno testified that people who had gathered at the scene of the accident told him that

Dionisio's car was "moving fast" and did not have its headlights on. 2 Dionisio, on the other hand, claimed that he was travelling at a moderate speed at 30 kilometers per hour and had just crossed the intersection of General Santos and General Lacuna Streets and had started to accelerate when his headlights failed just before the collision took place. 3

Private respondent Dionisio asserts that Patrolman Cuyno's testimony was hearsay and did not fag within any of the recognized exceptions to the hearsay rule since the facts he testified to were not acquired by him through official information and had not been given by the informants pursuant to any duty to do so. Private respondent's objection fails to take account of the fact that the testimony of Patrolman Cuyno is admissible not under the official records exception to the hearsay rule 4 but rather as part of the res gestae. 5 Testimonial evidence under this exception to the hearsay rule consists of excited utterances made on the occasion of an occurrence or event sufficiently startling in nature so as to render inoperative the normal reflective thought processes of the observer and hence made as a spontaneous reaction to the occurrence or event, and not the result of reflective thought. 6

We think that an automobile speeding down a street and suddenly smashing into a stationary object in the dead of night is a sufficiently startling event as to evoke spontaneous, rather than reflective, reactions from observers who happened to be around at that time. The testimony of Patrolman Cuyno was therefore admissible as part of the res gestae and should have been considered by the trial court. Clearly, substantial weight should have been ascribed to such testimony, even though it did not, as it could not, have purported to describe quantitatively the precise velocity at winch Dionisio was travelling just before impact with the Phoenix dump truck.

A third related issue is whether Dionisio purposely turned off his headlights, or whether his headlights accidentally malfunctioned, just moments before the accident. The Intermediate Appellate Court expressly found that the headlights of Dionisio's car went off as he crossed the intersection but was non-committal as to why they did so. It is the petitioners' contention that Dionisio purposely shut off his headlights even before he reached the intersection so as not to be detected by the police in the police precinct which he (being a resident in the area) knew was not far away from the intersection. We believe that the petitioners' theory is a more credible explanation than that offered by private respondent Dionisio — i.e., that he had his headlights on but that, at the crucial moment, these had in some mysterious if convenient way malfunctioned and gone off, although he succeeded in switching his lights on again at "bright" split seconds before contact with the dump truck.

A fourth and final issue relates to whether Dionisio was intoxicated at the time of the accident. The evidence here consisted of the testimony of Patrolman Cuyno to the effect that private respondent Dionisio smelled of liquor at the time he was taken from his smashed car and brought to the Makati Medical Center in an unconscious condition. 7 This testimony has to be taken in conjunction with the admission of Dionisio that he had taken "a shot or two" of liquor before dinner with his boss that night. We do not believe that this evidence is sufficient to show that Dionisio was so heavily under the influence of liquor as to constitute his driving a motor vehicle per se an act of reckless imprudence. 8 There simply is not enough evidence to show how much liquor he had in fact taken and the effects of that upon his physical faculties or upon his judgment or mental alertness. We are also aware that "one shot or two" of hard liquor may affect different people differently.

The conclusion we draw from the factual circumstances outlined above is that private respondent Dionisio was negligent the night of the accident. He was hurrying home that night and driving faster than he should have been. Worse, he extinguished his headlights at or near the intersection of General Lacuna and General Santos Streets and thus did not see the dump truck that was parked askew and sticking out onto the road lane.

Nonetheless, we agree with the Court of First Instance and the Intermediate Appellate Court that the legal and proximate cause of the accident and of Dionisio's injuries was the wrongful — or negligent manner in which the dump truck was parked in other words, the negligence of petitioner Carbonel. That there was a reasonable relationship between petitioner Carbonel's negligence on the one hand and the accident and respondent's injuries on the other hand, is quite clear. Put in a slightly different manner, the collision of Dionisio's car with the dump truck was a natural and foreseeable consequence of the truck driver's negligence.

The petitioners, however, urge that the truck driver's negligence was merely a "passive and static condition" and that private respondent Dionisio's negligence was an "efficient intervening cause and that consequently Dionisio's negligence must be regarded as the legal and proximate cause of the accident rather than the earlier negligence of Carbonel. We note that the petitioners' arguments are drawn from a reading of some of the older cases in various jurisdictions in the United States but we are unable to persuade ourselves that these arguments have any validity for our jurisdiction. We note, firstly, that even in the United States, the distinctions between "cause" and "condition" which the 'petitioners would have us adopt have already been "almost entirely discredited." Professors and Keeton make this quite clear:

Cause and condition. Many courts have sought to distinguish between the active "cause" of the harm and the existing "conditions" upon which that cause operated. If the defendant has created only a passive static condition which made the damage possible, the defendant is said not to be liable. But so far as the fact of causation is concerned, in the sense of necessary antecedents which have played an important part in producing the result it is quite impossible to distinguish between active forces and passive situations, particularly since, as is invariably the case, the latter are the result of other active forces which have gone before. The defendant who spills gasoline about the premises creates a "condition," but the act may be culpable because of the danger of fire. When a spark ignites the gasoline, the condition has done quite as much to bring about the fire as the spark; and since that is the very risk which the defendant has created, the defendant will not escape responsibility. Even the lapse of a considerable time during which the "condition" remains static will not necessarily affect liability; one who digs a trench in the highway may still be liable to another who fans into it a month afterward. "Cause" and "condition" still find occasional mention in the decisions; but the distinction is now almost entirely discredited. So far as it has any validity at all, it must refer to the type of case where the forces set in operation by the defendant have come to rest in a position of apparent safety, and some new force intervenes. But even in such cases, it is not the distinction between "cause" and "condition" which is important but the nature of the risk and the character of the intervening cause. 9

We believe, secondly, that the truck driver's negligence far from being a "passive and static condition" was rather an indispensable and efficient cause. The collision between the dump truck and the private respondent's car would in an probability not have occurred had the dump truck not been parked askew without any warning lights or reflector devices. The improper parking of the dump truck created an unreasonable risk of injury for anyone driving down General Lacuna Street and for having so created this risk, the truck driver must be held responsible. In our view, Dionisio's negligence, although later in point of time than the truck driver's negligence and therefore closer to the accident, was not an efficient intervening or independent cause. What the Petitioners describe as an "intervening cause" was no more than a foreseeable consequent manner which the truck driver had parked the dump truck. In other words, the petitioner truck driver owed a duty to private respondent Dionisio and others similarly situated not to impose upon them the very risk the truck driver had created. Dionisio's negligence was not of an independent and overpowering nature as to cut, as it were, the chain of causation in fact between the improper parking of the dump truck and the accident, nor to sever the juris vinculum of liability. It is helpful to quote once more from Professor and Keeton:

Foreseeable Intervening Causes. If the intervening cause is one which in ordinary human experience is reasonably to be anticipated or one which the defendant has reason to anticipate under the particular circumstances, the defendant may be negligence among other reasons, because of failure to guard against it; or the defendant may be negligent only for that reason. Thus one who sets a fire may be required to foresee that an ordinary, usual and customary wind arising later wig spread it beyond the defendant's own property, and therefore to take precautions to prevent that event. The person who leaves the combustible or explosive material exposed in a public place may foresee the risk of fire from some independent source. ... In all of these cases there is an intervening cause combining with the defendant's conduct to produce the result and in each case the defendant's negligence consists in failure to protect the plaintiff against that very risk.

Obviously the defendant cannot be relieved from liability by the fact that the risk or a substantial and important part of the risk, to which the defendant has subjected the plaintiff has indeed come to pass. Foreseeable intervening forces are within the scope original risk, and hence of the defendant's negligence. The courts are quite generally agreed that intervening causes which fall fairly in this category will not supersede the defendant's responsibility.

Thus it has been held that a defendant will be required to anticipate the usual weather of the vicinity, including all ordinary forces of nature such as usual wind or rain, or snow or frost or fog or even lightning; that one who leaves an obstruction on the road or a railroad track should foresee that a vehicle or a train will run into it; ...

The risk created by the defendant may include the intervention of the foreseeable negligence of others. ... [The standard of reasonable conduct may require the defendant to protect the plaintiff against 'that occasional negligence which is one of the ordinary incidents of human life, and therefore to be anticipated.' Thus, a defendant who blocks the sidewalk and forces the plaintiff to walk in a street where the plaintiff will be exposed to the risks of heavy traffic becomes liable when the plaintiff is run down by a car, even though the car is negligently driven; and one who parks an automobile on the highway without lights at night is not relieved of responsibility when another negligently drives into it. --- 10

We hold that private respondent Dionisio's negligence was "only contributory," that the "immediate and proximate cause" of the injury remained the truck driver's "lack of due care" and that consequently respondent Dionisio may recover damages though such damages are subject to mitigation by the courts (Article 2179, Civil Code of the Philippines).

Petitioners also ask us to apply what they refer to as the "last clear chance" doctrine. The theory here of petitioners is that while the petitioner truck driver was negligent, private respondent Dionisio had the "last clear chance" of avoiding the accident and hence his injuries, and that Dionisio having failed to take that "last clear chance" must bear his own injuries alone. The last clear chance doctrine of the common law was imported into our jurisdiction by Picart vs. Smith 11 but it is a matter for debate whether, or to what extent, it has found its way into the Civil Code of the Philippines. The historical function of that doctrine in the common law was to mitigate the harshness of another common law doctrine or rule that of contributory negligence. 12 The common law rule of contributory negligence prevented any recovery at all by a plaintiff who was also negligent, even if the plaintiff's negligence was relatively minor as compared with the wrongful act or omission of the defendant. 13 The common law notion of last clear chance permitted courts to grant recovery to a plaintiff who had also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so. 14 Accordingly, it is difficult to see what role, if any, the common law last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code of the Philippines. 15

Is there perhaps a general concept of "last clear chance" that may be extracted from its common law matrix and utilized as a general rule in negligence cases in a civil law jurisdiction like ours? We do not believe so. Under Article 2179, the task of a court, in technical terms, is to determine whose negligence — the plaintiff's or the defendant's — was the legal or proximate cause of the injury. That task is not simply or even primarily an exercise in chronology or physics, as the petitioners seem to imply by the use of terms like "last" or "intervening" or "immediate." The relative location in the continuum of time of the plaintiff's and the defendant's negligent acts or omissions, is only one of the relevant factors that may be taken into account. Of more fundamental importance are the nature of the negligent act or omission of each party and the character and gravity of the risks created by such act or omission for the rest of the community. The petitioners urge that the truck driver (and therefore his employer) should be absolved from responsibility for his own prior negligence because the unfortunate plaintiff failed to act with that increased diligence which had become necessary to avoid the peril precisely created by the truck driver's own wrongful act or omission. To accept this proposition is to come too close to wiping out the fundamental principle of law that a man must respond for the forseeable consequences of his own negligent act or omission. Our law on quasi-delicts seeks to reduce the risks and

burdens of living in society and to allocate them among the members of society. To accept the petitioners' pro-position must tend to weaken the very bonds of society.

Petitioner Carbonel's proven negligence creates a presumption of negligence on the part of his employer Phoenix 16 in supervising its employees properly and adequately. The respondent appellate court in effect found, correctly in our opinion, that Phoenix was not able to overcome this presumption of negligence. The circumstance that Phoenix had allowed its truck driver to bring the dump truck to his home whenever there was work to be done early the following morning, when coupled with the failure to show any effort on the part of Phoenix to supervise the manner in which the dump truck is parked when away from company premises, is an affirmative showing of culpa in vigilando on the part of Phoenix.

Turning to the award of damages and taking into account the comparative negligence of private respondent Dionisio on one hand and petitioners Carbonel and Phoenix upon the other hand, 17 we believe that the demands of substantial justice are satisfied by allocating most of the damages on a 20-80 ratio. Thus, 20% of the damages awarded by the respondent appellate court, except the award of P10,000.00 as exemplary damages and P4,500.00 as attorney's fees and costs, shall be borne by private respondent Dionisio; only the balance of 80% needs to be paid by petitioners Carbonel and Phoenix who shall be solidarity liable therefor to the former. The award of exemplary damages and attorney's fees and costs shall be borne exclusively by the petitioners. Phoenix is of course entitled to reimbursement from Carbonel. 18 We see no sufficient reason for disturbing the reduced award of damages made by the respondent appellate court.

WHEREFORE, the decision of the respondent appellate court is modified by reducing the aggregate amount of compensatory damages, loss of expected income and moral damages private respondent Dionisio is entitled to by 20% of such amount. Costs against the petitioners.

SO ORDERED.

G.R. No. L-29745 June 4, 1973

MERCEDES M. TEAGUE, petitioner, vs.ELENA FERNANDEZ, et al., respondent.

Jose W. Diokno for petitioner.

Jose G. Gatchalian for respondents.

 

MAKALINTAL, J.:

The facts are stated in the decision of the Court of Appeals as follows:

The Realistic Institute, admittedly owned and operated by defendant-appellee Mercedes M. Teague was a vocational school for hair and beauty culture situated on the second floor of the Gil-Armi Building, a two-storey, semi-concrete edifice (Exhs. "C", "C-1" to "C-5" and "4") located at the corner of Quezon Boulevard and Soler Street, Quiapo, Manila. The said second floor was unpartitioned, had a total area of about 400 square meters, and although it had only one stairway, of about 1.50 meters in width, it had eight windows, each of which was provided with two fire-escape ladders (Exh. "4"), and the presence of each of said fire-exits was indicated on the wall (Exh. "5").

At about four o'clock in the afternoon of October 24, 1955, a fire broke out in a store for surplus materials located about ten meters away from the institute. Soler Street lay between that store and the institute. Upon seeing the fire, some of the students in the Realistic Institute shouted

'Fire! Fire!' and thereafter, a panic ensued. Four instructresses and six assistant instructress of the Institute were present and they, together with the registrar, tried to calm down the students, who numbered about 180 at the time, telling them not to be afraid because the Gil-Armi Building would not get burned as it is made of concrete, and that the fire was anyway, across the street. They told the students not to rush out but just to go down the stairway two by two, or to use the fire-escapes. Mrs. Justitia Prieto, one of the instructresses, took to the microphone so as to convey to the students the above admonitions more effectively, and she even slapped three students in order to quiet them down. Miss Frino Meliton, the registrar, whose desk was near the stairway, stood up and tried with outstretched arms to stop the students from rushing and pushing their way to the stairs. The panic, however, could not be subdued and the students, with the exception of the few who made use of fire-escapes kept on rushing and pushing their way through the stairs, thereby causing stampede therein.

Indeed, no part of the Gil-Armi Building caught fire. But, after the panic was over, four students, including Lourdes Fernandez, a sister of plaintiffs-appellants, were found dead and several others injured on account of the stampede.

xxx xxx xxx

The injuries sustained by Lourdes Fernandez consisted of lacerations in both eyes and on the upper lip, contused abrasions in different parts of the body, internal hemorrhage and fractures in the second and third right ribs. The cause of death, according to the autopsy report, was "Shock due to traumatic fractures of the ribs with perinephric hematoma and lacerations of the conjunctiva of both eyes."

The deceased's five brothers and sisters filed an action for damages against Mercedes M. Teague as owner and operator of Realistic Institute. The Court of First Instance of Manila found for the defendant and dismissed the case. The plaintiffs thereupon appealed to the Court of Appeals, which by a divided vote of 3 to 2 (a special division of five members having been constituted) rendered a judgment of reversal and sentenced the defendant to pay damages to the plaintiffs in the sum of P11,000.00, plus interest at the legal rate from the date the complaint was filed.

The case came up to this Court on a petition for review filed by the defendant below.

The decision of the appellate court declared that the defendant, hereinafter to be referred to as the petitioner, was negligent and that such negligence was the proximate cause of the death of Lourdes Fernandez. This finding of negligence is based primarily on the fact that the provision of Section 491 Of the Revised Ordinances of the City of Manila had not been complied with in connection with the construction and use of the Gil-Armi building where the petitioner's vocational school was housed. This provision reads as follows:

Sec. 491. Firepro of partitions, exits and stairways. — ... All buildings and separate sections of buildings or buildings otherwise known as accessorias having less than three stories, having one or more persons domiciled therein either temporarily or permanently, and all public or quasi-public buildings having less than three stories, such as hospitals, sanitarium, schools, reformatories, places of human detention, assembly halls, clubs, restaurants or panciterias, and the like, shall be provided with at least two unobstructed stairways of not less than one meter and twenty centimeters in width and an inclination of not less than forty degrees from the perpendicular, in case of large buildings more than two stairways shall likewise be provided when required by the chief of the fire department, said stairways shall be placed as far apart as possible.

The alleged violation of the ordinance above-quoted consisted in the fact that the second storey of the Gil-Armi building had only one stairway, 1.5 meters wide, instead of two of at least 1.2 meters each, although at the time of the fire the owner of the building had a second stairway under construction.

In ruling that such non-compliance with the City Ordinances was an act of negligence and that such negligence was the proximate cause of the death of Lourdes Fernandez, reliance is based on a number of authorities in the American jurisdiction, thus: .

The mere fact of violation of a statute is not sufficient basis for an inference that such violation was the proximate cause of the injury complained. However, if the very injury has happened which was intended to be prevented by the statute, it has been held that violation of the statute will be deemed to be proximate cause of the injury. (65 C.J.S. 1156).

The generally accepted view is that violation of a statutory duty constitutes negligence, negligence as a matter or law, or, according to the decisions on the question, negligence per se for the reason that non-observance of what the legislature has prescribed as a suitable precaution is failure to observe that care which an ordinarily prudent man would observe, and, when the state regards certain acts as so liable to injure others as to justify their absolute prohibition, doing the forbidden act is a breach of duty with respect to those who may be injured thereby; or, as it has been otherwise expressed, when the standard of care is fixed by law, failure to conform to such standard is negligence, negligence per se or negligence in and of itself, in the absence of a legal excuse. According to this view it is immaterial, where a statute has been violated, whether the act or omission constituting such violation would have been regarded as negligence in the absence of any statute on the subject or whether there was, as a matter of fact, any reason to anticipate that injury would result from such violation. .... (65 C.J.S. pp. 623-628).

But the existence of an ordinance changes the situation. If a driver causes an accident by exceeding the speed limit, for example, do not inquire whether his prohibited conduct was unreasonably dangerous. It is enough that it was prohibited. Violation of an ordinance intended to promote safety is negligence. If by creating the hazard which the ordinance was intended to avoid it brings about the harm which the ordinance was intended to prevent, it is a legal cause of the harm. This comes only to saying that in such circumstances the law has no reason to ignore the causal relation which obviously exists in fact. The law has excellent reason to recognize it, since it is the very relation which the makers of the ordinance anticipated. This court has applied these principles to speed limits and other regulations of the manner of driving. (Ross vs. Hartman, 139 Fed. 2d 14 at 15).

... However, the fact that other happenings causing or contributing toward an injury intervened between the violation of a statute or ordinance and the injury does not necessarily make the result so remote that no action can be maintained. The test is to be found not in the number of intervening events or agents, but in their character and in the natural and probable connection between the wrong done and the injurious consequence. The general principle is that the violation of a statute or ordinance is not rendered remote as the cause of an injury by the intervention of another agency if the occurrence of the accident, in the manner in which it happened, was the very thing which the statute or ordinance was intended to Prevent. (38 Am Jur 841).

The petitioner has raised a number of issues. The first is that Section 491 of the Revised Ordinances of the City of Manila refers to public buildings and hence did not apply to the Gil-Armi building which was of private ownership. It will be noted from the text of the ordinance, however, that it is not ownership which determines the character of buildings subject to its requirements, but rather the use or the purpose for which a particular building is utilized. Thus the same may be privately owned, but if it is devoted to any one of the purposes mentioned in the ordinance — for instance as a school, which the Realistic Institute precisely was — then the building is within the coverage of the ordinance. Indeed the requirement that such a building should have two (2) separate stairways instead of only one (1) has no relevance or reasonable relation to the fact of ownership, but does have such relation to the use or purpose for which the building is devoted.

It is next contended that the obligation to comply with the ordinance devolved upon the owners of the building and therefore it is they and not the petitioner herein, who is a mere lessee, who should be liable for the

violation. The contention ignores the fact that it was the use of the building for school purposes which brought the same within the coverage of the ordinance; and it was the petitioner and not the owners who was responsible for such use.

The next issue, indeed the basic one, raised by the petitioner is whether or not the failure to comply with the requirement of the ordinance was the proximate cause of the death of Lourdes Fernandez. The case of Villanueva Vda. de Bataclan, et al. vs. Medina, G. R. No. L-10126, October 22, 1957, is cited in support of the contention that such failure was not the proximate cause. It is there stated by this Court:

The proximate legal cause is that acting first and producing the injury, either immediately or by settling other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately affecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.

Having in view the decision just quoted, the petitioner relates the chain of events that resulted in the death of Lourdes Fernandez as follows: (1) violation of ordinance; (2) fire at a neighboring place; (3) shouts of "Fire!, Fire!"; (4) panic in the Institute; (5) stampede; and (6) injuries and death.

As thus projected the violation of the ordinance, it is argued, was only a remote cause, if at all, and cannot be the basis of liability since there intervened a number of independent causes which produced the injury complained of. A statement of the doctrine relied upon is found in Manila Electric Co. vs. Remoquillo, L-8328, May 18, 1956, wherein this Court, citing Corpus Juris said:

A prior and remote cause cannot be made the basis of an action if such remote cause did nothing more than furnish the condition or give rise to the occasion by which the injury was made possible, if there intervened between such prior or remote cause and the injury a distinct, successive unrelated, and efficient cause of the injury, even though such injury would not have happened but for such condition or occasion. If no danger existed in the condition except because of the independent cause, such condition was not the proximate cause. And if an independent negligent act or defective condition sets into operation the circumstances which result in injury because of the prior defective condition, such subsequent act or condition is the proximate cause. (45 C.J. p. 931.)

According to the petitioner "the events of fire, panic and stampede were independent causes with no causal connection at all with the violation of the ordinance." The weakness in the argument springs from a faulty juxtaposition of the events which formed a chain and resulted in the injury. It is true that the petitioner's non-compliance with the ordinance in question was ahead of and prior to the other events in point of time, in the sense that it was coetaneous with its occupancy of the building. But the violation was a continuing one, since the ordinance was a measure of safety designed to prevent a specific situation which would pose a danger to the occupants of the building. That situation was undue overcrowding in case it should become necessary to evacuate the building, which, it could be reasonably foreseen, was bound to happen under emergency conditions if there was only one stairway available. It is true that in this particular case there would have been no overcrowding in the single stairway if there had not been a fire in the neighborhood which caused the students to panic and rush headlong for the stairs in order to go down. But it was precisely such contingencies or event that the authors of the ordinance had in mind, for under normal conditions one stairway would be adequate for the occupants of the building. Thus, as stated in 38 American Jurisprudence, page 841: "The general principle is that the violation of a statute or ordinance is not rendered remote as the cause of an injury by the intervention of another agency if the occurrence of the accident, in the manner in which it happened, was the very thing which the statute or ordinance was intended to prevent." To consider the violation of the ordinance as the proximate cause of the injury does not portray the situation in its true perspective; it would be more accurate to say that the overcrowding at the stairway was the proximate cause and that it was precisely what the ordinance intended to prevent by requiring that there be two stairways instead of only one. Under the doctrine of the cases cited by the respondents, the principle of proximate cause applies to such violation.

A procedural point mentioned by the petitioner is that the complaint did not specifically allege that the ordinance in question had been violated. The violation, however, as an act of negligence which gave rise to liability, was sufficiently comprehended within paragraph 7 of the complaint, which reads: .

Par. 7. That the death of Lourdes Fernandez was due to the gross negligence of the defendant who failed to exercise due care and diligence for the safety of its students in not providing the building with adequate fire exits and in not practicing fire drill exercises to avoid the stampede, aside from the fact that the defendant did not have a permit to use the building as a school-house.

The decision appealed from is affirmed, with costs.

G.R. No. L-17500             May 16, 1967

PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF MANILA, plaintiffs-appellants, vs.DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER CORPORATION and CONNELL BROS. CO. (PHIL.), defendants-appellants.

Angel S. Gamboa for defendants-appellants.Laurel Law Offices for plaintiffs-appellants.

DIZON, J.:

On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed to do business in the Philippines — hereinafter referred to as ATLANTIC — sold and assigned all its rights in the Dahican Lumber concession to Dahican Lumber Company — hereinafter referred to as DALCO — for the total sum of $500,000.00, of which only the amount of $50,000.00 was paid. Thereafter, to develop the concession, DALCO obtained various loans from the People's Bank & Trust Company — hereinafter referred to as the BANK — amounting, as of July 13, 1950, to P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of Washington D.C., evidenced by five promissory notes of $50,000.00 each, maturing on different dates, executed by both DALCO and the Dahican America Lumber Corporation, a foreign corporation and a stockholder of DALCO, — hereinafter referred to as DAMCO, all payable to the BANK or its order.

As security for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of the BANK — the latter acting for itself and as trustee for the Export-Import Bank of Washington D.C. — a deed of mortgage covering five parcels of land situated in the province of Camarines Norte together with all the buildings and other improvements existing thereon and all the personal properties of the mortgagor located in its place of business in the municipalities of Mambulao and Capalonga, Camarines Norte (Exhibit D). On the same date, DALCO executed a second mortgage on the same properties in favor of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber concession amounting to the sum of $450,000.00 (Exhibit G). Both deeds contained the following provision extending the mortgage lien to properties to be subsequently acquired — referred to hereafter as "after acquired properties" — by the mortgagor:

All property of every nature and description taken in exchange or replacement, and all buildings, machinery, fixtures, tools equipment and other property which the Mortgagor may hereafter acquire, construct, install, attach, or use in, to, upon, or in connection with the premises, shall immediately be and become subject to the lien of this mortgage in the same manner and to the same extent as if now included therein, and the Mortgagor shall from time to time during the existence of this mortgage furnish the Mortgagee with an accurate inventory of such substituted and subsequently acquired property.

Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure the same obligations.

Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity, the BANK paid the same to the Export-Import Bank of Washington D.C., and the latter assigned to the former its credit and the first mortgage securing it. Subsequently, the BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory note.

After July 13, 1950 — the date of execution of the mortgages mentioned above — DALCO purchased various machineries, equipment, spare parts and supplies in addition to, or in replacement of some of those already owned and used by it on the date aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore regarding "after acquired properties," the BANK requested DALCO to submit complete lists of said properties but the latter failed to do so. In connection with these purchases, there appeared in the books of DALCO as due to Connell Bros. Company (Philippines) — a domestic corporation who was acting as the general purchasing agent of DALCO — thereinafter called CONNELL — the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.

On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose, passed a resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by CONNELL and DAMCO to it. Thereafter, the corresponding agreements of rescission of sale were executed between DALCO and DAMCO, on the one hand and between DALCO and CONNELL, on the other.

On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure proceedings in the Court of First Instance of Camarines Norte against DALCO and DAMCO. On the same date they filed an ex-parte application for the appointment of a Receiver and/or for the issuance of a writ of preliminary injunction to restrain DALCO from removing its properties. The court granted both remedies and appointed George H. Evans as Receiver. Upon defendants' motion, however, the court, in its order of February 21, 1953, discharged the Receiver.

On March 2, 1953, defendants filed their answer denying the material allegations of the complaint and alleging several affirmative defenses and a counterclaim.

On March 4 of the same year, CONNELL, filed a motion for intervention alleging that it was the owner and possessor of some of the equipments, spare parts and supplies which DALCO had acquired subsequent to the execution of the mortgages sought to be foreclosed and which plaintiffs claimed were covered by the lien. In its order of March 18,1953 the Court granted the motion, as well as plaintiffs' motion to set aside the order discharging the Receiver. Consequently, Evans was reinstated.

On April 1, 1953, CONNELL filed its answer denying the material averment of the complaint, and asserting affirmative defenses and a counterclaim.

Upon motion of the parties the Court, on September 30, 1953, issued an order transferring the venue of the action to the Court of First Instance of Manila where it was docketed as Civil Case No. 20987.

On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the machineries, equipment and supplies of DALCO, and the same were subsequently sold for a total consideration of P175,000.00 which was deposited in court pending final determination of the action. By a similar agreement one-half (P87,500.00) of this amount was considered as representing the proceeds obtained from the sale of the "undebated properties" (those not claimed by DAMCO and CONNELL), and the other half as representing those obtained from the sale of the "after acquired properties".

After due trial, the Court, on July 15, 1960, rendered judgment as follows:

IN VIEW WHEREFORE, the Court:

1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of P200,000,00 with 7% interest per annum from July 13, 1950, Plus another sum of P100,000.00 with 5% interest per annum from July 13, 1950; plus 10% on both principal sums as attorney's fees;

2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of P900,000.00 with 4% interest per annum from July 3, 1950, plus 10% on both principal as attorney's fees;

3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of P425,860.55, and to pay unto Dahican American Lumber Co. the sum of P2,151,678.24 both with legal interest from the date of the filing of the respective answers of those parties, 10% of the principals as attorney's fees;

4. Orders that of the sum realized from the sale of the properties of P175,000.00, after deducting the recognized expenses, one-half thereof be adjudicated unto plaintiffs, the court no longer specifying the share of each because of that announced intention under the stipulation of facts to "pool their resources"; as to the other one-half, the same should be adjudicated unto both plaintiffs, and defendant Dahican American and Connell Bros. in the proportion already set forth on page 9, lines 21, 22 and 23 of the body of this decision; but with the understanding that whatever plaintiffs and Dahican American and Connell Bros. should receive from the P175,000.00 deposited in the Court shall be applied to the judgments particularly rendered in favor of each;

5. No other pronouncement as to costs; but the costs of the receivership as to the debated properties shall be borne by People's Bank, Atlantic Gulf, Connell Bros., and Dahican American Lumber Co., pro-rata.

On the following day, the Court issued the following supplementary decision:

IN VIEW WHEREOF, the dispositive part of the decision is hereby amended in order to add the following paragraph 6:

6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety (90) days, the Court orders the sale at public auction of the lands object of the mortgages to satisfy the said mortgages and costs of foreclosure.

From the above-quoted decision, all the parties appealed.

Main contentions of plaintiffs as appellants are the following: that the "after acquired properties" were subject to the deeds of mortgage mentioned heretofore; that said properties were acquired from suppliers other than DAMCO and CONNELL; that even granting that DAMCO and CONNELL were the real suppliers, the rescission of the sales to DALCO could not prejudice the mortgage lien in favor of plaintiffs; that considering the foregoing, the proceeds obtained from the sale of the "after acquired properties" as well as those obtained from the sale of the "undebated properties" in the total sum of P175,000.00 should have been awarded exclusively to plaintiffs by reason of the mortgage lien they had thereon; that damages should have been awarded to plaintiffs against defendants, all of them being guilty of an attempt to defraud the former when they sought to rescind the sales already mentioned for the purpose of defeating their mortgage lien, and finally, that defendants should have been made to bear all the expenses of the receivership, costs and attorney's fees.

On the other hand, defendants-appellants contend that the trial court erred: firstly, in not holding that plaintiffs had no cause of action against them because the promissory note sued upon was not yet due when the action to foreclose the mortgages was commenced; secondly, in not holding that the mortgages aforesaid were null and void as regards the "after acquired properties" of DALCO because they were not registered in accordance with the Chattel Mortgage Law, the court erring, as a consequence, in holding that said properties were subject to the mortgage lien in favor of plaintiffs; thirdly, in not holding that the provision of the fourth paragraph of each of said mortgages did not automatically make subject to such mortgages the "after acquired

properties", the only meaning thereof being that the mortgagor was willing to constitute a lien over such properties; fourthly, in not ruling that said stipulation was void as against DAMCO and CONNELL and in not awarding the proceeds obtained from the sale of the "after acquired properties" to the latter exclusively; fifthly, in appointing a Receiver and in holding that the damages suffered by DAMCO and CONNELL by reason of the depreciation or loss in value of the "after acquired properties" placed under receivership was damnum absque injuria and, consequently, in not awarding, to said parties the corresponding damages claimed in their counterclaim; lastly, in sentencing DALCO and DAMCO to pay attorney's fees and in requiring DAMCO and CONNELL to pay the costs of the Receivership, instead of sentencing plaintiffs to pay attorney's fees.

Plaintiffs' brief as appellants submit six assignments of error, while that of defendants also as appellants submit a total of seventeen. However, the multifarious issues thus before Us may be resolved, directly or indirectly, by deciding the following issues:

Firstly, are the so-called "after acquired properties" covered by and subject to the deeds of mortgage subject of foreclosure?; secondly, assuming that they are subject thereto, are the mortgages valid and binding on the properties aforesaid inspite of the fact that they were not registered in accordance with the provisions of the Chattel Mortgage Law?; thirdly, assuming again that the mortgages are valid and binding upon the "after acquired properties", what is the effect thereon, if any, of the rescission of sales entered into, on the one hand, between DAMCO and DALCO, and between DALCO and CONNELL, on the other?; and lastly, was the action to foreclose the mortgages premature?

A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every nature and description taken in exchange or replacement, as well as all buildings, machineries, fixtures, tools, equipments, and other property that the mortgagor may acquire, construct, install, attach; or use in, to upon, or in connection with the premises — that is, its lumber concession — "shall immediately be and become subject to the lien" of both mortgages in the same manner and to the same extent as if already included therein at the time of their execution. As the language thus used leaves no room for doubt as to the intention of the parties, We see no useful purpose in discussing the matter extensively. Suffice it to say that the stipulation referred to is common, and We might say logical, in all cases where the properties given as collateral are perishable or subject to inevitable wear and tear or were intended to be sold, or to be used — thus becoming subject to the inevitable wear and tear — but with the understanding — express or implied — that they shall be replaced with others to be thereafter acquired by the mortgagor. Such stipulation is neither unlawful nor immoral, its obvious purpose being to maintain, to the extent allowed by circumstances, the original value of the properties given as security. Indeed, if such properties were of the nature already referred to, it would be poor judgment on the part of the creditor who does not see to it that a similar provision is included in the contract.

B. But defendants contend that, granting without admitting, that the deeds of mortgage in question cover the "after acquired properties" of DALCO, the same are void and ineffectual because they were not registered in accordance with the Chattel Mortgage Law. In support of this and of the proposition that, even if said mortgages were valid, they should not prejudice them, the defendants argue (1) that the deeds do not describe the mortgaged chattels specifically, nor were they registered in accordance with the Chattel Mortgage Law; (2) that the stipulation contained in the fourth paragraph thereof constitutes "mere executory agreements to give a lien" over the "after acquired properties" upon their acquisition; and (3) that any mortgage stipulation concerning "after acquired properties" should not prejudice creditors and other third persons such as DAMCO and CONNELL.

The stipulation under consideration strongly belies defendants contention. As adverted to hereinbefore, it states that all property of every nature, building, machinery etc. taken in exchange or replacement by the mortgagor "shall immediately be and become subject to the lien of this mortgage in the same manner and to the same extent as if now included therein". No clearer language could have been chosen.

Conceding, on the other hand, that it is the law in this jurisdiction that, to affect third persons, a chattel mortgage must be registered and must describe the mortgaged chattels or personal properties sufficiently to enable the parties and any other person to identify them, We say that such law does not apply to this case.

As the mortgages in question were executed on July 13, 1950 with the old Civil Code still in force, there can be no doubt that the provisions of said code must govern their interpretation and the question of their validity. It happens however, that Articles 334 and 1877 of the old Civil Code are substantially reproduced in Articles 415 and 2127, respectively, of the new Civil Code. It is, therefore, immaterial in this case whether we take the former or the latter as guide in deciding the point under consideration.

Article 415 does not define real property but enumerates what are considered as such, among them being machinery, receptacles, instruments or replacements intended by owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and shall tend directly to meet the needs of the said industry or works.

On the strength of the above-quoted legal provisions, the lower court held that inasmuch as "the chattels were placed in the real properties mortgaged to plaintiffs, they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil Code".

We find the above ruling in agreement with our decisions on the subject:

(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph 5 of the Civil Code (old) gives the character of real property to machinery, liquid containers, instruments or replacements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry.

(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a mortgage constituted on a sugar central includes not only the land on which it is built but also the buildings, machinery and accessories installed at the time the mortgage was constituted as well as the buildings, machinery and accessories belonging to the mortgagor, installed after the constitution thereof .

It is not disputed in the case at bar that the "after acquired properties" were purchased by DALCO in connection with, and for use in the development of its lumber concession and that they were purchased in addition to, or in replacement of those already existing in the premises on July 13, 1950. In Law, therefore, they must be deemed to have been immobilized, with the result that the real estate mortgages involved herein — which were registered as such — did not have to be registered a second time as chattel mortgages in order to bind the "after acquired properties" and affect third parties.

But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil. 709, claim that the "after acquired properties" did not become immobilized because DALCO did not own the whole area of its lumber concession all over which said properties were scattered.

The facts in the Davao Sawmill case, however, are not on all fours with the ones obtaining in the present. In the former, the Davao Sawmill Company, Inc., had repeatedly treated the machinery therein involved as personal property by executing chattel mortgages thereon in favor of third parties, while in the present case the parties had treated the "after acquired properties" as real properties by expressly and unequivocally agreeing that they shall automatically become subject to the lien of the real estate mortgages executed by them. In the Davao Sawmill decision it was, in fact, stated that "the characterization of the property as chattels by the appellant is indicative of intention and impresses upon the property the character determined by the parties" (61 Phil. 112, emphasis supplied). In the present case, the characterization of the "after acquired properties" as real property was made not only by one but by both interested parties. There is, therefore, more reason to hold that such consensus impresses upon the properties the character determined by the parties who must now be held in estoppel to question it.

Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central Altagracia, Inc. (225 U.S. 58) where it was held that while under the general law of Puerto Rico, machinery placed on property by a tenant does not become immobilized, yet, when the tenant places it there pursuant to contract that it shall belong to the owner, it then becomes immobilized as to that tenant and even as against his assignees and creditors who had sufficient notice of such stipulation. In the case at bar it is not disputed that DALCO purchased the "after

acquired properties" to be placed on, and be used in the development of its lumber concession, and agreed further that the same shall become immediately subject to the lien constituted by the questioned mortgages. There is also abundant evidence in the record that DAMCO and CONNELL had full notice of such stipulation and had never thought of disputed validity until the present case was filed. Consequently all of them must be deemed barred from denying that the properties in question had become immobilized.

What We have said heretofore sufficiently disposes all the arguments adduced by defendants in support their contention that the mortgages under foreclosure are void, and, that, even if valid, are ineffectual as against DAMCO and CONNELL.

Now to the question of whether or not DAMCO CONNELL have rights over the "after acquired properties" superior to the mortgage lien constituted thereon in favor of plaintiffs. It is defendants' contention that in relation to said properties they are "unpaid sellers"; that as such they had not only a superior lien on the "after acquired properties" but also the right to rescind the sales thereof to DALCO.

This contention — it is obvious — would have validity only if it were true that DAMCO and CONNELL were the suppliers or vendors of the "after acquired properties". According to the record, plaintiffs did not know their exact identity and description prior to the filing of the case bar because DALCO, in violation of its obligation under the mortgages, had failed and refused theretofore to submit a complete list thereof. In the course of the proceedings, however, when defendants moved to dissolve the order of receivership and the writ of preliminary injunction issued by the lower court, they attached to their motion the lists marked as Exhibits 1, 2 and 3 describing the properties aforesaid. Later on, the parties agreed to consider said lists as identifying and describing the "after acquire properties," and engaged the services of auditors to examine the books of DALCO so as to bring out the details thereof. The report of the auditors and its annexes (Exhibits V, V-1 — V4) show that neither DAMCO nor CONNELL had supplied any of the goods of which they respective claimed to be the unpaid seller; that all items were supplied by different parties, neither of whom appeared to be DAMCO or CONNELL that, in fact, CONNELL collected a 5% service charge on the net value of all items it claims to have sold to DALCO and which, in truth, it had purchased for DALCO as the latter's general agent; that CONNELL had to issue its own invoices in addition to those o f the real suppliers in order to collect and justify such service charge.

Taking into account the above circumstances together with the fact that DAMCO was a stockholder and CONNELL was not only a stockholder but the general agent of DALCO, their claim to be the suppliers of the "after acquired required properties" would seem to be preposterous. The most that can be claimed on the basis of the evidence is that DAMCO and CONNELL probably financed some of the purchases. But if DALCO still owes them any amount in this connection, it is clear that, as financiers, they can not claim any right over the "after acquired properties" superior to the lien constituted thereon by virtue of the deeds of mortgage under foreclosure. Indeed, the execution of the rescission of sales mentioned heretofore appears to be but a desperate attempt to better or improve DAMCO and CONNELL's position by enabling them to assume the role of "unpaid suppliers" and thus claim a vendor's lien over the "after acquired properties". The attempt, of course, is utterly ineffectual, not only because they are not the "unpaid sellers" they claim to be but also because there is abundant evidence in the record showing that both DAMCO and CONNELL had known and admitted from the beginning that the "after acquired properties" of DALCO were meant to be included in the first and second mortgages under foreclosure.

The claim that Belden, of ATLANTIC, had given his consent to the rescission, expressly or otherwise, is of no consequence and does not make the rescission valid and legally effective. It must be stated clearly, however, in justice to Belden, that, as a member of the Board of Directors of DALCO, he opposed the resolution of December 15, 1952 passed by said Board and the subsequent rescission of the sales.

Finally, defendants claim that the action to foreclose the mortgages filed on February 12, 1953 was premature because the promissory note sued upon did not fall due until April 1 of the same year, concluding from this that, when the action was commenced, the plaintiffs had no cause of action. Upon this question the lower court says the following in the appealed judgment;

The other is the defense of prematurity of the causes of action in that plaintiffs, as a matter of grace, conceded an extension of time to pay up to 1 April, 1953 while the action was filed on 12 February, 1953, but, as to this, the Court taking it that there is absolutely no debate that Dahican Lumber Co., was insolvent as of the date of the filing of the complaint, it should follow that the debtor thereby lost the benefit to the period.

x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New Civil Code);

and as the guaranty was plainly inadequate since the claim of plaintiffs reached in the aggregate, P1,200,000 excluding interest while the aggregate price of the "after-acquired" chattels claimed by Connell under the rescission contracts was P1,614,675.94, Exh. 1, Exh. V, report of auditors, and as a matter of fact, almost all the properties were sold afterwards for only P175,000.00, page 47, Vol. IV, and the Court understanding that when the law permits the debtor to enjoy the benefits of the period notwithstanding that he is insolvent by his giving a guaranty for the debt, that must mean a new and efficient guaranty, must concede that the causes of action for collection of the notes were not premature.

Very little need be added to the above. Defendants, however, contend that the lower court had no basis for finding that, when the action was commenced, DALCO was insolvent for purposes related to Article 1198, paragraph 1 of the Civil Code. We find, however, that the finding of the trial court is sufficiently supported by the evidence particularly the resolution marked as Exhibit K, which shows that on December 16, 1952 — in the words of the Chairman of the Board — DALCO was "without funds, neither does it expect to have any funds in the foreseeable future." (p. 64, record on appeal).

The remaining issues, namely, whether or not the proceeds obtained from the sale of the "after acquired properties" should have been awarded exclusively to the plaintiffs or to DAMCO and CONNELL, and if in law they should be distributed among said parties, whether or not the distribution should be pro-rata or otherwise; whether or not plaintiffs are entitled to damages; and, lastly, whether or not the expenses incidental to the Receivership should be borne by all the parties on a pro-rata basis or exclusively by one or some of them are of a secondary nature as they are already impliedly resolved by what has been said heretofore.

As regard the proceeds obtained from the sale of the of after acquired properties" and the "undebated properties", it is clear, in view of our opinion sustaining the validity of the mortgages in relation thereto, that said proceeds should be awarded exclusively to the plaintiffs in payment of the money obligations secured by the mortgages under foreclosure.

On the question of plaintiffs' right to recover damages from the defendants, the law (Articles 1313 and 1314 of the New Civil Code) provides that creditors are protected in cases of contracts intended to defraud them; and that any third person who induces another to violate his contract shall be liable for damages to the other contracting party. Similar liability is demandable under Arts. 20 and 21 — which may be given retroactive effect (Arts. 225253) — or under Arts. 1902 and 2176 of the Old Civil Code.

The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO, after failing to pay the fifth promissory note upon its maturity, conspired jointly with CONNELL to violate the provisions of the fourth paragraph of the mortgages under foreclosure by attempting to defeat plaintiffs' mortgage lien on the "after acquired properties". As a result, the plaintiffs had to go to court to protect their rights thus jeopardized. Defendants' liability for damages is therefore clear.

However, the measure of the damages suffered by the plaintiffs is not what the latter claim, namely, the difference between the alleged total obligation secured by the mortgages amounting to around P1,200,000.00, plus the stipulated interest and attorney's fees, on the one hand, and the proceeds obtained from the sale of "after acquired properties", and of those that were not claimed neither by DAMCO nor CONNELL, on the other. Considering that the sale of the real properties subject to the mortgages under foreclosure has not been effected, and considering further the lack of evidence showing that the true value of all the properties already sold was not realized because their sale was under stress, We feel that We do not have before Us the true elements or factors that should determine the amount of damages that plaintiffs are entitled recover from

defendants. It is, however, our considered opinion that, upon the facts established, all the expenses of the Receivership, which was deemed necessary to safeguard the rights of the plaintiffs, should be borne by the defendants, jointly and severally, in the same manner that all of them should pay to the plaintiffs, jointly a severally, attorney's fees awarded in the appealed judgment.

In consonance with the portion of this decision concerning the damages that the plaintiffs are entitled to recover from the defendants, the record of this case shall be remanded below for the corresponding proceedings.

Modified as above indicated, the appealed judgment is affirmed in all other respects. With costs.

Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.

G.R. No. L-32762 January 27, 1983

CRISTINA PENULLAR, petitioner, vs.PHILIPPINE NATIONAL BANK, respondent.

Teodoro T Junio for petitioner.

Antonio M. Ramos for respondent PNB.

 

GUTIERREZ, JR., J.:

The principal issue raised in this petition is whether or not the Court of Appeals, even as it sustained the trial court's finding that the titles covering the disputed parcels of land are null and void, could still declare that the mortgages annotated on those titles are valid.

The Court of Appeals stated the facts of this case as follows:

RESOLVING: On Appeal Civil Case No. D-894 of the Court of First Instance of Pangasinan instituted by Cristina P. Penullar against Florencio Felix et. al., for declaration of absolute nullity of judicial proceedings in which after filing of the complaint on 9 May, 1959, answer on 27 May, 1959 by the Philippine National Bank stipulation of facts on 1 February, 1967 and hearing on 11 August 1967 with only plaintiff presenting evidence purely documentary there was after that promulgated decision disposing.

WHEREFORE, in view of all the foregoing the Court rules that:

(1) that the proceedings made under Land Registration Case No. 16347 are null and void;

(2) that all the titles issued by the Land Registration Court pursuant to the said Land Registration proceedings, as well as all Certificate of Title flowing from the said original title are null and void;

(3) that the land covered by this case are the registered properties of the plaintiff over which she holds an irrevocable and indefeasible title over the same;

(4) that the writ of possession issued by the land registration court on 26 of September 1958 in connection with Land Registration Case No. 16347 is null and void; (5) that since the plaintiff

has been found to be the sole and absolute owner of the properties in question, the defendants are hereby ordered to vacate the same and to surrender the possession as well as the ownership thereof in favor of the plaintiff;

(6) that the defendants are required to render a true and faithful accounting of the fruits of the said properties from September 26, 1958 until the possession of the plaintiff has been restored, and to indemnify value of said products as may be found in said accounting. The defendants are likewise ordered to pay the costs of this suit.

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which defendant Philippine National Bank has taken here on appeal on the errors assigned in its brief;

IT APPEARING: That the antecedents are rather complicated; it will be the task of this Court to simplify; on 27 February, 1936 claiming that she was the absolute owner but that therein defendants were pretending to have an interest in the property and had intruded sometime in December, 1935, Genoveva Miguel filed Civil Case No. 7199 in the Court of First Instance of Pangasinan against Praxedes Moya et al., predecessors of herein plaintiff Cristina Penullar, for declaration of ownership over three (3) portions of agricultural land situated at Bayambang, Pangasinan; Praxedes Moya and companions presented their answer in due time Exh. A-1; while that Civil Case No. 7199 was pending, Genoveva Miguel presented formal application for registration of her title on 1 February, 1938 in land Case No. 16347; and Praxedes Moya opposed on 10 June, 1938 Exh. B-3; well then on a date which is not very clear in the records but during the pendency of both Civil Case No. 7199 and the land registration Case No. 160.47, Praxedes Moya was able to obtain free patent over the property and unto her was issued original certificate of title No. 3148 and on another parcel also was issued a free patent in the name of one Josefa Sison also one of herein plaintiff's predecessors and unto her was issued Original Certificate of Title No. 2932; in both cases, Civil Case No. 7199 and Expediente 16347 trial Judge issued order on 15 February, 1940 suspending hearing in order to give a chance to Genoveva Miguel to investigate the Original Certificates of Title No, 3148 and 2932 Exh. A-4, issuing a supplementary order on 11 September, 1940 that said cases be held in abeyance,

Until after the Department of Agriculture and Commerce pass upon the complaint that Genoveva Miguel and others have made for the cancellation or withdrawal of the free 'patent certificate issued in the name of Praxedes Moya and others.

the parties shall immediately notify the Court soon after the Department of Agriculture and Commerce renders any action on said claim. 'Exh. B- 6;

but nothing more happened with respect to the cancellation of the free patents; and so it was that, on 22 May, 1947 Exh. A-7 because

since September 11, 1940 up to this date, the plaintiff has failed to take any steps for the prosecution of her action.

trial Judge in Civil Case No. 7199 dismissed the case,

without prejudice and without pronouncement as to costs,

and what Genoveva Miguel instead did after that was to prosecute the registration case and after the same had been finally heard, in the absence of Praxedes Moya, et. al., the Registration Court promulgated its decision on 20 December, 1955 ordering the inscription of

the properties now in question in the name of applicant Genoveva Miguel's heirs because she had died in the meantime and as the judgment afterwards became final: Genoveva Miguel or better stated her successors in interest applied for a writ of possession which was granted the Registration Court on 25 September, 1958 and it was executed by the Sheriff on 30 September, 1958 but in the words of the Sheriff, herein plaintiff successor in interest of oppositor Praxedes Moya,

vehemently objected to the possession of the applicant,'

and a few months after that herein plaintiff Cristina Penullar filed the present Civil Case No, T-894 for annulment of the Registration Proceeding specifically the decision rendered therein and the titles issued pursuant to that in the name of the heirs of Genoveva Miguel, namely Original Certificates No. 14242, 24244, 24240, 14238, 24313 as well as the incumbrance by way of mortgage constituted by the said adjudicatees in favor of the Philippine National Bank, on the Position that the lands having already been registered, although by way of free patent, the titles in the names of Praxedes Moya and Josefa Sison, predecessors in interest of Cristina Penullar became an absolute bar against posterior registration and in the trial of the case plaintiff submitted her case on the basis of aforementioned documentary proofs constituting of Exhs. A to 0, against this, Philippine National Bank in its answer p. 23 R.A. submitted as special defense that it was an innocent mortgagee for value having granted loans to the adjudicatees in the registration case namely Maximo Alejo, Filomeno Domingo, Serafina Gascon relying on their titles which appeared to be genuine, issued in due course and regular on their face; and it is to be stated that the fact of this constitution of the mortgages in favor of the Philippine National Bank by the said adjudicatees successors in interest of Genoveva Miguel does not appear to be debated; but trial Judge after hearing the case held for Cristina Penullar successor in the interest of Praxedes Moya and Josefa Sison and annulled the titles issued pursuant to the decision of the Land Registration Court in favor of the successors in interest of Genoveva Miguel; ...

The respondent Court of Appeals modified the appealed decision to the effect ... that the mortgages in favor of Philippine National Bank attacked by plaintiff are hereby declared valid.' In all other respects, the decision of the lower court was affirmed. (Annex " D ", p. 18, rollo)

Not satisfied with the modified decision, plaintiff-appellee Cristina Penullar filed a motion for reconsideration and when the motion was denied by the respondent court, filed the instant petition.

The petitioner assigns the following errors:

I

THE COURT OF APPEALS ERRED IN HOLDING AS VALID THE MORTGAGES NEVER ANNOTATED IN PETITIONER'S TITLES BUT IN THE VOID TITLES OF RESPONDENT'S CO-DEFENDANTS.

II

THE COURT OF APPEALS ERRED IN ADJUDICATING RESPONDENT'S APPEAL UPON AN ISSUE NOT RAISED IN THE PLEADINGS BEFORE ITSELF NOR BEFORE THE TRIAL COURT.

III

THE COURT OF APPEALS ERRED IN RESORTING TO PALPABLY UNTENABLE THEORIES AND POSTULATES TO JUSTIFY ITS DECISION.

The main issue centers on the ruling of the Court of Appeals' sustaining the validity of the mortgages in favor of the respondent Philippine National Bank.

The petitioner contends: 1. that the Court of Appeals did not have a basis to rule on the matter since the issue of the Philippine National Bank as a mortgagee in good faith was never raised before the trial court and the Court of Appeals, and 2. under the facts obtaining in the case was not justified in ruling that respondent Philippine National Bank's mortgages were valid.

The record on Appeal filed by the Philippine National Bank shows that in the Answer of the bank, there was alleged the special defense .. that the Philippine National Bank, a credit institution, in the ordinary course of business, in good faith and for valuable consideration, is an innocent purchaser having granted loans to Maximo Alejo. ... and to Filomeno Domingo and Serafina Gascon ... under the security of Torrens Title issued to the borrower and relying on the fact of the same which appeared to be genuine, regular and in due form." (Record on Appeal, p. 24) Moreover, respondent Philippine National Bank on the very theory that it was a mortgage in good faith filed a Motion to Dismiss the case as against it. (Record on Appeal, pp. 31-34) And this motion was subject to another URGENT MOTION for Resolution filed by respondent Philippine National Bank (Record on Appeal, pp. 39-40).1äwphï1.ñët The same motion prompted the petitioner plaintiff in the trial court, to file an Opposition thereto, (Record on Appeal, PP- 40-41) which in turn led the respondent Philippine National Bank to file a Reply to the Opposition. (Record on Appeal pp, 48- 50).

In its appeal to the Court of Appeals, the Philippine National Bank maintained its position that it was a mortgagee in good faith. Thus, in the third Assignment of Error of its brief filed before the appellate court, the Philippine National Bank adequately discussed its being a mortgagee in good faith. The first proposition is without merit.

The second proposition covered by the first and third assignments of errors is premised on the following arguments: Since the torrens titles wherein respondent Philippine National Bank's mortgages were annotated were declared void, necessarily the same mortgages annotated in the said torrens title should also be declared void, on the theory that a mortgage is but an accessory contract. The petitioner maintains that her torrens title should not answer for the same mortgages since the latter were not annotated considering the "fundamental principle of registration that Torrens titles are affected only by the encumbrance registered and annotated in said titles." Furthermore, she argues that to validate the mortgages annotated in the void titles of Philippine National Bank's co-defendants but never annotated in her torrens titles would in effect revalidate the void titles to co-exist with her valid title.

The petitioner considers the ruling of the Court of Appeals inconsistent because according to her no valid lien could emanate from a void title.

The petitioner's arguments have no merit. The Court of Appeals fully explained the reasons why the mortgages annotated in the void torrens titles should be considered valid. Thus:

... now in resolving this question let it be granted that there is clear logic in the position of appellees that the titles of the heirs of Genoveva Miguel mortgagors to Philippine National Bank having been declared void, on the principle that the rights of Philippine National Bank being dependent upon those void titles, Philippine National Bank should not be permitted to pretend that its mortgages should be considered a valid encumbrance upon the property, for it is like the branch of a dead tree so to speak but the trouble is that cases cannot be decided upon pure logic; the fact of the matter is that the Bank relief upon regular Torrens Titles issued pursuant to a regular judgment of the registration Court: there is no showing, absolutely no showing, that the Bank was made specifically aware of the fact that the very property already covered by the free patents were only afterwards adjudicated to and Torrens Titles issued in the name of the heirs of Genoveva Miguel, who were the parties that afterwards had secured the mortgages from the Bank, not only this, the declaration of nullity of the titles of the heirs of Genoveva Miguel due to the fact that there had already been free patents issued in the name of plaintiff's predecessors Praxedes Moya and Josefa Sison came in only much later and in fact as of the time when these mortgages were accepted by the Bank, there was as yet no

decision declaring the titles of the mortgagors null and void; stated otherwise there can be no denying the fact that the Bank was made to rely and had the right to rely upon regular certificates of title first presented to it by the mortgagors; ... (Rollo, pp. 17-18)

The foregoing findings and conclusions of the respondent Court are sustained by rulings in precedent cases.

In Director of Lands v. Abache (73 Phil. 606) the principal issue hinged on whether or not the mortgage lien annotated on the torrens title which was declared null and void should likewise be ordered null and void. We said:

Where, however, innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificates of title, for everyone dealing with property registered under the Torrens System would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the court. And this is contrary to the evident purpose of the law. Section 39 of Act No. 496 provides that every person receiving a certificate of title in pursuance of a dectree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith, shall hold the same free of all encumbrance except those noted on said certificate. We have heretofore emphasized, and do so now, that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property .

Resolving a similar issue in Blanco, et al. v. Esquierdo, et al. (110 Phil. 495) this Court ruled:

That the certificate of title issued in the name of Fructuosa Esquierdo (mortgagor) is a nullity, the same having been secured thru fraud, is not here in question. The only question for determination is whether the defendant bank is entitled to the protection accorded to 'innocent purchasers for value', which phrase, according to sec. 38 of the Land Registration Law, includes an innocent mortgagee for value. The question, in our opinion, must be answered in the affirmative.

The trial court, in the decision complained of, made no finding that the defendant mortgagee bank was a party to the fraudulent transfer of the land to Fructuosa Esquierdo. Indeed, there is nothing alleged in the complaint which may implicate said defendant mortgagee in the fraud, or justify a finding that it acted in bad faith. On the other hand, the certificate of title was in the name of the mortgagor Fructuosa Esquierdo when the land was mortgaged by her to the defendant bank. Such being the case, the said defendant bank, as mortgagee, had the right to rely on what appeared in the certificate and, in the absence of anything to excite suspicion, was under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the fact of said certificate. (De Lara, et. al. vs. Ayroso 95 Phil. 185; 50 Off. Gaz., [101 4838; Joaquin vs. Madrid, et al., 106 Phil. 1060). Being thus an innocent mortgagee for value, its right or lien upon the land mortgaged must be respected and protected, even if the mortgagor obtained her title thereto thru fraud. ...

In the instant case, the Philippine National Bank relied on the torrens titles of the mortgagors which had been regularly issued. The torrens titles were the result of regular land registration proceedings duly registered with the Register of Deeds. There was nothing in the torrens titles which would excite suspicion that the same were fraudulently processed by the mortgagors. Applying, therefore, the principles enunciated in the afore- cited cases, the respondent Bank was not duty bound to further investigate the validity and/or invalidity of the torrens title.

The assertion that the Philippine National Bank could not be an innocent mortgagee in good faith considering that the same parcel of land covered by the invalidated titles was previously mortgaged by: first, Domingo Cayabyab, a predecessor-in-interest of the petitioner and second, by the petitioner herself under Transfer

Certificate of Title No. 8822 to the respondent Philippine National Bank is not well-taken. An examination of the technical descriptions of the parcels of land covered by the three subject torrens titles shows that they are different from each other and there is no way for a reader to detect that the void torrens titles covered the same parcels of land in Transfer Certificate of Title No. 8822, previously mortgaged to the respondent Bank. Thus, Transfer Certificate of Title No. 8822 has the following technical description of the land it covers:

A parcel of land Plan F-61451, situated in the barrio of Pant-at Municipality of Bayambang, Province of Pangasinan, Islands of Luzon, Bounded on the Northeast by Lot No. 1-B of Plan Psd 8364, Lot No. 1 of Plan Psu-30431-Amd. and Lot No. 2 of plan Psu-37494 vs. Lot No. 2 of plan Psu 30431 Amd. on the Southeast, by property of Josefa Sison de Mananzan, on the Southwest, by properties of Maximiano Felix and Heirs of Martin Palisoc, and on the Northwest by Lot No. 5 of plan Psu-103094, and Lot No. 1-B of plan Psd 8364. Containing an area of ONE HUNDRED FIVE THOUSAND TWO HUNDRED SEVENTY EIGHT (105,278), square meters more or less. Surveyed under authority of Sections 41, 43, Act No. 2874 and in accordance with existing regulations of the Bureau of Lands by Pedro Terrado, Private Land Surveyor, on Dec. 17, 1933.

On the other hand, the technical description of the parcel of land awarded to Maximo Alejo, mortgagor in one of the subject mortgages in favor of the respondent Bank, which appears in the writ of possession issued by the cadastral court in the voided land registration proceedings and which necessarily must have been included in the Original Certificate of Title No. 14240 issued in the name of the same Maximo Alejo reads:

4. A parcel of land (Lot No. 3, plan Psu-103094). Bounded on the NE, by property of Gregorio de Leon & Domingo Rodriguez (before) Onofre Sison Abalos (now); on the SE. by lot No. 2; on the SW. by properties of Flaviano Junio and Vicente Castillo; and on the NW. by Lot No. Area 14,807 square meters. Adjudicated in favor of Maximo Alejo.

The technical description of the parcel of land awarded to Filomeno Domingo, the mortgagor in the other mortgage in favor of respondent Philippine National Bank, which description necessarily must have been inscribed on Transfer Certificate of Title No. 24313 issued in his name reads:

1. A parcel of land (Lot No. 1, plan Psu- 103094).Bounded on the N. and NW. by Lot No. 2; on the NE. by property of Gregorio de Leon & Domingo Rodriguez (before) Onofre Sison Abalos (now); on the SE. by Vecinal Road (before) heirs of German Maramba (now); and on the SW. by properties of Faustino Pinto and Filemon Padua. Area 27,463 square meters. Adjudicated in favor of Florencio Felix.

2. A parcel of land (Lot No. 2, Plan Psu-103094). Bounded on the NE: by property of Gregorio de Leon & Domingo Rodriguez before Onofre Sison Abalos (now); on the SE. and S. by Lot No. 1; on the SW. by property of Flaviano Junio and on the NW. by Lot No. 3. Area 26,870 square meters. Adjudicated in favor of Florencio Felix.

We agree with the invocation by the Court of Appeals of the principle of equity:

... if there be any doubt as to the correctness of this solution this court might as well invoke the principle that where one of two innocent parties must have to suffer due to the act of a third person, he whose negligence had caused the damage should be made to bear the loss; in the present case if 'he heirs of Genoveva Miguel, that is to say herein plaintiff had only been diligent, and had appealed from the decision in the registration case, no certificate of Title would have been issued just like that in the name of the heirs of Genoveva Miguel and no mortgage could have been constituted by them in favor of Bank but as it is, said successors of Praxedes Moya and Josefa Sison failed to do that; instead they let the decision in the registration case gain the status of finality; allowed without prior protest, the certificate of title to be issued; did not even as early as possible, annotate an adverse claim on the "titles; and they filed this case only several months afterwards, it was their negligence that permitted said adjudicatees in the said registration case to apply for and secure mortgages from the Bank.

The petitioner argues that neither she nor her predecessors could have appealed the decision in the land registration proceedings because: 1) her predecessors were already dead at the time of the promulgation of the decision, and 2) she was not substituted as a party nor was she aware of said registration proceedings, 3) petitioner's predecessor Praxedes Moya who was aware of the land registration proceedings had the right to rely on the previous suspension of the land registration proceedings; and 4) petitioner's predecessor had the right to rely on the dismissal of Civil Case No. 7199 filed by respondent's co-defendant against; petitioner's predecessors for "declaration of ownership 'over the subject, parcels of land and that nobody notified petitioner or her predecessors of the revival of the void subsequent registration proceedings.

The arguments are not well-taken. The records show that Praxedes Moya, predecessor-in-interest of the petitioner, was fully aware of the subject land registration proceedings. From the stipulation of the Facts" alone, the extent of her knowledge can be gleaned Thus:

xxx xxx xxx

(7) That Notice of Hearing of the Registration Case No. 16347, G.L.R.O. Record No. 52435, dated July 11, 1955 was issued by the Court, setting the trial for October 6, 1955.

(8) Copy of this Notice of Hearing was sent by registered mail, under Registered letter No. 118, which was received by counsel for Praxedes Moya Atty. Jose M. Garcia, on July 22, 1955, as evidenced by Registry Return Card of letter No. 118 attached in the Record of the said registration case on page 148; and,

(9) Praxedes Moya herself received or. July 23, 1955 copy of the Notice of Hearing as evidenced by Registry Return Card of registered letter No. 119 attached to the records of Registration Case No. 16347 on page 151. (See minutes of October 6, 1955, page 153 of the Records of Registration Case No. 16347, G.L.R.O. Records No. 524 35.

(10) On December 20, 1955, the Court rendered its decision in said Reg. Case 16347, Record 52435 making the following adjudication ...

xxx xxx xxx

Copy of this Decision were (sic) sent by registered mail to Atty. Jose M. Garcia, counsel for Praxedes Moya who received it on January 27, 1956 as evidenced by Registry Return Card of Letter No. 39 attached to the Record of Registration Case No. 16347, on page 187,

(12) Praxedes Moya, herself, was also notified of this decision, furnished to her by registered letter which she received on January 30, 1956 as evidenced by Registry Return Card of Registered Letter No. 138, attached to the record of this registration Case 16347, on page 179. " (Record on Appeal pp, 55-56)

xxx xxx xxx

As successor-in-interest, the petitioner did not only succeed to the rights and interests of her predecessor-in-interest but she was also bound to recognize the liens and/or encumbrances attached to the subject parcels of land which by law are considered to be valid though not inscribed in the torrens title of that land. The petitioner cannot invoke her relationship with her predecessor when it is to her advantage and yet disclaim the effects of said relationship on exactly the same subject matter when it is to her disadvantage. This is the principle which the Court of Appeals took into consideration when it ruled that the negligence of petitioner's predecessor-in-interest was binding upon the petitioner herself notwithstanding her non- substitution as party to the subject land registration proceedings.

WHEREFORE. the decision appealed from is hereby affirmed. Costs against the petitioner.

SO ORDERED.

G.R. No. L-27730 January 21, 1974

PRIMA MALIPOL, in her own behalf and as guardian ad litem of her minor children, LYDIA MALIJAN, JOSEFINA MALIJAN, TEODORA MALIJAN, and SEBASTIAN MALIJAN, plaintiffs-appellees, vs.LILY LIM TAN and ERNESTO LABSAN, defendants-appellants.

Edgardo Moncada for plaintiffs-appellees.

Achacoso, Ocampo and Simbulan for defendants-appellants.

 

ZALDIVAR, J.:1äwphï1.ñët

Appeal on questions of law from the decision dated July 1, 1966, a judgment by default, and from the order dated October 10, 1966, of the Court of First Instance of Batangas in its Civil Case No. 1732 which denied defendants-appellants' motion to lift the order of default and for a new trial and which considered the judgment by default as standing with full force and effect.

In the evening of February 6, 1965, at about 8:35 o'clock, Pantaleon Malijan, who was walking with his companion Leonardo Amante on the shoulder of the road in Barrio San Felix, Sto. Tomas, Batangas, was hit by a gasoline tanker and was thrown to the ground. While he was sprawling on the ground Malijan was run over by the tanker's right wheel that got detached from its axle. Malijan's companion, with the aid of the barrio captain, brought Malijan to the San Pablo City Hospital where he died that same night, the cause of death being "possible traumatic cerebral hemorrhage due to vehicular accident."

The gasoline tanker with Plate No. T-52573, series of 1964, driven at the time of the accident by herein appellant Ernesto Labsan, was being used in connection with the gasoline business of the owner, the herein appellant Lily Lim Tan.

Representations and demands for payment of damage having been ignored by appellants, appellees filed on May 18, 1966 a complaint in the Court of First Instance of Batangas praying that appellants be condemned to pay, jointly and severally, the damages as specified in said complaint. The appellees are the mother and the minor brothers and sisters of the deceased Pantaleon Malijan.

Appellants were duly served with summons on May 19, 1966, but they failed to file their answer within the reglementary period. Upon appellees' motion of June 8, 1966 the trial court, in an order dated June 10, 1966, declare the appellants in default, and appellees were permitted to present their evidence in the absence of the appellants. The trial court rendered a decision, dated July 1, 1966, the dispositive portion of which reads as follows:

WHEREFORE, finding the averments in the complaint as supported by the evidence to be reasonable and justified, judgment is hereby rendered in favor of the plaintiffs and against the defendants. The defendant driver, Ernesto Labsan, is ordered (1) to pay the sum of P2,100.00 to the plaintiffs for expenses for hospitalization, medical treatment, vigil and burial of Pantaleon Malijan; (2) to pay to the plaintiffs the sum of P6,000.00 for the death of said victim; (3) to pay to the plaintiffs the sum of P20,000.00 for the loss of earnings of said deceased for a period of five years; (4) to pay to the plaintiffs the sum of P5,000.00 for moral damages; (5) to pay to the plaintiffs the sum of P2,000.00 for attorney's fees and P500.00 for incidental and litigation expenses; and (6) to pay the costs of the suit. Should Ernesto Labsan not be able to pay the foregoing damages, they shall be paid for by defendant Lily Lim Tan, who by law, being the owner and operator of the gasoline tanker that featured in the accident, is subsidiarily liable.

Copy of the decision was received by the appellees August on 23, 1966.

A motion for execution was filed on August 26, 1966 by appellees but the trial court held its resolution in abeyance until September 22, 1966 when the judgment would become final.

On September 21, 1966 appellants filed a verified motion to lift the order of default and for a new trial, alleging that they were deprived of their day in court when the order of default was issued and a decision rendered after; that they had good and valid defenses, namely: (a) that the accident which gave rise to the case was due to force majeure; (b) that appellant Ernesto Labsan was without fault in the accident that gave rise to the case; and (c) that appellant Lily Lim Tan had exercised the due diligence required of a good father of a family to prevent damage. Finding said motion to be without merit, the trial court denied the same on October 10, 1966. Hence, this appeal wherein appellants made assignment of errors, as follows:

(a) The trial court erred in finding that appellants took the complaint for granted by reason of the fact that appellants referred to their lawyer the complaint for answer only after the lapse of eleven (11) days from receipt thereof ;

(b) The trial court erred in not holding that the mistake committed by the late Atty. Daniel Chavez in giving the wrong date of receipt by appellants of the summons and the complaint to Atty. Romulo R. de Castro on June 10, 1966 due to the abnormal mental condition of the late Atty. Daniel Chavez on June 10, 1966 which thereafter resulted in the commission of suicide by the latter on June 17, 1966, constitutes the mistake and accident in law which warrant the relief from default and the granting of the new trial;

(c) The trial court erred in not holding that the fact that appellants, through Atty. Romulo R. de Castro, filed on June 10, 1966 a motion for extension of time to file answer, and thereafter actually did file their answer to the complaint on June 20, 1966 wherein they alleged good, valid and meritorious defenses against the claim of plaintiffs in the complaint, should warrant favorable consideration of appellants' motion to lift order of default and for new trial; and

(d) The trial court erred in not holding that the fact that appellants' motion to lift order of default and for new trial.

1. In support of their first assignment of error, counsel for appellants contends that the finding of the trial court, that the appellants took the complaint for granted when they referred the complaint to their lawyer only on the eleventh day after receipt thereof, was unwarranted, because appellants had 15 days from receipt of the summons and complaint to answer and their lawyer, the late Atty. Daniel Chavez, after the complaint was referred to him on the eleventh day, had still four days to file the answer, which he could very well do inasmuch as he was well acquainted with the facts because he was the lawyer of appellant Ernesto Labsan in Criminal Case No. 2200 of Court of First Instance of Batangas for homicide thru reckless imprudence — which case arose from the very accident subject of appellees' complaint; that appellant Lily Lim Tan, furthermore, had instructed her employee, Eleuterio Dizon, to handcarry the summons and to deliver it to nobody except to Atty. Chavez; that Atty. Chavez, in a distance telephone conversation with appellant Lily Lim Tan, assured the latter that he would attend to the complaint.

We do not find merit in the contention of counsel for appellants. It is within the sound discretion of the court to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer. In the motions for reconsideration of an order of default, the moving party has the burden of showing such diligence as would justify his being excused from not filing the answer with the reglementary period as provided by the Rules of Court, otherwise these guidelines for an orderly and expeditious procedure would be rendered meaningless. 1 Unless it is shown clearly that a party has justifiable reason for the delay the court will not ordinarily exercise its discretion in his favor. 2

In the instant case, We agree with the trial court that appellants have not shown that they exercised such diligence as an ordinary prudent person would exercise, to have the answer filed within the reglementary period. Appellant Lily Lim Tan admitted in her affidavit 3 that she received the summons and copy of the complaint on May 19, 1966, and that having read the complaint she found out that she was being sued, together with her driver, for damages in connection with the accident of February 6, 1965 at Sto. Tomas, Batangas. The damages asked in the complaint amounts to P36,600.00. The summons required them to answer the complaint within 15 days from receipt thereof, and warned them that should they fail to answer within said period the plaintiffs would take judgment against them for the relief demanded in the complaint. The damages demanded was not a negligible sum, and appellant Lily Lim Tan, who is a business woman, should have considered the matter a serious one. Ordinary prudence would dictate that she should concern herself about the matter, that she should refer said complaint with the least possible delay to her lawyer. But, for reasons she did not explain, she referred the complaint to her lawyer only after the lapse of ten (10) days from receipt thereof, i.e., on May 30, 1966. She should have considered that four days might not be sufficient time for her lawyer to prepare and file the answer.

Appellants, however, contend that their lawyer, Atty. Chavez, could very well prepare the answer within the remaining four days of the reglementary period, for he was conversant with the facts of the case. Be that as it may, the fact was that Atty. Chavez failed to file the answer. Because Atty. Chavez assured her, in their long distance telephone conversation that he would take care the complaint, appellant Lily Lim Tan took for granted that the answer would be filed on time. Said appellant should have checked before the expiration of the period for filing the answer whether the complaint was really taken care of, or not. But this, appellant Lily Lim Tan failed to do, and this is another instance showing her lack of concern over the complaint. There was, therefore, no showing of due diligence on the part of appellants which would excuse their failure to file their answer on time. There is no showing either that the other appellant, Ernesto Labsan, had taken any step to have an answer filed in his behalf — evidently he was relying on his employer.

2. In support of the second assignment of error, appellants contend that the facts show that on June 10, 1966, Atty. Chavez, who was then acting strangely, endorsed the summons and complaint to Atty. Romulo R. de Castro; that upon inquiry by Atty. de Castro from Atty. Chavez the latter informed him that the summons was served on appellants on May 30, 1966; that appellant Lily Lim Tan, who was assured by Atty. Chavez in their long distance telephone conversation that the complaint would be attended to, could not, by the exercise of ordinary diligence, have foreseen, and avoided, the circumstance that at the time she referred the summons to Atty. Chavez, the latter was already in an abnormal condition which later resulted in his committing suicide on June 17, 1966; that it was Atty. Chavez's abnormal condition and his having given to Atty. de Castro the wrong date of the receipt of the summons by the appellees that caused the delay in the filing of the answer; that said circumstances constituted mistake and accident which entitled appellants to relief from default and a grant of new trial.

Appellants' contention that the delay in filing the answer was due to mistake and accident is untenable.

The mistake, according to appellants, consisted in Atty. Chavez's having told Atty. de Castro on June 10, 1966 that appellants received the summons and complaint on May 30, 1966. Even if Atty. Chavez had told Atty. de Castro the correct date, that is, that appellants received the summons on May 19, 1966, the answer could not have been filed on time by Atty. de Castro, because the reglementary period for filing the answer expired on June 3, 1966, and it was already June 10, 1966, when the complaint was endorsed by Atty. Chavez to Atty. de Castro.

The accident, according to appellants' counsel, consisted in Atty. Chavez's being in an abnormal condition at the time the complaint was given to him on May 30, 1966. This claim of appellants is not supported by the record.

The record does not show that Atty. Chavez was suffering from an abnormal mind on May 30, 1966. His actuations on May 30 were those that could be expected of a normal person. Atty. Chavez asked the employee of appellant Lily Lim Tan about the date when his employer received the summons and complaint, and because the employee could not give him the desired information Atty. Chavez placed a long distance telephone call to appellant Lily Lim Tan to ask about said date. This action of Atty. Chavez showed that he

was very much aware that the reglementary period within which the answer should be filed was to be computed from the date of the receipt of the summons and the complaint. It also showed that Atty. Chavez knew the easiest and the most practical means to get the information that he needed — that was by a long distance telephone call to his client, Lily Lim Tan. These actuations of Atty. Chavez showed that he knew the importance of the matter at hand, and he was exercising the ordinary and reasonable care over the interests of his client. These specific actions of Atty. Chavez indicated that as of May 30, 1966 he had a sound mind.

It is claimed by appellants that on June 10, 1966 Atty. Chavez endorsed the complaint to Atty. de Castro, and told the latter that the summons and complaint were received by the appellants on May 30, 1966. It is further claimed by appellants that this information given by Atty. Chavez — that the summons and complaint were received by the appellants on May 30, 1966 — was the mistake that caused the delay of the filing of the answer. But it should be noted that on June 10, 1966 when Atty. Chavez endorsed the complaint to Atty. de Castro and informed the latter that the summons and complaint were received by the appellants on May 30, 1966, the period within which the answer should be filed had already expired — the expiry date being June 3, 1966.<äre||anº•1àw> There is no showing that between May 30, when Atty. Chavez received the summons and complaint from the employee of Lily Lim Tan, and June 3, 1973 Atty. Chavez was incapacitated to file the answer. And so it is clear that before the case was endorsed to Atty. de Castro, the appellants were already in default. The failure to file the answer on time may well be attributed to the mistake or "negligence of Atty. Chavez. The appellants are bound by the mistakes, and may suffer by the negligence, of their lawyer. In fact, on June 8, 1966, or two days before Atty. Chavez endorsed the case to Atty. de Castro, the appellees had filed a motion in court to declare the defendants (now the appellants) in default. The moves taken by Atty. de Castro — in filing a motion for extension of time to file an answer on June 10, 1966, and in finally filing an answer on June 20, 1966 — were already late.

The fact that Atty. Chavez committed suicide on June 17, 1966 does not necessarily prove that he was abnormal, incompetent or insane on May 30, 1966. Although there is a judicial declaration that a sane man would not commit suicide, cognizance is nevertheless taken of the fact that circumstances at some given time may impel a person to commit suicide. 4 The probative value of suicide in determining the sanity of a person is dependent on the factual situation in each case. Such matters as the reasons for the act of self-destruction, the circumstances indicating the person's state of mind at the time, and other pertinent facts must be considered. The appellants had not indicated to the trial court any circumstance from which the trial court could form an opinion of the mental condition of Atty. Chavez before he committed suicide. The trial court, therefore, did not err when it did not favorably consider the claim of the appellant that their failure to file their answer to the complaint was due to accident or mistake, as contemplated in Section 3 of Rule 18 of the Rules of Court.

3. In support of the third assignment of error, appellants argue that acting on the wrong information given by Atty. Chavez, Atty. Romulo de Castro filed on June 10, 1966 a motion for an extension of 20 days within which to file an answer and that he did file the answer with good, valid and meritorious defenses on June 20, 1966; that on June 27, 1966 when appellees were allowed to present their evidence ex-parte, the motion for extension of time and the answer already formed part of the records of the case; that inasmuch as the late filing of the answer was due to accident and mistake, and appellants had good, valid, and meritorious defenses, the motion to lift the order of default and for new trial should have been favorably considered by the court. 5

Let it be noted that the lower court rendered its decision on July 1, 1966, and the appellees received notice of said decision on August 23, 1966. The decision would have become final on September 22, 1966. On September 21, 1966 the appellants filed their motion to lift the order of default and for new trial. The motion of the appellants therefore, was in the nature of a motion for a new trial based on fraud, accident, mistake or excusable negligence under paragraph (a) of Section 1 of Rule 37 of the Rules of Court. Under Section 2 of said Rule 37 the moving party must show that he has a meritorious defense. The facts constituting the movant's good and substantial defense, which he may prove if the petition were granted, must be shown in the affidavit which should accompany the motion for a new trial. 6 In the instant case, the motion to lift the order of default and for new trial as well as the affidavit of merits accompanying the motion did not contain clear statements of the facts constituting a good and valid defense which the appellants might prove if they were given a chance to introduce evidence.<äre||anº•1àw> The allegations in the motion that defendants have good

and valid defenses, namely: that the accident which gave rise to the case was force majeure; that defendant Ernesto Labsan is absolutely without fault in the accident that gave rise to the case; and that defendant Lily Lim Tan has exercised due diligence required of a good father of a family to prevent damage 7, are mere conclusions which did not provide the court with any basis for determining the nature and merit of the probable defense. An affidavit of merit should state facts, and not mere opinion or conclusions of law.

Hence the trial court correctly denied the motion to set aside order of default and for new trial.

We must, however, point out a flaw in the decision of the lower court. It is stated in the decision appealed from that the driver, Ernesto Labsan, was primarily liable for the payment of damages adjudged therein, and the appellant Lily Lim Tan, being the owner and operator of the gasoline tanker that figured in the accident, is subsidiarily liable, that is, liable only in case Ernesto Labsan was not able to pay. This is not correct. The action in the instant case was brought not to demand civil liability arising from a crime. The complaint makes no mention of a crime having been committed, much less of the driver Ernesto Labsan having been convicted of a crime. But there is an allegation in the complaint that Ernesto Labsan was the authorized driver of the truck that figured in the accident, which truck was operated by appellant Lily Lim Tan in connection with her gasoline business. The prayer in the complaint, furthermore, sought to hold appellants jointly and solidarily liable for damages. The instant action, therefore, was based, as the complaint shows, on quasi delict. 8 Under Article 218 of the Civil Code, which treats of quasi delicts, the liability of the owners and managers of an establishment or enterprise for damages caused by their employees is primary and direct, not subsidiary. 9 The employer, however, can demand from his employee reimbursement of the amount which he paid under his liability. 10 The employer, appellant Lily Lim Tan, must be held primarily and directly, not subsidiarily, liable for damages awarded in the decision of the lower court. This is, of course, without prejudice to the right of appellant Lily Lim Tan to demand from her co-appellant Ernesto Labsan reimbursement of the damages that she would have to pay to appellees.

WHEREFORE, the decision of the Court of First Instance of Batangas, dated July 1, 1966, as modified in accordance with the observations We made in the preceding paragraph, and the order, dated October 10, 1966, denying appellants' motion for the lifting of the order of default and for new trial, in Civil Case No. 1732, are affirmed. Costs against defendants-appellees.

It is so ordered.

Fernando, Barredo, Antonio and Aquino, JJ., concur.1äwphï1.ñët

 

G.R. No. L-38756 November 13, 1984

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.ROMUALDO CAPILLAS and AQUILINO PACALA, accused-appellants.

 

ABAD SANTOS, J.:

This is an automatic review of the decision rendered by the defunct Circuit Criminal Court at Pasig, Rizal, in CCC-VII-1335 Rizal, for murder.

ROMUALDO CAPILLAS and AQUILINO PACALA were accused of the crime of murder alleged to have been committed as follows:

That on or about September 9, 1971, in the New Bilibid Prison, Muntinlupa, Rizal, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused while then,

confined at the said institution, conspiring, confederating and helping one another with treachery and evident premeditation, and each armed with improvised deadly weapons did then and there wilfully, unlawfully and feloniously assault and wound therewith one Patricio Gallardo, No. 39072-P a sentenced prisoner in the same institution, inflicting upon him the multiple stab wounds, while then unarmed and unable to defend himself/themselves from the attack launched by the accused, as a result of which the said Patricio Gallardo died instantly;

That the offense when committed by the above accused was attended by the aggravating circumstances of recidivism in the case of both accused. (Expediente, p. 1.)

When the accused were arraigned on July 5, 1973, with the assistance of counsel, both pleaded GUILTY. Thereafter, according to the trial court:

The accused were apprised by the Court of the consequence of their plea of guilty that there is no other penalty to be meted upon them except death and the said accused manifested that although they are aware that they might be punished with death, still they are pleading guilty to the crime they have committed.

Pursuant to the doctrine laid down by the Supreme Court in the case of People vs. Daeng, et al., G.R. No. L-34091, January 30, 1973, the Court ordered the presentation of evidence to determine the degree of culpability of the accused. (Id, p. 113.)

The trial court rendered the following judgment:

WHEREFORE, in view of the spontaneous and voluntary confession of guilt made by the accused Romualdo Capillas and Aquilino Pacala, the Court finds them GUILTY, beyond reasonable doubt, of the crime of Murder in accordance with Article 248 of the Revised Penal Code, as charged in the information, and hereby sentences them to suffer the penalty of DEATH; to indemnify the heirs of the offended party in the amount of P12,000.00; to pay the amount of P5,000.00 as moral damages; another P5,000.00 as exemplary damages; and to pay the costs. (Id., p. 118.)

The appellants do not dispute the factual findings of the trial court. The errors which they impute to said court relate to the propriety of imposing the death penalty on them and ordering the payment of moral and exemplary damages.

The People's version of the facts is as follows:

Romualdo Capillas and Aquilino Pacala are both inmates of the death row of the National Prisons at Muntinlupa (p. 2, tsn, November 28, 1973; p. 2, tsn, November 27, 1973). Romualdo Capillas has been confined in the national penitentiary since 1964. He was sentenced to death for the crime of robbery in band with homicide by the Court of First Instance of Samar (pp. 4-6, tsn, November 27, 1973; pp. 24 and 28, Records). Aquiline Pacala was sentenced to death together with his brother by the Court of First Instance of Samar (pp. 8-9, tsn, November 28, 1973) for robbery with homicide (p. 24, Records). As of September 9, 1971, the date of the slaying of the victim in the instant case, the decisions convicting both accused were still under automatic review by this Honorable Court (p. 6, tsn, November 27, 1973; pp. 24, 28 & 30, Records).

Sometime before September 9, 1971, the victim Patricio Gallardo, also an inmate of Muntinlupa, was transferred from his original cell to the so-called death row dormitory. His leg was chained when he was transferred there (p. 9, tsn, November 27, 1973). Accused Capillas was the squad leader of dormitory 1-D, the dormitory to which the victim was transferred (p. 3, tsn, November 27, 1973).

On September 9, 1971 at about 1 1:00 A.M., the victim was in cell 32, dormitory 1-D (p. 3, tsn, November 27, 1973).

While the victim was seated near the door of his cell (Cell No. 32), accused Capillas stabbed him without any warning, first in the stomach, then successively in different parts of the body (pp. 8-9, tsn, November 27, 1973; Exhibit G).

Accused Pacala is one of the followers of accused Capillas (p. 7, tsn, November 28, 1973). Before and up to September 9, 1971, Capillas' Batang Samar Leyte gang was fighting the Genuine Ilocano gang of Gallardo. (p. 12, tsn, November 28, 1973). Capillas had previously told Pacala that he entertained ill feelings against the victim (p. 8, tsn, November 28, 1973). When he saw Capillas stabbing the victim, and with his previous knowledge of the ill feeling entertained by Capillas against the victim, Pacala got out of his cell, took his weapon and also stabbed the victim (p. 8, tsn, November 28, 1973) on the chest. At the time that the victim was being stabbed by the accused, he was pleading for his life saying, 'Maawa na kayo sa akin' (p. 5, tsn, November 28, 1973), 'Huwag mo na akong patayin' (p. 11, tsn, November 11, 1973). The accused, nevertheless, disregarded his plea for mercy and proceeded to stab him. Because of the multiple wounds, death was immediate (p. 5, tsn, Oct. 27, 1973).

An autopsy was conducted by Dr. Ricardo G. Ibarrola of the NBI who found the following wounds:

Exhibit "A" (p. 96, Records)

Aside from abrasives

Inside wound, left hand, dorso-medial aspect, 6.5 cm, long running almost vertically, involving deeply the muscles.

Stab wounds, elliptical in shape, with cleancut edges, one of the extremities of which is blunt and the other sharp.

1. Left mammary region, medial aspect, level of the third intercostal space along the parasternal line, 4.8 cm. from the anterior midline, 1.8 cm. long, running downwards medially, superior extremity, of which is sharp, directed slightly upwards, medially and backwards, involving among others the soft tissues ... 12.0 cm. depth.

2. Left inframary region ...

3. Left infraxillary region — 15.0 cm. depth.

4. Left infra-axillary line — 9.0 cm. depth.

5. Left hypochondriac region — 11 cm. depth.

6. Umbilican region — 9.0 cm. depth.

7. Right arm — 2.3 cm. depth.

8. Left forearm — 3.5 cm. depth.

9. Left thigh — 7.0 cm. depth.

10. Left thigh — 9.0 cm. depth.

11. Left thigh — 6.0 cm. depth.

12. Left thigh — 10.0 cm.depth.

(Brief, pp. 3-6.)

The trial court appreciated in favor of the accused the mitigating circumstances of voluntary surrender and plea of guilty. Nonetheless the death penalty was imposed on them because, according to the court, "this being a case of quasi-recidivism, as special aggravating circumstance, the same cannot be offset by any ordinary mitigating circumstance because of the mandatory provision of Article 160 of the Revised Penal Code which specifically provides that the offender shall be punished by the maximum period of the penalty prescribed by law for the new felony. (Pp. vs. Perete, 58 O.G. 8628)." (Expediente, p. 118.)

The appellants claim, and the Solicitor General agrees, that Article 160 of the Revised Penal Code does not apply to them. The codal provision reads as follows:

Art. 160. Commission of another crime during service of penalty imposed for another previous offense — Penalty. — Besides the provisions of rule 5 of article 62, any person who shall commit a felony after having been convicted by final judgment, before beginning to serve such sentence, or while serving the same, shall be punished by the maximum period of the penalty prescribed by law for the new felony.

In the case at bar the appellants committed the crime of murder while they were confined at the New Bilibid Prison. But such fact does not justify the application of Article 160 of the Revised Penal Code to them because the record is bereft of any evidence introduced by the prosecution showing that they were serving sentence by virtue of final judgments.

Romualdo Capillas had been sentenced to death for robbery in band with homicide by the Court of First Instance of Samar but when he committed the murder on September 9, 1971, his sentence had not yet become final because it was still under review by this Court.

As to Aquilino Pacala he admitted that he had been sentenced to death for a crime committed in Laya, Samar, and that he had been previously convicted of trespass. But there is no evidence to the effect that when he took part in killing Patricio Gallardo he was serving final sentence for the crime committed in Samar.

(The death sentence imposed on Romualdo Capillas was reduced to reclusion perpetua for lack of necessary votes in a decision promulgated on October 21, 1981. See People vs. Capillas, L-27177, 108 SCRA 173. As to Aquiline Pacala the death sentence imposed on him was likewise reduced to reclusion perpetua in a decision promulgated on August 15, 1974. See People vs. Pacala, L-26647, 58 SCRA 370).

It is true that the information alleges recidivism as an aggravating circumstance for the two accused. True it is also that a plea of guilty is deemed as an admission of all the material allegations in the information including the attendant circumstances. But in the instant case the trial court proceeded to receive evidence despite the plea of guilty because of the serious nature of the offense and the evidence shows that the appellants are not recidivists. The evidence, under the circumstances, must prevail over the admission.

The Solicitor General concedes that Capillas is entitled to two mitigating circumstances: voluntary surrender and plea of guilty.

The Solicitor General concedes that Pacala is entitled to the mitigating circumstance of plea of guilty but denies that he can invoke voluntary surrender because it is not supported by the evidence. The latter point is well-taken because Pacala himself stated during the hearing that he did not surrender; he merely waited in his cell until prison employees took him out.

The penalty for murder is reclusion temporal in its maximum period to death. Capillas has two mitigating circumstances in his favor so that the penalty is reduced by one degree to prision mayor maximum to reclusion temporal medium. As to Pacala who has one mitigating circumstance in his favor, the minimum period of the penalty for murder is applicable.

The appellants claim that the trial court erred in awarding moral and exemplary damages. This claim appears to be academic and would require no discussion in the light of their economic condition. Nonetheless, it is useful to state that the relevant provisions of the Civil Code do authorize the award not only of compensatory or actual damages in delicts and quasi-delicts but also of moral and exemplary damages. (See People vs. Pantoja, L-18793, Oct. 11, 1968, 25 SCRA 468.)

WHEREFORE, the judgment of the court a quo is modified; Romualdo Capillas is sentenced to an indeterminate penalty of ten (10) years of prision mayor, as minimum, to fourteen (14) years of reclusion temporal, as maximum; Aquilino Pacala is sentenced to an indeterminate of reclusion temporal, as minimum, to twenty (20) years of reclusion temporal, as maximum; both shall indemnify, jointly and severally, the heirs of the deceased in the amount of P30,000.00, and to pay the costs.

SO ORDERED

G.R. No. 98695 January 27, 1993

JUAN J. SYQUIA, CORAZON C. SYQUIA, CARLOTA C. SYQUIA, CARLOS C. SYQUIA and ANTHONY C. SYQUIA, petitioners, vs.THE HONORABLE COURT OF APPEALS, and THE MANILA MEMORIAL PARK CEMETERY, INC., respondents.

Pacis & Reyes Law Offices for petitioners.

Augusto S. San Pedro & Ari-Ben C. Sebastian for private respondents.

 

CAMPOS, JR., J.:

Herein petitioners, Juan J. Syquia and Corazon C. Syquia, Carlota C. Syquia, Carlos C. Syquia, and Anthony Syquia, were the parents and siblings, respectively, of the deceased Vicente Juan Syquia. On March 5, 1979, they filed a complaint 1 in the then Court of First Instance against herein private respondent, Manila Memorial Park Cemetery, Inc. for recovery of damages arising from breach of contract and/or quasi-delict. The trial court dismissed the complaint.

The antecedent facts, as gathered by the respondent Court, are as follows:

On March 5, 1979, Juan, Corazon, Carlota and Anthony all surnamed Syquia, plaintiff-appellants herein, filed a complaint for damages against defendant-appellee, Manila Memorial Park Cemetery, Inc.

The complaint alleged among others, that pursuant to a Deed of Sale (Contract No. 6885) dated August 27, 1969 and Interment Order No. 7106 dated July 21, 1978 executed between plaintiff-appellant Juan J. Syquia and defendant-appellee, the former, father of deceased Vicente Juan J. Syquia authorized and instructed defendant-appellee to inter the remains of deceased in the Manila Memorial Park Cemetery in the morning of July 25, 1978 conformably and in accordance with defendant-appellant's (sic) interment procedures; that on September 4, 1978, preparatory to transferring the said remains to a newly purchased family plot also at the Manila Memorial Park Cemetery, the concrete vault encasing the coffin of the deceased was

removed from its niche underground with the assistance of certain employees of defendant-appellant (sic); that as the concrete vault was being raised to the surface, plaintiffs-appellants discovered that the concrete vault had a hole approximately three (3) inches in diameter near the bottom of one of the walls closing out the width of the vault on one end and that for a certain length of time (one hour, more or less), water drained out of the hole; that because of the aforesaid discovery, plaintiffs-appellants became agitated and upset with concern that the water which had collected inside the vault might have risen as it in fact did rise, to the level of the coffin and flooded the same as well as the remains of the deceased with ill effects thereto; that pursuant to an authority granted by the Municipal Court of Parañaque, Metro Manila on September 14, 1978, plaintiffs-appellants with the assistance of licensed morticians and certain personnel of defendant-appellant (sic) caused the opening of the concrete vault on September 15, 1978; that upon opening the vault, the following became apparent to the plaintiffs-appellants: (a) the interior walls of the concrete vault showed evidence of total flooding; (b) the coffin was entirely damaged by water, filth and silt causing the wooden parts to warp and separate and to crack the viewing glass panel located directly above the head and torso of the deceased; (c) the entire lining of the coffin, the clothing of the deceased, and the exposed parts of the deceased's remains were damaged and soiled by the action of the water and silt and were also coated with filth.

Due to the alleged unlawful and malicious breach by the defendant-appellee of its obligation to deliver a defect-free concrete vault designed to protect the remains of the deceased and the coffin against the elements which resulted in the desecration of deceased's grave and in the alternative, because of defendant-appellee's gross negligence conformably to Article 2176 of the New Civil Code in failing to seal the concrete vault, the complaint prayed that judgment be rendered ordering defendant-appellee to pay plaintiffs-appellants P30,000.00 for actual damages, P500,000.00 for moral damages, exemplary damages in the amount determined by the court, 20% of defendant-appellee's total liability as attorney's fees, and expenses of litigation and costs of suit. 2

In dismissing the complaint, the trial court held that the contract between the parties did not guarantee that the cement vault would be waterproof; that there could be no quasi-delict because the defendant was not guilty of any fault or negligence, and because there was a pre-existing contractual relation between the Syquias and defendant Manila Memorial Park Cemetery, Inc.. The trial court also noted that the father himself, Juan Syquia, chose the gravesite despite knowing that said area had to be constantly sprinkled with water to keep the grass green and that water would eventually seep through the vault. The trial court also accepted the explanation given by defendant for boring a hole at the bottom side of the vault: "The hole had to be bored through the concrete vault because if it has no hole the vault will (sic) float and the grave would be filled with water and the digging would caved (sic) in the earth, the earth would caved (sic) in the (sic) fill up the grave." 3

From this judgment, the Syquias appealed. They alleged that the trial court erred in holding that the contract allowed the flooding of the vault; that there was no desecration; that the boring of the hole was justifiable; and in not awarding damages.

The Court of Appeals in the Decision 4 dated December 7, 1990 however, affirmed the judgment of dismissal. Petitioner's motion for reconsideration was denied in a Resolution dated April 25, 1991. 5

Unsatisfied with the respondent Court's decision, the Syquias filed the instant petition. They allege herein that the Court of Appeals committed the following errors when it:

1. held that the contract and the Rules and Resolutions of private respondent allowed the flooding of the vault and the entrance thereto of filth and silt;

2. held that the act of boring a hole was justifiable and corollarily, when it held that no act of desecration was committed;

3. overlooked and refused to consider relevant, undisputed facts, such as those which have been stipulated upon by the parties, testified to by private respondent's witnesses, and admitted in the answer, which could have justified a different conclusion;

4. held that there was no tort because of a pre-existing contract and the absence of fault/negligence; and

5. did not award the P25,000.00 actual damages which was agreed upon by the parties, moral and exemplary damages, and attorney's fees.

At the bottom of the entire proceedings is the act of boring a hole by private respondent on the vault of the deceased kin of the bereaved petitioners. The latter allege that such act was either a breach of private respondent's contractual obligation to provide a sealed vault, or, in the alternative, a negligent act which constituted a quasi-delict. Nonetheless, petitioners claim that whatever kind of negligence private respondent has committed, the latter is liable for desecrating the grave of petitioners' dead.

In the instant case, We are called upon to determine whether the Manila Memorial Park Cemetery, Inc., breached its contract with petitioners; or, alternatively, whether private respondent was guilty of a tort.

We understand the feelings of petitioners and empathize with them. Unfortunately, however, We are more inclined to answer the foregoing questions in the negative. There is not enough ground, both in fact and in law, to justify a reversal of the decision of the respondent Court and to uphold the pleas of the petitioners.

With respect to herein petitioners' averment that private respondent has committed culpa aquiliana, the Court of Appeals found no negligent act on the part of private respondent to justify an award of damages against it. Although a pre-existing contractual relation between the parties does not preclude the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court finding that there was no negligence.

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict . . . . (Emphasis supplied).

In this case, it has been established that the Syquias and the Manila Memorial Park Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of Perpetual Care" 6 on August 27, 1969. That agreement governed the relations of the parties and defined their respective rights and obligations. Hence, had there been actual negligence on the part of the Manila Memorial Park Cemetery, Inc., it would be held liable not for a quasi-delict or culpa aquiliana, but for culpa contractual as provided by Article 1170 of the Civil Code, to wit:

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.

The Manila Memorial Park Cemetery, Inc. bound itself to provide the concrete box to be send in the interment. Rule 17 of the Rules and Regulations of private respondent provides that:

Rule 17. Every earth interment shall be made enclosed in a concrete box, or in an outer wall of stone, brick or concrete, the actual installment of which shall be made by the employees of the Association. 7

Pursuant to this above-mentioned Rule, a concrete vault was provided on July 27, 1978, the day before the interment, and was, on the same day, installed by private respondent's employees in the grave which was dug earlier. After the burial, the vault was covered by a cement lid.

Petitioners however claim that private respondent breached its contract with them as the latter held out in the brochure it distributed that the . . . lot may hold single or double internment (sic) underground in sealed concrete vault." 8 Petitioners claim that the vault provided by private respondent was not sealed, that is, not waterproof. Consequently, water seeped through the cement enclosure and damaged everything inside it.

We do not agree. There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and in the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault would be waterproof. Private respondent's witness, Mr. Dexter Heuschkel, explained that the term "sealed" meant "closed." 9 On the other hand, the word "seal" is defined as . . . any of various closures or fastenings . . . that cannot be opened without rupture and that serve as a check against tampering or unauthorized opening." 10 The meaning that has been given by private respondent to the word conforms with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be equated with "waterproof". Well settled is the rule that when the terms of the contract are clear and leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulation shall control. 11 Contracts should be interpreted according to their literal meaning and should not be interpreted beyond their obvious intendment. 12 As ruled by the respondent Court:

When plaintiff-appellant Juan J. Syquia affixed his signature to the Deed of Sale (Exhibit "A") and the attached Rules and Regulations (Exhibit "1"), it can be assumed that he has accepted defendant-appellee's undertaking to merely provide a concrete vault. He can not now claim that said concrete vault must in addition, also be waterproofed (sic). It is basic that the parties are bound by the terms of their contract, which is the law between them (Rizal Commercial Banking Corporation vs. Court of Appeals, et al. 178 SCRA 739). Where there is nothing in the contract which is contrary to law, morals, good customs, public order, or public policy, the validity of the contract must be sustained (Phil. American Insurance Co. vs. Judge Pineda, 175 SCRA 416). Consonant with this ruling, a contracting party cannot incur a liability more than what is expressly specified in his undertaking. It cannot be extended by implication, beyond the terms of the contract (Rizal Commercial Banking Corporation vs. Court of Appeals, supra). And as a rule of evidence, where the terms of an agreement are reduced to writing, the document itself, being constituted by the parties as the expositor of their intentions, is the only instrument of evidence in respect of that agreement which the law will recognize, so long as its (sic) exists for the purpose of evidence (Starkie, Ev., pp. 648, 655, Kasheenath vs. Chundy, 5 W.R. 68 cited in Francisco, Revised Rules of Court in the Phil. p. 153, 1973 Ed.). And if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control (Santos vs. CA, et al., G. R. No. 83664, Nov. 13, 1989; Prudential Bank & Trust Co. vs. Community Builders Co., Inc., 165 SCRA 285; Balatero vs. IAC, 154 SCRA 530). 13

We hold, therefore, that private respondent did not breach the tenor of its obligation to the Syquias. While this may be so, can private respondent be liable for culpa aquiliana for boring the hole on the vault? It cannot be denied that the hole made possible the entry of more water and soil than was natural had there been no hole.

The law defines negligence as the "omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place." 14 In the absence of stipulation or legal provision providing the contrary, the diligence to be observed in the performance of the obligation is that which is expected of a good father of a family.

The circumstances surrounding the commission of the assailed act — boring of the hole — negate the allegation of negligence. The reason for the act was explained by Henry Flores, Interment Foreman, who said that:

Q It has been established in this particular case that a certain Vicente Juan Syquia was interred on July 25, 1978 at the Parañaque Cemetery of the Manila Memorial Park Cemetery, Inc., will you please tell the Hon. Court what or whether you have participation in connection with said internment (sic)?

A A day before Juan (sic) Syquia was buried our personnel dug a grave. After digging the next morning a vault was taken and placed in the grave and when the vault was placed on the grave a hole was placed on the vault so that water could come into the vault because it was raining heavily then because the vault has no hole the vault will float and the grave would be filled with water and the digging would caved (sic) in and the earth, the earth would (sic) caved in and fill up the grave. 15 (Emphasis ours)

Except for the foreman's opinion that the concrete vault may float should there be a heavy rainfall, from the above-mentioned explanation, private respondent has exercised the diligence of a good father of a family in preventing the accumulation of water inside the vault which would have resulted in the caving in of earth around the grave filling the same with earth.

Thus, finding no evidence of negligence on the part of private respondent, We find no reason to award damages in favor of petitioners.

In the light of the foregoing facts, and construed in the language of the applicable laws and jurisprudence, We are constrained to AFFIRM in toto the decision of the respondent Court of Appeals dated December 7, 1990. No costs.

SO ORDERED.

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 affirmed 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 fire 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 fire 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 first 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 fire.

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 first question before Us refers to the admissibility of certain reports on the fire prepared by the Manila Police and Fire Departments and by a certain Captain Tinio of the Armed Forces of the Philippines. Portions of the first 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 unknown Filipino lighted a cigarette and threw the burning match stick near the main valve of the said underground tank. Due to the gasoline fumes, fire suddenly blazed. Quick action of Leandro Flores in pulling off the gasoline hose connecting the truck with the underground tank prevented a terrific explosion. However, the flames 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 complainants furnished this Office a copy of a photograph taken during the fire 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 fire 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: first, 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 first 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 mentioned in his alleged report (signed by Detective Zapanta). All he said was that he was one of those who investigated "the location of the fire 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 testified, 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 official records made in the performance of his duty by a public officer 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 officer, or by another person specially enjoined by law to do so; (b) that it was made by the public officer 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 officer or other person had sufficient knowledge of the facts by him stated, which must have been acquired by him personally or through official 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 fire were not within the personal knowledge of the officers who conducted the investigation. Was knowledge of such facts, however, acquired by them through official information? As to some facts the sources thereof are not even identified. Others are attributed to Leopoldo Medina, referred to as an employee at the gas station were the fire 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 fire. To qualify their statements as "official information" acquired by the officers 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 officers through official 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 fire, 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 definite," and that while the rules do not prohibit its adoption in appropriate cases, "in the case at bar, however, we find 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 maintained 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 specific act of negligence, but the appellate court overruled the defense under the doctrine of res ipsa loquitur. The court said:

The first point is directed against the sufficiency 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 proximate 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. Requena, 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 applicable 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 suffices 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, fire is not considered a fortuitous event, as it arises almost invariably 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 filling station. On October 8, 1934, during the term of the lease, while gasoline was being transferred from the tank wagon, also operated by the Shell Petroleum Corporation, to the underground tank of the station, a fire 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 fire and the other relating to the spreading of the gasoline about the filling station.

Other than an expert to assess the damages caused plaintiff's building by the fire, no witnesses were placed on the stand by the defendant.

Taking up plaintiff's charge of negligence relating to the cause of the fire, we find it established by the record that the filling station and the tank truck were under the control of the defendant and operated by its agents or employees. We further find from the uncontradicted testimony of plaintiff's witnesses that fire started in the underground tank attached to the filling station while it was being filled 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 plaintiff.

Predicated on these circumstances and the further circumstance of defendant's failure to explain the cause of the fire 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 reasonable 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 fire occurred therein and spread to and burned the neighboring houses. The persons who knew or could have known how the fire 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 crossing and very thickly populated neighborhood where a great number of people mill around t

until

gasoline

tever be theWactjvities of these peopleor lighting a cigarette cannot be excluded and this constitute a secondary hazard to its operation which in turn endangers the entire neighborhood to conflagration.

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 flames from leaping over it in case of fire.

Records show that there have been two cases of fire which caused not only material damages but desperation and also panic in the neighborhood.

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 fleet of taxicabs numbering ten or more, adding another risk to the possible outbreak of fire at this already small but crowded gasoline station.

The foregoing report, having been submitted by a police officer 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 fire 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 filled he went to the tank truck to close the valve, and while he had his back turned to the "manhole" he, heard someone shout "fire."

Even then the fire possibly would not have spread to the neighboring houses were it not for another negligent omission on the part of defendants, namely, their failure to provide a concrete wall high enough to prevent the flames 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 fire 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 fire 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 unfavorable 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 find acceptable here. "It is the rule that those who distribute 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 operate to bring about harm to another, the fact that the active and substantially simultaneous operation of the effects of a third person's innocent, 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 sufficient to relieve 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 fire Caltex owned the gasoline station and all the equipment therein; (3) Caltex exercised control over Boquiren in the management 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 license 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 complaint.

Caltex admits that it owned the gasoline station as well as the equipment therein, but claims that the business conducted at the service station 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 fire. 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 January 1, 1948 so as to cover the date of the fire, namely, March 18, 1948. This retroactivity provision is quite significant, and gives rise to the conclusion that it was designed precisely to free Caltex from any responsibility with respect to the fire, 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 Boquiren 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 terminate 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 services at will; that the service station belonged to the company and bore its tradename and the operator sold only the products of the company; 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 fixed by the company and not by the operator; and that the receipts signed by the operator indicated that he was a mere agent, the finding 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 respective obligations stipulated or agreed upon may be shown and inquired into, and should such performance conflict 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 satisfied 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 negligence of those performing service under its direction. We think the evidence was sufficient to sustain the verdict of the jury. (Gulf Refining 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 Boquiren 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 insurance 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 principle 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 purposes 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 filing of the complaint, and costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.Dizon, J., took no part.

G.R. No. L-21749             September 29, 1967

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs.LUZON STEVEDORING CORPORATION, defendant-appellant.

Office 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 account 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 diligence 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 ordering 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 filing 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 finding 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 finding 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 encourage 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 appellant'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 first 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 Anglo 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 & Pacific 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 definition, 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 difficulty 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 dificil 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 insufficient. 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 constructions 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 find 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 secure, upon written motion, a similar order dated November 24, 1962, allowing reception of additional evidence for the said defendant-appellant.4

          WHEREFORE, finding no error in the decision of the lower Court appealed from, the same is hereby affirmed. Costs against the defendant-appellant.

G.R. No. 83589 March 13, 1991

RAMON FAROLAN as ACTING COMMISSIONER OF CUSTOMS, and GUILLERMO PARAYNO, as CHIEF OF CUSTOM INTELLIGENCE and INVESTIGATION DIVISION, petitioners, vs.SOLMAC MARKETING CORPORATION and COURT OF APPEALS, respondents.

Dakila F. Castro & Associates for private respondent.

 

SARMIENTO, J.:p

This petition for review on certiorari, instituted by the Solicitor General on behalf of the public officers-petitioners, seek the nullification and setting aside of the Resolution 1 dated May 25, 1988 of the Court of Appeals in CA-G.R. No. SP-10509, entitled "Solmac Marketing Corporation vs. Ramon Farolan, Acting Commissioner of Customs, and Guillermo Parayno, Chief of Customs Intelligence and Investigation Division," which adjudged these public officers to pay solidarily and in their private personal capacities respondent Solmac Marketing Corporation temperate damages in the sum of P100,000.00, exemplary damages in the sum of P50,000.00, and P25,000.00, as attorney's fees and expenses of litigation. This challenged resolution

of the respondent court modified its decision 2 of July 27, 1987 by reducing into halves the original awards of P100,000.00 and P50,000.00 for exemplary damages and attorney's fees and litigation expenses, respectively, keeping intact the original grant of P100,000.00 in the concept of temperate damages. (Strangely, the first name of petitioner Farolan stated in the assailed resolution, as well as in the decision, of the respondent court is "Damian" when it should be "Ramon", his correct given name. Strictly speaking, petitioner Ramon Farolan could not be held liable under these decision and resolution for he is not the one adjudged to pay the huge damages but a different person. Nonetheless, that is of no moment now considering the disposition of this ponencia.)

The relevant facts, as culled from the records, are as follows:

At the time of the commission of the acts complained of by the private respondent, which was the subject of the latter's petition for mandamus and injunction filed with the Regional Trial Court (RTC) of Manila in Civil Case No. 84-23537, petitioner Ramon Farolan was then the Acting Commissioner of Customs while petitioner Guillermo Parayno was then the Acting Chief, Customs Intelligence and Investigation Division. They were thus sued in their official capacities as officers in the government as clearly indicated in the title of the case in the lower courts and even here in this Court. Nevertheless, they were both held personally liable for the awarded damages "(s)ince the detention of the goods by the defendants (petitioners herein) was irregular and devoid of legal basis, hence, not done in the regular performance of official duty . . . ." 3 However, as adverted to at the outset, in the dispositive portion of the challenged resolution, the one held personally liable is a "Damian Farolan" and not the petitioner, Ramon Farolan. Also as earlier mentioned, we will ignore that gross error.

Private respondent Solmac Marketing Corporation is a corporation organized and existing under the laws of the Philippines. It was the assignee, transferee, and owner of an importation of Clojus Recycling Plastic Products of 202,204 kilograms of what is technically known as polypropylene film, valued at US$69,250.05.

Polypropylene is a substance resembling polyethelyne which is one of a group of partially crystalline lightweight thermoplastics used chiefly in making fibers, films, and molded and extruded products. 4 Without defect, polypropylene film is sold at a much higher price as prime quality film. Once rejected as defective due to blemishes, discoloration, defective winding, holes, etc., polypropylene film is sold at a relatively cheap price without guarantee or return, and the buyer takes the risk as to whether he can recover an average 30% to 50% usable matter. 5 This latter kind of polypropylene is known as OPP film waste/scrap and this is what respondent SOLMAC claimed the Clojus shipment to be.

The subject importation, consisting of seventeen (17) containers, arrived in December, 1981. Upon application for entry, the Bureau of Customs asked respondent SOLMAC for its authority from any government agency to import the goods described in the bill of lading. Respondent SOLMAC presented a Board of Investment (BOI) authority for polypropylene film scrap. However, upon examination of the shipment by the National Institute of Science and Technology (NIST), it turned out that the fibers of the importation were oriented in such a way that the materials were stronger than OPP film scrap. 6 In other words, the Clojus shipment was not OPP film scrap, as declared by the assignee respondent SOLMAC to the Bureau of Customs and BOI Governor Lilia R. Bautista, but oriented polypropylene the importation of which is restricted, if not prohibited, under Letter of Instructions (LOI) No. 658-B. Specifically, Sections 1 and 2 of LOI No. 658-B provide that:

xxx xxx xxx

1. The importation of cellophane shall be allowed only for quantities and types of cellophane that cannot be produced by Philippine Cellophane Film Corporation. The Board of Investments shall issue guidelines regulating such importations.

2. The Collector of Customs shall see to the apprehension of all illegal importations of cellophane and oriented polypropylene (OPP) and the dumping of imported stock lots of cellophane and OPP.

xxx xxx xxx

Considering that the shipment was different from what had been authorized by the BOI and by law, petitioners Parayno and Farolan withheld the release of the subject importation.

On June 7, 1982, petitioner Parayno, then Chief of Customs Intelligence and Investigation Division, wrote the BOI asking for the latter's advice on whether or no t the subject importation may be released 7 A series of exchange of correspondence between the BOI and the Bureau of Customs, on one hand, and between the late Dakila Castro, counsel for the private respondent, and the BOI and the Bureau of Customs, on the other, ensued, to wit:

xxx xxx xxx

4. In a letter dated August 17, 1982, the BOI agreed that the subject imports may be released but that holes may be drilled on them by the Bureau of Customs prior to their release.

5. On January 20, 1983, (the late) Atty. Dakila Castro, (then) counsel of private respondent wrote to petitioner Commissioner Farolan of Customs asking for the release of the importation. The importation was not released, however, on the ground that holes had to be drilled on them first.

6. Atty. Dakila Castro then wrote a letter dated October 6, 1983, to BOI Governor Hermenigildo Zayco stressing the reasons why the subject importation should be released without drilling of holes.

7. On November 8, 1983, BOI Governor H. Zayco wrote a letter to the Bureau of Customs stating that the subject goods may be released without drilling of holes inasmuch as the goods arrived prior to the endorsement on August 17, 1982 to the drilling of holes on all importations of waste/scrap films.

8. On February 1, 1984, petitioner Commissioner Farolan wrote the BOI requesting for definite guidelines regarding the disposition of importations of Oriented Polypropylene (OPP) and Polypropylene (PP) then being held at the Bureau of Customs.

9. On March 12, 1984, Minister Roberto Ongpin of Trade, the BOI Chairman, wrote his reply to petitioner Farolan . . . . 8 (This reply of Minister Ongpin is copied in full infra.)

On March 26, 1984, respondent Solmac filed the action for mandamus and injunction with the RTC as above mentioned. It prayed for the unconditional release of the subject importation. It also prayed for actual damages, exemplary damages, and attorney's fees. As prayed for, the trial court issued a writ of preliminary injunction.

After hearing on the merits, the RTC rendered a decision on February 5, 1985, the dispositive portion of which reads as follows:

Premises considered, judgment is hereby rendered ordering defendants to release the subject importation immediately without drilling of holes, subject only to the normal requirements of the customs processing for such release to be done with utmost dispatch as time is of the essence; and the preliminary injunction hereto issued is hereby made permanent until actual physical release of the merchandise and without pronouncement as to costs.

SO ORDERED. 9

From the decision of the trial court, Solmac, the plaintiff below and the private respondent herein, appealed to the Court of Appeals only insofar as to the denial of the award of damages is concerned. On the other hand, the petitioners did not appeal from this decision. They did not see any need to appeal because as far as they were concerned, they had already complied with their duty. They had already ordered the release of the

importation "without drilling of holes," as in fact it was so released, in compliance with the advice to effect such immediate release contained in a letter of BOI dated October 9, 1984, to Commissioner Farolan. Thus, to stress, even before the RTC rendered its decision on February 5, 1984, the Clojus shipment of OPP was released 10 to the private respondent in its capacity as assignee of the same. Be that it may, the private respondent filed its appeal demanding that the petitioners be held, in their personal and private capacities, liable for damages despite the finding of lack of bad faith on the part of the public officers.

After due proceeding, the Court of Appeals rendered a decision 11 on July 27, 1987, the dispositive portion which reads as follows:

WHEREFORE, the appealed judgment is modified by ordering the defendants Ramon Farolan and Guillermo Parayno solidarity, in their personal capacity, to pay the plaintiff temperate damages in the sum of P100,000, exemplary damages in the sum of P100,000 and P50,000 as attorney's fees and expenses of litigation. Costs against the defendants.

SO ORDERED.

On August 14, 1987, the petitioners filed a motion for reconsideration of the decision of the Court of Appeals.

On May 25, 1988, the Court of Appeals issued its resolution modifying the award of damages, to wit: temperate damages in the sum of P100,000,00, exemplary damages in the sum of P50,000.00, and P25,000.00 as attorney's fees and expenses of litigation. The respondent court explained the reduction of the awards for exemplary damages and attorney's fees and expenses of litigation in this wise:

3. In our decision of July 27, 1987, We awarded to plaintiff-appellant Pl00,000 as temperate damages, Pl00,000.00 as exemplary damages, and P50,000.00 as attorney's fees and expenses of litigation. Under Art. 2233 of the Civil Code, recovery of exemplary damages is not a matter of right but depends upon the discretion of the court. Under Article 2208 of the Civil Code, attorney's fees and expenses of litigation must always be reasonable. In view of these provisions of the law, and since the award of temperate damages is only P100,000.00, the amount of exemplary damages may not be at par as temperate damages. An award of P50,000.00, as exemplary damages may already serve the purpose, i.e., as an example for the public good. Likewise, the attorney's fees and expenses of litigation have to be reduced to 25% of the amount of temperate damages, or P25,000.00, if the same have to be reasonable. The reduction in the amount of exemplary damages, and attorney's fees and expenses of litigation would be in accord with justice and fairness. 12

The petitioners now come to this Court, again by the Solicitor General, assigning the following errors allegedly committed by the respondent court:

I

The Court of Appeals erred in disregarding the finding of the trial court that the defense of good faith of petitioners (defendants) cannot be discredited.

II

The Court of Appeals erred in adjudging petitioners liable to pay temperate damages, exemplary damages, attorney's fees and expenses of litigation. 13

These two issues boil down to a single question, i.e., whether or not the petitioners acted in good faith in not immediately releasing the questioned importation, or, simply, can they be held liable, in their personal and private capacities, for damages to the private respondent.

We rule for the petitioners.

The respondent court committed a reversible error in overruling the trial court's finding that:

. . . with reference to the claim of plaintiff to damages, actual and exemplary, and attorney's fees, the Court finds it difficult to discredit or disregard totally the defendants' defense of good faith premised on the excuse that they were all the time awaiting clarification of the Board of Investments on the matter. 14

We hold that this finding of the trial court is correct for good faith is always presumed and it is upon him who alleges the contrary that the burden of proof lies. 15 In Abando v. Lozada, 16 we defined good faith as "refer[ring] to a state of the mind which is manifested by the acts of the individual concerned. It consists of the honest intention to abstain from taking an unconscionable and unscrupulous advantage of another. It is the opposite of fraud, and its absence should be established by convincing evidence."

We had reviewed the evidence on record carefully and we did not see any clear and convincing proof showing the alleged bad faith of the petitioners. On the contrary, the record is replete with evidence bolstering the petitioners' claim of good faith. First, there was the report of the National Institute of Science and Technology (NIST) dated January 25, 1982 that, contrary to what the respondent claimed, the subject importation was not OPP film scraps but oriented polypropylene, a plastic product of stronger material, whose importation to the Philippines was restricted, if not prohibited, under LOI658-B. 17 It was on the strength of this finding that the petitioners withheld the release of the subject importation for being contrary to law. Second, the petitioners testified that, on many occasions, the Bureau of Customs sought the advice of the BOI on whether the subject importation might be released. 18 Third, petitioner Parayno also testified during the trial that up to that time (of the trial) there was no clear-cut policy on the part of the BOI regarding the entry into the Philippines of oriented polypropylene (OPP), as the letters of BOI Governors Tordesillas and Zayco of November 8, 1983 and September 24, 1982, respectively, ordering the release of the subject importation did not clarify the BOI policy on the matter. He then testified on the letter of the BOI Chairman Roberto Ongpin dated March 12, 1984, which states in full:

Thank you for your letter of 1 February 1984, on the subject of various importations of Oriented Polypropylene (OPP) and Polypropylene (PP) withheld by Customs and the confusion over the disposition of such imports.

I have discussed the matter with Vice-Chairman Tordesillas and Governor Zayco of the Board of Investments and the following is their explanation:

1. On 22 June 1982, the BOI ruled that importation of OPP/PP film scraps intended for recycling or repelletizing did not fall within the purview of LOI 658-B.

2. On 17 August l982, the BOI agreed that holes could be drilled on subject film imports to prevent their use for other purposes.

3. For importations authorized prior to 22 June 1982, the drilling of holes should depend on purpose for which the importations was approved by the BOI that is, for direct packaging use or for recycling/repelletizing into raw material. The exemption from drilling of holes on Solmac Marketing's importation under Certificates of Authority issued on 1 April 1982 and 5 May 1982 and on Clojus' importation authorized in 1982 were endorsed by the BOI on the premise that these were not intended for recycling/repelletizing.

Should your office have any doubts as to the authorized intended use of any imported lots of OPP/PP film scraps that you have confiscated, we have no objection to the drilling of holes to ensure that these are indeed recycled.

I have requested Governor Zayco to contact your office in order to offer any further assistance which you may require. 19

It can be seen from all the foregoing that even the highest officers (Chairman Ongpin, Vice-Chairman Tordesillas, and Governor Zayco) of the BOI themselves were not in agreement as to what proper course to take on the subject of the various importations of Oriented Polypropylene (OPP) and Polypropylene (PP) withheld by the Bureau of Customs. The conflicting recommendations of the BOI on this score prompted the petitioners to seek final clarification from the former with regard to its policy on these importations. This resulted in the inevitable delay in the release of the Clojus shipment, one of the several of such importations. The confusion over the disposition of this particular importation obviates bad faith. Thus the trial court's finding that the petitioners acted in good faith in not immediately releasing the Clojus shipment pending a definitive policy of the BOI on this matter is correct. It is supported by substantial evidence on record, independent of the presumption of good faith, which as stated earlier, was not successfully rebutted.

When a public officer takes his oath of office, he binds himself to perform the duties of his office faithfully and to use reasonable skill and diligence, and to act primarily for the benefit of the public. Thus, in the discharge of his duties, he is to use that prudence, caution, and attention which careful men use in the management of their affairs. In the case at bar, prudence dictated that petitioners first obtain from the BOI the latter's definite guidelines regarding the disposition of the various importations of oriented polypropylene (OPP) and polypropylene (PP) then being withheld at the Bureau of Customs. These cellophane/film products were competing with locally manufactured polypropylene and oriented polypropylene as raw materials which were then already sufficient to meet local demands, hence, their importation was restricted, if not prohibited under LOI 658-B. Consequently, the petitioners can not be said to have acted in bad faith in not immediately releasing the import goods without first obtaining the necessary clarificatory guidelines from the BOI. As public officers, the petitioners had the duty to see to it that the law they were tasked to implement, i.e., LOI 658-B, was faithfully complied with.

But even granting that the petitioners committed a mistake in withholding the release of the subject importation because indeed it was composed of OPP film scraps, 20 contrary to the evidence submitted by the National Institute of Science and Technology that the same was pure oriented OPP, nonetheless, it is the duty of the Court to see to it that public officers are not hampered in the performance of their duties or in making decisions for fear of personal liability for damages due to honest mistake. Whatever damage they may have caused as a result of such an erroneous interpretation, if any at all, is in the nature of a damnum absque injuria. Mistakes concededly committed by public officers are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith. 21 After all, "even under the law of public officers, the acts of the petitioners are protected by the presumption of good faith. 22

In the same vein, the presumption, disputable though it may be, that an official duty has been regularly performed 23 applies in favor of the petitioners. Omnia praesumuntur rite et solemniter esse acta. (All things are presumed to be correctly and solemnly done.) It was private respondent's burden to overcome this juris tantum presumption. We are not persuaded that it has been able to do so.

WHEREFORE, the petition is hereby GRANTED, the assailed Resolution of the respondent court, in CA-G.R. SP No. 10509, dated May 25, 1988, is SET ASIDE and ANNULLED. No costs.

SO ORDERED.

G.R. No. L-7664             August 29, 1958

MR. AND MRS. AMADOR C. ONG, plaintiffs-appellants, vs.METROPOLITAN WATER DISTRICT, defendant-appellee.

Tomas Tria Tirona for appellants.Government Corporate Counsel Ambrosio Padilla and Juan C. Jimenez for appellee.

BAUTISTA ANGELO, J.:

Plaintiffs spouses seek to recover from defendant, a government-owned corporation, the sum of P50,000 as damages, P5,000 as funeral expenses, and P11,000 as attorneys' fees, for the death of their son Dominador Ong in one of the swimming pools operated by defendant.

Defendant admits the fact that plaintiffs' son was drowned in one of its swimming pools but avers that his death was caused by his own negligence or by unavoidable accident. Defendant also avers that it had exercised due diligence in the selection of, and supervision over, its employees and that it had observed the diligence required by law under the circumstances.

After trial, the lower court found that the action of plaintiffs is untenable and dismissed the complaint without pronouncement as to costs. Plaintiffs took the case on appeal directly to this Court because the amount involved exceeds the sum of P50,000.

Defendant owns and operates three recreational swimming pools at its Balara filters, Diliman, Quezon City, to which people are invited and for which a nominal fee of P0.50 for adults and P0.20 for children is charged. The main pool it between two small pools of oval shape known as the "Wading pool" and the "Beginners Pool." There are diving boards in the big pools and the depths of the water at different parts are indicated by appropriate marks on the wall. The care and supervision of the pools and the users thereof is entrusted to a recreational section composed of Simeon Chongco as chief, Armando Rule, a male nurse, and six lifeguards who had taken the life-saving course given by the Philippine Red Cross at the YMCA in Manila. For the safety of its patrons, defendant has provided the pools with a ring buoy, toy roof, towing line, saving kit and a resuscitator. There is also a sanitary inspector who is in charge of a clinic established for the benefit of the patrons. Defendant has also on display in a conspicuous place certain rules and regulations governing the use of the pools, one of which prohibits the swimming in the pool alone or without any attendant. Although defendant does not maintain a full-time physician in the swimming pool compound, it has however a nurse and a sanitary inspector ready to administer injections or operate the oxygen resuscitator if the need should arise.

In the afternoon of July 5, 1952, at about 1:00 o'clock, Dominador Ong, a 14-year old high school student and boy scout, and his brothers Ruben and Eusebio, went to defendant's swimming pools. This was not the first time that the three brothers had gone to said natatorium for they had already been there four or five times before. They arrived at the natatorium at about 1:45 p.m. After paying the requisite admission fee, they immediately went to one of the small pools where the water was shallow. At about 4:35 p.m., Dominador Ong told his brothers that he was going to the locker room in an adjoining building to drink a bottle of coke. Upon hearing this, Ruben and Eusebio went to the bigger pool leaving Dominador in the small pool and so they did not see the latter when he left the pool to get a bottle of coke. In that afternoon, there were two lifeguards on duty in the pool compound, namely, Manuel Abaño and Mario Villanueva. The tour of duty of Abaño was from 8:00 to 12:00 in the morning and from 2:00 to 6:00 in the afternoon, and of Villanueva from 7:30 to 11:30 a.m. and from 12:30 to 4:30 p.m. Between 4:00 to 5:00 that afternoon, there were about twenty bathers inside the pool area and Manuel Abaño was going around the pools to observe the bathers in compliance with the instructions of his chief.

Between 4:40 to 4:45 p.m., some boys who were in the pool area informed a bather by the name of Andres Hagad, Jr., that somebody was swimming under water for quite a long time. Another boy informed lifeguard Manuel Abaño of the same happening and Abaño immediately jumped into the big swimming pool and retrieved the apparently lifeless body of Dominador Ong from the bottom. The body was placed at the edge of the pool and Abaño immediately applied manual artificial respiration. Soon after, male nurse Armando Rule came to render assistance, followed by sanitary inspector Iluminado Vicente who, after being called by phone from the clinic by one of the security guards, boarded a jeep carrying with him the resuscitator and a medicine kit, and upon arriving he injected the boy with camphorated oil. After the injection, Vicente left on a jeep in order to fetch Dr. Ayuyao from the University of the Philippines. Meanwhile, Abaño continued the artificial manual respiration, and when this failed to revive him, they applied the resuscitator until the two oxygen tanks were exhausted. Not long thereafter, Dr. Ayuyao arrived with another resuscitator, but the same became of no use because he found the boy already dead. The doctor ordered that the body be taken to the clinic.

In the evening of the same day, July 5, 1952, the incident was investigated by the Police Department of Quezon City and in the investigation boys Ruben Ong and Andres Hagad, Jr. gave written statements. On the

following day, July 6, 1952, an autopsy was performed by Dr. Enrique V. de los Santos, Chief, Medico Legal Division, National Bureau of Investigation, who found in the body of the deceased the following: an abrasion on the right elbow lateral aspect; contusion on the right forehead; hematoma on the scalp, frontal region, right side; a congestion in the brain with petechial subcortical hemorrhage, frontal lobe; cyanosis on the face and on the nails; the lung was soggy with fine froth in the bronchioles; dark fluid blood in the heart; congestion in the visceral organs, and brownish fluid in the stomach. The death was due to asphyxia by submersion in water.

The issue posed in this appeal is whether the death of minor Dominador Ong can be attributed to the negligence of defendant and/or its employees so as to entitle plaintiffs to recover damages.

The present action is governed by Article 2176 in relation to Article 2080 of the new Civil Code. The first article provides that "whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damages done." Such fault or negligence is called quasi-delict. Under the second article, this obligation is demandable not only for one's own acts or omissions but also for those of persons for whom one is responsible. In addition, we may quote the following authorities cited in the decision of the trial court:

"The rule is well settled that the owners of resorts to which people generally are expressly or by implication invited are legally bound to exercise ordinary care and prudence in the management and maintenance of such resorts, to the end of making them reasonably safe for visitors" (Larkin vs. Saltair Beach Co., 30 Utah 86, 83 Pac. 686).

"Although the proprietor of a natatorium is liable for injuries to a patron, resulting from lack of ordinary care in providing for his safety, without the fault of the patron, he is not, however, in any sense deemed to be the insurer of the safety of patrons. And the death of a patron within his premises does not cast upon him the burden of excusing himself from any presumption of negligence" (Bertalot vs. Kinnare. 72 Ill. App. 52, 22 A. L. R. 635; Flora vs. Bimini Water Co., 161 Cal. 495, 119 Pac. 661). Thus in Bertalot vs. Kinnare, supra, it was held that there could be no recovery for the death by drowning of a fifteen-year boy in defendant's natatorium, where it appeared merely that he was lastly seen alive in water at the shallow end of the pool, and some ten or fifteen minutes later was discovered unconscious, and perhaps lifeless, at the bottom of the pool, all efforts to resuscitate him being without avail.

Since the present action is one for damages founded on culpable negligence, the principle to be observed is that the person claiming damages has the burden of proving that the damage is caused by the fault or negligence of the person from whom the damage is claimed, or of one of his employees (Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517). The question then that arises is: Have appellants established by sufficient evidence the existence of fault or negligence on the part of appellee so as to render it liable for damages for the death of Dominador Ong?

There is no question that appellants had striven to prove that appellee failed to take the necessary precaution to protect the lives of its patrons by not placing at the swimming pools efficient and competent employees who may render help at a moment's notice, and they ascribed such negligence to appellee because the lifeguard it had on the occasion minor Ong was drowning was not available or was attending to something else with the result that his help came late. Thus, appellants tried to prove through the testimony of Andres Hagad, Jr. and Ruben Ong that when Eusebio Ong and Hagad, Jr. detected that there was a drowning person in the bottom of the big swimming pool and shouted to the lifeguard for help, lifeguard Manuel Abaño did not immediately respond to the alarm and it was only upon the third call that he threw away the magazine he was reading and allowed three or four minutes to elapse before retrieving the body from the water. This negligence of Abaño, they contend, is attributable to appellee.

But the claim of these two witnesses not only was vehemently denied by lifeguard Abaño, but is belied by the written statements given by them in the investigation conducted by the Police Department of Quezon City approximately three hours after the happening of the accident. Thus, these two boys admitted in the investigation that they narrated in their statements everything they knew of the accident, but, as found by the trial, nowhere in said statements do they state that the lifeguard was chatting with the security guard at the

gate of the swimming pool or was reading a comic magazine when the alarm was given for which reason he failed to immediately respond to the alarm. On the contrary, what Ruben Ong particularly emphasized therein was that after the lifeguard heard the shouts for help, the latter immediately dived into the pool to retrieve the person under water who turned out to be his brother. For this reason, the trial court made this conclusion: "The testimony of Ruben Ong and Andres Hagad, Jr. as to the alleged failure of the lifeguard Abaño to immediately respond to their call may therefore be disregarded because they are belied by their written statements. (Emphasis supplied.)

On the other hand, there is sufficient evidence to show that appellee has taken all necessary precautions to avoid danger to the lives of its patrons or prevent accident which may cause their death. Thus, it has been shown that the swimming pools of appellee are provided with a ring buoy, toy roof, towing line, oxygen resuscitator and a first aid medicine kit. The bottom of the pools is painted with black colors so as to insure clear visibility. There is on display in a conspicuous place within the area certain rules and regulations governing the use of the pools. Appellee employs six lifeguards who are all trained as they had taken a course for that purpose and were issued certificates of proficiency. These lifeguards work on schedule prepared by their chief and arranged in such a way as to have two guards at a time on duty to look after the safety of the bathers. There is a male nurse and a sanitary inspector with a clinic provided with oxygen resuscitator. And there are security guards who are available always in case of emergency.

The record also shows that when the body of minor Ong was retrieved from the bottom of the pool, the employees of appellee did everything possible to bring him back to life. Thus, after he was placed at the edge of the pool, lifeguard Abaño immediately gave him manual artificial respiration. Soon thereafter, nurse Armando Rule arrived, followed by sanitary inspector Iluminado Vicente who brought with him an oxygen resuscitator. When they found that the pulse of the boy was abnormal, the inspector immediately injected him with camphorated oil. When the manual artificial respiration proved ineffective they applied the oxygen resuscitator until its contents were exhausted. And while all these efforts were being made, they sent for Dr. Ayuyao from the University of the Philippines who however came late because upon examining the body he found him to be already dead. All of the foregoing shows that appellee has done what is humanly possible under the circumstances to restore life to minor Ong and for that reason it is unfair to hold it liable for his death.

Sensing that their former theory as regards the liability of appellee may not be of much help, appellants now switch to the theory that even if it be assumed that the deceased is partly to be blamed for the unfortunate incident, still appellee may be held liable under the doctrine of "last clear chance" for the reason that, having the last opportunity to save the victim, it failed to do so.

We do not see how this doctrine may apply considering that the record does not show how minor Ong came into the big swimming pool. The only thing the record discloses is that minor Ong informed his elder brothers that he was going to the locker room to drink a bottle of coke but that from that time on nobody knew what happened to him until his lifeless body was retrieved. The doctrine of last clear chance simply means that the negligence of a claimant does not preclude a recovery for the negligence of defendant where it appears that the latter, by exercising reasonable care and prudence, might have avoided injurious consequences to claimant notwithstanding his negligence. Or, "As the doctrine usually is stated, a person who has the last clear chance or opportunity of avoiding an accident, notwithstanding the negligent acts of his opponent or the negligence of a third person which is imputed to his opponent, is considered in law solely responsible for the consequences of the accident." (38 Am. Jur. pp. 900-902)

It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself in the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances, the law is that a person who has the last clear chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. (Picart vs. Smith, 37 Phil., 809)

Since it is not known how minor Ong came into the big swimming pool and it being apparent that he went there without any companion in violation of one of the regulations of appellee as regards the use of the pools, and it appearing that lifeguard Aba_¤_o responded to the call for help as soon as his attention was called to it and immediately after retrieving the body all efforts at the disposal of appellee had been put into play in order to bring him back to life, it is clear that there is no room for the application of the doctrine now invoked by appellants to impute liability to appellee..

The last clear chance doctrine can never apply where the party charged is required to act instantaneously, and if the injury cannot be avoided by the application of all means at hand after the peril is or should have been discovered; at least in cases in which any previous negligence of the party charged cannot be said to have contributed to the injury. O'Mally vs. Eagan, 77 ALR 582, 43 Wyo. 233, 350, 2, P2d 1063. (A.L.R. Digest, Vol. 8, pp. 955-956)

Before closing, we wish to quote the following observation of the trial court, which we find supported by the evidence: "There is (also) a strong suggestion coming from the expert evidence presented by both parties that Dominador Ong might have dived where the water was only 5.5 feet deep, and in so doing he might have hit or bumped his forehead against the bottom of the pool, as a consequence of which he was stunned, and which to his drowning. As a boy scout he must have received instructions in swimming. He knew, or have known that it was dangerous for him to dive in that part of the pool."

Wherefore, the decision appealed from being in accordance with law and the evidence, we hereby affirm the same, without pronouncement as to costs.

G.R. No. L-21438             September 28, 1966

AIR FRANCE, petitioner, vs.RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.

Lichauco, Picazo and Agcaoili for petitioner.Bengzon Villegas and Zarraga for respondent R. Carrascoso.

 

SANCHEZ, J.:

          The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.

          On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs against petitioner.

          The case is now before us for review on certiorari.

          The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:

          Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958.

          On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila

to Bangkok, plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his "first class" seat in the plane.3

          1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals. Petitioner charges that respondent court failed to make complete findings of fact on all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's decision.

          Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based"; 6 and that "Every decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it". 7

          A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense". Because as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not mean that the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has been regularly performed, and that all the matters within an issue in a case were laid before the court and passed upon by it. 15

          Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written statement of the ultimate facts as found by the court ... and essential to support the decision and judgment rendered thereon". 16 They consist of the court's "conclusions" with respect to the determinative facts in issue". 17 A question of law, upon the other hand, has been declared as "one which does not call for an examination of the probative value of the evidence presented by the parties." 18

          2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals. 19 That judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the facts or to review the questions of fact. 20

          With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment.

          3. Was Carrascoso entitled to the first class seat he claims?

          It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the availability of first class seats.

          These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right to, first class seats on the "definite" segments of his journey, particularly that from Saigon to Beirut". 21

          And, the Court of Appeals disposed of this contention thus:

          Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee that the passenger to whom the same had been issued, would be accommodated in the first-class compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every station for the necessary first-class reservation. We are not impressed by such a reasoning. We cannot understand how a reputable firm like defendant airplane company could have the indiscretion to give out tickets it never meant to honor at all. It received the corresponding amount in payment of first-class tickets and yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should know whether or riot the tickets it issues are to be honored or not.22

          Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:

          On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows:

Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?

A. That the space is confirmed.

Q. Confirmed for first class?

A. Yes, "first class". (Transcript, p. 169)

x x x           x x x           x x x

          Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket without any reservation whatever.

          Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a "first class" accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation defendant had a verbal understanding with plaintiff that the "first class" ticket issued to him by defendant would be subject to confirmation in Hongkong. 23

          We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the judgment

of the lower court. 24 Implicit in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and "all questions raised by the assignments of error and all questions that might have been raised are to be regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all error". 25 We reached this policy construction because nothing in the decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the basis of the conclusions of the trial court. 26

          If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the ticket.

          The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the Manager". 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?

          4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad faith;31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:

3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration, the latter acting as general agents for and in behalf of the defendant, under which said contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, ... .

4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff with defendant's employees.

5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff has been compelled by defendant's employees to leave the First Class accommodation berths at Bangkok after he was already seated.

6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's breach of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila.32

x x x           x x x           x x x

          2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00. 33

x x x           x x x           x x x

          The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish first class transportation at Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion.

          Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals declared:

          That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has been sufficiently established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by the purser of the plane in his notebook which notation reads as follows:

          "First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene",

          and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The captain of the plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial of the case, or yet to secure his disposition; but defendant did neither. 37

          The Court of appeals further stated —

          Neither is there evidence as to whether or not a prior reservation was made by the white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences and to be subjected to the humiliation and indignity of being ejected from his seat in the presence of others. Instead of explaining to the white man the improvidence committed by defendant's employees, the manager adopted the more drastic step of ousting the plaintiff who was then safely ensconsced in his rightful seat. We are strengthened in our belief that this probably was what happened there, by the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters "O.K." appearing on the tickets of plaintiff, said "that the space is confirmed for first class. Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant, testified as follows:

"Q How does the person in the ticket-issuing office know what reservation the passenger has arranged with you?

A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959)

          In this connection, we quote with approval what the trial Judge has said on this point:

          Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better right" to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove "any better", nay, any right on the part of the "white man" to the "First class" seat that the plaintiff was occupying and for which he paid and was issued a corresponding "first class" ticket.

          If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily proven it by having taken the testimony of the said Manager by deposition, but defendant did not do so; the presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, par (e), Rules of Court]; and, under the circumstances, the Court is constrained to find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out of the plane if he did not give up his "first class" seat because the said Manager wanted to accommodate, using the words of the witness Ernesto G. Cuento, the "white man".38

          It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist class compartment - just to give way to another passenger whose right thereto has not been established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for ulterior purpose." 39

          And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance, thus:

          The evidence shows that the defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the "first class" seat that he was occupying to, again using the words of the witness Ernesto G. Cuento, a "white man" whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this "white man" had any "better right" to occupy the "first class" seat that the plaintiff was occupying, duly paid for, and for which the corresponding "first class" ticket was issued by the defendant to him.40

          5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner, his employer, must answer. Article 21 of the Civil Code says:

          ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

          In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42

          6. A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 And this, because of the relation which an air-carrier sustains with the public. Its business is mainly

with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages.

          Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. 44

          Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment under threat of ejection, though the language used was not insulting and she was not ejected." 46 And this, because, 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". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there held the carrier liable for the mental suffering of said passenger.1awphîl.nèt

          Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier — a case of quasi-delict. Damages are proper.

          7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —

Q You mentioned about an attendant. Who is that attendant and purser?

A When we left already — that was already in the trip — I could not help it. So one of the flight attendants approached me and requested from me my ticket and I said, What for? and she said, "We will note that you transferred to the tourist class". I said, "Nothing of that kind. That is tantamount to accepting my transfer." And I also said, "You are not going to note anything there because I am protesting to this transfer".

Q Was she able to note it?

A No, because I did not give my ticket.

Q About that purser?

A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I went to the pantry that was next to me and the purser was there. He told me, "I have recorded the incident in my notebook." He read it and translated it to me — because it was recorded in French — "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene."

Mr. VALTE —

I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your Honor.

COURT —

I will allow that as part of his testimony. 49

          Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook reading "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony on the entry does not come within the proscription of the best evidence rule. Such testimony is admissible. 49a

          Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res gestae.

          At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really true that no such entry was made, the deposition of the purser could have cleared up the matter.

          We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

          8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary damages — in contracts and quasi- contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." 53 The manner of ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in addition to moral damages.54

          9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that discretion well exercised — as it was here — should not be disturbed.

          10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' fees. The task of fixing these amounts is primarily with the trial court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof.57

          On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to affirm the same. Costs against petitioner. So ordered.

G.R. No. L-24837           June 27, 1968

JULIAN C. SINGSON and RAMONA DEL CASTILLO, plaintiffs, vs.BANK OF THE PHILIPPINE ISLANDS and SANTIAGO FREIXAS, in his capacity as President of the said Bank, defendants.

Gil B. Galang for plaintiffs.Aviado and Aranda for defendants.

CONCEPCION, C.J.:

Appeal by plaintiffs, Julian Singson and his wife, Ramona del Castillo, from a decision of the Court of First Instance of Manila dismissing their complaint against defendants herein, the Bank of the Philippine Islands and Santiago Freixas.

It appears that Singson, was one of the defendants in civil case No. 23906 of the Court of First Instance, Manila, in which judgment had been rendered sentencing him and his co-defendants therein, namely, Celso Lobregat and Villa-Abrille & Co., to pay the sum of P105,539.56 to the plaintiff therein, Philippine Milling Co. Singson and Lobregat had seasonably appealed from said judgment, but not Villa-Abrille & Co., as against which said judgment, accordingly, became final and executory. In due course, a writ of garnishment was subsequently served upon the Bank of the Philippine Islands — in which the Singsons had a current account — insofar as Villa-Abrille's credits against the Bank were concerned. What happened thereafter is set forth in the decision appealed from, from which we quote:

Upon receipt of the said Writ of Garnishment, a clerk of the bank in charge of all matters of execution and garnishment, upon reading the name of the plaintiff herein in the title of the Writ of Garnishment as a party defendants, without further reading the body of the said garnishment and informing himself that said garnishment was merely intended for the deposits of defendant Villa-Abrille & Co., Valentin Teus, Fernando F. de Villa-Abrille and Joaquin Bona, prepared a letter for the signature of the President of the Bank informing the plaintiff Julian C. Singson of the garnishment of his deposits by the plaintiff in that case. Another letter was also prepared and signed by the said President of the Bank for the Special Sheriff dated April 17, 1963.

Subsequently, two checks issued by the plaintiff Julian C. Singson, one for the amount of P383 in favor of B. M. Glass Service dated April 16, 1963 and bearing No. C-424852, and check No. C-394996 for the amount of P100 in favor of the Lega Corporation, and drawn against the said Bank, were deposited by the said drawers with the said bank. Believing that the plaintiff Singson, the drawer of the check, had no more control over the balance of his deposits in the said bank, the checks were dishonored and were refused payment by the said bank. After the first check was returned by the bank to the B. M. Glass Service, the latter wrote plaintiff Julian C. Singson a letter, dated April 19, 1963, advising him that his check for P383.00 bearing No. C-424852 was not honored by the bank for the reason that his account therein had already been garnished. The said B. M. Glass Service further stated in the said letter that they were constrained to close his credit account with them. In view thereof, plaintiff Julian C. Singson wrote the defendant bank a letter on April 19, 1963, claiming that his name was not included in the Writ of Execution and Notice of Garnishment, which was served upon the bank. The defendant President Santiago Freixas of the said bank took steps to verify this information and after having confirmed the same, apologized to the plaintiff Julian C. Singson and wrote him a letter dated April 22, 1963, requesting him to disregard their letter of April 17, 1963, and that the action of garnishment from his account had already been removed. A similar letter was written by the said official of the bank on April 22, 1963 to the Special Sheriff informing him that his letter dated April 17, 1963 to the said Special Sheriff was considered cancelled and that they had already removed the Notice of Garnishment from plaintiff Singson's account. Thus, the defendants lost no time to rectify the mistake that had been inadvertently committed, resulting in the temporary freezing of the account of the plaintiff with the said bank for a short time.

x x x           x x x           x x x

On May 8, 1963, the Singsong commenced the present action against the Bank and its president, Santiago Freixas, for damages1 in consequence of said illegal freezing of plaintiffs' account.1äwphï1.ñët

After appropriate proceedings, the Court of First Instance of Manila rendered judgment dismissing the complaint upon the ground that plaintiffs cannot recover from the defendants upon the basis of a quasi-delict, because the relation between the parties is contractual in nature; because this case does not fall under Article 2219 of our Civil Code, upon which plaintiffs rely; and because plaintiffs have not established the amount of damages allegedly sustained by them.

The lower court held that plaintiffs' claim for damages cannot be based upon a tort or quasi-delict, their relation with the defendants being contractual in nature. We have repeatedly held, however, that the existence of a contract between the parties does not bar the commission of a tort by the one against the order and the consequent recovery of damages therefor.2 Indeed, this view has been, in effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso,3 involving an airplane passenger who, despite his first-class ticket, had been illegally ousted from his first-class accommodation and compelled to take a seat in the tourist compartment, was held entitled to recover damages from the air-carrier, upon the ground of tort on the latter's part, for, although the relation between a passenger and a carrier is "contractual both in origin and nature ... the act that breaks the contract may also be a tort".

In view, however, of the facts obtaining in the case at bar, and considering, particularly, the circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank realized the mistake he and his subordinate employee had committed, the Court finds that an award of nominal damages — the amount of which need not be proven4 — in the sum of P1,000, in addition to attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights.5

WHEREFORE, the judgment appealed from is hereby reversed, and another one shall be entered sentencing the defendant Bank of the Philippine Islands to pay to the plaintiffs said sums of P1,000, as nominal damages, and P500, as attorney's fees, apart from the costs. It is so ordered.

G.R. No. L-31935 January 22, 1980

IN THE MATTER OF THE PETITION OF BABY NG alias NG KONG DING TO BE ADMITTED AS A CITIZEN OF THE PHILIPPINES. BABY NG alias NG KONG DING, petitioner-appellee vs.REPUBLIC OF THE PHILIPPINES, oppositor appellant.

 

BARREDO, J:

Appeal of the Republic of the Philippines from the order of the Court of First Instance of Quezon, Branch IV at Calauag, Quezon dated April 14, 1969 permitting the applicant for naturalization, Baby Ng alias Ng Kong Ding in its Naturalization Case No. 4-C, "to take his oath of allegiance as a Filipino citizen" and ordering that "the corresponding naturalization certificate be issued in his favor, to be registered in the local Civil Registry, with the consequent privilege(s) (of) enjoying all the civil and political rights of a Filipino citizen" (Pp. 80-81, Record on Appeal.)

On June 11, 1965 a decision was rendered in the abovementioned case granting the petition of above-named Baby Ng alias Ng Kong Ding for naturalization as a Filipino citizen. More than two years after said decision became final, on October 1, 1968, said petitioner moved, pursuant to Republic Act 530 for the presentation of evidence in the second and final hearing leading to the taking of the oath of allegiance and issuance of the corresponding certificate of naturalization. According to the trial court, at this latter proceeding, the petitioner testified and submitted and Identified thirty-six (36) exhibits marked Exhibits AAA to FFFFm1 and "That in the cross- examination of the petitioner on October 16, 1968 by Provincial Fiscal Severino 1. Villafranca, in representation of the Solicitor General, after he has not offered any objection to any of the exhibits presented by the petitioner, wherein photostat copies were substituted which are the faithful reproduction of the originals, it was shown that the petitioner never left the Philippines; that he reiterated his of in. come as testified to during his direct examination; and that he the c permits or certificates from those concerned; that the petitioner clarified that the land on which his theatre is constructed in Alabat belongs to Patricio Desembrana that the reason his net income decreased from lesss than P8,000.00 in 1966 to a little less than P6,000.00 in 1967 is due to the fact that his piggery and poultry suffered pestilence, that petitioner's children do not speak or understand the Chinese wage, as in fact they always speak in Tagalog. that the petitioner never uses chop-sticks in eating and rarely eats Chinese food, but that he uses the conventional spoon, knife and fork and eats native viands like sinigang, dinuguan, paksiw, guinanga pinakbet, caldereta, kandinga. dinayapan, pinangat and sinarubot that the petitioner finished his Grade IV elementary school in Alabat, and after that improved

himself through self- study and private tutor; that he loves Filipino customs and traditions and does not have the slightest intention to go to China; that he is willing to volunteer in the armed forces of the Philippines; that he has never smuggled silver coin and other items thru Hongkong or Taipei; that he has never used any counterfeit money; that he is against any group that would subvert our national economy; that he has never associated with any Chinese or any Chinese organization; that he is not prone to quarrel to anybody that if his petition for naturalization is approved he intends to take advantage of his right of suffrage, because he has the welfare of the people at heart; that he has never contributed to any politician or political parts that he has no real property but that his wife inherited from her parents; that petitioner reserved his right to present the approval of his application for renunciation of citizenship from China, as in fact he presented the same on December 19, 1968." (Pp. 72-79, Record on Appeal.) There is nothing to show that the Republic's representative did not present any evidence.

In his brief, the Solicitor General has assigned the following alleged errors:

I

THE LOWER COURT ERRED IN NOT RULING THAT PETITIONER HAD NO LUCRATIVE INCOME.

II

THE LOWER COURT ERRED IN NOT RULING THAT PETITIONER'S CHILDREN WERE NOT ENROLLED IN THE PRESCRIBED SCHOOL.

III

THE LOWER COURT ERRED IN NOT RULING THAT PETITIONER VIOLATED THE ANTI-ALIAS LAW.

IV

THE LOWER COURT ERRED IN NOT RULING THAT PETITIONER VIOLATED THE RETAIL TRADE ACT.

According to the Solicitor General:

Upon the original petition for naturalization filed on October 28, 1960, the lower court presided by Judge Union C. Kayanan rendered decision dated June 11, 196.5, finding the petition as meritorious; the petitioner possess of the qualifications and none of the disqualifications provided in Sections 2 and 4, respectively, of Commonwealth Act No. 473, and qualified to be admitted a citizen of the Philippines (pp. 39-40, Rec. on Appeal).

No appeal was taken from the decision.

On October 16, 1968, the lower court, after hearing, issued an order allowing petitioner to take the oath of allegiance as a naturalized Filipino citizen, in the following tenor:

As soon as the petitioner filed his certificate of renunciation of citizenship from the Chinese embassy, in the absence of any opposition from the Provincial Fiscal in representation of the Solicitor General or after thirty (30) days from this date, let the petitioner take his oath.

So Ordered.

(p. 52, Rec. on Appeal).

On December 20, 1968, the Republic filed a motion for reconsideration alleging that the court order dated October 16, 1968 tailed to comply with the requirements of Section 1. Republic Act No. 530 that provided for a finding that the applicant or petitioner for naturalization has (1) not left the Philippines, (2) has dedicated himself continuously to a lawful calling or profession, (3) has not been convicted of any offense or violation of Government promulgated rules, 4 or committed any act prejudicial to the interest of the nation. or contrary to any Government announced policies Since at any stage of the proceedings in naturalization, the Government can question the right or qualifications of an applicant to become a Filipino citizen, the Republic's motion for reconsideration also raised grounds opposing the grant of citizenship, touching on the qualifications and disqualifications of petitioner, to wit: (1) that petitioner had no lucrative income; (2) petitioner violated the Retail Trade Act (Republic Act 11801; (3) that petitioner's children were not shown to have been given an education in prescribed school; and (4) petitioner violated the Anti-Alias Law (Com. Act No. 142) pp. 53-62, Rec. on Appeal.

On January 20, 1969, petitioner opposed the motion for reconsideration filed by the Solicitor General on the ground that there was no premature oath-taking, stating precisely there was yet unsubmitted the certificate of renunciation from the Republic of China at Taipei and its official translation in English, as wen as advancing the excuse in behalf of the court order dated October 16, 1968 for not complying with the adverted Republic Act No. 530 (pp. 63-65, Rec. on Appeal).

On February 28, 1969, the Republic filed its Omnibus Motion, giving additional logical reasons anent the trial court's failure to comply with Section 1 of Republic Act No. 530, with citation of case authorities and praying for a reconsideration of the court's order dated October 16, 1968 (pp. 66-68, Rec. on Appeal).

On April 9, 1969, petitioner filed his opposition to the omnibus motion (pp. 70-71, Rec. on Appeal).

Finally, on April 14, 1969, the lower court issued its order (earlier reproduced) allowing petitioner to take his oath and in effect, denying the government's motion for reconsideration and the omnibus motion (pp. 81-83, Rec. on Appeal).

Thus, the appeal by the Government (pp. 81-83, Id.). (Pp. 2-5, Appellant's Brief.)

And in support of its first assigned error, counsel for the Republic contends thus:

The petition was filed in the Court of First Instance of Quezon Calauag in October 1960. Petitioner should prove by competent evidence, to show income stability that for some years before and at the time of such filing, he was engaged in lawful occupation or profession, deriving enough income to support his wife and children. He had two children at the time of the filing and there at the hearing of the petition. He did not submit his income tax returns, from 1957 to 1961, obviously because as stated in his petition, in 3rd paragraph thereof, his average annual income was only P3,000.00 which was insufficient. He only presented in court his returns from 1962 to 1964, which show that in 1962, petitioner's net income was P4,088.10; in 1963, P3,892.50; and in 1964, P7,732.98, which hardly could be considered as lucrative within the contemplation of the law. (Page 6, Appellant's Brief.)

Answering such argument, appellee maintains in his brief:

In the determination of what is lucrative income within the contemplation of the law, it is respectfully submitted that the cost of living and the purchasing power of the peso in the particular locality where the petitioner resides should be given primary consideration.

It is therefore our intention to establish the fact that the cost of living in Alabat, Quezon where the petitioner resides is very much lower than in other localities and especially that of Manila and that the purchasing power of the peso in the same locality is much higher than elsewhere.

Thus, Mr. Hermenegildo Mascarina one of the character witnesses of the petitioner, testified in part as follows:

Q. Do you know if the petitioner owns any real property in the Philippines?

A. None sir.

Q. What is his occupation?

A. Merchant, sir.

Q. Since when did you know petitioner to have engaged in business as a merchant"

A. Since 1951, sir,

Q. Where does he conduct his business?

A. At No. I corner of Burgos and Mabini Streets, Alabat,

Q. What can you say of the business of the petitioner as a merchant.

A. He is very prosperous and progressive, sir.

Q. Why were you able to say that petitioner's business is pro-sperous and progressive?

A. Judging from the flow of patrons and customers daily in his store and all the different wares being sold in his store I can say his business is very prosperous and his store is the most progressive store in Alabat.

COURT:

May Answer.

A. According to my observation, I not less than P500.00 a month.

Q. What can you say about the earnings of the petitioner as a merchant?

FISCAL EBRON

Objection, Your Honor. the witness is incompetent. that he is

Q. Are the of Baby Ng sufficient to maintain a descent family as obtaining in Alabat.

A. Yes sir.

Q. Why do you say so?

A. Because the cost of living in Alabat is much cheaper than the cost of living in other municipalities and especially those living in the cities. The value of Pl.00 may be sufficient for a family of 5 for the whole clays CID on in Alabat and the prime commodities especially those coming from the farms like bananas and other fruits and vegetable are much cheaper in Alabat than those of other municipalities.

Q. How much do you earn as a teacher?

A. P243.36 per month, sir.

Q. Is that amount you have t for you to maintain decently your family in accordance with the standard of arriving as obtaining in Alabat

A. It is sufficient, I have 6 c and my wife and 1, we are 8 in the family. (pp. 32, 33 & 34 Testimony of Mr. Hermenegildo M Masscarina an Feb. 15, 1965).

On the other hand, the petitioner BABY NG KONG DING, in so far as pertinent, declared in open court as follows:

Q. Will you compare the standard of living in Alabat, Quezon

A. If you are P10.00 per day in Alabat you will be spending P50.00 in the City of Manila, sir.

Q. How can you account for that?

A. Because dinner costing P0.70 in Alabat will satisfy me already while in Manila it will cost me P3.50 up to P4.00 and the commercial place which I am renting at P20.00 in Alabat would probably call for a rental of P300.00 in Manila. with that of Manila?

Q. WhatcanyousayaboutthestandardoflivinginAlabat?

A. The cost of prime commodities there are cheap, sir. (pp. 11 & 12, t.s.n. Testimony of Baby Ng Kong Ding - Hearing on March 25, 1965).

From the foregoing, it could readily be concluded that what may be considered as gainful employment in Alabat, Quezon where the present petitioner resides may not be so in other places especially in Manila.

During the trial proper, the petitioner has established through his Individual Income Tax Returns that his net income are as follows:

(1) P4,088. 10 in 1962 as per Exhibit 'MM' (p. 20 (1) - Record on Appeal);

(2) P3,892.50 in 1963 as per Exhibit 'NN' (p. 20 (2) - Supra);

(3) P7,732.98 in 1964 as per Exhibit 'OO' (p. 19 (3) - Supra);

During the final hearing, the same petitioner by means of similar documents has proven that his further net income are as follows:

(1) P7,970.06 in 1965 as per Exhibit 'GGG' (p. 42, par. 6 - Record on Appeal);

(2) P5,938.88 in 1966 as per Exhibit 'HHH' (p. 42, par. 8 - Supra);

(3) P7,864.52 in l967 as per Exhibit 'III' (p.43,par. 1- Supra).

Considering the income of the petitioner as reflected in his several individual income tax returns and making as the basis the cost of living and the purchasing power of Use peso in surpass the standard what is lucrative or gainful employment as intended by the law.

Furthermore, if the income of the petitioner is not lucrative, then he could not have acquired the following personal properties to wit:

(1) Chevrolet car model 1949 worth Pl,200.00;

(2) Refrigerator Whirlpool RCA worth P2.800.00;

(3) Television set GE model 1964 worth PI.900.00;

(4) Diesel generator worth P2,600.00;

(5) Household furnitures worth P2,000.00;

(6) Jewelries worth P1,000.00;

(7) with eight (8) pigs and

(8) A bank deposit with the Philippine Savings Bank totalling P6,675.15 as per certificate marked Exhibit ' "HH" ' (p. 30, Record on Appeal, lines 24 up to 32, which is a part of the trial court's findings as quoted in the Decision dated June 11, 1965.

Finally, were it not for his gainful occupation, petitioner could not have built his house where his family lives at the Poblacion of Alabat, Quezon with an assessed value of P1,000.00 (p. 19, XI (2) Record on Appeal). (Pp. 2-8, Appellee's Brief.)

Upon a review of the record, We are satisfied that appellee's position in regard to the sufficiency of his income is well taken, It is indeed unfair to judge the financial capacity of appellee who has been living since his birth, 37 years before 1965 when he filed his petition, in a small and comparatively remote town, Alabat, Quezon Province, by the standards and cost of living in progressive communities. If a teacher in that town like the witness Hermenegildo MasCarina whose testimony at the original hearing was corroborated substantially by Ambrosio Borlaza, a former councilor and Vice-Mayor thereof, has been able to live comfortably with his wife and six children on his salary of P243.36 a month, why should anyone wonder if petitioner, having only three children and with the financial capacity shown above would be able to maintain his family without any risk of him or any member of his family being a charge of the state?

The Republic's contention in its second assigned error is even less convincing. The evidence is indubitable that petitioner had at the time of the original hearing only two children of school age, Emelita aged 11 years and Nora aged nine years. (The third child Eleonor was then only seven months old.) Emelita and Nora were both enrolled at the Alabat Elementary School, the only institution of learning of that level in that small community. The school was being operated by the municipality itself. No doubt, such a school would qualify under the requirements of the naturalization law, for it is unquestionably recognized by the government and must have been and is still teaching Philippine history, government and civics as part of its curriculum. Indeed, the evidence presented by petitioner on this score was superfluous.

As to the claim of the Solicitor General that the trial court erred in not holding that petitioner has violated the anti-alias law, suffice it to point out that in the certified true copy of the record of birth of petitioner issued by the Local Civil Registrar of Alabat, Quezon on January 12, 1965, it appears that petitioner's registered name is "Baby Ng (Ng Kong Ding)". How can a duly registered name be deemed an alias under the law? Moreover, it is important to note that the name Baby Ng alias Ng Kong Ding was stated plainly and completely in the petition for naturalization of petitioner. (Page 2, Record on Appeal.)

Incidentally, just to complete the petitioner's relevant circumstances, in his brief, he states:

It is significant to state by way of further explanation that in his petition dated October 26, 1960, petitioner alleged, among others, that his Christian name is JOSE as it is required by the Catholic Church to adopt a Christian name by all who want to embrace the Catholic religion through baptism.

Said allegation is substantiated by petitioner's Exhibit 'Q' (p. 17 (4) - Record on Appeal) which is the baptismal certificate duly issued by Parish Priest Jose Almira of Alabat, Quezon on January 7, 1965, to the effect that the petitioner was baptized at Alabat, Quezon, on February 10, 1948, by then Rev. P. Adelino Imperial of the Roman Catholic Church and that the petitioner was given or had adopted the Christian name JOSE. That is the justification of the use by the petitioner of the Christian name JOSE. (Pp. 13-14, Appellee's Brief.)

Accordingly, We overrule appellant's third assignment of error.

Lastly, in what apparently is a tenacious but vain attempt to block petitioner's naturalization, the Solicitor General posits that petitioner has violated the Retail Trade Law because he engaged in retail trade even before being naturalized as a Filipino citizen.

What appellant has missed is that according to the recorded evidence not disputed by the government's representative at both the original and second hearings, petitioner had been maintaining and operating his sari-sari store at the corner of Burgos and Mabini streets in Alabat even way back in 1951 before the passage of the Retail Trade Act in 1954. And consider that said Act was not given retroactive effect in the sense that non-citizens already in the retail business before its passage have been allowed under said law to secure permits to continue thereat, all that petitioner had to do, in order not to violate the law, was to obtain such permit. To this effect, Exhibit KKK, which is the permit granted to petitioner by the Mayor of Alabat, Quezon is evidence of his compliance with the law. And if this is not enough, Exhibit JJJ, the permit issued to petitioner by the Municipal Treasurer of Alabat, Quezon, acting for and in behalf of the Secretary of Commerce and industry states:

PERMIT TO ENGAGE IN THE RETAIL BUSINESS

THIS IS TO CERTIFY that BABY NG ahas JOSE NG KONG DING, a citizen of China, holder of Alien Certificate of Registration No. 038819, dated February 28, 1964, and a resident of Alabat, Quezon, having complied with the requirements of Section 2 of Republic Act No. 1180 and the rules and regulations thereunder issued by the secretary of Commerce and Industry, is hereby permitted to continue his retail business at Alabat, Quezon. This permit is valid until December 31, 1968, unless sooner revoked for cause. (Page 18, Appellee's Brief)

Under these circumstances, We see no alternative but to hold that, contrary to the contention of the Republic, petitioner has not violated the Retail Trade Act.

In sum, finding as We do that the impugned order of the trial court of April 14, 1969, like its original decision of June 11, 1965 is adequately supported by strong valid convincing evidence, We are of the considered opinion that petitioner has satisfactorily established his right to be a natural Filipino citizen and that, therefore, the appeal of the Republic should be overruled Parenthetically, it may be stated that We are aware that under the

very strict criteria followed by this Court in action cases in the past, the posture of the Solicitor General in his brief filed in May, 1972 could well have some degree of plausibility. We are aware, however, that a new policy of liberal attitude regarding Naturalization has been adopted temporarily, to the extent of naturalization being granted administratively under less stringent conditions than those in the Naturalization Law. It would be out of tune with the times for the Court now to go along lines already abandoned to some extent by the political authorities of the Republic. Accordingly, the order appealed from is affirmed.